Committee of Creditors commercial wisdom controls resolution or liquidation; section 60(5) cannot compel a resolution path.
The Insolvency and Bankruptcy Code allocates the decision to pursue resolution or liquidation to the Committee of Creditors, and the Adjudicating Authority cannot use section 60(5) to compel approval of resolution-plan invitations, extend the corporate insolvency resolution process, or exclude time spent in replacing the resolution professional absent fraud or Code violation. The resolution professional may invite resolution applicants only with CoC approval under section 25(2)(h). Where no resolution plan is received within the statutory framework and the CoC does not approve further continuation, liquidation follows under section 33, and the resolution professional may be appointed as liquidator.
Issues: (i) Whether the Adjudicating Authority could, in exercise of section 60(5) of the Insolvency and Bankruptcy Code, 2016, direct the Committee of Creditors to approve invitation of resolution plans, extend the corporate insolvency resolution process, or exclude time spent in change of resolution professional. (ii) Whether, on the facts, liquidation was required under section 33 of the Insolvency and Bankruptcy Code, 2016.
Issue (i): Whether the Adjudicating Authority could, in exercise of section 60(5) of the Insolvency and Bankruptcy Code, 2016, direct the Committee of Creditors to approve invitation of resolution plans, extend the corporate insolvency resolution process, or exclude time spent in change of resolution professional.
Analysis: The statutory scheme vests the commercial decision whether to pursue resolution or liquidation in the Committee of Creditors. The resolution professional can invite prospective resolution applicants only with the approval of the Committee of Creditors under section 25(2)(h), and the Adjudicating Authority cannot substitute its view for that commercial wisdom. Section 60(5) is not an open-ended power to override the statutory allocation of functions where there is no fraud or violation of the Code. The refusal to approve invitation of resolution plans, or to extend the corporate insolvency resolution process, could not therefore be treated as a legal wrong requiring judicial correction.
Conclusion: The request to compel the Committee of Creditors to proceed with resolution, to exclude time, or to direct extension of the process was rejected.
Issue (ii): Whether, on the facts, liquidation was required under section 33 of the Insolvency and Bankruptcy Code, 2016.
Analysis: The record showed that no resolution plan had been received within time and the Committee of Creditors had not approved further continuation of the resolution process. The Tribunal held that once the statutory conditions under section 33 are satisfied, liquidation follows as a matter of mandate. The absence of a live resolution proposal, coupled with the inability of the corporate debtor to fund the process, left no basis to send the matter back to the Committee of Creditors for a fresh round of EOI or resolution consideration.
Conclusion: Liquidation was ordered and the resolution professional was appointed as liquidator.
Final Conclusion: The applications seeking exclusion of time, extension of the corporate insolvency resolution process, and directions to pursue resolution were dismissed, and the corporate debtor was directed into liquidation under the Code.
Ratio Decidendi: The commercial wisdom of the Committee of Creditors governs the decision to pursue resolution or liquidation, and the Adjudicating Authority cannot use section 60(5) to compel a resolution path; where no resolution plan is received within the statutory framework, liquidation under section 33 follows.
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