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2025 (4) TMI 380 - AT - IBCLiquidation of Corporate Debtor - applicability and interpretation of Regulation 32 and 32A of the Insolvency and Bankruptcy Board of India (IBBI) (Liquidation Process) Regulations 2016 - HELD THAT - The present is a case where the CIRP against the CD commenced on an Application filed under Section 10 by the CD itself. The RP continued the CIRP by inviting Resolution Plans. In response to the invitation of EoI only three entities have submitted the EoIs out of which one was M/s. Busy Bee in Consortium. Only two Resolution Plans were received by the RP and both Resolution Plans which were received were not found compliant. It is clear that there was no compliant Resolution Plan received in the CIRP. The CIRP has run its full course giving enough opportunity to the RP to revive the CD and it was only on 23.07.2024 after more than 14 months of initiation of CIRP a Resolution was passed by the CoC to liquidate the CD. The present is a case where no Resolution Plan was considered or approved and a decision was taken by the CoC with 100% vote share to liquidate the CD. The Adjudicating Authority in the impugned order has referred to the judgment of this Tribunal in Sreedhar Tripathy vs. Gujarat State Financial Corporation and Ors. 2022 (10) TMI 1143 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI where this Tribunal considering scope ambit and power of CoC has held that We are not convinced with the submission of learned counsel for the Appellant that the CoC s decision is an arbitrary decision. CoC is empowered to take decision under the statutory scheme and when in the present case the decision of the CoC for liquidation has been approved by the Adjudicating Authority we see not good ground to interfere at the instance of the Appellant. With respect to going concern sale the CoC was of the view that the Liquidator may sell assets on a standalone basis; assets in a slump sale; a set of assets collectively; and the assets in parcels and not wait for selling the CD or its business as a whole. The CoC has further observed However in the event a suo-moto proposal is received from any person by the Liquidator for taking the company or its business as a whole the same can be explored in discussions with the Stakeholders Consultation Committee - the CoC has adverted to the provisions of 39C and has taken a decision as noted above. Regarding the submission of the Appellant that CoC ought to have taken a decision for sale as a going concern the CoC was well aware of all details of the assets and facts and the decision taken by the CoC is based on the commercial wisdom of the CoC which needs no interference in exercise of appellate jurisdiction. The Hon ble Supreme Court in Arun Kumar Jagatramka vs. Jindal Steel and Power Ltd. and Ors. 2021 (3) TMI 611 - SUPREME COURT has noticed the amendment made in Section 230 of the Companies Act which provides for compromise and arrangement which can be proposed by the Liquidator appointed under the IBC. Regulation 2B in the Liquidation Process Regulation added subsequently provided for submission of scheme of compromise and arrangement to the Liquidator. The Hon ble Supreme Court in the above case has also noticed the third eventuality when a revival is contemplated through the modalities provided in Section 230 of the Companies Act. There can be no quarrel to the proposition laid down by the Hon ble Supreme Court in the above case which provides that revival of the CD can also be done by mode of compromise and arrangement. Conclusion - The CoC in the Legislative Scheme has been empowered to take decision to liquidate the Corporate Debtor any time after its constitution and before confirmation of the resolution plan. There are no error in the order of the Adjudicating Authority - appeal dismissed.
ISSUES PRESENTED and CONSIDERED
The core issues considered in this judgment were: 1. Whether the decision of the Committee of Creditors (CoC) to liquidate the Corporate Debtor (CD), Go Airlines (India) Limited, was valid under the Insolvency and Bankruptcy Code (IBC). 2. Whether the Corporate Debtor should be sold as a going concern, taking into account the potential for revival and its valuable assets. 3. The applicability and interpretation of Regulation 32 and 32A of the Insolvency and Bankruptcy Board of India (IBBI) (Liquidation Process) Regulations, 2016, regarding the sale of the corporate debtor as a going concern. 4. The possibility of submitting a compromise or arrangement proposal under Section 230 of the Companies Act, 2013. ISSUE-WISE DETAILED ANALYSIS 1. Validity of CoC's Decision to Liquidate the CD The legal framework for this issue is grounded in Section 33 of the IBC, which empowers the CoC to decide on liquidation if no compliant resolution plan is received. The Tribunal noted that the CoC's decision was made with 100% vote share after no compliant resolution plans were submitted. The CoC's decision was supported by the lack of viable plans and the CD's non-operational status for over a year. The Tribunal found no error in the CoC's decision, emphasizing the wide discretion given to the CoC under the IBC. 2. Sale of the CD as a Going Concern The relevant regulations are Regulation 32 and 32A of the IBBI (Liquidation Process) Regulations, 2016. The Tribunal examined whether the CD should be sold as a going concern. The CoC had considered this option but decided against it due to the lack of aircraft and operational activities. The Tribunal upheld the CoC's decision, noting that the CoC had the discretion to determine the mode of sale based on commercial wisdom. However, the Tribunal acknowledged that the Liquidator could explore any suo-moto proposals for a going concern sale. 3. Compromise or Arrangement under Section 230 of the Companies Act, 2013 The Tribunal considered the possibility of a compromise or arrangement under Section 230. Regulation 2B of the Liquidation Process Regulations allows for such proposals within 90 days of the liquidation order. The Tribunal noted that M/s Busy Bee Airways Pvt. Ltd. or any other interested party could submit a proposal during this period. The Tribunal emphasized that the liquidation order did not preclude the submission of a compromise or arrangement proposal. SIGNIFICANT HOLDINGS The Tribunal held that: - The CoC's decision to liquidate the CD was valid and in accordance with the IBC, as no compliant resolution plan was received. - The CoC's decision not to sell the CD as a going concern was based on commercial wisdom and relevant facts, including the CD's lack of operational assets. - The Tribunal affirmed that a scheme of compromise or arrangement under Section 230 of the Companies Act, 2013, could still be proposed within the statutory period. Key legal reasoning included: "The CoC in the Legislative Scheme has been empowered to take decision to liquidate the Corporate Debtor, any time after its constitution and before confirmation of the resolution plan." "Regulation 32A(1) emphasizes the importance placed on the transfer of the CD or its business as a going concern basis." "It is always open for the Appellant - M/s Busy Bee or any other eligible Applicant, to submit a scheme for compromise and arrangement before the Liquidator as per Regulation 2B of the Liquidation Process Regulation." In conclusion, the Tribunal dismissed the appeals, affirming the liquidation order while allowing for the possibility of a compromise or arrangement proposal. The Tribunal's decision underscores the CoC's broad discretion under the IBC and the potential for revival through statutory mechanisms.
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