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Judgment
This Application has been filed by Mr. Maligi Madhusudhana Reddy1, Resolution Professional of M/s. Naoline Infrastructure Private Limited2 under Section 33(2) of the Insolvency and Bankruptcy Code3, 2016, seeking an order to liquidate the Corporate Debtor.
BRIEF AVERMENTS OF THE APPLICANT:
(A) Admission of Petition and Appointment of Interim Resolution Professional
It is submitted that this Tribunal, vide order dated 04.06.2024 passed in C.P. (IB) No. 69/9/HDB/2023, admitted the Corporate Debtor into Corporate Insolvency Resolution Process (CIRP) and appointed Mr. Pankaj Bhattad as the Interim Resolution Professional (IRP).
(B) Public Announcement and Constitution of Committee of Creditors
It is submitted that pursuant to commencement of CIRP, the Interim Resolution Professional issued a public announcement on 08.06.2024, inviting creditors to submit their claims on or before 20.06.2024, in compliance with Sections 13 and 15 of the Code read with Regulation 6 of the CIRP Regulations, 2016. ii) It is further submitted that upon verification of the claims received, the Resolution Professional prepared and updated the list of creditors indicating the amounts claimed and admitted, in accordance with Regulation 13(2)(d) of the CIRP Regulations, 2016.
Based on the claims admitted, the following financial creditors formed part of the Committee of Creditors:
| Sl. No. | Name of the Financial Creditor | Amount claimed (Rs.) | Claim Admitted | Voting Percentage |
|---|---|---|---|---|
| 1. | Canara Bank | 1,18,00,22,035 | 99,83,53,096 | 47.05% |
| 2. | UCO Bank | 43,36,20,625 | 36,56,70,110 | 17.29% |
| 3. | Karnataka Bank Limited | 9,14,01,389 | 7,53,69,528 | 3.64% |
| 4. | Indian Overseas Bank | 35,59,74,482 | 29,67,49,585 | 14.19% |
| 5. | Union Bank of India | 44,70,93,932 | 38,64,62,442 | 17.83% |
| Total | 250,81,12,463 | 212,26,04,762 | 100% |
iii) Accordingly, the Interim Resolution Professional constituted the Committee of Creditors comprising five financial creditors, which was taken on record by this Tribunal vide order dated 03.07.2024 passed in IA (IBC) 1355/2024.
(C) Appointment of Resolution Professional
It is submitted that in the 1st meeting of the Committee of Creditors held on 03.07.2024, the CoC approved, with 100% voting share, the appointment of the present Applicant as the Resolution Professional. ii) Pursuant to the said decision, I.A. (IBC) No. 1523 of 2024 was filed before this Tribunal and this Adjudicating Authority, vide order dated 23.07.2024, replaced the Interim Resolution Professional and appointed the present Applicant as the Resolution Professional of the Corporate Debtor.
(D) Appointment of Registered Valuers
It is submitted that the Resolution Professional appointed IBBI registered valuers for determining the fair value and liquidation value of the assets of the Corporate Debtor across three classes of assets. The valuation reports received from the valuers were shared with the members of the Committee of Creditors.
| Asset Class | Name of the Valuer | Fair Value (Rs. in Lakhs) | Liquidation Value (Rs. in Lakhs) |
|---|---|---|---|
| Land & Buildings | A.S.R.K.V. Prasad | 3,063.42 | 2,297.57 |
| Thavva Chandra Obul Reddy | 3,817.73 | 2,672.41 | |
| Average | 3,440.58 | 2,484.99 | |
| Plant & Machinery | M.ChandraPrakash | 57.84 | 46.27 |
| V.R. Maganti | 62.64 | 50.11 | |
| Average | 60.24 | 48.19 | |
| Securities / Financial Assets | N. Lakshmi Reddy | 60.50 | 50.40 |
| N. Sri Venkatakrishna Rao | 55.50 | 50.50 | |
| Average | 58.00 | 50.45 | |
| Consolidated (All Classes) | Total | 3,558.82 | 2,583.63 |
(E) Invitation and Consideration of Resolution Plans
It is submitted that the Resolution Professional published Form-G inviting Expressions of Interest on 23.08.2024, 02.10.2024 and 14.11.2024.
ii) Based on the EOIs received, the Resolution Professional issued the final list of Prospective Resolution Applicants on 24.12.2024, comprising four applicants including the suspended director of the Corporate Debtor, the Corporate Debtor being an MSME. The Information Memorandum and Request for Resolution Plans were thereafter circulated to the Prospective Resolution Applicants.
iii) The resolution plans received were opened in the 10th meeting of the Committee of Creditors held on 13.02.2025. One of the applicants subsequently withdrew from the process.
iv) The remaining resolution plans submitted by M/s. Ardha Holdings Private Limited, Mr. Sandeep Omprakash Agarwal and Mr. Prabhakar Reddy Nallapu were placed before the 11th CoC meeting held on 18.02.2025.
Upon deliberations, the CoC advised the Resolution Professional to invite revised resolution plans, which were thereafter placed before the 12th CoC meeting held on 11.03.2025 along with the evaluation matrix scores and observations of the Resolution Professional.
(F) Decision of the Committee of Creditors to Liquidate
It is submitted that after consideration of the resolution plans, separate resolutions for approval of the three plans were placed before the Committee of Creditors for e-voting, however none of the plans secured the requisite voting share.
ii) Consequently, the Committee of Creditors resolved with 100% voting share to liquidate the Corporate Debtor under Section 33(2) of the Insolvency and Bankruptcy Code, 2016, and directed the Resolution Professional to file the present Application before this Adjudicating Authority.
Thus submitting, the present application is filed by the Resolution Professional seeking an order for liquidation of the Corporate Debtor, namely M/s. Naoline Infrastructure Pvt. Ltd. (CIN: U45200TG2010PTC068516), under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. The relevant provision of Section 33(2) of the Code reads as follows:
Section 33(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 [approved by not less than sixty-six per cent. of the voting share] 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).
[Explanation. - For the purposes of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, any time after its constitution under sub-section (7) of section 21 and before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum.]
We have heard Mr. Maligi Madhusudhana Reddy, Ld. Resolution Professional and perused the record.
We observe that the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) by this Adjudicating Authority vide order dated 04.06.2024 in C.P. (IB) No. 69/9/HDB/2023.
During the CIRP period, the Resolution Professional issued Form-G inviting Expressions of Interest on three occasions. Pursuant thereto, resolution plans were received from the prospective resolution applicants including M/s. Ardha Holdings Private Limited, Mr. Sandeep Omprakash Agarwal and Mr. Prabhakar Reddy Nallapu, the suspended director of the Corporate Debtor, the Corporate Debtor being an MSME.
It is further observed that the resolution plans received from the prospective resolution applicants were placed before the Committee of Creditors and deliberated upon in the meetings of the CoC. The revised resolution plans were ultimately placed before the 12th meeting of the Committee of Creditors held on 11.03.2025.
After deliberations, the resolution plans submitted by all the prospective resolution applicants were put to e-voting before the Committee of Creditors. However, none of the resolution plans received the requisite voting share for approval. Consequently, the Committee of Creditors resolved, with 100% voting share, to liquidate the Corporate Debtor under Section 33(2) of the Code. The same is extracted below:
Agenda Item 7, Resolution 4:
To recommend and approve the liquidation process of the Corporate Debtor, M/s. Naolin Infrastructure Private Limited, under Section 33(2), Chapter III of IBC 2016.
"RESOLVED THAT in terms of Explanation to sub-section (2) of section 33, Chapter III of Insolvency and Bankruptcy Code, 2016, the Corporate Debtor, namely, M/s. Naolin Infrastructure Pvt. Ltd., bearing CIN - U45200TG2010PTC068516, be and is hereby liquidated."
"RESOLVED FURTHER THAT the Resolution Professional be directed to intimate the Hon'ble Adjudicating Authority in terms of section 33(2) of the IBC, 2016 about the decision of the Committee of Creditors to liquidate the Corporate Debtor."
The above resolution has been approved by the CoC members 100% voting share.
It is settled law that the commercial decision of CoC is non-justiciable. In the present case, it is seen that CoC with 100% majority has passed the resolution seeking liquidation of the Corporate Debtor.
Accordingly, we are satisfied that the requirements of Section 33(2) of the Insolvency and Bankruptcy Code, 2016 stand fulfilled and that the Corporate Debtor is liable to be liquidated.
ORDER
The Corporate Debtor i.e M/s. Naoline Infrastructure Private Limited, is put under liquidation process in the manner laid down in Chapter-III of the Code with effect from the date of order.
The Insolvency and Bankruptcy Board of India ("IBBI") vide its circular number Liq-12011/214/2023-IBBI/840 dated 18/07/2023, by exercising its powers conferred under Section 34(4)(b) of the Code has 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.
Thus, we hereby appoint Ms. Narala Varalakshmi having Registration no. IBBI/IPA-002/IP-N00620/2018-2019/11980, Address: 1-8-588/29/A, Achhainagar, Baghlinngampally, Backside RTC Kalyana Mandapam, Hyderabad, Telangana, 500044, email id: [email protected] Mobile No. 9000987444, as Liquidator whose AFA is valid upto 31.12.2026. She is directed to file her consent in Form AA within 2 days of receipt of the copy of this order.
The Liquidator shall issue public announcement stating that the Corporate Debtor is in liquidation in terms of Regulation 12 of IBBI (Liquidation Process) Regulations, 2016.
The Moratorium declared under Section 14 of the code shall cease to have its effect.
Subject to Section 52 of the Code, no suit or other legal proceedings shall be instituted by or against the Corporate Person. This shall however 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.
All powers of the Board of Directors, Key Managerial Personnel and partners of the Corporate Debtor shall cease to have effect and shall be vested in the Liquidator.
The Liquidator shall exercise the powers and perform duties as envisaged under Sections 35 to 50 and 52 to 54 of the Code, read with Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
The personnel connected with the Corporate Debtor shall extend all assistance and co-operation to the Liquidator as would be required for managing its affairs.
The Liquidator shall be entitled to such fees as may be specified by the Board in terms of Section 34 (8) of the Code.
This order 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.
The Applicant herein is directed to serve a copy on the Liquidator appointed herein above.
The Regional Director, Ministry of Corporate Affairs, Registrar of Companies & Official Liquidator, Hyderabad, the Registered Office of the Corporate Debtor and the Liquidator.