NCLT's Decision on Sapphire Land Development Liquidation Sparks Debate Over IBC Procedural Compliance

The National Company Law Tribunal’s (NCLT) decision to reserve orders on a plea to liquidate Sapphire Land Development has triggered debate within insolvency circles after proceedings revealed that Form G—a mandatory step for inviting prospective resolution applicants under the Insolvency and Bankruptcy Code (IBC)—was never published. The development has raised a wider legal question over whether a company can be pushed into liquidation when a key stage of the Corporate Insolvency Resolution Process (CIRP), intended to test market interest in rescuing the company, was admittedly not completed. During the hearing, the Resolution Professional informed the tribunal that the statutory CIRP period had expired and that Form G was never issued because the Committee of Creditors (CoC) did not approve its publication. Suraksha Asset Reconstruction Ltd., which sought liquidation of the corporate debtor, argued that the insolvency process had effectively run its course, substantial CIRP costs had already been incurred and there was no realistic prospect of resolution. Unity Small Finance Bank opposed the plea, contending that the CIRP itself remained incomplete because the mandatory invitation for Expressions of Interest (EOIs) from prospective resolution applicants was never issued. The lender argued that Regulation 36A of the CIRP Regulations requires publication of Form G before resolution applicants can participate. In its absence, no investor or bidder was given an opportunity to submit a resolution plan. The bank further submitted that while publication of Form G had been placed before the CoC, the voting process was never carried through to its conclusion. Consequently, the insolvency process never progressed to the stage where competing resolution plans could be invited, evaluated or placed before creditors. After hearing the parties, the tribunal reserved its order. The case has drawn attention beyond the parties involved because it touches upon the resolution-first framework of the IBC. Insolvency professionals say Form G is not merely a procedural requirement but the mechanism through which distressed companies are exposed to potential investors. Without it, they argue, the market is never formally invited to explore a resolution. Legal experts say the tribunal’s eventual ruling could clarify how courts should deal with cases where mandatory procedural steps remain incomplete. While some believe the tribunal could permit completion of the statutory process before considering liquidation, others say the court will have to determine whether the expiry of the CIRP timeline outweighs procedural lapses. Any eventual liquidation order is expected to be closely watched and could face challenge before the National Company Law Appellate Tribunal (NCLAT), where questions relating to Regulation 36A, procedural compliance and the IBC’s emphasis on resolution over liquidation may receive further judicial scrutiny.