Can an Insolvency Professional Continue After Age 70? NCLAT Chennai Clarifies AFA Rules and Liquidation Period Extension
Overview of the Case
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, recently delivered a significant ruling in Chavva Naga Sampathi Tayaru Vs Sri Ananda Lakshmi Narasimha Industries India Pvt Ltd, addressing two critical questions that arise frequently in insolvency proceedings:
- Whether the Adjudicating Authority has jurisdiction to grant a second extension of the liquidation period under
Regulation 44(2)of the IBBI (Liquidation Process) Regulations, 2016; and - Whether a Bankruptcy Trustee who has crossed 70 years of age can lawfully continue to discharge duties in respect of assignments already entrusted to him prior to the expiry of his Authorisation for Assignment (AFA).
Both company appeals were dismissed by the NCLAT, affirming the impugned orders of the National Company Law Tribunal (NCLT), Amaravati Bench, and providing important clarity on the interplay between age-based disqualification and ongoing insolvency assignments.
Background and Factual Matrix
Origin of the Insolvency Proceedings
M/s. Sri Ananda Lakshmi Narasimha Industries India Pvt. Ltd. (the Corporate Debtor), a company incorporated under the Companies Act, 1956, had availed credit facilities from Central Bank of India (the Financial Creditor) aggregating to Rs. 33,18,09,761/-. The erstwhile Director of the Corporate Debtor had also personally guaranteed repayment of these credit facilities.
Upon default in repayment, the Financial Creditor initiated Corporate Insolvency Resolution Process (CIRP) proceedings by filing an application before the NCLT on 29 June 2022, registered as CP(IB)/82/7/AMR/2022. CIRP was formally commenced vide an order dated 20 March 2023.
Simultaneously, proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016 were initiated against the appellant in his capacity as Personal Guarantor, through CP(IB) No. 99/95/AMR/2022. He was admitted to the Personal Insolvency Resolution Process (PIRP) by an order dated 25 January 2023.
Failure of Resolution and Liquidation Order
Since no credible or viable resolution plan was received during the CIRP period, the NCLT passed a liquidation order on 19 December 2024. In terms of Regulation 44 of the IBBI (Liquidation Process) Regulations, 2016, the liquidation process was initially directed to be completed within one year, i.e., by 19 December 2025.
Successive Extensions Sought by the Liquidator
When the liquidation could not be completed within the stipulated one-year period, the Liquidator filed an application seeking an extension of four months — from 19 December 2025 to 17 April 2026. This was granted by the NCLT vide order dated 05 January 2026 in IA(IBC)/436/2025.
Upon expiry of the four-month extension, the Liquidator filed yet another application — IA/143/2026 — seeking a further extension of 150 days (from 18 April 2026 to 14 September 2026). The NCLT, however, granted only a one-month extension from 18 April 2026 to 17 May 2026, invoking Section 60(5) of the Insolvency and Bankruptcy Code, 2016, read with Regulation 44(2) of the IBBI (Liquidation Process) Regulations, 2016, and Rule 11 of the NCLT Rules, 2016.
The Two Challenges Before NCLAT
Company Appeal (AT) (CH) (Ins) No. 261/2026 — Challenging the Liquidation Extension
The appellant, being the erstwhile Director and Personal Guarantor of the Corporate Debtor, filed Company Appeal (AT) (CH) (Ins) No. 261/2026 challenging the NCLT's impugned order dated 20 April 2026.
Primary Arguments of the Appellant: