Tribunal Orders Liquidation of Non-Operational Company, Upholds Creditor Committee's Decision

The Tribunal allowed the application for liquidation of the Corporate Debtor due to its non-operational status and lack of significant assets, appointing Mr. Dilipkumar Natvarlal Jagad as the Liquidator. Allegations of improper conduct during the Corporate Insolvency Resolution Process were dismissed. The Tribunal upheld the commercial wisdom of the Committee of Creditors in deciding on liquidation, emphasizing the CoC's unanimous decision based on careful assessment. The Liquidator was tasked with managing the liquidation process in accordance with regulations, with all powers of the Corporate Debtor's personnel vested in the Liquidator.

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Issues Involved:
1. Liquidation of the Corporate Debtor under Section 33(1) read with Section 60 of the Insolvency and Bankruptcy Code, 2016.
2. Appointment of the Liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016.
3. Allegations of improper conduct and process violations during the Corporate Insolvency Resolution Process (CIRP).
4. Objections by the suspended director against the liquidation and conduct of the CIRP.
5. Commercial Wisdom of the Committee of Creditors (CoC) in deciding liquidation.

Issue-Wise Detailed Analysis:

1. Liquidation of the Corporate Debtor:
The application for liquidation was filed by the Resolution Professional (RP) under Section 33(1) read with Section 60 of the Insolvency and Bankruptcy Code, 2016, seeking the liquidation of the Corporate Debtor. The Tribunal noted that the CoC, with 100% majority, decided to liquidate the Corporate Debtor due to its non-operational status for the last two years and the absence of significant assets except a shop at Borivali. The Tribunal observed that the Corporate Debtor’s only asset was a shop, and there were no operations or manufacturing facilities, making revival unfeasible.

2. Appointment of the Liquidator:
The Tribunal appointed Mr. Dilipkumar Natvarlal Jagad as the Liquidator under Section 34(1) of the Insolvency and Bankruptcy Code, 2016. The Liquidator was directed to conduct the liquidation process as per the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The Liquidator was granted all powers of the board of directors, key managerial personnel, and partners of the Corporate Debtor, which would cease to exist and vest with the Liquidator.

3. Allegations of Improper Conduct and Process Violations:
The suspended director alleged that the RP conducted the CIRP improperly, violating the principles of the Code. He claimed that no attempts were made to revive the Corporate Debtor, and no advertisements were published for inviting Expressions of Interest or Resolution Plans. The Tribunal noted that the suspended director’s application for excluding a period of 270 days from the CIRP period was dismissed due to non-pursuance.

4. Objections by the Suspended Director:
The suspended director opposed the liquidation, arguing that the Corporate Debtor was capable of operating as a going concern and had identified an investor willing to acquire it. He alleged that the RP and CoC did not make efforts to invite Resolution Plans and that the decision to liquidate was a mere formality influenced by the Financial Creditor (Bank of Baroda). The Tribunal dismissed these objections, emphasizing the commercial wisdom of the CoC.

5. Commercial Wisdom of the CoC:
The Tribunal upheld the CoC’s decision to liquidate the Corporate Debtor, citing the Supreme Court’s decisions in K. Sashidhar vs Indian Overseas Bank and Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. These decisions highlight the importance of respecting the commercial wisdom of the CoC. The Tribunal concluded that the CoC’s unanimous decision to liquidate the Corporate Debtor was based on careful assessment and was not to be interfered with.

Conclusion:
The Tribunal allowed the application for liquidation, appointing Mr. Dilipkumar Natvarlal Jagad as the Liquidator and directing the initiation of the liquidation process. The objections raised by the suspended director were dismissed, and the Tribunal emphasized the commercial wisdom of the CoC in deciding the liquidation. The Liquidator was instructed to manage the liquidation process in accordance with the relevant regulations, and all powers of the Corporate Debtor’s board and key personnel were vested in the Liquidator.

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