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TMI Blog2025 (4) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Angad Baxi, Ms. Vishrutyi Sahani and Ms. Fatema Kachewala, Advocates for CoC For the Appellant : Ms. Priya Singh, Mr. Gaurav Singh and Mr. Bhanukaran Singh Jodha, Advocates For the Respondents : Mr. Ritin Rai, Sr. Advocate with Ms. Pratiksha Mishra, Mr. Shreyas Endupuganti, Advocates for R - 1 Mr. Dheeraj Nair, Mr. Angad Baxi, Ms. Vishrutyi Sahani and Ms. Fatema Kachewala, Advocates for CoC JUDGMENT ASHOK BHUSHAN, J. These three Appeal(s) have been filed challenging order dated 20.01.2025 passed by National Company Law Tribunal, Court V, New Delhi allowing the Liquidation Application and directing the liquidation of the CD - M/s Go Airlines (India) Limited. The Appellant(s) aggrieved by order directing for liquidation and appointing Liquidator Dinkar T Venkatasubramanian have filed these Appeal(s). 2. Company Appeal (AT) (Ins.) No.124 of 2025 has been filed by M/s Busy Bee Airways Pvt. Ltd., who had submitted a Resolution Plan in the Corporate Insolvency Resolution Process ("CIRP") of the Corporate Debtor ("CD"), which having been found non-compliant was not considered by the Committee of Creditors ("CoC"). The Appellant aggrieved by order directing for liquidation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Applicant to refund of the EMD. (vi) The CoC in 37th Meeting held on 23.07.2024 deliberated and resolved to liquidate the CD. The CoC found that no compliant Resolution Plan have been received, in pursuance of which, voting on the Resolution took place from 24.07.2024 to 31.07.2024 and the Resolution for liquidation of the CD was passed with 100% vote share. The CoC of the CD consisted of Central Bank of India, Bank of India and IDBI Bank. (vii) In pursuance of the Resolution passed by the CoC in its 37th Meeting, the erstwhile RP filed an Application being IA(Liq.) 33/ND/2024 praying for passing an order of liquidation. Liquidation Application was heard by NCLT on 18.12.2024 and was reserved for orders. The Appellant - M/s Busy Bee on 17.01.2025 filed an Application being IA (IBC) 358 of 2025 in Company Petition seeking an opportunity to put forth the revised Resolution Plan and reconsideration of revised Resolution Plan. (viii) The Adjudicating Authority by the impugned order dated 20.01.2025 allowed the IA (Liq.)33/ND/2024 and appointed Mr. Dinkar T Venkatasubramanian as Liquidator. 4. On 31.01.2025, Company Appeal (AT) (Ins.) No.124 of 2025 came for considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIRP. It is submitted that arbitration proceedings were initiated by the CD against P&W, who had provided defective engines, which arbitration proceedings have been initiated at the Singapore International Arbitration Center, which is pending adjudication. The CD has also land admeasuring 94.71 situated at Thane, District Maharashtra in the name of Wadiya Reality Pvt. Ltd. Learned Counsel for the Appellant submits that Regulation 32 and 32A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 ("Liquidation Process Regulation") provide for sale of assets as a going concern and Liquidator is obliged to endeavour to first sell the CD and its business as a going concern. It is submitted that Resolution passed in 37th CoC Meeting, the CoC also recognised that if the Liquidator receives a suo-moto proposal for acquiring the company or its business as a whole, it may be discussed with the Stakeholders Consultation Committee. It is submitted that the Appellant - M/s Busy Bee Airways Pvt. Ltd. is desirous of acquiring the CD as a going concern and has also submitted a commercial offer dated 02.02.2025 during pendency of this Appeal. 8. Learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicants, including the Appellant that their Resolution Plans cannot be considered. In the 37th Meeting of the CoC held on 23.07.2024, under the heading 'Update on Resolution Process', following was minuted: "Update on Resolution Process : The RP informed the CoC Members that pursuant to the discussions in the 36th CoC meeting, the Resolution Professional had informed the Prospective Resolution Applicants ("PRAs") that the Resolution Plans submitted by them did not address the various non-compliances which were brought to their attention by way of various compliance reports (as prepared by the CoC and RP Counsel) as a result of which the resolution plans submitted by them continued to remain non-compliant with the applicable requirements set forth under the provisions of the Insolvency and Bankruptcy Code (IBC) and the Regulations made thereunder. The PRAs were accordingly informed that the CoC has decided not to give additional time for submission of revised resolution plan beyond this point considering that multiple chances have been provided to the PRAs to enable them to submit compliant resolution plans. The CoC Members inquired if the PRAs had contested the above decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct for purchase of 72 additional aircrafts as well as land. The submission is that revival of CD is of utmost importance and liquidation is the last resort. 14. From the facts as noticed above, 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. Section 33, sub-section (2) of the IBC provides as follows: "33(2) Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors approved by not less than sixty-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). Explanation. - For the purpose of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find any error in the decision taken by the CoC to liquidate the CD. 17. Learned Counsel for the RP has submitted that after the judgment of the Delhi High Court dated 24.04.2024, lenders have taken back all aircrafts and as on date, no aircraft is left with the CD. It is further submitted that all slots, which was allotted to the CD, have been revoked and the only asset left is arbitration proceedings with regard to arbitration, which is initiated by the CD against P&W in the Singapore International Arbitration Center. It is submitted that present was a case where CoC has rightly taken a decision to liquidate the CD. After considering the submissions of the parties and materials on record, we do not find any error in the Resolution of the CoC, taken in its 37th Meeting on 23.07.2024 to liquidate the CD. The Adjudicating Authority has not committed any error in allowing the Liquidation Application filed by the RP. 18. The second limb of submission, which has been pressed by Shri Krishnendu Datta is with regard to sale of the CD as a going concern. Learned Counsel for the Appellant has referred to Regulation 39B and 39C of the IBBI (Insolvency Resolution Process for Corporate Per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egulation 2016 or sale of the business of the CD as a going concern. Regulation 32 of the Liquidation Process Regulations, provides as follows: "32. Sale of Assets, etc. The liquidator may sell- (a) an asset on a standalone basis; (b) the assets in a slump sale; (c) a set of assets collectively; (d) the assets in parcels; (e) the corporate debtor as a going concern; or (f) the business(s) of the corporate debtor as a going concern: Provided that where an asset is subject to security interest, it shall not be sold under any of the clauses (a) to (f) unless the security interest therein has been relinquished to the liquidation estate." 20. The CoC in its 37th Meeting has adverted to the question as to whether the CD be sold as a going concern. The Minutes notice consideration under Regulation 39B, 39BA and 39C and 39D. With regard to 39BA and 39C, the 37th Minutes of CoC records following: "39BA (Assessment of Compromise or Arrangement) The RP informed the CoC Members that Regulation 39BA of the CIRP Regulations stipulate that while deciding to liquidate the CD under section 33 of the IBC, the CoC shall examine whether to explore compromise or arrangement under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 above decision of the CoC, thus, fully empowers the Liquidator to place any suo-moto proposal, if received for taking the company or its business as a whole and the same was to be placed for discussion before the Stakeholders Consultation Committee. In the above Resolution, the CoC also took a decision that all aircrafts having been deregistered and presently the CD does not have any aircrafts and operations of the CD are also standstill for more than a year, the Liquidator was authorised to sale assets on standalone basis and in a slump sale. Thus, 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 as cited above is based on the commercial wisdom of the CoC, which needs no interference in exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with statutory requirement as provided under Regulation 2B of the Liquidation Process Regulation and Section 230 of the Companies Act. 24. The challenge in the present Appeal is to the order dated 20.01.2025 allowing IA (Liquidation Application) filed by the RP and directing for liquidation of the CD. Learned Counsel for the RP has submitted that Resolution, which was proposed in 37th CoC Meeting was passed with 100% vote share of the CoC. The Resolution has been passed by the CoC after considering all relevant facts and statutory provisions, including Regulation 39BA and 39C, as noted above. We, thus, do not find any infirmity in the Resolution of the CoC taken in its 37th CoC Meeting on 23.07.2024 and the order passed by the Adjudicating Authority dated 20.01.2025 allowing the Liquidation Application. As per statutory provisions of Regulation 2B of Liquidation Process Regulation, it is open for the Appellant - M/s. Busy Bee Airways Pvt. Ltd. or any other eligible Applicant to submit a scheme for compromise and arrangement before the Liquidator, which needs to be considered in accordance with law. 25. Learned Counsel for the Appellant has relied on judgment of the Hon'ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the liquidator appointed under the IBC. Aligned to this submission, he urged that the decision in Meghal Homes [Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti, (2007) 7 SCC 753] recognises that the liquidator is an additional person who may submit an application under Section 391 of the 1956 Act (corresponding to Section 230 of the 2013 Act). The submission of Mr Bajaj however misses the crucial interface between the provisions of Section 230 of the 2013 Act in their engagement with a company in respect of which the provisions of the IBC have been invoked, resulting in an order of liquidation under Section 33 IBC. Liquidation of the company under the IBC, as emphasised by this Court in its previous decisions, is a matter of last resort. Section 33 requires NCLT, acting as the adjudicating authority, to pass an order for the liquidation of the corporate debtor where: (i) before the expiry of the insolvency resolution process period or the maximum period contemplated for its completion a resolution plan has not been received under sub-section (6) of Section 30; or (ii) the resolution plan has been rejected under Section 31 for non-compliance with the requirements of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of liquidation under the IBC and the other as a tribunal for passing an order under Section 230 of the 2013 Act. Following the decision of Nclat, an amendment was made on 25-7-2019 to the Liquidation Process Regulations by IBBI so as to refer to the process envisaged under Section 230 of the 2013 Act." 27. The Hon'ble Supreme Court in the above paragraph 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. We have also observed above that it is always open for the Appellant - M/s. Busy Bee or any other eligible Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X
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