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Judgment
ORDER
This is an application filed by the RP under Section 54 r.w. 60(5) IBC & Reg. 14 of IBBI (Liquidation Process) Regulations, 2016 & Rule 11 of NCLT Rules, 2016 seeking state way dissolution of the Corporate Debtor from CIRP process without opting for liquidation process with the following prayers:
a)Your Lordships may be pleased to allow the present application;
b)Your Lordships may be pleased to pass an order under Section 60(5) read with Section 54 of the Insolvency and Bankruptcy Code, 2016 and Regulation 14 of Liquidation Regulations, 2016 and Rule 11 of National Company Law Tribunal, Rules, 2016 for the dissolution of the Corporate Debtor; OR
c)Your Lordships may be pleased to orcer Liquidation of Orient Newsprint Limited as per Section 33 of the Insolvency and Bankruptcy Code, 2016;
d)Your Lordships may be pleased to grant any other relief as may deem fit in the interest of justice;
An application under Section 9 of the IBC, 2016, being CP (IB) 225 (AHM) 2022, was ordered on 19.06.2023, and one Mr. Rahul Shah was appointed as the IRP. A public announcement was made, and on receipt of the claims, the CoC was constituted. It was resolved in the first CoC meeting to appoint Mr. Vikash G. Jain as RP of the corporate debtor, which was allowed by this Tribunal vide order dated 25.08.2023, in IA No. 943 of 2023.
On 29.09.2023, the 4th CoC meeting was conducted, and the applicant herein apprised the CoC that there are no assets of the corporate debtor. The RP further apprised that Rainbow Papers Limited has been assigned by the Members of the Consortium Lenders of Rainbow Papers Limited to RARE ARC.
On 04.12.2023, in the 6th CoC meeting, the CoC resolved the dissolution of the corporate debtor. The relevant resolution is placed at page No. 93 in the application, which is reproduced as under:
"RESOLVED THAT the approval of committee of creditors be and is hereby accorded, pursuant to Section 54 of the Code, to dissolve the corporate debtor. Further in case direct dissolution not granted by Hon'ble NCLT the approval of committee of creditors be and is hereby accorded, pursuant to Section 33(2) of the Code, to initiate the liquidation of the corporate debtor.
Form H is placed on page No. 102 of the application.
A perusal of Form H reveals that the fair value and the liquidation value of the corporate debtor are Rs. 9174/- as per the valuation report.
Today, Learned Counsel, Mr. Nipun Singhvi, appears and states that since there are no assets, the company may be ordered to state way dissolved under the liquidation process. Learned Counsel, Mr. Nipun Singhvi, placed four judgments on the coordinated Bench, which are as below:-
Mr. Mandar Wagh, IRP of M/s Synew Steel Pvt Ltd.
Mr. T. Sivagurunathan, RP of Aesys Technologies India Pvt Ltd
Mr. Rajiv Kumar Agarwal, RP of Nouvelle Advisory Services Private Limited
Rakesh Kumar Relan IRP of Sachika Tranding Private Limited
Section 54 of the Insolvency and Bankruptcy Code, 2016 is reproduced as under:-
(1)Where the assets of the corporate debtor have been completely liquidated, the liquidator shall make an application to the Adjudicating Authority for the dissolution of such corporate debtor.
(2)The Adjudicating Authority shall on application filed by the liquidator under sub-section (1) order that the corporate debtor shall be dissolved from the date of that order and the corporate debtor shall be dissolved accordingly. (3) A copy of an order under sub-section (2) shall within seven days from the date of such order, be forwarded to the authority with which the corporate debtor is registered.
From the prayer and simple reading of the Act, it is clear to us that it is the liquidator who can make an application under Section 54 of the IBC, 2016 seeking the liquidation of the corporate debtor. The RP under the Act has no locus to file an application seeking dissolution of the corporate debtor without the company being
put into the liquidation process.
Learned Counsel for the applicant has relied upon certain judgments, which are quoted above. These are judgments / orders of the Coordinate Bench’s that are only persuasive and not binding upon this Bench.
Learned Counsel for the applicant has also made an alternate prayer, which is prayer (c), which is to order the liquidation of the corporate debtor.
In our view, the corporate debtor undergoing the CIRP process cannot be put in a state way put to dissolution it has to first under go the process of liquidation. Keeping in view the alternate prayer as made through prayer (c), we hereby allow the prayer (c).
The corporate debtor is hereby ordered for liquidation subject to the following terms of the directions:-
The Corporate Debtor - M/s. Orient Newsprint Limited shall be ordered for liquidation in terms of the provisions of section 33(2) of the Code r.w. Regulations made thereunder which shall be effective from the date of this order.
The Moratorium declared under section 14 of the Code shall cease to have effect from the date of the order of liquidation.
As per section 34(4) (b) of the Code, Mr. Kailash Shah, having Registration No. IBBI/IPA-001/IP-P00267/2017-2018/10511, is hereby appointed as a Liquidator of the Corporate Debtor i.e., M/s. Orient Newsprint Limited. The Liquidator so appointed shall complete the liquidation process as per the provisions of the Code r.w. the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
All the powers of the Board of Directors, key managerial persons, and the partner of the Corporate Debtor, as the case may be, hereafter cease to exist. All these powers henceforth vest with the Liquidator.
The personnel of the Corporate Debtor are directed to extend all cooperation to the Liquidator as required by him in managing the liquidation process of the Corporate Debtor.
The Liquidator will charge fees for the conduct of the liquidation proceedings in proportion to the value of the liquidation estate assets as specified by IBBI and same shall be paid to the Liquidator from the proceed of the liquidation estate under section 53 of the Code.
Once the liquidation process is initiated, subject to section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor. The Liquidator has the liberty to institute a suit and other legal proceedings on behalf of the Corporate Debtor with the prior approval of this Adjudicating Authority, as provided in sub-section (5) of section 33 of the Code.
This liquidation order shall be deemed to be 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 Liquidator shall endeavour to explore the viability of selling the Corporate Debtor as a going concern in term of Regulation 32A of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016.
This Adjudicating Authority directs the Liquidator to issue a public announcement stating that the Corporate Debtor is in liquidation. The Liquidator will also serve a copy of this order to the various Government Departments such as Income Tax, GST, VAT, etc., who are likely to have any claim upon the Corporate Debtor so that the authorities concerned are informed of the liquidation order timely. The Liquidator will also provide a copy of this order to the trade unions/employee associations of the Corporate Debtor so that the workman/employees could also be informed of this liquidation order through their association.
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 present Resolution Professional is directed to hand over the relevant documents and control of the Corporate Debtor to the newly appointed liquidator forthwith.
The Registry is directed to communicate this order to the concerned Registrar of the Companies, the registered office of the Corporate Debtor, IBBI, the resolution professional, and the Liquidator by speed post as well as e-mail within one week from the date of this order, after completion of all the formalities.
Accordingly, IA/(Dis.)3(AHM)2024 is disposed off.