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Judgment
ORDER
This Application has been filed under Section 33(1)(a) of the I&B Code,2016 by Mr. Raju Palanilkunathil Kesavan Resolution Professional in the matter of Dhanlaxmi Bank Limited Versus M/s. Trivandrum International Health Services Limited for initiation of Liquidation Process of the Corporate Debtor and to appoint the Resolution Professional as the Liquidator of the Corporate Debtor.
The brief facts are: -This Tribunal vide order dated 07.02.2020, admitted the application filed by the Financial Creditor Dhanlaxmi Bank Limited and initiated Corporate Insolvency Resolution Process (CIRP)against the respondent M/s. Trivandrum International Health Services Limited and appointed the Applicant herein as the Interim Resolution Professional to carry out the CIR Process. The Applicant published a public announcement in Newspapers in Form A on 12.02.2020 and verified the claims received and also formed the Committee of Creditors (CoC). The Committee of Creditors was constituted by the applicant as follows: -
| Sl. No. | Type of Creditor | Name of Creditor | Claim Admitted as on 30.09.2021 | Voting Share |
| 1 | Financial Creditor | Kerala Financial Corporation | 42,78,15,226 | 48.11% |
| 2 | Financial Creditor | State Bank of India | 31,90,06,638 | 35.87% |
| 3 | Financial Creditor | Dhanlaxmi Bank Limited | 14,24,90,488 | 16.02% |
| 88,93,12,352 | 100% |
It is also stated that the Resolution Professional made the public announcement on 26.10.2020 inviting Expression of Interest(EOI) to submit the Resolution Plan. He has received Resolution Plan from 4 Prospective Resolution Applicants. A final list was published by the Resolution Professional with the details of the Prospective Resolution Applicants. The Resolution Professional received 3 Resolution Plans out of the 4 Prospective Resolution Applicants. Meanwhile, INVP/02/KOB/2021 was filed before this Tribunal by Dr. C Bharath Chandran promoter Suspended Director of the Corporate Debtor with a prayer to allow him to file a Resolution Plan. Vide order dated 30.06.2021 this Tribunal permitted him to file the Resolution Plan. Thereupon, the promoter Suspended Director of the Corporate Debtor submitted his Resolution Plan on 05.07.2021 along with Dr. Pradeep Mahajan and Mr. Ramu Tatini as co-applicants. The said Resolution Plan was placed before the CoC for their consideration. Since the Resolution Plan submitted by the Resolution Applicants were bundled with conditions and to incorporate details on feasibility and viability, and to consider a substantial increase in the financial outlay, the CoC requested the Resolution Applicants to file the modified Resolution Plan and held further meetings on 30.07.2021, 04.08.2021, 18.08.2021 and 22.09.2021 and granted a last opportunity to submit the modified plan before 30.09.2021. Accordingly, Dr. C Bharath Chandran, the Suspended Director filed a revised and final Resolution Plan on 30.09.2021 and the other Prospective Applicants refused to revise their Resolution Plans, but requested to consider the Resolution Plan they have already submitted. The 14th meeting of the CoC held on 07.10.2021 considered all the four Resolution Plans submitted by Dr. C Bharath Chandran along with Dr. Pradeep Mahajan and Mr. Ramu Tatini with 100% voting rights accepted the Resolution Plan of Dr. C Bharath Chandran and rejected all the other Resolution Plans. Further, in the same meeting of the CoC, it was resolved to liquidate the Corporate Debtor in case of failure of Resolution Plan or non-approval of Resolution Plan by the Adjudicating Authority and approved the appointment of Liquidator and the other terms and conditions to be adopted in case of Liquidation of the Company. Thereafter, the Resolution Professional issued a Letter of Intent (L0I) to Dr. C Bharath Chandran conveying the approval of the Resolution Plan on 12.10.2021 and the same was unconditionally accepted by Dr.C Bharath Chandran, the successful Resolution Applicant, on 13.07.2021 on behalf of the consortium applicants. As per the conditions stipulated in the LoI & RFRP, the successful Resolution Applicant was to furnish a Performance Guarantee for Rs 5 Crore latest by 20.10.2021. However, the Resolution Applicant failed to execute the performance guarantee within the stipulated time, i.e., on or before 20.10.2021.
In the 15th meeting of CoC held on 21.10.2021 since the Resolution Applicant failed to execute the performance guarantee as stipulated in the RFRP, it was resolved to authorize the RP to proceed with the decision to liquidate the Corporate Debtor following the requirements prescribed in Regulation 39(B),39(C)and 39 (D) of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016.
On 28.10.2021, the RP received an e-mail from Dr. Bharath Chandran stating that since they were unable to submit the performance guarantee sought permission to substitute Dr. Sudeepkumar Narayana Pillai and Dr. Chitra Sudeep in place of the co-applicants, and sought 10 days’ time to submit the performance guarantee after approving the Resolution Plan. In the meantime, on 27.10.2021, RP received a copy of the application IA(IBC)/166/KOB/2021 filed by Sabine Hospital and Research Centre Pvt Ltd against the Corporate Debtor seeking permission to submit an Expression of Interest and submit a Resolution Plan for the Corporate Debtor and stay the liquidation proceedings.
On 30.10.2021, RP convened the 16th meeting of CoC and the CoC resolved to forfeit the performance guarantee submitted by the Successful Resolution Applicant on account of its failure to submit the performance guarantee. In the said meeting RP placed the letter received from Dr. Bharath Chandran and also the application IA(IBC)/177/KOB/2021 filed before this Tribunal by Sabine Hospital and Research Centre Pvt Ltd. However, the CoC stated that they have no authority to deviate from the mandatory timeline of 330 days for completing the resolution process and that no valid Resolution Plan is pending before the CoC and that the timeline of 330 days will be expiring on 04.11.2021.
In view of the decision in the 15th CoC meeting and the developments, Resolution Professional has filed an application IA(IBC)/180/KOB/2021 for Liquidation of the Corporate Debtor. Meanwhile, Dr. Bharath Chandran filed an application as IA(IBC)/177/KOB/2021 for permitting him to amend his plan by substituting new co-applicants. In IA(IBC)/177/KOB/2021, this Tribunal vide order dated 21.12.2021 passed the following directions: -
In view of the above, since this matter is to be concluded on 01.01.2022, we direct the RP to continue the CIRP from the stage of consideration of the Resolution Plans. The Prospective Resolution Applicants - Dr. C. Bharath Chandran and M/s.Sabine Hospital and Research Centre Private Limited shall submit their Resolution Plan to the Resolution Professional immediately and the RP shall place these Resolution Plans before the Committee of Creditors on receipt of the same for consideration of the CoC. The Committee of Creditors shall consider these Resolution Plans and take a decision on that and communicate the decision to the Successful Resolution Applicant to submit the Performance Guarantee. It is made clear that, in case the successful Resolution Applicant fails to submit the statutory requirements within the time granted, the Resolution Professional can approach this adjudicating Authority for approval of Liquidation of the Corporate Debtor. At any cost, the CIRP should be closed on or before 01.01.2022. No further time will be allowed. With respect to the request of Dr. C. Bharath Chandran for replacement of the existing co-applicants with new co-applicants, this matter may be considered by the Committee of Creditors while considering the Resolution Plan of Dr. C. Bharath Chandran.
Further to this order, the prospective Resolution Applicants submitted their Resolution Plans. The Committee held discussion with the two Resolution Applicants in its meeting held on 20.01.2022 and advised the Resolution Applicants to submit their revised plans by enhancing the resolution amount/reduce the timeline/furnishing additional evidence for source of finance. Accordingly, the Resolution Applicants submitted their revised Resolution Plans by 27.01.2022. After certifying the mandatory contents of the Resolution Plans, the RP placed both the Resolution Plans before the Committee in its 21st meeting held on 19.02.2022 along with evaluation matrix for its final consideration and voting. The Committee perused the additional clarifications and detailed workings showing the details of investment in plant and machinery submitted by Dr. C Bharath Chandran in support of the claim of MSME status of the Corporate Debtor. The Committee also held discussions with both the Resolution Applicants who were invited to the meeting. During the interaction, M/s Sabine Hospitals and Research Centre Private Limited expressed their willingness to enhance their resolution amount further. Dr. C Bharath Chandran along with representative of co-applicants produced certain additional documents in support of their source of finance. After considering the enhancement/ additional documents produced by the applicants, the Committee made a final evaluation of the resolution plans for its feasibility and viability. The Committee also considered the evaluation matrix placed by the RP as well as the fair value and liquidation value of the company for their evaluation and the various reliefs claimed in the Resolution Plan as also the detailed discussion on the feasibility and viability of the Resolution Plans in the meeting held 19.02.2022. The CoC members expressed their divergent views with regard to the selection of a particular Resolution Plan. M/s KFC representing 48.11% of the voting power favoured the Resolution Plan submitted by Dr.C Bharath Chandran along with two co-applicants whereas M/s State Bank of India along with M/s. Dhanlalaxmi jointly holding 51.89% voting results favoured the resolution plan submitted by M/s Sabine Hospitals and Research Centre Private Limited.
Since, both the Resolution Plans submitted by the Resolution Applicants failed to obtain the required 66% of voting consent, and the time allowed will be expiring on 26.02.2022, CoC again considered the Liquidation of the Corporate Debtor and resolved for recommending the Liquidation of the Corporate Debtor and directed the R.P to approach this Tribunal for an order to liquidate the Corporate Debtor. The committee further resolved to explore the possibility of “sale of the Corporate Debtor” as a going concern during liquidation as required under Regulation 32 of IBBI (Liquidation Process) Regulations,2016. The CoC also resolved to approve the estimated cost required for the Liquidation of the Corporate Debtor.
We have heard the Applicant/ Resolution Professional through video conferencing and had gone through all the relevant records placed before us. It appears from the records that the CoC approved the liquidation of Corporate Debtor with 100% voting right after exploring all possibilities and considering the orders of this Tribunal and the Plans submitted by the Resolution Applicants Dr.C Bharath Chandran and M/s. Sabine Hospital and Research Centre Pvt Ltd.
When the matter was taken up for consideration of the liquidation of the Corporate Debtor, after considering the submission of the Corporate Debtor and M/s Sabine Hospital and Research Centre (P) Limited, this Tribunal vide order dated 21.12.2021 in IA(IBC)/166/KOB/2021, IA(IBC)/177/KOB/2021 & IA(IBC)/180/KOB/2021 In IBA/51/KOB/2019 granted further time to the parties to explore the possibility of running the Hospital as a going concern, by passing the following order:
“51.51. In view of the above, we issue direction to the RP as follows;
a. The Prospective Resolution Applicants –(i) Dr. C. Bharath Chandran along with the new co-applicant and (ii) M/s. Sabine Hospital and Research Centre Private Limited shall submit their Expression of Interest to the Resolution Professional at once.
b. The RP shall examine the Expression of Interest and verify that the prospective Resolution Applicants meet the eligibility criteria fixed by the CoC.
c. The Resolution Professional shall share the Information Memorandum with the prospective Resolution Applicants after obtaining a confidentiality agreement.
d. Thereafter, the prospective Resolution Applicants may submit their Resolution Plans before the CoC for its consideration and the Resolution Plan of the prospective Resolution Applicants may be examined based on the parameters fixed under Section 29A and 30(6) of IBC, 2016. If needed, the CoC may garner an expert opinion on the status of MSME and consequential ineligibility clause under Section 29A of IBC, 2016 in relation to the prospective Resolution Applicants.
e. All these processes are strictly required to be completed on or before 26.02.2022 and the RP is directed to file a status
52.Once the Committee of Creditors consider the Resolution Plans the same shall be communicated to the Successful Resolution Applicant and the successful Resolution Applicant shall immediately deposit the Performance Guarantee as fixed by the CoC. It is made clear that, in case the Successful Resolution Applicant fails to submit the statutory requirements within the time granted, the Resolution Professional can approach this Adjudicating Authority seeking Liquidation of the Corporate Debtor. With respect to the request of Dr. C. Bharath Chandran for replacement of the existing co-applicants with new co-applicants, this matter may be considered by the Committee of Creditors as to whether bringing in a new co-applicant has any bearing on the change of status of MSME in respect of the Corporate Debtor, while considering the Resolution Plan of Dr. C. Bharath Chandran.”
With the above directions, the application for liquidation has been posted to 09.03.2022. On 09.03.2022, when this IA was taken up for hearing and disposal, it is seen that as per the directions of this Tribunal both Resolution Plans viz.(i) Dr. C. Bharath Chandran and (ii) Sabine Hospitals and Research Centre Private Limited were placed before the CoC and those Resolution Plans were considered in the 21st CoC meeting. But none of the Resolution Plans received requisite vote of 66% and hence, this Tribunal invoked the second proviso to Regulation 39(3B) of the IBBI (Liquidation Process) Regulations, 2016 and ordered to place the Resolution Plan which received the highest vote again before the CoC for its voting vide order dated 30.03.2022. The operative part of the said order is as under:
“3.9.We find that it is a fit case to exercise such powers given by the Hon’ble Supreme Court in the matter of Committee of Creditors of Essar Steel India(supra) and grant extension of time period of CIRP period only for a limited period of 20 days from the date of this order, for the purpose of placing the Resolution Plan which received the highest vote viz. M/s Sabine Hospitals and Research Centre Private Limited, to again place it before the CoC for its voting as per second proviso to Regulation 39(3B) of the IBBI (Liquidation Process) Regulations, 2016.
3.10.Thus, as per second proviso to Regulation 39(3B) of the 1381 (Liquidation Process) Regulations, 2016, we hereby direct the RP to call for a CoC meeting within a period of 7 days from the date of this order and to place the Resolution Plan of M/s Sabine Hospitals and Research Centre Private Limited, (which received the highest vote of 51.89% in the 21St CoC meeting), before the CoC, not less than 15 days from the date of this order. The CoC may decide and vote upon the Resolution Plan of M/s Sabine Hospitals and Research Centre Private Limited within a period of 5 days thereof.
3.11.The RP is directed to file a report within a period of 20 days from the date of this order, as to its outcome on the voting on the Resolution Plan. Based upon the report filed by the RP, the final order will be passed in the present Application.”
When this case was again taken up for hearing on 22.04.2022, the RP through his Report stated that the 23rd CoC meeting held on 11.04.2022 rejected the Resolution Plan of M/s. Sabine Hospitals and Research Centre Private Limited as the said plan failed to obtain the required 66% voting.
When this Tribunal taken up the matter for considering the prayer of the RP to pass an order for liquidation, Shri Raghunathan Sarangapany, the Learned Authorised Representative of the erstwhile promoter Dr. Bharathchandran stated that in order to prevent the Corporate Debtor from being ordered for liquidation, the erstwhile promoter has felt it appropriate to secure 100% voting of all the Financial Creditors by way of entering into a joint Memorandum of Understanding between him and M/s. Sabine Hospitals and Research Centre Private Limited, the prospective Resolution applicant in whose favour 51.89% of the total voting by CoC was obtained. Taking this into consideration and to see that the Corporate Debtor should run as a going concern without going into the rigours of liquidation, in the interests of justice, this Tribunal on 22.04.2022 passed the following order:
“Taking into consideration the said representation and in the interest of justice to all Financial Creditors and other parties in proceedings, this Adjudicating Authority is of the considered view that it is prudent to allow this representation. We therefore issue the following directions:
1)Let the said joint Memorandum of Understanding elucidating the purpose and other terms understood between the parties be entered into between Dr. Bharat Chandran- the erstwhile promoter and M/s. Sabine Hospitals and Research Centre Private Limited- the prospective Resolution Applicant who secured 51.89% voting within 2 working days of this Order.
2)The RP should place the said joint Memorandum of Understanding before the meeting of the Committee of Creditors to be convened within 5 days of the joint Memorandum of Understanding for consideration and unanimous approval of the Committee of Creditors. It is hereby clarified that not more than 7 days can be allowed to conclude the entire process.
3)The RP shall submit the report before this Adjudicating Authority and file the recommendation of CoC duly accompanied by the minutes of CoC and a certified copy of the joint Memorandum of Understanding within 7 days of the conclusion of the Meeting of the CoC.
Registry is directed to issue copy of this Order to both the parties through email immediately. List this IA for further hearing on 18.05.2022.”
As directed, the Registry of this Tribunal communicated a copy of the above order to the Resolution Professional, Dhanalaxmi Bank Limited (Financial creditor) and Trivandrum International Health Services Limited and M/s Sabine Hospitals and research Centre Private Limited on 27.04.2022.
On 18.05.2022, when the matter came up for orders, the learned Resolution Professional submitted that the CoC held on 13.05.2022 noted the failure of the applicants in submitting a joint resolution plan. In the said meeting, the Resolution Applicants appeared and sought time till 16.05.2022 for submitting their joint Resolution Plan as committed before this Tribunal. Considering their request, the 25th meeting of CoC directed them to submit their Plan latest by 16.05.2022 and decided to adjourn the meeting further to 16.05.2022 for considering the progress of submission of Resolution Plan. On 16.05.2022, both the applicants intimated their inability to submit a joint Resolution Plan by email and confirmed this matter by appearing before the adjourned CoC held on 16. 05.2022.
The resolution Professional has produced the letters received from M/s Sabine Hospital and Research Centre Private Limited and Dr. Bharath Chandran, which are quoted as under:
Letter from Sabine Hospital and Research Centre:
“This is to inform you that though a series of discussions were held between us and Promoter of the Corporate Debtor C Bharath Chandran and multiple feasible options were tired, we are unable to resolve the legal intricacies ensuring from such combinations and its associated risks. Though we earnestly tried to arrive at a resolution planed situated to all, we could not successfully arrive at the desired outcome. Hence, we regret our inability. Hence, it is requested to proceed as per law.”
Letter from Dr. Bharath Chandran:
From the above, it is clear that the only option left with this Tribunal to order the liquidation of the Corporate Debtor. Hence, this Tribunal proceeded to order the liquidation of the Corporate Debtor.
We have also gone through the minutes of the meeting of the Committee of Creditors held on 19.02.2022 in which as item No.6 the following resolution has been passed: -
“The Committee RESOLVED with 100% voting right to recommend for liquidation of the Corporate Debtor and to authorize the RP to file a necessary application before the Hon'ble NCLT as required considering the fact that no resolution plan was approved within the permissible CIRP period including the time extended by the Hon’ble NCLT. Further resolved to appoint Sri. Raju Palanilkunnathil Kesavan (Reg No. 1BBI IPA-001/IP-POO801/2017-18/11356), the present Resolution Professional as Liquidator in case liquidation of the corporate debtor is approved by the Hon'ble NCLT. Further resolved to entrust the Liquidator to explore the possibility of a sale as a going concern of the corporate debtor in the case of liquidation of the company. Further resolved to approve the estimated cost of liquidation and the fees payable to the liquidator as listed above in the case of liquidation of the corporate debtor.”
Section 33 (1) of the I&B Code,2016 empowers this Tribunal for ordering Liquidation of the Corporate Debtor. Section 33 (1) of the I&B Code,2016 is as under: -
33.(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.
In view of the aforesaid provision, the following order is passed: -
O R D E R
M/s. Trivandrum International Health Services Limited is hereby put under liquidation with immediate effect under Section 33 (1) of I&B Code, 2016.
Shri. Raju Palanilkunnathil Kesavan, with Registration No. IBBI/IPA-001/IP-P00801/2017-2018/11356, [E-mail- [email protected]] having address CGNRA-9(33/1183A), Kodamassery Lane, Chalikkavattom, Vennala P O, Kochi,Ernakulam,Kerala ,682028 is appointed as the Liquidator of the Corporate Debtor subject to submission of written consent under Section 34 (1) of the I&B Code, 2016 in the prescribed form within a week from the date of receipt of this order.
The Liquidator is directed to adhere to Section 33(1) (ii) & (iii) and discharge his powers and duties as specified under Section 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 Liquidator shall initiate the liquidation process as envisaged under Chapter-II of the Code and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016;
Whenever the Liquidator issues any publication in the newspapers, the said shall be published in widely circulated newspapers in the State in which the Registered Office of the Company is incorporated.
Public Notice shall be issued in two newspapers, viz., one in English and another in Malayalam language, stating that the Corporate Debtor is in liquidation, as required in terms of Section 33(1) of the Code;
All the powers of the Board of Directors and the key managerial persons of the Corporate Debtor shall cease to exist. All these powers shall henceforth be vested with the Liquidator.
The Suspended Directors and the personnel of the Corporate Debtor are directed to extend all 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 the liberty to the liquidator to institute suit or other legal proceedings 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.
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 continued during the liquidation process by the Liquidator.
The Deputy Registrar/Assistant Registrar shall forward a copy of this Order to i) the Liquidator and (ii) the Registrar of Companies, Kerala, immediately upon pronouncement of this Order; for updating the Master Data of the Corporate Debtor.
The fee payable to the Liquidator shall be in compliance with Regulation 4 of IBBI (Liquidation Process) Regulations,2016.
With the above directions, IA (IBC) 49/ KOB/ 2022 stands allowed.