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2022 (6) TMI 172 - AT - Insolvency and BankruptcyLiquidation of corporate debtor - disposal of asseets - Withdrawal of Scheme of arrangement under Section 230 of the Companies Act, 2013 - HELD THAT - When no Scheme could be submitted or approved under Section 230, there was no option left to the Adjudicating Authority except to direct the Liquidator to proceed further in the liquidation process. The Appellate Authority while considering the Appeal filed against the order of the Liquidation has clearly stated that the Appellate Authority is not inclined to interfere with the impugned order. The mere fact that the Appellants in this Appeal claims that they are interested to offer a higher amount to one which the Corporate Debtor has been auctioned cannot be a ground to entertain this Appeal or interfere with the impugned order. Everyone including the Appellants had ample opportunity before the Adjudicating Authority when proceedings were on to submit appropriate Scheme Under Section 230. A Scheme under Section 230 was submitted by Mahalaxmi Continental Limited an Operational Creditor which was a consortium of Operational Creditors including some of the Appellants also. The Scheme was subsequently withdrew by the Applicant. It is amply clear that there is no Scheme under Section 230 which may obviate proceeding in the liquidation. No grounds have been made out to interfere with the impugned orders - Appeal dismissed.
Issues:
1. Appeal against orders passed by the Adjudicating Authority. 2. Liquidation process and submission of Scheme under Section 230 of the Companies Act, 2013. 3. Withdrawal of Scheme application and e-auction of Corporate Debtor's assets. 4. Challenge to impugned orders and e-auction notice. Issue 1: Appeal against orders passed by the Adjudicating Authority The Appeals were filed against two orders passed by the Adjudicating Authority, one on 26.04.2021 in I.A No. 3150/2020 by the Liquidator, and the other on 07.03.2022 in I.A No. 3770/2020 by 'Mahalaxmi Continental Limited' withdrawing the Application for submitting a Scheme under Section 230 of the Companies Act, 2013. The Appellate Tribunal considered the history of the case, including the initiation of Corporate Insolvency Resolution Process (CIRP) and subsequent liquidation orders. The Tribunal upheld the previous order of liquidation and directed the Liquidator to proceed with the liquidation process. The Liquidator had also sought an extension of time to explore a scheme under Section 230, but no viable scheme was received. The Adjudicating Authority had directed the Liquidator to liquidate the assets of the Corporate Debtor due to the absence of a workable scheme. Issue 2: Liquidation process and submission of Scheme under Section 230 of the Companies Act, 2013 The Tribunal noted that there were attempts to explore a Scheme under Section 230, with 'Mahalaxmi Continental Limited' submitting a Scheme for Compromise of the Corporate Debtor. However, the Application for the Scheme was subsequently withdrawn on 07.03.2022. The Tribunal emphasized that without a Scheme approved under Section 230, the Liquidator was directed to proceed with the liquidation process. The Adjudicating Authority had previously directed the Liquidator to follow the decision of the Tribunal and proceed with the liquidation as per the law. The Tribunal found no grounds to interfere with the impugned orders as no viable Scheme under Section 230 was available to prevent the liquidation. Issue 3: Withdrawal of Scheme application and e-auction of Corporate Debtor's assets The withdrawal of the Scheme application by 'Mahalaxmi Continental Limited' and subsequent e-auction of the Corporate Debtor's assets were key points of contention. The Appellant Operational Creditors argued that they were willing to offer a higher amount than the highest bidder in the e-auction to take over the Corporate Debtor. However, the Tribunal noted that all parties, including the Appellants, had sufficient opportunity to submit a Scheme under Section 230 during the proceedings. 'Assam Industrial Development Corporation' defended its position as the highest bidder and highlighted that the payment had already been made. Issue 4: Challenge to impugned orders and e-auction notice The Appellants sought to quash the orders directing liquidation and permitting the withdrawal of the Scheme application, as well as the e-auction notice. The Tribunal, after considering the arguments presented, dismissed the Appeal, stating that no valid grounds were established to interfere with the impugned orders. The Tribunal emphasized the importance of having a viable Scheme under Section 230 to prevent liquidation, which was not present in this case. The e-auction process was conducted, and the highest bidder had already made the payment, leading to the conclusion that the Appeal lacked merit and was thus dismissed.
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