Pammvi Consultancy Services Limited vs Prashant Agarwal Liquidator Of Global ...

Comp. App. (AT) (Ins) No. 1641 of 2024 & I.A. No. 5989 of 2024

(Arising out of the Order dated 23.04.2024 passed by the National Company Law Tribunal, Jaipur Bench, in Interlocutory Application (IBC) No. 340/JPR/ 2020 in Company Petition (IB) No. 79/7/JPR/2019).

1. M/s Pammavi Consultancy Limited. Through its Director/ Authorized Representative, Amit PremKumar Gupta having its office at C-501, Remi Bizcourt Plot No.9, Shah Industrial Estate Off Veera Desai Rd. Andheri (West), Mumbai, Maharashtra - 400 053 E-mail: accounts@pammvi.com ...Appellant Versus 1. Mr. Prashant Agrawal, Liquidator of M/s Global Syntex (Bhilwara) Limited. having its office at F-106, 1st Floor, Sumer Complex, Behind Bagadia Bhawan, Gautam Marg, C Scheme, Jaipur - 302001. E-mail: ippagrawal@gmail.com ...Respondent 2. M/s Bharka Synthetics Private Limited. Financial Creditor of the Corporate Debtor, having its office at Bazar no. 2, Bhilwara - 311001. E-mail: bdahinsa2001@yahoo.co.in

3. M/s Ahinsa Infrastructure Limited Financial Creditor of the Corporate Debtor, having its office at 60, Mulji Jetha Building, 3rd Floor, 185/187, Princess Street, Mumbai, Maharashtra - 400002. E-mail: bdahinsa2001@yahoo.co.in

4. M/s Bhilwara Spinners Limited Financial Creditor/ Auction Purchaser of the Corporate Debtor, having its office at 26, Industrial Area, Gandhinagar, Bhilwara, Rajasthan - 311 002. E-mail: b.s.choudhary63@gmail.com

Present For Appellants: Mr. Ankur Goel & Mr. Saket Singh, Advocates

For Respondents: Mr. Prakul Khurana, Mr. Abhinav Mathur & Mr. Gaurav Asati, Advocates for R-1 Liquidator

Mr. Gaurav Mitra, Ms. Neha Agarwal & Ms. Aishwarya Modi, Advocates for R-2

JUDGEMENT

( 21.01.2026)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed by the Appellant i.e., M/s Pammvi

Consultancy Services Limited who is an operational creditor of M/s Global

Syntex (Bhilwara) Limited under Section 61 of the Insolvency and Bankruptcy

Code, 2016 ('Code') against the Order dated 23.04.2024 ("Impugned Order")

passed by the National Company Law Tribunal, Jaipur Bench ("Adjudicating

Authority") in Interlocutory Application (IBC) No. 340/JPR/ 2020 in Company

Petition (IB) No. 79/7/JPR/2019.

Mr. Prashant Agrawal, who is the Liquidator of M/s Global Syntex

(Bhilwara) Limited, is the Respondent No.1 herein.

Page 2 of 22

M/s Bharkha Synthetics Private Limited, who is one of the financial

creditors, is the Respondent No.2 herein.

M/s Ahinsa Infrastructure Limited, who is one of the financial creditors, is

the Respondent No.3 herein.

M/s Bhilwara Spinners Limited, who is one of the financial creditors as

well as Successful Auction Purchaser of the immovable properties of the

Corporate Debtor, is the Respondent No.4 herein.

2. The appellant submitted that it is an operational creditor of the Corporate

Debtor, Ms Global Syntex Bhilwara Limited, with an admitted operational debt

of Rs. 2,17,04,875/-. The appellant contended that Respondents No. 2, 3, and 4

are the financial creditors, interrelated as Respondent No. 4 is a subsidiary of

Respondent No. 3, with directors of Respondent No. 2 interested in Respondent

No. 3, and the Corporate Debtor identified as an entity in which directors of

Respondent No. 2 are interested as per its balance sheet.

3. The appellant submitted that CIRP commenced on a Section 7 petition by

Respondent No. 2, admitted on 21.08.2019 based on the Corporate Debtor's

admission of liability. The appellant contended that the CoC comprised only

Respondents No. 2, 3, and 4, who are related parties.

4. The appellant submitted that the 3rd CoC meeting on 18.01.2020 resolved

for liquidation, which was approved and ordered by the Adjudicating Authority

on 24.01.2020, with Respondent No. 1 as Liquidator and Respondents No. 2, 3,

Page 3 of 22 4 as financial creditors. The appellant further submitted that the Stakeholders

Consultation Committee (SCC) also comprised only these respondents.

5. The Appellant submitted that the Corporate Debtor was the owner of two

prime land parcels:

(i) a leasehold land with a building situated at Plot No. SPL-1, Industrial

Area, Biliya Extension, Bhilwara, having a total area of 26,800 Sq. Mt.;

and

(ii) freehold agricultural land situated at Araji No. 1442/135 and Araji No.

135, adjacent to the aforesaid leasehold land at Industrial Area, Biliya

Extension, Bhilwara.

6. The Appellant stated that in the first meeting of the SCC held on

25.06.2020, permission was granted to the Liquidator to sell the aforesaid

immovable properties of the Corporate Debtor. An e-auction was conducted on

31.07.2020 at a reserve price of Rs. 11,13,42,501.50, which failed. A second e-

auction on 14.08.2020 reduced the reserve price by 25%, but it also failed. A third

e-auction on 31.08.2020 further reduced the reserve price by 10%, wherein

Respondent No. 4, the sole bidder with over 60% voting share in the SCC,

purchased both properties for Rs. 7,51,56,188.51.

7. The appellant submitted that auctions occurred hurriedly within one month

amid COVID-19, substantially reducing reserve price by 35% overall, far below

valuation (market Rs. 15.4 crores, fair Rs. 15.36 crores, distressed value of Rs.

13.86 crores). The appellant contended that sale notices lacked details (plot nos.,

Page 4 of 22 area, industrial location), deterring third parties and enabling Respondent No. 4's

undervalued purchase, violating asset maximization under the Code. The

appellant further objected to this process, ignored by respondents acting in

collusion.

8. The appellant contended that Respondents No. 2, 3, 4 inflated claims from

principal Rs. 4.66 crores to over Rs. 15.70 Crores via extortionate interest,

admitted by Respondent No. 1 without scrutiny; the Adjudicating Authority noted

this and directed the Respondent Nos.2, 3, 4 to refund of excess interest of the

liquidation proceeds.

9. The Appellant submitted that the impugned order erroneously disregarded

undisputed facts that Respondents Nos. 2, 3 and 4 are related to the Corporate

Debtor, as per Respondent No. 2's Balance Sheet stating the Corporate Debtor as

an entity in which its Directors are interested.

10. The Appellant submitted that the impugned order erroneously disregarded

undisputed facts that, per registered government valuer's report, market value was

Rs. 15.4 Crores and distressed sale value Rs. 13.86 Crores, yet sold to Respondent

No. 4 for Rs. 7.51 Crores.

11. Concluding arguments, the Appellant requested this Appellate Tribunal to

set aside the Impugned Order and allow this appeal.

12. Per contra, the Respondent No.1 denied all averments made by the

Appellant as misleading and baseless.

Page 5 of 22

13. The Respondent No.1 contended that post CIRP of the Corporate Debtor

initiated by the Adjudicating Authority vide order dated 21.08.2019, in the 3rd

CoC meeting dated 18.01.2020, the resolution to liquidate the Corporate Debtor

was approved and the same was confirmed by the Adjudicating Authority vide

order dated 24.01.2020.

14. The Respondent No.1 submitted that the Appellant, being an Operational

Creditor, filed its claim of Rs. 2,14,12,584/- based on an ex-parte civil court

decree passed at Mumbai, which claim was duly verified and admitted. It was

further submitted that the Appellant was represented throughout the process by

its authorized representatives, who are practicing advocates, in both CoC and

SCC meetings, and no objection whatsoever was raised by them regarding the

CIRP or liquidation proceedings. The Respondent No.1 contended that in view

of the above conduct, the Appellant is estopped from raising belated objections

after completion of the entire CIRP and liquidation process, particularly when the

orders initiating CIRP and liquidation have already attained finality under Section

61 of the Code.

15. The Respondent No.1 submitted that the SCC was constituted on

10.06.2020, inclusive of the Appellant. In compliance with Regulation 34 of the

Liquidation Process Regulations, the Asset Memorandum dated 22.06.2020

recorded an average market value of Rs. 15,36,68,908/- and an average

liquidation value of Rs. 11,13,42,501/-.

Page 6 of 22

16. The Respondent No.1 contended that the first sale notice dated 09.07.2020

fixed the reserve price at Rs. 11,13,42,501/- for auction scheduled on 31.07.2020.

Although one bid was received, it was subsequently withdrawn. Thereafter, in the

2nd SCC meeting dated 04.08.2020, the reserve price was reduced by 25% in

accordance with Schedule I of the Liquidation Process Regulations, without any

objection from the Appellant's representative.

17. The Respondent No.1 submitted that pursuant to the reduced reserve price

of Rs. 8,35,06,876.125/-, the second auction notice dated 08.08.2020 was issued

for auction on 18.08.2020, pursuant to which two bids were received. Upon

failure of the second auction, the SCC members were informed of a further

reduction of 10% for the third auction, to which again no objection was raised by

the Appellant.

18. The Respondent No.1 contended that the third sale notice dated 21.08.2020

fixed the reserve price at Rs. 7,51,56,188/- for auction on 31.08.2020. Two bids

were received, out of which one bidder withdrew. Consequently, Bhilwara

Spinners emerged as the successful auction purchaser, and the same was duly

communicated by emails dated 01.09.2020 and 02.09.2020.

19. The Respondent No.1 submitted that at no stage did the Appellant

challenged the market value, liquidation value, or reserve price during the

liquidation process. It was further submitted that the values mentioned in the

Asset Memorandum were comparable with the valuation report obtained by the

Appellant itself from a registered valuer. It was contended that since the auction

Page 7 of 22 proceeds were insufficient even to satisfy the claims of financial creditors, the

Appellant, being an operational creditor, was not entitled to any distribution under

Section 53 of the IBC.

20. The Respondent No.1 contended that all decisions relating to the auction

were taken unanimously by the SCC members, and the Appellant raised

objections only after completion of the sale, vide email dated 03.09.2020. It was

submitted that the Appellant is barred by the doctrine of estoppel and the principle

of acquiescence, having participated in the SCC proceedings without protest, and

reliance was placed on settled judicial precedents.

21. The Respondent No.1 submitted that the objection regarding conduct of

three auctions within one month is untenable, as the auction process strictly

followed the model timelines under Regulation 47 of the Liquidation Process

Regulations. It was further contended that mere expectation of a higher price,

including objections relating to COVID-19 conditions, is not a valid ground to

set aside a concluded auction.

22. The Respondent No.1 contended that the allegation that asset details were

not disclosed in the sale notices is misleading. It was submitted that each sale

notice clearly specified the existence of two immovable properties of the

Corporate Debtor at Bhilwara, Rajasthan, and also mentioned the e-auction

service provider.

23. The Respondent No.1 submitted that for the convenience of prospective

bidders, the complete Asset Memorandum was uploaded on the website, the URL

Page 8 of 22 of which was provided in the sale notices. It was further submitted that detailed

contact information for inspection, e-auction facilitation, and the Liquidator

himself was also disclosed.

24. The Respondent No.1 contended that the allegation of Respondent Nos. 2

to 4 being related parties of the Corporate Debtor is not legally permissible, as

the Appellant failed to establish any relationship under Section 5(24) of the Code.

It was submitted that reliance on balance sheet disclosures of Respondent No.2 is

misplaced and that the Adjudicating Authority has already rejected this objection

in the impugned order.

25. Concluding his arguments, the Respondent No.1 requested this Appellate

Tribunal to dismiss the present appeal.

26. Now we will deal with the submissions of the Respondent No.2 to 4

conjointly as they had argued collectively before us.

27. The Respondent Nos. 2 to 4 submitted that the Adjudicating Authority has

rightly held that the Appellant/Operational Creditor failed to establish that any of

the Financial Creditors are "related parties" of the Corporate Debtor within the

meaning of Section 5(24) of the Code. The Respondent Nos. 2 to 4 contended

that the sole document relied upon by the Appellant/Operational Creditor is the

balance sheet of M/s Shree Barkha Synthetics for the year ending 31.03.2019,

particularly the heading "Advance to others includes advances to concerns in

which directors are interested", which reliance is wholly misconceived,

misleading, and frivolous. The Respondent Nos. 2 to 4 submitted that the said

Page 9 of 22 heading is a broad and generic accounting description and is not restricted to, nor

does it conclusively establish, a related party relationship as alleged by the

Appellant/Operational Creditor. It was further contended that the related party

disclosures contained in the said balance sheet do not reflect any relationship

whatsoever with the Corporate Debtor or its erstwhile directors.

28. The Respondent Nos. 2 to 4 pointed out that the erstwhile directors of the

Corporate Debtor were Mr. Nitin Singhvi, Mr. Balwantsingh Ranka, Mr. Nathu

Tailor, and Mrs. Maya Devi. However, the related parties disclosed in the balance

sheet at page 412 of the present appeal make no reference to any of the aforesaid

individuals and instead mention only Chandra Singh Kothari, Bhanwar Singh

Kothari, and Chandra Singh Kothari (HUF). The Respondent further submitted

that even the related party transactions disclosed therein do not evidence any

transaction with the Corporate Debtor.

29. The Respondent Nos. 2 to 4 contended that, in terms of the settled

principle, a document must be read holistically to ascertain its true import. The

Appellant has selectively relied upon a solitary heading in the balance sheet while

completely ignoring the remaining disclosures, thereby attempting to construct a

case on an incomplete and distorted reading of the document. It was further

submitted that the burden of proof squarely lay upon the Appellant to establish

the existence of a related party relationship, in accordance with the settled

principle that "he who asserts must prove."

Page 10 of 22

30. The Respondent Nos. 2 to 4 submitted that had any of the Financial

Creditors been related to the Corporate Debtor, the same would have been duly

reflected in the financial statements of the Corporate Debtor, and the absence of

any such disclosure clearly establishes that no such relationship exists. It was also

contended that even if the Financial Creditors are related to each other, such inter

se relationship does not ipso facto render them "related parties of the Corporate

Debtor" unless the relationship squarely falls within any of the specific limbs of

Section 5(24) of the Code, which alone constitutes the lawful and determinative

test for ascertaining related party status.

31. The Respondent Nos. 2 to 4 submitted that the Appellant has failed to

establish any fraud, collusion, or illegality so as to warrant setting aside the CIRP

or the auction process. The Section 7 application filed by M/s Shree Barkha

Synthetics was admitted on 21.08.2019 on the basis of the same term sheets,

addenda, and balance sheets which are now belatedly questioned by the Appellant

with gross delay and laches. The Corporate Debtor participated throughout the

proceedings and never disputed the existence or legality of the financial debt. The

Appellant was also represented in the CoC and SCC meetings but did not raise

any objection at any stage of the CIRP.

32. The Respondent Nos. 2 to 4 submitted that the Corporate Debtor repeatedly

acknowledged the outstanding financial debt in its audited balance sheets for the

years ending 31.03.2018, 31.03.2019, and 31.03.2020, which constitutes valid

acknowledgment of debt as settled by the Hon'ble Supreme Court in Asset

Page 11 of 22 Reconstruction Co. (India) Ltd. v. Bishal Jaiswal [(2021) 6 SCC 366]. It was

further contended that the CIRP admission order and the admission of claims

were never challenged within limitation and have thus attained finality. In view

of the settled law on delay and laches, the Appellant cannot reopen the CIRP at

this belated stage.

33. The Respondent Nos. 2 to 4 submitted that the Appellant has failed to

establish any violation of the statutory provisions of the Code or the Liquidation

Process Regulations in relation to the auction conducted by the Liquidator. The

Respondents contended that the Adjudicating Authority has exhaustively dealt

with the auction process in paragraphs 25 to 39 of the Impugned Order. It was

submitted that the CoC, in its 3rd meeting dated 18.01.2020, resolved to liquidate

the Corporate Debtor, pursuant to which the liquidation order dated 24.01.2020

was passed and remained unchallenged. Thereafter, the Asset Memorandum was

prepared on 22.06.2020 and the Liquidator proceeded to conduct e-auctions

strictly in accordance with Regulation 33 read with Schedule I of the Liquidation

Process Regulations.

34. The Respondent Nos. 2 to 4 further submitted that three public e-auctions

were conducted on 31.07.2020, 18.08.2020, and 31.08.2020 with complete

disclosures. The reserve price was reduced first by 25% and thereafter by 10%,

strictly in terms of Schedule I of the Liquidation Regulations as applicable at the

relevant time. All such reductions were duly informed to all members of the

Page 12 of 22 Stakeholders' Consultation Committee, including the Appellant, who was an

SCC member under Regulation 31A.

35. The Respondent Nos. 2 to 4 submitted that the allegation that the assets

were sold at a "throw-away price" is completely baseless. As per the Asset

Memorandum, the average market value of the Corporate Debtor was ₹15.36

crore and the average liquidation value was ₹11.13 crore, which closely aligns

with the valuation figures reported by the valuer appointed by the Appellant itself.

Thus, the valuation data consistently demonstrates that the auction price was in

line with market realities.

36. The Respondent Nos. 2 to 4 further submitted that upon failure of the first

and second auctions, the Liquidator reduced the reserve price strictly in

accordance with Schedule I of the Liquidation Regulations, after duly intimating

all SCC members, including the Appellant. Reliance was placed on the judgment

of this Appellate Tribunal in Kerala State Co-operative Bank Limited v. Mr.

Aravindhakshan Nair R, wherein it was held that reduction of reserve price in

the prescribed manner does not amount to violation of the Liquidation

Regulations in the absence of any documentary proof.

37. The Respondent Nos. 2 to 4 also relied upon the judgment of this Appellate

Tribunal in Jai Agarwal v. Satyendra Prasad Khorania (Liquidator) [CA(AT)

(INS) No. 30 of 2024], wherein it was held that interference with a concluded

auction is unwarranted unless allegations of manipulation are supported by

Page 13 of 22 cogent evidence, as speculative challenges would undermine the certainty and

finality of liquidation proceedings.

38. The Respondent Nos. 2 to 4 submitted that the Liquidator duly informed

all SCC members about the successful conclusion of the third auction and the

Appellant raised objections only thereafter, for the first time, which objections

were duly replied to by the Liquidator. It was contended that the Appellant

thereafter filed the impugned application belatedly on 04.10.2022, much after

completion of the auction process, in gross violation of statutory timelines and

without any supporting material, warranting outright dismissal.

39. The Respondent Nos. 2 to 4 further submitted that the Appellant was

present in all SCC meetings and never raised any objection to the reduction of

reserve price or auction timelines at the relevant time. Accordingly, the belated

objections are barred by the principles of acquiescence.

40. The Respondent Nos. 2 to 4 submitted that all auction notices duly

disclosed the details of the immovable properties, contained links to the Asset

Memorandum, and clearly specified that the e-auction would be conducted

through the designated service provider. Therefore, no procedural irregularity or

regulatory violation has been established by the Appellant, and the findings of the

Adjudicating Authority on this issue do not warrant any interference.

41. Concluding their arguments, the respondents requested this Appellate

Tribunal to dismiss the present appeal.

Page 14 of 22

Findings

42. At the outset we note that an application under Section 7 was filed by Shree

Bharkha Synthetics Limited i.e., Respondent No. 3 herein against the Corporate

Debtor which was admitted and CIRP was initiated on 21.08.2019 and

Respondent No. 1 was appointed as Resolution Professional. We further take

into consideration the fact that Respondent No. 1 constituted the CoC consisting

of Respondents No. 2, 3 & 4 herein and further Respondent No. 1 invited EoI.

However, in absence of suitable response for resolution of the Corporate Debtor

and based on an application filed by Respondent No. 1, the Adjudicating

Authority passed order for imitation of liquidation of Corporate Debtor vide order

dated 24.01.2014 appointing Respondent No. 1 as Liquidator.

43. We also note that the claims were collated by the Resolution Professional

earlier and position of admitted claims reads as under :-

Page 15 of 22

44. We would also like to take into account the Asset Memorandum of the

Corporate Debtor prepared by liquidator in terms of Regulation 34 of Liquidation

Regulation and the assets of the Corporate Debtor are mentioned as under :-

45. It will be pertinent to note that the E-auction was conducted on 31.072020

at reserve price of 11,13,42,501/- which failed and subsequent to which the

reserve price was refused by 25% to Rs. 8,35,06,876/- which also failed and the

reserve price was further reduced by 10% to Rs. 7,51,56,188/- and M/s Bhilwara

Spinners Limited submitted its bid at reserve price and was declared successful,

subsequent to which M/s Bhilwara Spinners Limited paid complete consideration

and the sale proceedings were distributed among the creditors of the Corporate

Debtor as per Waterfall Mechanism in the following manner :-

Page 16 of 22

46. At this stage, the Appellant challenged the auction proceedings as well as

CIRP proceedings. The Appellant raised the issue regarding fraudulent action of

the Corporate Debtor and Shree Bharkha Synthetics Limited, the Respondent

No.2 who initiated Section 7 application as Director of Shree Bharkha Synthetics

Limited were interested and related party of the Corporate Debtor. The Appellant

stated that being Operational Creditor, it provided its services to the Corporate

Debtor way back and its operational debts amounting to Rs. 2,17,04,875/-

remained outstanding from the Corporate Debtor. The Appellant submitted

before us that Corporate Debtor had two available property of land parcels at the

prime locations Bhilwara. The Appellant brought various facts and events to

establish the fact that the CoC contesting Respondent No. 1, 2, 3, & 4 in

connivance kept on reducing the reserve price and sold the immovable properties

to Respondent No. 2 at throw away prices.

Page 17 of 22

47. We note that the issue is broadly regarding incorrect initiation of CIRP as

well as alleged flawed liquidation process.

48. As regard, the CIRP is concerned, in terms of the Section 7 of the Code,

the Adjudicating Authority is required to establish the debt and default and once

this is established, the Adjudicating Authority ought to have to allowed the CIRP

of the Corporate Debtor. We note that in present case, an application under

Section 7 of the Code, in CP (IB) No. 79/7/JPR/2019, was initiated by

Respondent No. 2 and the Adjudicating Authority after being fully satisfied,

passed an order initiating CIRP of the Corporate Debtor vide its order dated

21.08.2019. Thus, we do not find any logic in the Appellant's contention that

CIRP was illegal. Despite the fact that prima facie, the loans were not required

by the Corporate Debtor at that stage, since its operation was shut way back and

also keeping into consideration that no due process of CIRP governance was

followed by Corporate Debtor including non-registration of charge or passing any

resolution of the BoD while taking loans from the unsecured Financial Creditors/

the Respondent No.2, 3, &4 , however the fact remain that the transaction did

happen between the Financial Creditors and the Corporate Debtor. No one has

disputed this fact nor anyone has not been brought to our notice, that loan money

was not disbursed by the Financial Creditors to the Corporate Debtor. Having

established that the loan money has been received by the Corporate Debtor, the

Adjudicating Authority was duty bound to allow Section 7 application filed by

Page 18 of 22 the Respondent No. 2. In this background, we do not find much merit in the

contention of the Appellant that the CIRP was incorrect and illegal.

49. Now we will examine the other irregularities pointed out by the Appellant

w.r.t. the liquidation process carried out by the liquidator i.e the Respondent No.1

under supervision of CoC constituting of Respondents No. 2,3 &4.

50. We take into account the submissions of all the stakeholders as well as the

rational of the Adjudicating Authority contained in the Impugned Order. As

regard, the contention of the Appellant that the Financial Creditors (Respondents

No. 2,3 &4) were related party, we take into consideration the fact that the

Appellant could not establish the relationship between the Financial Creditor and

the Corporate Debtor in terms of the Section 5(24) of the Code. We note that the

Appellant relied upon the balance-sheet of the Corporate Debtor of the

Respondent No. 2 for the period 31.03.2019, where it has been indicated that

"advance to other includes advance to concern in which directors are interested".

We also note that the said balance-sheet does not contain names of the alleged

interested party. As such, the plea of the Appellant is not found to be valid which

has correctly been adjudicated by the Adjudicating Authority in the Impugned

Order.

51. Now, we shall examine the other allegations of the Appellant about other

alleged illegalities in the liquidation process as adjudicated in the Impugned

Order.

Page 19 of 22

52. It is noted that the relationship between Ahinsa Infrastructure and

Developers Limited and M/s Bhilwara Spinners Limited being subsidiary

company relationship exist but do not alter status of financial creditor as there is

no embargo for such related parties to lend money to any corporate entity.

53. We are also not inclined to accept logic of the Appellant that CoC did not

try for resolution of the Corporate Debtor seriously and jumped to Liquidation

process in haste. The Adjudicating Authority has correctly given its finding in

this regard after evaluating all details under Section 33(2) of the Code and also

taking into account the judgement passed by this Appellate Tribunal in the case

of Sunil S. Kakkad v/s Atrium Infocom [(2020) SCC OnLine NCLAT 1160]

where it was held that:

"Thus, it is clear that the decision of CoC to liquidate the Corporate Debtor without taking any steps for Resolution of the Corporate Debtor is covered under explanation to sub- clause (2) of Section 33 of the I&B Code and the same being decision on commercial wisdom, is non-justiciable given the law laid by Hon'ble Supreme Court of India in case of K. Sashidhar (supra). Thus, it is clear that there is no illegality in the decision of CoC in liquidating the Corporate Debtor before taking any steps for inviting Expression of Interest for submission of Resolution Plan."

(Emphasis supplied)

Thus, we reject contention of the Appellant on this issue.

Page 20 of 22

54. Further, as regard the alleged fraudulent nature of loans, the Adjudicating

Authority has correctly recorded that the transactions indeed happened between

the Financial Creditor and the Corporate Debtor albeit at much higher rate interest

of 24% per compounded monthly. We are aware that the Adjudicating Authority

held that the loan was not required by the Corporate Debtor since, its operation

was shut long ago. There was no documentation of loans, no charge was created

and no interest has been provided for in the financial statements of the Corporate

Debtor. We tend to agree with the same, however, the fact remains that the money

lent were transferred from the Financial Creditors to the books of the Corporate

Debtor. As such, the loan amount was payable by the Corporate Debtor to the

Financial Creditors. However, we do not find fault in disallowing the exorbitant

interest by the Adjudicating Authority as detailed in other connected judgement

of CA (AT) (INS) NO. 1456 of 2024 in the matter of M/s. Bhilwara Spinners

Limited & Ors. vs Prashant Agarwal Liquidator of M/s Global Syntex

(Bhilawara) Ltd.

55. The Appellant has pointed out that whole process of liquidation was done

in great haste and CoC kept on reducing the reserved price. We note that no

specific instance of any violation of the timeline has been provided to us w.r.t.

CIRP Liquidation Regulation as well as the manner and to the extend to which

reserve price could not have been reduced as alleged by the Appellant has been

brought out, as such we do not find any error in the Impugned Order on this issue.

Page 21 of 22

56. Prima-facie, the Respondent No. 1/ Liquidator had carried out Liquidation

process in accordance with laid down process under the Code and the CIRP

Liquidation Rules 2016. In view of this background, we are not convinced by the

logic of the Appellant that the liquidation process was illegal which need to be

interfered with.

57. We have gone into detail of the Impugned Order and found it logical and

rational. Based on above detailed analysis, we do not find any error in the

Impugned Order. The Appeal devoid of any merits stands rejected. No Cost.

I.A., if any, are closed.

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical) Sim

Page 22 of 22