M/s Ultratreat Industrial Services vs M/s Karan Processors Private Limited

The instant application has been filed by Mr. Amar Nath (hereinafter referred to as 'Applicant/Liquidator'), the liquidator of M/s Karan Processors Private Limited Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "Code") for the dissolution of the Corporate Debtor, i.e., M/s Karan Processors Private Limited, on the ground that the assets of the Corporate Debtor have been fully liquidated.

The main Company Petition bearing CP (IB) No. 339/Chd/Hry/2019 was filed by M/s Ultratreat Industrial Services -Operational Creditor under Section 9 of IBC and was admitted by the Adjudicating Authority, by order dated 22.01.2020 for initiating the Corporate Insolvency Resolution Process (hereinafter referred to as "CIRP") and Mr. Sameer Rastogi was appointed as Interim Resolution Professional.

The facts as narrated by the applicant are summarized hereunder:

Thereafter, the “Preliminary Report” was filed on 21.01.2021 vide Diary No. 0404116006772020/5 before the Adjudicating Authority, containing the Statement of Share Capital as of Liquidation Commencement Date (hereinafter referred to as “LCD”), i.e., 26.11.2020; Statement of Assets and Liabilities as on LCD, Agenda and Minutes of the SCC meeting held on 18.01.2020, Liquidation Estate and Asset Memorandum.

The final list of stakeholders, their claims, admitted claims, and the amount distributed to them has been attached as Annexure - H of the Application.

While the said application filed by the Liquidator under Section 54 of the Code for dissolution was pending, the Excise and Taxation Commissioner, through its Excise and Taxation Officer, Faridabad (East), filed an application under Section 42 of the Code bearing I.A. No.486/2021 seeking a direction to the liquidator to accept the claim filed by the respondent in Form-C in terms of IBBI (Liquidation Process), Regulations 2016.

In the application filed by the Excise and Taxation Commissioner (hereinafter referred to as “Department”), it is stated that the accounts of the Corporate Debtor, for the assessment years 2014-2015 and 2016-2017 were assessed on 15.03.2018 and 05.02.2020, respectively, and an amount of tax was found due of Rs. 3,39,157/- and Rs. 14,82,357/-, total amounting to Rs. 18,21,513/-. The Department came to know that the liquidation proceedings against the Corporate Debtor is pending, therefore, they filed an application on 01.03.2021 and informed the liquidator through email. The Liquidator replied on 03.03.2021 that the date of submission of the claim was upto 26.12.2020 and the claim received much beyond the period prescribed cannot be entertained.

The Adjudicating Authority while relying on the judgment of the Hon'ble Supreme Court in the case of State Tax Officer vs. Rainbow Papers Limited, Civil Appeal No. 1661 of 2020 and Civil Appeal No. 2568 of 2020, decided on 06.09.2022, held that the filing of dues within the prescribed period does not apply to the taxation department, as Section 26 of Haryana Value Added Tax, 2003, creates a first charge on the property of the defaulter.

On this premise, the Adjudicating Authority issued a direction to the Liquidator to ensure that the stakeholders who have received any money beyond their entitlement at the time of distribution forthwith return the same as per Regulation 43 of IBBI (Liquidation Process) Regulation, 2016 so that the dues of the respondent are paid as directed.

An appeal was filed before the Hon'ble National Company Appellate Tribunal (hereinafter referred to as "NCLAT") bearing Company Appeal (AT/INS) No. 221 of 2023 and I.A. No. 795/2023, 796/2023. The Hon'ble NCLAT, vide Order dated 11.01.2024, set aside the impugned order and remanded it back to the Adjudicating Authority to decide it again on the ground that the Adjudicating Authority has not taken into consideration the practical difficulties to be faced by the Liquidator for the purpose of recovering the amount from 29 stakeholders after the entire proceedings were over. Also, the decision rendered in the case of Rainbow Papers Limited (supra) is distinguishable on the facts because it has been rendered in the matter where the CIRP proceedings were pending, whereas it is the case where even the liquidation proceedings are over.

The Adjudicating Authority in the matter remanded back from the Hon'ble NCLAT, ruled that since the claim was filed after the liquidator had already distributed the funds and the liquidator had expressed his inability to consider the claim of the Excise and Taxation Department, Haryana, there were no remaining funds to honour the applicant's claim. As a result, IA No. 486/2021 was dismissed vide Order dated 01.05.2024.

Since the liquidator has conducted and completed the liquidation process and disposed of the assets of the Corporate Debtor, there remains nothing in the Corporate Debtor. Hence, the Corporate Debtor is required to be dissolved under Section 54(2) of the Code.

The details of the assets as per the Asset Memorandum and Final Sale Report are as follows:

The details of the distribution of sale proceeds to claimants/stakeholders has been annexed as Annexure H of the application, and the same has been reproduced below.

NOTE : AFTER CIRP AND LIQUIDATION EXPENDITURE AN AMOUNT OF Rs. 35,13,282/- WAS AMONGST THE STAKEHOLDERS AS PER DETAILS ABOVE.

The details of the amount available for final distribution as per Form H (annexed as Annexure-J) in terms of Section 53 of the Code, 2016, are mentioned as below:

It is submitted that since the Corporate Debtor has been liquidated successfully and the realized amount has been distributed to the stakeholders as per Section 53 of the Code read with Regulation 42 of the Liquidation Regulations, the bank account in the name and style of the Corporate Debtor, maintained at Punjab National Bank, Mewla Maharajpur, Faridabad, was closed on 19.06.2021.

During the course of the hearing on 26.11.2024, the liquidator was directed to place on record the audited financial statements as on the date of the CIRP and as on the date of the liquidation order. In compliance with the above order, a compliance affidavit was filed vide Diary No. 00793/11 dated 28.11.2024 (taken on record on 04.12.2024). However, the financial statements as on 22.01.2020 submitted by the liquidator do not contain the independent auditor report as well as the UDI number of the auditor. Further, the Liquidator was directed to rectify the same, and in compliance of the Order dated 04.12.2024, an Affidavit was filed vide diary No.00793/12 dated 26.12.2024 and refilled on 30.12.2024 (taken on record on 10.03.2025).

We have heard the learned counsel for the applicant and perused the material available on record carefully.

The present application is filed under Section 54 of the Code. The relevant provisions of Section 54 of the Code read as follows:

The above facts and circumstances of the case established that due process of Liquidation, as per extant provisions, was followed by the Liquidator to liquidate the assets of the company, and the realized amounts were also distributed to the respective claimants. Therefore, the liquidation process is deemed to have been completed under Chapter III of Part II of the Code, and thus it would be just and proper for the Adjudicating Authority to dissolve the company. No party is going to be affected adversely by dissolving the company.

In the result, by exercising powers conferred on the Adjudicating Authority, under Section 54(2) of the Code, the interim application bearing IA No.393/2021 in CP (IB) No. 339/Chd/Hry/2019 is disposed of with the following directions:

Accordingly, IA No.393/2021 in CP (IB) No. 339/Chd/Hry/2019 stands allowed and disposed of.