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2024 (2) TMI 22 - AT - Insolvency and BankruptcyValidity of order of liquidation of the Corporate Debtor based on the unanimous decision of the Committee of Creditors with 100% voting rights - Locus-Standi of the appellants - HELD THAT - It is to be remembered that the Representatives of the Corporate Debtor were also present in the 7th CoC meeting and it cannot be brushed aside that the only Asset, which was on Lease for a period of 30 years, provided by Bekal Resorts Development Corporation Ltd. (BRDCL) was cancelled on 30.03.2022. In fact, the Corporate Debtor s Representatives, who were present during the meeting had mentioned that they had not assailed the termination of Lease Agreement till the start of the CIRP date. Also, that the Resolution Professional was unable to take any action in as much as the Termination of the Lease Agreement was more than 10 months before the CIRP and BRDCL had informed of not changing its decision through its letter dated 15.03.2023. Merely because there were No Assets and no option for revival of the Corporate Debtor an unanimous 100% decision was taken by the Committee of Creditors in its commercial wisdom to liquidate the Corporate Debtor. The commercial wisdom of the Committee of Creditors is to be respected subject to the limited judicial review, that was available to the Adjudicating Authority / Tribunal. Also that the commercial wisdom of Committee of Creditors is beyond the ambit of challenge, pertaining to the decision taken for liquidation of the Corporate Debtor being essentially a business decision based upon the commercial wisdom and keeping in view the ingredients of Section 33(2) of the I B Code, 2016 and the explanation thereto. In law, when the Resolution Plan is in accordance with Section 30 and 31 of the Code, the Resolution Plan was to be approved. Whether the Adjudicating Authority/Appellate Tribunal, it cannot enter into any analysis to judge, as to whether the prescription of the Resolution Plan results in maximization of the value of assets are not as per decision of Hon ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association v. NBCC (India) Ltd. 2021 (3) TMI 1143 - SUPREME COURT . As far as the present case is concerned, commercial decision taken by the Committee of Creditors was in fulfilment of the relevant provisions of the I B Code, 2016 and Regulations, especially in the teeth of Regulation 40D of the IBBI Corporate Persons Regulations, 2016 - The I B Code, 2016 does not any way spell out any such opportunity being provided to the Appellants (Promoters/Shareholders), at the time of passing of the Liquidation order and they don t have any semblance of any legal right or vested right to oppose the Liquidation order before the Adjudicating Authority/Tribunal in the considered opinion of this Tribunal. Viewed in that perspective the Appellants in the instant Appeal are not to be characterised as Aggrieved Persons within the parameters of Section 61 of the I B Code, 2016. This Tribunal taking note of the rival contentions advanced on either side is of the earnest opinion that in the present case the only Asset to Corporate Debtor, which was on Lease for 30 years was cancelled on 30.03.2022 there were no Assets and no option for the resurrection /revival of the Corporate Debtor, the 100% unanimous decision taken by the Committee of Creditors, in its commercial wisdom to Liquidate the Corporate Debtor is not to be interfered with by this Tribunal because of the limited power of judicial review . Appeal dismissed.
Issues Involved:
1. Commercial decision of CoC and its justiciability. 2. Material irregularities in the CIRP process. 3. Applicability of Section 29A of the IBC and MSME exemptions. 4. Liquidation as a last resort. Summary: Commercial Decision of CoC: The Tribunal upheld the commercial decision of the Committee of Creditors (CoC) to liquidate the Corporate Debtor, emphasizing that such decisions are non-justiciable as per the Supreme Court ruling in K. Shashidhar v. Indian Overseas Bank. The CoC's unanimous resolution to liquidate, backed by 100% voting, was deemed final and beyond judicial interference. Material Irregularities in the CIRP Process: The Appellants argued that the Corporate Insolvency Resolution Process (CIRP) was marred by material irregularities, including the lack of valuation, expression of interest, and proper assessment of the project. They contended that the Resolution Professional and CoC acted arbitrarily and failed to maximize asset value. The Tribunal found no merit in these claims, noting that the CoC's decision was based on commercial wisdom and the lack of assets due to the terminated lease. Applicability of Section 29A of the IBC and MSME Exemptions: The Appellants, being promoters of an MSME, argued for exemptions under Section 29A of the IBC, citing the Supreme Court's rationale in Hari Babu Thota v. Shree Aashraya Infra-con Limited. However, the Tribunal noted that the Appellants' interest in submitting a Resolution Plan was not considered due to their classification as a Non-Performing Asset (NPA) and pending Section 7 application against them, thus failing to meet Section 29A requirements. Liquidation as a Last Resort: The Tribunal reiterated that liquidation is a last resort, as emphasized in various Supreme Court judgments. The CoC's decision to liquidate was taken after thorough deliberation and in the absence of any viable Resolution Plan. The Tribunal found that the CoC had exercised its commercial wisdom appropriately, considering the lack of assets and the impracticality of reviving the Corporate Debtor due to the terminated lease. Conclusion: The Tribunal dismissed the appeal, affirming the Adjudicating Authority's order for the liquidation of the Corporate Debtor, M/s Green Gateway Leisure Ltd., and concluded that the CoC's decision was in compliance with the IBC and its regulations. The appeal was found devoid of merits and was dismissed without costs.
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