Sanjay Dave Vs Andhra Bank Ltd (NCLAT Delhi)
In the case of Sanjay Dave Vs Andhra Bank Ltd., the National Company Law Appellate Tribunal (NCLAT) clarified that under Section 33 of the Insolvency and Bankruptcy Code (IBC), the Committee of Creditors (CoC) holds the authority to decide on the liquidation of a Corporate Debtor at any time before the resolution plan is confirmed by the Adjudicating Authority.
Section 33 explicitly allows the CoC, with a 66% voting majority, to recommend liquidation if they believe it is the best course of action. This decision can be made at any stage after the CoC’s constitution and before the preparation or confirmation of the resolution plan. The Adjudicating Authority is then required to pass a liquidation order as per the statutory process outlined in Section 33(1)(b).
The NCLAT emphasized that the CoC’s decision to liquidate is a business decision grounded in its commercial wisdom, which is not subject to judicial review, except for ensuring compliance with the IBC and associated regulations. This principle of the supremacy of the CoC’s commercial wisdom has been upheld consistently by the Supreme Court in various judgments.
The tribunal noted that there were no statutory violations by the Resolution Professional (RP) or the CoC in this case. It reaffirmed that the CoC’s discretion to decide on liquidation reflects its authority to act in the best interest of stakeholders, underscoring the legislative intent to prioritize business pragmatism over prolonged litigation in insolvency cases.
