# In the matter of Majestic Auto Limited vs. Sharan Hospitality Private Limited

> NCLAT judgment dated 2024-07-02. Citation: TCN-2024-NCLAT-00366. The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code 2016 by Majestic…

- **Court:** NCLAT
- **Order date:** 2 Jul 2024
- **Citation:** TCN-2024-NCLAT-00366
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/majestic-auto-limited-vs-sharan-hospitality-private-limited-18def739

## Summary

### Background

The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code 2016 by Majestic Auto Limited, the Successful Resolution Applicant (SRA), against an order dated 2023-11-22 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-I). The Adjudicating Authority had disposed of two I.A.s: one filed by the SRA seeking exclusion of time for implementation of the resolution plan due to ongoing litigation, and another filed by Axis Bank, a financial creditor, seeking liquidation of the Corporate Debtor, Sharan Hospitality Private Limited. The Adjudicating Authority declared the resolution plan's implementation failed and ordered liquidation of the Corporate Debtor.

## Facts

Sharan Hospitality Private Limited was admitted into insolvency on 2019-05-08. Majestic Auto Limited emerged as the Successful Resolution Applicant (SRA) during the Corporate Insolvency Resolution Process (CIRP). The Resolution Plan of the SRA was approved by the Committee of Creditors (CoC) on 2020-01-30 and by the Adjudicating Authority on 2021-04-15. Prior to the CIRP, Daiichi Sankyo Co. Ltd. had approached the Delhi High Court in connection with a decree against the promoters of Sharan Hospitality. The Delhi High Court passed orders restraining the Corporate Debtor from transferring or creating third-party interests in its immovable properties. The SRA filed I.A. No. 266 of 2023 seeking exclusion of time for implementation of the resolution plan due to the stay

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was justified in ordering liquidation of the Corporate Debtor …

**Ratio:** Liquidation should be the last resort in the scheme of the IBC, and resolution should be

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**Reasoning:** The NCLAT reasoned that the interim orders of the Supreme Court created an embargo on the

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**Interpretation:** Section 33 of the IBC outlines the grounds for liquidation. Liquidation can be

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**Application:** The NCLAT found that the Adjudicating Authority erred in ordering liquidation

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## Parties

- **Judges:** Ashok Bh…; Barun M…
- **Appellants:** Majestic Auto…
- **Respondents:** Sharan Hospitality…

## Timeline

- **2019-05-08 — Insolvency Ad…**: Sharan Hospitality Private Limited…
- **2020-01-30 — CoC Appr…**: The Resolution Plan of Majestic Auto Limited was approved by the Committee of Creditors…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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