Section 33(2) of IBC empowers the CoC for deciding to initiating liquidation even before inviting Resolution Plans | Decision of CoC to liquidate the Corporate Debtor is not open to Judicial Review | A liquidation order passed under Section 33 of IBC can be challenged only on the grounds of material irregularity or fraud, as provided under Section 61(4) of Insolvency Code – Sunil Surrendrakumar Kakkad Vs. Sujyot Infrastructure Pvt. Ltd. – NCLAT New Delhi
November 15, 2024
The Hon’ble NCLAT held that: (i) Section 33(2) of the IBC unambiguously shows that it is not incumbent upon the CoC to complete the steps for resolution of the Corporate Debtor before exercise of its jurisdiction to pass an order of liquidation of the Corporate Debtor (ii) The use of the phrase “any time” twice clearly reinforces the legislative intent to empower the CoC to take decision to liquidate the Corporate Debtor any time after its constitution even prior to the preparation of the Information Memorandum (IM) but before confirmation of the resolution plan (iii) The decision of the CoC to liquidate having been approved by the Adjudicating Authority, the same is not open to judicial review when no grounds have been made out as provided under Section 61(4) of the IBC of material irregularity or fraud committed in relation to such an order. (iv) The decision of the CoC to liquidate could not have been interfered with by the Adjudicating Authority because of the limited powers of judicial review.