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Judgment
The present Application has been filed by Mr. Sanjay Mehra, Resolution Professional (hereinafter referred to as the “RP”) for Punj Security & Housekeeping Services Private Limited, Corporate Debtor, under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “Code”) seeking initiation of liquidation in the ongoing Corporate Insolvency Resolution Process of the Corporate Debtor.
The submissions made by the Applicant in its Application and as presented by their Learned Counsel are summarized hereunder:
The CIRP was initiated pursuant to the order dated 25.08.2022 of the Adjudicating Authority, which was communicated to the Interim Resolution Professional on 26.08.2022, whereupon the IRP assumed charge of the registered office of the Corporate Debtor. In compliance with the provisions of the Code and the applicable Regulations, public announcements inviting claims were published in two newspapers on 27.08.2022, fixing 09.09.2022 as the last date for submission of claims.
Pursuant to the public announcement, claims were received and verified by the Resolution Professional. A financial debt claim of Rs.32,15,667.84 was filed and provisionally admitted in favour of Punj Foods & Facility Management Private Limited, a related party financial creditor. Operational Creditor claims were also received from various entities, including the Regional Provident Fund Commissioner (Rs.10,00,66,551), Girotra & Co., Chartered Accountants (Rs.2,52,000), the Employees’ State Insurance Corporation (Rs.30,17,702), the Central Goods and Services Tax Department (Rs.10,16,77,854), and individual claimants Umesh Kumar Sharma and Parag Sharma (Rs.21,62,500 each), the latter two being the related party operational creditors. Further, no claims were received from workmen, employees, or any other category of creditors.
The first meeting of the Committee of Creditors (hereinafter referred to as the ‘CoC’) was convened on 24.09.2022 wherein the CoC took note of the claims received and the list of creditors prepared under Regulation 13(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The voting shares of the CoC members were determined, and the IRP, Mr. Sanjay Mehra, was confirmed as the Resolution Professional.
In the second CoC meeting held on 20.10.2022, the CoC was reconstituted as the claim of the Regional Provident Fund Commissioner (RPFC) was rejected as the claim submitted by the RPFC was in FORM G of the Liquidation Process i.e., under a wrong Form, resulting in a revision of the voting shares. During the said meeting, the CoC also approved the CIRP timelines, including publication of Form G, invitation and evaluation of Expressions of Interest (EOIs), and the submission of resolution plans.
In accordance with the approved schedule, Form G inviting Expressions of Interest was published on 24.10.2022 in Financial Express and Amar Ujala. Pursuant thereto, EOIs were received from two prospective resolution applicants, namely, Raj Enterprises, a proprietorship concern represented by Mr. Yogendra Choudhary, and Sabrimala Industries India Limited. The RP provided the Information Memorandum, Request for Resolution Plan (RFRP), and Evaluation Matrix to both prospective resolution applicants after obtaining the requisite confidentiality undertakings. However, despite being afforded the opportunity, neither of the prospective resolution applicants submitted a resolution plan by the stipulated deadline of 07.01.2023.
The CoC was once again reconstituted in its third meeting after the Regional Provident Fund Commissioner submitted a revised claim in the correct Form B, necessitating a fresh determination of the voting shares. Subsequently, in the fourth CoC meeting, the Resolution Professional apprised the members that no resolution plan had been received from either of the eligible prospective resolution applicants. The members of the CoC expressed that they were not inclined to reissue Form G, particularly as the Corporate Debtor did not possess any significant fixed assets apart from a few movable assets, and accordingly requested the RP to proceed with liquidation.
Although certain members favoured seeking an extension of the CIRP period by an additional 90 days to examine the records of the Corporate Debtor, the proposal could not be approved since the Employee’s Provident Fund Organisation, holding a voting share of 47.91%, stated that it did not wish to continue as part of the CoC, thereby preventing the requisite 66% majority from being achieved.
The RP, by communication dated 21.02.2023, conveyed his consent to act as the Liquidator of the Corporate Debtor and affirmed compliance with the requirements under Regulations 29C and 39D of the applicable Regulations, with the matter to be further placed before the Stakeholder’s Consultation Committee. During the CIRP, the RP carried out all duties assigned under the Code and the Regulations, regularly submitted status reports before the Adjudicating Authority, and kept the Adjudicating Authority apprised of the progress of the CIRP.
Since the statutory CIRP period of 180 days expired on 21.02.2023 and no resolution plan was received from any prospective resolution applicant, the Resolution Professional has contended that the Corporate Debtor is liable to be liquidated in accordance with Section 33 of the Code.
The CoC became inoperative/non-functional on account of the EPFO not being treated as a member of the CoC and therefore no commercial decision regarding liquidation and Regulations 39B, 39C and 39D could be undertaken. However, in its Convenience Proforma it is stated that Regulations 39B, 39C and 39D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, be discussed in the First Stakeholder Consultation Committee Meeting.
We have heard the learned counsel appearing on behalf of the Applicant, Suspended Management, ESI and have perused the relevant material available on record.
It is observed that the present Application has been filed under section 33 of the Code for the initiation of the liquidation process of the Corporate Debtor. The CoC consists of five members, i.e., EPFO Department, GST Department, Department of Excise and Taxation Union Territory, ESIC, and Girotra & Co., Chartered Accountant. The Interim Resolution Professional has published Form G on 24.10.2022, and thereafter, no resolution plan was received; and the members of the CoC in its fourth meeting was of the concurrence view that they are not interested in re-publishing FORM G and requested the RP to liquidate the Company.
It is noted that the CIRP period of 180 days had expired on 21.02.2023 and in view of the fact that no Resolution Plan from any of the two PRAs was received by the RP. The members of the CoC were not interested in re-publishing FORM G as there were no fixed assets in the Company except few movable assets and had requested the RP to liquidate the Company. As such, the Application deserves to be allowed.
In the Application it is stated that the RP-Sanjay Mehra has given its consent vide letter dated 21.02.2023 to act as Liquidator for appointment as Liquidator and with respect to compliance as per Regulation 39B, 39C and 39D the same shall be discussed in the First Stakeholder Consultation Committee. However, considering the guidelines as issued by the IBBI as regards appointment of the liquidator other than the RP, we considered the name of Ms. Maya Gupta, having Registration Number: IBBI/IPA-002/IP-N00363/2017-2018/11061 email: fcsmayagupta@gmail.com for appointment as liquidator.
In view of the circumstances on record, it is concluded that the requirements prescribed under Section 33 of the Code have been duly fulfilled. Accordingly, the Corporate Debtor, Punj Security & House Keeping Services Private Limited, is hereby ordered to undergo liquidation in accordance with the procedure set out in Chapter III of the Code.
Accordingly, this Tribunal by exercising its powers under Section 33(2) of the Code pass the following Orders:-
The Corporate Debtor shall be liquidated with immediate effect as on the date of this Order in the manner provided under Chapter III, Part II of the Code and other relevant Rules and Regulations, including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017, as amended up to date, enjoined upon him. Accordingly, we allow IA(I.B.C.)/1029(CH)2023.
The Moratorium declared under section 14 of the Code shall cease to have effect from the date of the Order of liquidation.
We appoint Ms. Maya Gupta, having Registration Number: IBBI/IPA-002/IP-N00363/2017-2018/11061, email: fcsmayagupta@gmail.com as a liquidator of the Corporate Debtor, i.e., Punj Security & House Keeping Services Private Limited. The liquidator so appointed shall file his consent and proceed with to complete the liquidation process as per the provisions of the Code read with the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
All the powers of the Board of Directors, key managerial persons, and the members /partners of the Corporate Debtor, as the case may be, hereafter cease to exist. All these powers henceforth vest with the liquidator.
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 liquidator's fees shall be in accordance with Regulation 4 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
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.
The liquidator is directed to issue a public announcement stating that the Corporate Debtor is in liquidation. The liquidator shall also serve a copy of this Order to the various Government Departments, namely Income Tax Department, GST, VAT, etc., who are likely to have any claim upon the Corporate Debtor so that the departments concerned are informed of the liquidation Order in a timely manner. The liquidator shall also provide a copy of this Order to the trade unions/employee associations of the Corporate Debtor so that the workmen/employees shall also be informed of this liquidation Order through their association.
The Applicant/Resolution Professional is directed to communicate this Order to the concerned Registrar of the Companies, the registered office of the Corporate Debtor and the liquidator by speed post and/or e-mail within one week from the date of this Order.
The Applicant/Resolution Professional is directed to hand over the relevant documents and control of the Corporate Debtor to the newly appointed Liquidator forthwith.
Accordingly, IA(I.B.C.)/1029(CH)2023 is allowed and disposed of.