Company liquidation upheld by Tribunal due to CIRP violations - Liquidator directed to comply

The National Company Law Tribunal, Chennai Bench, upheld the liquidation order passed by the Adjudicating Authority, finding it in accordance with the law. It determined that the Corporate Insolvency Resolution Process (CIRP) procedure was not correctly followed due to the absence of an Information Memorandum, leading to the inability to file resolution plans. The Tribunal declined to grant additional time for the resolution process beyond the initial 30-day extension, emphasizing the Liquidator's duty to ensure the company's revival during liquidation and follow specific steps outlined in relevant cases. The appeals were disposed of with directions for the Liquidator to act accordingly under Section 230 of the Companies Act, 2013.

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Issues Involved:
1. Whether the liquidation order passed by the Adjudicating Authority was in accordance with the provisions of law.
2. Whether the Corporate Insolvency Resolution Process (CIRP) procedure was followed correctly.
3. Whether the Adjudicating Authority should have granted additional time for the resolution process.
4. Whether the Liquidator is required to follow specific steps for the revival of the Corporate Debtor during the liquidation stage.

Issue-wise Detailed Analysis:

1. Whether the liquidation order passed by the Adjudicating Authority was in accordance with the provisions of law:
The Corporate Insolvency Resolution Process (CIRP) was initiated based on applications under Section 10 filed by the Corporate Debtor. The Adjudicating Authority (National Company Law Tribunal, Chennai Bench) ordered liquidation on 11.01.2018. The orders were challenged on the grounds that the liquidation was ordered without adhering to the provisions of law. The appellants argued that the Adjudicating Authority did not consider the necessary legal provisions and procedures required for CIRP before passing the liquidation orders.

2. Whether the Corporate Insolvency Resolution Process (CIRP) procedure was followed correctly:
It was contended that the CIRP procedure was not followed correctly as no Information Memorandum was prepared, leading to the non-filing of any resolution plans. The appellants submitted that the Adjudicating Authority only allowed an additional 30 days beyond the initial 180 days, and if more time (270 days) had been granted and a fresh Information Memorandum issued, there could have been a successful resolution.

3. Whether the Adjudicating Authority should have granted additional time for the resolution process:
The appellants argued that the Adjudicating Authority should have granted more time for the resolution process. They claimed that if the Adjudicating Authority had allowed up to 270 days and issued a fresh Information Memorandum, there could have been a better chance of receiving a resolution plan. However, the Tribunal found that since the applications were admitted on 14.06.2017, there was no inclination to grant further time for successful resolution and thus, did not interfere with the liquidation orders.

4. Whether the Liquidator is required to follow specific steps for the revival of the Corporate Debtor during the liquidation stage:
The Tribunal emphasized that during the liquidation stage, the Liquidator must ensure that the company remains a going concern and take steps for the revival of the Corporate Debtor. The Liquidator is required to follow the decision in "Y. Shivram Prasad Vs. S. Dhanapal & Ors." and other relevant cases. The Tribunal outlined that the Liquidator should:
- Ensure the company remains a going concern.
- Attempt revival through compromise or arrangement with creditors or members under Section 230 of the Companies Act, 2013.
- Sell the business as a going concern if revival fails.
- Only proceed with liquidation as a last resort.

The Tribunal directed the Liquidator to act in accordance with these guidelines and take steps under Section 230 of the Companies Act, 2013. The appeals were disposed of with these directions, and the interim orders were vacated.

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