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2025 (4) TMI 518 - AT - IBCLiquidation of the Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code 2016 - HELD THAT - There is no dispute to the fact that RBL Bank is the sole member of the CoC with 100% voting right. It is also not in dispute that there were three resolution plans before the CoC in which one of the resolution plan was submitted by the Appellant and the sole member of the CoC abstained from voting. The CIRP Regulations provides for different modes of voting. As per the regulations the members of the CoC may either vote in favour against or abstain from voting. In the present case it is alleged that sole member of the CoC abstained from voting therefore the resolution plan submitted by the Appellant was not rejected but the very fact that the sole member of the CoC did not vote in favour of the resolution plan submitted by the Appellant therefore it had exercised its commercial wisdom and chose to abstain from voting as has been held by the Hon ble Supreme Court in the case of K. Sashidhar 2019 (2) TMI 1043 - SUPREME COURT that commercial wisdom of the CoC is paramount therefore the reason cannot be questioned by the Appellant. In so far as the application for liquidation having been filed without consent of the CoC is concerned argument of the Appellant is not tenable because in the 6th CoC meeting there was discussion regarding the possibility of the liquidation and in the course of said discussion the CoC sought recommendation for the nomination of liquidator. In this regard erstwhile RP sent email to the CoC seeking its consent to file the liquidation application and the nomination of liquidator to which the sole member of the CoC gave consent by returning email on the same. It is also a fact to be noticed that when the case was listed for hearing on 31.05.2024 before this Court it was brought to the notice of this court that e-auction notice was issued on 23.05.2024 scheduling the e-auction of the CD as a going concern on 21.06.2024 at the reserve price of Rs. 20.61 Cr. Instead of granting stay this court clearly said that the Appellant shall have the right to participate but it had failed to participate whereas in the auction Respondent No. 4 to 7 were held to be successful as they gave the bid of Rs. 20.63 Cr. which was over and above the reserve price. The said amount has already been paid by R4 to 7 and the sale certificate has been issued in their favour whereas the Appellant had only offered a sum of Rs. 8 Cr. to take over the CD as a going concern. Conclusion - The CoC s decision upheld emphasizing the primacy of its commercial wisdom. The legality of the liquidation process and subsequent auction confirmed. Appeal dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Commercial Wisdom of the CoC The Tribunal emphasized the paramountcy of the CoC's commercial wisdom, as established in precedents such as K. Sashidhar v. Indian Overseas Bank. The CoC's decision to abstain from voting on the resolution plans was interpreted as an exercise of this wisdom, rather than indecisiveness. The CoC, represented solely by RBL Bank, chose not to support the resolution plans, including the Appellant's, which offered Rs. 8 Cr. compared to the Rs. 20.63 Cr. achieved in the liquidation auction. Filing of Liquidation Application The Tribunal found that the application for liquidation filed by the Resolution Professional (RP) was in compliance with Section 33(1) of the Code. Despite the Appellant's argument that the CoC's explicit consent was required, the Tribunal noted that the CoC had discussed liquidation possibilities in its 6th meeting and had consented to the nomination of a liquidator. The RP's actions were deemed consistent with the legal framework, especially given the expiration of the Corporate Insolvency Resolution Process (CIRP) period on 30.03.2024. Standing of the Unsuccessful Resolution Applicant The Tribunal addressed the Appellant's standing by referencing the decision in Independent Sugar Corporation Ltd. v. Girish Sriram Juneja, which outlines the criteria for an "aggrieved person" under Section 61 of the Code. The Tribunal concluded that the Appellant, as an unsuccessful resolution applicant, did not qualify as an aggrieved person capable of challenging the CoC's decision or the liquidation order. Interpretation of CoC's Abstention The Tribunal rejected the Appellant's argument that the CoC's abstention from voting was equivalent to rejection or indecisiveness. The Tribunal highlighted that abstention is a valid option under the CIRP Regulations and reflects the CoC's commercial judgment. The Karnataka High Court's interpretation in Kirloskar Electric Co. Ltd. was considered, but the Tribunal maintained that the CoC's abstention was a deliberate exercise of its rights. Conduct of Liquidation Process and E-Auction The Tribunal found that the liquidation process and e-auction were conducted in accordance with the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The Appellant was given the opportunity to participate in the auction but chose not to. The successful bid of Rs. 20.63 Cr. by Respondents 4 to 7 was significantly higher than the Appellant's proposal, supporting the CoC's decision to pursue liquidation. 3. SIGNIFICANT HOLDINGS The Tribunal upheld the CoC's decision, emphasizing the primacy of its commercial wisdom. It reiterated that the CoC's abstention from voting is a legitimate exercise of its rights and does not constitute indecisiveness or misuse of the insolvency process. The Tribunal confirmed that the RP's filing of the liquidation application was procedurally sound, given the expiration of the CIRP period and the CoC's prior discussions on liquidation. Key principles established include the recognition of the CoC's commercial wisdom as paramount and the procedural validity of liquidation applications filed post-CIRP expiration. The Tribunal dismissed the appeal, finding no merit in the Appellant's arguments and confirming the legality of the liquidation process and subsequent auction.
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