Liquidator’s commercial wisdom is not open to judicial review: SC
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- Last Updated on 30 August, 2022
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Case Details: R.K. Industries (Unit-II) LLP v. H.R. Commercials (P.) Ltd. - [2022] 141 taxmann.com 508 (SC)
Judiciary and Counsel Details
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- N.V. Ramana, CJI, J.K. Maheshwari & Hima Kohli, JJ.
Facts of the Case
In the instant case, the Apex Court retreated that Commercial or business decisions taken by the Liquidator for conducting the sale of the movable/immovable assets of the Corporate Debtor in liquidation are not open to any judicial review by the adjudicating authority or the appellate authority.
Supreme Court Held
“It is not for the court to question the judiciousness of the decision taken by the Liquidator with the idea of enhancing the value of the assets of the Corporate Debtor being put up for sale. The right to refuse the highest bid or completely abandon or cancel the bidding process was available to the Liquidator.
The powers vested in and the duties cast upon the Liquidator have been made subject to the directions of the Adjudication Authority (NCLT) under Section 35 of the IBC. Once the Liquidator applies to the Adjudicating Authority (NCLT) for appropriate orders/directions, including the decision to sell the movable and immovable assets of the Corporate Debtor in liquidation by adopting a particular mode of sale and the Adjudicating Authority (NCLT) grants approval to such a decision, there is no provision in the IBC that empowers the Appellate Authority (NCLAT) to suomotu conduct a judicial review of the said decision.
The jurisdiction bestowed upon the Adjudicating Authority [NCLT] and the Appellate Authority [NCLAT] are circumscribed by the provisions of the IBC. NCLT & NCLAT cannot act as a Court of equity or exercise plenary powers to unilaterally reverse the decision of the Liquidator based on commercial wisdom and supported by the stakeholders.
The Appellate Authority cannot don the mantle of a supervisory authority for overseeing the validity of the Liquidator in opting for a particular mode of sale of the assets of the Corporate Debtor”,
said Court
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