Summary
The Supreme Court dismissed a defaulting resolution applicant’s appeal against liquidation after it failed, despite repeated opportunities, to deposit the promised additional Rs 50 crores. The applicant could not require the company’s status to be changed from liquidation to active so that it could mortgage corporate assets to raise the money. The earlier stay had not set aside liquidation. The stipulated forfeiture of Rs 20 crores followed, and management reverted to the liquidator.
Issues
- Whether a resolution applicant that repeatedly failed to meet its funding commitments should receive further relief against liquidation.
Held
- Although genuine insolvency resolution is preferred and liquidation is a last resort, compliance with the resolution plan and the Court’s time-bound commitments remained essential. Indefinite delay would defeat the statutory scheme. (¶¶ 3, 10-11)
- The liquidation order had only been stayed. The applicant’s inability to raise money unless the company first became active and its assets could be mortgaged did not justify the requested relief after repeated defaults and extensions. (¶¶ 5-6, 10-11)
- Failure to make the additional deposit attracted the expressly stipulated forfeiture of the Rs 20 crores already deposited. Management was to revert to the liquidator to proceed according to law. (¶ 10-11)
Result
Civil appeal dismissed; Rs 20 crores forfeited in accordance with the earlier order, and management to revert to the liquidator. Pending applications disposed of.