9911796707
TMI Blog2020 (8) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... in CP No. 181/NCLT/AHM/2019. Parties are represented by their original status in the company petition for the sake of convenience. 2. The Appellant has filed this Appeal under Section 61 of Insolvency and Bankruptcy Code, 2016 (in short "I&B Code") praying for setting aside the Impugned Order dated 05th December 2019. 3. Brief facts of the case are as follows: The Learned Adjudicating Authority by its order dated 10th July 2019 triggered Corporate Insolvency Resolution Process (from now on referred to as 'CIRP') against the Corporate Debtor in CP No. 181/NCLT/AHM/2019. During CIRP, the Interim Resolution Professional (from now on referred to as 'IRP') after receiving the claims, formed the Committee of Creditors (in short 'CoC'). After that, three meetings of CoC took place. In the second meeting, the Committee of Creditors resolved to defer the publishing of Expression of interest till the next CoC meeting. After that, in the third CoC meeting dated 21st September 2019, the CoC passed the Resolution that Corporate Debtor Company is not working for the last five years and there is no possibility/hope of Resolution Plan, therefore decided to liquidate the Corporate Debtor, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he I&B Code, 2016 based on the Resolution passed by the CoC with 100% vote share to liquidate the Corporate Debtor. 7. The Learned Counsel for the Respondents has placed reliance on the judgment of this Appellate Tribunal in case of Global Business Corporation Vs. Punjab National Bank 2020 (117) Taxman.com162 (NCLAT) dated 23rd January 2020 wherein it is held : 'In their commercial wisdom, COC have decided not to accept the Resolution Plan with conditions contained therein. Even though the suspended Board of Directors has a right to attend the meeting and may offer any suggestion but they cannot force their decision on their terms to Committee of Creditors especially when the suspended Board of Directors has no right to vote on the Resolution Plan. We also note that Committee of Creditors has rejected the resolution plan with 100% voting'. 'Verbatim copy' It is further contended that the commercial decisions of the Committee of Creditors are non-justiciable; therefore, they cannot be assailed in this Appeal. 8. We have heard the arguments of the Learned Counsel for the parties and perused the record. 9. The issue, which arises for our consideration is as under: Can the Resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 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 purposes of this sub-section, it is hereby declared 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.] Prior to amendment by Insolvency and Bankruptcy Code (Amendment) Act, 2019 (Act 26 of 2019), Section 33 read as: Chapter III LIQUIDATION PROCESS 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation matrix, location of publishing EOI. IRP apprised CoC that form-G (Invitation for Expression of Interest) (Under Regulation 36A (1) of the Insolvency and Bankruptcy (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 has been prepared. IRP has to make public announcement to invite interest resolution Applicants to submit resolution plan. The committee after discussion passed the following Resolution: "RESOLVED THAT the decision to publish EOI has been deferred till next CoC meeting." Thus, it is evident that the Resolution Professional sought approval for inviting Expression of Interest for submission of Resolution Plan and for fixing eligibility criteria for the Resolution Applicant. However, the CoC deferred the matter and passed the Resolution to the effect stating that; "the decision to publish EoI has been deferred till next CoC meeting". 17. It is also on record that in the third CoC meeting held on 01st October 2019, wherein Agenda item No 5 was for the approval of Expression of Interest for inviting Resolution Plan, fixing eligibility criteria for Resolution Applicant and for fixing the last dates for submission of Resolution Plan, the CoC with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are took the commercial decision to liquidate the Corporate Debtor, which is non-justiciable as per the law laid down by Hon'ble the Supreme Court of India in case of K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150: (2019) 4 SCC (Civ) 222: 2019 SCC OnLine SC 257 at page 187. In the above case Hon'ble the Supreme Court held; "58. Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the Resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with Section 31(1) of the I&B Code. No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (NCLAT) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters 'other than' enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I&B Code and not to act as a court of equity or exercise plenary powers. 59. In our view, neither the adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been envisaged by the legislature to empower the Resolution professional, the adjudicating authority (NCLT) or for that matter the appellate authority (NCLAT), to reverse the 'commercial decision' of CoC much less of the dissenting financial creditors for not supporting the proposed resolution plan. Whereas, from the legislative history there is contra indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority.' (emphasis supplied) 21. Thus, it is clear that the decision of CoC to liquidate the Corporate Debtor without taking any steps for Resolution of the Corporate Debtor is covered under explanation to sub-clause (2) of Section 33 of the I&B Code and the same being decision on commercial wisdom, is non-justiciable given the law laid by Hon'ble Supreme Court of India in case of K. Sashidhar (supra). Thus, it is clear that 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. 22. Therefore, we are of the considered opinion that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
