Oriental Bank of Commerce vs M/s Vallabh Steel West Pvt. Ltd.

This is an application for dissolution of M/s Vallabh Steel West Pvt. Ltd. (Corporate Debtor/CD), filed by the Liquidator, Mr Narender Kumar Sharma (Applicant/Liquidator), under Section 54 of the Insolvency and Bankruptcy Code, 2016 (IBC / Code) read with Regulation 45(3)(b) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Liquidation Process Regulations) r/w Rule 11 of NCLT Rules, 2016. The prayers made in the Application are as follows:

As submitted by the parties in the pleadings and submissions made in the court, the following are the relevant facts of the case:

A petition under Section 7 of the Code bearing no. CP (IB)-107/2019 was filed by the Financial Creditor (Oriental Bank of Commerce) against the Corporate Debtor/M/s Vallabh Steel West Pvt. Ltd., which was admitted into Corporate Insolvency Resolution Process (CIRP) by this Adjudicating Authority vide order dated 03.07.2019, and Mr Narender Kumar Sharma was appointed as the Interim Resolution Professional (IRP).

In pursuance thereof, the IRP made a public announcement inviting claims from the creditors. On receipt of the claims, the IRP constituted the Committee of Creditors (CoC), and in the 2^nd meeting of the CoC the IRP was confirmed as the Resolution Professional (RP). Subsequently, as no viable resolution plan was received (the sole resolution plan received, of Rs. 2.5 crore, being far below the liquidation value, was rejected by the CoC, which in its 4th meeting held on 19.03.2020 resolved with 100% voting to liquidate the CD), an application bearing no IA-3641/2020 was filed under section 33 of the Code seeking permission of this Adjudicating Authority to commence liquidation against the Corporate Debtor. This Adjudicating Authority vide order dated 16.09.2020, allowed the same and ordered the liquidation of the Corporate Debtor. As the name of the liquidator and the claim value were inadvertently misstated in the said order, the same were rectified vide corrigendum order dated 06.11.2020 passed in IA-4226/2020, whereby Mr Narender Kumar Sharma was appointed as the liquidator.

The relevant excerpt of the order is reproduced herein under:

Thereafter, the corrigendum order dated 06.11.2020 passed by this AA is also extracted below for ready reference:

In compliance with Regulation 12(1) of the Liquidation Process Regulations, the Liquidator made a public announcement in prescribed Form B dated 11.11.2020 in the Financial Express newspaper, Chandigarh edition, Jansatta, New Delhi Hindi edition, and Rozana Spokesman Chandigarh Punjabi edition, inviting claims from all stakeholders with the last date for submission being 08.12.2020.

The claims received from financial creditors and other creditors were collated and verified by the applicant. In compliance with Regulation 31A of the Liquidation Process Regulations, the Stakeholders Consultation Committee (SCC) was formed, and the final list of stakeholders is extracted herein below:

The applicant convened a total of 12 SCC meetings during the Liquidation process of the Corporate Debtor up to the filing of the present application, the 12th meeting having been held on 12.01.2023. Thereafter, the 13th meeting of the SCC was held on 23.06.2026.

Further, pursuant to Regulation 13 and 34 of the Liquidation Regulations, the Liquidator has filed the ‘Preliminary Report’ and ‘Asset Memorandum’ on 22.01.2021. The same has been annexed with this application at Annexure A-13 of the application. The details of the assets as per the Asset Memorandum report are extracted as below:

On 16.11.2020, the Liquidator appointed the following valuers registered with the IBBI to carry out the valuation of the assets:

The relevant details of the auction of the assets of the CD as encapsulated in the application are extracted below:

Thus, the Liquidator conducted 7 rounds of Auction of the assets of the Corporate Debtor and sold the plant and machinery of the CD in the 8^th round through private sale. Hence, it is submitted that all the assets, as per the asset memorandum filed by the Liquidator, have been sold.

Further, another application bearing no. IA-563/2022 was filed by the Liquidator on 25.01.2022 for declaring certain transactions of the CD as preferential under Section 43 of the Code.

Accordingly, the present application bearing no IA (I.B.C)/2315(PB) 2023 was filed for the dissolution of M/s Vallabh Steel West Pvt. Ltd. on 24.04.2023 on the DMS e-portal.

The Liquidation period commenced on 06.11.2020 (i.e. the date of the corrigendum order). As per Regulation 44, the liquidation shall be completed within 1 year, and on failure of the same, he shall make an application to the AA to continue such liquidation, along with a report explaining why the liquidation has not been completed and specifying the additional time that shall be required for liquidation. The liquidation period was expiring on 06.11.2021. Accordingly, the liquidator sought several extensions, which were allowed by this Adjudicating Authority, the details of which are tabulated below:

The liquidator has submitted the details of the assets realised during the liquidation process:

In compliance with Regulation 15(1)(a) of the IBBI Liquidation Process Regulations, 2016, the Liquidator submitted 9 progress reports for every quarter post commencement of liquidation, which were taken on record by this Adjudicating Authority.

Pursuant to Regulation 41 of the Liquidation Regulations, the Liquidator had also opened a separate bank account in the name of the Corporate Debtor as on 20.05.2021, the details of which are provided as under: Account Name: Vallabh Steel West Pvt Ltd Bank and Branch: Punjab National Bank Liquidation Account Number: 0987102100000026 IFSC Code: PUNB0098710 The bank account opened during the liquidation period has been closed on 16.01.2023. The acknowledgement for bank account closure by the Punjab National Bank is extracted below:

In accordance with the Liquidation Process Regulations, the Liquidator had maintained a detailed record of all receipts and disbursements made during the course of the liquidation. The cumulative Statement of Receipts and Payments for the period from the date of the Liquidator's appointment, i.e., 06.11.2020 to 16.01.2023, along with the audited Statement of Receipts and Payments for the period 01.04.2022 to 16.01.2023, is provided in the final report contained in the application. A CA certificate has also been placed on record as regards the veracity of the statement of receipts and payments, and the same is extracted below:

The details of the amount distributed to the stakeholders as per Section 52 or 53 of the Code are as follows:

We note that all the realisable assets of the CD have been sold and distributed to the stakeholders in accordance with section 53. It is submitted by the liquidator that the liquidation value of the liquidation estate of the CD was Rs. 8,69,98,933/- (Eight Crores Sixty-Nine Lakhs Ninety-Eight Thousand Nine Hundred and Thirty-Three only). However, the Applicant has realised an amount of Rs. 11,02,72,177 /- (Indian Rupees Eleven Crore Two Lakh Seventy-Two Thousand One Hundred and Seventy-Seven Only).

A Final Report has to be filed under Regulation 45(3) of the Liquidation Process Regulations, which reads as:

The Liquidator has filed a Final Report in compliance with Regulation 45 of the Liquidation Process Regulations, 2016, along with the present application at Annexure A-1. The Compliance Certificate in Form H, as per Regulation 45(3) of the Liquidation Process Regulations, 2016, has also been prepared and filed along with the present application at Annexure A-2. A copy of the Form-H is extracted below for ready reference:

We have gone through the present Application filed by the Liquidator praying for closure of the liquidation process and dissolution of the Corporate Debtor, and in terms of Section 54 of the Insolvency and Bankruptcy Code, 2016, read with Regulation 45 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

That the Applicant/Liquidator has filed application(s) and various documents/Reports which were required to be submitted as per the provisions of IBC, 2016, read with relevant regulations.

That the Liquidator had made efforts to sell the assets of the Corporate Debtor on a standalone basis as per Regulation 32(a) read with Regulation 33 of the IBBI Liquidation Process Regulations, 2016, through E-Auction in the manner specified in Schedule I of the IBBI Liquidation Process Regulations, 2016. In pursuance thereof, the Liquidator had conducted several rounds of e-Auctions, and sold the plant and machinery through private sale.

An application bearing no. IA-563/2022 was filed for avoidance of certain transactions. Vide order dated 11.06.2026, this Adjudicating Authority allowed IA-563/2022, filed under Section 43 of the Code, holding the payments made by the Corporate Debtor in favour of M/s Vallabh Steels Limited (VSL) to be preferential transactions. In exercise of powers under Section 44 of the Code, the Respondent was directed to repay a sum of Rs. 52,84,000/- along with interest at the rate of 10% per annum, calculated from the date of the preferential payments until actual realisation, to the liquidation estate of the Corporate Debtor.

It is further noted that, by a separate order passed by the Adjudicating Authority in the instant application, the Liquidator was directed to file an affidavit setting out the course of action and steps proposed to be undertaken in respect of the proceeds arising from the avoidance applications before the dissolution application is proceeded with.

In compliance with the aforesaid direction, the Liquidator has filed an affidavit on 20.07.2026 on the DMS e-portal explaining the proposed mechanism for recovery and distribution of the amount directed to be paid by VSL pursuant to the order dated 11.06.2026 in IA-563/2022.

The Liquidator has stated that the SCC, in its 13th meeting held on 23.06.2026, took note of the said order and recorded that the amount was recoverable from VSL, comprising the principal sum of Rs. 52,84,000/- along with interest calculated at the rate of 10% per annum up to 25.06.2026, amounting to Rs. 99,91,827/-, with further interest continuing to accrue until the date of actual payment. Since the liquidation account had already been closed on 16.01.2023 following distribution of the realised proceeds, the SCC had resolved that the amount recovered from VSL would be deposited directly into the designated bank account maintained by Punjab National Bank (being the lead bank), for onward distribution amongst the secured financial creditors, namely Punjab National Bank and State Bank of India, in proportion to their voting shares in accordance with Section 53(1)(b) of the Code, as their claims remain outstanding. The details of the bank account are extracted below:

The Liquidator has further stated that a demand letter dated 01.07.2026 was issued to VSL by email and Speed Post (delivered on 08.07.2026) calling upon it to remit the aforesaid amount, together with further interest @ 10% p.a., within a period of 7 days from the receipt of the letter. The Liquidator has also undertaken to continue pursuing recovery proceedings against VSL, if necessary, notwithstanding the dissolution of the Corporate Debtor, and to ensure distribution of the amount so recovered in accordance with the aforesaid mechanism.

That the Liquidation process has been conducted within the extended timelines, the details of which have been accompanied with this application. It is pertinent to note here that the matter was listed time and again, and the applicant/liquidator was granted multiple opportunities to comply with the directions issued by this Adjudicating Authority. A short note has also been filed by the Liquidator on the DMS e-portal, and the same has been taken into consideration by this Adjudicating Authority.

That as required by Regulation 45(3) of IBBI (Liquidation Process) Regulations, 2016, the Final Report has been filed by the Liquidator.

That the compliance report in Form H in terms of Regulation 45(3) was placed on record by the Applicant.

That, in compliance with Order dated 16.09.2020, the Applicant had intimated the following Statutory Authorities at their respective offices located at New Delhi regarding initiation of Liquidation Proceedings of the Corporate Debtor

That there are no pending litigations against the CD to the best of the knowledge, belief and effort of the Liquidator. The applications IA-626/2022 and IA-331/2022, which were pending at the time of filing of the present application, have since been disposed of; IA-626/2022 filed by M/s S.P. Construction was dismissed vide order dated 11.12.2023 and IA-331/2022 was withdrawn on 30.04.2024. However, the amount directed to be recovered pursuant to the order dated 11.06.2026 in IA-563/2022 remains to be realised, in respect of which the Liquidator has furnished the aforesaid affidavit setting out the proposed course of action for recovery and distribution.

That the Applicant has submitted that all the assets of the Corporate Debtor have been completely liquidated and/ or distributed to stakeholders as per Section 53 of the Code, and there is nothing left to be further liquidated.

In view of the above facts and circumstances, it is prayed by the Applicant that the CD may be dissolved under Section 54 of the IBC, 2016.

We have heard the submissions made by the Applicant, perused the Application and the affidavits filed by the Liquidator. It is relevant to mention Section 54 of the IBC, 2016, and Regulation 45 of the IBBI (Liquidation Process) Regulations, 2016, here:

Since in the instant case, all the assets of the Corporate Debtor have been liquidated and all the requirements of Regulation 45 of the IBBI (Liquidation Process) Regulations, 2016 have been fulfilled, therefore, we are inclined to allow the present Application under Section 54(2) of the IBC, 2016.

Accordingly, there being no other impediment, the present Application is allowed, and the Corporate Debtor is ordered to be dissolved with immediate effect.

IA (IBC)-2315/2023 is allowed and disposed of.

The Registry is directed to send a copy of this order passed under Section 54(2) to the ROC Delhi and Haryana, with which the Corporate Debtor is registered and the IBBI within seven days from the date of this order.