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Issues: (i) whether the liquidation order passed under the Insolvency and Bankruptcy Code was valid in view of the Committee of Creditors' resolution and the expiry of the CIRP period; and (ii) whether the Appellant could resist action against the mortgaged property and the possession orders passed in favour of the secured creditor during the insolvency process.
Issue (i): whether the liquidation order passed under the Insolvency and Bankruptcy Code was valid in view of the Committee of Creditors' resolution and the expiry of the CIRP period.
Analysis: The Corporate Insolvency Resolution Process had run its course, no approved resolution plan emerged, and the Committee of Creditors had resolved to liquidate the corporate debtor with the requisite voting share. The statutory scheme treats liquidation as the consequence when resolution fails, and the Adjudicating Authority is bound by the commercial decision of the Committee of Creditors, which is not open to judicial reappraisal on merits.
Conclusion: The liquidation order was upheld and the challenge to it failed, against the Appellant.
Issue (ii): whether the Appellant could resist action against the mortgaged property and the possession orders passed in favour of the secured creditor during the insolvency process.
Analysis: The property was found to belong to the Appellant on the basis of the registered title documents and the settlement deed, while the corporate debtor's balance-sheet entries did not confer ownership. The Appellant had executed the mortgage documents as guarantor and mortgagor, and the moratorium did not protect a personal guarantor or prevent enforcement of security against the mortgaged property. The secured creditor was therefore entitled to proceed under the SARFAESI Act and to retain possession in the manner directed.
Conclusion: The Appellant could not the secured creditor's action against the property, and the possession-related orders were affirmed against the Appellant.
Final Conclusion: The appeals were dismissed, and the liquidation of the corporate debtor as well as the secured creditor's enforcement of rights over the mortgaged property were maintained.
Ratio Decidendi: The commercial decision of the Committee of Creditors to liquidate a corporate debtor after failure of CIRP is non-justiciable, and a personal guarantor cannot invoke insolvency moratorium to defeat enforcement of a validly created security interest over property owned by him.
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