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Judgment
Heard the Learned Counsel for the Applicant.
I.A is allowed by separate order. File be consigned to records.
List on 28.07.2025 for final report of Liquidator.
This Present Application has been filed on 30.01.2024 by Ratnakar Shetty, Interim Resolution Professional of the Corporate Debtor, i.e., NYS Granites Impex Private Limited, under sub-section (2) of Section 33 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the 'Code') read with rule 11 of the National Company Law Tribunal Rules, 2016, with following prayers:
a. "Initiate the liquidation of Corporate Debtor i.e. M/s. NYS Granites Impex Private Limited;
b. Appointing Ms. Ranjana Singh, Insolvency Professional, having Registration No. IBBI/IPA-002/Ip-No1181/2021-22/13968 as the liquidator of the Corporate Debtor, i.e., M/s NYS Granites Impex Private Limited; and
c. Any such other orders, directions as deemed fit and necessary in the interests of justice and equity.”
Brief relevant facts of the present Petition are:
A Company Petition bearing C.P (IB) No.4/BB/2022 was filed under Section 10 of the Code by “NYS Granites Impex Pvt. Ltd.” to initiate Corporate Insolvency Resolution Process (‘CIRP’) against Corporate Debtor was admitted on 02.06.2023 and Mr. Ratnakar Shetty was appointed as Interim Resolution Professional (‘IRP’) of the Corporate Debtor. The IRP had issued a public announcement on 04.06.2023 pursuant whereof only one claim from Karnataka State Financial Corporation (hereinafter referred to as “KSFC”) was received. After examining the claim, the IRP had constituted the Committee of Creditors (‘CoC’) and conducted the CIRP of the Corporate Debtor, including on-site visit to the Debtor’s plant and the preparation of relevant reports.
As the Corporate Debtor had ceased operations in 2016 and had dues exceeding Rs. 21.6 crores, the Applicant found its revival unlikely. After discussions with the sole financial creditor, KSFC, the CoC concluded that, instead of incurring additional costs on procedures like Expression of interests (EoI) publications, etc., it would be prudent to seek the Tribunal’s orders for liquidation.
The Sole member of the CoC, in first meeting of the CoC which was held on 12.07.2023, decided to initiate the liquidation of the Corporate Debtor as per Section 33 (2) of the Code. KSFC reaffirmed its decision to initiate the Corporate Debtor’s liquidation during the second CoC meeting held on 28.08.2023. It also informed the Applicant that it would file the liquidation application independently, without requiring the Applicant’s assistance.
Further, in the second CoC meeting held on 28.08.2023, KSFC informed the Applicant that it did not intend to appoint the Applicant as the Proposed Liquidator. It instead recommended Ms. Ranjana Singh, Insolvency Professional, having Registration No. IBBI/IPA-002/Ip-No1181/2021-22/13968 as the liquidator of the Corporate Debtor.
KSFC subsequently filed I.A. No. 769/2023 before this Tribunal under Section 33(2) of the IBC, seeking a liquidation order against the Corporate Debtor. However, the application was dismissed on 08.01.2024, on the grounds that, as a financial creditor, KSFC was not eligible to file it. The Tribunal, however, granted liberty to the Applicant, as the Insolvency Professional, to file a fresh application under Section 33(2) of the IBC.
In the 3rd CoC meeting held on 19.01.2024, it was decided to grant permission and Authority to the Applicant (IRP) to file an application under Section 33(2) of the IBC for the issuance of liquidation orders against the Corporate Debtor, hence the present Application.
We have carefully considered the submissions made in the application filed by the Interim Resolution Professional and have also perused the material on record.
For the sake of convenience, the relevant provisions of sub-section (1) and sub-section (2) of Section 33 of the Code are reproduced herein:
“33. Initiation of liquidation. -
(1)Where the Adjudicating Authority, —
(a)before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under section 12 or the fast-track corporate insolvency resolution process under section 56, as the case may be, does not receive a resolution plan under sub-section (6) of section 30; or
(b)rejects the resolution plan under section 31 for the non-compliance of the requirements specified therein, it shall:
(i)pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;
(ii)issue a public announcement stating that the corporate debtor is in liquidation; and
(iii)require such order to be sent to the authority with which the corporate debtor is registered.
(2)Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1)."
Prescribed period for filing application: In the present case, the Petition under Section 7 was admitted on 02.06.2023 and the present Application is filed on 30.01.2024. Hence, this application shall be considered under sub-section (2) of Section 33 of the Code.
Appointment of Liquidator: It is submitted that the Sole Member of CoC in the 2nd meeting held on 28.08.2023 approved the appointment of Ms. Ranjana Singh as Liquidator of the Corporate Debtor as per section 34 of the Insolvency and Bankruptcy Code. Additionally, the approved Liquidator has also given her written consent through a letter dated 29.01.2024 to act as the Liquidator of the Corporate Debtor. Therefore, Ms. Ranjana Singh with Registration No. IBBI/IPA-002/IP-NO1181/2021-2022/13968 is appointed as the Liquidator.
Regulations 39B, 39C and 39D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 are examined hereunder:
a. Liquidation Cost [Regulation 39B of IBBI (Insolvency Resolution Process for Corporate Persons) & Regulation 32(ea) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation 2016] - Pursuant to Regulation 39B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation 2016, the CoC in its 2nd meeting held on 28.08.2023 approved the estimated Liquidation cost of Rs.7,75,000/- excluding the Liquidator Fee.
b. Assessment of Sale as a going concern [Regulation 32(e) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016] - The Sole member of the CoC in its 2nd meeting held on 28.08.2023 approved not to explore the option of sale of Corporate Debtor as a going concern.
| Votes cast in favour | Votes cast against | Abstained | |
|---|---|---|---|
| The Committee of Creditors hereby approves not to explore the sale of Corporate Debtor as a going concern as per Regulation 32 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. | 100% | 0 | 0 |
c. Fees of the Liquidator [Regulations 4 (2) (b) of IBBI (Liquidation Process) Regulations, 2016] - The CoC in its 2nd meeting held on 28.08.2023 approved the fee payable to the Liquidator at a remuneration which will be 80% of the prescribed fee payable as per Table under Regulation 4 (2) (b) of the IBBI (Liquidation Process) Regulations 2016 plus applicable taxes and excluding out of pocket expenses to carry out the Liquidation process of Corporate Debtor.
The IRP, vide order dated 19.11.2024 was directed to file an affidavit regarding any litigations or legal proceedings, if any, pending where Corporate Debtor is involved. Pursuant to the said order, the Applicant has filed an Affidavit on 31.12.2024 stating that civil proceedings will culminate on dissolution of Corporate Debtor while criminal complaint cases under Section 138 of the Negotiable Instruments Act, will continue to be pursued by the beneficiary against the accused persons arrayed therein.
In view of the satisfaction of the conditions provided under Section 33 (2) of the Code, the Corporate Debtor, NYS Granites Impex Private Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code. Following directions in this background are issued:
As per provisions of sub-section (5) of Section 33 of the Code and subject to Section 52 of the code, no suit or other legal proceedings shall be instituted against the corporate Debtor, except with the prior approval of this Adjudicating Authority;
ii) 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;
iii) 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;
iv) 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;
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 provision of Section 19 of the Code shall apply in relation to voluntary liquidation process as they apply in relation to liquidation process with the substitution of references to the liquidator for references to the Interim Resolution Professional;
vi) The Liquidator shall publish public announcement in accordance with Regulation 12 to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 in Form B of Schedule II of the said Regulations within a period of five days from the date of receipt of this order for calling upon the Stakeholders to submit their claims as on liquidation commencement date and provide the last date for submission of claims which shall be 30 days from the liquidation commencement date.
vii) The ‘Liquidator’ shall file his preliminary report within 75 days and to file regular progress reports as per Regulation 15 thereafter in accordance with Regulation 13 of the Insolvency and Bankruptcy Board of India (Liquidation Process), Regulations, 2016.
Accordingly, I.A No. 4 of 2024 is allowed and disposed of.
Copy of this order be supplied to IRP, Liquidator and also forwarded to the Registrar of Companies, Bengaluru, forthwith.