Case Note & Summary
The appeal was filed against the order of the Adjudicating Authority directing the liquidation of Jeppiaar Cements Ltd. The corporate debtor had guaranteed loans taken by Jeppiaar Power Corporation Ltd. from Indian Bank. Following defaults in repayment, Indian Bank initiated Corporate Insolvency Resolution Process (CIRP) against the corporate debtor, which was admitted on 10.10.2019. The CIRP timeline was extended due to COVID-19, and a One-Time Settlement (OTS) was sanctioned by Indian Bank, allowing the directors of the principal borrower time to repay the debt. Despite partial payments made under the OTS, the resolution professional filed for liquidation on 26.08.2022, which was allowed by the Adjudicating Authority. The appellants argued that the liquidation was unjustified as it was passed without proper voting from the Committee of Creditors (CoC) and while the OTS was still being complied with. The liquidator contended that the resolution professional acted within his rights under Section 33(1) of the IBC. The court analyzed the circumstances leading to the liquidation order, emphasizing the importance of the resolution professional's independent judgment and the need for fairness in the insolvency process. Ultimately, the court found the liquidation order unsustainable and directed that it must give way to allow for the possibility of a settlement under Section 12A of the IBC.
Headnote
A) Insolvency Law - Liquidation Process - Premature Liquidation - Insolvency and Bankruptcy Code, 2016, Section 33(1) - The court found that the resolution professional acted under undue influence from the Registry, leading to a premature liquidation order despite ongoing settlement efforts. Held that the order of liquidation was not sustainable under the circumstances (Paras 10-24).
Issue of Consideration
Whether the order of liquidation was justified given the ongoing One-Time Settlement and lack of voting for liquidation by the Committee of Creditors.
Final Decision
The court found the order of liquidation unsustainable and directed that it must give way to allow for the possibility of a settlement under Section 12A of the IBC.
Law Points
- Insolvency and Bankruptcy Code
- corporate insolvency
- liquidation process
- resolution professional's duties
- statutory timelines
