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Judgment permits liquidation under IBC Section 33(2), upholding CoC's decision. Moratorium ends post-liquidation. The judgment allows the application for liquidation under Section 33(2) of the IBC, appointing the IRP as the Liquidator for the Corporate Debtor. The ...
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The judgment allows the application for liquidation under Section 33(2) of the IBC, appointing the IRP as the Liquidator for the Corporate Debtor. The CoC's decision for liquidation, based on commercial wisdom, is upheld without judicial interference. The moratorium under Section 14 of the IBC ceases upon the liquidation order, with the Liquidator tasked to manage proceedings and creditor payments. The judgment outlines the Liquidator's powers, duties, and fee entitlement, emphasizing CoC's discretion in maximizing asset value. The application is granted, directing compliance with specified observations and orders.
Issues involved: Liquidation of Corporate Debtor under Section 33(2) of the IBC, 2016.
Analysis: The judgment pertains to an application filed under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 (IBC) for the liquidation of the Corporate Debtor. The case originated from CP (IB) No. 386 of 2019, filed by an Operational Creditor against the Corporate Debtor seeking initiation of Corporate Insolvency Resolution Process (CIRP), which was admitted by the Adjudicating Authority. The Applicant was appointed as the Interim Resolution Professional (IRP) of the Corporate Debtor. Subsequently, the Committee of Creditors (CoC) decided in its meetings to continue with the IRP and later resolved for the liquidation of the Corporate Debtor due to the absence of assets, plant & machinery, inventories, ongoing projects, or business operations.
The judgment emphasizes that the Adjudicating Authority does not have the jurisdiction to interfere in the commercial wisdom of the CoC, citing precedents such as K. Sasidhar's case and a judgment by the Hon'ble Supreme Court regarding the Essar Steel India Limited case. The commercial wisdom exercised by the CoC in deciding on liquidation is considered final, as it involves factors aimed at maximizing the asset value of the Corporate Debtor. The judgment reiterates that the discretion of payment to creditors lies with the CoC.
Regarding the orders passed, the judgment declares the cessation of the moratorium under Section 14 of the IBC upon the liquidation order. The Liquidator is directed to issue a public announcement about the liquidation, send a certified copy of the order to the relevant authority, and handle legal proceedings on behalf of the Corporate Debtor with prior approval. The judgment specifies the powers and duties of the Liquidator, including the cessation of powers of the Board of Directors and other key personnel of the Corporate Debtor. The Liquidator is entitled to charge a fee for conducting the liquidation proceedings.
In conclusion, the judgment allows the application for liquidation and appoints the IRP as the Liquidator for the purpose of liquidating the Corporate Debtor. The instant application is allowed and disposed of accordingly, with the specified observations and directions for compliance.
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