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CS Professional · Insolvency and Bankruptcy - Law and Practice · Liquidation of Corporate Person

The Adjudicating Authority passes a liquidation order against Lotus Pharma Ltd. A creditor, Rohan Mehta, believes that the order was procured by concealing facts and wishes to challenge it. Which statement correctly describes his remedy?

Rohan may appeal to the NCLAT within thirty days, extendable by up to fifteen days for sufficient cause, but only on grounds of material irregularity or fraud committed in relation to the liquidation order. A general merits challenge is not available, and the appeal does not go to the Adjudicating Authority.

  1. AHe may appeal to the NCLAT within thirty days, on grounds of material irregularity or fraud committed in relation to the liquidation orderCorrect
  2. BHe may appeal to the NCLAT on any ground of merit, including disagreement with the commercial decision
  3. CHe may appeal only to the Adjudicating Authority that passed the order
  4. DNo appeal lies against a liquidation order passed under section 33

Explanation

Section 61(4) permits an appeal against a liquidation order under section 33 only on grounds of material irregularity or fraud committed in relation to that order, and section 61(2) sets thirty days for filing, extendable by up to fifteen days on sufficient cause. Concealment of facts fits fraud. Appeals on general merits are not permitted by the sub-section, and the appeal lies to NCLAT, not back to the Adjudicating Authority.

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