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2021 (3) TMI 1444 - AT - Insolvency and BankruptcyLiquidation of Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 - opportunity of hearing was not provided to Appellants - violation of principles of natural justice - HELD THAT - During Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, no Expression of Interest (EoI) was received and the Committee of Creditors (COC) in its meeting held on 3rd September, 2020, passed the Resolution for the liquidation of the Corporate Debtor. In absence of any EoI being filed and no Resolution Applicant coming forward with a viable and feasible Resolution Plan, no option was left with either the COC or the Adjudicating Authority but to send the Corporate Debtor into liquidation. The explanation to Section 33(2) by Act No. 26 of 2019 enforced w.e.f. 16th August, 2019 sufficiently makes it clear that the COC is empowered to take decision to liquidate the Corporate Debtor any time after its constitution and before the confirmation of Resolution Plan which, in plain terms, gives a pre-eminent position to the COC in taking such business decision in exercise of their commercial wisdom even when a Resolution Plan duly approved by it with requisite vote share is pending before the Adjudicating Authority for approval. In view of the same, it should not lie in the mouth of the Appellant that it was not given an opportunity of being heard, more so when the Corporate Debtor was contesting the matter and duly represented. There are no merit in this appeal. The same is dismissed.
Issues:
1. Lack of opportunity of hearing provided to Appellants during the Corporate Insolvency Resolution Process (CIRP). 2. Breach of Rules of Natural Justice in sending the Corporate Debtor into liquidation. 3. Absence of Expression of Interest (EoI) and viable Resolution Plan leading to liquidation. 4. Judicial review of the Resolution of Committee of Creditors (COC) regarding liquidation. 5. Empowerment of COC under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. 6. Appellant's contention of not being heard despite Corporate Debtor's representation. Analysis: The Appellate Tribunal addressed the issue of lack of opportunity of hearing for the Appellants during the Corporate Insolvency Resolution Process (CIRP). The Tribunal noted that no Expression of Interest (EoI) was received, and the Committee of Creditors (COC) passed a resolution for liquidation in the absence of a viable Resolution Plan. This lack of EoI and absence of a Resolution Applicant left no choice but to send the Corporate Debtor into liquidation, as determined by the Adjudicating Authority. Regarding the breach of Rules of Natural Justice in the liquidation process, the Tribunal emphasized that the COC's decision to send the Corporate Debtor into liquidation is not subject to judicial review. The explanation to Section 33(2) of the Insolvency and Bankruptcy Code, 2016, highlighted the COC's authority to decide on liquidation before the confirmation of a Resolution Plan, giving precedence to their commercial wisdom in such matters. The Tribunal further elaborated on the empowerment of the COC under Section 33(2) of the Insolvency and Bankruptcy Code, 2016, emphasizing the COC's prerogative to make decisions regarding liquidation even when a Resolution Plan is pending approval. This provision underscores the COC's pivotal role in determining the fate of the Corporate Debtor. In response to the Appellant's contention of not being heard despite the representation of the Corporate Debtor, the Tribunal found no merit in the appeal. The Tribunal dismissed the appeal, highlighting that the Corporate Debtor was contesting the matter and adequately represented during the proceedings. The decision reaffirmed the authority of the COC in making crucial decisions related to the liquidation process.
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