Ramesh Chaudhary & Anr. vs Anju Agarwal

ORDER

a . T he App lica nts ha s pa id the e ntire Sa le Co ns ide ra tio n a nd same be ad jus te d in the fo llo wing ma nne r: (i) I NR 1 ,00 ,00 ,000 / -(I ndian Rupe es O ne C ro re s o nly) by way of inve stme nt into the e quity s ha re s o f the Co rpo ra te Deb to r; a nd (ii) the ba la nce a mo unt o f I N R 44 ,30 ,00 ,000 / - (I nd ia n Rupee s Fo rty Fou r C ro re T hirty Lak hs o nly) in the fo rm o f u nse cu re d de bt.

b. A d ire ctio n be issue d tha t as o n the d a te of issu ance o f Sale Ce rtifica te b y the Liquid a to r, the a pplic ant ge t a ll the rights , title a nd inte res t i n whole a nd e ve ry p a rt o f the Co rpo ra te De b to r inc lud ing bu t not limite d to inte lle c tua l p rope rty rights , free from se cu rity inte re s t, e ncu mb ra nce , c la im, cou nte r c la im. Sa le Co ns ide ra tio n s ha ll be d is tribu te d b y the Liquid a to r in te rms o f the Se c tio n 53 o f the Code ;

c . a dire c tion be issue d tha t on a nd from the da te o f s ale ce rtifica te , a ll the c la ims or de ma nds made b y, o r liab ilitie s o r ob liga tio ns owne d o r pa yab le to a ny ac tua l o r Po te ntia l cre d ito r, F ina nc ia l C re dito rs , Emp loye e s, Wo rkme n including claims re la te d to the ir soc ia l se curity co ntribu tio ns , Supp lie rs , Go ve rnme nta l A ge nc ie s, tax au tho ritie s o f the Co rpo ra te De bto r (includ ing bu t not limite d to liabilitie s , intere s t, fine s , pe na ltie s , du tie s, taxe s , ce ss , su rc ha rge , la te fe e s e tc . on a ccou nt o f i nco me -tax , tax de ductio n a t sou rce , tax colle c tio n a t sou rce , goods a nd se rv ice s tax , cus to m du ty, value adde d tax , se rv ice tax , we alth - tax , ce ss , DGFT due s; due s re la ting to p rovide nt fu nd , gra tu ity, fire , e le c tricity, SEBI , we ights a nd me asu re s , s tate Bo ile r, s tock e xc ha nge , De posito rie s (CDSL, N SD L) e tc .; a nd po llu tio n co ntro l boa rd , La nd re ve nue, Mu nicip al tax, Wa te r tax , Wa te r ce s s, F ac to rie s Ac t due s , ROC dues e tc .) whe the r d ire ct o r ind ire c t, whe the r file d/adm itte d/ve rifie d o r no t, due or co ntinge nt , a sse rte d o r u nasse rte d, c rys tallize d o r un -c rys ta llize d, k nown o r u nkno wn, se cu re d o r u nse cu re d, dispu te d , u ndispu te d, pre se nt o r fu tu re , includ ing a ny liab ility aris ing ou t o f no n -co mplia nce o f p ro visio n o f a ny la ws , rule s , re gula tio ns , d ire ctio ns , no ti fica tio ns , circula rs, guide line s, po licie s , lice nse s , app rov als , co nse nts o r pe rmiss ions as app licab le o n the Co rpo ra te De bto r, in re la tio n to a ny pe riod p rior to the Da te o f s ale ce rtifica te will be written o ff in fu ll and s hall s ta nd pe rma ne ntly ex tingu is he d b y the Liquid a to r in acco rda nce with se c tion 53 o f I BC 2016 . Fu rthe r no such c la im, liab ility e tc . s ha ll be re cove rable in a ny fo rm o r manner wha tsoe ve r from the App lic ant a nd the pa yme nt o f Sa le Conside ra tio n b y the App lica nt into the liqu ida tion a ccou nt is a fu ll a nd final se ttle me nt b y the App lica nt to wa rds suc h c la ims , liab ilitie s e tc .

d . a dire c tion be issue d tha t, from the da te o f the Sa le Ce rtifica te , the App lica nt s ha ll be e ntitle d to the be ne fit o f Se c tio n 32A o f the Code , a ny and a ll the le ga l p roce e dings (inc lud ing any s ho w cau se , no tice , ad jud ica tio n p roce e dings , a sse ssme nt p roce e dings , re gu la to ry o rde rs e tc ,), a rb itra tio n or o the r le ga l, jud ic ia l, re gu la to ry o r adminis tra tive p roce e dings , initia te d be fore a ny cou rt, tribu na l o r au tho rity b y or on be half o f a ny c re dito r o r gove rnme ntal au tho ritie s , to e nfo rce a ny rights o r claims a ga ins t the compa ny s ha ll be withd ra wn, ab a te d, se ttle d and / o r e xtingu is he d with e ffe c t fro m the d a te o f the Sa le Ce rtifica te and the Applica nt s ha ll no longe r be re quire d to make a ny pa yme nts in re la tio n to su ch litiga tio ns p ro cee dings . Fu rthe r d ire c tio n to a ll the stake ho lde rs o f the Co mpa ny (includ ing c re dito rs a nd gove rnme ntal au tho ritie s ), for no t pu rsu ing su ch litiga tio ns / p roce e dings a nd withd ra wi ng a ll e xis ting litiga tio ns / p roce e dings , whe re ve r pe nd ing.

e . a d ire ctio n be issue d tha t all fina nc ia l a nd pe cunia ry liab ilitie s of the Co rpo ra te De bto r, (inc lud ing withou t limita tion, a ny pe na lty, whe the r continge nt, a sse sse d, k nown o r u nknown, inte re s t, fine s o r fee s a nd a ny o the r liabilitie s a nd/o r obliga tions whic h ma y ha ve a financia l imp ac t) in re la tio n to any pe riod p rio r to the Da te of Sa le Ce rtificate shall be de e me d to be e xtingu is he d;

f. a d ire c tio n be is sue d tha t a ny no n-co mplia nce o f p rov is io ns o f any la ws , rule s , re gu la tions , dire c tions , no tifica tions, c ircu la rs , gu ide line s , po licie s , lice nse s, app ro va ls , co nse nts o r pe rmis sio ns p rio r to the d ate o f exe cu tio n o f s ale ce rtifica te s ha ll be de e med to be e x tingu is he d;

g . a d ire ctio n be issue d tha t all t he e xis ting s ha re s /e quity s ha re c ap ita l o f the Co rpo ra te De bto r s hall be e xtingu is he d/c ance lle d withou t a ny co ns ide ra tio n, a nd rights a nd lia bilitie s a ris ing ou t of the sa me s ha ll also be e xtingu is he d;

h. a dire c tion be issue d tha t on a nd from the Da te o f Sa le Ce rtifica te , the s ta tu s o f the Co rpo ra te Deb to r in the re co rds o f the Re gis tra r o f Comp anie s s hou ld be re fle c ted a s 'a c tive ' from the s ta tus of ' liqu ida tion' ;

i.

a d ire ctio n be issue d tha t from the Da te o f Sa le Ce rtific a te , the Boa rd o f D ire c to rs o f the Co rpo ra te De bto r be re - co ns titu te d as pe r the Co mpanie s A c t, 2013 a nd tha t the fo llo wing indiv idua ls be appo inte d as D ire cto rs o f the Co rpo ra te De bto r du ly appo inte d unde r the p ro vis ions o f the Comp anie s Ac t, 2013 , and d ire c t the Re gis tra r o f Comp anie s to do a ll su ch ac ts, de e ds and things tha t a re ne ce ssa ry to appo int the fo llowing individu als as d ire cto rs o f the Co rpo rate De bto r, who a re ind iv idua ls re co mme nde d b y the App lica nts , in o rde r to e nable the Co rpo ra te De bto r to file re le va nt re tu rns re quire d b y app licab le la w:

k. a d ire ctio n be issue d tha t the Co rpo ra te De bto r s ha ll have a right to re v ie w and te rmina te any c o ntrac t that wa s e nte re d into p rio r to the d a te o f the issu ance o f Sa le Ce rtifica te ;

l . a dire c tion be issue d tha t on a nd from the Da te o f Ac quisitio n, a ll the as se ts spe c ifie d in the comp le te E - Auc tion Me mo ra ndums s ha ll co ntinue to be the a sse ts o f the Co rpo ra te De b to r, towa rds whic h the App lica nt has made pa yme nt b y wa y o f the Sa le Co ns ide ration;

m . a d ire c tio n be issue d to the Liquid a to r to coope ra te with, a nd p rov ide all ne ce ssa ry suppo rt and a ss is ta nce to the App lica nt, includ ing bu t no t limite d to pe rfe c ting / a me nding / mod ifying / c re a ting the la nd re co rds in re lation to a ll p a rce ls o f la nd , the immo vab le p rope rtie s and a sse ts , be longing to the Co rpo ra te De b to r in favou r o f the Co rpo ra te De bto r within 15 da ys from Da te o f Ac quisitio n;

n. a d ire c tio n be issue d to the Liquid a to r to , imme dia te ly, write b ack a ll the liab ilitie s of the Co rp o ra te De b to r, includ ing c re dito rs , te rm loa ns , wo rking c apita l loa ns , tax liabilitie s , o the r s ta tu to ry liab ilitie s, e tc . whic h a re no t pa yab le a nd re fle c t the to tal liabilitie s a t the amou nt o f the co ns ide ra tio n (a s re duce d by the amou nt o f insolve nc y re so lu tio n p roce ss co s ts a nd the liquid a tio n cos ts) de te rmine d in the au c tio n; a nd (ii) the asse ts whic h a re no t re cove rable (de bto rs , inve nto rie s a nd lo ans a nd adva nce s , e tc .) s hould be writte n do wn to the ir re alizab le v alue ; in the fina nc ia l s ta te me nts (P ro f it and Loss Ac count a nd the Ba la nce She e t) o f the Co rpora te De bto r as o n 31s t Ma rch 2023 .

o. a d ire ctio n be issue d to d raw up , p re pa re , finalize , a nd file the fina nc ial s ta te me nts o f the Co rpo ra te De b to r the re by re co rd ing e xtingu is hme nt o f all liabilitie s o f the Co rpo ra te Deb to r till the d a te o f Sa le Ce rtifica te a nd as cla rifie d b y the re lie fs a nd co nce ss ions grante d b y this Ho n’b le T ribunal, and to file suc h financial s ta te me nt with the re le va nt re gu la to rs su ch a s Re gis tra r o f Comp a nie s, I nco me T ax Au tho ritie s and a ny o the r Gove rnme nt Au tho ritie s ;

p . a dire c tion be is sue d tha t the b rou ght fo rwa rd tax los se s o f the Corpo ra te De bto r be pe rmitte d to be c a rrie d forwa rd a nd se t -o ff a ga ins t fu tu re income a s change of s ha re ho ld ing o f the Co rpo ra te De bto r is pu rsu ant to the bid submitte d b y the App lica nt unde r the E -Au c tio n P roce ss ;

q. a d ire ctio n be is sue d to Utta r P rade s h Sta te I ndustria l De ve lopme nt Au tho rit y to co ns ide r the p re se nt au c tion pu rc ha se o f co rpo ra te De bto r (a s a go ing co nce rn) as indu c tio n o f ne w s hare ho lde rs to re hab ilita te the Co mpa ny upo n the o rde r o f this Ho n’b le Cou rt a nd gra nt the re lie fs as pe r the ir po licy pe rtaining to s ick co mpa nie s a nd wa ive the re quire me nt o f ob ta ining an app rov al for c ha nge in o wne rs hip / co ns titu tio n/ma na ge me nt o f the Co rpo ra te De bto r;

r . the bid submitte d b y the Applic a nt s hou ld be co ns ide re d to be a re solu tio n p la n u nde r Sec tio n 79 o f the I ncome Tax Ac t, 1961 ;

s . a d ire c tio n be is sue d to the Sta te Ele c tricity Boa rd to re s to re po we r co nne c tio n to the fa c to ry p re mise o f the CD , a nd waive a ll a nd a ny pas t due s ;

t . a d ire ctio n be issue d tha t the Co rpo ra te De bto r a nd the Succe ss fu l B idde r s ha ll be gra nte d a n e xemp tio n fro m all T axe s, le v ie s, su rcha rge s , ce ss , fee s , trans fe r c ha rge s , s tamp du ty, re gis tra tio n cha rge s , trans fer p re miu ms , a nd su rc ha rge s tha t a rise from o r re la te to imp le me nta tion o f Sa le o f Co rpo ra te De bto r as a go ing co nce rn u nde r Liquid a tio n;

u. a d ire ctio n be issue d to SEBI a nd B SE for De lis ting o f Sha re s , a ll the s hare s o f all c la sse s o f s ha re ho lde rs have co mple te ly lo s t the ir va lue in d is tribu tio n as pe r se c tion 53 o f the code .

v.

a dire c tion be issue d to tha t the au tho rise d s ha re c ap ital o f the Comp any is to re ma in intac t, and tra ns fe r o f o wne rship o f the Co rpo ra te De bto r shall take p lace b y wa y of writing o ff the e ntire e quity sha re h o lding o f Co rpo ra te De b to r a nd is sua nce o f fre sh e quity sha res to App lica nt and its nom ine e s. M inis try o f Co rpo ra te A ffairs, Re gis tra r o f Compa nie s, SEBI , Stock Exc ha nge , De posito rie s a nd o ther Au tho ritie s to give ne ce ssa ry e ffe c t to the abo ve c ha nge in Sh a re ho ld ing;

w. a d ire ctio n be issue d tha t the Co rpo ra te De bto r a nd/o r the Suc ce ss fu l Bidde r s ha ll be a t libe rty to se e k re me dy if a ny av ailab le be fo re the Ho n’b le T ribu na l to add re ss any d ifficultie s fa ce d with re spe c t to imp le me nta tion o f the acqu is itio n o f the Co rpo ra te De bto r a s a going co nce rn;

x . O the r o r fu rthe r o rde r o r o rde rs be p assed a nd /o r d ire c tio n o r dire c tions be give n as this Ho n’b le T ribunal may dee m fit a nd p rope r.

2 . T ha t the a fo res aid re lie fs and co nce ss io n are e sse ntia l fo r the succe ss fu l imp le me nta tion o f the b id and is no n p re jud ic ia l to a ny o f the s take holde rs of the Co rpo ra te De b to r.

3 . T ha t the p re sent app lica tion is bon af id e and in the inte re s t o f jus tice .

I n vie w o f the fo re going, it is hu mbly sub mitte d tha t this Hon’ble Cou rt may:

(a ) Pa ss a n o rde r allo wing the p re se nt app lica tio n; and

(b)

Pa ss an o rde r granting re lie fs a nd co nce ss io n a s me ntio ne d in Pa ra 10 (a ) to (x) o f the p re se nt app lica tion;

(c ) Pa ss a ny o the r o rde r as this Hon’ble Cou rt m ay de em fit.

“[Sale of Assets, etc.

The Liquidator may sell-

a)

an asset on a standalone basis;

b)

the assets in a slump sale;

c)

a set of assets collectively;

d)

the assets in parcels;

e)

the corporate debtor as a going concern; or

f)

the business(s) of the corporate debtor as a going concern:

Provided that where an asset is subject to security interest, it shall not be sold under any of the clauses (a) to (f) unless the security interest therein has been relinquished to the liquidation estate.]”

The phrase ‘as a going concern’ imply that the Corporate Debtor would be functional as it would have been prior to the initiation of CIRP, other than the restrictions put by the Code.”

“7.

‘Going Concern’ means all the assets, tangibles or intangibles and resources needed to continue to operate independently a business activity which may be whole or a part of the business of the corporate debtor without values being assigned to the individual asset or resource.”

In view of this, the following options are submitted for consideration:

a. The corporate debtor may be sold as a going concern, as provided in the extant regulations. As the Company survives, there will be no need for dissolution of the Company in terms of section 54 of the Code. The assets along with all attendant claims, limitations, licenses, permits or business authorizations remain in the Company. The Company survives as it was; the ownership of the Company is transferred by the Liquidator to the acquirer. The Liquidator shall make an application to the AA for approval of the sale of the corporate debtor as a going concern and the AA may pass an order with respect to:

(a)

Sale of the corporate debtor to the intended buyer as a going concern

(b)

Transfer of shares of the corporate debtor to the intended buyer

(c)

Transfer of the going concern of the corporate debtor to the buyers

(d)

Continuation of the authority, powers and obligations of the Liquidator to complete the liquidation process as provided under the Code and the regulations including the control, operations and continuation of the liquidation bank account of the corporate debtor,

(e)

Payment to stakeholders in accordance with section 53 from the liquidation bank account, and

(f)

Protection of the intended buyer from all claims and liabilities pertaining to the period prior to the sale of the corporate debtor as a going concern.

In such a case, the final report of Liquidator, as required under clause (3) of regulation 45, shall form part of the application for the closure of the liquidation process of the corporate debtor and not for the dissolution of the corporate debtor to the AA to be made under section 54.

b. The regulations may provide another option of sale, that is, sale of business of the corporate debtor as a going concern. It will be only sale of business, not the corporate debtor which will be liquidated in accordance with the regulations. In this case, the assets and liabilities relevant for the business are transferred to a new entity, and stakeholders are paid from proceeds of sale in accordance with section 53 and the corporate debtor will be dissolved.”

8.

Both the options require consent of the secured creditors to relinquish security interest. If security interest is not relinquished, other modes of sale will be used.”