Andhra Pradesh State Financial Corporation vs Shree Rangham Ispat (P) Ltd

PER: BENCH

This is an application filed by the Resolution Professional (hereinafter referred to as “RP”) under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) praying this Adjudicating Authority to order liquidation of M/s. Shree Rangham Ispat Private Limited (hereinafter referred to as “Corporate Debtor”).

The gist of the Application in brief:

a. It is stated that this Adjudicating Authority vide order dated 14.10.2022 allowed the application filed by the Financial Creditor under section 7 of the I&B Code, 2016 and admitted the Corporate Debtor into Corporate Insolvency Resolution Process and appointed Mr. Murali Krishna Prasad as Interim Resolution Professional (IRP).

b. On 15.10.2022 Public Announcement in Form A was issued by the Interim Resolution Professional inviting claims from the creditors. Resolution professional received claims from two financial creditors subsequent to the constitution of COC with APSFC secured financial creditor (1^st Charge holder) and UBI (second charge holder) the sole Financial Creditor, with a 100% voting share on 01.06.2022.

c. It is averred that in the 1^st CoC meeting the CoC had resolved to appoint Mr. Murali Krishna Prasad, as Resolution Professional in terms of Section 22(2) of IBC 2016.

d. It is averred that the Resolution Professional issued Expression of Interest Form G inviting expression of interest (EOI) from Prospective Resolution Applicants (PRAs), which was published on 05.12.2022 and received the Resolution Plans in sealed covers from six Resolution Applicants.

e. It is averred that the CIRP was ordered by this Tribunal on 26.09.2022 and 180 days duration was to expire on 25.03.2023 and the resolution plan is in the initial stages of negotiation, as recommended by COC the undersigned filed IA No.530/2023 and this Tribunal vide order dated 27.03.2023, granted extension of 60 days, effective from 24.03.2023 and the extended period expired on 23.05.2023.

f. It is averred that initially 6 resolution applicants have submitted their resolution plans and participated in negotiations at the 5^th CoC/6^th CoC meetings held on 08.03.2023 and 10.03.2023. One of the resolution applicants have participated during negotiations on 24.03.2023.

g. It is averred that during the negotiations the resolution applicants have in turn insisted for the TSSPDCL to issue NOC for restoration of original power connection of 7700 KVA and dedicated power line, without insisting for additional amounts, for enhancement of the amount proposed towards their claim.

h. It is averred that APSFC also expressed the view that amounts proposed by most of the Resolution Applicants toward their Claim are not all satisfactory and needs to be improved substantially and the RAs were advised to submit their revised financial proposals enhancing the amounts proposed under their respective resolution plans. Subsequently 2 more resolution applicants have withdrawn and others have sought additional information regarding statutory dues and the same has been provided to them.

It is averred that in the 9^th COC meeting held on 03.05.2023, the remaining 3RAs called for further negotiations. The APSFC also informed that the payment offered to APSFC needs to be further enhanced having regard to the value of the fixed assets on which they are having first charge and TSSPDCL sought time to discuss the request of the Resolution Professional.

j. It is averred that the COC in their 10^th COC meeting has revolved to seek extension of CIRP process for a further period of 60 days w.e.f from 24.05.2023 to enable to complete the CIRP process further in IA No 913/2023 and this Tribunal extended the CIRP period vide order dated 05.06.2023, the extended period is expired on 23.07.2023.

k. It is averred that in the 11^th COC meeting, dated 19.07.2023 the Committee resolved to seek extension of CIRP period for a further period of 30 days w.e.f, 24.07.2023 and also decided to conclude the negotiations and to invite the resolution applicants for final negotiations to the 12^th COC on 31.07.2023.

l. It is averred that there are three applicants, namely 1) M/s Pankaz Kumaar Agarwal, 2) M/s Maha Shiv Shakti Steel Rolling Mills Private Limited, 3) M/s Radha Smelters Private Limited, have participated in negotiations at 12^th COC meeting on 31.07.2023, and pursuant to the negotiations, submitted their resolution plans, which have contained certain conditions, with regard to distribution of plan payments among the creditors, and tenure of plan, etc.,

m. It is averred that the Andhra Pradesh State Financial Corporation (APSFC), the lead member of COC with 59.23% voting share observed that in view of the uncertainty over the feasibility, which is manifest in the withdrawal of two RAs and several conditions stipulated in the present resolution plans submitted, the value of maximization of various stake holders is not possible during CIRP and felt desirable to recommend to the Adjudicating Authority for ordering for liquidation as per the provisions of the Code. As such the APSFC, has voted against all the resolution plans, copy of voting by APSFC enclosed.

n. It is averred that the CoC recalled that a period of 300 days permitted by this Tribunal has already been consumed in the process of negotiations with the resolution applicants, follow up with TSSPDCL authorities for their NOC, the same was expired on 24.07.2023.

o. It is averred that the Lead member APSFC also advised the UBI representative to take the required administrative approvals as expeditiously as possible to enable the RP to file necessary application with adjudicating authority within maximum permissible time of 330 days as per the provisions of the Code.

p. It is averred that the liquidator allowed time up to 21.08.2023, for UBI, to complete their voting and the UBI once again vide their e-mail dated 19.08.2023, informed the because of its internal reasons, Union Bank of India could not be able to get the approval for voting with regard to the 12^th COC meeting held on 31.07.2023 and requested extension of one week from 21.08.2023 so as to enable them to vote on the Resolution Plans.

q. It is averred that the Resolution applicants have withdrawn as TSSPDL was not prepared to give NOC for power reconnection and as voting of Union Bank of India with regard to the resolutions passed in the 12^th COC meeting dated 31.07.2023 is awaited, unless this Tribunal is pleased to order for the extension of CIRP period by a further period of 30 days from 24.07.2023 as recommended by the 11^th COC meeting held by the COC, under section 12 of the Insolvency and Bankruptcy Code and additional, 15days time for obtaining voting from Union Bank of India, further steps to conclude the CIRP process cannot be taken.

r. It is averred that the RP filed an IA 1390/2023 in CP No 325/7/HDB/2021 before this Tribunal seeking extension of time. However, this Tribunal vide orders dated 25.08.2023 has been pleased to dismiss the IA 1390/2023, directing RP to close the voting and proceed further in the interests of CIRP/Liquidation of the Corporate Debtor.

s. It is averred that the direction of this Tribunal and as all the Resolution applicants backed out since TSSPDCL authorities are unable to give the benefits sought by the proposed Resolution Applicants. The APSFC the lead member of the COC felt desirable to recommend to this Tribunal for ordering for liquidation and as Union Bank of India abstained from voting. In compliance of the orders of this Tribunal dated 25.08.2023 in IA No. 1390/2023, the RP have come up with the present application praying this Tribunal to pass orders of Liquidation of the Corporate Debtor.

t. The RP have no objection to continue as Liquidator if this Tribunal appoints the RP as Liquidator.

We have heard the Learned Counsel for the Applicant/RP and learned RP. Perused the record. From the above, it would appear that despite all possible steps as required under the Code taken during the CIRP, the Corporate Debtor could not be resolved through CIRP. The CoC in its wisdom has resolved in favour of the liquidation of the Company. This Adjudicating Authority has no reason before it to take a contrary view in terms of Section 33 (1) of the Code. Therefore, we have no option than to pass an order of liquidation of the Company in the manner laid down in Chapter-III of the Code.

A. This Adjudicating Authority hereby orders liquidation of the Corporate Debtor, i.e., Shree Rangham Ispat Private Limited, which shall be conducted in the manner as laid down in Chapter III of the Code;

B. Shri. Murali Krishna Prasad having IP registration no. IBBI/IPA-001/IP-P00967/2017-2018/11588, is hereby appointed as Liquidator;

C. He shall issue public announcement stating that the Corporate Debtor is in liquidation in terms of Regulation 12 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

D. The moratorium declared under Section 14 of the Code, shall cease to have effect from the date of the order of liquidation;

E. Subject to Section 52 of the Code, 2016, no suit or other legal proceedings shall be instituted by/or against the Corporate Debtor. This shall however not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

F. All the powers of the Board of Directors, Key Managerial Personnel and partners of the corporate Debtor shall cease to have effect and shall be vested in the Liquidator.

G. The Liquidator shall exercise the powers and perform duties as envisaged under Sections 35 to 50 and 52 to 54 of the Code read with the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

H. Personnel connected with the Corporate Debtor shall extend all assistance and co-operation to the Liquidator as would be required for managing its affairs.

J. The Applicant is directed to serve the copy of this order to Registrar of Companies, Regional Director, Official Liquidator of Hyderabad, Registered office of the Corporate Debtor for information and compliance.