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Judgment
Per: Ms. LAKSHMI GURUNG, MEMBER (Judicial)
The present I.A. No. 90 of 2024 has been filed under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘Code’) by the Resolution Professional of M/s Essenzaa Lifescience Limited (hereinafter referred to as ‘Corporate Applicant’) Mr. Rajkumar Shamlal Jaiwal (hereinafter referred to as ‘Applicant’/ ‘Resolution Professional’) seeking following reliefs as follows:
i) To pass an order for liquidation of the Corporate, Essenzaa Lifescience under Section 33(1)(a) of the Code. ii) To appoint liquidator from panel of IBBI as this Hon’ble Tribunal may deem fit. iii) To Pass any other order(s) which this Hon’ble Adjudicating Authority may deem fit the facts and circumstances of the present case
On an application filed by Bank of India under Section 7 of the Code, a Corporate Insolvency Resolution Process (‘CIRP’) of the Corporate Debtor was commenced vide order dated 10.11.2023 in C.P.(IB)350/MB/2023 (‘said Order’/ ‘Insolvency Commencement Date’). Subsequent to the said Order, the Applicant was appointed as Interim Resolution Professional (‘IRP’).
The IRP issued a Public Announcement in ‘Form –A’, on 12.11.2023. The Public Announcement was made in one English Language Newspaper (The Financial Express, Mumbai Edition) and in Marathi Language Newspaper (Navkal, Mumbai Edition), inviting the creditors of the Corporate Debtor to file their proof of claims. The last date of submission of claims was 24.11.2023.
In pursuance of the Public Announcement, the Applicant received and collated claim of creditors as per Section 21 of the Code. The claims as admitted comprise Rs. 5,51,61,332.93 (Rupees Five Crores Fifty-One Lakhs Sixty-One Thousand Three Hundred and Thirty Two and Ninety-Three Paisa Only/-) of Secured Financial Creditor, Bank of India. Further, the IRP has not received any claims from workmen, employees, operational creditors and statutory authorities of the Corporate Debtor.
The Committee of Creditors (‘CoC’) comprised of sole financial creditor, Bank of India. The CoC passed resolution to appoint the IRP as a Resolution Professional (‘RP’), in the 1st CoC meeting held on 08.12.2023.
The committee in the 1st CoC Meeting to provide an estimate of Fair Value and Liquidation Value of assets of Corporate Debtor as on 10.11.2023 (Insolvency Commencement Date) appointed M/s Rite Value Consulting Private Limited and Mr. Ankush Garg as Valuers. Further, in the said meeting M/s Raj Gupta and Co., Chartered Accountants were appointed Transaction Auditors to the corporate debtor.
The Applicant submits that in the 2nd CoC Meeting held on 28.12.2023, the CoC resolved to approve, issuance of Request for Resolution Plan and Evaluation Matrix eligibility criteria of Potential Resolution Applicants (‘PRA’) and publication of Form-G for inviting Expression of Interest (‘EoI’).
Thereafter, the Applicant published an Invitation of Expression of Interest (‘EoI’) in Form-G as per the CIRP Regulations on 05.01.2024 one English Language Newspaper (The Business Line, Mumbai Edition) and in Marathi Language Newspaper (Pratahkal, Mumbai Edition). The last date of submission of EoI was 20.01.2024 whereas, the last date of submission of Resolution Plan was 21.03.2024.
The Applicant in the 3rd CoC Meeting held on 24.04.2024 submitted that the period of CIRP of the Corporate Debtor as per Section 12(2) of the Code was to be completed within 180 Days from the Insolvency Commencement Date that is, 10.11.2023 and therefore, resolved to file an application for extension of CIRP period.
Further, in the 3rd CoC Meeting it was considered that since no EoI was received in response to the advertisement dated 05.01.2024, it was resolved to republish the EoI with renewed timelines to increase the likelihood of successful resolution of insolvency of corporate debtor.
In pursuance to the resolution as approved in the 3rd CoC Meeting, the applicant re-published the EoI in Form-G on 02.05.2024. The last date of submission of EoI and Resolution Plan was 17.05.2024 and 13.07.2024, respectively.
The RP on instruction received in the 3rd CoC Meeting filed I.A. No. 2632 of 2022 seeking an extension of 90 Days for completion of CIRP. This Tribunal vide order dated 06.06.2024 allowed extension of CIRP period for 90 days with effect from 08.05.2024 to 06.08.2024.
In the 4th CoC Meeting held on 30.07.2024, it was considered that no financially viable resolution plan was received after the re-publication of Form-G. Further, the Applicant submits that the CoC as per circular number Liq-12011/214/2023-IBBI/840 dated 18.07.2023 concerning that an Insolvency Professional other than RP/IRP be appointed as a Liquidator to the corporate debtor. The CoC did not propose appointment of any liquidator and resolved that this Tribunal may appoint the liquidator from the panel list maintained with Insolvency and Bankruptcy Board of India (IBBI).
Accordingly, the following agenda was approved by sole member of CoC such that to proceed with the liquidation of the Corporate Debtor under Section 33 of the Code. The relevant extract of the resolution as approved is given in “Exhibit G-2: Minutes of 4th CoC Meeting” of the Petition is reproduced as under:
“ xxx
RESOLVED THAT the consent of the members of Committee of Creditors be and is hereby accorded for Liquidation of the Corporate Debtor under Section 33(2) of the Insolvency and Bankruptcy Code, 2016.
RESOLVED FURTHER THAT Mr. Rajkumar Shamlal Jaiswal be and is hereby authorized to make necessary application for Liquidation of the Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016 in the matter of Essenzaa Lifescience Limited and to do all such act, deeds and things to give effect to the aforesaid resolution. xxx”
The Applicant in regards the Insolvency and Bankruptcy Board of India (Insolvency Resolution of Corporate Persons) (Amendments) Regulations, 2024 (w.e.f. 15.02.2024) submits to have placed emphasis on Regulation 31B in the 4th CoC Meeting and it was unanimously resolved by the committee to approve the CIRP costs. The relevant extract of the resolution is reproduced as under:
“ xxx
RESOLVED THAT, the consent of members be and is hereby accorded to approve the CIRP costs of INR 10,07,052/- incurred till date.
RESOLVED FURTHER THAT, Mr. Rajkumar Shamlal Jaiswal, Resolution Professional be and is hereby authorized to take all necessary actions as prescribed under the provisions of the Insolvency and Bankruptcy Code, 2016 read with the applicable Regulations. xxx”
(bold for emphasis)
The Applicant submits that the Corporate Debtor was not operating as a going-concern and has no operating cashflows/liquid assets. Therefore, it was resolved in the 4th CoC Meeting that the CoC is to contribute towards the estimated liquidation cost of the corporate debtor. The relevant extract of the resolution as approved is given in “Exhibit G-2: Minutes of 4th CoC Meeting” of the Petition is reproduced as under:
“xxx
RESOLVED THAT pursuant to regulation 39B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016, consent of the members of the Committee of Creditors be and is hereby accorded to approve the plan providing for contribution for meeting the differential expenses between the estimated value of liquid assets and estimated liquidation cost in the event an order of liquidation under section 33 of the Code.
RESOLVED FURTHER THAT the consent of members of Committee of Creditors, be and is hereby accorded to contribute an amount of INR 5,42,700/- in order to meet the Liquidation cost as per Regulation 39B of CIRP Regulation. xxx”
(bold for emphasis)
Accordingly, the present Interlocutory Application was filed under Section 33(1)(a) of the Code on 07.08.2024 seeking Liquidation of the Corporate Applicant.
We have considered the submissions made by the counsel for the applicant and perused the record.
Considering the resolution passed by the CoC to liquidate the Corporate Debtor Company on grounds that it is not operating as a going-concern and has no cashflow/liquid assets and further has not received a financially viable resolution plan before the expiry of CIRP therefore, the order of liquidation shall be passed by this Adjudicating Authority under section 33 of the Code. The said Section is quoted below for the convenience and the ready reference:
“(1)Where the Adjudicating Authority, —
a. before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under section 12 or the fast track corporate insolvency resolution process under section 56, as the case may be, does not receive a resolution plan under sub-section (6) of section 30; or
b. rejects the resolution plan under Section 31 for the non-compliance of the requirements specified therein, it shall—
(i)pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;
(ii)issue a public announcement stating that the corporate debtor is in liquidation; and
(iii)require such order to be sent to the authority with which the corporate debtor is registered.
(2)Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1).”
Given the facts and circumstances of the case and discussions hereinabove, this Bench is satisfied and is of the considered opinion that the present Interlocutory Application is in consonance with Section 33(1)(a) of the Code. Accordingly, this Authority is left with no option except to pass an order for Liquidation of the Corporate Debtor Company in the manner laid down in Chapter III of the Code considering the fact there is no Resolution Plan for consideration and CoC does not foresee any possibility of getting Plans for the Corporate Debtor. Therefore, the I.A. No. 90 of 2024 in C.P. (IB) No. 350 of 2023 is ordered as follows:
ORDER
The Application is allowed. The Corporate Debtor, Essenzaa Lifescience Limited, shall be liquidated in the manner as laid down in Chapter-III of the Code.
In regards the decision of the CoC in its fourth meeting held on 30.07.2024, we hereby appoint Mr. Arihant Nenawati, having Registration No. IBBI/IPA-001/IP-P00456/2017-2018/10799 having e-mail id [email protected] and contact no.: +91 9930708377, as per Section 34(4) of the Code, from the panel of Insolvency Professionals maintained by the IBBI as the Liquidator of “Essenza Lifesciences Limited” to conduct liquidation process.
That the Liquidator for conduct of the Liquidation proceedings would be entitled to fees as Regulation 4 of IBBI (Liquidation Process) Regulations, 2016 or as approved by the committee in the 4th CoC Meeting, whichever is higher.
The Moratorium declared under Section 14 of the IBC 2016 shall cease to operate here from. A fresh moratorium shall commence under Section 33(5) of IBC.
This order shall be deemed to be a notice of discharge to the officers, employees and the workmen of the Corporate Debtor as per Section 33(7) of the IBC.
- f) Liquidator shall issue public announcement to Registrar of Companies, Maharashtra and Official Liquidator, Maharashtra stating that Corporate Debtor is in liquidation. - g) Subject to Section 52 of the Code no suit or other legal proceedings shall be instituted by or against the Corporate Debtor save and except the liberty to the liquidator to institute suit or other legal proceeding on behalf of the Corporate Debtor with prior approval of this Adjudicating Authority. - h) All 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. - i) The Liquidator shall exercise the powers and perform duties as envisaged under Sections 35 to 50 and 52 to 54 of Part-III of the Code read with the Liquidation Process Regulations. - j) All persons connected with the Corporate Debtor shall extend all assistance and cooperation to the Liquidator as will be required for managing its affairs. - k) This 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. - l) The Liquidator shall comply with the liquidation regulation and accordingly submit Progress Reports as per Regulation 15 of the IBBI (Liquidation Process) Regulations, 2016; and shall further apprise the Bench about the Liquidation Process of the Corporate Debtor.
Registry shall furnish a copy of this Order to:
Insolvency and Bankruptcy Board of India, New Delhi; ii. Regional Director (Western Region), Ministry of Corporate Affairs; iii. Registrar of Companies & Official Liquidator, Maharashtra; iv. Erstwhile Resolution Professional, Mr. Rajkumar Shamlal Jaiswal.
Liquidator, Mr. XXXXX;
Accordingly, this Application, stands disposed of as Allowed.
Ordered Accordingly.