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Judgment
PER: SHRI DHARMINDER SINGH, MEMBER (JUDICIAL)
This is an application is filed by Mr. Tarun Batra, (hereinafter referred to as the "Applicant") who has been appointed as RP in the matter of M/s Bhupindra Agro Pvt. Ltd Vs. M/S. Shri Vardhman Rice Mills Pvt. Ltd. vide first COC meeting held on 15.01.2020. The present application is filed under Section 25(2)(j), 43,45,66 and Section 235A of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as the “Code”).
Originally, an application bearing no. CP (IB) NO.241/ND/2019 under Section 9 was filed by M/s Bhupindra Agro Pvt. Ltd. (the operational creditor) against M/s Shri Vardhman Rice Mills Pvt. Ltd. (the corporate Debtor), the same was admitted vide order dated 04.12.2019 wherein Mr. Vikas Garg was appointed as the interim resolution professional. Later own in the 1st COC meeting held on 15.01.2020 appointed Mr. Tarun Batra as the RP of the corporate debtor.
The applicant states that they have come across certain instances of transactions i.e. preferential transactions in the independent transaction audit report and the same are carried with intent to defraud creditors.
The total claim which was admitted was Rs. 2351.97 Lakhs including claims of financial creditors i.e. Rs. 2277.80 Lakhs and claims of operational creditors i.e. Rs. 74.17 Lakhs. The applicant further stated that the Corporate Debtor has availed financial assistance from Punjab National Bank and ICICI Bank Limited and total claim admitted from financial creditors are Rs. 2277.80 Lakhs. It is pertinent to note here that ICICI Bank Limited has not submitted its claim as financial creditor. The COC in its second meeting appointed A.K.G. & Associates for carrying transaction audit for the period of 01.04.2017 to 04.12.2019. Upon perusal of the final transaction audit report dated 20.03.2020 reflects large number of irregularities in conduct and business management of the Corporate Debtor. The contents of the said audit report is herein reproduced below: -
i.“The corporate debtor has not justified the sale of goods/stock at lower prices by stating the reason for the same that the stock was old/obsolete and simultaneously using the same for drawing power calculation year by year.
ii.The corporate debtor has failed to provide substantial evidence to prove the genuineness of sale and purchase transactions including movement to stocks during the audit period. Along with that such sale purchase were found to be done with various parties having common registered address, cancelled GST registration and non-existence of parties shows malicious intention of the Corporate Debtor.
iii.The Corporate debtor has intentionally sold/transferred its fixed assets at loss through booked entries to keep them out of the reach of secured creditors. Further, there was no substantial evidence to justify the same was available on record.
iv.In our opinion it is evident that the corporate debtor has deliberately made the above stated transactions to defraud the creditors. The corporate debtor has not been able to justify the sale of goods/stock at lower process merely by stating that the stock was old/obsolete."
The applicant has submitted section wise details of avoidance transactions as the same was mentioned in the transaction audit report. Party wise details of Preferential Transactions under section 43 is hereby reproduced: -
I. Shree Ji International- It was observed by the transaction auditor that total amount considered under the preferential transaction was Rs. 75.00 Lakhs and the same was opening payable balance as on 01.04.2017 with the party. It's to be noted that Rs. 70.00 Lakhs had been paid in the month of April and Rs. 5.00 Lakhs had been paid during the CIRP period i.e., 17.12.2019. The said transactions with the parties are not done in ordinary course of business and to be considered as preferential transactions.
II. Ram Bhaj Jain (Suspended Director)- Observation made by the transaction Auditor that Rs. 97000/- was opening payable balance as on 01.04.2017 with the party. During the audit period corporate debtor has received a total of Rs. 10.25 lakhs out of which Rs1.05 Lakhs has been received by cash and the corporate debtor has paid back Rs. 12.80 Lakhs against the opening balance and amount received. However, due to time limit under section 43, out of total amount paid, payment of Rs. 10.29 Lakhs has been made under the period of 04.12.2017 to 04.12.2019 which will be covered under section 43 as preferential transaction and the said transaction with the suspended director is not done in ordinary course of business and to be considered as preferential transactions.
III. Radico Trading Limited (related party and Corporate Guarantor of the Corporate debtor)- Observation made by the transaction Auditor that Rs. 5.25 Crores were payable to the party as on 04.04.2017. during the audit period the Corporate Debtor has received Rs. 20.85 Lakhs from the party and Rs. 4.08 Crores has been paid against the opening payable balance. However, due to time limit under section 43, out of total amount paid, payment of Rs. 2.86 Crores will be covered under section 43 as preferential transaction for the period of 04.12.2018 to 04.12.2019 and the payment of Rs. 4.07 Crores for the period of 04.12.2017 to 04.12.2019. And it is to be noted that the said transactions are not done in the ordinary course of business and to be considered as preferential transaction.
IV. G.G. Enterprises- Observation made by the transaction Auditor that the Corporate Debtor has taken an unsecured loan of Rs. 3.00 Lakhs from the party on 04.10.2017. Later on, 18.05.2018 the same has been repaid but on verification of Tax Audit report of FY 2018-19 the same was not shown under the repayment of loans/deposits. The said transactions were not done in ordinary course of business and not to be considered as preferential transactions.
V. Hinglaj Enterprises- It was observed that the Corporate Debtor has adjusted receivable balance of Rs. 14.40 Lakhs receivable from various parties, against the opening payable balance of Hinglaj Enterprises during period under audit. However, the repayment of Rs. 5.77 Lakhs is done/adjusted during the 2 years preceding CIRP date i.e. 04.12.2019. It was observed that the said opening payable balance as on 01.04.2017 was consist of unsecured loan which was taken from the party during the FY 2014-15 and the Corporate Debtor has shown this unsecured loan under the head "Sundry Debtors" in the books of accounts. Further, the above said adjustments/repayment of loan made during the period under Audit was not shown in the Tax Audit Report. Further, it was also observed that the information such as address, contact details and the name of the proprietor are not available on record, hence, the same were not verified with respect that whether, the party is related or not. The said transactions were not done in ordinary course of business and not to be considered as preferential transactions.
The Applicant has further submitted party wise details of Undervalue Transactions under section 45 and the same is hereby reproduced: -
I. Kundan Trading Co.- The observation was made that the corporate debtor during the review period has made sales of 2119.35 quintal of Rice at average sales rate of Rs. 775.78/- per quintal amounting to Rs. 164.41 Lakhs. The corporate debtor has booked loss of Rs. 781.78 Lakh by selling 21192.35 quintal of Rice. The value of stock was Rs. 4464.76 per quintal. The amount of undervalue transactions is Rs. 781.78 Lakhs, without considering the profit element. The bank transactions with this party are made in a single month to adjust the balance. Enquiry letter were issued by the RP but the same were returned undelivered due to non-existence of the party address. The suspended director has purposely done these undervalue transactions to transfer the assets of the Corporate Debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions were not done in ordinary course of business and not to be considered as Undervalue Transactions under section 45.
II. R.K. International- The corporate debtor during the review period has made sales of 20234.90 quintal of Rice at average sales rate of Rs. 787.37 per quintal amounting to Rs. 159.32 Lakhs. The Corporate Debtor has booked loss of Rs. 744.12 Lakh by selling 20234.90 quintal of Rice. The cost value of stock was Rs. 4464.76 per quintal. The amount of undervalue transactions is Rs. 744.12 Lakh, without considering the profit element. Purposely the suspended director has done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The bank transactions with this party are also made in a single month to adjust the balance. The enquiry letter issued by the Applicant /Resolution Professional are also returned undelivered due to non-existence of the party at address. The said transactions were not done in ordinary course of business and not to be considered as Undervalue Transactions under section 45.
III. Panchdev Foods & Chemicals Pvt Ltd. (Related Party)- The Corporate Debtor during the review period has made sales of 889 quintal of rice at average sales rate of Rs. 3670.52 per quintal amounting to Rs. 32.63 Lakh. The Corporate Debtor has booked loss of Rs. 7.06 Lakhs by selling 889 quintals of Rice and the cost value of stock was Rs. 4464.76 per are quintal. The amount of undervalue transactions is Rs. 7.06 Lakhs, without considering the profit element. The suspended director has purposely done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions were not done in ordinary course of business and not to be considered as Undervalue Transactions under section 45.
IV. Kanha Rice and Paddy Traders- The Corporate Debtor during the review period has made sales of 612.26 quintal of Rice at average sales rate of Rs. 2618.84 per quintal amounting to Rs. 16.03 Lakh. The Corporate Debtor has booked loss of Rs. 11.30 Lakhs by selling 612.26 quintal of Rice. The cost value of stock was Rs. 4464.76 per quintal. The amount of undervalue transactions is Rs. 11.30 Lakhs, without considering the profit element. The suspended director has purposely done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions were not done in ordinary course of business and not to be considered as Undervalue Transactions under section 45.
V. Saraswati Foods- The Corporate Debtor during the review period has made sales of 502.23 quintal of Rice at average sales rate of Rs. 1534.25 per quintal amounting to Rs. 7.71 Lakhs. The Corporate Debtor has booked loss of Rs. 14.72 Lakhs by selling 502.23 quintal of Rice. The cost value of stock was Rs. 4464.76 per quintal. The amount of undervalue transactions is Rs. 14.72 Lakhs, without considering the profit element. The suspended director has purposely done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions were not done in ordinary course of business and not to be considered as Undervalue Transactions under section 45.
VI. Panchdev Foods and Chemical Limited (Related Party)- It was observed by the Transaction Auditor, that during the month of November 2019 the suspended directors has sold its 4 vehicles / trucks to the related party. The said sales have been made below the fair market value as per the valuation available on public domain. It's merely a books entry to exclude such assets from the reach of secured creditors. The suspended director has purposely done these undervalue transactions to transfer the assets of the corporate debtor to beneficiary and to keep the assets out of the reach of the creditors. The said transactions were not done in ordinary course of business and not to be considered as Undervalue Transactions under section 45.
It is further submitted by the Applicant that in the transaction auditor report it has been observed that the suspended directors have made most of its sales and purchases with the same party/group. The total sales of Rs. 1121.6 Lakhs and Purchases of Rs. 882.19 Lakhs was made through these parties. The adjustment of purchase and sales without bank transaction is Rs. 492.52 Lakhs. Additionally, the corporate debtor has been making sales and purchases with group of common entities as the parties i.e. Sansar International, Caps Commodities House, Bharat Agro Foods, East India Overseas and Life Time Enterprises all are operating from the same address which is 3973/74, 3rd Floor, Naya Bazar, New Delhi-110006. Fraudulent transactions under Section 66 as per details is hereby reproduced: -
I. Sansar International- The Suspended directors during the review period has made sales of Rs. 758.90 Lakhs and Purchase of Rs. 359.65 Lakhs during the review period. The amount adjusted in the sale /purchase is Rs. 359.65 Lakhs without any bank transactions. The sales and purchase transactions are entered by the suspended directors without any movement of goods and only for purpose of inflating the sales/purchase and also write off the non-existence stock from the books of corporate debtor. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors.
II. Cap Commodities House- The Suspended has made sales of Rs. 156.75 Lakhs and Purchase of Rs. 96.31 Lakhs during the review period. The amount adjusted in the sale /purchase is Rs. 21.75 Lakh without any bank transactions. The sales and purchase transactions are entered by the suspended directors without any movement of goods and only for purpose of inflating the sales/purchase and also write off the non-existence stock from the books of corporate debtor. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors.
III. Bharat Agro Foods- The Suspended has made sales of Rs. 205.50 Lakhs during the review period. The sales transactions were entered by the suspended directors without any movement of goods and only for purpose of inflating the sales/purchase and also write off the non-existence stock from the books of corporate debtor. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors.
IV. East India Overseas- The Suspended has made purchase of Rs. 106.61 Lakhs during the review period. The said amount had been adjusted without any bank transactions. The said purchase transactions were entered by the suspended directors without any movement of goods and only for purpose of inflating the purchase and stock values in the books of corporate debtor. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors.
V. Life Time Enterprises-The Suspended has made purchase of Rs. 319.62 Lakhs during the review period. The said amount had been adjusted without any bank transactions. The said purchase transactions were entered by the suspended directors without any movement of goods and only for purpose of inflating the purchase and stock values in the books of corporate debtor. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors.
VI. Panchdev Foods and Chemicals Pvt Ltd.- Observation made by the transaction auditor that the suspended directors have made sales of Rs. 32.63 lakh during the month of Jan-2019 and Feb-2019. The Corporate Debtor has received Rs. 86.00 lakh against the sales made. was also observed that the Corporate Debtor has adjusted Rs. 21.50 Lakh with Kamal Enterprises and Rs. 3.27 has been adjusted against the Electric Bill. On verification of invoices by Transaction auditor for the FY 2018-19 it was observed that out of total sales of Rs. 26.09 Lakhs has been carried out with self-owned vehicles of the Corporate Debtor at the time of the execution of sale. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors.
VII. Shivoham Enterprises- It was observed that the Corporate Debtor has made purchases of Rs. 5.80 lakhs during the month of April-2017, and Rs. 2.72 lakhs have been paid against the purchases made. It was also observed that the Corporate Debtor has made sales of Rs. 3.08 lakhs and no amount has been received against the sales made. Further, it was observed that the Corporate Debtor has adjusted the total sales against the purchases made during the period. No GST number has been mentioned as per the books of accounts. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors.
VIII. Kundan Trading Co.- It was observed by the Transaction Auditor that the suspended directors have made sales of Rs. 164.40 Lakhs, but no transportation details were given on the invoices. The enquiry letter was issued by the applicant /resolution professional, but no such party was found on the registered/available address. It was also observed that the GSTN number of the said party was found cancelled and the same got cancelled on 01.06.2019. The suspended directors have purposely done these fraudulent transactions with the intent to defraud the creditors.
IX. R.K. International- It was observed by the transaction Auditor that the suspended director had made sales of Rs. 159.32 Lakhs but no transportation details were available on the invoices. The enquiry letter was issued by the applicant /resolution professional, but no such party was found on the registered/available address. It was also observed that the GSTN number of the said party was found cancelled.
Subsequently, the applicant has submitted in his petition that the total admitted claims of Rs. 2351.97 Lakhs of the creditors are yet unrecoverable. The summary of avoidance transactions is also submitted with the petition and the same is reproduced hereunder: -
| Nature of Transaction | Amount |
|---|---|
| Preferential Transactions under section 43 under IBC, 2016. | Rs. 502.46 Lakhs |
| Undervalue Transactions under section 45 under IBC, 2016. | Rs. 1721.19 Lakhs |
| Fraudulent transactions under Section 66 under IBC, 2016. | Rs. 2384.32 Lakhs |
The Respondent No.6 filed reply and stated the following:
The Hinglaj Enterprises (Sole Proprietor) is wholesale trader in Rice and Pulses in the Mumbai Agricultural Produce Marketing Committee (APMC) located in Vashi, Navi Mumbai, Maharashtra. It is not related in any way to the corporate debtor and its transactions with the corporate debtor have been only for the purpose of trade and business. The respondent does not fall under the ambit of 'related party' as per the definition stated in Section 5(24) of the IBC, 2016.
As per the Transaction Audit Report dated 15th May 2020, It is pertinent to note that there is an exhaustive disclaimer in the Transaction Audit Report (at page 98 of the Application) which states that the report does not confirm to any national or international accounting standards. It further states that the report may not be deemed to advocate 'any position on behalf of any party in any legal matter or proceeding. Furthermore, under the heading 'Limitations/Disclaimers' the report under clause (k)states that no invoices of purchases or any other supporting documents were available on record, therefore we were unable to verify the same and in clause (L) its stated that no invoices of sales or any other supporting documents of the FY 2017-18 were available on record, therefore they were unable to verify the same.
The report submitted that the transaction auditor report is incomplete as the same doesn't confirm to any accounting standards and not to be used in any legal proceedings.
The respondent further denies the veracity of the ledger accounts of the Corporate Debtor pertaining what mentioned in the Annexure 11 of the Application. As the respondent has no knowledge of any of the transactions attributed to it and cannot be held liable for what is recorded by the Corporate Debtor in its books.
The respondent states that they had purchased a total of five consignments of rice from the Corporate Debtor vide purchase orders dated 16-03-2014, 20-03-2014 and 24-03-2014. The consignments totalled was Rs. 38,89,552.50/-. (Rupees 38.89 Lakhs).
It is the contention of the respondent that the relevant time-period for persons other than related parties as per Sec. 43(4)(b) is up to a period of one year prior to the insolvency commencement date. In the present matter, the insolvency proceedings commenced on 04-12-2019. Therefore, the relevant period for the purpose of Section 43 is from 05-12-2018 to 04-12-2019. The last transaction attributed by the respondent is of 28-02-2018, which is six months before the beginning of the relevant time-period i.e., 05-12-2018. With respect to the same respondent is relying on the Judgment passed by the Supreme Court in the matter of Anuj Jain v. Axis Bank Limited (2020 SCC online SC 237), while discussing Section 43 of the Code it was held that transactions deemed to be preferential transactions can be excluded if they are considered to be "in the ordinary course of the business or financial affairs of the corporate debtor or the transferee".
The Applicant has filed the rejoinder reiterating the averments/submissions made in the Application and contravening the objections raised by the Respondent No. 6 in its reply.
We have heard the Ld. Counsel for the parties and perused the case records. Admittedly, except Respondent No. 6 and the respondent no. 6 in its reply has placed reliance on the judgment passed by the Hon'ble Supreme Court of India in the matter of Anuj Jain Vs. Axis Bank Limited (2020 SCC OnLine SC 237) it which it was held that "the transactions deemed to be preferential can be excluded if they are considered to be done in the ordinary course of business or financial affairs of the corporate debtor."
The respondent No. 6 has placed on record copies of Purchase Orders, Statement of bank accounts and ledger accounts to show that the alleged transactions were done during the ordinary course of business. There is nothing on record to show that the respondent no. 6 is a related party to the corporate debtor. Therefore, since there is nothing on record to suggest that the respondent no. 6 is a related party then the relevant time period would be one year prior to commencement of CIRP and thus, the alleged transactions are outside the purview of Section 43 of the Code in respect to the Respondent No. 6.
In respect to the other respondents, it is seen that despite service of notices, no one appeared on behalf of any of the remaining respondents. The Transaction auditor in the transaction audit report has clearly pointed out the transactions which covered under Section 43,45 and 66 of the Code.
The sub-section (1) of Section 25 casts a duty upon the Resolution Professional to preserve and protect the assets of the Corporate Debtor Company, including the continued business operations of the Corporate Debtor Company. Clause (J) of sub-section (2) of Section 25 casts duty upon the Resolution Professional (RP) to apply for the avoidance of any such transaction before the Adjudicating Authority. Section 66 casts duty on the Resolution professional to apply to the Adjudicating Authority in respect of fraudulent and wrongful transactions.
Further, sub-section (1) of Section 66 of the Code provides that if during the CIRP, it is found that any business of the Corporate Debtor has been carried on with the intent to defraud creditors of the Corporate Debtor or for any fraudulent purpose, the Tribunal may on application of the Resolution professional pass an order directing any persons who were knowingly parties to carry on the business in such manner shall be liable to make such contribution to the assets of the Corporate Debtor as it may deem fit. sub-section (2) of Section 66 states that if before the insolvency commencement date, a Director or partner know or sought to have known that there was no reasonable prospect of avoiding the commencement of Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor; and such Director or partner did not exercise due diligence in minimizing the potential loss to the creditors of the Corporate Debtor, such director shall be liable to make such contribution to the assets of the Corporate Debtor.
We have gone through the each and every transaction submitted by the Resolution Professional, and after elaborate examination it is seen that the impugned transactions mentioned in 5 above are preferential transactions, except in respect of respondent no.6 as defined in the sub-section 2(a) of Section 43 of the IBC as these transactions have been executed within the look back period of two years before the commencement of Insolvency proceeding and are therefore covered under section 43(4)(a). Further the transaction mentioned in para 6 above are therefore held to be undervalued transactions in terms of Section 45 of the Code and Transaction as explained in para 7 are held to be fraudulent transactions as defined under Section 66 of the Code.
In view of the above discussions the present application is allowed with following directions:
a. The Respondents, except respondent no.6, are hereby directed to pay the aforementioned amounts as explained in para 5,6 and 7 to the corporate debtor within 30 days from the date of the pronouncement of this order.
b. The applicant is hereby directed to initiate penal proceedings as per law against the suspended directors and other parties.
A copy of this order shall be communicated to the parties herein and IBBI for further actions.
PER: MS. SUMITA PURUKAYASTHA, MEMBER (TECHNICAL)
This is an application filed by the Resolution Professional under Section 33(1) (a) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as the "Code") for issuance of directions for liquidation of the Corporate Debtor, Shri Vardhman Rice Mills Private Limited
The facts in brief are that the operational creditor, Bhupinder Agro Private Limited, had filed an application under Section 9 of the Code for initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The said application was admitted by this Tribunal on 04.12.2019 initiating CIRP against the corporate debtor and appointed Mr. Vikas Garg as the Interim Resolution Professional (IRP).
Thereafter the IRP made the Public Announcement in 'Form A' in respect of initiation of CIRP of CD as well intimated to the all suspended directors of the CD. The IRP after collecting and verifying claims received and constituted Committee of Creditors (CoC).
Subsequently, the first meeting of CoC was held on 15.02.2020 with (94.95%) votes and the applicant was appointed as Resolution Professional vide its order dated 24.02.2020. Further it is submitted that the applicant as the RP on 24.02.2020 carried out its duties regarding the CIRP of the corporate debtor.
In terms of Section 25(h) and after approval by CoC in the 4th meeting held on 04.09.2020, the applicant published the Invitation for Expression of Interest for submitting resolution plan in “Jansatta” and “Financial Express” on 10.09.2020 and consequently Resolution professional received 9 Expression of interest from applicants and after verifying their documents, Resolution Professional published a final list if 9 Prospective Resolutions Professionals to whom Information Memorandum was issued.
It is submitted that the prospective Resolution Applicant Shri. Ram Bhaj Jain with Shri. Vikas Gupta sent its Expression of Interest on 25.09.2020 and obtained the Information Memorandum and other relevant information from RP for the purpose of submitting Resolution Plan and the last date of submission of Resolution Plan was 26.10.2020 and on the last date Resolution Professional received 2 Resolution Plans submitted by:
a. Shri. Ram Bhaj Jain, suspended Director with investor Vikas Gupta
b. Shri. Vijayant Sharma
Thereafter, both these plans were received as per the Expression of Interest and Demand Draft of 25 lakh was also received with them and subsequently in the 5th CoC meeting held on 05.11.2020, the Resolution Professional with permission of the CoC opened sealed envelopes of the resolution plans received for discussion. However, the Resolution Applicant Shri. Vijayant Sharma later in its 8th CoC meeting held on 10.03.2021 withdrew his plan and the CoC returned his Demand Draft.
It is submitted that the resolution Professional after approval of CoC in its 5th CoC meeting held on 15.05.2020 filed an application bearing IA. No. 3041 of 2020 seeking extension of 90 days of CIRP period from expiry of 180 days which occurred on 01.06.2020 based on lockdown imposed due to COVID-19 pandemic which was allowed by this Tribunal vide order dated 18.08.2020.
It is submitted that in the 6th CoC meeting held on 06.02.2021, Shri. Ram Bhaj Jain (suspended director) presented his plan before the CoC members and the CoC asked him to submit a revised/ improved plan in financial terms as well as for compliance with section 30 of the Code.
Further, the RP on 19.01.2021, with 100% approval in its 6th CoC meeting held on 06.01.2021, filed an application bearing IA No. 371 of 2021 seeking extension of 90 days beyond 330 days period which expired on 11.02.2021 which was allowed by this Tribunal vide order dated 22.02.2021.
Further revised plan submitted by Shri. Raj Bhaj Jain on 17.01.2021 received by the Resolution Professional on 18.01.2021 was discussed in its 7th CoC meeting held on 27.01.2021.
Furthermore, the Adjudicating Authority vide its order dated 24.03.2021 allowed the application bearing IA. No. 2277/2020 and declared the sale of plant machinery of Corporate debtor to Radio Trading Limited as cancelled and further directed the possession of the said plant and machinery to be handed over to RP.
It is submitted that Resolution applicant in its 9th CoC meeting held on 02.04.2021 submitted the revised plan on 25.03.2021 for deliberation and discussion and the Resolution Plan was resolved to be put to voting by the CoC members.
Since in terms of Section 30(6) the RP did not have a Resolution Plan approved by the CoC and also since statutory period of 330 days of CIRP along with extended period of 60 days have been expired, the RP has now filed present application under section 33(1)(a) of the Code.
In view of the submission made by the parties the liquidation has to follow as recommended by the Committee of Creditors in terms of provisions of Section 33 (2) of the Code. Adherence to statutory requirement has to be in toto. When the language of the Code is clear and explicit the Adjudicating Authority must give effect to it whatever may be the consequences and in present case the consequence is liquidation of Corporate Debtor.
In the factual background, since there is no resolution plan, and in conformity with the decision of the Committee of Creditors with 100% voting share, the payer for liquidation of the corporate debtor under Section 33 of the Code is hereby allowed.
In the result the application is allowed by ordering liquidation of the corporate debtor, namely M/s. Shri. Vardhman Rice Mills Private Limited in the manner laid down in the Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 along with following directions:
a. Mr. Tarun Batra is appointed as Liquidator in terms of Section 34(1) of the Code.
b. Mr. Tarun Batra, is directed to issue Public Announcement stating that the corporate debtor is in liquidation, in terms of Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Regulations);
c. The Registry is directed to communicate this Order to the Registrar of Companies, NCT of Delhi & Haryana and to the Insolvency and Bankruptcy Board of India;
d. The Order of Moratorium passed under Section 14 of the Code shall cease to have its effect and that a fresh Moratorium under Section 33(5) of the Code shall commence;
e. The Liquidator is directed to proceed with the process of liquidation in the manner laid down in Chapter III of Part II of the Code and in accordance with the relevant regulations.
f. The liquidator shall follow up and investigate the financial affairs of the corporate debtor in accordance with provisions of Section 35 (1) of the Code.
g. The liquidator shall also follow pending application, if any, for its disposal during the process of liquidation including initiation of steps for recovery of dues of the Corporate Debtor as per law.
h. 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 Regulations.
Copy of this order be sent to the financial creditors, corporate debtor and the Liquidator for taking necessary steps.
j. I.A. 1816/2021 filed in IB 241/(ND)/2019 is disposed of in the aforesaid terms.