Mr. Shailendra Singh vs Mr. Samir Singh & Anr.

PER: DR. SANJEEV RANJAN, MEMBER (TECHNICAL)

This Application has been filed by Mr. Shailendra Singh, the Resolution Professional of the Corporate Debtor before this Adjudicating Authority under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 ("IBC" or "Code") seeking initiation of the Liquidation of the Corporate Debtor. The Applicant seeks the following relief:

An Application was filed by M/ s Shimping Technology Pvt. Ltd. (Financial Creditor) to initiate Corporate Insolvency Resolution Process ("CIRP") against M/s Foxdom Technologies Pvt. Ltd. (Corporate Debtor) under Section 7 of the Code filed before this Adjudicating Authority. This Adjudicating Authority vide order dated 03.02.2023 ("Admission Order") admitted the Application and declared a moratorium and appointed Mr. Shailendra Singh as an Interim Resolution Professional. Subsequently, Mr. Shailendra Singh, the Applicant, was confirmed as the Resolution Professional by the Committee of Creditors ("CoC").

The Applicant submitted that a public announcement in Form A was made on 11.02.2023 in the English newspaper "Financial Express" and the Hindi newspaper "Jansatta". The last date for submission of claims was 22.02.2023.

The Applicant submitted that an E-mail was sent to the Corporate Debtor on 13.02.2023 informing him about his appointment and seeking cooperation. However, no response was received.

The Applicant submitted that he visited the registered office of the Corporate Debtor at RZ-81, F/F, Indra Park, Uttam Nagar, Delhi-110059 on 13.02.2023, which was found locked. Thereafter, a phone call was received on 14.02.2023 assuring cooperation, but no one visited.

The Applicant submitted that two representatives of the Corporate Debtor visited his office on 15.02.2023 and were provided a list of required documents. They assured cooperation, but no action followed. A further email was sent on 16.02.2023 calling the directors and others on 18.02.2023 at 4:00 PM, but no one appeared. The Applicant further sent another email on 26.02.2023 seeking requisite documents and requesting presence on 02.03.2023 at 4:00 PM, but no one came. A further proposed visit on 09.03.2023 also did not materialize.

The Applicant submitted that the Committee of Creditors (CoC) was constituted with M/s Shimping Technology Pvt. Ltd. as the sole financial creditor having a claim of ₹4,83,60,531 and holding 100% voting share. The report was filed through IA No. 1449/2023 and was taken on record by order dated 17.03.2023.

The Applicant submitted that the 1st meeting of CoC was held on 11.03.2023, wherein the CoC confirmed the appointment of the Applicant as Resolution Professional with 100% voting. The Applicant apprised the CoC of non-cooperation by the suspended directors and proposed to file application under Section 19(2) of the Code.

The Applicant submitted that an Application under Section 19(2) & (3) of the Code, bearing IA No. 1911/2023 was filed and was disposed of by the Hon'ble Adjudicating Authority on 02.01.2024 with directions to the suspended directors to extend cooperation.

The Applicant submitted that an application bearing IA No. 1518/2023 was filed for intimation of CoC's decision confirming his appointment, and the same was allowed by the Hon'ble Adjudicating Authority on 22.03.2023.

The Applicant submitted that the 2nd meeting of CoC was held on 07.04.2023. No new claims or documents were received. The appointment of Mr. Sunil Kumar Gupta and AAA Valuation Professionals LLP as valuers was intimated. A draft Form G was placed and approved for publication.

The Applicant submitted that Form G was published on 09.04.2023 in Financial Express (English) and Jansatta (Hindi). The last date for submission of resolution plans was 07.07.2023.

The Applicant submitted that the 3rd meeting of CoC was held on 06.06.2023. It was informed that no Expression of Interest (“EOI”) was received till date. The CoC approved re-publication of Form G with 100% voting and noted that if no EOI is received again, Liquidation will be considered.

The Applicant submitted that CIRP costs approved in the 2nd meeting were paid from the ICICI bank account of the Corporate Debtor and it was informed that this account had Rupees 19 lakhs as the balance. CoC approved future CIRP expenses to be paid from the said account.

The Applicant submitted that Form G was republished in Newspapers Financial Express (English) and Jansatta (Hindi) on 30.06.2023 with last date for submission of resolution plans being 15.07.2023.

The Applicant submitted that on 11.07.2023, a cheque issued by the Applicant from ICICI Bank A/c No. 000705050228 for payment of CIRP cost, was dishonoured. Upon inquiry, it was informed that the account had been frozen on instructions of Mr. Prem Singh Meena, Asst. Director, ED, Delhi Zonal Office – I. Thereafter, E-mails dated 13.07.2023 and 17.07.2023 were sent to the Bank by the Applicant, requesting for a copy of ED’s letter and to unblock the account. The bank replied with ED’s letter dated 08.07.2023 and stated it would act only on directions from the Adjudicating Authority.

The Applicant submitted that ED in its letter dated 08.07.2023 informed about PMLA investigation and stated that debit transactions were prohibited under Section 17(1A) of PMLA. Pursuant to which letters dated 13.07.2023 and 25.07.2023 were sent to ED by the Applicant, requesting unfreezing of the account, but no response was received.

The Applicant submitted that the 4th meeting of CoC was held on 26.07.2023 and it was resolved to wait till 30.07.2023 for EOIs, failing which an application would be filed seeking extension.

The Applicant submitted that the 5th meeting of CoC was held on 07.08.2023. No EOI was received till 30.07.2023. Sole CoC member expressed willingness to submit a plan and requested the Applicant to move an application seeking 90-day extension. CoC approved the same with 100% voting.

The Applicant submitted that a reminder email was sent to ED on 08.08.2023. ED replied on 14.08.2023 stating that the account was frozen following due process and that moratorium under IBC does not affect PMLA proceedings.

The Applicant submitted that CIRP dues including RP fees, legal counsel fees, valuer fees, publication costs remained unpaid due to freezing of the account. Further, an application bearing IA No. 4689/2023 under Section 60(5) was filed against ED to unfreeze the bank accounts.

The Applicant submitted that the 6th CoC meeting was held on 29.09.2023. The Applicant informed about IA 4689/2023 and that three EOIs were received. One was eligible and two were not, but all were accepted upon recommendation of the CoC. Evaluation Matrix and RFRP were approved with 100% voting. Payment for two Form G publications was also approved.

The Applicant submitted that an application bearing IA No. 4392/2023 seeking extension of 90 days was filed before this Adjudicating Authority which was allowed vide order dated 22.08.2023, extending CIRP till 31.10.2023.

The Applicant submitted that the 7th CoC meeting was held on 01.11.2023. It was resolved to further extend CIRP by 60 days beyond 270 days, and unpaid CIRP costs were to be paid within 10 days from 31.10.2023. Pursuant to which an application bearing IA No. 6085/2023, for extension was filed before this Adjudicating Authority, whereby an extension of 60 days was allowed vide order dated 10.11.2023, extending CIRP till 30.12.2023.

The Applicant submitted that the 8th CoC meeting was held on 18.11.2023. Despite extension, no plan was received. One valuation report was received, others awaited. It was resolved to make a final attempt by extending deadline for plan submission by 10 days. The CoC proposed to move an application to allow the Financial Creditor to submit a resolution plan. That after the 8th meeting, multiple reminders were sent to the CoC for CIRP cost payment, but no response was received.

The Applicant submitted that the 9th meeting of CoC was scheduled on 27.12.2023. As the CoC member did not attend, the meeting was adjourned to 28.12.2023, and again to 30.12.2023 due to lack of quorum.

The Applicant submitted that the 10th meeting of the Committee of Creditors was held on 23.01.2024, wherein it was noted that the CIRP period had ended on 31.12.2023, no resolution plan had been received, and CIRP costs remained unpaid. The CoC, with 100% voting, resolved to initiate liquidation, approved estimated liquidation costs of ₹24,00,000 for 12 months, fixed the Liquidator's monthly fee at ₹1,50,000, and resolved to explore sale of the Corporate Debtor or its business as a going concern. The CoC also approved the Applicant's appointment as Liquidator.

The resolution(s) passed in the 10th meeting of the CoC with respect to Liquidation is as follows:

It is submitted by the Resolution Professional that the present Application is being filed in the interest of justice and the same is bona fide in nature.

We have heard the Arguments of the Ld. Counsel appearing for the Applicant and perused the records carefully.

This Adjudicating Authority has heard the submissions of the Applicant in the present Application filed under Section 33(2) of the Insolvency and Bankruptcy Code, 2016, seeking initiation of liquidation of the Corporate Debtor, M/s Foxdom Technologies Pvt. Ltd., and has perused the material placed on record.

It is observed that CIRP of the Corporate Debtor commenced pursuant to the admission of the Section 7 Application on 03.02.2023. The Applicant was appointed as the Interim Resolution Professional and later confirmed as the Resolution Professional by the sole member of the Committee of Creditors (CoC), namely M/s Shimping Technology Pvt. Ltd., holding 100% voting share.

Multiple meetings of the CoC were held, and in the 10th meeting held on 23.01.2024, the CoC, with 100% voting share, resolved to initiate liquidation of the Corporate Debtor, approved the estimated liquidation cost and monthly remuneration of the Liquidator, and resolved to explore sale of the Corporate Debtor or its business as a going concern. The CoC also approved the Applicant's appointment as the Liquidator. However, the Applicant subsequently withdrew his consent to act as Liquidator, by email dated 30.03.2024, on the ground that CIRP dues remained unpaid despite repeated reminders to the sole CoC member.

It is further noted that the Corporate Debtor's ICICI Bank Account No. 000705050228 was frozen pursuant to a letter dated 08.07.2023 issued by the Directorate of Enforcement (ED), Delhi Zonal Office-I. As recorded in the Application and submissions of the Applicant, the said account had a balance of approximately ₹19 lakhs and was the source of CIRP cost payments. Following the freezing of the account, a cheque issued by the Applicant towards CIRP cost was dishonored. Thereafter, the Applicant addressed communications to both the Bank and the ED and filed IA No. 4689 of 2023 under Section 60(5) of the Code seeking directions to unfreeze the account.

This Adjudicating Authority, while disposing of IA No. 4689 of 2023 vide order dated 11.02.2025, had specifically taken note of the fact that the bank account of the Corporate Debtor was frozen pursuant to a letter issued by the Directorate of Enforcement, in connection with proceedings initiated under the Prevention of Money Laundering Act, 2002 (PMLA) wherein the suspended director of the Corporate Debtor as well as the Corporate Debtor are the Respondents. The said letter indicated that the freezing had been carried out in exercise of powers under Section 17(1A) of the PMLA, which prohibits debit transactions in accounts suspected to involve proceeds of crime. While disposing of the said Application, this Adjudicating Authority observed that the provisions of the IBC do not override the statutory framework under the PMLA and accordingly held that no direction could be issued to unfreeze the said account in view of the ongoing investigation.

It is pertinent herein to refer to the judgement passed by the Hon'ble Supreme Court in the matter of K. Sashidhar Versus Indian Overseas Bank & Ors. in Civil Appeal No. 10673 of 2018 where it has been held that the commercial decision of CoC is non-justiciable. In this case, it is seen that CoC with 100% majority has passed the resolution seeking liquidation of the Corporate Debtor.

The above-quoted decision of the Supreme Court, makes it clear that the “Commercial wisdom of CoC” is to be given paramount status. This Adjudicating Authority is not endowed with the powers of jurisdiction or authority to analyse or evaluate the commercial decision of the CoC. The members of the CoC are the best judges of their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by this Adjudicating Authority for the reason that it is not a part of the judicial function to examine their commercial decisions. Therefore, this Adjudicating Authority does not find any plausible reason to interfere with the commercial wisdom of the CoC who have in their 13th CoC meeting held on 18.11.2023, resolved to initiate liquidation of the Corporate Debtor with 87.39% of majority votes.

Accordingly, this Adjudicating Authority is of the view that the Liquidation of the Corporate Debtor, M/s Foxdom Technologies Pvt. Ltd. should be carried out in accordance with the provisions of the Code and the IBBI (Liquidation Process) Regulations, 2016.

That being stated, it is, however, clarified that the initiation or pendency of liquidation proceedings under the Insolvency and Bankruptcy Code, 2016, shall not, in any manner, impede, obstruct, or prejudice the independent proceedings initiated or pending before the Adjudicating Authority under the Prevention of Money Laundering Act, 2002, wherein the Corporate Debtor and its suspended directors are arrayed as respondents. The present order shall not be construed as granting any relief against, or placing any embargo upon, the statutory jurisdiction of the Adjudicating Authority under the PMLA, or the investigative and enforcement powers of the Directorate of Enforcement under the said enactment.

Accordingly, this Adjudicating Authority is inclined to permit the Liquidation of the Corporate Debtor in the present circumstances. The Liquidation. A.-13/2024 filed by Mr. Shailendra Singh, the Resolution Professional of the Corporate Debtor is hereby allowed and the Corporate Debtor is ordered to be Liquidated in terms of Section 33(2) of the Code read with sub-clause (i) of clause (b) thereof;

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. Parveen 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-001/IP-P-02022/2020-2021/13110 Address : 501, Lane no. 3A (Band Gali), Chanderlok, behind Sanatan Dharam Mandir, New Delhi, National Capital Territory of Delhi ,110093 Contact No. : +91 9312222564 E-mail : parveen_2817@yahoo.co.in

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. Shailendra Singh, 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.