The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice M. Venugopal, Judicial Member and Dr. Alok Srivastava, Technical Member was hearing an appeal and held that the Appellants, in their capacity as promoters and shareholders, are deemed to lack the requisite standing to contest the liquidation order.
The NCLAT bench observed that the commercial decisions of the Committee of Creditors (CoC) are non-justiciable. Despite the appellants' arguments regarding irregularities in the Corporate Insolvency Resolution Process (CIRP), the Appellate Tribunal found no grounds to interfere with the CoC's unanimous decision to liquidate the company.
The National Company Law Appellate Tribunal (NCLAT) rendered a judgment on Company Appeal (AT)(CH)(Ins.) No. 464/2023, concerning the liquidation of Green Gateway Leisure Limited. The appellants, represented by a practising company secretary, contested the liquidation order issued by the Adjudicating Authority/NCLT, Kochi Bench, arguing various irregularities during the Corporate Insolvency Resolution Process (CIRP).
They criticized the decision to liquidate without exploring alternative resolution plans, emphasizing the importance of reviving the corporate debtor as per the spirit of the Insolvency and Bankruptcy Code, 2016 (IBC). They also highlighted exemptions for Micro, Small, and Medium Enterprises (MSMEs) under Section 29A of the IBC and criticized the rejection of the promoter's interest in submitting a resolution plan.
Despite the appellants' arguments, the NCLAT upheld the Adjudicating Authority's decision, stating that the Committee of Creditors (CoC) commercial decision was non-justiciable. The Tribunal found no grounds to interfere with the CoC's decision, leading to the affirmation of the liquidation order for Green Gateway Leisure Limited.
Respondents representing Union Bank of India and other stakeholders emphasized the sequence of events leading to liquidation and the CoC's unanimous decision. The Tribunal concluded that the liquidation decision was within the CoC's commercial wisdom and in compliance with IBC provisions and regulations.
Additionally, the Tribunal noted that the appellants, being promoters/shareholders of the corporate debtor, lacked standing to challenge the liquidation order. Therefore, the NCLAT affirmed the decision of the Adjudicating Authority/NCLT to order liquidation, dismissing the appeal without costs. In summary, the NCLAT upheld the liquidation order for Green Gateway Leisure Limited, concluding that the CoC's decision was valid and legally sound while rejecting the appeal filed by the appellants.
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