2021 (9) TMI 683 - Tri - Insolvency and Bankruptcy

Seeking Liquidation of Corporate Debtor - Section 33(2) and 34(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - Despite all possible steps as required under the Code taken during the CIRP, the CoC did not accept any of the resolution plans/proposal for revival of the Company. The CoC in its wisdom has resolved with 81% voting share in favour of the liquidation of the Company. This Authority has no reason before it to take a contrary view in terms of Section 33(1)(a) of the Code. Therefore, there are no option than to pass an order for liquidation of the Company in the manner laid down in Chapter-III of the Code. On reading the Application and the documents enclosed therein, it is found the RP has complied with the procedure laid down under the Code; Regulations made thereunder - this is a fit case to pass liquidation order under sub-clauses (i), (ii) and (iii) of Clause (b) of Sub-Section (1) of Section 33 of the Code for liquidation in the absence of any resolution plan. The Corporate Debtor i.e. M/s. Ind-Barath Power Gencom Limited shall be liquidated in the manner laid down in Chapter-III of the Code - Application allowed.

Issues:
Liquidation order under Section 33(2) and 34(1) of the Insolvency and Bankruptcy Code, 2016 for M/s. Ind-Barath Power Gencom Limited/Corporate Debtor. CoC rejection of resolution plans, objections by Ex-Management, arbitrary decision by CoC, legal proceedings, appointment of Liquidator.

Issue 1: Liquidation Order

The Tribunal received an Application from the Resolution Professional seeking orders for the liquidation of M/s. Ind-Barath Power Gencom Limited/Corporate Debtor under Section 33(2) and 34(1) of the Insolvency and Bankruptcy Code, 2016. The CoC, with 81% voting share, favored the liquidation of the Company after rejecting two resolution plans due to lack of commercial viability. The Tribunal, in compliance with the Code, passed an order for liquidation under Chapter-III of the Code as the CoC did not accept any revival proposal.

Issue 2: Objections by Ex-Management

During the hearing, objections were raised by the Ex-Management regarding the initiation of the CIRP and the rejection of resolution plans by the CoC. The Ex-Management highlighted issues related to outstanding dues from TANGEDCO, lack of plant preservation during CIRP, and the CoC's decision based on the expiry of the CIRP period. The objections emphasized that the CoC's rejection was arbitrary, contradicting the extension of limitation granted by the Supreme Court in a previous case.

Issue 3: CoC Decision and Legal Proceedings

The CoC's rejection of the resolution plans was challenged by the Ex-Management, citing an arbitrary decision based on the CIRP period's expiry. However, the Tribunal referred to a Supreme Court judgment emphasizing that the CoC's commercial decisions are not subject to review by the Adjudicating Authority. Despite objections raised, the Tribunal found no reason to deviate from the CoC's decision and ordered the liquidation of the Company as per the provisions of the Code.

Issue 4: Appointment of Liquidator and Further Directions

The Tribunal allowed the Application and appointed the Resolution Professional as the Liquidator for M/s. Ind-Barath Power Gencom Limited. The order included directions for the public announcement of liquidation, cessation of moratorium, transfer of powers to the Liquidator, compliance with Code sections and regulations, cooperation from personnel connected with the Company, fee entitlement for the Liquidator, discharge notice to officers and employees, and communication of the order to relevant authorities.

In conclusion, the Tribunal, following due process and legal provisions, ordered the liquidation of M/s. Ind-Barath Power Gencom Limited based on the CoC's decision and in the absence of viable resolution plans. The appointment of the Liquidator and the issuance of necessary directions were part of the comprehensive order to manage the liquidation process effectively.

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