The National Company Law Appellate Tribunal, Delhi (“NCLAT”) on September 01, 2022 in the matter of Nikhil Tandon v. Sanjeev Bindal & Ors., set aside an order for liquidation of Corporate Debtor and gave one more opportunity to the Committee of Creditors (“CoC”) and Resolution Professional for finding out a Resolution Plan to revive the Corporate Debtor.

In the instant matter, an appeal was filed under against an order of National Company Law Tribunal, New Delhi (“Adjudicating Authority”) allowing an Interlocutory application filed by the Resolution Professional under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) directing for liquidation of the Corporate Debtor. In the present case the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (“CIRP”) on a petition under Section 7 of the IBC by the Creditor and a Resolution Professional was appointed.

In the 5th CoC, it was decided that since the operation of Corporate Debtor were not being carried on for more than one year, it should be liquidated. In the 6th CoC meeting, the Suspended Director of Corporate Debtor (“Appellant”) submitted a resolution plan before the CoC claiming to be an MSME and hence eligible to submit a plan. The CoC did not consider the Plan for not being in accordance with Section 30 of the IBC. In the subsequent CoC meeting, the Resolution Professional opined that the Appellant is not an MSME and decided that Appellant’s plan cannot be deliberated since no Resolution Plan was invited and the liquidation was already approved in the 5th CoC meeting. Subsequently, the Resolution Professional filed an application for liquidation of the Corporate Debtor before the Adjudicating Authority and the latter approved liquidation. Thus, the issue before the Bench was whether the decision of the CoC taken in the 5th CoC meeting to liquidate the Corporate Debtor was a sustainable decision?

It was observed by the Bench that the entire object and purpose of the IBC is to revive the Corporate Debtor and put it back on the track. The CoC had not taken any effort to issue any Form G to find out as to whether there can be resolution of the Corporate Debtor by any Resolution Applicant. Without even making one effort, CoC jumped on conclusion to liquidate. It was further observed that material irregularity has been committed in the process as the Adjudicating Authority had only relied on the resolution of the CoC in 5th meeting and had directed for liquidation, without taking into consideration the subsequent meetings of CoC and Appellant’s request for submitting Resolution Plan.

Thus, the Bench allowed the appeal, setting aside of the order of Liquidation and gave an opportunity to the CoC for finding out as to whether there can be any Resolution Plan to revive the Corporate Debtor.