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Judgment
Heard.
This Application has been filed under Section 33 and Section 60(5) of IBC r/w Rule 11 of NCLT Rules seeking for the liquidation of the Corporate Debtor.
It is stated that CIRP was initiated on the Application filed by the Corporate Applicant u/s 10 of IBC vide an Order dated 09.12.2024. The IRP / RP initiated an action to take control and custody of the assets of the Corporate Debtor. However, till date, books of account were not received by the IRP. It was informed by the suspended Directors that the Corporate Debtor ceased its commercial operations six years back and all the records / accounts were damaged. No material is available other than the financial statement.
It is stated that one unsecured Financial Creditor submitted a claim. There are no banks / financial institutions. The IRP prepared the list of the Creditors which included Ram Chandran Traders Pvt. Ltd (unsecured Financial Creditor, Kakatiya Enclaves Pvt. Ltd (Operational creditor) and income Tax Department (Operational Creditor) and constituted the CoC. The first CoC meeting was held on 18.01.2025 where it was noticed that there are no assets in the fixed asset register.
Possible recoveries from the Debtors are very minimal and it might not even cover the CIRP / liquidation costs. Though RP initiated recovery action against the Debtors of the Corporate Debtor, but did not get any success. There are no employees working with the Company. The RP also sought clarification from the suspended Directors regarding the trade receivables to which the suspended Directors responded vide letter dated 09.12.2024 that all the dues receivable from sundry debtors were outstanding for more than 8 to 11 years and are time barred. The RP conducted the CoC meeting on 04.02.2025 to decide on the CIR Process, where the CoC voted for moving an application for liquidation and early dissolution. The issue of not providing books by the suspended directors was also discussed and the CoC decided not to proceed with an Application u/s 19(2) of IBC, 2016. It also resolved not to appoint any forensic auditor since the Corporate Debtor has no commercial operations for more than 5 years. It is stated that 3rd CoC meeting was held on 04.03.2025 where CoC decided to move an application for early dissolution of the Corporate Debtor. It was resolved that the IRP be appointed as the Liquidator for filing the application for early dissolution.
It is stated that there is no scope for revival of the business of the Corporate Debtor. The Corporate Debtor has no fixed assets to sell and settle the Operational creditors. The CoC is not willing to spend any monies on the conduct of the process.
With the application, the RP has given his consent to act as a Liquidator of the Corporate Debtor and annexed Form-AA as annexure –A11.
On a consideration of the facts narrated in the Application, Minutes of the CoC and the Resolution passed in the CoC meetings, we find that the Corporate Debtor has no fixed assets to sell and settle the dues of the Operational Creditors. There are no Financial Creditors of the Corporate Debtor. The Corporate Debtor has ceased its business operations for more than six years. Though it had trade receivables but they have become time barred. There is no prospect of recovery of time barred debts. Except the financial statements, no records are available with the Applicant / IRP / RP to proceed with the CIR Process. The CoC has also taken decision not to file an application u/s 19(2) of IBC, 2016 against the suspended Directors nor is inclined to conduct the forensic audit of the records of the Corporate Debtor. It has resolved for the liquidation and early dissolution of the Corporate Debtor.
It was observed in the case of Janak Jagjivan Shah (RP) Vs CoC of Rainbow Infrabuild Pvt. Ltd (Company Appeal (AT) (Insolvency) No.1406 of 2024, dated 28.10.2024 – NCLAT, Principal Bench, New Delhi, that the Scheme of IBC provides that dissolution is a step subsequent to the Corporate Debtor having been completely liquidated. In the present case, the liquidation proceedings have not been undertaken and resorting to Section 54 can be taken as per the scheme of the IBC.
It is informed that the CoC has decided not to make any contribution towards the liquidation process. The creditors are not ready to proceed any further.
Considering the facts in totality, we are of the view that provisions of Regulation 14 of IBBI Liquidation Regulations are to be resorted. Before resorting to early dissolution, an order requiring liquidation of the Corporate Debtor is to be passed. The CoC has also resolved to go for liquidation and early dissolution. It has recommended the name of the IRP / RP to act as a Liquidator. He has also given his consent by submitting Form-AA which is valid.
The AFA of the Applicant, Mr. G. Mukundan, has expired on 30.06.2025. We hereby appoint Mr. G.S.Sudhir, with Reg. No. IBBI/IPA-001/IP-P-02744/2022-2023/14183; e-mail ID: sudhircaip@gmail.com as the Liquidator of the Corporate Debtor. He is directed to take necessary steps which are required for the early dissolution of the Corporate Debtor as provided under Regulation 14 of IBBI Liquidation Regulations.
Since for this purpose, certain compliances are to be made as provided in the Code and the Regulations, which would require expenses, we direct the members of the CoC to contribute Rs.1.0 Lakh proportionate to their claims, so that early dissolution of the Corporate Debtor can take place.
The Liquidator Mr. G.S.Sudhir is directed to carry out the liquidation process subject to the following terms of the directions.
The Liquidator shall strictly act in accordance with the provisions of IBC, 2016 and the attendant Rules and Regulations including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 as amended upto date enjoined upon him.
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.
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 suitable application before this Adjudicating Authority.
The Liquidator is directed to proceed with the process of liquidation in a manner laid down in Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016.
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 report as are required to be filed under the relevant Regulations, in addition, shall also be duly filed by him with this Adjudicating Authority.
The Registry is directed to communicate this order to the Registrar of Companies, concerned and to the Insolvency and Bankruptcy Board of India;
The order of Moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cease to have its effect and that a fresh Moratorium under section 33(5) of the Insolvency and Bankruptcy Code shall commence.
Copy of this order be sent to the financial creditors, Corporate Debtor and the Liquidator for taking necessary steps and for extending the necessary co-operation in relation to the Liquidation process of the Corporate Debtor.
With these observations, the Application is disposed of.