Liquidation under insolvency law may proceed when creditors resolve to liquidate and no resolution plan remains for approval

Where the Committee of Creditors validly resolves to liquidate after the resolution process fails and no resolution plan remains capable of approval, the adjudicating authority may order liquidation under section 33 of the Insolvency and Bankruptcy Code. The Tribunal also held that a request to stay liquidation is not maintainable in the absence of any surviving plan or demonstrable legal infirmity in the liquidation decision, particularly where the insolvency process has already remained pending for a prolonged period. The decision confirms that liquidation may proceed once the creditor body's resolution is duly communicated and no viable basis exists to interfere.

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Issues: (i) Whether liquidation of the corporate debtor was to be ordered on the basis of the Committee of Creditors' decision where no resolution plan survived for approval. (ii) Whether the request to stay the decision of the Committee of Creditors to proceed with liquidation was maintainable.

Issue (i): Whether liquidation of the corporate debtor was to be ordered on the basis of the Committee of Creditors' decision where no resolution plan survived for approval.

Analysis: The application for liquidation was founded on the Resolution Professional's intimation that the Committee of Creditors, by unanimous voting, had decided to liquidate the corporate debtor after the resolution process failed to yield an approved plan. The statutory scheme under section 33 of the Insolvency and Bankruptcy Code, 2016 permits liquidation where the requisite decision of the Committee of Creditors is communicated before confirmation of a resolution plan. The record showed that the resolution plan process did not culminate in any subsisting plan capable of approval, and the creditor body had resolved to liquidate.

Conclusion: Liquidation was properly ordered in favour of the petitioner.

Issue (ii): Whether the request to stay the decision of the Committee of Creditors to proceed with liquidation was maintainable.

Analysis: The application seeking stay did not demonstrate any surviving resolution plan or any infirmity in the decision to liquidate. In the absence of a viable plan and given the prolonged pendency of the insolvency process, the Tribunal held that the process could not be extended indefinitely and that no ground existed to interfere with the Committee of Creditors' decision.

Conclusion: The stay request was rejected and the challenge to liquidation failed.

Final Conclusion: The corporate debtor was directed into liquidation and the objection to that course was dismissed, thereby bringing the insolvency proceedings to the liquidation stage.

Ratio Decidendi: Where the Committee of Creditors validly resolves to liquidate and no resolution plan remains for approval, the adjudicating authority may order liquidation under section 33 of the Code and will not interfere absent a demonstrable legal infirmity.

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