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Judgment
This Application has been filed under Section 54 of the Insolvency and Bankruptcy Code, 2016 by the Liquidator of the Corporate Applicant herein seeking for Dissolution of the Corporate Applicant viz., Victory Electricals Limited.
It is stated that the Petition for initiation of Corporate Insolvency Resolution Process (CIRP) was filed by an Operational Creditor viz Crotica Manufacturing Company (India) Pvt Ltd under Section 9 of the IBC, 2016. It was admitted by this Adjudicating Authority vide an Order dated 10th April, 2019 in CP/872/IB/2018 Dr.S.Sivaramakrishnan was appointed as the Interim Resolution Professional.
It is stated that in the first CoC meeting held on 10.05.2019, the CoC recommended appointing Sri Chinnam Poorna Chandra Rao, as the Resolution Professional and the same was allowed by the Adjudicating Authority, vide Order dated 29/05/2019 in IA/510/2019 in CP/872/IB/2018 read with corrigendum dated 07/06/2019. Subsequent to that, Sri Chinnam started performing the duties as Resolution Professional (RP).
It is stated that on 23.09.2019, in its 5th CoC meeting, it was unanimously resolved to liquidate the Corporate Debtor after ascertaining that no Resolution Plan that was acceptable to the CoC was received during the CIRP. Accordingly, CoC directed the RP to file an Application for the Liquidation of the CD. It is stated that the liquidation was ordered on 19/11/2019 in MA/1144/2019 in CP/872/IB/2018. Sri Chinnam Poorna Chandra Rao was appointed as the Liquidator for carrying out the liquidation process of the CD.
It is stated that on 28/11/2019, the Liquidator issued a Public Announcement in Form B inviting claims from all the Stakeholders on or before 28.12.2019. Subsequently, the Liquidator sent intimations to the Statutory authorities with available data.
It is stated that in response to this Public Announcement inviting the claims, the Liquidator received claims, which were verified from the records submitted by the Claimants. It is stated that the Applicant received claims from 17 claimants in Form B, Form G and in Form C, for a total amount of Rs. 831,25,66,188/-. The claims to the extent of Rs. 830,81,85,188/- were admitted. The Stakeholders Consultation Committee was constituted on 22.01.2020. Subsequently, the SCC was re-constituted on 15.10.2022 as per Regulation 31A of IBBI (Liquidation Process) Regulations, 2016. It is stated that the Secured Creditors amongst the Stakeholders relinquished their Security Interest to the Liquidation Estate.
The Liquidator conducted the following SCC meetings as tabulated below:
| CoC Meet No | Date of the Meeting | Important business discussed/ transacted |
|---|---|---|
| 1 | 29.01.2020 | Constitution of SCC; discussing the aspects of the liquidation process; taking control of |
| assets; strategy to sell the assets; appointment of the professionals to assist the liquidation process; etc | ||
| 2 | 03.10.2020 | Discussing status of assets sold; Fire Accident at Medchal property; belated claims; the effect of COVID on the litigations, disposal of assets to be sold and recovery of amounts on the assets sold; and other routine matters like accounts, assets sold, distributions made, expenses incurred, discussing status of other litigations |
| 3 | 29.04.2021 | Litigations instituted by ESIC and EPFO and other routine matters like accounts, assets sold, distributions made, expenses incurred, discussing status of other litigations |
| 4 | 23.08.2021 | Appointment of professionals to assist the Liquidator in increasing complexity of litigations and other routine matters like accounts, distributions made, expenses incurred, discussing litigations. |
| 5 | 11.05.2022 | Discussing on the litigation for Medchal land and ways to end it and other routine matters |
| 6 | 16.11.2022 | Take note of the reconstituted SCC; Discussing on the litigation for rented out Medchal Industrial Shed and considering and approving the terms of auction for selling the Industrial Shed as scrap |
| 7 | 04.09.2023 | Discussing on the litigation for Medchal land and ways to end it; and considering and approving the terms of auction for selling the land |
| 8 | 17.02.2024 | Placing details of sale of Medchal Land; approval of payments to all the professionals and discussing about the dissolution of the CD |
| 9 | 14.05.2024 | Approval to dissolve the CD and considering the Final Distribution figures and the Dissolution Papers like Final Report and Form |
This stated that the COVID and Litigations prevented the disposal of the certain assets of Corporate Debtor. The Liquidator applied for exclusions and extensions to conclude the liquidation process as given below:
| Exemption given upto | By Order |
|---|---|
| Exclusion of COVID period from 25.03.2020 to 14.07.2021 effectively ordering that the Liquidation should be completed before 01.03.22, | in IA/ 689 (CHE)/2021 dated 04.10.2021 |
| 01.03.2023 | in IA/ 230 (CHE)/2022 dated 28.04.2022 |
| 01.03.2024 | in IA/255 (CHE)/2023 dated 20.02.2023 |
| 01.07.2024 | in IA/516 (CHE)/2024 dated 29.02.2024 |
It is stated that the Liquidator prepared the Preliminary Report under regulation 13 of IBBI (Liquidation Process) Regulations, 2016 and the same was submitted to Tribunal on 22/01/2020 in compliance with the Reg.5(1)(a) of the IBBI (Liquidation Process) Regulations, 2016. A copy of the Preliminary Report is annexed at Page No.71-74.
It is stated that the Liquidator prepared the Asset Memorandum u/r 34 of the IBBI (Liquidation Process) Regulations, 2016 and submitted to the Tribunal on 22/01/2020 in compliance with r. 5(1)(b) of the IBBI (Liquidation Process) Regulations, 2016. It is further stated that the Liquidator took control of the Assets as listed in the Asset Memorandum. A copy of the Asset memorandum is annexed at Page No.661-662.
It is stated that in compliance with Reg.41(1) of the IBBI (Liquidation Process) Regulations, 2016, the Liquidator opened a separate Liquidation Bank Account bearing No. 6869882322 with Indian Bank, Gachibowli Branch, Hyderabad on 16/03/2020. It is stated that the Bank Account was closed and the certificate was issued on 24.06.2024.
It is stated that the Liquidator filed the Final Report with the IBBI and also with the Registrar of Companies, Chennai on 28.06.2024.
The details of the compliances as mandated under Section 54 of the IBC, 2016 read with the IBBI (Liquidation Process) Regulations, 2016 are listed hereunder: -
| S. No | COMPLIANCE | AVERMENTS | PAGE NO. IN THE APPLICATION |
|---|---|---|---|
| 1 | Regulation 12 | Public Announcement in Form B in Telegu newspapers – Eeanadu, Sakshi, Andhra Jyothi, Namasthe Telangana, Nava Telangana and English newspapers – Financial Express, Business Standard, Business Line, Economic Times and Tamil and English (News Today and Malaisudhar) | 70 |
| 2 | Regulation 35(2) | Appointment of Registered Valuers where no valuation conducted during CIRP | N/A |
| 3 | Regulation 31(2) | List of Stakeholders within 45 days of the Liquidation Commencement Date | 687-698 |
| 4 | Regulation 31A | Constitution of Stakeholders Consultation Committee (SCC) and the Re-constituted Stakeholders Consultation Committee after adjusting for distribution made under Section 53 to Secured Financial Creditors and EPFO | 687-692 |
| 5 | Regulation 13 | Preliminary Report dated 22.01.2020 | 71-74 |
| 6 | Regulation 34 | Preparation of Asset Memorandum within Seventy-Five days from LCD dated 22.01.2020 | 75-76 and at 661-662 |
| 7 | Regulation 41 | Opening of Bank Account in the name of the company in Liquidation in “Indian Bank” | 667-685 |
| 8 | Proof of Closure of the above Bank Account and other account in the name of the Company | 686 | |
| 9 | Regulation 15 | Quarterly Progress Reports and proof of filing the same before this Tribunal | 77-660 |
| 10 | Regulation 36 | Asset Sale Reports after sale of Reports | N/A |
| 11 | Regulation 42(2) | Proof of Distribution within Ninety days from the receipt of realization | N/A |
| 12 | Regulation 45 (3) | Final report dated 07.10.2023 | 10-41 |
| 13 | Regulation 5 (1) (e) | Reporting consultations with stakeholders in Form A of Schedule II | 709 - 764 |
| 14 | Regulation 15 | Audited Accounts of receipts and Payments | 693 - 696 |
| 15 | Regulation 37 | Completion of Liquidation Process within one year from Liquidation Commencement Date or extension if any, date of the order & period | 6 |
| 16 | Form-H -Compliance Certificate | 697 - 707 |
It is stated that one of the SCC members, Mahindra Kumar Vaddineni filed a memo. It is alleged that the Liquidator abandoned the actionable claims of the Corporate Debtor and cannot be shielded by filing of Form -H for the dissolution of the company. It is stated that this Tribunal has the power to dismiss the application when there is clear violation of provisions of the code. The SCC member has further alleged that the Liquidator clearly wants to wash off his hands by abandoning the actionable claims of the Company. His actions are supported by the members of the CoC/SCC led by SBI which did not prefer to contribute funds for the recovery of the actionable claims of the Company.
We have heard Ld. Counsel for the Applicant and perused the report, synopsis and the affidavit filed by the Liquidator.
The contentions raised by the SCC member in the memo were already adjudicated in I.A. No.2328/2024, 2330/2024, 2329/2024 of filed under Section 65 of IBC, 2016, and the matter was decided on merits. Therefore, the SCC member cannot restate the same issue when it has already been decided.
In the present case, following cases are pending
| Sr No. | Parties & Forum | Brief description of the matter | Remarks |
|---|---|---|---|
| 1 | V Venkatappaiah Naidu vs Union of India & Ors at Telangana High Court | WP No. 11158 of 2021: WP seeking to declare the Forensic Audit Report as ultra vires | This is a Petition filed by a suspended Director against Uol and SBI and the Liquidator has been made a Party. Liquidator filed his reply. The case is going for a very long time. |
| 2 | Vaddineni Mahindra vs Union of India & Ors at Telangana High Court | WP No. 36683 of 2024 and 36682 of 2024: WPs challenging the classification of VEL loan facilities as 'Fraud' by SBI. | This Petition is against Uol and SBI and Liquidator is also made a party. The Liquidator has no role in declaring the Loan as Fraud. |
| 3 | TSSPDCL vs Liquidator at NCLAT, Chennai | COMP APP(AT)(CH)(INS) No. 70 of 2024: Against the impugned order of NCLT, dismissing the IA against the Liquidator who rejected the belated claim of the Applicant, the Applicant filed an appeal. The Liquidator filed a reply and the matter is pending. | The claim is rejected by Liquidator as it is submitted with a 1307 days' delay, which was upheld by NCLT. Appeal is preferred with NCLAT which is pending and adjournments are taking place. Recently TSSPDCL person told that, if the rejection is upheld by NCLAT, they will go to SC, else the CAO will find fault with TSSPDCL. Even if the claim is admitted, they would not receive any amount because the secured creditors are not fully paid. |
| 4 | VEL vs National Insurance Company at NCDRC, Delhi | C.C 1096/2015, Denial of Insurance claim against Burglary at Chennai factory amounting to Rs.3,18,15,100/- The Appeal is dismissed by NCDRC on 30/04/2025 | This amounts realizable in SBI are assigned to FCs, i.e. SBI, BoB and EARC. SC appeals filed on 14.07.2025 with diary no.37857/2025 against NCDRC dismissal by Liquidator as advised by SBI in view of dissolution application still pending. |
| 5 | VEL vs National Insurance Company NCDRC, Delhi | C.C 1097/2015, Denial of Insurance claim against Burglary at Chennai factory amounting to Rs.13,90,80,355/- The appeal is dismissed by NCDRC on 30/04/2025 | This amounts realizable in this are assigned to FCs, i.e. SBI, BoB and EARC. SC appeals filed on 14.07.2025 with diary no.37838/2025 against NCDRC dismissal by Liquidator as advised by SBI in view of dissolution application still pending. |
| 6 | VEL vs New India Assurance Company at NCDRC, Delhi | C.C 357/2015, Denial of Insurance claim against Burglary at Chennai factory amounting to Rs.3,27,68,725/- The appeal is dismissed by NCDRC on 30/04/2025 | This amounts realizable in this are assigned to FCs, i.e. SBI, BoB and EARC. SC appeals filed on 14.07.2025 with diary no 37859/2025 against NCDRC dismissal by Liquidator as advised by SBI in view of dissolution application still pending. |
| 7 | VEL vs New India Assurance Company at NCDRC, Delhi | C.C 358/2015, Denial of Insurance claim against Burglary at Chennai factory amounting to Rs.2,20,37,982/- The appeal is dismissed by NCDRC on 30/04/2025 | This amounts realizable in this are assigned to FCs, i.e. SBI, BoB and EARC. SC appeals filed on 14.07.2025 with diary no 37657/2025 against NCDRC dismissal by Liquidator as advised by SBI in view of dissolution application still pending. |
In the order dated 21.07.2021, it was recorded as follow:
“Shri. Pranav Charan appearing for State Bank of India submits that the writ petitions pending before Hon’ble Telangana High Court will be pursued by State Bank of India. Further, there is no stay from the Hon’ble High Court qua the liquidation proceedings. The Liquidator submits that in respect of the matters pending before Hon’ble NCDRC, the matter was placed before the SCC in the meeting held on 28.06.2024, where a decision was taken to assign the matters to the Financial Creditors and they will be the beneficiary of the transactions and that they will pursue all the four matters. In respect of appeal filed by TSSPDCL before Hon’ble NCLAT there is no stay of the proceedings. It is stated that the appeal has been filed by one of the Operational Creditors against the rejection of the claim by this Tribunal. The Liquidator submits that the amount realized from the liquidation is less than 10% of the claims filed by the Secured Creditors. Even if the appeal is allowed, as per Section 53, no amount will go to TSSPDCL, the Operational Creditor. It is stated that in the application for dissolution, the liquidator has referred only six matters. He states that another case was filed after this application.”
The Liquidator has filed a Memo in compliance with the order dated 21.07.2025. It is stated that a Writ Petition, W.P. No. 36882 of 2024, has been filed before the Hon'ble High Court of Telangana by Sri Vaddineni Mahindra and others, the erstwhile promoters. The Writ assails the classification of the Corporate Debtor's loan account as "Fraud" by the Fraud Identification Committee of the State Bank of India, Stressed Asset Resolution Group. The Applicant has been arrayed as Respondent No. 5 in the Writ Petition.
The Liquidator states that the Applicant's presence in the Writ Petition is formal, as the challenge is essentially directed against Union of India, Reserve Bank of India, State Bank of India, and Central Bureau of Investigation. The reliefs sought pertain only to declaring the "Fraud" classification as illegal, arbitrary, and void. The Liquidator has no role in the classification of the loan account as "Fraud," and no relief has been sought against the Liquidator in the Writ Petition.
It is stated that no applications are pending before this Tribunal for avoidance, Preferential, Undervalued or Fraudulent Transactions.
The Liquidator has filed the receipts and Payments account, which is reproduced as under:
| Receipts | Amount Rupees | Payments | Amount Rupees |
|---|---|---|---|
| Opening Bank Balances | 24,62,522 | Amount paid to EPFO | 32,83,161 |
| Sale of Property | 44,64,00,000 | Amount Distributed to FCs | 43,43,01,160 |
| Rents Received | 37,25,371 | CIRP Funding Repaid | 14,80,279 |
| Interest Earned | 5,12,432 | CIRP Exp paid in Liq period | 1,80,642 |
| Liquidator Fee | 89,70,400 | ||
| Liq Exp - Advt Exp | 1,01,876 | ||
| Liq Exp - Auction Exp | 14,750 | ||
| Liq Exp - Audit fee | 1,50,750 | ||
| Liq Exp - Bank Charges | 2,496 | ||
| Liq Exp - Book Keeping exp | 6,85,000 | ||
| Liq Exp - Compliance Exp | 44,810 | ||
| Liq Exp - E Voting Expenses | 9,440 | ||
| Liq Exp - GST Paid (net of ITC) | 5,83,958 | ||
| Liq Exp - Insurance Expenses | 94,812 | ||
| Liq Exp - Legal Expenses | 17,57,750 | ||
| Liq Exp - Miscellaneous Exp | 2,872 | ||
| Liq Exp - Out-of-Pocket Exp | 5,60,000 | ||
| Liq Exp - Security Expenses | 18,86,747 | ||
| Liq Exp - Support Services | 5,34,000 | ||
| Liq Exp - Survey Expenses | 25,750 | ||
| Liq Exp - Travel Expenses | 21,665 | ||
| Liq Exp - Valuation Expenses | 1,19,900 | ||
| Income-tax (TDS) | 5,46,707 | ||
| Closing Bank Balances | NIL | ||
| 45,30,40,725 | 45,30,40,725 |
The liquidator has filed the synopsis showing the realization and the distribution as under:
Realization:
| VEL 1A | VEL 1B | VEL 1C | VEL 2 | VEL 3 | VEL 4 | ||
|---|---|---|---|---|---|---|---|
| Registers d Valuer 1 Aug/ Sep 2019 | Fair Value | 3238.72 | 57.10 | 136.00 | 400 | ||
| Liquidation Value | 2429.04 | 40.00 | 38.40 | 300 | |||
| Registers d Valuer 2 Aug/Sep 2019 | Fair Value | 3352.79 | 51.60 | 34.00 | 447.86 | ||
| Liquidation Value | 2350.00 | 38.70 | 27.50 | 335.75 | |||
| Registers d Valuer 3 December 2021 | Fair Value | 306.00 | |||||
| Liquidation Value | 408.00 | ||||||
| Registers d Valuer 4 December 2021 | Fair Value | 455.34 | 2,211.00 | ||||
| Liquidation Value | 312.00 | 1,547.70 | |||||
| Registers d Valuer 5 August 2023 | Fair Value | 2,899.00 | |||||
| Liquidation Value | 2,174.00 | ||||||
| Registers d Valuer 6 August 2023 | Fair Value | 3,089.99 | |||||
| Liquidation Value | 2,300.00 | ||||||
| Manner of Sale | Type | On a standalone basis | In parcels | On a standalone basis | |||
| Reason | Maximization of value | ||||||
| Mode of Sale | Type | E - Auction | Recovery | E - Auction | |||
| Reason | Transparency | Practicality | Transparency | ||||
| Sale Value Realised | 510.00 | 3,099.99 | 165.00 | 71.00 | 620.00 | ||
| Date of Sale | 26-03-21 | 23-11-23 | 21-12-22 | 26-03-20 | 14-09-20 | ||
| Date of Dist'ion | 23-04-21, 20-09-23 | 30-12-23 | 05-10-23 | 30-07-20 | 14-09-20, 03-11-20, 20-09-23 | ||
| Sale Property | Sale amount realized (Rs.) |
|---|---|
| VEL 1A | 510.00 |
| VEL 1B | 3,099.99 |
| VEL 1C | 165.00 |
| VEL2 | - |
| VEL 3 | 71.00 |
| VEL 4 | 620.00 |
| Total | 4,465.99 |
Distribution:
| SrNo | Name of the Claimant | Priority u/s 53 | Amount Admitted | Amount Distributed |
|---|---|---|---|---|
| Rs in Lacs | Rs in Lacs | |||
| 1 | State Bank of India | s. 53(1)(b)(ii) See Note (a) | 348,68.13 | 37,53.47 |
| 2 | Bank of Baroda | s. 53(1)(b)(ii) See Note (a) | 211,45.45 | 5,89.55 |
| 3 | Edelweiss Asset Reconstruction Co Ltd | s. 53(1)(b)(ii) See Note a | 242,64.53 | 0 |
| 4 | Employees Provident Fund Organization (EPFO), Hyderabad | See Note (b) | 21.04 | 21.04 |
| 5 | Employees Provident Fund Organization (EPFO), Chennai | See Note (b) | 11.79 | 11.79 |
| 6 | Employees Provident Fund of Hyderabad (Damages) | s. 53(1)(e)(i) | 9.77 | 0 |
| 7 | Employees Provident Fund, Chennai North (Damages) | s. 53(1)(e)(i) | 0.08 | 0 |
| 8 | Deputy Commissioner of Income Tax, Circle-17(2), Hyderabad | s. 53(1)(e)(i) | 2,77.84 | 0 |
| 9 | Central Tax, Central Excise and Service Tax, Office of the Deputy Commissioner, Medchal Division, Secunderabad | s. 53(1)(e)(i) | 15.82 | 0 |
| 10 | Commercial Taxes, Olo Joint Commissioner, Directorate Of Commercial Taxes, Dharmatola Circle, Kolkata | s. 53(1)(e)(i) | 830.17 | 0 |
| 11 | Sales Tax, Malkajgiri Circle-2, Hyderabad | s. 53(1)(e)(i) | 9,89.05 | 0 |
| 12 | Cortica Manufacturing India Private Limited, Chennai | s. 53(1)(f) | 26.09 | 0 |
| 13 | Test Steel Industries, Chennai | s. 53(1)(f) | 20.40 | 0 |
| 14 | Raj Petro Specialties' Private Limited, Chennai - 600010. | s. 53(1)(f) | 168.14 | 0 |
| 15 | Premier Transport Limited, Mumbai | s. 53(1)(f) | 103.39 | 0 |
| 16 | Karnataka Power Transmission Corporation Limited, Bengaluru | s. 53(1)(f) | 330.14 | 0 |
| 17 | Sri Mahindra Vaddineni | s. 53(1)(h) | 0.00 | 0 |
| Total | 830,81.83 | 43,75.85 | ||
From the averments made in the Application and on perusal of the final report and the Compliance Certificate filed in Form-H by the Applicant, it is seen that the Corporate Debtor has been completely liquidated. In the circumstances as averred and as prayed for by the Applicant, an order for dissolution is required to be passed by this Tribunal under Section 54 of the IBC, 2016. Accordingly, we order for the dissolution of the Corporate Debtor viz., Victory Electricals Limited.
The Liquidator is directed to forward the copy of this Order to the RoC and also to the IBBI for their records within a period of 7 days from the date of this Order.
The Liquidator, Mr. Chinnam Poorna Chandra Rao, is discharged as the Liquidator of the Corporate Debtor. The RoC is directed to change the status of the Corporate Debtor as “Dissolved”.
The liquidator shall preserve physical or electronic copy of the reports, registers, and the books of account referred to in Regulation 45A of the IBBI (Liquidation Process) Regulations, 2016 for at least eight years after the dissolution of the Corporate debtor, either with himself or with an information utility.
In terms of the above, this IA(IBC)(Dis.)/21/CHE/2024 stands allowed and CP(IB)/872/CHE/2018 stands disposed of. File be consigned to records.