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Judgment
PER: DEEP CHANDRA JOSHI, MEMBER JUDICIAL
This instant application is filed by Mr. Rajesh Kumar Agarwal, Resolution Professional of the Corporate Debtor, KVR Steels Orissa Ltd. (hereinafter referred to as "Applicant") under section 33 of the Insolvency and Bankruptcy Code,2016 (hereinafter referred to as the "Code") for seeking liquidation of the Corporate Debtor.
The averments made by the Applicant in its application are as follows:
This Adjudicating Authority vide its order dated 29.11.2023 admitted the petition under section 7 of the Code, filed by the Financial Creditor, i.e., Indian Bank, for initiation of Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor. The Applicant herein was appointed as the Interim Resolution Professional (IRP) of the Corporate Debtor. ii. The Applicant made a public announcement of the CIRP of the Corporate Debtor on 30.11.2023 in Form A, by publishing it in the newspaper i.e., “Orissa Post, All Orissa”, “Odisha Bhaskar(Oriya), All Orissa” and Business Standard and Aajkal Kolkata Edition on 01.12.2023 for inviting submissions of claims by the Creditors. The last date of submission was on 14.12.2023. Initially, the Committee of Creditors (“CoC”) was constituted on 21.12.2023. iii. The Applicant, on 21.12.2023, went to the registered office of the Corporate Debtor at Balasore, to look upon the operation of the Corporate Debtor, but had not found any assets, factory or office in the name of the Corporate Debtor there. The Applicant, after this, had a telephonic conversation with Mr. Vinod Agarwal, the suspended Board of Director, to cooperate with him, but no positive response was received from his end. As the Applicant was unable to locate the factory and office of the Corporate Debtor, therefore, he sent mail to the Suspended Board of Directors for the required list of documents/information, books of accounts, but till then, no response has been received. iv. The Committee of Creditors in the 1st CoC meeting held on 27.12.2023 had given their consent to the Applicant to initiate an application under Section 19(2) of the Code against the suspended Board of Directors for their non-cooperation before this Tribunal. The Applicant had appointed two sets of Registered Valuers within 14th days of his appointment, who were ratified by the CoC to do the fair value and liquidation value, but due to non-cooperation, no valuation work was concluded. The Application for non-cooperation filed on 29.12.2023 is still pending for adjudication before this Tribunal.
The Applicant in the 2nd, 3rd, 4th, 5th, 6th and 7th CoC meeting held on 22.01.2024, 24.01.2024, 16.04.2024, 105.03.2024, 30.04.2024, 02.05.2024, 24.05.2024 and 28.06.2024, respectively, put the agenda for the invitation of Expression of Interest, wherein the members of CoC discussed about the non-cooperation of the suspended board of directors as well as statutory auditors and about the assets which were not located at the registered office of the Corporate Debtor. Thereafter, the CoC requested Applicant to wait for the conclusion of the hearing of the application for non-cooperation before this Tribunal. Accordingly, the CoC would make a decision. vi. This Tribunal vide order dated 30.04.2024 directed Applicant to take assistance of police and local people to take over the possession of the corporate Debtor. The Applicant then sent a letter to the Local Police Authorities for assistance, where the registered office of the suspended board of directors falls for possession of assets of the Corporate Debtor. The Applicant from time to time was also convening the meeting of the CoC wherein the issue of non-cooperation by Suspended Board of Directors and the timeline of CIRP were deliberated and therein the CoC has taken a view that in the interest of all stakeholders and resolution of the Corporate Debtor, the CoC should wait for adjudication of application filed under section 19 of the Code. vii. Meanwhile, the Applicant had informed CoC that 180 days of CIRP were about to complete on 26.05.2024 for which they need to file an application for extension of time period for 90days. Accordingly, an application was filed on 25.05.2024 and this Tribunal vide order dated 26.06.2024 allowed the same. Thereafter, this Tribunal vide order dated 01.08.2024 in IA(IB) No. 11/CB/2023 (application for non-cooperation) issued a bailable warrant of Rs. 5000/- by Registry through concerned police officer against the suspended board of directors where the registered office of the Corporate Debtor falls.
In the 8th meeting of the CoC held on 16.08.2024, the Applicant updated the CoC about the progress of pending application for non-cooperation of the suspended board of directors and again placed the proposal for invitation of expression of interest as per Regulation 36A of the CIRP Regulations,2016, wherein the CoC opt for liquidation of the Corporate Debtor. The CoC, after discussion, requested the Applicant to adjourn the meeting so that the members of the CoC can take a necessary decision in regard to the liquidation of the Corporate Debtor.
The CoC in their 8th adjourned meeting held on 19.08.2024 recommended for liquidation of the Corporate debtor by stating therein the fact “that as at present there is complete non-cooperation of the Board of Directors suspended, no assets were traceable, application under Section 19 is pending for adjudication and the time period of CIRP is completing on 24.08.2024.” The CoC had put 100 % votes to approve the liquidation of the Corporate Debtor. Henceforth, the Applicant had filed this application for approval for Liquidation.
As no EOI was issued, no resolution plan can be placed before the Tribunal for approval. Form H, i.e., Compliance Certificate as required under regulation 39(4) of the IBBI (IRPCP) Regulations,2016 as amended from time to time is enclosed in application as Annexure-E. The CIRP period of the Corporate Debtor is expiring on 24.08.2024 and this application is filed before the expiry of CIRP period after considering the extension as allowed by this Tribunal.
We have heard the learned counsel appearing on behalf of the Applicant, and have perused the documents available on record. It is noted that the Corporate Debtor was admitted into CIRP vide order dated 29.11.2023. The CoC was comprised of the sole financial creditor named Indian Bank, with a 100 % voting share, voted for Liquidation. It is observed that the assets of the company are not present at the registered office of the company, and the Suspended Board of Directors had also not cooperated with the Resolution Professional. This Tribunal vide its order dated 01.08.2024 had issued a bailable warrant to ensure the presence of the suspended director, but they didn't make their representation. As there was non-cooperation from the side of suspended directors, therefore, the Resolution Professional was unable to ascertain the assets available in the company, for which fair value and liquidation value could not be obtained from registered valuers.
It is evident from Serial No.7 of FORM H annexed in the application that there is no resolution plan in this matter. Therefore, at its 8th Meeting held on 16.08.2024 and the adjourned eighth meeting held on 19.08.2024, the CoC decided that, due to the non-cooperation of the suspended board of directors and the inability to trace any assets, the CoC recommended liquidation of the Corporate Debtor. As such, the application deserves to be allowed.
In view of the facts and circumstances and documents available on record, we pass the following order:
The Corporate Debtor, KVR Steels Orissa Ltd. shall be put into liquidation in terms of the provisions of Section 33 (2) of the Code read with the Regulations made thereunder which shall be effective from the date of this order. Accordingly, we allow IA (IB) (Liq) No. 3/CB/2024.
The Moratorium declared under Section 14 of the Code shall cease to have effect from the date of the order of liquidation.
In accordance with Section 34(4)(b) of the Code and the Circular dated 18.07.2023 of IBBI, we hereby appoint Mr. Umesh Chandra Sahoo., an Insolvency Professional Entity having registration no. IBBI/IPA-002/IP-N00621/2018-19/11855 as a liquidator of the Corporate Debtor. The Liquidator so appointed shall complete the liquidation process of the Corporate Debtor as per the provisions of the Code read with the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
In furtherance of the recommendation of the CoC at its 8th meeting, the Liquidator so appointed shall explore the possibility of selling the Corporate Debtor as a going concern under Regulation 32 (e) or selling the business of the Corporate Debtor as a going concern under Regulation 32 (f) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. In this regard, the Applicant is directed to provide the Liquidator with the group-wise assets from the latest accounts of the Corporate Debtor which may be used for the sale of the Corporate Debtor as a going concern.
All the powers of the Board of Directors and Key Managerial Persons of the Corporate Debtor, as the case may be, hereafter cease to exist. All these powers henceforth vest with the Liquidator so appointed.
The personnel of the Corporate Debtor are directed to extend all cooperation to the Liquidator as required by him in managing the liquidation process of the Corporate Debtor.
The CoC in its 8th meeting in furtherance of Regulation 39D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 has approved the Liquidator fees which shall be Rs. 1,00,000/- (Rupees One Lakh Only) per month exclusive of GST and Out of out-of-pocket expenses.
Once the liquidation process is initiated, subject to Section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor. The Liquidator has the liberty to institute a suit and other legal proceedings on behalf of the Corporate Debtor with the prior approval of this Adjudicating Authority, as provided in sub-section (5) of section 33 of the Code.
This liquidation order shall be deemed to be notice of discharge to the officers, employees, and workmen of the Corporate Debtor except to the extent that the business of the Corporate Debtor continued during the liquidation process by the Liquidator.
This Adjudicating Authority directs the Liquidator to issue a public announcement stating that the Corporate Debtor is in liquidation. 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. The Liquidator will also provide a copy of this order to the trade unions/employee associations of the Corporate Debtor so that the workman/employees can also be informed of this liquidation order through their association.
The Registry is directed to communicate this order to the concerned Registrar of the Companies, the registered office of the Corporate Debtor, the Resolution Professional, and the Liquidator by speed post as well as e-mail within one week from the date of this order, after completion of all the formalities.
The Applicant is directed to hand over the relevant documents and control of the Corporate Debtor to the newly appointed liquidator forthwith.
Accordingly, IA (IB) (Liq) No. 3/CB/2024 is ALLOWED and DISPOSED OFF.