Tribunal upholds liquidation order for non-compliance with Resolution Plan

The Tribunal upheld the liquidation order due to the Resolution Applicant's failure to comply with the approved Resolution Plan, leading to inordinate delays and non-compliance. The decision to initiate liquidation proceedings was supported by the overwhelming majority of the Committee of Creditors. The Tribunal appointed a liquidator and approved liquidation costs, emphasizing the mandatory adherence to statutory requirements. The Resolution Applicant's financial viability and eligibility were questioned, leading to the dismissal of the appeal and the return of the deposited amount.

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Issues Involved:
1. Delay in Implementation of Resolution Plan
2. Non-compliance with Approved Resolution Plan
3. Decision to Initiate Liquidation Proceedings
4. Appointment of Liquidator and Liquidation Costs
5. Opportunity for Resolution Applicant to be Heard
6. Financial Viability and Eligibility of Resolution Applicant
7. Role and Authority of Liquidator and Stakeholders
8. Use of Inherent Powers under Rule 11 of NCLAT Rules

Detailed Analysis:

1. Delay in Implementation of Resolution Plan
The Tribunal noted that the successful resolution applicant, Kridhan Infrastructure Private Limited, failed to infuse equity funds as per the terms of the Resolution Plan and did not take over the control of management even after eight months from the approval of the plan. The Committee of Creditors (CoC) passed a resolution for the liquidation of the Corporate Debtor due to the inordinate delay and non-compliance by the Resolution Applicant.

2. Non-compliance with Approved Resolution Plan
The Tribunal observed that the Resolution Applicant had repeatedly failed to honor their commitments, including equity infusion, upfront payment, and taking control of management, which severely threatened the going concern status of the Corporate Debtor. The Tribunal cited Section 33(3) of the Insolvency and Bankruptcy Code, 2016, which mandates liquidation if the approved resolution plan is contravened.

3. Decision to Initiate Liquidation Proceedings
The CoC, with an overwhelming majority of 99.28% voting share, resolved to initiate liquidation proceedings due to the non-compliance and inordinate delay by the Resolution Applicant. The Tribunal upheld this decision, emphasizing that adherence to statutory requirements is mandatory and the language of the Code is clear and explicit.

4. Appointment of Liquidator and Liquidation Costs
The Tribunal appointed Mr. Ramachandran Subramanian as the liquidator, as proposed by the CoC, under Section 34(1) of the Code. The Tribunal also approved the liquidation costs and fees payable to the liquidator and support team, as detailed in the CoC's resolution.

5. Opportunity for Resolution Applicant to be Heard
The Appellant contended that they were not given an opportunity to be heard and sought more time to file a detailed reply, which was not granted. However, the Tribunal found that multiple opportunities were given to the Appellant to comply with the Resolution Plan, and the liquidation order was passed only after significant delays and non-compliance.

6. Financial Viability and Eligibility of Resolution Applicant
The Tribunal considered the financial viability and eligibility of the Resolution Applicant, noting that the Appellant's subsidiaries had defaulted on significant loans, making them ineligible under Section 29A of the Code. The Tribunal also noted the Appellant's poor financial performance and inability to implement the Resolution Plan.

7. Role and Authority of Liquidator and Stakeholders
The Tribunal clarified that the stakeholders' consultation committee under the liquidation process does not have the power to determine decisions, and their consultations are not binding on the liquidator. The liquidator must act in the interests of the collective body of creditors.

8. Use of Inherent Powers under Rule 11 of NCLAT Rules
The Tribunal emphasized that inherent powers should not be invoked when specific provisions in law exist to deal with situations. The Tribunal found no exceptional or extraordinary circumstances to invoke Rule 11 of the NCLAT Rules to set aside the liquidation order.

Conclusion:
The Tribunal upheld the liquidation order, finding no legal flaw or material irregularity in the Adjudicating Authority's decision. The appeal was dismissed, and the sum of Rs. 15 crores deposited by the Appellant in the Escrow Account was ordered to be returned. The Tribunal directed the Appellant to file the certified copy of the impugned order within ten days.

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