AA Rightly Rejected CoC’s Decision to Liquidate CD After Preparation of IM, as it is Beyond the CoC’s Power | NCLAT

  • News|Blog|Insolvency and Bankruptcy Code|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 1 August, 2023

Information Memorandum

Case Details: Hero Fincorp Ltd. v. Hema Automotive (P.) Ltd. - [2023] 152 taxmann.com 311 (NCLAT-New Delhi)

Judiciary and Counsel Details

    • Justice Ashok Bhushan, Chairperson & Ms Shreesha Merla, Technical Member
    • Sanjeev SinghMs Taniya BansalMs Ridhi PahujaMs Pallavi Aggarwal, Advs. for the Appellant.

Facts of the Case

In the instant case, the appellant initiated proceedings under section 13(4) of the SARFAESI Act, 2002 against the corporate debtor. Subsequently, the CIRP proceedings were commenced against the corporate debtor. The appellant filed its claim and CoC was constituted with the appellant as sole member of CoC.

On 7-10-2022, RP published Form-G, wherein the last date for receipt of an Expression of Interest (EOI) was 24-10-2022. On 19-10-2022, CoC passed the resolution for the liquidation of the corporate debtor. However, the Adjudicating Authority (NCLT) rejected the said resolution directing the CoC to reconsider said liquidation order.

Thereafter, an appeal was filed to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

The appellant challenged the said order submitting that it was mandatory for the Adjudicating Authority to pass an order of liquidation in view of section 33(2) of the IBC.

It was noted that as per section 33(2), CoC could take the decision to liquidate the corporate debtor at any time before the preparation of the Information Memorandum and as per regulation 36 of the CIRP Regulation, Information Memorandum must be prepared and circulated to members of CoC prior to issuance of Form-G.

NCLAT Held

The NCLAT held that since in the instant case, the decision of liquidation by CoC was taken after Form-G had been issued i.e. after the preparation of the Information Memorandum, the Adjudicating Authority didn’t commit any error in rejecting for liquidation and asking the CoC to reconsider its decision. Accordingly, the appeal was to be dismissed.

List of Cases Reviewed

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied