Time-bound CIRP and commercial wisdom of CoC justified liquidation after prolonged failure of the resolution process.

Prolonged CIRP, repeated rejection of the resolution plan and successive addenda, and expiry of the statutory resolution period justified moving the corporate debtor to liquidation under the IBC. The text notes that the insolvency framework is meant to operate in a time-bound manner, and repeated remittal to the same resolution applicant after significant delay would frustrate that object. It also states that the Adjudicating Authority should not interfere with the commercial wisdom of the Committee of Creditors. The impugned order treating the liquidation application as not maintainable and infructuous was set aside, and liquidation of the corporate debtor was directed.

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Issues: Whether the impugned order dismissing the application as not maintainable and infructuous was liable to be set aside and liquidation of the corporate debtor was to be directed under the Insolvency and Bankruptcy Code, 2016.

Analysis: The appeal arose from prolonged CIRP where the Committee of Creditors had repeatedly rejected the resolution plan and successive addenda, while the statutory outer limit for completion of the resolution process had already expired. The decision emphasised that the insolvency framework is intended to operate in a time-bound manner and that repeated reference back to the same resolution applicant after prolonged delay would defeat the object of the Code. It was also noted that the Adjudicating Authority ought not to interfere with the commercial wisdom of the Committee of Creditors and that, once liquidation became the appropriate course under the statutory scheme, the application for liquidation could not be treated as infructuous.

Conclusion: The appeal was allowed, the impugned order was set aside, and liquidation of the corporate debtor was directed under Section 33(1) of the Insolvency and Bankruptcy Code, 2016.

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