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Judgment
O R D E R
Per: Harish Chander Suri, Member (Technical)
The Court is convened by video conference today.
This petition under section under 9 of the Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,2016 had been filed by Spectrum Artcomm Private Limited, a corporate entity, through its Director namely Mr. Mridul Kotriwala, duly authorised vide Resolution dated 5th December, 2019 (Annexure-3) (hereinafter referred as the Operational Creditor), seeking initiation of corporate insolvency resolution process in respect of New Town Grand, Realtors LLP, having its registered office at Infinity Benchmark, 6th Floor, Office No. 8 PLGI Block-EP & GP, Sec-V, Salt Lake, Kolkata-700091, (hereinafter referred as the Corporate Debtor).
In this petition vide order dated 31.10.2019, this Adjudicating Authority had initiated CIRP against the New Town Grand Realtors LLP, the Corporate Debtor and appointed Mr. Sumir Kumar Bhattacharya as the IRP. The said IRP, however, was replaced by one Mr. Nitesh Kumar More vide order dated 18.12.2019. It is submitted that the IRP had received the order dated 18.03.2020. It is submitted by the IRP that the Corporate Debtor was declared ex parte and the order was passed without hearing the Corporate Debtor on 31st October, 2019. It is submitted that on 19th March, 2020, the IRP had visited the registered office as per MCA data base. However, IRP was told that the office address had been shifted to some other place and they did not know about the new address. It is submitted that the IRP somehow got the Mobile No. of the one of the Directors, Mr. Sanjit Kasyup, who told that there is no active office of Corporate Debtor and assurance was given by him that he will return after 10-15 days and thereafter he will be able to provide the information and records.
It is further submitted that IRP contacted him time and again but no information or records has been provided till date. It is further submitted that the said Director of the Corporate Debtor did not disclose about his present address also.
It is further submitted by the IRP that public announcement to invite claim was also published in the Financial Express, Kolkata (English edition) & Ekdin, Kolkata (Bengali edition ) on 20.03.2020. It is further submitted that thereafter a nationwide lockdown started. It is submitted that the letters sent to the Directors at their residential address taken from the MCA data had also been returned unserved. Thereafter, the IRP filed an application under Section 19(2)of the Code twice, firstly on 16.06.2020 and subsequently on 11.10.2020 when the e-filing portal come into existence. He mentioned the matter for urgent hearing also and matter was heard time and again, however, suspended board did not appear again before the NCLT. The IRP had requested the applicant-Operational Creditor to submit its claim but no claim was received till the date of filing this application. Therefore, no CoC could be formed.
It is submitted that since the Corporate Debtor is an LLP, unaudited financial statement is available on MCA portal. However, there is no list of debtor and creditor and there is no charge also on the MCA portal. It is submitted that as per financial statements, there were two bank accounts of the Corporate Debtor which had been closed by the Corporate Debtor. It is submitted that in IA(IBC)/485/KB/2021, exclusion for 505 days was allowed and the CIRP period also ended on 15.09.2021.
The IRP has submitted that total CIRP cost of Rs.2,85,150/-.Details whereof are given below:-
| Public Announcement: | 4,650 | |
| Consolidated fees: Preparation & filling of Sec 1 19(2) Application, including filling fees&expenses& appearances fees | 38,000 | |
| Consolidated fees: Preparation of Exclusion Application, including filling fees & other expenses. | 28,000 | |
| Consolidated fees: Preparation of Exclusion Application under Reg 33: against creditor, including filling fees & other expenses. | 28,000 | |
| Appearance fees & Legal Consultants | 29,500 | |
| Miscellaneous Expenses | 9,000 | |
| Application for CIRP disposes off | 30,000 | |
| IRP Fees | 1,00,000 | |
| GST on IRP Fees (18%) | 18,000 | |
| 2,85,150 |
It is submitted that the Operational Creditor has not submitted any claim to the IRP and it appears that it has no intention even to submit any claim. Ld. Counsel appearing for the IRP submitted that since there is no claim from any quarter including the one from the Operational Creditor who filed the main C.P (IB) No.466/KB/2019.The CIRP process in respect of the Corporate Debtor may be closed and the IRP may be relieved of his assignment and duties. It is, however, submitted that the CIRP cost /expenses including fees of IRP of Rs.2,85,150/- may be ordered to be paid by the Operational Creditor within 7 days of the date of the order.
The IRP has cited two orders in support of its arguments. It is submitted that in the case of S3 Electricals and Electronics Private Limited Vs. Brian Lau & Anr. passed by Supreme Court of India in Civil Appeal No. 835 of 2018. The Hon’ble Supreme Court has held as under:-
“ C.A. No. 835/ 2018: We have been shown Regulation 33 of the Insolvency and Bankruptcy Board of India ( Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which reads as follows:-
“ 33. Costs of the interim resolution professional:- (1) The applicant shall fix the expenses to be incurred on or by the interim resolution professional.
(2)The Adjudicating Authority shall fix expenses where the applicant has not fixed expenses under sub-regulation (1).
(3)The applicant shall bear the expenses which shall be reimbursed by the committee to the extent it ratifies.
(4)The amount of expenses ratified by the committee shall be treated as insolvency resolution process costs.
[ Explanation.- For the purposes of this regulation, “expenses” include the fee to be paid to the interim resolution professional, fee to be paid to insolvency professional entity, of any, and fee to be paid to professionals, if any, and other expenses to be incurred by the interim resolution professional.]”
A bare reading of Regulation 33(3) indicates that the applicant is to bear expenses incurred by the RP, which shall then be reimbursed by the Committee of Creditors to the extent such expenses are ratified. We are informed that, in this case, no Committee of Creditors was ever appointed as the interim resolution process did not reach that stage. In these circumstances, it is clear that whatever the Adjudicating Authority fixes as expenses will be borne by the creditor who moved the application.
In this view of the matter, the impugned judgment dated 02.08.2017 is set aside only to the extent that these expenses are to be paid by the Corporate Debtor. The appeal is allowed to the aforesaid extent”.
It is submitted that in the case of Om Logistics Limited & Anr. Vs. M/s Ryder India Pvt. Ltd. The NCLT New Delhi Bench has passed following orders:-
“ 17. After hearing submissions of the Applicant/IRP, perusing his averments and documents placed on record, this Bench is of the view that the prayer made by the IRP for dissolution of the Corporate Debtor cannot be accepted since the Liquidation is a pre-requisite to the Dissolution and in the present case, no order of Liquidation has been passed due to absence of any such proposal and non-functioning of the CoC. 18. We observe that even if the ETO Bahadurgarh has withdrawn its claim, the CoC have functioned with the Sole Member/ Operational Creditor, at whose instance the CIRP was initiated. However, in the present case we notice that even the Sole Member/Operational Creditor of the CoC has been shirking from the responsibility and not pursuing the CIR Process of the Corporate Debtor. 19. In the case the Sole Member/ Operational Creditor of the CoC was not interested in pursuing the CIR Process, the appropriate course could have been to file a withdrawal application, under section 12A of IBC, 2016. The contents of the Section 12A are reproduced below:
“12A. Withdrawal of application admitted under Section 7, 9 or 10
The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or Section 9 or section 10, on an application made by the applicant with the approval of ninety percent voting share of the committee of Creditors, in such manner as may be specified.”
20.The aforesaid sequence of events shows that the intention of the Operational Creditor i.e, M/s Om Logistics Ltd., at whose instance the CIR Process was initiated, was not for the resolution of Insolvency. Instead, the Operational Creditor has used this forum for recovery and got the CIR Process kick started with malicious intent for a purpose other than the resolution of insolvency of the Corporate Debtor, which is not permissible under the IBC 2016. As per the Code, if any person [as defined under Section 3(23) of IBC] initiates the Insolvency Resolution Process fraudulently or with malicious intent for any purpose other than for the resolution of the insolvency, or liquidation, such an act is punishable under section 65(1) of IBC 2016. Hence, before taking any action under Section 65(1) IBC 2016, we think it proper to issue a show cause notice, under Rule 59 of the National Company Law Tribunal Rules 2016, on the Operational Creditor M/s Om Logistics Ltd. through its Directors as to why the penalty as stipulated under Section 65(1) of IBC, 2016 shall not be imposed on it. Ld. Registrar NCLT is directed to issue the show cause notice under Section 65(1) of IBC 2016 read with Rule 59 of the National Company Law Tribunal Rules,2016 on M/s Om Logistics Ltd. through its Directors giving them fifteen days’ time to explain and submit in writing as to why the penalty as stipulated under Section 65(1) of IBC, 2016 shall not be imposed on them. The Registry is directed to allot a case No. for the proceedings for which the Show Cause is being issued to the Operational Creditor under Section 65(1) of IBC, 2016. Registry /Court Officer to list this matter on 01.09.2021.”
21.Now, coming to the prayer of the Applicant, we are of the view that it is not the duty of the IRP to run after the Members of CoC to attend the meeting and pursue the CIR Process. In a similar situation, when the CoC was not interested in pursuing the CIR Process, this Adjudicating Authority has terminated the CIR Process in the matter of M/s Surendra Steels Sales Vs. M/s Immortal Buildcon Pvt. Ltd., (IB)- 1152(ND) 2019 dated on 07.01.2020. The relevant extract of the said order is reproduced below:
“….The IRP has submitted that he has meeting expenses from his own pocket. Pursuant to the publication, no other claim was received. It is submitted that the first meeting has been held while the second meeting has been postponed a few times, at the instances of the Operational Creditor/CoC on grounds of a possible settlement with the Corporate Debtor. As such there was no confirmation of the RP further steps take. There was no concession on the fees to be given, much less expenses to be met. No progress has been made in this case. This bench is apprised of the fact that the Operational Creditor has been in talks of settlement with the Corporate Debtor and, is therefore, not interested in taking any step to proceed with the CIR Process. Under such circumstances with no other claimant and the sole member of the CoC not being interested in prosecuting the CIR Process, it would be expedient to terminate the CIR Process. In view of the above, the CIR Process is hereby, terminated. The Corporate Debtor is released from the rigors of the moratorium and is permitted to function through its own board. We find that the Operational Creditor has not only failed to reimburse the expenses and fees of the Interim Resolution Professional, but has also wasted the time of this Bench after the Petition was duly admitted. Accordingly, while terminating the CIR Process, a cost of Rs.50,000/- is imposed on the Operational Creditor to be paid to the Prime Minister’s Relief …”
22.In the Circumstances, when the Applicant is unable to carry forward the CIR Process for want of cooperation/participation from the sole member of CoC,we feel it appropriate to terminate the CIR Process of the Corporate Debtor. In view of the above, by exercising our jurisdiction under Section 60(5) of IBC 2016 along with inherent power under Rule 11 of the NCLT Rules, 2016, we hereby terminate the CIR Process of the Corporate Debtor with immediate effect and release the Corporate Debtor from the rigors of the CIRP and moratorium.
After having gone through the petition, orders passed by this bench and the pleadings made in the application and the submissions made in the Court by the Ld. Counsel for the IRP, we consider it a fit case to close the CIRP in the case of New Town Grand Realtors, L.L.P (Corporate Debtor) as ordered in CP(IB) 466/KB/2019 vide order dated 31.10.2019 passed by this Adjudicating Authority.
We, therefore, order that the CIRP in respect of the Corporate Debtor shall stand closed from the date of this order and the IRP stands relieved.
The Operational Creditor at whose instance, the CIRP of the Corporate Debtor was initiated shall pay a sum of Rs. 1,85,150/-towards the CIRP costs and expenses and Rs.1,00,000/- towards fees of the IRP.
In view of the above said order passed in C.P (IB) No.466/KB/2019 closing CIRP process initiated against the Corporate Debtor New Town Grand Realtors LLP, all these IAs being, IA(IB)/484/KB/2021 IA(IB)/1078/KB/2020 and IA(IB)/827/KB/2021 are also dismissed along with main C.P (IB) No.466/KB/2019
Certified copy of the order may be issued to all the concerned parties, if applied for, upon compliance with all requisite formalities.