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2023 (9) TMI 573 - AT - Insolvency and BankruptcyLiquidation order - it is alleged that Resolution Professional have not considered all the requisites of the IBC - HELD THAT - The present is a case where before expiry of CIRP period or the maximum period permitted for completion of the CIRP, no Resolution Plan was received. The CoC has passed a resolution to liquidate the Corporate Debtor by vote share of 100%. The statutory scheme indicates that in the eventualities mentioned in Section 33(1) (2) initiation of liquidation proceedings can be made by the Adjudicating Authority. In the present case, extension granted by the Adjudicating Authority of 90 days by order dated 31.07.2020 was also coming to an end on 28.09.2020 on which date CoC in 11th meeting decided to liquidate the Corporate Debtor. The decision of the CoC in 11th meeting of the CoC to liquidate the Corporate Debtor was taken with 100% vote share - It is noted that timeline for CIRP even after extension of 90 days was coming to an end on 28.09.2020 - When CIRP period was coming to an end on 28.09.2020, CoC, there being no Resolution Plan in the CIRP, had rightly passed a resolution to liquidate the Corporate Debtor with 100% vote share. The submission of the Appellant that Resolution Professional did not complete the various process including obtaining the Audit Report cannot be accepted. The period of CIRP having coming to an end, CoC has no option but to take a decision of the liquidation of the Corporate Debtor. In the facts of the present case, there are no error in the decision of the Adjudicating Authority allowing the liquidation application - appeal dismissed.
Issues Involved:
1. Challenge to the order of liquidation. 2. Compliance with the directions issued by the Adjudicating Authority. 3. Commercial wisdom of the Committee of Creditors (CoC). Summary: 1. Challenge to the order of liquidation: The appeal was filed by two suspended directors of the corporate debtor challenging the order of the Adjudicating Authority (National Company Law Tribunal), Jaipur Bench, dated 31.08.2022, which allowed IA No. 325/JPR/2020 filed by the Resolution Professional for passing an order of liquidation. The Adjudicating Authority also dismissed IA No. 433/JPR/2021, which prayed for an extension of the Corporate Insolvency Resolution Process (CIRP) period as it had become infructuous. 2. Compliance with the directions issued by the Adjudicating Authority: The appellants contended that the Resolution Professional did not complete the audit of the corporate debtor or prepare the Information Memorandum, and that assets had been siphoned off by other directors. They argued that the CoC could not have passed a resolution for liquidation without completing the necessary processes. The Adjudicating Authority had issued various orders (dated 26.11.2020, 18.11.2021, 17.12.2021, and 07.03.2022) which, according to the appellants, were not complied with. The Resolution Professional, however, submitted that all orders issued by the Adjudicating Authority were complied with and that the CIRP was conducted in accordance with relevant regulations. The CoC, with 100% vote share, resolved to liquidate the corporate debtor as no resolution plan was forthcoming, and the CIRP period, including an extension, had expired. 3. Commercial wisdom of the Committee of Creditors (CoC): The CoC, in its 11th meeting held on 28.09.2020, resolved to liquidate the corporate debtor with 100% vote share, noting that no resolution plan was received and the CIRP period had ended. The Tribunal emphasized that the commercial wisdom of the CoC in deciding to liquidate the corporate debtor, especially when no resolution plan was forthcoming, is not subject to judicial review. The Tribunal cited a previous judgment, "Praveen Kumar Nanda Kumar vs. VSL Securities Pvt. Ltd. & Ors.," which upheld the CoC's decision to liquidate when the CIRP period had expired and no resolution plan was available. Conclusion: The Tribunal found no error in the Adjudicating Authority's decision to allow the liquidation application, given that the CIRP period had ended, and the CoC had resolved to liquidate the corporate debtor with 100% vote share. The appeal was dismissed accordingly.
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