Bank of Baroda vs JM Feed Mills Private Limited

The present Application is being filed by Mr. Somnath Gupta, Resolution Professional (hereinafter referred to as “RP”/ “Applicant”) for JM Feed Mills Pvt. Ltd. (hereinafter referred to as “Corporate Debtor”) under sub-section (2) of Section 33 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “Code”). It is prayed by the Applicant that an order for liquidation of the Corporate Debtor in terms of sub-section (2) of Section 33 of the Code be passed and Mr. Ashok Kumar Gupta, Insolvency Professional having registration number IBBI/IPA-003/IP-N00010/2016-17/10072 be appointed as the liquidator.

The submissions made by the Applicant in its Application are summarized hereunder:

An insolvency Petition was filed under Section 7 of the Code by the Financial Creditor for initiating the Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) against the Corporate Debtor. The Petition was duly admitted vide order dated 10.01.2023, and the Applicant was appointed as Interim Resolution Professional (hereinafter referred to as “IRP”). A copy of the order dated 10.01.2023 has been annexed as Annexure A-1 to the Application.

Pursuant to the aforementioned order, the Applicant collated all the claims submitted by the creditors and constituted a Committee of Creditors (hereinafter referred as to CoC), comprising of sole financial creditors of the Corporate Debtor I.e. Bank of Baroda. The details of financial creditor of the Corporate Debtor being sole member of the Committee of Creditors is provided hereinunder:

The IRP in the first meeting of the CoC on 06.02.2023, placed the agenda for appointment of IRP as the Resolution Professional. The same was approved by the CoC with 100% voting shares. The same was confirmed by the Adjudicating Authority vide Order dated 27.03.2023.

Pursuant to the 2nd CoC meeting, Form G was published in newspapers, namely Financial Times (English) NCR Edition, Jansatta (Hindi), NCR Edition, Times of India (English), Rozana Spokesman (Punjabi) in Punjab Edition and Dainik Bhaskar (Hindi) in Jind Edition on 15.02.2023 specifying the last date to submit the Expression of Interest ('EOI') as 11.03.2023.

The 3rd meeting of the CoC was convened on 24.03.2023 wherein the Applicant apprised the sole member of the CoC that more than 24 parties had shown interest, however finally, only one Prospective Resolution Applicant has submitted EOI along with the Earnest Money Deposit. The Applicant further informed that some parties have shown interest after last date as stipulated in Form G and advised to issue fresh Form G for maximisation of value of Corporate Debtor. Upon discussions and deliberations, the sole member of CoC decided to issue fresh Form G in the matter of the Corporate Debtor.

Pursuant to the above, in terms of the decision of the CoC and Regulation 36A (1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as “CIRP Regulations”), the Applicant had published Invitation for Expression of Interest in Form G dated 25.03.2023 in two newspapers namely, Times of India (English) and Dainik Bhaskar (Hindi). The last date for receipt of expression of interest was stipulated as 11.04.2023. Form G was also published on the website of Insolvency and Bankruptcy Board of India.

Subsequently, the Applicant had received Six expressions of Interest from the Prospective Resolution Applicants (hereinafter, referred to as PRAs), namely, Harish Taneja, Triveni Hatcheries Private Limited, Lakshya Health Food Private Limited, SSR Townships Private Limited, RM Argo Indus Private Limited and Amanthari Industries Private Limited. The Applicant shared provisional list of PRAs with the sole member of CoC vide Email dated 15.04.2023. After perusing the documents submitted by PRAs, the Applicant shared the Final list of PRAs in the matter of the Corporate Debtor vide email dated 25.04.2023.

The 5^th meeting of the CoC was convened on 21.06.2023 wherein the Applicant apprised the sole member of CoC that the Applicant has received four Resolution Plans in the matter of the Corporate Debtor from four PRAS, namely, Harish Taneja, RM Agro Indus Pvt. Ltd. Lakshya Health Food Pvt. Ltd. And Triveni Hatcheries Pvt. Ltd. The Applicant observed some discrepancies in the Resolution Plans submitted in the matter of the Corporate Debtor and the same was conveyed to the PRAs for correction. Thereafter, the Applicant with permission of sole member of CoC invited the PRAs one by one for presenting their Resolution Plan. Upon discussions and deliberations, CoC informed PRAs that their plan value is very low and needs substantial improvement. The member of CoC also requested the PRAs to submit best financial proposal in the next meeting. The Applicant further placed the agenda for extension of CIRP, beyond 180 days expiring on 08.07.2023, by 90 days. The sole member of CoC approved the agenda for extension of CIRP. The extension of CIRP was allowed by this Tribunal vide Order dated 21.06.2023.

The 7^th meeting of CoC was convened on 19.08.2023 wherein the Applicant informed the CoC that one proposal under Section 12A of the Code has been received from the Suspended Director of Corporate Debtor, however the same is not in compliance with Section 12A of the Code read with Regulation 30A of CIRP Regulations.

The 10^th meeting of CoC was convened on 26.09.2023 wherein the Applicant placed the resolutions for voting on the Resolution Plans received from PRAs. The Applicant also placed the agenda to consider filing of Application seeking Liquidation of the Corporate Debtor under Section 33(2) of the Code in the event the CoC members decide to vote against the Resolution Plan. The Applicant placed the Resolution in accordance with Regulation 39B, 39BA, 39C and 39D of the CIRP Regulations before CIRP for voting. The Resolutions were placed on e-voting which started on 29.09.2023 at 11:00 AM and concluded on 28.10.2023 at 06:10 PM. The CoC requested the Applicant to also place the resolutions for seeking extension of 30 days beyond the CIRP period for voting on the Resolution Plans. The Applicant in accordance with the decision taken by the CoC in its 10^th meeting filed an application bearing I.A. No. 2392/2023 before this Tribunal seeking extension of CIRP period by 30 days expiring on 07.10.2023. The extension was allowed by this Tribunal vide Order dated 07.10.2023.

The CoC requested the Applicant to extend the voting period from 07.10.2023 to 13.10.2023, then 13.10.2023 to 20.10.2023 and thereafter from 20.10.2023 to 28.10.2023. The Applicant in terms of request of the CoC extended the voting period accordingly. The voting lines concluded on 28.10.2023 and it was ascertained that the CoC have rejected the Resolutions for approval of Resolution Plans and approved the Resolution for Liquidation of the Corporate Debtor under sub section (3) of Section 33 of the Code with 100% voting shares. The CIRP in the matter of the Corporate Debtor was expiring on 06.11.2023 and the Committee of Creditors in its commercial wisdom have approved the resolution for liquidation of the Corporate Debtor in its 10^th meeting convened on 26.09.2023 with 100% voting share. The relevant resolutions passed are as follows:

There is no explicit resolution as per the Regulation 39B of the CIRP Regulations. However, the RP has discussed the required compliance with the CoC. The relevant part of the minutes of 10^th Meeting of CoC dated 26.09.2023 is reproduced here as follows:

The IRP in terms of Regulation 35 of the CIRP Regulations appointed IBBI Registered Valuers for carrying out valuation of assets of the Corporate Debtor. In view of the aforesaid, the total Average Fair Value and total Average Liquidation Value of the Land & Building of the Corporate Debtor is as follows:

The Applicant at the time of 10^th meeting dated 26.09.2023 had agreed to give his consent to act as Liquidator in the matter of the Corporate Debtor. The CoC have approved the Resolution for appointment of the Applicant as the Liquidator for the Corporate Debtor in its 10^th meeting dated 26.09.2023 with 100% voting share.

The Applicant convened the 12^th CoC meeting in the matter of the Corporate Debtor on 04.11.2023, wherein the Applicant apprised the CoC that the lease deed of factory land, building and machinery has expired on 31.10.2023. The CoC requested the Applicant to renew the same. The Applicant further requested the CoC members to defray CIRP costs ratified by the CoC from time to time. The Applicant further informed the CoC member that in view of the circular dated 18.07.2023 issued by IBBI, RP cannot be appointed as the Liquidator for the same Corporate Debtor. Upon discussions and deliberations, the CoC proposed the name of Mr. Ashok Kumar Gupta (Insolvency Professional) having IBBI Reg. No. IBBI/IPA-003/IP-N00010/2016-17/10072 to be appointed as Liquidator in the matter of the Corporate Debtor.

Mr. Ashok Gupta has given his consent form AA to act as the Liquidator in the matter of the Corporate Debtor as approved by the CoC in its 12^th CoC meeting dated 04.11.2023 with 100% voting share.

We have heard the learned counsel appearing on behalf of the Resolution Professional, and have perused the relevant material available on record carefully.

It is noted that the corporate debtor was admitted into CIRP vide order dated 10.01.2023. The CoC consists of sole member, i.e., Bank of Baroda. It is observed that the present Application has been filed under sub-section (2) of the section 33 of the Code for the initiation of the liquidation process of the Corporate Debtor. The Resolution Professional has published Form-G twice. Consequently, six PRAs submitted their expression of interest and 4 PRAs submitted their Resolution plans to the Resolution Professional. The Resolution Plans along with the resolution for Liquidation of the Corporate Debtor was placed for voting in the 10^th meeting of the CoC. The sole member in its 10th CoC meeting dated 26.09.2023 rejected the resolution plans and passed the resolution for liquidation of the corporate debtor.

The CoC resolved to first explore for compromise and arrangement and then to try for sale of the corporate debtor as a going concern.

Considering the above facts and circumstances of the case and taking into account the guidelines of IBBI, dated 18.07.2023 that IP other than the IRP/RP may be appointed as liquidator in all the cases where a liquidation order is to be passed, henceforth, we have considered the name of Mr. Ashok Kumar Gupta (Insolvency Professional) having IBBI Reg. No. IBBI/IPA-003/IP-N00010/2016-17/10072, email: [email protected], as proposed by CoC for appointment as liquidator.

In view of the satisfaction of the conditions provided under section 33 of the Code, the Corporate Debtor, i.e., JM Feed Mills Private Limited, is directed to be liquidated in the manner as laid down in Chapter III of the Code.

Accordingly, by exercising our power under sub-section (1) of section 33 of the Code we pass the following Order:

This Adjudicating Authority directs the liquidator to issue a public announcement stating that the corporate debtor is in liquidation. The liquidator will also serve a copy of this order to the various Government Departments such as Income Tax, GST, VAT, RPFC etc., who are likely to have any claim upon the corporate debtor so that the authorities concerned are informed of the liquidation order timely. The liquidator will also provide a copy of this order to the trade unions/employee associations of the corporate debtor so that the workman/employees could also be informed of this liquidation order through their association.

Accordingly, IA(Liq.) 2701 of 2023 in CP(IB) No. 27 of 2019 is allowed and disposed of.