2023 (4) TMI 1312 - Tri - Insolvency and Bankruptcy

Corporate debtor liquidation ordered under Section 33(1) after no resolution plan submitted under Section 30(6)

The NCLT Hyderabad ordered liquidation of the CD under Section 33(1) read with Section 34(1) of the IBC, 2016. The RP sought liquidation after no ... Seeking for an order for liquidation of the Corporate Debtor (CD) - Section 33(1) read with section 34(1) of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- The fact remains that there is no resolution plan pending before the CoC and in the 18th CoC meeting, the RP explained to the CoC that in the event, the NCLT, Hyderabad does not accede to the request of granting further extension of 60 days, the liquidation process u/s 33(1) of Code shall commence in line with the order dated 31/12/2020. The ld. Counsel for the petitioner relies on this part of the Minutes of the 18th CoC meeting to contend that resolution of the CoC has to be deemed as being made, since CoC also noted the explanation given by the RP with regard to the liquidation. However, the Hyderabad Bench of NCLT, in the similar circumstances, has ordered for liquidation without the resolution of the CoC for liquidation. The adjudicating authority considered that no resolution plan was pending before CoC and that the adjudicating authority did not receive any resolution plan under sub-section (6) of Section 30 of the I&B Code, 2016. When under section 33(1)(a), the Adjudicating Authority has power to order for liquidation when no resolution plan is submitted to it, it implies that the Adjudicating Authority has to only see whether any resolution plan has come up before it for approval prior to the order for liquidation under section 33(1)(a). As no resolution plan is received by the Adjudicating Authority, the questions whether CoC has resolved for liquidation or whether there is no coordination between RP and CoC, are immaterial for the Adjudicating Authority to order for liquidation u/s 33(1)(a). There are no reason to reject the request made by the RP to order for liquidation of the Corporate Debtor - application allowed. Issues Involved:1. Liquidation of the Corporate Debtor (CD) under sections 33(1) and 34(1) of the Insolvency & Bankruptcy Code, 2016.2. Coordination and resolution between the Committee of Creditors (CoC) and the Resolution Professional (RP).3. Compliance with procedural requirements under the Insolvency & Bankruptcy Code, 2016.Summary of Judgment:Issue 1: Liquidation of the Corporate Debtor (CD)The application sought an order for the liquidation of the Corporate Debtor (CD) under sections 33(1) and 34(1) of the Insolvency & Bankruptcy Code, 2016. The Tribunal noted that the CD was taken to Corporate Insolvency Resolution Process (CIRP) by an order dated 05/09/2019. Despite multiple extensions and efforts to invite resolution plans, no viable resolution plan was received. The Tribunal emphasized that the CIRP period had already expired, and no resolution plans were pending before the CoC. Consequently, the Tribunal ordered the liquidation of the CD as per Chapter III of Part II of the I&B Code, 2016.Issue 2: Coordination and Resolution between CoC and RPThe counsel for the suspended director of the CD raised objections regarding the lack of coordination between the CoC and the RP and argued that no resolution for liquidation was passed by the CoC. The Tribunal observed that despite the CoC's direction to seek an extension of the CIRP period, the RP filed for liquidation due to the absence of a resolution plan. The Tribunal highlighted that the RP is obligated to adhere to the decisions of the CoC but noted that the maximum period for CIRP had expired without any resolution plan being approved.Issue 3: Compliance with Procedural RequirementsThe Tribunal addressed the procedural objections raised by the respondent's counsel, emphasizing that hyper-technical objections should not frustrate the proceedings. The Tribunal referenced section 33(1) of the IBC, which allows for liquidation when no resolution plan is received before the expiry of the insolvency resolution process period. The Tribunal concluded that the absence of a resolution plan and the expiration of the CIRP period justified the liquidation order, regardless of the CoC's resolutions or coordination issues.Order:The Tribunal ordered the liquidation of the Corporate Debtor, appointing Mr. Kondapalli Venkata Srinivas as the Liquidator. The moratorium declared under section 14 of the I&B Code ceased, and the Liquidator was directed to manage the liquidation process as per the relevant regulations. The Tribunal also provided specific instructions regarding the conduct of the liquidation process, including the sale of the Corporate Debtor or its business as a going concern within 90 days.Conclusion:The application for liquidation was allowed, and the Tribunal emphasized the importance of adhering to the timelines and objectives of the Insolvency & Bankruptcy Code, 2016. The Tribunal dismissed hyper-technical objections and focused on the substantive issues, ensuring that the liquidation process proceeded efficiently.