2018 (11) TMI 804 - SC - Insolvency and Bankruptcy

Winding up of the corporate debtor - Held that - As HC ordered National Company Law Tribunal (NCLT), Chandigarh, may continue with the proceedings but should not pass a final order thereon. Thereafter, several proceedings have taken place and ultimately adjournments have taken from time to time, thanks to which, the period of 270 days, mentioned under the Code, has now come to an end. We have been informed by the learned counsel appearing for the Resolution Professional (R.P.) that as many as six Resolution Plans were in fact considered and rejected. The Committee of Creditors has now opined under Section 30 of the Code that the matter should proceed for liquidation. In view of this fact, we feel that the impugned interim order needs to be vacated and the proceedings have to logically culminate in a winding up of the corporate debtor.

Summary

Issues:
1. Constitutional validity of provisions of the Insolvency and Bankruptcy Code, 2016 (IBC).
2. Proceedings before the National Company Law Tribunal (NCLT) and rejection of Resolution Plans.
3. Committee of Creditors' decision for liquidation.
4. Vacating the interim order and winding up of the corporate debtor.
5. Appellants' eviction during winding up process.

Analysis:

1. The Supreme Court addressed the issue of the constitutional validity of certain provisions of the Insolvency and Bankruptcy Code, 2016 (IBC), raised in a writ petition before the Punjab & Haryana High Court. The High Court had earlier directed the National Company Law Tribunal (NCLT), Chandigarh, to continue proceedings but not pass a final order. After multiple proceedings and rejected Resolution Plans, the Committee of Creditors decided that liquidation was appropriate under Section 30 of the Code. Consequently, the Supreme Court determined that the interim order should be vacated, and the proceedings should lead to the winding up of the corporate debtor.

2. The Court noted that the Resolution Professional (R.P.) had considered and rejected six Resolution Plans, leading to the Committee of Creditors' decision in favor of liquidation. Given this development, the Court found it necessary to conclude the proceedings with the winding up of the corporate debtor. The appeal was allowed to this extent, and the pending application was disposed of accordingly.

3. In a separate matter, the Court addressed an application related to the appellants' potential eviction during the winding up process. The Court ruled that the appellants should not be evicted until necessary during the winding up process initiation. The appellants were instructed to cooperate with the Resolution Professional and refrain from instigating any workers regarding the property in question. With these directions, the civil appeal was disposed of, and pending applications were also resolved.

Overall, the Supreme Court's judgment clarified the issues surrounding the constitutional validity of IBC provisions, rejection of Resolution Plans, the decision for liquidation by the Committee of Creditors, vacating the interim order, and managing the appellants' eviction during the winding up process. The Court's decisions aimed to ensure a fair and orderly resolution in the insolvency proceedings, balancing the interests of all parties involved.