M/s. Loveni Marketing & Advertising Pvt. Ltd. vs M/s. SN Cinema Advertising Pvt. Ltd.

PER: DR. SANJEEV RANJAN, MEMBER (TECHNICAL)

This Application has been filed by the Applicant being the Resolution Professional, before this Adjudicating Authority under Section 33(2) read with Section 33(1)(b)(i), (ii), (iii) and Section 34 of the Insolvency and Bankruptcy Code, 2016 (“IBC” or “Code”) and Rule 11 of the NCLT Rules, 2016 (“Rules”) seeking initiation of the Liquidation of the Corporate Debtor. The Applicant seeks the following relief:

The Applicant submitted that the Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor i.e., M/s. SN Cinema Advertising Pvt. Ltd. was initiated by this Adjudicating Authority vide order dated 03.01.2023 pursuant to Section 7 Application filed by the Financial Creditor, M/s Loveni Marketing & Advertising Private Limited (now known as M/s Viraj Technology India Limited) and the Applicant herein i.e., Mr. Parveen Kumar Jain was appointed as the Interim Resolution Professional.

The Applicant made Public Announcement was made in two newspapers, namely Financial Express (English) Delhi NCR and JanSatta (Hindi) for invitation of claims in the CIRP of the Corporate Debtor.

That on 20.01.2023, the applicant conducted meeting with the Suspended Board of Directors (hereinafter “SBD”) for the purpose of discussing the operations of the Corporate Debtor and the Applicant had requested the SBD to share the information / documents in relation to the Corporate Debtor.

That the Applicant vide E-mail dated 23.01.2023 requested the SBD to supply all the relevant documents and information relating to the Corporate Debtor, to which, the SBD vide email dated 08.02.2023 informed the Applicant that they are procuring all the relevant documents and they will hand over the documents to the Applicant.

That on 24.01.2023, the Applicant constituted the Committee of Creditors (CoC) and filed report for constitution of CoC with one Financial Creditor namely Viraj Technology Limited (formerly known as Loveni Marketing & Advertising Private Limited) wherein the agenda of appointment of Resolution Professional along with remuneration of the Resolution Professional was placed before the CoC and the same was approved by the CoC with 100% voting and the application confirming the Applicant as Resolution Professional was filed before this Adjudicating Authority in I.A. No. 1286 of 2023 and the same was allowed vide order dated 26.09.2023.

The Applicant further submitted that against the initiation of CIRP, the SBD had preferred a Company Appeal bearing No. (AT)(Ins) No. 162 of 2023 before the Hon’ble NCLAT. Interim directions to the Applicant were passed by the Hon’ble NCLAT to not proceed with the CIRP on the ground that the SBD wishes to settle the matter, on 16.02.2023; however, the appeal was dismissed on 26.04.2023 and the Interim Order was vacated.

That on 29.04.2023, 07.05.2023, 19.05.2023 and 21.05.2023, the Applicant requested the SBD to provide the information and documents relating to the Corporate Debtor but the SBD failed to provide complete documents and information relating to the Corporate Debtor and only provided few documents to the Applicant.

The Applicant submitted that the 1st meeting of the CoC was held on 01.02.2023, in which only one claim was received. In the said meeting, the Interim Resolution Professional was confirmed as the Resolution Professional.

That the Applicant called the 2nd meeting of the Committee of Creditors on 11.05.2023. During the meeting, the Applicant again requested the SBD to provide all information and documents relating to the Corporate Debtor, upon which the SBD assured the Applicant that they would soon supply all the documents and also hand over physical possession of all assets of the Corporate Debtor. The Applicant further informed the SBD that he would proceed with filing an application under Section 19(2) of the Code if the information and possession of the assets were not handed over.

The 2nd CoC meeting held on 11.05.2023 is by when two claims were received and valuers were appointed. At this meeting the Applicant placed the Form G before the CoC for approval however, the CoC deferred the agenda for the same. That Applicant submitted that at the 2nd CoC meeting, the CoC directed the Applicant to convene CoC meeting w.r.t the Form-G after 10-15 days. That the Committee took the note of all the agendas and requested the voting on all the agendas in the next CoC meeting.

The updated claims list was put forth before the CoC in the 2^nd CoC, which is as follows:

That the Applicant submitted that it has filed an Application bearing I.A. no. 3409 of 2023 under Section 19(2) read with Section 70 of the Code, 2016 seeking action against the SBD before this Adjudicating Authority. That the Applicant has also filed application bearing I.A. No. 3967 of 2023 under Section 18(1)(f) read with Section 25(2)(A) seeking handover of the possession of the assets of the Corporate Debtor. That both these Applications were pending adjudication at the time of filing the present Application for Liquidation; since then, in I.A. No. 3967/2023 the Adjudicating Authority directed the SBD to hand over possession of the company's assets to the IRP (now RP) and in I.A. No. 3409/2023 the Adjudicating Authority directed to furnish the information/documents as requested by the IRP (now RP). That due to non-supply of the documents as mentioned in the Section 19(2) application, the Applicant was unable to get the transaction audit conducted and was also unable determine PUFE transactions relating to the Corporate Debtor.

That the Applicant also filed application under Section 60(5) seeking exclusion of the period of 69 days of CIRP in IA No. 2678 of 2023 and the same has been allowed by this Adjudicating Authority vide order dated 26.09.2023. The appointment of valuers, transaction auditor as per Section 25 of the Code, and their professional fee were ratified by the CoC.

That in the 3rd CoC meeting held on 26.08.2023, the Applicant again discussed the issue of invitation of Expression of Interest (Form G) for submission of resolution plans from prospective resolution applicants, and the criterion of Form G to be published for prospective resolution applicants. The CoC requested that the agenda of Form G be deferred until the SBD of the Corporate Debtor provided the documents, complete information, and physical custody of the assets, as without having adequate information or records there was no point in issuing Form G. The relevant portion of the discussion of the CoC w.r.t. Form G in the 3rd CoC meeting, is reproduced here:

That on 25.09.2023, the Applicant and the Financial Creditor had received an E-mail from one "Kishan Experience Center" conveying interest in submission of a resolution plan. The Applicant submitted that it intimated the said interested party that as and when Form G would be published, they would be informed.

In the 4th CoC meeting held on 11.10.2023, the liquidation of the Corporate Debtor was discussed, as the SBD had failed to provide documents and hand over assets. The CoC, with 92.53% voting in favor, resolved to file an application for liquidation under Section 33 of the Code, noting that the Corporate Debtor had ceased operations and continuation of CIRP would be futile. It was also decided that the Applicant would seek exclusion of the CIRP period lost due to delays and pending adjudication of interim applications, covering 10.09.2023 to 02.11.2023. The CoC further approved the appointment of the Resolution Professional (Applicant herein) as liquidator at a fee of Rs. 50,000/- per month, exclusive of taxes and expenses, and the minutes along with the agenda for voting were circulated to the members. The Applicant submitted that it consents to appointment as Liquidator.

That the Applicant submitted that it has not filed any separate application for exclusion of CIRP w.e.f. 10.09.2023 till 02.11.2023 (53 days) and has prayed for the same in the present application.

The Applicant submitted that the commercial wisdom of the Committee of Creditors (CoC) is binding and not open to interference, and has relied upon the judgments of the Hon'ble Supreme Court, including Arun Kumar Jagatramka v. Jindal Steel and Power Limited & Ors and Vallal RCK v. Siva Industries and Holdings Limited & Ors, Civil Appeal Nos. 1811-1812 of 2022, to support the said submission.

That vide order dated 08.01.2025, the Applicant was directed to file an affidavit in terms of Regulation 39A, 39BA, 39C & 39D of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016; the same was duly filed by the Applicant on 03.02.2025.

During the course of arguments, the Applicant submitted that the Resolution Professional is not empowered to invite resolution plans without the approval of the CoC and is, therefore, bound by the instructions of the CoC. It was further submitted that the SBD had been given several opportunities to submit a repayment plan, but till date no such payment proposal had been provided. The CoC observed that this conduct was only a delay tactic by the SBD to derail the process, as despite being given ample opportunity, the SBD failed to submit any proposal either under Section 12A of the Code or even a proposal sufficient to convince the CoC to publish Form G. Owing to these circumstances, including the absence of operations, repeated delay tactics, and unnecessary CIRP costs being incurred, the CoC was constrained to resolve for the liquidation of the Corporate Debtor.

The objections / reply is being filed by the SBD of the Corporate Debtor in terms of order dated 08.11.2023 to the present Application.

The SBD submitted that the Corporate Debtor was incorporated in the year 2010 and has been engaged in the business of advertising marketing research, survey and other promotional activities being in the service sector.

The SBD submitted that the Corporate Debtor was registered as a Micro, Small and Medium Enterprise (MSME) in the year 2017. The Objector No. 1 is one of the Directors of the Corporate Debtor since 2010. The SBD had not taken any monetary benefit from the corporate debtor.

That the CIRP of the Corporate Debtor was commenced due to the following reasons:

M/s Viraj Technology India Limited (formerly Loveni Marketing and Advertising Private Limited) converted certain payments due from the Corporate Debtor into loans and filed false complaints under Section 138 of the NI Act against the Corporate Debtor and its directors. In response, the Corporate Debtor entered into a compromise deed in Faridabad District Court; however, M/s Viraj failed to submit the same before this Adjudicating Authority, which led the Corporate Debtor to stop payments.

During the course of arguments, it was submitted by the SDB that the settlement statement was executed under coercion before Ld. Judicial Magistrate Ms. Himani Sagar at Faridabad District Court in three complaints - Ex. 1: 48757/2022, Ex. 2: 63560/2022, and Ex. 3: 86268/2022, to settle a cumulative claim of ₹60,00,000. These complaints arise from the same underlying transaction that forms the basis of the Section 7 IBC proceedings admitted by this Adjudicating Authority, initiated by Loveni Advertising & Marketing Pvt. Ltd. (now Viraj Technologies Pvt. Ltd.), a major CoC member. The settlement was induced by oral assurances regarding resolution of corporate dues and asset regularisation. Despite this, the CIRP costs as on date exceed ₹50 lakh, approved by the same CoC member, resulting in duplicative liability and prejudicial conduct.

The CIRP was commenced, and the Interim Resolution Professional was appointed. The SDB challenged the CIRP before the Hon'ble NCLAT and sought settlement, but it failed due to non-cooperation and malafide intentions of M/s Viraj Technology India Limited.

It was further submitted by the SBD that during the CIRP, M/s Viraj and the Applicant allegedly colluded with malafide intent to liquidate the Corporate Debtor, misusing the IBC as a recovery mechanism. The SDB reserve their rights to file under Section 65(1) of the IBC against them.

The SBD submitted that the present application is not maintainable, is frivolous, and is an abuse of the process of law.

The SBD submitted that it has not been impleaded in the application, and the liquidation of the Corporate Debtor is sought to be ordered behind the back of the promoters and management without giving any opportunity to revive the Corporate Debtor.

The SBD submitted that the Resolution Professional has not published Form G and has not invited Expressions of Interest from prospective resolution applicants. This omission vitiates the entire Corporate Insolvency Resolution Process and renders the present application liable to be dismissed.

The SBD submitted that M/s Viraj Technology India Limited, holding 92.53% voting share in the Committee of Creditors, has acted arbitrarily and has misused its dominant position. The Committee of Creditors has acted only with the objective of recovery, which is contrary to the object of the Insolvency and Bankruptcy Code, 2016.

The SBD submitted that the present application is contrary to the settled principle laid down by the Hon'ble Supreme Court in various judgments, including K.N. Raja Kumar v. V. Nagarajan, Civil Appeal No. 2901 of 2021 that the revival of the Corporate Debtor and preservation of the going concern status must be the first objective, and liquidation can be resorted to only as a last measure.

The SBD submitted that the commercial wisdom of the Committee of Creditors is not absolute and cannot be exercised in violation of the provisions of the Code or in a manner which frustrates its objectives. The SDB rely upon the judgment of the Hon'ble Supreme Court in M.K. Rajagopalan v. Dr. Periasamy Palani Gounder & Anr., Civil Appeal No. 1682-1683 of 2022 wherein it has been held that the commercial wisdom of the Committee of Creditors cannot be exercised contrary to the objectives of the Code.

The SBD submitted that the present application deserves to be dismissed as the action of the Committee of Creditors and the Applicant defeats the purpose of resolution of debt, leading to forced liquidation, which ought not to be permitted by this Adjudicating Authority.

The SBD submitted that the application is liable to be dismissed as it is unclear on what basis the Committee of Creditors passed the resolution, and the Applicant has denied the SBD, who are Directors of an MSME unit, the opportunity to submit a Resolution Plan, on false and frivolous grounds.

The SBD submitted that the resolution for liquidation was passed in haste on 11.10.2023, without application of mind, while the maximum CIRP period of 330 days under Section 12 was still available for inviting a Resolution Plan.

It was also submitted by the SBD that during the CIRP, the Applicant received an email from M/s Kisan Experience Centre enquiring about publication of Form G. This fact is recorded in the minutes of the Fourth CoC meeting held on 11.10.2023, yet no opportunity was provided to the entity to submit a Resolution Plan, nor was a cogent reason was provided for the same.

During the course of arguments, it was submitted by the SDB that during the 4th CoC Meeting, Mr. Sudhanshu Srivastava, suspended Director of the Corporate Debtor was being pressurized to provide payment schedule and EMD deposit for putting up the resolution plan for further consideration of the CoC members the relevant paragraphs are reproduced herein:

It was submitted by the SBD that the application is not maintainable as the Applicant acted contrary to provisions of the Insolvency and Bankruptcy Code, 2016, and the rules and regulations framed thereunder, and has not acted transparently, concealing true facts and presenting false information with mala fide intentions.

During the course of arguments, the SBD submitted that the CIRP period had expired on 09.09.2023, yet the 4th CoC meeting was convened on 11.10.2023 without seeking the requisite extension. During this meeting, the CoC approved agenda item No. 8 for extension of the CIRP period by 90 days, with 92.53% voting share, and instructed the Applicant/Resolution Professional to file the extension application before this this Adjudicating Authority. However, the Applicant/Resolution Professional intentionally failed to file the application for extension, with malafide intentions to push the Corporate Debtor into liquidation, rendering the resolution for liquidation invalid.

Further, during the course of arguments, the SBD submitted that as per agenda Item No. 7 of the 4th CoC meeting, the Applicant claimed total CIRP costs of ₹11,51,667/- up to 21.09.2023, of which ₹11,35,247/- pertains to fees of the IRP/RP (₹8,00,000/-) and legal professionals (₹3,35,247/-). Only ₹16,420/- has been claimed towards other expenses, including public announcement in Form A (₹8,820/-), MCA filing fees (₹2,600/-), and travelling, conveyance, and miscellaneous expenses (₹5,000/-) for conducting the CIRP from 03.01.2023 to 03.09.2023. These facts establish that the Applicant failed to take any meaningful steps for the revival of the Corporate Debtor, as required under the Insolvency and Bankruptcy Code. It is evident that, in collusion with M/s Viraj Technology India Limited, the Applicant deliberately squandered the 180-day CIRP period to seek liquidation, while claiming a professional fee of ₹8,00,000/- without fulfilling statutory duties. The total CIRP cost of ₹11,51,667/-, payable in priority from the Corporate Debtor's assets upon liquidation, has thus been incurred in complete disregard of the mandate of the Code, reflecting conduct in blatant violation of the statutory framework.

While arguing it was orally prayed that, accordingly directions be issued to the IRP to recover CIRP costs from the concerned CoC member first and stay coercive or liquidation actions until the fee dispute and cost recovery are resolved.

The SBD submitted that no discussion or resolution regarding the appointment of the Applicant as Liquidator took place in the 4th CoC meeting. The Applicant's claim of consent from the CoC is incorrect, and no resolution for his appointment was approved, as evident from the minutes.

The SBD submitted that the Applicant has failed to discharge duties and responsibilities under the Code. One person from the team of the Applicant has been managing the Corporate Debtor's affairs since commencement of the CIRP. The SDB are in the process of filing a complaint against the Applicant with the IBBI for commission of professional misconduct for not fulfilling the duties and responsibilities as provided under the Code.

The SBD submitted that the Applicant has not legally or properly controlled the affairs and activities of the Corporate Debtor and, has acted with mala fide intention, and is attempting to push the Corporate Debtor into liquidation. The application is liable to be dismissed.

The SBD submitted that the Corporate Debtor was the exclusive agency for advertising in PVR cinema halls across India. Due to COVID-19 and lack of conciliation of accounts, arbitration was initiated between the Corporate Debtor and PVR. During CIRP, the arbitration process has been delayed due to actions of the Applicant and M/s Viraj Technology India Limited (formerly Loveni Marketing and Advertising Private Limited). The SDB provided all documents and details for filing a counter-claim against PVR, but the Applicant has not filed the same.

The SDB submitted that post COVID-19, the cinema industry has rebounded, presenting substantial revival and growth opportunities for the Corporate Debtor's advertising business.

The SBD submitted that Mr. Sudhansu Srivastava, a Power-Suspended Director of the Corporate Debtor, has over 20 years of experience in the advertising sector and receives work orders from various government departments, PSUs, and international clients. He intended to submit a Resolution Plan under Section 240A of the IBC, as the Corporate Debtor is a registered MSME, but no opportunity was granted by the Applicant or the CoC, where M/s Viraj holds over 90% voting share and is illegally and arbitrarily controlling the entire CIRP.

The SDB submitted that on 25.09.2023, M/s Kisan Experience Centre expressed willingness to submit a Resolution Plan, but neither the Applicant nor the CoC pursued this opportunity and showcases the intention of the Applicant and the CoC that they are forcing Liquidation.

The SBD submitted that after CIRP commencement, the Applicant's team met Mr. Sudhansu Srivastava and received verbal and documentary information regarding the Corporate Debtor's operations, its working and status, and factors leading to CIRP. Despite repeated submissions via email, pendrive, and hardcopy, the Applicant failed to act, evidencing malafide intent; moreover, the same have not been annexed with the Applicant which furthers the dishonest and malafide intent.

The SBD/ Objector submitted that it has provided all documentary evidence to the Applicant and his team. Had the Applicant taken appropriate steps, significant recovery could have been made, enabling smooth business operations of the Corporate Debtor. Despite being informed by an ex-employee, the Applicant failed to recover Rs. 5,55,000 from the Tribal Department of Maharashtra, which with interest could have been leveraged to recover an amount of Rs. 11,00,000, towards late payment to the Corporate Debtor being an MSME.

The SBD submitted that the Applicant, along with M/s Viraj holding 90% voting share, has acted to prevent revival of the Corporate Debtor, deliberately withholding Form G and pushing for liquidation.

The SBD submitted that the actions of the Applicant and CoC demonstrate deliberate suppression of material facts and high-handed control, rendering the process nugatory. The Applicant has also falsely claimed to have placed correct facts on record, which constitutes perjury.

In view of the above, The SBD prays that the present application is liable to be dismissed with costs, and appropriate proceedings should be initiated against the Applicant. The SBD further prays that the Applicant and the CoC be directed to grant and opportunity to the SBD to submit a Resolution Plan and for the Applicant and the CoC to publish Form G.

The Adjudicating Authority has considered the material placed on record, the submissions of the Applicant, the objections filed by the Suspended Board of Directors (SBD), and the procedural history of the Corporate Insolvency Resolution Process (“CIRP”) of M/s SN Cinema Advertising Pvt. Ltd.

It is noted that the CIRP of the Corporate Debtor was initiated on 03.01.2023 pursuant to an order under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code”), on the basis of a petition filed by the Financial Creditor, M/s Loveni Marketing & Advertising Private Limited (now M/s Viraj Technology India Limited). The Applicant herein, Mr. Parveen Kumar Jain, was appointed as the Interim Resolution Professional (“IRP”) and subsequently confirmed as Resolution Professional (“RP”) vide order dated 26.09.2023 in I.A. No. 1286 of 2023.

Following initiation of CIRP, the IRP issued Public Announcement in Financial Express (English, Delhi NCR) and JanSatta (Hindi) newspapers inviting claims from creditors, as required under the Code. The IRP also convened a meeting with the SBD on 20.01.2023 to obtain documents and information regarding the Corporate Debtor’s operations. Despite repeated requests, complete records were not provided, with the SBD stating on 08.02.2023 that they were procuring relevant documents.

The Committee of Creditors (“CoC”) was constituted on 24.01.2023, comprising the sole Financial Creditor, M/s Viraj Technology India Limited. The appointment of the RP and remuneration was approved by the CoC with 100% voting. This confirmation was filed before this Adjudicating Authority and allowed on 26.09.2023.

During the CIRP, the SBD preferred an appeal before the Hon'ble NCLAT (AT (Ins) No. 162 of 2023) seeking to stay the CIRP proceedings alleging willingness to settle. Interim directions were granted by the Hon'ble NCLAT on 16.02.2023, restraining continuation of CIRP. However, the appeal was dismissed on 26.04.2023 and the interim order vacated, thereby permitting the RP to continue the CIRP.

Multiple requests were made to the SBD to provide complete information and assets, on 29.04.2023, 07.05.2023, 19.05.2023, and 21.05.2023. The record shows partial compliance only; complete handover of documents and physical custody of assets did not occur.

The first, second, and third CoC meetings were held on 01.02.2023, 11.05.2023, and 26.08.2023 respectively. At each meeting, the RP informed the CoC of the lack of cooperation by the SBD. In particular, the agenda regarding issuance of Form G and invitation for Expression of Interest from prospective resolution applicants was deferred, as it was not feasible to invite plans without complete information or custody of assets. The minutes of the third CoC meeting reflect the SBD's repeated assurances to provide documents, but there is no evidence of compliance in full.

It is observed that during the course of the CIRP, the Interlocutory Applications being I.A. No. 3409/2023 and I.A. No. 3967/2023 were instituted prior to the filing of the liquidation application, though their disposal took place subsequently, after the liquidation application had already been moved before this Adjudicating Authority. The filing of these Applications itself indicates that the Applicant/ Resolution Professional was constrained to approach this Adjudicating Authority on account of the continuous non-cooperation by the suspended management, particularly in not handing over the records and assets of the Corporate Debtor. Such conduct of the suspended management not only obstructed the effective conduct of the Corporate Insolvency Resolution Process but also compelled the Applicant/ Resolution Professional to expend further time and resources in litigation, which otherwise could have been avoided had due cooperation been extended in terms of Section 19 of the Insolvency and Bankruptcy Code, 2016.

The fourth CoC meeting held on 11.10.2023 was convened to deliberate on the future course of the CIRP. The CoC recorded that the SBD had failed to provide information and hand over physical assets despite repeated opportunities. The minutes reflect that the SBD did not submit any concrete repayment schedule or resolution plan under Section 12A or otherwise. The CoC, exercising its commercial wisdom, resolved with 92.53% voting in favour that further continuation of CIRP would be futile and resolved for liquidation of the Corporate Debtor under Section 33(2) of the Code. It further approved the appointment of the RP as Liquidator at fees fixed in the CoC meeting and resolved to seek exclusion of CIRP period from 10.09.2023 to 02.11.2023 lost due to delays and adjudication of interim applications.

The SBD, in their objections, contend that the liquidation was precipitous, the Applicant colluded with the Financial Creditor to effect liquidation, Form G was not issued, and the SBD were denied opportunity to submit a resolution plan. They allege that the Applicant and CoC acted with mala fide intent and in violation of statutory duties. It is also submitted that the Corporate Debtor is a registered MSME, with revival potential and ongoing contracts, which could enable submission of a viable plan.

The record, however, demonstrates the following:

The CIRP commenced on 03.01.2023 and extended through multiple meetings, including interim reliefs granted by the Hon'ble NCLAT;

Despite multiple requests from the Applicant, the SBD failed to provide complete information and assets;

The CoC repeatedly deferred agendas to allow SBD to comply, but the SBD did not submit any concrete plan;

There is evidence of repeated assurances by the SBD which were not honoured, causing procedural delays;

The CoC, after due deliberation, determined by overwhelming majority (92.53%) that liquidation was the only viable course given cessation of operations, non-cooperation, and risk of further CIRP costs without resolution.

The Suspended Board of Directors have objected that the CIRP period expired on 09.09.2023, no extension was sought thereafter, and hence the 4th CoC meeting held on 11.10.2023 was without jurisdiction. It is contended that the resolution for liquidation passed therein is non est in law, and consequently the liquidation application itself is not maintainable.

This Adjudicating Authority notes that a separate application ought to have been filed for extension and exclusion but the Applicant has instead incorrectly combined such relief with the liquidation application itself. Such practice and manner of filing cannot be encouraged and reflects procedural laxity on part of the Applicant; however, it is ultimately a procedural lapse. Even if a separate application had been filed, the matter would necessarily the matter would have ultimately reached the same stage as at present due to decision by the CoC in their commercial wisdom to proceed with the liquidation.

It is settled law that the commercial wisdom of the CoC is binding upon the Adjudicating Authority and is not to be interfered with except on grounds of illegality, malafide intent, or violation of statutory provisions which has been categorically held in various judgements such as, K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150; Arun Kumar Jagatramka v. Jindal Steel and Power Limited, (2021) 7 SCC 474; Vallal RCK v. Siva Industries and Holdings Ltd., Civil Appeal Nos. 1811-1812 of 2022. In the present matter, no such illegality is established. The objections of the SBD, though detailed, do not demonstrate that the CoC acted contrary to the objectives of the Code or in violation of statutory duties. Further, no cogent documentary proof has been brought on record by the SBD to substantiate their allegation of collusive actions between the sole CoC member holding majority voting rights and the Resolution Professional.

This Adjudicating Authority also notes the submissions of the SBD regarding CIRP costs and alleged non-recovery of certain dues. While CIRP costs are significant, it is evident from record that such costs arise due to protracted non-cooperation by the SBD and are payable in priority from the Corporate Debtor's assets under the Code. This however, cannot be a basis to frustrate the resolution of the process.

The Hon'ble Supreme Court in K. N. Raja Kumar v. V. Nagarajan, Civil Appeal No. 2901 of 2021, has emphasized that revival is desirable, but where revival is frustrated by the non-cooperation of the management, the CoC is entitled to opt for liquidation. Similarly, as per Section 33(2) of the Code, the RP is empowered to file for liquidation when continuation of CIRP is futile, which is the case here.

In light of the above, it is evident that the CIRP continuation is no longer feasible, the CoC has exercised its commercial wisdom after repeated opportunities to the SBD and the fact that more than two years have lapsed since the CIRP commencement.

The Adjudicating Authority finds that the present application filed by the RP under Section 33(2) read with Section 33(1)(b) of the Code is maintainable, justified, and should be allowed.

Accordingly, we are of the view that Liquidation of the Corporate Debtor should commence forthwith in terms of Section 33(1)(a) of the Code.

The prayer for Liquidation and Extension in IA-6026/2023 is hereby allowed.

The Insolvency and Bankruptcy Board of India (“IBBI”) vide its circular number Liq-12011/214/2023-IBBI/840 dated 18.07.2023 in the exercise of its powers conferred under Section 34(4)(b) of the Code had recommended that an IP other than the RP/IRP may be appointed as Liquidator in all the cases where Liquidation order is passed henceforth and the Liquidator can be appointed from the panel list of the IBBI.

Therefore, this Adjudicating Authority appoints Mr. Rakesh Kumar Jain as the Liquidator of the Corporate Debtor from the available list of the Panel of Resolution Professionals as maintained by the IBBI. The details of the Liquidator are as follows:

Registration No. : IBBI/IPA-002/IP-N00053/2017-2018/10105 Address : E-205, Basement, Greater Kailash II, New Delhi, NCT of Delhi ,110048 Contact No. : +91 9810060524 E-mail : [email protected]

The appointed Liquidator is further directed to submit a valid Authorization for Assignment along with Written Consent in Form-2 and a copy of Registration Certificate within 3 days of the pronouncement of this order.

Mr. Parveen Kumar Jain, the Resolution Professional of the Corporate Debtor is relieved from the present assignment as the Resolution Professional. 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 Liquidator will charge fees for the conduct of the Liquidation proceedings in proportion to the value of the Liquidation estate as specified by the IBBI and the same shall be paid to the Liquidator from the proceed of the Liquidation estate under Section 53 of the Code.

The Liquidator shall initiate the Liquidation process as envisaged under Chapter-III of the Code and the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

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.

All the powers of the Board of Directors, and key managerial personnel, shall cease to exist in accordance with Section 34(2) of the Code. All these powers shall henceforth vest in the Liquidator.

The personnel of the Corporate Debtor are directed to extend all assistance and cooperation to the Liquidator as required by him in managing the Liquidation process of the Corporate Debtor.

The Order of Moratorium passed under Section 14 of the Code shall cease to have its effect and a fresh Moratorium under Section 33(5) of the Code shall commence. On initiation of the Liquidation process but subject to Section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor save and except the liberty to the liquidator to institute the suit or other legal proceeding on behalf of the Corporate Debtor with prior approval of this Adjudicating Authority, as provided in Section 33(5) of the Code read with its proviso.

The Liquidator shall follow up and continue to investigate the financial affairs of the Corporate Debtor in accordance with provisions of Section 35(1) of the Code.

The Liquidator shall also follow up on the pending applications for disposal during the process of Liquidation including initiation of steps for recovery of dues of the Corporate Debtor as per law.

The Liquidator shall keep in view the provisions of Regulation 32A of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and shall endeavor 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 the liquidation commencement date, the Liquidator shall proceed to sell the assets of the Corporate Debtor under clauses (a) to (d) of Regulation 32 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

The Liquidator shall submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the Liquidation commencement date as per Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016;

The Liquidator and the Registry are hereby directed to send a copy of this order within 3 days from the date of this order to the Registrar of Companies, NCT of Delhi & Haryana. The Registrar of Companies shall take further necessary action upon receipt of a copy of this order.

The Registry is directed to send a copy of this order to the IBBI for their record.

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

No order as to costs.