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Judgment
O R D E R
Per: Ashok Kumar Borah, Member (J)
This IA has been filed under Section 33(3) and 33(4) of the Insolvency and Bankruptcy Code 2016 [hereinafter referred to as I&B Code 2016] by Shri R. Velu, Erstwhile Resolution Professional appointed by this Tribunal in TIBA/09/KOB/2019 in the matter of Palm Lagoon Backwater Resorts Private Limited seeking the following reliefs: -
i.Pass an order of Liquidation of the Corporate Debtor in terms of Section 33(3) and 33(4) of the Insolvency and Bankruptcy Code, 2016 and other applicable provisions of law in this regard, as per the directions of the NCLAT vide its Order dated 21.09.2021;
ii.Appoint the Applicant herein as the Liquidator of the Corporate Debtor in terms of Section 33 and 34(1) of the Code for the purpose of Liquidation of the Corporate Debtor;
iii.Any other Orders as the Bench may consider just and appropriate in the facts and circumstances of the case.
The brief facts leading to this IA are as under:
The Assets Reconstruction Company (India) Limited filed an application under Section 7 of the IBC before the NCLT, Chennai Bench where the same was numbered as C.P. (1B) 1312 of 2018. After the constitution of the NCLT, Kochi Bench, the said case was transferred to this Bench and renumbered as TIBA/9/KOB/2019. This Bench admitted the application by order dated 20.09.2019 and appointed Mr. R. Velu, as the Interim Resolution Professional. CIRP commenced thereafter and IRP was later appointed as the Resolution Professional by the Committee of Creditors (COC) in its 1st meeting held on 18.10.2019. The Resolution Professional published an invitation of Expression of Interest (EoI). M/s. Invent Asset Securitisation & Construction Private Limited [Resolution Applicant] submitted an EoI on 24.12.2019. The Resolution Applicant who is the sole eligible company submitted the Resolution Plan on 31.01.2020. The CoC approved the Resolution Plan on 19.08.2020 with a voting share of 100% and thereafter this Tribunal vide order dated 10.09.2020 approved the Resolution Plan submitted by the Resolution Applicant M/s. Invent Asset Securitisation & Construction Private Limited.
After approval of Resolution Plan by this Tribunal, a Monitoring Committee was constituted with the Applicant/Resolution Professional as the Chairman. The stakeholders submitted the name of the representatives on 17.09.2020. The Monitoring Committee consist of 3 members, the Financial Creditor, Resolution Applicant and the Insolvency Resolution Professional [Chairman of the Committee]. On 18.09.2020 the Resolution Applicant confirmed ₹50,000/-as the fee of the Chairman for a period of 15 days. On 18.09.2020 the Resolution Applicant requested the Chairman to share the details of Bank Account to deposit the plan value amount, time line for payment of instalments and modalities of collecting property documents.
On 23.09.2020 the Resolution Applicant sent an E-mail to the other Committee members stating that they want an additional 30 days’ time to deposit the first balance amount of ₹25,00,000/- and 45 days for the balance of ₹50,00,000/-. The Monitoring Committee held a meeting to discuss the extension of time sought by the Resolution Applicant. In that meeting the Financial Creditor stated that instead of agreeing to the rescheduling of payment as sought by the Resolution Applicant, the Resolution Applicant be directed to pay the first balance of ₹25,00,000/- on 28.09.2020 or 29.09.2020. It is also stated that the expenses arising out of rescheduling the payment has to be borne by the Resolution Applicant. The Resolution Applicant even though agreed to enquire and revert to the suggestions put forth by the Financial Creditor, Resolution Applicant did not revert. On 21.10.2020 the Chairman sent an e-mail to the Financial Creditor and Resolution Applicant to arrive at a conclusion on payment terms of the approved plan.
However, the Resolution Applicant sent an e-mail on 23.10.2020 seeking withdrawal of the Resolution Plan approved by this Tribunal stating that the Reserve Bank of India denied permission for the Resolution Plan as the Resolution Applicant did not conform to the guidelines laid down for Asset Reconstruction Companies. They demanded the refund of performance guarantee of ₹25,00,000/- paid by them.
The Monitoring Committee held its 2nd meeting on 30.10.2020 through video conference, and after detailed discussions and deliberations the Monitoring Committee resolved as under: -
a). In view of non-payment of plan value, there is default in complying with the approved Resolution Plan. Financial Creditor said that as per the provisions of RFRP performance guarantee of 25,00,000/- (Twenty-Five Lakhs Only) to be forfeited. Financial Creditor also pointed out that the RA has never indicated that they were not inclined to implement the plan since the same was approved. Even in the first meeting of the Monitoring Committee held on 26.09.2020 they requested for 30-45 days’ time for payment.
The Resolution Applicant requested not to forfeit the RFRP performance guarantee as withdrawal of Resolution Plan was required only to comply with RBI regulatory rules. It was decided by FC to forfeit the Performance Guarantee because enough time and opportunity had been provided to RA to implement the plan as per the approved Resolution Plan.
b)FC requested for initiation of Liquidation of the Corporate Debtor or such other steps may be decided by Hon'ble NCLT.
C) Mr. Velu, Chairman of the Monitoring Committee has sent invoice for Rs.1,00,000/ to Resolution Applicant which has to be paid by the RA as per the approved Resolution plan
For this Resolution Applicant, requested the Chairman to include the Fee payable for acting as Chairman of Monitoring Committee as a prayer in the application to be filed with the Hon'ble NCLT as the management of RA was not willing to make payment.
After the decision of the Monitoring Committee on 30.10.2020, the Applicant filed an application MA/186/KOB/2020 and IA(IBC)/16/KOB/2021 before this Tribunal. This Tribunal disposed of the aforesaid application vide an order dated 10.02.2021 holding, inter alia, that this Tribunal cannot order Liquidation as this Tribunal has become functus officio after the approval of Resolution Plan with the approval of COC.
It is further stated that being aggrieved by the order of this Tribunal dated 10.02.2021 in MA/186/KOB/2020 & IA(IBC)/16/KOB/2021, a Company Appeal (AT) (CH) (INS) No. 38 of 2021 was filed before the Hon’ble NCLAT seeking the following reliefs: -
i.Allow the present appeal, set aside the Impugned order dated 10.02.2021 passed by the Adjudicating Authority in MA/186/KOB/2020 in TIBA/09/KOB/2019;
ii.Order Liquidation of the Corporate Debtor in terms of Section 33(3) & 33(4) of the Code and to appoint the Appellant to act as Liquidator of the Corporate Debtor per the resolution passed in 11th COC Meeting held on 19.08.2020;
iii.Direct the Resolution Applicant/Respondent to pay the Appellant an amount of Rs. 10,00,000/- towards his remuneration including that for the extended period as Chairman of Monitoring Committee;
iv.Pass such other and further reliefs that this Hon’ble Tribunal may deem fit in the facts and circumstances of the case.
The aforesaid appeal was to allowed by the Hon’ble NCLAT vide order dated 21.09.2021. The relevant portion of the order dated 21.09.2021 is extracted as under: -
“(24)As discussed above, this ‘Tribunal’ is of the view that the Respondent failed to implement the plan in its totality and on completion of 330 days, the Company ought to have liquidated by passing appropriate orders. Section 12 of the I&B Code, 2016 stipulates the time limit for completion of insolvency resolution process, proviso to Sub Section 3 of Section 12 states that “Provided further that the Corporate Insolvency Resolution Process shall mandatorily be completed within a period of 330 days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor.”
“(25)As per the above provision of Law, this ‘Tribunal’ comes to a conclusion that 330 days have expired and upon non-implementation of the plan by the Resolution Applicant, the Adjudicating Authority ought to have passed the Order of Liquidation of the Corporate Debtor. For the aforesaid reasons, this ‘Tribunal’ pass the following Order.
(a)The Adjudicating Authority (NCLT, Kochi Bench) is directed to pass Order of Liquidation as prayed in MA No. 186/KOB/2020 in terms of Section 33(3) and 33(4) of the I&B Code, 2016 and other applicable provisions of law in this regard.
(b)Accordingly, the Impugned Order dated 10.02.2021 is set aside to the extent as mentioned above”
Hence, the Applicant has filed this application under Section 33(3) and 33(4) seeking the aforesaid reliefs.
FINDINGS
We have heard learned counsel for the Applicant/ Erstwhile Resolution Professional through video conferencing and have gone through the materials placed on record.
When the matter taken up for hearing the learned counsel for the Applicant argued that this application has been filed as directed by the Hon’ble NCLAT in its order dated 21.09.2021 in Company Appeal (AT) (CH) (INS) No. 38 of 2021 wherein the appeal filed by the Applicant against the order of this Tribunal was allowed and this Tribunal was directed to pass appropriate orders for Liquidation of the Corporate Debtor. Hence, he has prayed for an order to liquidate the Corporate Debtor.
We have gone through the order of the Hon’ble NCLAT in Company Appeal (AT) (CH) (INS) No. 38 of 2021 and also the Resolution passed by the 11th CoC in its meeting held on 19.08.2020. Resolutions Nos. 1 to 3 are as under: -
Resolution No 1. – Agenda No. 6:
After deliberations are following resolution was passed with respect to meeting of the Liquidation Costs.
“RESOLVED THAT, a sum of Rs. 4,51,300/- as one time cost/event-based cost and Rs. 56,939/- monthly expenses estimated as the Net Liquidation Cost, to be funded by the COC Member-Assets Reconstruction Company (India) Limited (ARCIL), is hereby approved”
Resolution No 2.- Agenda No. 7:
After deliberations the following resolution was passed on assessment of sale as a going concern.
“RESOLVED THAT, the Committee does not recommend the CD to be sold as a going concern as per Regulation 32(e) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 or as a sale of the business of the Corporate Debtor as a going concern as per Regulation 32(f) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, during the liquidation period.”
Resolution No.3.- Agenda No. 8
While approving a resolution plan under Section 30 or deciding to liquidate the Corporate Debtor under Section 33, the committee may, in consultation with the resolution professional, fix the fee payable to the liquidator, if an order for liquidation is passed under Section 33, for the balance period of liquidation. As per Regulation 4 of IBBI (Liquidation Process) Regulations, 2016 the fee payable to Liquidator shall be in accordance with the decision taken by the COC under Regulation 39D of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Further Mr. R. Velu, Resolution Professional, shall act as Liquidator. “RESOLVED THAT, a sum of Rs. 2,00,000/- plus applicable GST plus actual expenses, is being fixed as remuneration for the Liquidator, from the date of the NCLT Order for liquidation.”
In view of the above, this Tribunal allow the IA(IBC)/159/KOB/2021 as under: -
The Corporate Debtor M/s. Palm Lagoon Backwater Resorts Private Limited is hereby put under liquidation with immediate effect under Section 33(1) of IBC, 2016.
The Resolution Professional Shri. R. Velu, [email protected] Reg.No.IBBI/IPA-001/IP-P00127/2017-18/10269, New No. 28, Old No. 22, Menod Street, Purasawalkam, Chennai- 600 007. is hereby appointed as Liquidator of the Corporate Debtor under Section 34 of IBC, 2016.
That the Corporate Debtor be liquidated in the manner as laid down in Chapter III by issuing a Public Notice stating that the Corporate Debtor is in liquidation. It is also directed that the Applicant shall send this order to ROC under which this Company has been registered.
The Applicant herein is hereby directed to act as a Liquidator for the purpose of liquidation of Corporate Debtor company with all powers of the Board of Directors, key managerial persons, and the partners of the Corporate Debtor shall cease to have effect and hereby vested in the Liquidator. The officials/personnel of the Corporate Debtor are directed to extend all co-operation to the Liquidator as may be required by him in managing the affairs of the Corporate Debtor.
Since the Liquidation Order has been passed, no suit or other legal proceedings shall be instituted by or against the Corporate Debtor without prior approval of this Adjudicating Authority, save and except as mentioned in Sub-Section 6 of Section 33 of the Code.
The Liquidator shall co-ordinate with all the authorities, and the respective Govt. authorities shall provide complete information required by the Liquidator to facilitate the process of Liquidation.
The Liquidator is at liberty to seek any directions, if need be, from this Adjudicating Authority during the Liquidation Process.
The Liquidator is hereby Authorized to represent the Corporate Debtor before the Government Authorities, if need be.
Moratorium declared vide Order dated 20.09.2019 in TIBA/ 9/KOB/2019, henceforth ceased to exist