Pariman Enterprises Pvt. Ltd. vs Atlantis Life Sciences Pvt. Ltd.

Per: Ms. Lakshmi Gurung, Member (Judicial)

The present application has been filed under Section 54 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’/ ‘IBC’) read with Regulation 45 of IBBI (Liquidation Process) Regulations, 2016 (‘Liquidation Regulations’) by the Liquidator of Atlantis Life Sciences Private Limited (‘Corporate Debtor’) seeking dissolution of the Corporate Debtor and consequential order.

Upon an application filed by Pariman Enterprises Limited (‘Operational Creditor’) under Section 9 of the Code, this Tribunal vide order dated 07.08.2018 admitted the petition and initiated Corporate Insolvency Resolution Process (‘CIRP’) of the corporate debtor. Mr. Dhananjay Kumar Vatsyayan was appointed as an Interim Resolution Professional (‘IRP’). Subsequently, this Tribunal vide order dated 14.12.2018 in M.A. No. 1426 of 2018 appointed Mr. Dilipkumar Natvarlal Jagad as the Resolution Professional (‘RP’) of the Corporate Debtor.

The CIRP period was to expire on 03.02.2019 which period was extended by 90 days vide order dated 31.01.2019 in M.A. No. 214 of 2019. However, it is submitted that upon thorough consideration of the quantum of claims received and admitted, and noting the absence of assets of the corporate debtor sufficient to facilitate its operation as a going concern, and considering that the promoter’s proposed One-Time Settlement through asset purchase by an Asset Reconstruction Company was not acceptable to the Committee of Creditors (‘CoC’), the Committee accordingly determined that revival of the corporate debtor is not possible and in its fourth meeting held on 27.06.2019 unanimously resolved to liquidate the Corporate Debtor.

Consequently, the Applicant filed M.A. No. 2702 of 2019 under Section 33 of the Code, which was allowed vide order dated 05.03.2021 (‘liquidation order’) and the Applicant was appointed as the Liquidator. While passing the liquidation order, the Tribunal noted that the corporate debtor is non-operational for last two years and the only asset left with it is a shop situated at Borivali which is discussed later in the order.

The registered address of the Corporate Debtor is Shop No. 4, The Gorai Indraprastha CHSL, RSC-37, Gillary Gunj, Plot No.-90, Gorai-2, Borivali (W), Mumbai – 400 092. Pursuant to a liquidation order dated 05.03.2021, the Applicant made a public announcement in Form-B on 10.03.2021, inviting claims from creditors of the Corporate Debtor. The announcement was published in Active Times (English Edition) and Mumbai Lakshadeep (Marathi Edition), with a last date for claim submissions of 09.04.2021.

Bank of Baroda, the secured financial creditor assigned its debts and rights in relation to the Corporate Debtor to CFM-ARC vide ‘Assignment Deed’ dated 16.04.2021 upon which CFM-ARC entered the shoes of Bank of Baroda, as secured financial creditor. CFM-ARC filed Form-D on 20.04.2021 stating NOT to relinquish security interest of the corporate debtor.

A list of stakeholders on the basis of claims received was prepared and filed and was taken on record on receipt of letter dated 23.04.2021 [Ref.: C.P. No. 65 of 2018 and MA 2702 of 2019 in the matter of Atlantis Lifesciences Private Lmited; Sub: List of Stakeholders as per Regulation 31 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016]. The details of claims received and admitted are as under:

Based on the claims received, the Liquidator formed the Stakeholders Consultation Committee (SCC) on 26.04.2021. The List of Stakeholders annexed as Exhibit- ‘F’ to the application is as follows: -

It is submitted that no meeting of SCC was convened as the secured creditor did not relinquish its security interest to liquidation estate but went ahead to realise it under Section 52 of the Code in accordance with the provisions of SARFAESI Act. The description of the immovable property as taken over by the secured financial creditor is given in Note 1 above. It is further submitted by the Applicant that as the Liquidation Estate of the Corporate Debtor as per Section 36 of the Code was ‘NIL’, the Asset Sale Report was not prepared by the Liquidator in accordance with Regulation 36 of the Liquidation Regulations.

The Applicant filed the Preliminary Report dated 15.05.2021 and Asset Memorandum 15.05.2021. According to the Asset Memorandum, the valuation of assets of the corporate debtor is as follows:

CFM-ARC addressed a letter dated 07.10.2021 to the corporate debtor and the guarantors of the corporate debtor requesting for handing over possession of secured assets under the provisions of the SARFAESI Act.

In furtherance to the aforementioned letter, the CFM-ARC issued a letter dated 12.10.2021 to the corporate debtor and the guarantors of the corporate debtor, intimating possession of the Secured Assets under Rule 4 and 8(1) of the Security Interest (Enforcement) Rules, 2002 of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 and also the Secured Financial Creditor, CFM-ARC did not relinquish its security interest to liquidation estate and moved under the SARFAESI Act to realize its security as per Section 52 of the Code.

Liquidation Regulations

It is pertinent to mention that as no details about realisation of security interest was mentioned in the application, a query was raised by this Tribunal vide order dated 03.01.2025, which is clarified vide an additional affidavit dated 16.01.2025 stating that the encumbered assets of the corporate debtor were sold by CFM-ARC through e-auction held on 31.05.2022 for Rs. 3,60,00,000 (Rupees Three Crores Sixty Lakhs Only/-).

The Applicant further states that till the time of expiry of liquidation period on 04.03.2022, the status on the monetisation of the assets taken over by the Secured Financial Creditor under Section 52 of the Code was not known, hence the applicant was unable to incorporate the details under Regulation 21A-Presumption of security interest in the dissolution application filed under Section 54 of the Code.

An extract from para 16 of the additional affidavit is reproduced as under:

Submission of Quarterly Reports The Applicant, till date, has submitted five quarterly progress reports for the quarters ending 31.03.2021 to 04.03.2022 as per Regulation 15 of Liquidation Regulations, as per details below:

The Applicant submitted that the timeline for completion of liquidation within one year from the liquidation commencement date as per Regulation 44(1) of the Liquidation Regulations was to expire on 04.03.2022.

The Applicant states that the available funds in the liquidation estate were insufficient to cover all the liquidation expenses and also the Applicant/Liquidator is stated to have not received any fees as defined under Regulation 4 of the Liquidation Regulations. The amount distributed to stakeholders is NIL as per Section 52 or 53 of the Code.

The Applicant relies on the Independent Auditor’s Report dated 07.03.2022, who were appointed to audit the Corporate Debtor’s Receipts and Payments accounts for the period 05.03.2021 04.03.2022. The audit Report pertains to the period from 05.03.2021 to 31.03.2021 and from 01.04.2021 to 04.03.2022. It confirms that the details of realization and disbursement for the period upto 04.03.2022, reconciles with the books of account and other records of the corporate debtor.

A Current Account - 016481300000980 was opened in the name of “Atlantis Lifesciences Private Limited – In Liquidation” with Yes Bank Limited at Abhilasha, Punjabi Lane, Borivali (West), Mumbai – 400092 as per Regulation 41(1) of Liquidation Regulations for the purpose of liquidation activities. The Applicant has submitted the Final Report dated 08.03.2022 stating that the balance in a Current Account -016481300000980 with Yes Bank is Rs. NIL. A copy of the Final Report is attached as Annexure- ‘P’ to the application.

Further, the total admitted claims amounted to Rs. 12,25,48,509/. Only Rs. 77,918 could be distributed towards Liquidation Cost and the Secured Financial Creditor opted to realise its security interest as per section 52 of the Code. The bifurcation of amount distributed to stakeholders as disclosed in Form-H: Compliance Certificated dated 09.03.2022 is reproduced as under: -

Further, in compliance with this Tribunal’s order dated 06.12.2022, the Applicant filed an Additional Affidavit dated 17.12.2022 placing on record an e-mail from Yes Bank dated 27.09.2022 certifying that the liquidation bank account of the corporate debtor stands closed on 26.09.2022.

Further, vide order dated 15.07.2024 this Tribunal directed the Applicant to provide reconciliation of Fixed Deposit Receipt (FDR) of the Corporate Debtor with Bank of Baroda as given in Progress Report for the Period ended 04.03.2022 and Final Report dated 08.03.2022 in pursuance thereof, the applicant filed an Additional Affidavit dated 10.08.2024 and submitted that the Corporate Debtor availed credit facility from Bank of Baroda vide Sanction Letter dated 01.03.2014. The terms of availing Letter of Credit facility mandated the corporate debtor to deposit margin of 25%, in the form of Fixed Deposits. The corporate debtor accordingly deposited margin money for availing Letter of Credit from time to time against the said Fixed Deposit Receipt (FDR) which was adjusted on discharge of Letter of Credit. At the relevant time, as per the corporate debtor’s records FDR stood at Rs. 15,21,972/-. However, the Bank deducted Bank Charges amounting to Rs. 77,845 and as per Bank’s record the amount of FDR stood at Rs. 14,44,127/-. This FDR amount has been set-off by Bank of Baroda as reflected in their claim in Form D at serial no. 7 stating that Rs. 14,44,127/- has been set off and the balance claim has been filed.

The Applicant further submits that the proceeds realized from the sale of said assets were substantially less than the admitted claim of the Secured Financial Creditor, CFM-ARC of Rs. 11,54,74,645/-. CFM-ARC, pursuant to the provisions of Section 52 of the Code, exercised its right to realize its security interest and did not relinquish the same to the liquidation estate. Therefore, the proceeds from such sales were appropriated towards the claim of secured financial creditor as per Section 52 of the Code, and consequently, no distribution under Regulation 42 of the Liquidation Regulations is applicable in the present case.

I.A. 2839 of 2019 was filed by the Resolution Professional under Section 66 of the Code which was allowed to be withdrawn on an oral request by the Applicant vide this Tribunal’s order dated 06.12.2022 and as per Form-H submitted by the applicant there are no litigation pending preferential, undervalued, and extortionate credit transactions.

It was submitted that the Applicant has fulfilled all his duties as per the tenets of the Insolvency and Bankruptcy Code, 2016, and has complied with all the necessary obligations as per the timeline provided under Insolvency and Bankruptcy Board of India (Liquidation process) Regulation. 2016. Therefore, the Applicant is filing this present application seeking dissolution of the Corporate Debtor under section 54 of Insolvency and Bankruptcy Code, 2016.

We note that the admitted claim of the secured financial creditor is Rs. 11,54,74,645/- while the estimated Fair Value and Liquidation Value of the corporate debtor was estimated at Rs. 4,66,20,344/- and at 3,29,52,049/- respectively. A copy of the Valuation Report dated 07.05.2021 is annexed as Exhibit-K1 to the application.

The Applicant further submits that all the compliances have been done by the Applicant as per the provisions/regulations envisaged in the Code, a copy of the compliance certificate in prescribed Form – H to the Final Report is annexed to this application. We note that the Final Report dated 08.03.2022 was filed even prior to realisation of security interest by the secured financial creditor.

As per Section 54 of the Code, where the assets of the corporate debtor have been completely liquidated, the Liquidator shall make an application to the Adjudicating Authority for dissolution of such corporate debtor and the Adjudicating Authority shall, on such application, order for dissolution of the Corporate Debtor from the date of the order.

The Secured Financial Creditor has exercised its right to enforce the security interest under Section 52 of the Code. As per the Statement of Receipts and Payment from 05.03.2021 to 04.03.2022, cash and bank balance with the liquidator was to the tune of Rs. 77,918/- which has been distributed towards liquidation cost. The claims of the financial creditors and operational creditors stand settled in terms of Section 53 of the Code. We are satisfied that in the present case, there are no further assets of the corporate debtor left for liquidation and no useful purpose would be served by keeping the corporate debtor alive. Thus, this is a fit case of a Corporate Debtor to be dissolved as prescribed under Section 54 of The Insolvency and Bankruptcy Code, 2016.

Accordingly, we hereby order for the dissolution of the Corporate Debtor i.e. Atlantis Life Sciences Private Limited with the following directions:

ii) The Liquidator, Mr. Dilipkumar Narvarlal Jagad [IBBI/IPA-001/IP-P00233/2017-2018/10462], is discharged from his duties and responsibilities as the Liquidator of the Corporate Debtor.

iii) The Registry is directed to forward copy of this Order to the concerned Registrar of Companies and to the IBBI, within 7 (seven) days from the date of uploading of this order. for further necessary action as prescribed under Law.

iv) Liquidator is also directed to forward copy of this Order to the concerned authorities including Income Tax and Sales Tax authorities, the concerned Registrar of Companies and IBBI for further necessary action as prescribed under the law.

In the result, IA No. 775 of 2022 is hereby allowed and stands disposed of and C.P.(IB)- 65 (MB)/2018 is hereby closed.

“Files be consigned to records.”