2021 (5) TMI 1012 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - Section 33 of the IB Code - HELD THAT - No one appeared on behalf of the Suspended management even after issuance of notice. The Suspended Management is also found absent in the said meeting held on 08.03.2021. In view of the above situation it is also pertinent to mention herein that recently the Hon ble Supreme Court of India in its judgement passed in Civil Appeal No. 8766-67 of 2019 Committee of Creditors of Essar Steel India Limited through Authorised Signatory Vs. Satish Kumar Gupta Ors. 2019 (11) TMI 731 - SUPREME COURT has held that the commercial wisdom has been exercised by the CoC after taking into count all the factors leading to maximisation of asset value of the Corporate Debtor but the ultimate discretion of what to pay and how to pay each class or sub-class of creditors lies with the CoC. The Corporate Debtor is allowed to be liquidated - application allowed.

Summary

Issues:
1. Application filed under section 33 of the IB Code, 2016.
2. Resolution to liquidate the Corporate Debtor by the COC.
3. Absence of Suspended Management.
4. Interpretation of commercial wisdom by the Hon'ble Supreme Court.
5. Orders passed by the Adjudicating Authority for liquidation.

Analysis:

1. The application in question was filed under section 33 of the Insolvency and Bankruptcy Code, 2016 (IB Code). The Corporate Insolvency Resolution Process (C.P. (I.B) No. 482/2019) was admitted, and Mr. Dharit K Shah was appointed as the Interim Resolution Professional (IRP) and subsequently confirmed as the Resolution Professional (RP).

2. The Committee of Creditors (COC) in its meeting resolved to liquidate the Corporate Debtor, empowering the RP to file an application under Section 33 of the IB Code before the Adjudicating Authority. The absence of the Suspended Management during the meeting was noted.

3. The Adjudicating Authority referred to a recent judgment by the Hon'ble Supreme Court of India, emphasizing that the commercial wisdom of the COC should not be interfered with. The Supreme Court held that the discretion of payment to creditors lies with the COC, affirming that the Adjudicating Authority does not have jurisdiction to reverse the COC's commercial decisions.

4. Subsequently, the Adjudicating Authority issued various orders regarding the liquidation process. The moratorium under Section 14 of the IB Code was lifted, and the Liquidator was directed to make a public announcement about the liquidation. Legal proceedings against the Corporate Debtor were restricted, except with the approval of the Authority.

5. The Adjudicating Authority appointed Mr. Dharit Kishorbhai Shah as the Liquidator for the Corporate Debtor, following the COC's decision in the 8th meeting. The Authority directed the Registry to communicate the order to relevant parties for compliance. The instant application was disposed of in light of these decisions.