M/s Canara Bank vs M/s Shresht Industries Private Limited

[PER : BENCH]

I. The instant Application is filed by the Resolution Professional of M/s. Shresht Industries Private Limited/Corporate Debtor under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016, R/w Rule 11 of the National Company Law Tribunal Rules, 2016, seeking –

To liquidate the Corporate Debtor/M/s. Shresht Industries Private Limited; and

To appoint Mr. Narender Gandhari as the Liquidator of the Corporate Debtor.

II. This Adjudicating Authority, vide Order dated 09.09.2022 admitted the Company Petition bearing CP (IB) No. 160/7/HDB/2022 filed by M/s. Canara Bank, for short “Financial Creditor” against M/s. Shresht Industries Private Limited, for short “Corporate Debtor” and initiated CIRP process by appointing Mr. Narender Gandhari as Interim Resolution Professional, who was later confirmed as Resolution Professional (RP).

III. On assuming charge as Interim Resolution Professional, the Applicant took various steps/actions for completing the CIRP process.

IV. The Applicant made a public announcement of initiation of CIRP against M/s. Shresht Industries Private Limited, under Section 15 of the Code r/w Regulation 6 of the IBBI Regulations, 2016 in the newspapers viz., Financial Express and Mana Telangana in English and Telugu.

V. The Applicant vide email dated 16.09.2022 intimated suspended directors not to exercise any of the powers as Directors and not to operate the bank accounts of the Company as the initiation of CIRP is commenced. On 17.09.2022, the applicant visited the office of the Corporate Debtor situated at 8-2-293/82/A/727, Plot No. 727, Road No. 36, Jubilee Hills, Hyderabad – 500033 and found no office of the Corporate Debtor in the said location.

VI. The Applicant vide email dated 19.09.2022 communicated to the suspended directors stating that the office address of the Corporate Debtor is not traceable and requested to send the address, where the records and books of accounts of the company were kept. Again, through various emails the applicant requested the suspended directors to arrange the information as per the list to complete the CIRP process.

VII. In the 2^nd COC Meeting, the COC directed the RP to file an application for non-co-operation of suspended board of directors and the RP had filed an IA 1337 of 2022 before this Hon’ble Tribunal, which was allowed by this Adjudicating Authority on 24.04.2023 directing the suspended management to furnish all the information as prayed for within 15 days from the date of the order. However, despite the Order passed by this Hon’ble Tribunal and despite intimating the same by virtue of the email dated 03.05.2023 as well as letter dated 06.05.2023, the suspended directors have not provided the information as sought for and have thus violated the order passed by this Honourable Tribunal in IA 1337 of 2022.

VIII. Further, the Applicant had filed a Contempt Application IA 14/2023 in CP(IB) No. 160/7/HDB/2022 for violation of order in IA 1337 of 2022 and the same is pending. In the Contempt Application, the Respondents therein have been set ex parte. It will not be out of place to submit that an application for excluding the period of non-co-operation from 16.09.2022 to 07.06.2023 in IA No. 965/2023 from the total period of the CIRP and the same was allowed by virtue of the order dated 15.06.2023.

IX. In the 6^th COC Meeting, the COC directed the Resolution Professional for filing the Liquidation application before this Adjudicating Authority as there is no clearly visible business model which can be offered to a prospective Resolution Applicant; the applicant was unable to prepare the Information Memorandum; issue Expression of Interest and RFRP. Due to lack of information, the COC decided to Liquidate the Corporate Debtor. Further, COC resolved to appoint the existing RP as Liquidator of the CD.

X. In view of the facts and circumstances, as the Resolution Professional did not receive any information from the suspended board of directors of the Corporate Debtor as per the directions in IA No. 1337 of 2022 filed under Section 19(2) of IBC, the Applicant had filed an IA No. 14/2023 under Section 70 of IBC, 2016. Further, there is no business which can be offered to the prospective resolution applicants through any Resolution Plan (as the CD has stopped its operations long back and there were no fixed assets, except one vehicle which was funded by Central Bank of India). Hence, this Adjudicating Authority deems it proper to allow the present application. Accordingly, in exercise of powers conferred under Sub-Clause (i), (ii) and (iii) of Clause (b) of Sub-Section (1) of Section 33 of the I&B Code, 2016, we proceed to pass the Order as follows: —

This Adjudicating Authority hereby order for Liquidation of M/s. Shresht Industries Private Limited, which shall be conducted in the manner as laid down in the Chapter III of part II of the I&B Code, 2016;

This Adjudicating Authority hereby appoints Mr. Narender Gandhari as Liquidator as resolved by COC. He shall issue a public announcement stating therein that the Corporate Debtor is in Liquidation;

The moratorium declared under Section 14 of the I&B Code, 2016, shall cease to have effect from the date of the order of Liquidation;

Subject to Section 52 of the I&B Code, 2016, no suit or other legal proceedings shall be instituted by/or against the Corporate Debtor. However, a suit and other legal proceedings may be instituted by the Liquidator, on behalf of the Corporate Debtor, with the prior approval of this Authority.

We make it clear that para (iv) hereinabove shall not apply to legal proceedings in relation to such transactions as notified by the Central Government in consultation with any financial sector regulator.

This Order 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.

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 Company Liquidator viz., Mr. Narender Gandhari. In addition to this, the Company Liquidator shall exercise the powers and duties as enumerated in Sections 35 to 50, 52 to 54 of the I&B Code, 2016, r/w Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

The personnel of the Corporate Debtor shall extend all assistance and co-operation to the Company Liquidator as may be required by him in managing the affairs of the Corporate Debtor.

The Liquidator shall keep in view of the provisions of Regulation 32A of IBBI (Liquidation Process) Regulations, 2016 and shall endeavour to first sell the Corporate Debtor or its business as a going concern. However, if he is unable to sell the Corporate Debtor or its business within 90 days from liquidation commencement date, Liquidator shall proceed to sell the assets of the Corporate Debtor under clauses (a) to (d) of Regulation 32 of IBBI (Liquidation Process) Regulations, 2016.

The Liquidator shall be entitled to charge such fee for conducting the Liquidation proceedings in accordance with the decision taken by the COC under Regulation 39D of IBBI (Insolvency Resolution Process Corporate Persons) Rules, 2016 r/w Regulation 4(1) of IBBI (Liquidation Process) Regulations, 2016.

Copy of this Order shall be sent to the concerned Registrar of Companies, RD, OL, Registered Office of the Corporate Debtor and Company Liquidator viz., Mr. Narender Gandhari for information and compliance.

Registry is directed to furnish a copy of this order to IBBI for confirmation of appointment of Liquidator.

Accordingly, Application bearing IA No. 1769/2023 is allowed and stands disposed of.