Shri Harsh Garg vs M/s. You Seung Sang Sa India Construction Private Limited

IA (IBC)/1908 (CHE)/2023 in IBA/796(CHE)/2020 is an application filed under Section 33 of the Insolvency & Bankruptcy code, 2016 (herein after termed as “the Code”) by Mr. Harsh Garg, RP of M/s. You Seung Sang Sa India Construction Private Limited, the Corporate Debtor (hereinafter referred as “CD”) seeking following reliefs as follows,

The corporate debtor, M/s. You Seung Sang Sa India Construction Private Limited, located at No.342/1, New No.523, Anna Salai, Nandanam, Chennai, Tamil Nadu - 600 035, was admitted to Corporate Insolvency Resolution Process, (hereinafter referred as “CIRP”) vide an order dated 09.08.2021 passed by this Adjudicating Authority. Mr. Harsh Garg, was appointed as the Interim Resolution Professional of the CD.

Form the Compliance certificate (Form H) attached with the application the dates and events subsequent to initiation of CIRP of the CD is as follows,

It is stated that after appointment the applicant received claims from the Creditors of the CD and formed the CoC of the CD.

The final Composition of CoC is only of Operational Creditors and extracted as follows,

The applicant submits that the suspended Directors of the Corporate Debtor were South Korean Nationals who left the country prior to CIRP. Except the Residential addresses in South Korea and email addresses no details of them are available. The registered office and other addresses of the CD which were know from the website of the CD had been inspected by the applicant and found all to be rental offices which were vacated long before.

It is submitted that the applicant as he did not get any co-operation from the Directors and Statutory Auditors of the CD, applicant filed IA(IBC)/993(CHE)/2021 seeking direction for co-operation from the suspended board (Mr. Her Seung Hwi and Mr. Hur Yoo Hae) and the statutory auditor (M/s. S. Kalyanaraman & Co. LLP) of the CD.

It is stated that during the 4th CoC meeting dated 15.10.2021 the RP informed the position of the CIRP and non-availability details relating to assets, financial records, books of accounts etc., of the CD and suggested the process of liquidation since no EoI recieved. The CoC rejected the said suggestion and directed the RP to pursue the IA(IBC)/993(CHE)/2021. The Copy of the Minutes of 4th CoC is placed at Page 24 – 32 of the Application.

It is stated that the applicant filed an IA(IBC)/160(CHE)/2022 on 28.01.2022 for seeking exclusion of period from 10.09.2021 till disposal of IA(IBC)/993(CHE)/2021.

It is submitted that during 6th CoC meeting the issue of Paper Publication in Korea was discussed and RP was directed to file another application seeking permission for publishing notices to the suspended directors only in English Newspaper circulating in Korea in the matter of hearing co-operation application. Therefore IA(IBC)/586(CHE)/2022 in IA(IBC)/993(CHE)/2022 was filed on 04.04.2022 and same is allowed on 26.10.2022 by this Tribunal.

It is also submitted that, this Tribunal vide order dated 26.10.2022 dismissed the IA(IBC)/160(CHE)/2022 and recorded the non-satisfactory performance of the RP as follows,

It is submitted that 7th CoC meeting was conducted on 02.11.2022, wherein again the CoC were against the idea of Liquidation for the reason that the last balance sheet of the CD shows assets close to value of Rs.100 Crores. The Copy of minutes of the 7th CoC meeting is placed at Page 33 – 37 of the Application.

It is submitted that the applicant has approached the NCLAT against the Order dated 26.10.2022 of this Tribunal passed in IA(IBC)/160(CHE)/2022. The said appeal was dismissed as withdrawn vide order dated 23.12.2022 directing the applicant to approach this Tribunal. So this applicant before this Tribunal moved an application IA(IBC)2070(CHE)/2023 seeking reliefs as follows,

However said application was also dismissed by this Tribunal vide order dated 23.02.2024 thus giving the finality in respect of relief sought for exclusion of CIRP period starting from 10.09.2021 till the disposal of IA(IBC)/993(CHE)/2021 in respect of the CD.

It is submitted that during the 8^th CoC meeting dated 30.01.2023, applicant proposed the CoC that Form G was published and no response received. Further 330 days deadline for CIRP in relation to the CD had also ended and no resolution plan was submitted, it would be best to liquidate the CD. The said proposal was accepted and voted in favour with 83.29%, thus permitting the Liquidator applicant to file the present application. The Copy of the 8^th CoC meeting was placed at Page 40 – 50 of the Application.

The details relating to the Resolutions passed in respect of the present application are extracted as follows,

It is submitted that the CoC had recommended the appointment of the applicant RP as the Liquidator in respect of the CD and fixed Rs.2,50,000/- per month as his remuneration. The voting of the CoC for the resolutions passed is extracted as follows,

We have heard the Ld. Counsel for the applicant and perused the documents on record.

It is observed that the CoC after a period of inordinate delay found no prospects in continuing with the CIRP. Therefore the resolution for Liquidation of the Corporate Debtor has been passed by the CoC directing the Resolution professional to file necessary applications for Liquidation of the Corporate Debtor.

The Applicant/RP submitted FORM-H as per Regulation 39 (4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016. The same is placed at Page 54 – 59 of the application. Further the applicant has filed convenience proforma dated 08.12.2023 which discusses about 4 valuers in connection to the CD. It also discloses some pending litigations and PUFE transaction applications connected to the CD.

From the records it is apparent that the Applicant RP and CoC had not stick on with the timelines mandated by the code. The apathetic behaviour of both the RP and CoC is inappropriate and not appreciative. Even the same is recorded in the order of this Tribunal dated 26.10.2022 & 23.02.2024.

In the present matter no exclusion or extension has been granted after expiry of 180 days of the CIRP. Without obtaining any required permission of this Tribunal, even after the expiry of 330 days, maximum time limit provided under IBC no resolution plan was received. Only after passing order dated 26.10.2022, in 05.03.2023 the present application has been filed.

Section 33 of the Insolvency and Bankruptcy Code, stipulates as follows,

In Arcelormittial India Pvt Ltd v. Satish Kumar Gupta ((2019) 2 SCC 1) it is observed as follows;-

Similarly explaining the ambit of the cases covered under Section 33 (1) (i) and (ii), the Supreme Court in Manish Kumar v Union of India ([2021] 14 S.C.R. 895), observed as follows;-

It is also noted from the minutes that the CoC has recommended Mr. Harsh Garg (Applicant herein) to act as the Liquidator of the Corporate Debtor. However IBBI vide its notification bearing No. Liq-12011/214/2023-IBBI/840 dated 18.07.2023 has recommended that the person other than IRP/RP of the Corporate Debtor to be appointed as the Liquidator in the case of liquidation the Corporate Debtor. Since no resolution plan was submitted by any person, CoC constrained to pass resolution for Liquidation of CD and passed by majority. Further CoC also recommended the name of the Applicant/ RP to be appointed as Liquidator. Therefore there is no impediment to appoint him as the Liquidator.

From the above facts, circumstances and precedents, this Adjudicating Authority deems it fit to order Liquidation of the Corporate. Accordingly, we order liquidation of the Corporate Debtor (M/s. You Seung Sang Sa India Construction Private Limited) by appointing Mr. Harsh Garg having Reg. No. IBBI/IPA-001/IP-P00243/2017-18/10472 with active AFA status till 30.06.2025 (email address - [email protected]) as the Liquidator to carry out the liquidation process subject to the following terms/directions: -

The Liquidator shall strictly act in accordance with the provisions of IBC, 2016 and the attendant Rules and Regulations including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 as amended up to date enjoined upon him.

The Liquidator shall issue the public announcement that the Corporate Debtor is in liquidation. In relation to officers/ employees and workers of the Corporate Debtor, taking into consideration Section 33(7) of IBC, 2016, this order shall be deemed to be a notice of discharge.

The Liquidator shall investigate the financial affairs of the Corporate Debtor particularly, in relation to preferential transactions/ undervalued transactions and such other like transactions including fraudulent preferences and file a suitable application before this Adjudicating Authority.

In terms of section 178 of the Income Tax Act, 1961, the Liquidator shall give necessary intimation to the Income Tax Department. In relation to other fiscal and regulatory authorities which govern the Corporate Debtor, the Liquidator shall also duly intimate about the order of liquidation.

The order of Moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cease to have its effect and a fresh Moratorium under Section 33(5) of the Insolvency and Bankruptcy Code shall commence.

The Liquidator is directed to proceed with the process of liquidation in a manner laid down in Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016.

The Liquidator is directed to investigate the financial affairs of the Corporate Debtor in terms of the provisions of Section – 35(1) of IBC, 2016 read with relevant rules and regulations and also file its response for disposal of any pending Company Applications during the process of liquidation.

The Liquidator shall submit individual Preliminary report to this Tribunal within 75 (seventy-five) days from the liquidation commencement date as per Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016. Further such other or further reports as are required to be filed under the relevant Regulations, in addition, shall also be duly filed by him with this Adjudicating Authority.

The Liquidator directed explore the possibilities of selling the Corporate Debtor as the going concern.

Copy of this order be sent to the Creditors, Corporate Debtor and the Liquidator for taking necessary steps and for extending the necessary co-operation in relation to the Liquidation process of the Corporate Debtor, viz., Company-in-liquidation.

With the above directions, IA(IBC)/ 1908(CHE)/2023 in IBA/796/2020 stands allowed and disposed of.

The Registry is directed to communicate this order to the Registrar of Companies, Chennai and to the Insolvency and Bankruptcy Board of India.