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Judgment
[Per: Ms. Manorama Kumari, Member (J)]
The Applicant, the Resolution Professional (hereinafter referred as "RP") of the Corporate Debtor filed the instant MA No. 17 of 2018 in the aforesaid Company Petition (IB) No. 135 of 2017 for liquidation of the Corporate Debtor under section 33(1) (a) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as "IB Code") and for the appointment of the Liquidator.
The facts of the case are stated herein:
CP(IB)No. 135/2017 filed by Financial Creditor, Bank of Baroda against the Corporate Debtor Vimal Oil & Foods Ltd under Section 7 of the IB Code seeking initiation of Corporate Insolvency Resolution Process (hereinafter referred as "CIRP") was admitted by this Adjudicating Authority vide its Order dated 19.12.2017 and appointed Mr. Abhay N Manudhane as Interim Resolution Professional (hereinafter referred as "IRP") of the Corporate Debtor.
It is stated in the application that Committee of Creditors (hereinafter referred as "CoC") in its First Meeting held on 22.01.2018 decided for continuation of the IRP as RP.
It is stated by the applicant that RP has received six EoIs after the public advertisement, out of which only four Resolution Plans were found eligible. It is further stated that Resolution Plan submitted by M/s. Parixit Irrigation Ltd., one out of the four Resolution Applicant, was found higher in offer value by the RP. The CoC informed the representatives of M/s. Parixit Irrigation Ltd. that their plan will approved if they increase the offer by 15%. The representatives of M/s. Parixit Irrigation Ltd. agreed for the same and revised the plan. Similar process of suggestions of CoC and revision of Resolution Plan took place in subsequent CoC meetings. Further, RP also got the extension of 90 days' time beyond 180 days vide order dated 19.06.2018 as the said period was expired on 16.06.2018.
Even after such extension of time, the revised Resolution Plan of M/s Parixit Irrigation Ltd. was rejected by CoC with 70.69% voting result. Since no Resolution Plan was approved, RP moved this application before the Adjudicating Authority for passing order under section 33(1) (a) of the IB Code for liquidation of the Corporate Debtor.
During the pendency of the application under Section 33 of IB Code, one IA 453 of 2018 was filed by one of the Resolution Applicant viz., M/s Parixit Irrigation Ltd., whose plan was rejected, with the prayer to quash and set aside the decision of CoC of rejecting the Resolution Plan submitted by the Applicant/Resolution Applicant and further direct the CoC to reconsider the Resolution Plan submitted by the Applicant/Resolution Applicant.
On perusal of the records, it is found that CoC took the Resolution Plan for fresh consideration however the same was rejected by 70.69% voting. Under such circumstances, this Adjudicating Authority is of the view that the Adjudicating Authority has no jurisdiction to interfere in the commercial wisdom of the CoC as observed in K. Sasidhar's case and subsequently also reiterated by the Hon'ble Supreme Court of India in its judgement passed in Civil Appeal No.8766-67 of 2019- Committee of Creditors of Essar Steel India Limited through Authorised Signatory vs. Satish Kumar Gupta &Ors observed as follows:
The commercial wisdom of the Committee of Creditors cannot be interfered into by the Adjudicating Authority. The Hon'ble Supreme Court affirmed K. Sashidhar's judgement that neither the Adjudicating Authority nor the Appellate Authority has been endowed with the jurisdiction to reverse the commercial wisdom of the CoC.
The Hon'ble Supreme Court took the view that the commercial wisdom has been exercised by the CoC after taking into count all the factors leading to maximisation of asset value of the Corporate Debtor, but the ultimate discretion of what to pay and how to pay each class or sub-class of creditors lies with the CoC.
Under the facts and circumstances as narrated above, we pass the following orders:
The moratorium declared under Section 14 of the IB Code shall cease to have effect from the date of the order of liquidation.
The Liquidator is further directed to issue public announcement stating that the Corporate Debtor is in liquidation.
The Liquidator is required to send certified copy of this order to the authority with which the Corporate Debtor is registered.
Subject to Section 52 of the IB Code, no suit or other legal proceedings shall be instituted by/or against the Corporate Debtor. However, a suit and other legal proceedings may be instituted by the Liquidator, on behalf of the Corporate Debtor, with the prior approval of this Authority.
This Authority makes it clear that para (d) hereinabove shall not apply to legal proceedings in relation to such transactions as notified by the Central Government in consultation with any financial sector regulator.
The Order shall be deemed to be a notice of discharge to the officers, employees and workmen of the Corporate Debtor, except when the business of the Corporate Debtor is continued during the liquidation process by the Liquidator.
All the powers of the Board of Directors, Key Managerial Personnel and the Partners of the Corporate Debtor, as the case may be, shall cease to have effect and shall be vested with the Company Liquidator. In addition to this, the Company Liquidator shall exercise the powers and duties as enumerated in Sections 35 to 50, 52 to 54 of the IB Code, 2016, read with Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
The personnel of the Corporate Debtor shall extend all assistance and cooperation to the Liquidator as may be required by him in managing the affairs of the Corporate Debtor.
The Company Liquidator shall be entitled to charge such fee for the conduct of the liquidation proceedings in such a proportion to the value of the liquidation estate assets as may be specified by the Board.
The Registry is directed to communicate this order with immediate effect to the concerned Registrar of Companies, registered office of the Corporate Debtor and Company Liquidator for information and compliance
Hence, the IA 453 of 2018 filed by the Applicant/ Resolution Applicant for direction upon CoC is dismissed and MA 17 of 2018 is allowed with above observations. The Adjudicating Authority passes an order for initiation liquidation of the Corporate Debtor viz., M/s Vimal Oil & Foods Limited under Section 33 of the IB Code, 2016. Mr. Manoj Khattar (Reg. No. IBBI/IPA-002/IP-N00748/2018-2019/12264) shall act as the Liquidator for the purpose of liquidation of the Corporate Debtor.
Accordingly, the instant IAs stands disposed of with the above observations.