Tribunal Upholds Liquidation Order, Dismisses Appeal on Corporate Debtor's Liquidation

The Tribunal upheld the liquidation order dated 05.05.2021, dismissing the appeal and affirming the liquidation of the Corporate Debtor (CD). The Appellant's challenge to the liquidation order, disqualification as a director, and claims regarding CoC participation were rejected. The Tribunal emphasized the commercial wisdom of the CoC in deciding to liquidate the CD, citing precedents. The Appellant's lack of standing to challenge CoC decisions due to not being part of the suspended Board of Directors was a key factor in the Tribunal's decision.

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Issues Involved:
1. Challenge to the liquidation order.
2. Disallowance of participation in Committee of Creditors (CoC) meetings.
3. Disqualification of the Appellant as Director.
4. Revival efforts for the Corporate Debtor (CD).

Issue-Wise Detailed Analysis:

1. Challenge to the Liquidation Order:
The Appellant, a suspended management/ex-director of Maktel Power Limited, filed an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 against the liquidation order dated 05.05.2021 passed by the National Company Law Tribunal (NCLT), Ahmedabad Bench. The Appellant sought to set aside the liquidation order and re-initiate the Corporate Insolvency Resolution Process (CIRP).

2. Disallowance of Participation in CoC Meetings:
The Appellant contended that he was not issued notice for the first CoC meeting and was not provided with the agenda. Although he received notice for the second meeting, he was not given a way link to participate. The Appellant cited the Supreme Court judgment in Vijay Kumar Jain Vs. Standard Chartered Bank, asserting his right to participate in CoC meetings. The Tribunal, however, noted that the Appellant was not part of the suspended Board of Directors at the time of CIRP initiation and thus did not have the right to participate.

3. Disqualification of the Appellant as Director:
The Respondent argued that the Appellant was disqualified as a director under Section 164(2) of the Companies Act, 2013, due to defaults by another company, Apex Power Equipments Pvt. Ltd. The Appellant's Director Identification Number (DIN) was disqualified from 01.11.2016 to 31.10.2021. The Tribunal observed that the Appellant had vacated his office as a director in accordance with Section 167 of the Companies Act, 2013, and had not challenged his DIN disqualification with any appropriate authority.

4. Revival Efforts for the Corporate Debtor (CD):
The Appellant claimed that the Resolution Professional (RP) failed to take adequate steps for the revival of the CD. The RP, however, demonstrated that he had made multiple attempts to initiate the Expression of Interest (EOI) process, but no viable EOIs were received. Consequently, the CoC resolved with 100% majority to liquidate the CD. The Tribunal upheld the CoC's decision, emphasizing that the commercial wisdom of the CoC is non-justiciable, as reiterated by the Supreme Court in several judgments, including Committee Of Creditors Of Essar Steel India Limited Vs. Satish Kumar Gupta.

Conclusion:
The Tribunal concluded that the Appellant was not part of the suspended Board of Directors and thus did not have the standing to challenge the CoC's decisions. The Tribunal upheld the impugned order dated 05.05.2021, dismissing the appeal and affirming the liquidation of the CD. All pending interim applications were disposed of, and no order as to costs was made.

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