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2023 (12) TMI 1174 - AT - Insolvency and BankruptcyLiquidation Order - whether issuance of Form-G decision cannot be taken by CoC to liquidate the Corporate Debtor? - HELD THAT - On looking into the resolution passed by the Committee of Creditors, CoC has given reasons as to that there are no employees, no business, no registered office, no filing of annual account of the MCA since 31.03.2011, no returns and no transactions since 2017. The scheme of the IBC as delineated by Section 33 sub section 2 empower of Committee of Creditors to take a decision to liquidate after constitution of Committee of Creditors. It is true that the decisions of the CoC to liquidate has to be with reasons and that cannot be arbitrarily done but in the present case when looked into the resolution of the CoC it is clear that there was objective consideration by the CoC for taking a decision to liquidate. Since SLP having been dismissed and review having also dismissed on the said submission the hearing of the appeal cannot be adjourned. It goes without saying that any order passed by Hon ble Supreme court is binding by this tribunal and Adjudicating Authority, in event any such order is passed in the Curative Petition - in view of the order which we are passing in this appeal the subsequent application has become infractuous and has to be closed. The order passed by Adjudicating Authority dated 31.08.2023 is set aside - appeal allowed.
Issues Involved:
The appeal challenges the order allowing liquidation and the requirement of Form-G for liquidation decision by the Committee of Creditors. Liquidation Decision and Form-G Requirement: The appeal was filed against the order allowing liquidation and directing for liquidation. The Committee of Creditors (CoC) passed a resolution for liquidation based on reasons such as lack of business activity, no employees, and no financial transactions. The appellant argued that the Insolvency and Bankruptcy Code does not mandate the issuance of Form-G before the CoC can decide on liquidation. The Resolution Professional published Form-G after an interim order but received no Expression of Interest (EOI). The Tribunal noted that the CoC's decision for liquidation was based on objective considerations and upheld the decision, emphasizing that the CoC has the authority to decide on liquidation after its constitution. Validity of CoC Decision and Judicial Review: The Tribunal referred to a judgment highlighting the wide powers of the CoC to decide on liquidation, emphasizing that decisions must be reasoned and not arbitrary. The CoC's decision in this case was deemed valid due to the lack of business activity and other factors. The Tribunal dismissed the appeal, stating that decisions for liquidation are subject to judicial review based on individual case facts. The respondent cited a judgment where the absence of claims led to the closure of the Corporate Insolvency Resolution Process (CIRP), emphasizing that a CoC cannot be constituted with a single Operational Creditor. However, the Tribunal clarified that the cited judgment did not address the issue of constituting a CoC with a single Operational Creditor. Pending Curative Petition and Subsequent Application: The respondent mentioned a pending Curative Petition against the admission order of Section 9. Despite the subsequent application for liquidation filed by the Resolution Professional after the Form-G issuance, the Tribunal found the application to be infructuous due to the appeal decision. The appeal was allowed, setting aside the Adjudicating Authority's order and directing for liquidation, appointing a Liquidator for the Corporate Debtor's liquidation proceedings. Each party was directed to bear its own costs.
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