While the Insolvency and Bankruptcy Code, 2016 (“IBC”) positions the rescue of a corporate debtor as its primary directive, this preference is bound by an economic expiration date. Resolution is not a licence for perpetual delay, nor is an approved resolution plan an option contract that a Successful Resolution Applicant (“SRA”) can hold open indefinitely while asset values erode.
In Taguda Pte. Ltd. v. State Bank of India & Anr1 The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, New Delhi, builds upon the emerging jurisprudence governing the post-approval implementation of resolution plans. The decision establishes a clear doctrinal boundary: when an SRA fails to perform due to regulatory or funding contingencies it voluntarily assumed, liquidation may become the inevitable statutory consequence to prevent the endless suspension of creditors’ rights.
The Factual Chronology
The Corporate Insolvency Resolution Process (“CIRP”) of Ushdev International Ltd. commenced more than eight years ago, on May 17, 2018. After a protracted cycle of litigation, Taguda Pte. Ltd. ‘s (“Taguda”) Revised Resolution Plan, proposing a total payout of ₹227 crores, including ₹225 crores designated for financial creditors, was formally approved by the NCLT on February 3, 2022.
What followed was a prolonged pattern of implementation failures, characterised by a continuous pattern of defaults and successive judicial lifelines, Taguda attributed its initial delays to pending applications before the Reserve Bank of India (“RBI”) regarding Foreign Exchange Management Act (“FEMA”) compliance linked to guarantees furnished by the erstwhile management. Recognising the standstill, the NCLT issued an order on December 8, 2023, granting Taguda a final, strict two-month window to implement the plan, explicitly noting that all regulatory prerequisites rested solely with the SRA. Taguda defaulted on this deadline. In July 2024, during an interim appellate challenge, the NCLAT directed Taguda to demonstrate its bona fides by depositing ₹225.14 crores into an SBI branch in Singapore or the UAE. Instead of executing the transfer, Taguda shifted its funding structure mid-stream, introduced a new UAE-based investor and subsequently cited Dubai Financial Services Authority (“DFSA”) regulatory restrictions regarding fund sourcing to justify its failure to comply with the judicial deposit order. On October 16, 2025, the NCLT admitted the lenders’ application for liquidation. Crucially, the NCLT rejected Interlocutory Application No. 4253 of 2025, filed unilaterally by Taguda and proposing a revised, staggered payment schedule. The application was filed only after oral arguments in the liquidation proceedings had concluded and judgment had been reserved, and was treated as a belated attempt to reopen concluded proceedings. Dismissing Taguda’s subsequent appeal, the NCLAT upheld the liquidation order and imposed costs of ₹5 lakhs upon the SRA.
Jurisprudential Analysis
A critical doctrinal holding in Taguda is the Tribunal’s firm application of procedural finality. Taguda had already litigated its implementation delays, offshore deposit difficulties and pleas for further time in an earlier appellate round, which culminated in dismissal by the NCLAT on May 30, 2025, and was subsequently affirmed by the Supreme Court of India on July 23, 2025. The NCLAT therefore held that an appeal against the resulting liquidation order could not be used as a backdoor mechanism to re-agitate the original causes of the implementation default, particularly when substantially identical issues had already attained finality between the parties. The judgment also reinforces the allocation of regulatory risk under Section 31(4) of the IBC, which requires the SRA to obtain all necessary statutory approvals within one year from the date of approval of the plan. Taguda’s attempt to rely upon the mere pendency of its applications before the RBI as an equitable shield against liquidation was rejected, with the Tribunal reiterating that simply moving an application before a regulator does not constitute compliance. Since the requirement for regulatory clearances was embedded in the terms of the Request for Resolution Plan and voluntarily assumed by Taguda, any subsequent failure or delay in securing those clearances remained a commercial and regulatory risk borne by the SRA. The decision further links implementation delay with continuing value erosion, reaffirming that the Code protects not merely the possibility of resolution but also the economic value of the insolvency estate, and that regulatory pendency cannot operate as an ongoing safe harbour against liquidation. The Tribunal also declined to interfere with the Stakeholders’ Consultation Committee’s rejection of Taguda’s fresh proposal by an 81.778% majority, noting that the loss of confidence in the SRA was rooted in objective commercial considerations. Taguda had relied upon scanned copies of demand drafts and pay orders without delivering physical, realisable instruments into the liquidation estate, while also proposing to use approximately ₹41 crores from the Corporate Debtor’s own accumulated cash balances to fund a portion of the promised payout. By validating the SCC’s rejection, the NCLAT reinforced that once stakeholders lose confidence in an SRA’s ability to implement the plan through chronic non-performance, they are legally justified in preferring immediate and certain distributions in liquidation over uncollateralised promises of corporate revival. In reaching this conclusion, the Tribunal relied upon the Supreme Court’s decision in State Bank of India v. Consortium of Murari Lal Jalan & Florian Fritsch (Jet Airways)2 to establish that approved plans cannot remain in a state of suspended animation and that where an SRA creates a regime of endless non-compliance, resolution may become impracticable and liquidation the necessary statutory relief. At the same time, the NCLAT dismantled Taguda’s reliance on Asha Chopra v. Hind Motors India Ltd.3 by holding that the absence of asset alienation or irreversible third-party rights did not grant a defaulting applicant an automatic right to stall liquidation indefinitely when its capacity to perform remained unproven.
Conclusion
The Taguda decision provides a necessary correction to the behavioural dynamics of the insolvency market. It illustrates that the implementation stage of an approved resolution plan is bound by the same structural discipline, certainty and finality that governs the CIRP timeline.
Once a resolution plan fails because the SRA cannot execute the obligations it voluntarily assumed, the Code does not require creditors, stakeholders or adjudicating authorities to preserve an unworkable resolution framework. At some point, the preference for corporate survival must yield to economic reality. In these circumstances, liquidation ceases to be a failure of the system and becomes exactly what the legislature intended: a crucial statutory mechanism to prevent further asset degradation and bring finality to the estate.
Citations
Expositor(s): Adv. Jahnobi Paul
