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TMI Blog2020 (8) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... apparent that statutory provision permits CoC to take the decision for liquidation of Corporate Debtor at any stage of CIRP, but before confirmation of Resolution Plan. In the instant case, the CoC intentionally deferred the matter for approving EoI for inviting the Expression of Interest for submission of Resolution Plan and unanimously decided to liquidate the Corporate Debtor. As per the explanation added to sub-clause (2) of Section 33 of the I B Code, it is clear that the CoC has the power to order for liquidation at any stage of CIRP but before confirmation of Resolution Plan - It is germane to mention that CIRP of the Corporate Debtor was initiated on 10th July 2019 and during Corporate Insolvency Resolution Process, the CoC unanimously, with 100%vote share took the commercial decision to liquidate the Corporate Debtor, which is non-justiciable. There is no illegality in the decision of CoC in liquidating the Corporate Debtor before taking any steps for inviting Expression of Interest for submission of Resolution Plan - Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 194 of 2020 - - - Dated:- 10-8-2020 - [Justice Jarat Kumar Jain] Member (Judicial), [Mr Balvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm any of the necessary steps under the CIR Process, i.e. to prepare Information Memorandum, evaluation matrix, evaluation of assets etc. which are significant towards achieving the objective of the Code, i.e. maximization of the assets of the Corporate Debtor; the Adjudicating Authority failed to appreciate that the IRP completely overlooked the process for inviting Expression of Interest. Despite that, one of the prospective Resolution Applicants in a meeting dated 09th September 2019 showed its willingness to submit EOI; the Adjudicating Authority failed to adhere to the timeline as prescribed under the Code to conduct CIR Process to afford a chance for Resolution of the Corporate Debtor, somewhat intentionally delayed the required process to push the Corporate Debtor into liquidation; the Adjudicating Authority has failed to appreciate that I B Code is not a forum for recovery proceeding, and Resolution is the prime objective of the Code when there are viable prospects of revival of a Corporate Debtor; the Adjudicating Authority erred in passing the impugned order of liquidation under Section 33 of the Code ex-parte without affording a chance to the Appellant herein to put fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Justice. It is further contended that the Learned Adjudicating Authority has failed to appreciate that the Committee of Creditors with 100% vote share took a decision to liquidate the Corporate Debtor, without even issuing notice in Form-G for inviting Expression of Interest for submission of Resolution Plan. It is also pointed out that neither the Resolution Professional nor the CoC took any steps for Resolution of the Corporate Debtor. 11. It is important to mention that the impugned order is passed under Section 33(2) of the I B Code, which is given as under: 33. Initiation of liquidation - (1) Where the Adjudicating Authority,- (a) before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under Section 12 or the fast track Corporate Insolvency Resolution Process under Section 56, as the case may be, does not receive a resolution plan under sub- Section (6) of Section 30; or (b) rejects the resolution plan under Section 31 for the non-compliance of the requirements specified therein, it shall- (i) pass an order requiring the corporate debtor to be liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -six per cent. of the voting share] to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub- section (1). 12. The explanation to sub-section (2) of Section 33 of the I B Code, which is added by the amendment in the I B Code w.e.f 16th August 2019, specifically provides that the Committee of Creditors may take the decision to liquidate the Corporate Debtor, any time after its constitution under sub-section (1) of Section 21 and before the confirmation of the Resolution Plan, including at any time before the preparation of the information memorandum. 13. Based on the added explanation to sub-section (2) of Section 33 of the I B Code, 2019, it is evident that the Committee of Creditors after its constitution under sub-section (1) of Section 21 of the Code, at any stage during Corporate Insolvency Resolution Process and before the confirmation of Resolution plan, including at any time before preparation of Information Memorandum, is authorized to take a decision to liquidate the Corporate Debtor. 14. Admittedly, in this case, only three meetings of Committee of Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riteria and other procedural documents relating to resolution plan. It was resolved that; since Company is not working since last five years and there is no possibility/hope for resolution plan, it is decided to liquidate the corporate debtor, i.e. Atrium Infocomm Private Limited the CoC also requested the IRP for filing an application before the Adjudicating Authority. 18. Based on the Resolution passed by CoC with 100% vote share, the IRP filed the Application under Section 33(2) of the I B Code for liquidation of the Corporate Debtor. The Adjudicating Authority has allowed the Application filed by IRP and passed an order of liquidation of the Corporate Debtor based on the Resolution passed by the CoC with 100% vote share. 19. It is pertinent to mention that explanation to sub-section (2) of Section 33 of the I B Code, 2016 depicts that the CoC is fully empowered to order for liquidation at any stage of the CIRP, but before the confirmation of the Resolution Plan. 20. In the circumstances, it is apparent that statutory provision permits CoC to take the decision for liquidation of Corporate Debtor at any stage of CIRP, but before confirmation of Resolution Plan. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidation process postulated in Chapter III of the I B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October 2017; and now after the amendment w.e.f. 6-6-2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed resolution plan, de jure, entails in its deemed rejection. 62. The argument, though attractive at the first blush, but if accepted, would require us to rewrite the provisions of the I B Code. It would also result in doing violence to the legislative intent of having consciously not stipulated that as a ground - to challenge the commercial wisdom of the minority (dissenting) financial creditors. Concededly, the process of resolution plan is necessitated in respect of corporate debtors in whom their financial creditors have lost hope of recovery and who have turned into non-perfo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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