Case Note & Summary
The appeal was filed by Debashis Nanda, the Liquidator of Chamber Constructions Private Limited, against an order from the National Company Law Tribunal, which dismissed his application seeking an extension of time to complete the sale of the Corporate Debtor as a going concern. The appeal arose from a liquidation order dated 21.02.2024, which directed the Liquidator to explore the sale of the Corporate Debtor as a going concern. The controversy centered on the interpretation of the Committee of Creditors' (CoC) decision under Regulation 39C of the CIRP Regulations and the implications of subsequent amendments to the Liquidation Regulations. The Appellant argued that the CoC's recommendation to sell as a going concern was part of the liquidation order and that the process had commenced with the order itself. The Appellate Tribunal noted that the Adjudicating Authority had dismissed the application on the grounds that no auction notice had been issued before the amendments came into force. The Tribunal found that the steps taken by the Liquidator were part of a continuous process and that the judicial restraint imposed by the Appellate Tribunal prevented the issuance of an auction notice. The Tribunal concluded that the liquidation process had commenced with the liquidation order and that the Adjudicating Authority's interpretation was incorrect. The Appellate Tribunal ultimately decided to set aside the Impugned Order, allowing the Liquidator to continue the sale process as directed by the liquidation order.
Headnote
A) Insolvency Law - Liquidation Process - Commencement of Liquidation - Insolvency and Bankruptcy Code, 2016, Section 33 - The Appellate Tribunal held that the liquidation by sale as a going concern commenced on the date of the liquidation order, not upon issuance of an auction notice, as the CoC's decision was incorporated into the liquidation order. The Tribunal emphasized that the process of sale is continuous and cannot be isolated to specific steps (Paras 20-50).
Issue of Consideration
Whether the liquidation by sale of the Corporate Debtor as a going concern had commenced on 21.02.2024 or only upon issuance of an auction notice or finalisation of an Asset Sale Process Document.
Final Decision
The Appellate Tribunal set aside the Impugned Order, allowing the Liquidator to continue the sale process as directed by the liquidation order dated 21.02.2024.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Liquidation Process Regulations
- Committee of Creditors
- judicial restraint
- commercial wisdom
