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2021 (1) TMI 389 - AT - Insolvency and BankruptcyLiquidation of the Corporate Debtor - Liquidation order is challenged mainly because the Resolution Professional had not laid the Resolution Plans before the CoC for voting and based on discussion and deliberations Plans were rejected - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The CoC was empowered to decide to liquidate the Corporate Debtor at any time before confirmation of the Resolution Plan, including any time before the preparation of Information Memorandum. It also appears that when CoC noticed that both the Resolution Plans were not feasible and viable, and are being non-compliant which Section 30 of the Code read with Regulation 37 of CIRP Regulation thus. The same could not be considered the Resolution Plans per se within the Code and Regulations' meaning framed thereunder. Consequently, the CoC decided to propose the liquidation of the Corporate Debtor and on voting the same was passed by a majority of 87.30% of voting share of the Members of CoC. Both the Appeals sans merit hence dismissed-no order as to costs.
Issues Involved:
1. Validity of the liquidation order under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. 2. Alleged failure of the Resolution Professional (RP) to present Resolution Plans for voting. 3. Inclusion of leasehold properties in the liquidation value. 4. Commercial wisdom of the Committee of Creditors (CoC). 5. Applicability of the Supreme Court judgment in Municipal Corporation of Greater Mumbai v. Abhilash Lal. Detailed Analysis: 1. Validity of the Liquidation Order: The Appeals challenge the liquidation order dated 09th January 2020 passed by the Adjudicating Authority (NCLT) under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. The order was based on the CoC's decision, which approved the liquidation with an 87.30% voting share. The Appellate Tribunal upheld the liquidation order, emphasizing that the CoC's commercial wisdom is paramount and non-justiciable, as established in K. Sashidhar v. Indian Overseas Bank. 2. Alleged Failure of the RP to Present Resolution Plans for Voting: The Appellants contended that the RP did not put the Resolution Plans to a vote and dismissed them based on discussions. The Tribunal noted that the CoC, after detailed discussions, found the plans non-compliant with Section 30 of the Code and Regulation 37 of CIRP Regulations. The CoC decided to propose liquidation as the plans were not feasible or viable, and this decision was approved by the required voting share. 3. Inclusion of Leasehold Properties in the Liquidation Value: The Appellants argued that leasehold properties should not be included in the liquidation value, citing the Supreme Court's judgment in Municipal Corporation of Greater Mumbai v. Abhilash Lal. The Tribunal distinguished this case, noting that the lease deeds in question were executed in favor of the Corporate Debtor, unlike in the MCGM case where no lease deed was executed. Therefore, the inclusion of these properties in the liquidation value was deemed appropriate. 4. Commercial Wisdom of the CoC: The Tribunal reiterated that the commercial wisdom of the CoC is paramount and cannot be questioned by the Adjudicating Authority or the Appellate Authority. The decision to liquidate the Corporate Debtor was made after thorough discussions and was supported by the required voting share. The Tribunal referenced the Supreme Court's judgment in K. Sashidhar, which emphasized that the CoC's decision is non-justiciable and must be respected. 5. Applicability of the Supreme Court Judgment in Municipal Corporation of Greater Mumbai v. Abhilash Lal: The Appellants relied on the MCGM judgment to argue against the inclusion of leasehold properties in the liquidation value. The Tribunal clarified that the facts of the MCGM case were different, as the lease deed was not executed in favor of the Corporate Debtor. In the present case, the lease deeds were executed, and the properties could be included in the liquidation value. Conclusion: The Appeals were dismissed as they lacked merit. The Tribunal upheld the liquidation order, emphasizing the CoC's commercial wisdom and the non-applicability of the MCGM judgment to the present case. The interim order was vacated, and the IA was disposed of accordingly.
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