Tribunal Upholds Liquidation Order, Emphasizes Importance of IBC Compliance

The Tribunal upheld the liquidation order of the Corporate Debtor, dismissing the appeals challenging the impugned order. It emphasized the significance of following the IBC provisions and the authority of the CoC in making commercial decisions. The possession of the Hospital premises was confirmed to remain with the 1st Respondent pending resolution of ownership disputes. The Tribunal highlighted the statutory jurisdiction of the Adjudicating Authority and Appellate Tribunal, underscoring their obligation to operate within the framework of the IBC.

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Issues Involved:
1. Validity of the impugned order dated 04.12.2019.
2. Whether the Corporate Applicant should remain as a 'Going Concern'.
3. Ownership and possession of the Hospital premises.
4. Compliance with the IBC provisions and extension of the CIRP period.
5. Liquidation of the Corporate Debtor.
6. Eligibility under Section 29A of the IBC.
7. Allegations of non-cooperation by the Suspended Directors.
8. Application of SARFAESI Act to the subject property.
9. Penalty under Section 65 of the IBC.
10. Jurisdiction and powers of the Adjudicating Authority and Appellate Tribunal.

Detailed Analysis:

Validity of the Impugned Order:
The Appellant challenged the validity, legality, and correctness of the impugned order dated 04.12.2019, arguing that it was in complete negation to the provisions of the IBC, 2016. The Appellant contended that the Adjudicating Authority failed to appreciate that the Corporate Applicant should have remained as a 'Going Concern' to arrive at a suitable Resolution Plan and that without it, the pending debts could not be repaid, affecting all stakeholders.

Going Concern:
The Appellant argued that the Adjudicating Authority erred in not maintaining the Corporate Applicant as a 'Going Concern', which was crucial for repaying debts and protecting stakeholders' interests. The physical possession of the Hospital was with the 1st Respondent, which should have been under the custody of the Resolution Professional after the order of 'Moratorium' dated 04.04.2019.

Ownership and Possession of Hospital Premises:
The Appellant contended that the ownership of the Hospital premises was with the Corporate Applicant and not the Promotor, as alleged by the 1st Respondent. The Adjudicating Authority passed the liquidation order without ascertaining the ownership issue, which was pending in MA 363/2019. The Appellant argued that the Hospital premises should have been handed over to the Interim Resolution Professional.

Compliance with IBC Provisions and CIRP Extension:
The Appellant argued that the Adjudicating Authority failed to extend the CIRP period adequately, as only 15 days were granted instead of the available 90 days. The Appellant claimed that the actions of the Resolution Professional, influenced by the 1st Respondent, led to the locking up of valuable medical equipment and deprived the Corporate Applicant of potential earnings.

Liquidation of Corporate Debtor:
The Adjudicating Authority ordered the liquidation of the Corporate Debtor as the CoC passed a resolution for liquidation with a 73.44% voting share on 18.10.2019. The Appellant argued that the liquidation order was passed without providing an opportunity for the Corporate Applicant to undergo CIRP and without inviting Expressions of Interest and Resolution Plans from prospective applicants.

Eligibility under Section 29A:
The Appellant argued that the Suspended Directors were not eligible to participate in the Resolution Process due to their classification as Non-Performing Assets (NPA) and their inability to repay debts for at least one year before the CIRP commencement.

Non-Cooperation by Suspended Directors:
The Adjudicating Authority noted that the Suspended Directors failed to provide necessary information and funds, which delayed the CIRP process. Despite repeated assurances, no funds were forthcoming, leading to the CoC's decision to liquidate the Corporate Debtor.

Application of SARFAESI Act:
The 1st Respondent argued that the moratorium under Section 14 of the IBC does not apply to the property of the Guarantor/Surety and that the property being reflected in the Balance Sheet does not confer any title or ownership in law. The 1st Respondent proceeded under the SARFAESI Act to enforce its charge on the property.

Penalty under Section 65:
The Appellant requested a penalty against the 1st Respondent under Section 65 of the IBC for allegedly violating the Tribunal's order and taking steps against the Corporate Debtor's assets. The Tribunal noted that penalties under Section 65 require an ex-facie opinion of fraudulent or malicious intent.

Jurisdiction and Powers:
The Tribunal emphasized that the Adjudicating Authority and Appellate Tribunal are creatures of statute with jurisdiction conferred by the IBC. They cannot act as courts of equity and must abide by the statutory framework. The Tribunal upheld the liquidation order, noting that the CoC's commercial wisdom is paramount and binding.

Conclusion:
The Tribunal dismissed the appeals, upholding the liquidation order and the possession of the Hospital premises by the 1st Respondent until the adjudication of ownership issues. The Tribunal emphasized the importance of adhering to the statutory provisions of the IBC and the commercial decisions of the CoC.

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