Case Law Details
Sreedhar Tripathy Vs Gujarat State Financial Corporation & Ors. (NCLAT Delhi)
The grievance of the Appellant is that CoC’s decision is arbitrary decision, it cannot be said to be decision taken in commercial wisdom of the CoC.
Section 33 Sub-section (2) of the I&B Code which deals with initiation of liquidation. The Explanation under Section 33 (2) has been inserted by Act of 26 of 2019 contains the legislative declaration and intention. The CoC in the Legislative Scheme has been empowered to take decision to liquidate the Corporate Debtor, any time after its constitution and before confirmation of the resolution plan. The power given to the CoC to take decision for liquidation is very wide power which can be exercised immediately after constitution of the CoC. The reasons which has been given in Agenda Item 1, it is made clear by the CoC that the Corporate Debtor is not functioning for last 19 years and all machinery has become scrap, even the building is in dilapidated condition and the CIRP will involve huge costs. We are not convinced with the submission of learned counsel for the Appellant that the CoC’s decision is an arbitrary decision. CoC is empowered to take decision under the statutory scheme and when in the present case the decision of the CoC for liquidation has been approved by the Adjudicating Authority, we see not good ground to interfere at the instance of the Appellant. However, we make it clear that the decision taken by the CoC was in the facts of the present case and it cannot be said that whenever decision is taken for liquidation the same is not open to judicial review by NCLT and NCLAT. It depends on the facts of the each case as to whether the decision to liquidate the Corporate Debtor is in accordance with the I&B Code or not. With these observations, the Appeal is dismissed.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
Heard learned counsel for the Appellant. This Appeal has been filed against order dated 23.06.2022 by which order the Adjudicating Authority has directed for liquidation of the Corporate Debtor. Learned counsel for the Appellant challenging the order contends that present is a case where decision of the CoC has been arbitrarily taken. It is submitted that the CoC never wanted to continue with the CIRP and after having been constituted, after admission of Section 10 application assets, were never handed over to the Resolution Professional, hence, Resolution Professional could not draw Information Memorandum and issue EOI.
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