Exclusive Engineers Private Limited vs Mr. Manoj Kulshrestha

Per: Balraj Joshi, Member (Technical)

This Adjudicating Authority convened through hybrid mode.

IA(IBC)/1053(KB)2022 is an application filed under section 33 of the Insolvency and Bankruptcy Code, 2016 (in short “IBC”) by the Resolution Professional (“RP”) of Exclusive Engineers Private Limited, the Corporate Applicant (Corporate Debtor), praying for the following reliefs: -

This Adjudicating authority, on a petition filed u/s. 10 of the IBC read with rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by Exclusive Engineers Private Limited, the Corporate Applicant, vide order dated 21/11/2019 in CP(IB)/07(KB)2018, had ordered initiation of CIRP against the Corporate Applicant. Mr. Manoj Kulshrestha was appointed as the Interim Resolution Professional (“IRP”).

In terms of section 15 of the IBC, Public Announcements^{22.Averments in paragraph 4.3 at page 10 of the application} in Form A was published in “Financial Express” (English) and “Ek Din” (Bengali) on 26/11/2019 inviting claims from the creditors.

In terms of section 21 of the IBC Committee of Creditors^{33.Averments in paragraph 4.4 at page 10 of the application} (in short “CoC”) was duly formed with the following two Operational Creditors:

It is stated in the application that two applications one u/s. 19(2) of the IBC and the other under rule 11 of the NCLT Rules were filed being IA(IBC)/204(KB)2020 and IA(IBC)/205(KB)2020, which were dismissed with liberty to file a fresh copy of the application in accordance with law^{44.Annexure C at pagt 30 of the application} vide order dated 11/05/2022

1^st meeting of the CoC was held on 23/11/2020 at M.K.Associates, 4F, CS-14, Ansal Plaza, Vaishali, Ghaziabad, Uttar Pradesh and a copy of the minutes of the 1^st CoC meeting forms Annexure B^{55.At pages 21 to 29 of the application} to the application.

It is stated in the application that due to suspension of AFA of the applicant, the applicant could not take any steps at that time. However, CoC did not take any steps to file the requisite application for replacement of IRP/RP in accordance with section 27 of the IBC, 2016^{66.Averments in paragraph 4.8 at page 13 of the application}.

It is submitted by the Ld. Counsel for the RP that the maximum permissible limit of 330 days of the CIRP period has expired long back. Under the circucumstances and especially in the light of the fact that there are no assets of the Corporate Debtor, non-cooperation from the Corporate Applicant and no funds have been provided even by the CoC members for CIRP cost, it is clear that there is no scope for resolution and consequently the Corporate Applicant ought to be liquidated as per operation of law.

It is also submitted by the Ld. Counsel for the RP that necessary direction be passed directing the Directors of the Corporate Debtor / CoC for making payments of CIRP costs and expenses incurred by the IRP/RP in the matter to the tune of Rs.17,36,566/- in accordance with the minutes of the meeting of the CoC, details of which are given in Annexure 'E'^{77.At page 32 of the application} to the application.

Mr. Manoj Kulshrestha, Resolution Professional has not given his consent to act as the Liquidator of the Corporate Debtor. It is pertinent to note that the 330 days CIRP period has elapsed by efflux of time.

We have heard the Ld. Counsel for the RP, perused the application and the documents attached therewith.

Section 33(1)(a) of the Code mandates that the Adjudicating Authority shall pass an order of liquidation where no resolution plan is received before the expiry of the CIRP. Sub-section (2) thereof requires the Adjudicating Authority to pass the liquidation order where the Resolution Professional intimates to the Adjudicating Authority the decision of the Committee of Creditors approved by not less than 66% of the voting share to liquidate the Corporate Debtor.

(i) Section 54 of the Code reads as follows: -

Upon a conjoint reading of the above provisions, the ultimate objective of the Code is either to resolve the issue by way of approval of Resolution Plan or to liquidate and then to dissolve the Corporate Debtor, as expeditiously as possible. Since the Corporate Debtor does not prima facie own any valuable asset whose value is capable of maximization and have entirely eroded its capital and has neither any assets nor any cooperation from the suspended members of the Board of Directors of the Corporate Debtor, even no funds have been provided by the CoC members to meet IRP/RP fees and CIRP cost and that the Corporate Debtor was not a going concern, no useful purpose would be served by resorting to the rigour of liquidation as the CoC has not even paid the CIRP cost and as submitted by the RP is not at all interested in bearing the liquidation cost as well.

Since the Corporate Debtor does not have any assets, as stated at page 13 of the IA, no useful purpose would be served by instituting liquidation process as required under section 33 of the code. It is submitted by the Ld. Counsel for the RP that the CoC, which comprises of the Union of India – Navy (99.05%) and the Commissioner of Commercial Tax, Government of West Bengal (0.95%), is not interested in spending more money and hence the hesitation in taking any decisions in the meetings and providing direction to the RP. From the submissions of the Ld. Counsel for the RP, it is clear that it would be judicious to resort to direct dissolution of the Corporate Debtor rather than first sending it to liquidation fruitlessly and then attempting to liquidate non-existent assets and then dissolving the Corporate Debtor, particularly when it is clear that even the fees of the RP and the CIRP cost have not been paid by the CoC. In view of the “nil” assets it is presumed that the assets have been liquidated.

In view of the above facts and circumstances, it is prudent to dissolve the Corporate Debtor, and it is ordered accordingly. However, personal liability/Guarantee of any Directors/Promoters of the Corporate Debtor, if any, would not absolve them of their liability by virtue of this order. Aggrieved party/parties, if any, shall be at liberty to continue or to take appropriate legal remedies against them.

The CoC is directed to pay the IRP/RP fees and CIRP cost as approved by them at the CoC meeting held on 23/11/2020.

The Resolution Professional is further directed to serve a copy of this order upon the Registrar of Companies, West Bengal, immediately and, in any case, within fourteen days of receipt of this order. The Registrar of Companies shall take further necessary action upon receipt of a copy of this order.

The Resolution Professional shall stand discharged from his responsibilities, subject to procedural compliances.

IA(IBC)/1053(KB)2022 in CP(IB)/07(KB)2018 is allowed with the above directions and the IA(IBC)/1053(KB)2022 and CP(IB)/07(KB)2018 are hereby disposed of accordingly.

The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

Certified Copy of this order may be issued, if applied for, upon compliance of all requisite formalities.

File be consigned to records.