Canara Bank vs Shri Rajeev Kumar Sharma & Anr.

The present application has been filed on 29.04.2025 by Canara Bank, being the sole member of the Committee of Creditors (CoC) having 100% voting share of M/s Pratishtha Dairy Farms Private Limited (hereinafter referred to as the “Corporate Debtor”), under Section 33 of the Insolvency and Bankruptcy Code, 2016 (“IBC”/ “the Code”) seeking an order for liquidation of the Corporate Debtor.

As per the averments made in the application and submissions advanced by the Ld. Counsel for the Applicant, the following facts have been put before us:

i. That Company Petition CP (IB) No. 90/ALD/2019 was filed by the Operational Creditor M/s Baff Engineers Private Limited under Section 9 of the Code for initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor namely, M/s Pratishtha Dairy Farms Private Limited. The said petition was admitted by this Adjudicating Authority vide order dated 11.08.2021, wherein Shri Ankit Agrawal was appointed as the Interim Resolution Professional (IRP). Subsequently, vide order dated 02.03.2022, the said IRP was confirmed as the Resolution Professional (RP). ii. That the public announcement was made on 13.08.2021 in “Financial Express” (English) and “Jansatta” (Hindi). The last date for submission of claims was 25.08.2021. The RP invited claims from all creditors in accordance with the provisions of the Code.

That after collation and verification of the claims, the CoC was constituted on 03.09.2021 with only one Financial Creditor i.e., the Applicant Canara Bank holding 100% voting share. The details of claims submitted are as follows:

That a total of 16 meetings of the CoC were conducted during the CIRP period.

That in the 3rd CoC meeting held on 17.11.2021, the CoC approved the publication of Form G, along with the Request for Resolution Plan, Evaluation Matrix, and eligibility criteria. Pursuant thereto, Form G was published on 23.11.2021, fixing the last date of receipt of Expressions of Interest (EoIs) as 08.12.2021.

That in response, the RP received three (03) Expressions of Interest from the following prospective Resolution Applicants (PRAs):

A. RKG Asset Management LLP (Investment Manager of RKG Trust)

B. Mr. Amrit Agarwal

C. Mr. Rajeev Kumar Sharma and Ms. Chandna Sharma (Consortium)

That out of the aforesaid PRAs, only one Resolution Plan was submitted by Mr. Rajeev Kumar Sharma and Ms. Chandna Sharma (Consortium). These two persons are part of Ex-Management Ms. Chandna Sharma, being Ex-Director of Corporate Debtor and Mr. Rajeev Kumar Sharma, being the shareholder of the Corporate Debtor. Thus resolution Plan is found to have been submitted by the Ex-Management of the Corporate Debtor, which in the normal course would have not been qualified as per Section 29A of the Code being related party of the Corporate Debtor. However, in the case of MSMEs, Section 240A provides exemption to the promoters and ex-management for submitting a Resolution Plan. Accordingly, the Resolution Plan submitted by the Directors of the Ex-Management of the Corporate Debtor, being covered under MSME exemption, was considered by the CoC, after it was placed before the CoC in the 5th CoC meeting dated 01.02.2022.

Subsequently, after removal of discrepancies pointed out, a revised Resolution Plan was submitted by the said Resolution Applicant, which was placed before the 11th CoC meeting held between 07.10.2022 and 09.10.2022.

That upon consideration and e-voting conducted between 07.10.2022 and 09.10.2022, the CoC, by 100% voting share, approved the Resolution Plan submitted by Mr. Rajeev Kumar Sharma and Ms. Chandna Sharma (Consortium). Certain modifications suggested by Canara Bank vide email dated 12.10.2022 were also accepted by the Successful Resolution Applicant (SRA) through communication dated 14.10.2022. Accordingly, the Resolution Plan stood approved in the 11th CoC meeting.

That the Resolution Plan, having been approved by the CoC with 100% voting share, was filed before this Adjudicating Authority for approval on 05.04.2023. The amount claimed, admitted and the amount proposed to be paid by the SRA under the said Resolution Plan is tabulated as under:

Total fund required in the aforesaid Resolution Plan is Rs.6,23,16,474.00. The above Resolution Plan for approval of this Adjudicating Authority filed vide I.A. No. 178 of 2023 in CP (IB) No. 90/ALD/2019.

That this Adjudicating Authority, after due consideration of above IA, approved the said Resolution Plan vide order dated 05.09.2024.

That as per the terms of the Resolution Plan, the Successful Resolution Applicant was required to:

- Deposit CIRP Cost of Rs. 73,16,474/-, out of which Rs. 42,07,094/- had already been deposited before approval of the Plan and the remaining amount of Rs. 30,77,700/- was deposited within 30 days of approval. - Total amount apart from CIRP Cost to be paid is Rs. 5,50,00,000.00 out of which Rs. 1,50,00,000/- has been deposited within 30 days of approval of the Plan, which was duly deposited between 14.10.2024 and 05.11.2024.

- Balance consideration of Rs. 4,00,00,000/- was required to be deposited in four quarterly instalments of Rs. 1,00,00,000/- each over a period of one year from the date of approval of order i.e. 05.09.2024 before the end of the respective quarter.

That the SRA has failed to adhere to the aforesaid payment schedule. Against the requirement of depositing Rs. 2.00 Crore by 31.03.2025, the SRA has deposited only Rs. 41.50 Lakhs. Thus, the SRA has committed default in implementation of the approved Resolution Plan.

That the RP had also filed a Compliance Certificate in Form H under Regulation 39(4) of the CIRP Regulations, and the SRA had furnished a Performance Bank Guarantee of Rs. 60 Lakhs. However, the said Bank Guarantee has not been renewed by the SRA, and in terms of the order dated 05.09.2024, the CoC has been directed to forfeit the EMD of Rs. 5 Lakhs as well as the Performance Bank Guarantee.

That in view of the failure of the Successful Resolution Applicant to implement the Resolution Plan in its entirety, the CoC, in its meeting held on 03.03.2025, resolved with 100% voting share to liquidate the Corporate Debtor.

That the Applicant submits that the CoC, exercising its commercial wisdom, has taken a conscious decision to liquidate the Corporate Debtor in view of the failure of the Resolution Plan approved by this Adjudicating Authority.

That in these circumstances, the present application is filed under Section 33(3) of the Code seeking an order for liquidation of the Corporate Debtor in accordance with law.

It is to be noted that when the matter was heard on 18.08.2025, the learned counsel for the Financial Creditor submitted that the present application had been filed on the ground that the Resolution Plan, though approved, had failed in its implementation. It was pointed out that against the total plan value of Rs. 6.23 Crores, only a sum of Rs. 1.91 Crores had been paid by the Successful Resolution Applicant (SRA), while the balance amount remained outstanding. It was further brought to the notice of this Tribunal that the Performance Bank Guarantees, which were required to be kept alive during the currency of the Resolution Plan, had since lapsed and were therefore not available for invocation.

On the other hand, learned counsel appearing for the SRA submitted that due to certain difficulties in mobilization of funds, the payment schedule under the Resolution Plan could not be adhered to. However, it was assured that efforts were being made to revalidate the Performance Bank Guarantees, and for that purpose, a short accommodation was sought. Further, on 19.08.2025, learned counsels for both parties jointly submitted that a meeting was scheduled on the same day between the representatives of the Successful Resolution Applicant (SRA) and the Financial Creditor, Canara Bank, and accordingly sought an accommodation of one day in the matter.

During the course of hearing on 20.08.2025, learned counsel for the SRA submitted that a meeting had taken place on 19.08.2025 wherein certain concrete proposals were discussed, and sought some time for their finalization. However, during the course of hearing on 10.09.2025, learned counsel for Canara Bank submitted that the discussions held earlier had not materialized and that the Successful Resolution Applicant (SRA) had failed to comply with the terms of the approved Resolution Plan. On the other hand, learned counsel appearing for the SRA submitted that due to financial constraints, the Resolution Plan could not be implemented, though efforts were being made to arrange finances from the Bank. However, learned counsel for Canara Bank clarified that no negotiations were underway any longer and, on instructions, pressed for pursuing IA (Liq.) No. 02/2025 seeking initiation of liquidation proceedings. Thereafter, we considered IA (Liq.) No.02/2025 and completed hearing in this matter.

We have carefully considered the application filed by the Financial Creditor, the material placed on record, and the submissions advanced by the learned counsel for the respective parties. It is an admitted position that the Resolution Plan submitted by the Successful Resolution Applicant (“SRA”) was approved by the CoC with 100% voting share and was further approved by this Adjudicating Authority vide order dated 05.09.2024. In terms of the said Plan, the SRA was under an obligation to deposit the upfront amount of Rs. 1.50 Crores within 30 days from the approval of the Plan, and the balance sum of Rs. 4.00 Crores in four quarterly instalments of Rs. 1.00 Crore each, apart from CIRP costs.

It is noted that although part payment has been made by the SRA, substantial defaults have occurred in adhering to the payment schedule. Against the requirement of depositing Rs. 2.00 Crores by 31.03.2025, only Rs. 41.50 Lakhs have been deposited and against the total resolution value of Rs. 6.23 Crores, the SRA has deposited only Rs. 1.91 Crores, leaving substantial amounts outstanding. The default in performance of the plan obligations stands established on record.

Thus, the SRA has failed to comply with the financial commitments envisaged under the Resolution Plan. Further, the Performance Bank Guarantee furnished by the SRA has not been renewed and has since lapsed, thereby frustrating the protective mechanism contemplated for safeguarding the interests of stakeholders.

The explanation tendered on behalf of the SRA that difficulties were faced in mobilising funds does not absolve it of its binding obligations under the approved Resolution Plan. The law is well settled that once a Resolution Plan attains finality upon approval by the Adjudicating Authority, it becomes binding on all stakeholders, and non-compliance of the requirements specified in the Plan amounts to its failure.

It is further observed that despite the indulgence granted by this Tribunal on earlier occasions, including opportunity sought on 18.08.2025 and 20.08.2025 on the ground of exploring proposals for revival, no concrete progress has been demonstrated by the SRA in meeting the terms of payment of amount specified in the approved Resolution Plan. On the contrary, during the subsequent hearing on 10.09.2025, counsel for the SRA candidly admitted that due to financial constraints, the Resolution Plan is not possible to be implemented within the time line specified in the approved Resolution Plan and prayed for granting time till funds are arranged.

Here it is also important to consider that the SRA is from the Ex-Management of the Corporate Debtor being MSME against which CIRP was initiated due to its failure to repay the debt of the Financial Creditor Bank which is sole member of CoC. After failure of Corporate Debtor to repay debt, its Ex-Management as SRA has also now failed to revive the Corporate Debtor under a Resolution Plan due to sufficient funds not being available with them, therefore revival of Corporate Debtor in near future does not seem to be possible and its revival cannot be postponed indefinitely on the pela of SRA for time to be given to it to arrange funds of making payment of Resolution Plan amount.

Considering the above facts and circumstances of the case, we are of the considered view that any further delay and keeping the implementation of Resolution Plan in abeyance will further deteriorate the value of the assets of the Corporate Debtor, and thus prejudicially affects the interest of the Financial Creditor. Therefore, the natural consequence of failure of implementation of a Resolution Plan for a Corporate Debtor in this case would be to go for liquidation of the said Corporate Debtor.

The CoC, being the sole stakeholder with 100% voting share, has, in exercise of its commercial wisdom, already resolved in its meeting held on 03.03.2025 to liquidate the Corporate Debtor. We find no reason to interfere with the said commercial decision of the CoC, particularly when the Resolution Plan has failed in its implementation and revival of the Corporate Debtor is no longer a viable option.

In these circumstances, and in view of the mandate of Section 33 of the Code, we are satisfied that the present case warrants an order of liquidation of the Corporate Debtor.

We, therefore, pass the present order of liquidation initiating the liquidation process. The Applicant Bank being sole member of CoC has not proposed any name of Insolvency Professional for being appointed as Liquidator. As the plan submitted by Resolution Professional Mr. Ankit Agarwal and approved by us vide order dated 05.09.2024 could not succeed, we deem it appropriate to appoint a new Insolvency Professional as Liquidator. Mr. Ashish Sharma, is appointed as Liquidator bearing Registration No. IBBI/IPA-001/IP-P-02825/2023-2024/14375 Address: Shop No.22-23, First Floor, Chadha Complex, Gmd Road, Chadha Complex, Moradabad, Uttar Pradesh, 244001 e-mail: ashishkrishancaip@gmail.com from the list provided by Insolvency and Bankruptcy Board of India and his AFA is valid up to 30.06.2026 subject to his written consent to be filed within 07 days of this order along with affidavit stating that no disciplinary proceedings have been initiated against him by the Board or the Insolvency Professional Agency. The Law Research Associate of this Tribunal, Ms. Akshita Singh, has checked the credentials of Mr. Ashish Sharma and found that there are no disciplinary proceedings pending against the proposed liquidator, and also there is nothing adverse against him. After considering these details, we appoint Mr. Ashish Sharma, IBBI Registration No. IBBI/IPA-001/IP-P-02825/2023-2024/14375 to act as Liquidator in this matter.

In view of our foregoing discussions, we pass the following orders: -

The present IA is allowed for initiation of the liquidation proceedings of the Corporate Debtor in terms of Section 33(2) of the Code.

Mr. Ashish Sharma is appointed to act as a Liquidator.

The Liquidator is directed to forthwith take into his custody all the assets, Properties, and actionable claims of the corporate debtor and take necessary steps to ensure preservation, protection, security and maintenance of those properties as provided under section 35(1)(b) & (d) of IBC 2016.

The Liquidator is directed to adhere to Section 33(1) (ii) & (iii) and discharge his powers and duties as specified under Sections 35 to 41 of IBC, 2016 and meticulously adhere to the Rules and Regulations issued by IBBI in this regard from time to time.

The Stakeholder Consultation Committee (SCC) would be constituted as per Regulation 31A of IBBI (Liquidation Process) Regulations, 2016 and the list of SCC would be filed before this Tribunal in accordance with the provisions of the Code and Regulations made therein.

The Liquidator shall first try to sell the Corporate Debtor as a going concern in terms of Regulation 32A read with Regulation 32(e) and (f) of IBBI (Liquidation Process) Regulations, 2016. The Liquidator shall initiate the liquidation process as envisaged under Chapter III of the Code and the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

Fees of the Liquidator are to be paid in accordance with the Liquidation Process Regulations, 2016, and are to be decided in the meeting of SCC.

All the powers of the Board of Directors and of Key Managerial Personnel shall cease to exist in accordance with section 34(2) of the Code. All these powers shall henceforth vest in the Liquidator.

The personnel of the Corporate Debtor are directed to extend all assistance and co-operation to the Liquidator as required by him in managing the liquidation process of the Corporate Debtor.

On initiation of the liquidation process but subject to section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor save and except with 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, as provided in section 33(5) of the Code read with its proviso.

In accordance with section 33(7) of the Code, this liquidation order shall be deemed to be a notice of discharge to the officers, employees and workmen of the Corporate Debtor, except to the extent of the business of the Corporate Debtor continues during the liquidation process by the Liquidator as a going concern.

In terms of section 33(1)(iii), the Liquidator shall file a copy of this Order with the Registrar of Companies, Kanpur, Uttar Pradesh, within whose jurisdiction the Corporate Debtor is registered. Additionally, the Registry shall also forward a copy of this Order to the Registrar of Companies, Uttar Pradesh, Kanpur.

As per Regulation 13 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016, the liquidator shall submit a preliminary report to the Adjudicating Authority within 75 days from the liquidation commencement date, providing various details/information as mentioned in the said regulation.

Ordered Accordingly.

IA (Liq.) No.02/2025 stands allowed and disposed of.