AI Structured Summary
Not yet generated for this judgment
Judgment
ORDER
IA-40/2024: The prayer made in the captioned application reads thus:-
The CIRP was ordered to be commenced in terms of the order dated 06.12.2023. Apparently almost 18 months have lapsed from the date of commencement i.e. much beyond the maximum period prescribed for completion of the process. Our attention is drawn to the Resolution passed by the CoC on 05.06.2024, in terms of which the CoC decided that the corporate debtor should be liquidated. The relevant excerpt of Resolution reads thus:-
As can be seen from the provisions of Section 33(2) of IBC, 2016, in the wake of the decision taken by committee of creditors, this Tribunal should order liquidation of the corporate debtor in terms of the provisions of Section 33(1) of IBC, 2016. The provisions of Section 33(2) of IBC, 2016 reads thus:-
“Section 33. Initiation of liquidation.
…(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 1[approved by not less than sixty-six per cent. of the voting share] 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). 2[Explanation.-- For the purposes of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, any time after its constitution under sub-section (1) of section 21 and before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum.]”
Besides there being the Resolution passed by the CoC, even the maximum period for CIRP prescribed in Section 12 of IBC, 2016 is almost over. In the wake we are left with no option but to direct liquidation of the corporate debtor. Ordered accordingly.
Accordingly, Mr. Kamall Ahuja with Reg. No: [IBBI/IPA-002/IP-N01025/2020-2021/13389] so appointed as the Liquidator of the Corporate Debtor to carry out the liquidation process subject to the following terms of the directions inter alia:
The Liquidator shall strictly act in accordance with the provisions of IBC, 2016 (viz. Sections 35, 36, 37, 38, 39 and 41 thereof) and other relevant rules and Regulations including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 as amended up to date enjoined upon him.
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 a suitable application before this Adjudicating Authority.
The Registry is directed to communicate this order to the Registrar of Companies, having jurisdiction over the Corporate Debtor and 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 a fresh Moratorium under section 33(5) of the Insolvency and Bankruptcy Code shall commence.
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 to this Tribunal 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 reports 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 be sent to the financial creditors, Corporate Debtor and the Liquidator for taking necessary steps and for extending the necessary cooperation in relation to the Liquidation process of the Corporate Debtor, viz., company-in-liquidation.
It goes without saying that the fee of the Liquidator would be payable in terms of the provisions of Section 34 (7) of the IBC, 2016 read with Regulation 4 of IBBI (Liquidation Process) Regulation 2016.
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.
Nevertheless, it is seen from para 4 of the application that the corporate debtor was liable to pay Rs. 4,39,38,317 towards income tax. The para 4 of the application reads thus:-
It is seen from Section 179 of Income Tax Act, 1961, where any tax is due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.
Section 179(1) of the Act reads thus:-
“179. Liability of directors of private company in liquidation.
- [(1)] [ Section 179 renumbered as sub-Section (1) by Act 41 of 1975, Section 50 (w.e.f. 1.10.1975).] [Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company] [ Substituted by Act 41 of 1975, Section 50, for certain words (w.e.f. 1.10.1975).] cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.”
Apparently when the company has been ordered to be liquidated, in terms of the provisions of Section 53 of IBC, 2016 the possibility of recovery of aforementioned dues may be bleak and negligible. Thus we direct that the copy of this order be sent to the concerned Principal Chief Commissioner Income Tax who may take a view in terms of the aforementioned provision of law.
IA stands disposed of.