Appellate Tribunal Upholds Liquidation Orders, Emphasizes Need for Viable Scheme

The Appellate Tribunal upheld the orders of liquidation and directed the Liquidator to proceed with the liquidation process due to the absence of a viable Scheme under Section 230 of the Companies Act, 2013. The withdrawal of the Scheme application by 'Mahalaxmi Continental Limited' led to the e-auction of the Corporate Debtor's assets. The Tribunal dismissed the Appeal challenging the liquidation orders and e-auction notice, emphasizing the necessity of a workable Scheme under Section 230 to prevent liquidation, which was not presented in this case. The e-auction was completed with the highest bidder already making the payment.

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Issues:
1. Appeal against orders passed by the Adjudicating Authority.
2. Liquidation process and submission of Scheme under Section 230 of the Companies Act, 2013.
3. Withdrawal of Scheme application and e-auction of Corporate Debtor's assets.
4. Challenge to impugned orders and e-auction notice.

Issue 1: Appeal against orders passed by the Adjudicating Authority
The Appeals were filed against two orders passed by the Adjudicating Authority, one on 26.04.2021 in I.A No. 3150/2020 by the Liquidator, and the other on 07.03.2022 in I.A No. 3770/2020 by 'Mahalaxmi Continental Limited' withdrawing the Application for submitting a Scheme under Section 230 of the Companies Act, 2013. The Appellate Tribunal considered the history of the case, including the initiation of Corporate Insolvency Resolution Process (CIRP) and subsequent liquidation orders. The Tribunal upheld the previous order of liquidation and directed the Liquidator to proceed with the liquidation process. The Liquidator had also sought an extension of time to explore a scheme under Section 230, but no viable scheme was received. The Adjudicating Authority had directed the Liquidator to liquidate the assets of the Corporate Debtor due to the absence of a workable scheme.

Issue 2: Liquidation process and submission of Scheme under Section 230 of the Companies Act, 2013
The Tribunal noted that there were attempts to explore a Scheme under Section 230, with 'Mahalaxmi Continental Limited' submitting a Scheme for Compromise of the Corporate Debtor. However, the Application for the Scheme was subsequently withdrawn on 07.03.2022. The Tribunal emphasized that without a Scheme approved under Section 230, the Liquidator was directed to proceed with the liquidation process. The Adjudicating Authority had previously directed the Liquidator to follow the decision of the Tribunal and proceed with the liquidation as per the law. The Tribunal found no grounds to interfere with the impugned orders as no viable Scheme under Section 230 was available to prevent the liquidation.

Issue 3: Withdrawal of Scheme application and e-auction of Corporate Debtor's assets
The withdrawal of the Scheme application by 'Mahalaxmi Continental Limited' and subsequent e-auction of the Corporate Debtor's assets were key points of contention. The Appellant Operational Creditors argued that they were willing to offer a higher amount than the highest bidder in the e-auction to take over the Corporate Debtor. However, the Tribunal noted that all parties, including the Appellants, had sufficient opportunity to submit a Scheme under Section 230 during the proceedings. 'Assam Industrial Development Corporation' defended its position as the highest bidder and highlighted that the payment had already been made.

Issue 4: Challenge to impugned orders and e-auction notice
The Appellants sought to quash the orders directing liquidation and permitting the withdrawal of the Scheme application, as well as the e-auction notice. The Tribunal, after considering the arguments presented, dismissed the Appeal, stating that no valid grounds were established to interfere with the impugned orders. The Tribunal emphasized the importance of having a viable Scheme under Section 230 to prevent liquidation, which was not present in this case. The e-auction process was conducted, and the highest bidder had already made the payment, leading to the conclusion that the Appeal lacked merit and was thus dismissed.

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