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2021 (11) TMI 474 - AT - Insolvency and BankruptcyLiquidation of the corporate debtor - Applicability of time limitation - section 33 of I B Code - HELD THAT - It is recalled that the CIRP of the Corporate Debtor was initiated on 14.2.2020 and the decision by the CoC regarding moving for liquidation of Corporate Debtor was taken in its meeting dated16.6.2021. Thus, there is a passage of 16 months from the initiation of CIRP to the decision by CoC to move for liquidation. The Hon ble Apex Court has held in many judgments that proceedings under IBC should be completed in a time-bound manner. Moreover, if any resolution plan is not approved by CoC, the provision of section 33 of IBC has to kick in, with no option but to go for liquidation of the Corporate Debtor. The catena of judgments cited by the Learned Counsel for Appellant, relate to cases where applications were filed under section 12A of the IBC. In the instant case, no application was filed under Section 12A of IBC since there was no OTS that was acceptable to the Respondent No. 2 bank. Hon ble Supreme Court has held in many matters that the decision of the COC, taken in its commercial wisdom, should prevail unless such a decision has some legal infirmity. The impugned order passed by the Adjudicating Authority for liquidation of the corporate debtor, need not be interfered - appeal dismissed.
Issues:
1. Appellant's right to be heard in accordance with the principle of natural justice. 2. Consideration of a valid settlement plan by the Committee of Creditors (CoC). 3. Timely completion of Corporate Insolvency Resolution Process (CIRP). 4. Commercial wisdom of CoC and judicial intervention. Analysis: 1. The Appellant, a promoter and ex-Director of the Corporate Debtor, filed an appeal challenging the order of liquidation passed by the Adjudicating Authority. The Appellant claimed that his right to be heard in accordance with the principle of natural justice was infringed as he was not given an effective opportunity to place his objections on the liquidation application. The Appellant also argued that the CoC approved liquidation proceedings despite a valid scheme of settlement offered by him, which he believed would result in better returns to the creditors. 2. The CoC rejected the single resolution plan and decided for liquidation after considering various OTS proposals submitted by the Appellant, none of which were acceptable to Respondent No. 2 bank. The CoC, in its wisdom, decided to move for liquidation in the absence of any valid settlement plan. The Appellant did not file an application under section 12A of the IBC due to the rejection of his settlement proposals. 3. The CIRP against the Corporate Debtor was initiated in February 2020, and the CoC's decision to move for liquidation was taken in June 2021, after 16 months. The Honorable Apex Court emphasized the time-bound completion of insolvency proceedings under the IBC. If a resolution plan is not approved by the CoC, liquidation becomes inevitable under section 33 of the IBC. 4. The judgment highlighted the commercial wisdom of the CoC, stating that judicial intervention should only occur if there is a legal infirmity in the CoC's decision. The Supreme Court's stance on upholding the CoC's decisions unless legally flawed was reiterated, emphasizing that the commercial wisdom of the CoC should prevail. The Appellant's counsel did not identify any legal weaknesses in the CoC's decision or the liquidation order issued by the Adjudicating Authority. In conclusion, the Appellate Tribunal dismissed the appeal at the admission stage, upholding the liquidation order as legal, just, and in the interests of all creditors. The judgment emphasized the importance of timely completion of CIRP, the commercial wisdom of the CoC, and the limited scope for judicial intervention in CoC's decisions under the IBC.
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