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Judgment
Per: JUSTICE (RETD) S.RAMATHILAGAM, MEMBER (JUDICIAL)
This Application IA/120(CHE)/2021, is filed under Section 33 (2) of IBC, 2016 by the Resolution Professional of the Corporate Debtor herein Viz., C A V Cotton Mills Private Limited seeking the following reliefs:-
To pass an order to liquidate the Corporate Debtor C A V Cotton Mills Private Limited and to appoint the Resolution Professional as Liquidator.
To pass such other orders as it deems fit in the above circumstances of the case.
It was averred in the application that CIRP in respect of Corporate Debtor was initiated against on 27.09.2019 and one Mr. S. Sridhar was appointed as Interim Resolution Professional (IRP). Pursuant to the appointment the IRP made a Public Announcement on 02.10.2019, in response to that the IRP has received the claims from 2 Financial Creditors 1) State Bank of India (SBI) and 2) Bank of Baroda (BoB). Thereafter, CoC has been constituted with the said Financial Creditors with 71.28% (SBI) and 28.72% (BoB) of voting share.
It was further averred that in the meeting of 1st CoC held on 25.10.2019, the resolution was passed to appoint another Resolution Professional to act as RP. Consequently, on the application filed by the CoC, this Adjudicating Authority had appointed the Applicant herein as the Resolution Professional of the Corporate Debtor vide order dated 12.12.2019.
It was further averred that the Applicant has appointed valuers for valuation of Land & Building and Plant & Machinery and financial assets on 09.01.2020.
Meanwhile, the erstwhile director of the Corporate Debtor had filed an appeal against the CIRP order before the Hon'ble NCLAT, which is pending till date. It is noted that no stay has been granted against the CIRP order.
It was further averred that in the meeting of the 3rd CoC held on 28.02.2020, resolution was passed to file an application to seek an extension of the CIRP period. Accordingly, in the IA/383/2020 filed by CoC, this Adjudicating Authority had extended the CIRP period for 90 days vide its order dated 22.09.2020.
It was further averred that in the meeting of the 5th CoC held on 01.10.2020, one of the Financial Creditors Bank of Baroda (BoB) informed the committee that it has accepted the One Time Settlement (OTS) from the Promoter-Guarantor as the final settlement. In turn, the Promoter-Guarantor stepped into the place of BoB. The other Financial Creditor SBI proposed to issue Expression of Interest (EoI).
It is pertinent to note that as per the provisio to Section 21(2) of the IBC, 2016 the Financial Creditor BoB shall not have any right to participation or voting in the CoC and the Promotor Guarantor in place of BoB shall not form the part of CoC.
As an operation of law, the CoC will stand reconstituted with State Bank of India – Stressed Assets Recovery Branch, Coimbatore having 100% voting share become sole CoC member and intimated this Authority on 21.10.2020.
It was submitted by the Ld. Counsel for the Resolution Professional that in the meeting of the 6th CoC held on 23.10.2020 the Committee approved the EoI and the same was published in the newspapers 'The Hindu' and 'Dinamalar' dated 27.10.2020.
It was further submitted that the RP has received interest from 5 Prospective Resolution Applicants (PRA) and the request to send a Resolution plan has been sent to all the PRAs to submit the plan before 19.12.2020.
It was further submitted that the only one PRA Mr. R. Balumani submitted the Resolution Plan, in which the RP has observed some deficiencies and requested to the said PRA to clarify for which the RP has not received any response from PRA.
It was further submitted that in the 7th meeting of CoC which was held on 28.12.2020, the RP has informed the committee that there is no time to re-issue EoI and the extension period of CIRP ends shortly. Subsequently, the sole CoC member passed a resolution to approach this Adjudicating Authority in order to Liquidate the Corporate Debtor.
On a perusal of the documents placed on record and after submissions of counsel. It appears that no Resolution Plan was confirmed by the CoC and no stay against the CIRP order 27.09.2019 had been passed by this Adjudicating Authority in respect of the present Corporate Debtor.
It is seen that from the minutes of the 7th CoC held on 28.12.2020 the following resolution was passed
"It is resolved with 100% voting share to request the Hon'ble National Company Law Tribunal to liquidate the Corporate Debtor under Section 33(2) of the Insolvency and Bankruptcy Code, 2016."
"It is also resolved that the Resolution Professional Shri.N.Sivachalam, IBBI Reg. No.IBBI/IPA-001/IP-P00187/2017-18/10366 may be appointed as Liquidator."
It is further seen from the minutes of the 8th CoC that the Committee resolved to fix the fees of the Liquidator as per Regulation 4(2) of the IBBI (Liquidation Process) Regulation, 2016.
In such circumstances this Adjudicating Authority feels that it is appropriate to order liquidation of the Corporate Debtor and Mr. N. Sivachalam, Reg. No. [IBBI/IPA-001/IP-P00187/2017-18/10366], (e-mail: [email protected]) is appointed as the Liquidator of the Corporate Debtor to carry out the liquidation process subject to the following terms of the directions.
The Liquidator shall strictly act in accordance with the provisions of IBC, 2016 and the attendant Rules and Regulations including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 as amended upto date enjoined upon him.
The Liquidator shall issue the public announcement that the Corporate Debtor is in liquidation. In relation to officers/ employees and workers of the Corporate Debtor, taking into consideration Section 33(7) of IBC, 2016, this order shall be deemed to be a notice of discharge.
The Liquidator shall investigate the financial affairs of the Corporate Debtor particularly, in relation to preferential transactions/ undervalued transactions and such other like transactions including fraudulent preferences and file suitable application before this Adjudicating Authority.
The Registry is directed to communicate this order to the Registrar of Companies, Chennai and to the Insolvency and Bankruptcy Board of India;
In terms of section 178 of the Income Tax Act, 1961, the Liquidator shall give necessary intimation to the Income Tax Department. In relation to other fiscal and regulatory authorities which govern the Corporate Debtor, the Liquidator shall also duly intimate about the order of liquidation.
The order of Moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cease to have its effect and that a fresh Moratorium under section 33(5) of the Insolvency and Bankruptcy Code shall commence.
The Liquidator is directed to proceed with the process of liquidation in a manner laid down in Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016.
The Liquidator is directed to investigate the financial affairs of the Corporate Debtor in terms of the provisions of Section – 35(1) of IBC, 2016 read with relevant rules and regulations and also file its response for disposal of any pending Company Applications during the process of liquidation.
The Liquidator shall submit a Preliminary report before this Adjudicating Authority within 75 (seventy-five) days from the liquidation commencement date as per regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016. Further such other or further report as are required to be filed under the relevant Regulations, in addition, shall also be duly filed by him with this Adjudicating Authority.
Copy of this order to be sent to the Financial Creditors, Corporate Debtor and the Liquidator for taking necessary steps and for extending the necessary co-operation in relation to the Liquidation process of the Corporate Debtor, viz., company-in-liquidation.
Accordingly, IA/120(CHE)/2021 stands Allowed with the aforesaid directions.