2023 (1) TMI 305 - AT - Insolvency & Bankruptcy
Seeking initiation of the liquidation of the Corporate Debtor - Section 33, sub-section (2) read with Section 34 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Explanation to Section 33, sub-section (2) contains a legislative declaration empowering the CoC to take a decision to liquidate the Corporate Debtor any time after its constitution as per sub-section (1) of Section 31 and before the confirmation of the Resolution Plan, including at any time before the preparation of the Information Memorandum. The Explanation, thus, clarifies that CoC is fully empowered to take a decision to liquidate any time after the constitution under sub-section (1) of Section 21, but before – (i) the confirmation of the Resolution Plan; and (ii) at any time before the preparation of Information Memorandum - There is no material to indicate that CoC has taken into consideration the Explanation to Section 33, sub-section (2) before taking a decision to liquidate the Corporate Debtor. Explanation to Section 33, sub-section (2) has to be given some meaning.
There is no doubt that in Section 33, sub-sections (1) and (2) legislature has used the expression “shall”. However, the obligation of the Adjudicating Authority to direct for liquidation shall rise only when decision of the CoC is in accordance with the Code. Judicial review of the decision of the CoC in a particular case is not precluded. In Sreedhar Tripathy, it has been clearly held that judicial review of the decision of the CoC is not precluded and it depends on facts of each case.
Coming to the facts of the present case, Form-G having been issued after preparation of the Information Memorandum and the last date fixed by the CoC being 24.10.2022 for receiving Expression of Interest, we are satisfied that Adjudicating Authority did not commit any error in rejecting for liquidation and asking the CoC to reconsider its decision. The order of Adjudicating Authority clearly empowers the CoC to reconsider its decision and take an appropriate decision taking into consideration further facts and events - Appeal dismissed.