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TMI Blog2024 (11) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... complete all the steps relating to resolution of the Corporate Debtor prior to the liquidation of the Corporate Debtor and any interpretation to the contrary would clearly be antithetical to the spirit of Section 33(2) and Explanation appended to it wherein the legislature has consciously used the words any time for liquidation even before inviting resolution plans - the legislative fiat of Section 33(2) read with the explanation clause empowers the CoC for deciding to initiating liquidation even before inviting resolution plans. Whether there were good and cogent grounds noticed by the CoC to recommend liquidation or whether their reasoning was flawed and ex-facie arbitrary? - HELD THAT:- It is found that the health of the Company was not favourable for revival. In such circumstances, the CoC had come to the conclusion that there were no positive signs for revival and that there were no good grounds to prolong the process of CIRP. This decision of the CoC was taken keeping in view the financial position of the Corporate Debtor and does not reflect any arbitrariness. It was also noticed by the CoC that the RP had furnished a long list of documents required to comply with the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Varghese , Mr. Mohit Gupta , Mr. Sonal K Chopra , Advocates JUDGMENT ( Hybrid Mode ) Per : Barun Mitra , Member ( Technical ) The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 ( IBC in short) by the Appellant arises out of the Order dated 30.10.2023 (hereinafter referred to as Impugned Order ) passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad, Bench- I) in I.A. No. 558/AHM/2022 in C.P. (IB) No. 559 of 2019. By the impugned order, the Adjudicating Authority has ordered liquidation of the Corporate Debtor as approved by the Committee of Creditors ( CoC in short). Aggrieved by the impugned order, the present appeal has been preferred by the shareholder and Ex-Director of the Corporate Debtor. 2. Coming to the factual matrix of the present case, it is noticed that the Corporate Debtor-Sujyot Infrastructure Private Limited which was engaged in the business of construction of re-modelling of buildings was admitted into Corporate Insolvency Resolution Process ( CIRP in short) on 22.12.2021. The Resolution Professional ( RP in short) who was appointed following the CIRP admission constituted the CoC comprising of only two members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking upon liquidation of the Corporate Debtor. It was also asserted that the ground taken by the CoC to liquidate the Corporate Debtor was that the company was not a going concern but the CoC has decided to sell the Corporate Debtor as a going concern which shows the arbitrary decision making by the CoC. In support of their contention, the Ld. Sr. Counsel for the Appellant submitted that the Hon ble Supreme Court in Swiss Ribbons Private Limited V/s UoI, Writ Petition (Civil) No. 99 of 2018 has clearly held that the primary objective of IBC is reviving the Corporate Debtor and liquidation is available only as last resort. It was also contended that the decision of CoC is subject to judicial review as has been held by this Tribunal in Hero Fincorp Ltd. v/s M/s Hema Automotive Pvt. Ltd. in CA(AT)(Ins) No. 1540 of 2022. Attention was also adverted to the judgment of the Hon ble Supreme Court in Vallal Rck v/s M/s Siva Industries Holdings Ltd. and Ors. in Civil Appeal Nos. 1811-1812 of 2022 wherein it was held that if the decision of CoC is ex-facie arbitrary, the decision of CoC can be set aside. In the present case, when the decision of the CoC was not to accord primacy to resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 33(2) which was inserted later by an amendment vide Act No. 26 of 2019. This use of the phrase any time twice clearly reinforces the legislative intent to empower the CoC to take decision to liquidate the Corporate Debtor any time after its constitution even prior to the preparation of the Information Memorandum ( IM in short) but before confirmation of the resolution plan. The power given to the CoC to take decision for liquidation is of a wide amplitude which can be exercised immediately after constitution of the CoC. In terms of the statutory construct of IBC, it is therefore not required for the CoC to complete all the steps relating to resolution of the Corporate Debtor prior to the liquidation of the Corporate Debtor and any interpretation to the contrary would clearly be antithetical to the spirit of Section 33(2) and Explanation appended to it wherein the legislature has consciously used the words any time for liquidation even before inviting resolution plans. 8. We are therefore of the considered view that the legislative fiat of Section 33(2) read with the explanation clause empowers the CoC for deciding to initiating liquidation even before inviting resolution plans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay but whenever he is available, he can be contacted on the cordials given by him during meeting. Representative from Bank of Baroda inquired whether there are any valid contracts at present in the Company and in reply to that Mr. Kakkad confirmed that as Sujyot was an asset based company, there is no subsisting contact, license, etc. at present. Representative from Bank of Baroda inquired whether there is any possibility of revival of this Company and Mr. Kakkad replied that infact he has some investor who can revive company and he is trying to do the same since 2015. He further informed that the property at Gota is of all the three companies and it is a customized property which cannot be sold in bits and pieces. Bank of Baroda once again stated that no proposal has been received by CoC in regard to consideration, etc. for revival of the Company even though considerable time of more than 6/7 years has been lapsed and as CIRP being time bound process, CoC cannot wait further for unreasonable/undefined time At this stage, Mr. Kakkad, Director Suspended, stating that although he does not have voting right, he expressed his views to explore the opportunities to review the company rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Chauhan, from State Bank of India, one of the CoC member, expressed his opinion that as there is no information/documents/details available from the Corporate Debtor/Board of Directors (suspended) so far, the IM cannot be prepared completely which in turn will not render any help to any prospective investor. He, further, opined that as the business of the Corporate Debtor is not running since many years, there is no question of revival of the Company. RP, thereafter, requested the Officers of the Bank of Baroda to give view to which Mr. Bhavesh Modi from Bank of Baroda expressed same concerned which Mr. Nitin Chauhan expressed. Mr. Modi further added that when possession of the property is not with the RP and if the incomplete IM will be provided to the prospective investor and if he acts upon the same, the same may lead to very serious complications in future and hence, they also of the opinion to proceed with the liquidation. ( Emphasis supplied ) Thereafter voting was conducted and with 100% of voting share it was resolved that Form-G and its publication is not approved/rejected by the Committee of Creditors. Further with 100% of voting share it was also resolved the liquidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the Corporate Debtor, the IM could not be prepared in a wholesome manner as it would be bereft of all details of the Corporate Debtor. Given the non-availability of documents of the Corporate Debtor, the RP could prepare only an IM based upon limited information available in the public domain basis which it would not have been possible to secure realistic resolution plans which would maximise the value of the assets of the Corporate Debtor besides causing future complications. Clearly the scenario was dim for coming up with a holistic and comprehensive IM sans which the issue of Form-G becomes a meaningless exercise. Accordingly, the second CoC meeting after due deliberations had decided not to publish Form- G. 14. We also notice that the CoC has taken note of the fact that even the asset of the Corporate Debtor was under the attachment of Enforcement Directorate. It is also relevant to note that the CoC had taken cognizance of the fact that no resolution plan was received in the case of other two sister companies of the Corporate Debtor leading to their liquidation and by taking up liquidation of the present Corporate Debtor too, it would give an added advantage to sell com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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