Gujarat State Construction Corporation Ltd Vs

IA 763 of 2021 filed under Section 33 read with Section 34 of the Insolvency and Bankruptcy Code, 2016 ('IB, Code') for passing an Order for  Liquidation  in  the  case  of the  Corporate  Debtor,  viz., Gujarat State Construction Corporation Limited.

The facts in brief,  are that the  aforementioned  Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) by this Adjudicating Authority under  section  10  of IB  Code vide order dated  11.11.2020.  The  applicant Mr.  Arvind  Gaudana was appointed as Interim Resolution Professional (IRP) who made public announcement   as   per   Section 15   of  the   IB   Code, 2016.   The Applicant was later confirmed as Resolution Professional (RP).

The Corporate Debtor had defaulted to the Government Financial Institution, for the debt amounting to total Rs. 65,80,37,840/- as per financial statement for the year ended on 31.03.2018.

It is evident from the record that in compliance of Section 21 of IB Code,  2016  read with Rule 6  & 8  of Insolvency and Bankruptcy Board    of   India (Insolvency   Resolution    Process    for   Corporate Persons)    Regulations, 2016 (hereinafter   referred    to    as    "CIRP Regulation"), the IRP constituted CoC.

The CoC in its 2ndmeeting held on 03.09.2021 had discussed that the Corporate Debtor is a closed Company and there are no remote chances for revival and further there are meager movable assets, hence it would be futile exercise to undertake the further actions of publishing the Form G, as there is no claim lodged except of one financial     creditor     being     the     Gujarat     Government     Financial Institution. Thereby, the CoC in its 2nd meeting decided to pass a resolution for liquidation and also resolved to appoint the Applicant herein  Mr.   Arvind   Gaudana  bearing  registration   No.   IBBI/IPA-002/1P-00154/2016-17/ 1439 as a liquidator under Section 34 (4) of   the    Code.     Further   in    accordance    with    Regulation 32    of Liquidation Process Regulations, 2016 the CoC had resolved to fix liquidator's fee out of pocket expenses at Rs. 75,000/- per month.

We  have  carefully  heard  and  considered  the  arguments  of the learned counsel for the RP and have also perused the records. We noted  that  the  Corporate  Debtor  was  incorporated  as  a  private limited company on 16.12.1974 having CIN: U99999GJ1974SGC002635     there     are     no     claims     lodged     by Operational Creditor and the only Financial Creditor is Government of  Gujarat.   The   Corporate   Debtor   is   also   fully  owned   by   the Government  of  Gujarat.   We  noted  that  CoC  has  recommended liquidation of the company, as no resolution plan was forthcoming and the company has meager movable assets of approximately Rs. 1.72 lakhs.

The Hon'ble National Company Law Appellant Tribunal (`NCLAT'), in Praveen Kumar Nand Kumar Vs. VSL Securities Pvt. Ltd. in CA No. 1/2020 in CA No. 308/2000, dated 09.06.2020, observed as under:

"Likewise, the decision of the COC recommending liquidation of the corporate debtor after proper evaluation of the assets and liabilities of corporate debtor with no Resolution Plan forthcoming would be a business decision falling within the domain of commercial wisdom of the COC which is not amenable to judicial review."

In view of the foregoing, we hereby pass the order of liquidation of the Corporate Debtor M/s Gujarat State Construction Corporation Limited.,  and  consequently  allow  IA  No. 763  of 2021   and  issue following directions:

i) The liquidation of the Corporate Debtor is effective from the date of this order and the Moratorium declared vide order dated  11.11.2020 in OP (IB) No.665/10/NCLT/AHM/2019, henceforth, ceases to exist.

ii) The CoC had resolved to appoint the RP as the Liquidator. It is noted that Applicant has failed to file its written consent to act as liquidator in prescribed form. Thus subject to filing of written consent to act as liquidator in Form AA within five days from this Order, this Adjudicating Authority appoints Applicant  /   Resolution  Professional  Mr.  Arvind  Gaudana (Registration    No.     IBBUIPA-002/1P-00154/2016-17/1439) as  a  liquidator  of the  Corporate  Debtor  i.e.  M/s  Gujarat State Construction Corporation Limited who shall complete the  liquidation process as per the provision of Code read with Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016.

iii)   It is noted that as no resolution is passed by CoC under  Regulation 39B and 390 of CIRP Regulations, the liquidator is  directed  to  take  necessary  action  in  accordance  with relevant    regulations     of   the    IBBI (Liquidation    Process) Regulations, 2016.

iv) As per Section 33(5) of the Code and subject to Section 52 of the   Code,   no   suit   or  other  legal   proceedings   shall   be instituted by or against the Corporate Debtor; Provided  that  a  suit  or  other  legal  proceedings  may  be instituted  by  the  Liquidator  on  behalf  of  the  Corporate Debtor,     with    the     prior    approval    of   the    Adjudicating Authority;

v) The provisions of sub-section (5) of Section 33 of the Code shall  not  apply  to  legal  proceedings  in  relation  to  such transactions as may be notified by the Central Government in consultation with any financial sector regulator; and

vi) This order of liquidation under Section 33 of the Code shall be   deemed   to   be   a  notice   of  discharge   to   the   officers, employees  and  workmen  of the  Corporate  Debtor,  except when  the  business  of the  Corporate  Debtor is  continued during the liquidation process by the Liquidator; and

vii) All the  powers  of the  Board  of Directors,  key  managerial personnel and the partners of the Corporate Debtor, as the case may be, shall cease to have effect and shall be vested in the Liquidator; and

viii) The   personnel  of  the  Corporate   Debtor  shall  extend  all assistance  and  cooperation  to  the  Liquidator  as  may  be required by him in managing the  affairs  of the  Corporate Debtor and provisions of Section 19 of the Code shall apply in relation to liquidation process as they apply in relation to CIR   process   with   the   substitution   of  references   to   the Interim     Resolution     Professional    for    references    to    the Liquidator.

ix) The    Liquidator   shall   publish    public    announcement   in accordance  with  Regulation 12   of  the   CIRP  (Liquidation Process) Regulations, 2016 and in Form B of Schedule II of these Regulations within five days from receipt of this order calling upon the stakeholders to submit their claims as on liquidation commencement date  and provide the last date for submission of claim which  shall be  30  days from the liquidation commencement date.

x) The announcement shall be published in accordance with Regulation 12(3) of the  CIRP (Liquidation  Process) Regulation, 2016.

xi) That    in    accordance    with    Regulation 13     of   the    CIRP (Liquidation Process) Regulations, 2016, the Liquidator shall file preliminary report within 75 days and also file regular progress reports as per Regulation 15.

xii) Registry  is  directed  to  upload  this  order  on  the  official website within maximum two working days from the date of this order. The authenticated copy of this order also be sent by   the   registry   to   the   Operational   Creditor,    Corporate Debtor,  Registrar of the Company,  Resolution Professional cum  Liquidator by  Speed-post within  one  week from  this order.

Accordingly, the present I.A. No. 763 of 2021 stands disposed of.