2020 (6) TMI 756 - AT - Insolvency and Bankruptcy

Restoration of appeal - liquidation order - CIRP period expired - commercial wisdom of the Committee of Creditors with respect to Resolution Plan - HELD THAT - It is by now settled that, the commercial wisdom of the Committee of Creditors qua the business decision as regard the feasibility and viability of the Resolution Plan cannot be questioned before the Adjudicating Authority or even before this Appellate Tribunal. Likewise, the decision of the Committee of Creditors recommending liquidation of the Corporate Debtor after proper evaluation of the assets and liabilities of Corporate Debtor with no Resolution Plan forthcoming would be a business decision falling within the domain of commercial wisdom of the Committee of Creditors which is not amenable to judicial review. Admittedly, the Corporate Insolvency Resolution Process period has expired and the order of admission on application under Section 7 culminating in passing of impugned order of liquidation has not been assailed by the Appellant. Since, the Corporate Insolvency Resolution Process is over and all actions taken in such process go unassailed, there are no merit in the instant appeal - appeal dismissed.

Summary

Issues:
1. Restoration of dismissed appeal.
2. Validity of order sending Corporate Debtor into liquidation.
3. Challenge to initiation of Corporate Insolvency Resolution Process.
4. Committee of Creditors' decision for liquidation.

Restoration of Dismissed Appeal:
The Appellate Tribunal allowed restoration of the appeal despite not being fully convinced of the cause assigned. The appeal was against the order of liquidation passed by the Adjudicating Authority. The decision to restore the appeal was made considering the circumstances of the case.

Validity of Order Sending Corporate Debtor into Liquidation:
The appeal was filed by an Appellant claiming to be a Promoter, challenging the order of the Adjudicating Authority sending the Corporate Debtor into liquidation. The Appellant argued that the initiation of Corporate Insolvency Resolution Process was vitiated as another entity had also sought initiation but was dismissed. The Appellant contended that the Corporate Insolvency Resolution Process did not culminate properly, leading to the order of liquidation.

Challenge to Initiation of Corporate Insolvency Resolution Process:
The Corporate Insolvency Resolution Process was initiated by a Financial Creditor, culminating in the order of liquidation due to the absence of a Resolution Plan within the prescribed timelines. The Committee of Creditors recommended liquidation as the viable option, with no Resolution Plan forthcoming. The Tribunal emphasized that the commercial wisdom of the Committee of Creditors in deciding on liquidation cannot be judicially reviewed. The Appellant did not challenge the order of admission leading to liquidation, as the Corporate Insolvency Resolution Process had concluded.

Committee of Creditors' Decision for Liquidation:
The Committee of Creditors, after evaluating the assets and liabilities of the Corporate Debtor, recommended liquidation with a majority vote. The Tribunal reiterated that the Committee's decision for liquidation, after due consideration, falls within the realm of commercial wisdom and is not subject to judicial review. As the Corporate Insolvency Resolution Process had ended and all actions were unchallenged, the Tribunal found no merit in the appeal and dismissed it accordingly.