Liquidation under insolvency law upheld after CIRP ended without a resolution plan and no infirmity in creditors' decision was shown.

A challenge to the Committee of Creditors' unanimous liquidation resolution failed where no pleaded or proved lack of knowledge, misrepresentation, or other legal infirmity was shown, and commercial decisions of the creditors were treated as decisive. After the CIRP period expired without any approved resolution plan, the Insolvency and Bankruptcy Code required liquidation of the corporate debtor; the moratorium ceased, a liquidator was to be appointed, and the liquidation framework applied. The application for liquidation was therefore allowed and the resolution professional was appointed as liquidator.

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Issues: (i) whether the challenge to the Committee of Creditors' resolution for liquidation, based on alleged lack of knowledge of the procedure and misrepresentation, could be sustained; (ii) whether liquidation of the corporate debtor was warranted under the Insolvency and Bankruptcy Code after the expiry of the CIRP period without any approved resolution plan.

Issue (i): whether the challenge to the Committee of Creditors' resolution for liquidation, based on alleged lack of knowledge of the procedure and misrepresentation, could be sustained.

Analysis: The challenge was rejected as the record did not support any pleaded or proved lack of knowledge on the part of the Committee of Creditors. The resolution to liquidate had been taken unanimously with full voting share after repeated extensions to the prospective resolution applicants, and the decision of the Committee of Creditors in commercial matters was treated as decisive. A plea of ignorance of law was held to be untenable on the facts.

Conclusion: The challenge was dismissed in limine and was held to be unsustainable.

Issue (ii): whether liquidation of the corporate debtor was warranted under the Insolvency and Bankruptcy Code after the expiry of the CIRP period without any approved resolution plan.

Analysis: The corporate insolvency resolution process had run its course, no resolution plan had been received within the extended time, and the Committee of Creditors had resolved to seek liquidation. In that situation, the statutory framework under the Insolvency and Bankruptcy Code required liquidation, with consequences as to cessation of moratorium, appointment of a liquidator, vesting of powers, and application of the liquidation regulations.

Conclusion: Liquidation of the corporate debtor was ordered and the application for initiation of liquidation was allowed.

Final Conclusion: The collateral challenge to liquidation failed, while the application for liquidation succeeded, resulting in an order directing liquidation of the corporate debtor and appointment of the resolution professional as liquidator.

Ratio Decidendi: Where the Committee of Creditors has unanimously resolved for liquidation after the CIRP has run its full course without an approved resolution plan, and no legal infirmity in that commercial decision is shown, the adjudicating authority may order liquidation under the Code.

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