# In the matter of M. P. Agarwal Vs. Shri Lakshmi Cotsyn Ltd. & Anr. CA(AT)(Ins) No. 620 of 2020

> NCLAT judgment dated 2020-07-27. Citation: TCN-2020-NCLAT-00189. The case involves an appeal against an order by the Adjudicating Authority (National Company…

- **Court:** NCLAT
- **Order date:** 27 Jul 2020
- **Citation:** TCN-2020-NCLAT-00189
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/m-p-agarwal-vs-shri-lakshmi-cotsyn-ltd-anr-ca-6b757e52

## Summary

### Background

The case involves an appeal against an order by the Adjudicating Authority (National Company Law Tribunal), Allahabad Bench, which allowed an application filed by the Resolution Professional under Section 33(1)(a) r/w Section 33(2) of the Insolvency and Bankruptcy Code, 2016, for the liquidation of 'Shri Lakshmi Cotsyn Ltd.' The appellant, M. P. Agarwal, challenged the order, arguing that the Committee of Creditors (CoC) failed to consider the Settlement Offer/Proposal and that the liquidation recommendation was based on stale valuations. The appellant contended that the I&B Code should prioritize reorganization and resolution.

## Facts

The Adjudicating Authority ordered the liquidation of Shri Lakshmi Cotsyn Ltd. based on an application by the Resolution Professional. M. P. Agarwal, the Promoter and Member of the suspended Board of Directors, appealed this decision. Agarwal argued that the Committee of Creditors (CoC) did not adequately consider his settlement offer of Rs.650 Crores, which exceeded the liquidation value of Rs.500 Crores. The CoC rejected the offer because it was below their benchmark of Rs.1000 Crore. The CoC's decision was influenced by the fact that investors supporting the ex-management were frequently changing, and the required upfront amount was not deposited. The Corporate Insolvency Resolution Process (CIRP) period had expired, and the CoC believed the suspended management was

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## Issues and analysis

### Issue 1: Whether the Committee of Creditors (CoC) erred in rejecting the Appellant's settlement proposal and …

**Ratio:** The Committee of Creditors has the right to make commercial decisions regarding the

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**Reasoning:** The court reasoned that the CoC's decision was a business decision based on commercial

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**Interpretation:** The interpretation is that the I&B Code grants the CoC significant autonomy

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**Application:** The court applied this ratio to the facts by acknowledging that the CoC had

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## Parties

- **Judges:** Bansi Lal…; V. P. S…; +1 more
- **Appellants:** M. P. Ag…
- **Respondents:** Lakshmi Cotsyn…

## Timeline

- **2020-07-01 — Impugned…**: The Adjudicating Authority (National Company Law Tribunal), Allahabad Bench, allowed the…
- **2019-02-18 — CoC Meet…**: The Committee of Creditors in its 9th Meeting resolved to go for Liquidation of the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 33(1) — Initiation of liquidation](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-33)

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