Appellate Tribunal Upholds Liquidation Order for Non-Compliance with Resolution Plans

The Appellate Tribunal upheld the order of liquidation passed by the Adjudicating Authority, emphasizing the mandatory nature of such orders in cases of non-compliance with approved resolution plans by Successful Resolution Applicants.

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Issues:
1. Corporate Insolvency Resolution Process and approval of resolution plan.
2. Failure of Successful Resolution Applicant to comply with the resolution plan.
3. Application for liquidation filed by a Financial Creditor.
4. Appeal by the erstwhile Promoter and Ex Managing Director against the order of liquidation.

Issue 1: Corporate Insolvency Resolution Process and approval of resolution plan
The Corporate Insolvency Resolution Process was initiated against the Corporate Debtor, and M/s Ace Star Properties Pvt. Ltd. emerged as the Successful Resolution Applicant. Another entity, M/s Siddharth Credit & Investment Pvt. Ltd., was to provide financial support to the Successful Resolution Applicant. The resolution plan submitted by them was approved by the Adjudicating Authority, following which the Corporate Debtor was taken over by M/s Ace Star Properties Pvt. Ltd.

Issue 2: Failure of Successful Resolution Applicant to comply with the resolution plan
After the takeover, the Successful Resolution Applicant, M/s Ace Star Properties Pvt. Ltd., failed to fulfill its obligations as per the approved resolution plan. Subsequently, M/s J M Financial Asset Reconstruction Company Ltd., a Financial Creditor, filed an application before the Adjudicating Authority seeking liquidation of the Corporate Debtor due to the non-compliance by the Successful Resolution Applicant.

Issue 3: Application for liquidation filed by a Financial Creditor
The Financial Creditor's application for liquidation was based on the contravention of the approved resolution plan by the Corporate Debtor, which led to prejudicial effects on the interests of the concerned parties. The Adjudicating Authority, in response to this application, issued an order for the liquidation of the Corporate Debtor on 11th December, 2018.

Issue 4: Appeal by the erstwhile Promoter and Ex Managing Director against the order of liquidation
The erstwhile Promoter and Ex Managing Director of the Corporate Debtor filed an appeal challenging the order of liquidation. The Appellant argued that instead of liquidation, steps should have been taken for the revival of the Corporate Debtor by considering alternative plans. However, the Appellate Tribunal, considering the provisions of the Insolvency and Bankruptcy Code, held that in cases where a Successful Resolution Applicant fails to comply with the resolution plan, the Adjudicating Authority is bound to pass an order of liquidation as prescribed under Section 33(3) of the Code.

In conclusion, the Appellate Tribunal upheld the order of liquidation passed by the Adjudicating Authority, emphasizing the mandatory nature of such orders in cases of non-compliance with approved resolution plans by Successful Resolution Applicants.

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