Authority: National Company Law Tribunal, Division Bench, Court-I, Ahmedabad (Sh. Shammi Khan, Hon'ble Member (Judicial) & Sh. Sanjeev Sharma, Member (Technical))

Order Date: 13 July 2026

Case Overview

This Interlocutory Application (IA No. 527 of 2026) was filed by Axis Bank Limited under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the NCLT Rules, 2016. The application sought to amend the cause title and substitute the original applicant (the Liquidator of Avantha Power and Infrastructure Limited) with Axis Bank in the pending IA No. 31 of 2025.

IA No. 31 of 2025 was originally filed by the Liquidator, CA Tejas K Shah, on 10 December 2024 under Section 66 of the Code. It is an avoidance application against the suspended management of Avantha Power (Respondents 2 to 5: Anil Bhargav, Chiranjiv Singh, Janmejaya Mahapatra, and Avantha Holding Limited) concerning alleged wrongful/fraudulent transactions for the benefit of all stakeholders. The Corporate Debtor, Avantha Power and Infrastructure Limited, was admitted into Corporate Insolvency Resolution Process (CIRP) on 16 August 2021. Liquidation was ordered on 14 June 2024, and the sale of the corporate debtor as a going concern was approved on 9 March 2026.

The core dispute in the present application was whether Axis Bank, a member of the Stakeholder Consultation Committee (SCC), had the legal authority and locus standi to seek substitution of the Liquidator. Axis Bank argued that the SCC, in its 10th meeting (11 March 2025) and reaffirmed in its 24th meeting (9 April 2026 with an 85.62% majority vote), had resolved that it should pursue the avoidance application on behalf of all stakeholders, citing Regulation 44A of the IBBI (Liquidation Process) Regulations, 2016. It also relied on an NCLT order dated 25 February 2026, which recorded the Liquidator's submission about this assignment and directed Axis Bank to take appropriate steps for substitution.

The Respondents (suspended management) opposed the application, contending it was not maintainable. They argued that Axis Bank lacked an independent statutory right under Section 66 to seek substitution, that no assignment deed or resolution authorizing the substitution was on record at the time of filing (31 March 2026), and that the minutes of the 23rd SCC meeting (6 March 2026) did not contain such a resolution. The Liquidator (Respondent No. 1), in his reply, supported the application, stating it was in conformity with the SCC's decisions and Regulation 44A.

The Tribunal's key observation was that the maintainability of an application must be examined based on the legal rights and authority existing on its date of institution. It found that on 31 March 2026, when Axis Bank filed the application, there was no document (assignment agreement, resolution, deed, or instrument) vesting it with the legal authority to seek substitution. The minutes of the 9th and 10th SCC meetings did not confer such authority, and the order dated 25 February 2026 merely recorded a submission without making a judicial determination. The resolution from the 24th SCC meeting dated 9 April 2026 came into existence after the application was filed and could not retrospectively cure this foundational defect of lacking locus standi.

The Tribunal clarified that Regulation 44A obliges the Liquidator to specify how avoidance proceedings will be pursued post-liquidation but does not confer an independent statutory right on an SCC member to institute an application for substitution. It emphasized that the defect went to the root of maintainability and was not a mere procedural irregularity.

Final Outcome

The application (IA No. 527 of 2026) was dismissed as not maintainable. No costs were awarded. The dismissal is without prejudice to the pendency of the main avoidance application (IA No. 31 of 2025). The Tribunal clarified that its order does not express any opinion on: (i) the validity of the SCC resolution dated 9 April 2026; (ii) whether it validly authorizes Axis Bank to prosecute the Section 66 proceedings; or (iii) the broader legal question of whether an avoidance application can be prosecuted by a person other than the Liquidator after liquidation. Axis Bank is not precluded from instituting a fresh application if otherwise permissible in law, founded upon subsequent developments and the requisite authority.

Topics: NCLT Procedure, Locus Standi, Avoidance Applications