IBC Section 42: Appeal against the decision of liquidator

Section 42 of Insolvency and Bankruptcy Code, 2016: Appeal against the decision of liquidator

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

A creditor may appeal to the Adjudicating Authority against the decision of the liquidator accepting or rejecting the claims within fourteen days of the receipt of such decision.

Legal Commentary & Landmark Judgments: Section 42

Section 42 provides the statutory right of appeal to the Adjudicating Authority (NCLT) against the decision of the liquidator accepting or rejecting a claim, establishing a strict 14-day limitation period.

Right of Appeal Against Liquidator Decision: A creditor may appeal to the Adjudicating Authority against the decision of the liquidator accepting or rejecting the claims.
Strict 14-Day Limitation Window: The appeal must be preferred within fourteen days of the receipt of the decision under Section 40.
Plenary Review by NCLT: The NCLT possesses complete jurisdiction to re-examine facts, review accounting documents, and direct the liquidator to admit the claim in full or in part.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court highlighted Section 42 as the judicial review anchor of the liquidation process, holding that any quasi-judicial error by the liquidator is immediately rectifiable before the NCLT.
Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. (2023) 10 SCC 60: The Supreme Court affirmed that an appeal under Section 42 provides effective judicial scrutiny over security classification and priority of claims.

Courtroom Practice & Strategic Litigation Guidance:

Calculate limitation under Section 42 strictly: the 14-day period begins on the day the creditor receives the rejection email or letter. If filing an appeal, annex the original claim proof, the liquidator's rejection letter, and detailed point-by-point rebuttal evidence.