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Judgment
Per: Rajeswara Rao Vittanala, Member (J)
The instant Applications bearing I.A.Nos.628/2019 & 17/2020 in C.P.(IB)No.172/BB/2019 are filed by Hari Babu Thota, Resolution Professional of M/s. Unishire Housing LLP ('Applicant') U/s. 33 (2), 34(4) & 60(5) of the IBC, 2016, by inter-alia seeking to liquidate the Corporate Debtor under provisions of the Code, and to issue public announcement that the Corporate Debtor is in liquidation; to appoint Mr. Kondisetty Kumar Dushyantha, Insolvency Professional having Reg. No. IBBI/IPA-002/IP-N00237/2017-18/10688 as Liquidator of the Corporate Debtor i.e. M/s. Unishire Housing LLP, as recommended by the CoC etc.
Brief facts of the case, as mentioned in the Applications, which are relevant to the issue in question, are as follows:
Initially, M/s. VSL Securities Private Limited (Petitioner) has filed C.P. (IB)No.172/BB/2019, U/s. 7 of IBC, 2016, R/w Rule 4 of I&B (AAA) Rules, 2016, by inter-alia, seeking to initiate Corporate Insolvency Resolution Process (CIRP) in respect of M/s. Unishire Housing LLP (Respondent/Corporate Debtor) on the ground that it has committed default for an amount of Rs.21,58,04,027.39/-. Accordingly, the case was admitted by an order dated 31.07.2019 by initiating CIRP in respect of the Corporate Debtor, appointing Shri Gonugunta Murali as IRP, imposing moratorium etc. Subsequently, the Adjudicating Authority vide order dated 29th October, 2019 allowed the Application bearing I.A.No.561 of 2019 in C.P(IB)No.172/ BB/2019 filed by Shri Gonugunta Murali on behalf of Committee of Creditors of the Corporate Debtor to change the Resolution Professional of the Corporate Debtor and thus appointed Shri Hari Babu Thota, as the Resolution Professional in place of Shri Gonugunta Murali, in its Second meeting held on 17.10.2019.
In pursuant to the initiation of CIRP, the IRP in compliance with Section 13 and 15 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016, has made public announcement on 17th August, 2019, in Indian Express and in Kannada Prabha Newspapers by intimating the commencement of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor and calling the creditors to submit their proof of claims by 28th August, 2019. Subsequently, in compliance with Section 21(1) of the Code, the IRP has certified the constitution of the CoC, which consists of the following creditors:-
| Sl. No | Name of the Financial Creditor | Type of the Form | Claim received (Rs.) | Provisional admitted claim amount (Rs.) | Percent age of Voting share (%) |
|---|---|---|---|---|---|
| 1 | Altico Capital India Ltd | Form C | 1,65,53,44,568.00 | 1,65,53,44,568.00 | 73.09 |
| 2 | VSL Securities Pvt. Ltd | Form C | 21,58,04,027.39 | 21,58,04,027.39 | 9.53 |
| 3 | VSL Realities Pvt. Ltd | Form C | 15,00,49,301.00 | 15,00,49,301.00 | 6.62 |
| 4 | Sarbottam Alloy & Fiscal P. Ltd | Form C | 4,20,76,250.00 | 4,20,76,250.00 | 1.86 |
| 5 | Unicasa Dwellings Pvt. Ltd | Form C | 10,00,57,500.00 | 10,00,57,500.00 | 4.42 |
| 6 | Univalue Projects Pvt. Ltd | Form C | 4,72,00,000.00 | 4,72,00,000.00 | 2.08 |
| 7 | Growth Vinimay Pvt Ltd. | Form C | 4,78,20,000.00 | 4,78,20,000.00 | 2.11 |
| 8 | LVS Pravin Kumar | Form CA | 15,87,471.00 | 15,87,471.00 | 0.07 |
| 9 | BS Chandrashekar | Form CA | 15,73,414.00 | 15,73,414.00 | 0.07 |
| 10 | A Karthik | Form | 15,17,185.00 | 15,17,185.00 | 0.07 |
| CA | |||||
| 11 | Prime Asset Sources Pvt. Ltd | Form CA | 18,72,500.00 | 18,72,500.00 | 0.08 |
| Total | 2,26,49,02,216.39 | 2,26,49,02,216.39 | 100.00 |
Subsequently, IRP has made verifications of the claims received along with supporting documents, compared with books of the Company and done its reconstitution of Committee of Creditors. In addition to the claims from the aforementioned Creditors, the IRP has received total Claim amount of Rs.2,35,72,27,259/- against the Corporate Debtor and IRP admitted the Claim amount of Rs.2,33,24,02,526/-.
Accordingly, the IRP has conducted the first meeting of the CoC, held on 12th September, 2019 at 3.30 p.m at Bangalore, wherein inter-alia passed a resolution for appointment of, CS Hari Babu Thota, as Resolution Professional. The 2nd meeting of the Committee of Creditors (CoC) on 17th October, 2019 at 3.30 P.M, Bengaluru, wherein the members of the Committee of Creditors (CoC) M/s. Altico Capital India Limited represented by Mr. Dhruv Dua, VP; M/s. VSL Securities Pvt. Ltd. and VSL Realities Pvt. Ltd. represented by Mr. Rajesh Sethia; Mr. Sunil Jhunjhunwala represented by Mr. Suresh Balaji; Authorised Representative of Home buyers class of financial creditors, Mr. R.S. Dodda Byre Gowda and Mr. G. Murali, Chairman of the meeting were present. The members inter-alia approved for initiation of liquidation of the Corporate Debtor with 70.97%, voting, which reads as under:
Item No.9: To discuss & finalize eligibility criteria & evaluation matrix to select the resolution plan (Voting)
“The IRP has explained the resolution process as per IBC, 2016 to the CoC members. The authorized representative of Altico Capital India Ltd. (voting right 70.97%) opined that in the present distressed market conditions, liquidation is best option instead of going for resolution plans. Liquidation will result in quick relief for home buyers. On the contrary, the authorized representative for VSL Securities Pvt. Ltd., VSL Realities Pvt. Ltd., Sunil Kumar Jhunhunwala and authorised representative of home buyers (voting right 17.5%) expressed resolution plan instead of directly going to liquidation. IRP requested all the CoC members to provide write-up based on their views. This voting item is approved to go for Liquidation with 70.97% voting by the CoC members. This items approved by the CoC with 70.97% voting. E-voting members have not participated and caste their voting. Hence, no change of approval voting percentage after the e-voting.
Item No.10: To discuss & finalize Form G public announcement date etc. (Voting)
“The majority (voting right 70.97%) of the CoC members have approved and voting to go for liquidation. Hence, there is no question of Form G and call for Expression of Interest. This item approved by the CoC with 70.97% voting. E-voting members have not participated and caste their voting. Hence, no change of approval voting percentage after the evoting.”
In the 3rd meeting of the CoC was held on 18.10.2019 under the AEGIS of CS Hari Babu Thota, Resolution Professional, wherein it is inter-alia decided to appoint Shri Kondisetty Kumar Dushyantha, the Company Secretary in Practice and Insolvency Professional, as liquidator in the place of Hari Babu Thota. And the existing Resolution Professional has expressed his inability to continue as Liquidator of the Corporate Debtor due to other assignments under IBC and pre-commitments. Wherein, it is also inter-alia decided that ascertaining the Liquid Assets on the best estimate basis, which reads as under:
“...9. Ascertaining the liquid assets on best estimates basis:
The Chairman informed the Committee that pursuant to Regulation 39B(2) the Committee shall make a best estimate of the value of the liquid assets available to meet the liquidation costs in sub-regulation (1).
He further informed that there are no liquid assets in the Corporate Debtor except for the bank balance available in the Escrow Account at HDFC Bank of Rs.39,60,000/-. He further stated that Altico Capital India Ltd one of the member of CoC had filed a criminal complaint against the Corporate Debtor and its Promoters. The investigating officer of Sheshadripuram Police Station has issued notice to HDFC Bank directing them to stop transactions in the above account until further orders. Since then the account is un- operational.
As all the members of the Committee were not present in the meeting, it was put for voting through electronic means. The Resolution was considered as approved as the same was approved with 72.57% voting share of the members of the Committee as follows:
"RESOLVED THAT in accordance with Regulation 39B(2) of the CIRP Regulation the Committee of Creditors be and are hereby estimate Rs.39,60,000/- available in the Escrow Account Number 00090350005039 at HDFC Bank as liquid assets available to meet the liquidation cost.
11. Approval of Plan for Excess of Liquidation Cost over Liquid Assets
The Chairman informed the Committee that pursuant to Regulation 39B(3) of the CIRP Regulations, the Committee is required to approve a plan providing for contribution, to meet the excess of estimated liquidation cost over estimated liquid assets.
The liquidation cost was not ascertainable and available liquid assets is only to the extent of Rs.29,60,000/-.
As all the members of the Committee were not present in the meeting, it was put for voting through electronic means. The Resolution was considered as approved as the same was approved with 88.60% voting share of the members of the Committee as follows:
"RESOLVED THAT the consent of the Committee of Creditors be and is hereby accorded for the following plan to provide contribution for meeting the difference between the liquidation cost and liquid assets of the Corporate Debtor: The liquidator shall utilize the amount that may be realize during the liquidation process if compromise or arrangement under Section 230 of the Companies Act, 2013 entered into; And in absence of any compromise or arrangement under Section 230 the liquidator shall utilize the sale proceeds of any assets of the Corporate Debtor, if any and/or the Liquidator shall explore opportunity for availing interim finance for deficit amount and such amount shall prevail over the other payments while distributing to the stakeholders under the provisions of the Section 53 of the Code.
RESOLVED FURTHER THAT the Resolution Professional be and is hereby authorised to submit the same to the Adjudicating Authority."
Heard Shri Hari Babu Thota, learned Resolution Professional and Shri Pratik Joshi, learned Counsel for the Financial Creditor. We have carefully perused the pleadings of both the parties and also extant provisions of the Code and Rules made thereunder.
As stated supra, the Committee of Creditors have explored all the possibility to see that the Corporate Debtor is going concern and to get Resolution Plan, and found there was no possibility of getting any Resolution Plan and the liquidation cost was not ascertainable and available liquid assets is only to the extent of Rs. 29,60,000/-, whereas total claims amount received against the Corporate Debtor is Rs.2,35,72,27,259/- Therefore, there is no other alternative for the Committee of Creditors (CoC) except to recommend to initiate liquidation proceedings, as per the provisions of the Code.
The CoC with requisite majority has also further resolved to appoint Shri Kondisetty Kumar Dushyantha, Insolvency Professional to act as Liquidator in respect of the Corporate Debtor, who has also filed written consent dated 16.12.2019, by inter-alia declaring that he has registered with the Board as an insolvency professional; he is not subject to any disciplinary proceedings initiated by the Board or the Insolvency Professional Agency; he currently serving as Voluntary Liquidator of (a) Airespace Wireless Networks Private Limited; (b) Witworks Consumer Technologies Private Limited; (c) Qualkraft Engineering Private Limited; (d) Fairchild Semiconductor (India) Private Limited; he is eligible to be appointed as liquidator of the Corporate Debtor, under regulation 3 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and other applicable provisions of the Code and regulations etc. Therefore, he is provisionally eligible to be appointed as Liquidator. We are convinced with the reasons given by the Committee of Creditors (CoC) for filing this instant Application seeking for liquidation of the Company and consequently to appoint liquidator.
As per provisions of the Section 33 of the Code, the Adjudicating Authority has to pass an order for liquidating the Corporate Debtor in the manner as laid down in the Code, to issue public announcement that Corporate Debtor is in liquidation process etc., provided the Adjudicating Authority, do not receive any Resolution Plan during the time granted by the Adjudicating Authority (180 days as the case may be).
For the aforesaid reasons and circumstances, we are of the considered opinion that the instant Application deserves to be disposed of with necessary directions.
In the result I.A.Nos.628/2019 & 17/2020 in C.P.(IB)No.172/ BB/2019, are hereby disposed of with the following directions:
We hereby ordered that M/s. Unishire Housing LLP Respondent/Corporate Debtor, to be liquidated in the manner as laid down in Chapter III (Liquidation Process) of Part II of the Code.
We hereby appointed Mr. Kondisetty Kumar Dushyantha, Regn. No. IBBI/IPA-002/IP-N00237/2017-18/10688 as Liquidator, subject to the terms and conditions to be agreed upon by the parties in the light of the extant provisions of the IBBI.
We hereby directed the Liquidator to issue immediate public announcement by stating that the Corporate Debtor is in liquidation.
The Registry is directed to communicate this order to the Registrar of Companies, Karnataka for information and necessary action.
The liquidator is directed to strictly adhere to the extant provisions of the Code and the Rules made thereunder framed by IBBI from time to time and also directed to take expeditious steps to complete the liquidation process in the light of various orders.
Post the case on 13.02.2020 for report of the Liquidator.