M/s India SME Technology Services Limited vs Mr. Vinay Bansal

The present Application has been filed by Mr, Rajiv Kumar, CEO of M/s India SME Technology Services Limited under Section 60(5)) of the Insolvency & Bankruptcy Code, 2016 (“IBC” or “the Code”) r/w Rule 11., NCLT Rules, 2016 to withdraw/cancel the Voluntary Liquidation process initiated under sec 59 of the Code. Applicant has prayed for the following:

Applicant Company has been incorporated on 17.11.2005 with CIN: UL74140DL2005PLC142633, having Registered office at 10th Floor, Atma Ram House, SIDBI, 1, Tolstoy Marg, New Delhi-110001 under the provisions of the Companies Act, 1956 with the Registrar of Companies, NCT of Delhi. The Applicant Company is a joint initiative of SIDBI and four public sector banks namely, State Bank of India, Indian Bank, Oriental Bank of Commerce (now merged with Punjab National Bank), and India Overseas bank.

The Applicant Company has been offering technology related consultancy & advisory services in the area of Energy Efficiency and Sustainable Development. It was providing energy audit services to Micro, Small & Medium Enterprises (MSMEs) through empanelled agencies on a highly concessional fee. It was also empanelled as Project Management consultant with the Ministry of New and Renewable Energy (MNRE) for supporting 5 Ministries for installation of solar systems at rooftops of various offices of these ministries. The Applicant Company facilitated, through 10 nos. MSME vendors, installation of around 15.5 MW of solar rooftop projects with aggregate cost of around Rs.100 crore at 209 locations in the country. It has channelized incentive from Government of India aggregating to Rs. 25.16 crore to MSME solar vendors. These solar rooftop projects would lead to generation of around 20,374 MWh per annum energy leading thereby to energy cost savings of around Rs.297.18 crore as well as GHG emissions reduction over the project life of 25 years.

It is submitted that the Board of Directors of SIDBI in its Board meeting dated 26.04.2019 proposed the idea to voluntarily windup/liquidate the Applicant company due to the reason that the Applicant Company had not been able to fulfil its main objective to promote technological upgradation in MSME sector and the financial performance of the applicant company was also not encouraging. Further, the Applicant Company in its 14th Annual General meeting, unanimously approved the voluntary liquidation process on 18.10.2019 and Mr. Vinay Bansal was appointed as Liquidator of the Applicant company. At the time of commencement of voluntary liquidation, it was decided by the shareholders that the ongoing projects were to be completed and complete handover was to be made to the clients by Applicant Company and subsequently, the "Operations and Maintenance" of the completed projects were to be handed over to SIDBI. Subsequently, the progress of ongoing projects got delayed due to the COVID-19 induced lockdowns and restrictions over physical movements. Since the projects were near to completion but not at the stage of commencement of O&M, the projects could not be handed over to SIDBI. The liquidation of the company could not be started by the Liquidator. The delay was exacerbated by the COVID-19 Pandemic and the consequent restriction on movement of goods etc.

In the meanwhile, SIDBI through an independent 3^rd party namely, Brickwork Analytics (BWA) conducted a feasibility study for reviving the Applicant Company and withdrawal from voluntary liquidation. Further, feasibility study suggested that the credentials earned by the company in last 5-6 years can be utilized in the field of Green Energy and thus can create good value for the shareholders. Further, with the newfound impetus on the use of Renewable Energy in line with COP-26 (26^th annual Conference of parties under the United Nations Framework Convention on Climate Change Conference)/Panchamrit commitments, the shareholders now see an increase in opportunity of business and growth and thus want to give the Applicant Company one more chance.

Applicant Company in its application has submitted that it is expected to experience revenue growth in FY2024-2025 onwards as it starts to gain more project work, increase its customer base, and expand to new business lines. It is expected to take high value high margins projects. The operating margin is expected to be approximately 20.51% and profitability margin is expected to be approximately 10.91% on average.

Therefore, in this background, the Board of SIDBI at its 215^th meeting held on August 5, 2022 considered the proposal for revival of company and withdrawal of voluntary liquidation and thereby Board approved the said proposal. Copy of the minutes of 215^th Board meeting of SIDBI is annexed as Annexure A8 of the application, relevant part of which is reproduced below:

Further, on 22.09.2022, a proposal was put before the stakeholders of the Applicant Company to withdraw from the Voluntary Liquidation and thus, revive the company and the representatives of the stakeholders holding 100% voting rights attended the said meeting and the proposal to withdraw from the Voluntary Liquidation was accepted unanimously by 100% votes in favour of withdrawal from Voluntary Liquidation. Also, there has been no objection to this special resolution by any stakeholder or third party. Copy of the minutes of stakeholder’s meeting dated 22.09.2022 is annexed as Annexure A9. Relevant part of the stakeholders meeting is reproduced below:

Applicant Company has submitted that it has huge growth potential. Such revival not only gives growth opportunity to the Applicant Company but also provides opportunity for increase in employment and State's tax revenue. It further submitted that at present there are no dues present against the Applicant Company, and such revival shall not cause any prejudice to any of its stakeholders or any third party. It is contended that the revival of the Applicant Company shall not cause any prejudice to the parties .

We have heard the submissions made by the Applicant Company and also perused the records. Notice has been served on ROC and ROC submitted a report in compliance of the order dated 02.05.2024. ROC in its report stated that Applicant Company has not filed MGT-14 on the MCA portal with regard to proposal of withdrawal from the voluntary liquidation. Applicant company had also not filed its financial statements and annual return for the financial year 2018-2019 on MCA portal. Therefore, the company has violated provisions of section 137(1) & 92(4) of the Companies Act, 2013. Further ROC stated that the withdrawal of the application of voluntary liquidation is based on a resolution passed by the shareholders which is based on the business decision of the company against which the ROC office has no comments to offer.

In our earlier order dated 04.06.2024, Counsel for the Applicant Company undertook to file an affidavit in response to observation of ROC. Applicant Company in compliance of order dated 04.06.2024 has submitted an affidavit, relevant part of which is as under:

On 20.08.2024, Ld. Counsel for the RoC appeared through VC and states that she has received the copy of the affidavit and in view of the resolution passed by the shareholders seeking withdrawal of this petition under Section 59, RoC has no further comments/objections. On hearing the submissions made by the Ld. Counsel for the Applicant Company, ROC and after perusing the documents specifically the feasibility study regarding the revival of the Company, it appears that there are still the chances of revival of the Applicant Company. It is pertinent to mention here that under the scheme of the IBC, Liquidation should be resorted as the last measure. More pertinently, voluntary liquidation is filed in presence of unfavourable business conditions, when the company is operating at loss or the market has changed the direction or there can be any number of unfavourable circumstances due to which company is not able to pursue its objectives.

At this juncture, we would like to cite that the code contains the provisions for voluntary liquidation under section 59 but it does not contain the provisions for withdrawal of voluntary liquidation. It is for this reason that this Adjudicating Authority vide order dated 04.10.2023 has given directions to Registry to register this case under a new case type Voluntary Liquidation VL/ (PB)/2023.

Accordingly, in the facts of the present case, when Board as well as stakeholders of the Company have indicated for withdrawing the voluntary liquidation of the Applicant Company as recorded in para 7 above. Therefore, this Adjudicating Authority deems it a fit case to invoke its inherent powers under Rule 11 of NCLT Rules, 2016 and allow this application under section 60(5) of IBC.

Further, we deem it appropriate to send this order to IBBI to make suitable provisions/clarifications/amendments in the law to deal with such applications.

In view of the above facts and circumstances, the Company Petition bearing VL(IB)/03/2023 is ALLOWED and DISPOSED OF.

The Registry is directed to send e-mail copy of the order forthwith to the ROC for changing the status of the Company accordingly

The Registry is further directed to send email copy of the order to IBBI for further consideration as per para 14 above.

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

File be consigned to the record storage (final).