CMA Harshad Deshpande RP M/s Honest Derivatives Pvt. Ltd

This Interlocutory Application being IA(Liq)/05/AHM/2025 has been filed by the Applicant/ Resolution Professional under Section 33(2) r.w. Section 34 of the Insolvency and Bankruptcy Code, 2016 seeking relief as follows; -

In support of the application, it is submitted that:-

I. This Tribunal, vide its order dated 03.07.2024 admitted the application being CP(IB) No. 269 of 2023 under Section 7 of the Code seeking initiation of the Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor M/s. Honest Derivatives Private Limited and further appointed Mr. CMA Harshad Deshpande, the Applicant herein as the Interim Resolution Professional ("IRP") of the Corporate Debtor.

II. In Compliance with Section 13, Section 15 and other applicable sections of the Code read with Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 (hereinafter called “IRP Regulation”), the Applicant made the Public Announcement in English newspaper i.e. Financial Express (Ahmedabad edition) and in Gujarati Newspaper i.e. Financial Express (Ahmedabad edition) on 14.07.2024, intimating the commencement of CIRP against Corporate Debtor and calling upon the creditors to submit their claims with proof of claims.

III. The deadline for submission of claim was 26.07.2024. After collating all the claims and in pursuant to Section 21 of the Code, the IRP constituted the Committee of Creditors (“CoC”) in the following manner:-

IV. Pursuant to the constitution of CoC, the first meeting of the Committee of Creditors (“CoC”) was convened on 05.08.2024, wherein the CoC resolved to confirm the Applicant as the Resolution Professional (“RP”). In the same meeting, the CoC resolved to publish an invitation for Expression of Interest (Form-G) in terms of Section 25(h) of the Code read with Regulation 36A(4) of the CIRP Regulations, 2016.

V. The Applicant, in pursuance to the CoC’s resolution passed in the 1st CoC meeting, Published Form G on 18.08.2024. In response to the said Form G, the RP declared 5 (five) entities as prospective resolution applicants (“PRA”) and presented the said final list of PRAs before the CoC during the 3rd CoC meeting dated 24.10.2024.

VI. In the 4th CoC meeting held on 30.10.2024, the CoC directed the Applicant to issue a fresh Form-G to ensure wider participation and better value maximization. It was further resolved that the bids already submitted by the earlier PRAs would remain valid without requiring re-submission of documents. The Applicant, in pursuance to the CoC’s resolution passed in the 4th CoC meeting, Published Form G on 06.11.2024.

VII. In the 5th CoC meeting held on 03.12.2024, the applicant informed that in response to the Form-G dated 06.11.2024, two entities had submitted EoIs but failed to deposit the Earnest Money Deposit (“EMD”) and hence were not considered. Further, four other entities, who were earlier ineligible under the first Form-G dated 18.08.2024, became eligible under the revised criteria. Thus, a final list of nine (9) PRAs was placed before the CoC.

VIII. In the same meeting, in terms of Agenda Item No. (B) (3), the CoC noted that the initial 180-day CIRP period was expiring on 08.01.2025. Considering that the last date for receipt of resolution plans in terms of Form-G dated 06.11.2024 was 21.01.2025, and additional time would be required for evaluation and voting, the CoC, by way of Resolution No. 3, authorized the Applicant to seek an extension of ninety (90) days under Section 12(2) of the Code.

IX. Accordingly, the Applicant filed I.A. No. 18 of 2025 seeking extension of CIRP by 90 days. This Tribunal, vide order dated 20.01.2025 was pleased to condone the intervening delay of 12 days and extend the CIRP period by 90 days from 08.01.2025.

X. In the 6th COC meeting dated 08.01.2025, the applicant apprised the CoC about the notice dated 19.12.2024 issued by Tahsildar, Jamner, for auction of land belonging to the Corporate Debtor for recovery of property tax dues. The applicant had replied to the Tahsildar's office citing moratorium under Section 14. Considering urgency, the CoC authorised the applicant to move this Hon'ble Tribunal. The CoC also agreed to extend the deadline for submission of resolution plans by 15 days.

XI. In the 7th COC meeting dated 27.01.2025, the applicant informed that he had filed I.A. No. 61 of 2025 before this Tribunal challenging the proposed auction. Vide order dated 17.01.2025, this Tribunal granted interim stay on the auction. The applicant further apprised the CoC that the deadline for resolution plan submission was extended to 28.01.2025 and sought further extension by one month. The CoC approved extension till 28.02.2025.

XII. In the 8th COC meeting dated 25.02.2025, the applicant informed that this Tribunal, in I.A. No. 61 of 2025, granted a final opportunity to Tahsildar to file reply, and the matter was adjourned to 19.03.2025. He also apprised that one PRA had conducted a site visit and sought additional time. Considering pending litigations and requests of PRAs, the CoC extended the due date for resolution plans to 28.03.2025.

XIII. In the 9th COC meeting dated 26.03.2025, the RP informed that no resolution plan had been received till date. PRAs cited financial year end activities and the pendency of the litigation as reasons for delay. The CoC, however, observed that title to the property remained with the Corporate Debtor and litigation should not be a deterrent. After deliberations, the CoC resolved that the submission deadline be extended to 30.04.2025, while also extending the CIRP period by 90 days.

XIV. Considering the fact that the extension of 90 days granted vide Tribunal's Order dated 20.01.2025 was to come to an end on 08.04.2025, the CoC, in terms of Resolution No. 2 passed in the 9^th CoC meeting held on 26.03.2025, authorized the Applicant to file an application before this Tribunal seeking extension of the Corporate Insolvency Resolution Process (CIRP) by a further period of 90 days. In compliance of the said directions of the CoC, the Applicant filed I.A. No. 539 of 2025 seeking extension of CIRP of the Corporate Debtor by 90 days.

XV. At the 10^th CoC meeting, the Applicant apprised the members that although the deadline to submit Resolution Plans had been extended to 30.04.2025, none of the nine PRAs had submitted any plan. One PRA had even requested a refund of its EMD. On enquiry, the Applicant informed that PRAs were reluctant due to complications faced in the CIRP of a group company, fearing similar legal and implementation challenges if such issues arose here. Accordingly, the COC resolved to grant a final extension for submission of resolution plans until 10.05.2025, beyond which liquidation would be considered.

XVI. Meanwhile, I.A. No. 539 of 2025 came to be listed before this Tribunal on 28.04.2025. After considering the submissions, this Tribunal partly allowed the said application and excluded a period of 60 days from the CIRP timeline under the second proviso to Section 12(3) of the Code, effective from the date of the said order i.e., 28.04.2025, on account of time taken in legal proceedings.

XVII. At the 11^th CoC meeting, the Applicant informed the members that no resolution plans were received even after publishing Form G twice and granting extensions. The CoC, having explored all options for revival, resolved to liquidate the Corporate Debtor. Accordingly, the following resolution was placed for e-voting:

The said resolution, along with other resolutions, was kept for e-voting from 16.05.2025 to 26.05.2025, wherein the CoC voted in favour of liquidation.

XVIII. During the same meeting, the Applicant confirmed his willingness to act as the Liquidator, and a separate resolution to that effect was also placed for e-voting. The e-voting concluded. The CoC voted in favor of the liquidation of the Corporate Debtor. However, the CoC did not approve the Applicant’s appointment as the Liquidator.

XIX. In compliance of Regulation 39B of the CIRP Regulations, the Applicant had placed before the CoC a best estimate of liquidation cost, which was duly approved by the CoC in terms of Resolution No. 6.

XX. Further, in compliance with Regulation 39BA(1) of the CIRP Regulations, the Applicant enquired from the CoC about their assessment on compromise or arrangement. The CoC members confirmed that, as no such proposal was placed before them, they would not be considering any compromise or arrangement. Accordingly, the following resolution was put to e-voting and approved:

XXI. Further, in terms of Resolution No. 5, the CoC resolved that the Liquidator shall first explore the sale of the Corporate Debtor as a going concern under Regulation 32(e) of the IBBI (Liquidation Process) Regulations, 2016, in accordance with Regulation 39C of the IBBI (Resolution Process for Corporate Persons), Regulations 2016.

The Applicant filed 3^rd additional affidavit on 22.09.2025 vide inward no. D6311 thereby placing on record the 13^th meeting of CoC dated 03.09.2025 wherein the CoC unanimously resolved to appoint Mr. Akhil Ahuja as the Liquidator of the Corporate Debtor.

The present application is filed by the Applicant inter-alia seeking early liquidation of the Corporate Debtor in light of the various circumstances as mentioned hereinabove. In order to deal with the same, it is pertinent to mention that Section 33(2) of the Code which deals with initiation of liquidation proceedings against the corporate debtor.

A bare perusal of section 33(2) demonstrates that any time before the confirmation of resolution plan the COC can resolve to liquidate the Corporate Debtor by not less than 66% voting. Further, the same has been added in the explanation that the COC 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. Thus the requirement to satisfy shall be:-

Formation of CoC pursuant to section 21(1). ii. No confirmation of Resolution Plan. iii. Minimum voting of 66%

The Hon'ble Supreme Court of India in case of K. Sashidhar has concluded that the decision of CoC to liquidate the Corporate Debtor without taking any steps for resolution of the Corporate Debtor is covered under explanation to sub-clause (2) of Section 33 of the Code and the same being decision on commercial wisdom, is non-justiciable.

We have heard the learned counsel for the Applicant and perused the documents attached with the application.

The CIRP was initiated on 03.07.2024. The CoC was constituted on 31.07.2024. The CoC in its 11th meeting held on 16.05.2025 with 100% voting share resolved to liquidate the Corporate Debtor. The effective CIRP period, after the single extension under Section 12(3) and exclusion of time for legal proceedings (including IA No. 61/2025 and adjudication of the liquidation application) under the second proviso to Section 12(3), remains within the mandatory 330-day limit. Before adverting to the Applicant's contention, we consider it appropriate to refer the relevant provisions of the IBC, 2016 deciding upon the issue.

The provisions of Section 33(2) of the Code are reproduced below: -

The Form H was filed under inward diary no. D5233 dated 04.08.2025. As per Form H, the Liquidation and Fair Value of the Corporate Debtor are as under:

Fair Value : Land and Building: Rs. 43.51 Crores Plant and Machinery: Rs 23.98 Crores Securities and Financial Assets: NIL Liquidation Value : Land and Building Rs.33.44 Crores Plant and Machinery: Rs.15.59 Crores Securities and Financial Assets: Nil

As per Form H, the Timeline of the proceedings as under:

The order dated 20.01.2025 granted a 90-day extension under Section 12(3); the order dated 28.04.2025 excluded 60 days for time taken in legal proceedings under the second proviso to Section 12(3).

The information provided in the Application and submitted to this Tribunal while seeking the extension of CIRP period shows that prospective resolution applicants had shown interest in the Corporate Debtor but none of them submitted any resolution plan. The CoC with a full majority has taken a decision to liquidate the Corporate Debtor.

The Resolution Professional has through this application has intimated the decision of the CoC (approved with not less than sixty-six percent of the voting share) to this Adjudicating Authority to liquidate the Corporate Debtor.

Considering the above, this Tribunal is satisfied that the Applicant has fulfilled the requirements of Section 33(2) of the Code. The CoC's decision to liquidate the Corporate Debtor is within the statutory framework.

It is further observed that though the original CIRP period of 180 days expired on 08.01.2025, the CoC had resolved to seek extension well before expiry, and the Applicant had moved this Tribunal accordingly. Vide order dated 20.01.2025 in I.A. No. 18 of 2025 this Tribunal granted extension of 90 days, condoning the intervening delay, and by a subsequent order dated 28.04.2025 in I.A. No. 539 of 2025, excluded a further period of 60 days for time taken in legal proceedings (including the pending IA No. 61/2025) under the second proviso to Section 12(3). Thus, the delay stands duly condoned and the CIRP period stands validly extended by orders of this Tribunal.

The Hon'ble Supreme Court in the matter of K. Sashidhar Versus Indian Overseas Bank & Ors in Civil Appeal No. 10673 of 2018 has held that the commercial decision of CoC is non-justifiable. In this case, it is seen that the CoC with a 100% majority has passed the resolution seeking liquidation of the Corporate Debtor.

In view of the above findings, it is hereby ordered as follows: -

Accordingly, IA(Liq)/05(AHM)2025 in CP/269/AHM/2023 is allowed and disposed of.

A certified copy of this order may be issued, if applied for, upon compliance with all requisite formalities