The Supreme Court earlier this month observed that under the IBC proceedings, liquidation of a corporate debtor should be a matter of last resort..The Supreme Court, in its order passed on October 9, observed that the aim under the IBC is to find resolution to corporate insolvency and liquidation of a corporate debotor must be seen as a matter of last resort. The object under the IBC is not merely the recovery of monies, the Supreme Court said.."Liquidation of the Corporate Debtor should be a matter of last resort. The IBC recognizes a wider public interest in resolving corporate insolvencies and its object is not the mere recovery of monies due and outstanding.".This observation of the Bench of Justices DY Chandrachud, Indu Malhotra and Indira Banerjee came in an appeal filed against the order passed by the NCLAT, which had upheld an order of liquidation against the appellant corporate debtor..A Corporate Insolvency Resolution process had been set in motion against the appellant back in 2017. The Resolution plan drawn up was approved by the Committee of Creditors and subsequently the same got a stamp of approval from the National Company Law Tribunal (NCLT) in May of 2019..However, this resolution plan, depsite being approved, was not implemented and as such the NCLT was moved with an application under Section 33 of the Insolvency and Bankruptcy Code 2016 seeking liquidation of the Corporate Debtor. In January this year, the NCLT allowed this petition for liquidation..The Appellate Tribunal was moved in appeal against the order of liquidation and the NCLAT sought to know from the appellant the timeframe within which the resolution plan could be implemented. A revised timeline was prepared and placed before the NCLAT which stipulated that the Corporate debtor would deposit an amount of Rs 15 Crores upfront in an escrow account within seven days from the date of the NCLAT order and another amount of Rs 50 Crores thereafter within three months. In the event this second round of payment was not made, the Rs. 15 Crores deposit would be forfeited by the appellant..In July this year, the NCLAT allowed the appellant to make the first round of payment which was complied with. In August, the appellant furnished an undertaking in line with the agreement arrived at as regards payments to be made. Despite the same, however, in September, the NCLAT upheld the order of liquidation..It was against this order of the NCLAT that the Top Court was moved, which while noting that recovery of money is not the sole object under the IBC, proceeded to stay the order of the NCLAT. The Court observed that the appellant has demonstrated the bona fides by making the requisite deposits within the stipulated time and is specifically on notice about the contingency of forfeiture of the amount in the event of default..Therefore, the Court not only stayed the NCLAT order but also directed the appellant to "demonstrate its ability to implement the Resolution Plan". The appellant is also asked to deposit the remaining amount, in line with the undertaking, by January of next year. No properties of the debtor would be auctioned for the time being, the Court further said..Senior counsel Abhishek Manu Singhvi appeared on behalf of the appellant who was also represented by Advocates N.P.S. Chawla, Gaurav Varma, Sujoy Datta, Allan Massey, and Azeem Samuel.Senior Counsel Meenakshi Arora along with Advocates Misha, Charu Bansal, Prabhsimran Kaur, and S. S. Shroff represented the Respondents.Advocate Ashish Makhija represented the liquidator while Advocates Shagun Matta, Deepak Bashta, and Anurag Bhatt also represented other parties..Read Order:
The Supreme Court earlier this month observed that under the IBC proceedings, liquidation of a corporate debtor should be a matter of last resort..The Supreme Court, in its order passed on October 9, observed that the aim under the IBC is to find resolution to corporate insolvency and liquidation of a corporate debotor must be seen as a matter of last resort. The object under the IBC is not merely the recovery of monies, the Supreme Court said.."Liquidation of the Corporate Debtor should be a matter of last resort. The IBC recognizes a wider public interest in resolving corporate insolvencies and its object is not the mere recovery of monies due and outstanding.".This observation of the Bench of Justices DY Chandrachud, Indu Malhotra and Indira Banerjee came in an appeal filed against the order passed by the NCLAT, which had upheld an order of liquidation against the appellant corporate debtor..A Corporate Insolvency Resolution process had been set in motion against the appellant back in 2017. The Resolution plan drawn up was approved by the Committee of Creditors and subsequently the same got a stamp of approval from the National Company Law Tribunal (NCLT) in May of 2019..However, this resolution plan, depsite being approved, was not implemented and as such the NCLT was moved with an application under Section 33 of the Insolvency and Bankruptcy Code 2016 seeking liquidation of the Corporate Debtor. In January this year, the NCLT allowed this petition for liquidation..The Appellate Tribunal was moved in appeal against the order of liquidation and the NCLAT sought to know from the appellant the timeframe within which the resolution plan could be implemented. A revised timeline was prepared and placed before the NCLAT which stipulated that the Corporate debtor would deposit an amount of Rs 15 Crores upfront in an escrow account within seven days from the date of the NCLAT order and another amount of Rs 50 Crores thereafter within three months. In the event this second round of payment was not made, the Rs. 15 Crores deposit would be forfeited by the appellant..In July this year, the NCLAT allowed the appellant to make the first round of payment which was complied with. In August, the appellant furnished an undertaking in line with the agreement arrived at as regards payments to be made. Despite the same, however, in September, the NCLAT upheld the order of liquidation..It was against this order of the NCLAT that the Top Court was moved, which while noting that recovery of money is not the sole object under the IBC, proceeded to stay the order of the NCLAT. The Court observed that the appellant has demonstrated the bona fides by making the requisite deposits within the stipulated time and is specifically on notice about the contingency of forfeiture of the amount in the event of default..Therefore, the Court not only stayed the NCLAT order but also directed the appellant to "demonstrate its ability to implement the Resolution Plan". The appellant is also asked to deposit the remaining amount, in line with the undertaking, by January of next year. No properties of the debtor would be auctioned for the time being, the Court further said..Senior counsel Abhishek Manu Singhvi appeared on behalf of the appellant who was also represented by Advocates N.P.S. Chawla, Gaurav Varma, Sujoy Datta, Allan Massey, and Azeem Samuel.Senior Counsel Meenakshi Arora along with Advocates Misha, Charu Bansal, Prabhsimran Kaur, and S. S. Shroff represented the Respondents.Advocate Ashish Makhija represented the liquidator while Advocates Shagun Matta, Deepak Bashta, and Anurag Bhatt also represented other parties..Read Order:
