Sugesan Transport Pvt. Ltd. vs E.C. Bose and Company Pvt. Ltd.

Per: Rekha Kantilal Shah, Member (Technical)

This court convened via hybrid mode.

The I.A. (I.B.C) (LIQ) No. 41/KB/2024 is an Application filed praying for Liquidation of the Corporate Debtor.

This adjudicating authority vide its order dated 25 October 2019, directed initiation of the Corporate Insolvency Resolution Process of E.C. Bose & Company Private Limited. (“Corporate Debtor”), on a Petition filed by Sugesan Transport Private Limited (“Financial Creditor”) against E.C.Bose & Company Pvt. Ltd. under section 7 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’) and appointed Mr. Swarbanabi Ramasami as the Interim Resolution Professional (‘IRP’).

Mr. Swarbanabi Ramasami replaced as the Interim Resolution Professional of EC Bose and Company Private Limited. In his place, Ms Geetha Sridhar was appointed as the new Interim Resolution Professional of the Corporate Debtor. In the 1^st CoC meeting held on 25^th March, 2020 the appointment as Resolution Professional was confirmed.

The Applicant Published Form G on 21.05.2024 in three leading newspaper.

On 5^th June E.O.I submitted by Tantia Construction Limited and on 9^th August 2024 Tantia Constructions Ltd, the sole Resolution Applicant, submitted a Resolution Plan. However, Your failure to comply with the mandatory requirement of furnishing a bid bond guarantee of rupees 1.5 crores, as stipulated under request for resolution plan affected the resolution process. Their financial account classified as non performing asset, restricting their ability to mobilize resource despite prior direction of this Tribunal in a related matter.

On 5^th November, 2024 Resolution Applicant approached this Tribunal by filing an application, IA (I.B.C)/2203(KB)2024, seeking specific reliefs to address their financial constraints.

During the 19^th CoC meeting, The committee emphasized inability to deviate from the condition of request for resolution plan, Reiterating that the full bid bond guarantee was non negotiable.

No Resolution Applicant opted not to press IA(I.B.C)/2203(KB)2024 and requested that it be disposed of with a direction for the refund of the Earnest Money Deposit, which was eventually allowed on 18^th November, 2024.

The Resolution Professional filed an application with the approval of COC being IA (IBC)/2299/KB/2024 praying for an extension/enlargement of 30 days to complete the CIRP of the corporate debtor. The application was allowed by the Hon'ble bench and 30 days extension/enlargement was granted vide order dated 26^th November 2024.

On 20^th CoC meeting held on 21^st Nov, 2024 wherein it was decided that an additional 30 days would be required to complete the remaining process of the rebooted CIRP of the corporate debtor. During the 20th COC meeting on 21st November 2024 it was decided by the СОС members to extend the CIRP by 30 days to finalize the process and obtain SBI's approval for liquidation.

Under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016, if the Corporate Insolvency Resolution Process (CIRP) is not concluded within 330 days, including any extensions and periods of litigation, the Adjudicating Authority can pass an order to liquidate the Corporate Debtor. In light of the fact that no approval for liquidation of the corporate debtor during the 21st meeting of the COC would be obtained and that the statutory timeline of 330 days has lapsed, it is respectfully submitted that the Adjudicating Authority may be pleased to pass an order for the liquidation of the Corporate Debtor, as this remains the only viable course of action.

The Applicant has sought for the following relief:

We have considered the submission made by the Ld. Counsel and perused the record.

Section 33(1) of the Code enjoins the Adjudicating Authority to pass an order for Liquidation of the Corporate Debtor when no approval for liquidation of the corporate debtor during the 21st meeting of the CoC has been obtained and that the statutory timeline of 330 days has lapsed.

It is observed from the minutes of 21^st meeting of CoC that item no. B2 was kept to discuss and approve the appointment of liquidator in terms of section 34 of the code. The representative of the SBI informed in the meeting that approval from higher authority regarding the liquidation of corporate debtor was still pending, SBI would not be in a position to take any decision in this regard. The representative of STPL also conveyed that they would wait until SBI’s decision. In light of this, no decision was made on this agenda item.

The IBC 2016 envisages CIRP and liquidation as two distinct processes with distinct roles and responsibilities. Thus, IP undertakes two different assignments as RP and liquidator, separately. Segregating the dual role of IP in the same CD as RP and liquidator will foster an inbuilt system of check and balance in the process, thereby enhancing the accountability of each job and strengthening the stakeholder’s trust in the code. The primary objective of the Code is resolution. Accordingly, in this case where the Corporate Debtor has not been successfully resolved not CoC members have given their approval, it is in the interest of the all stakeholders and the process, other Insolvency Professional is being appointed that will not only eliminate the chance of RP being securing the next assignment on ex-ante basis but also entrust the fair process to meet the objective of the Code.

Hence, we do find merit in the prayers made in I.A. (I.B.C) No. 41/KB/2024, and deem it fit to order Liquidation of the Corporate Debtor.

This Bench, therefore, hereby orders as follows: -

a. Prayers as sought for in I.A. (I.B.C) No. 41/KB/2024 filed by RP, is allowed and E.C. Bose & Company Pvt.Ltd., the Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code;

b. Shri Rakesh Dugar, having registration Number IBBI/IPA-001/IP-P01654/2019-2020/12892, (mobile no. 9831103113 and email id- [email protected]) is hereby appointed as Liquidator is hereby appointed as Liquidator as provided under section 34(1) of the Code subject to a valid Authorisation for Assignment (AFA) issued by the Insolvency Professional Agency (IPA) of which he is a professional member. The Liquidator is directed to submit his consent to act as Liquidator within 10 days of receipt of this order. The erstwhile RP shall handover all papers and documents in his possession concerning the Corporate Debtor to the Liquidator appointed in this matter within 10 days.

c. The Liquidator shall initiate liquidation process as envisaged under Chapter-III of the Code and the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

d. Liquidator shall put his endeavour to sale the Corporate debtor as going concern or business of corporate debtor as going concern as resolved in 20th CoC meeting.

e. The Liquidator fee is fixed as per Regulation 4(2)(b) of IBBI (Liquidation Process) Regulations, 2016.

f. The RP informed that agenda for meeting of liquidation cost as per regulation 39B of the CIRP Regulations 2016 was presented in 21^st CoC meeting but no decision was made by CoC. Hence, as per Regulation 2A, the Financial creditor being the financial institutions shall contribute towards liquidation cost over the excess of liquid assets of the Corporate Debtor.

g. Public Notice shall be issued in the newspapers stating that the Corporate Debtor is in Liquidation.

h. All the powers of the Board of Directors, and of key Managerial Persons, shall cease to exist in accordance with section 34(2) of the Code. All these powers shall henceforth vest in the Liquidator.

j. On initiation of the Liquidation process but subject to section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor save and except the liberty to the Liquidator to institute suit or other legal proceeding on behalf of the Corporate Debtor with prior approval of this Adjudicating Authority, as provided in section 33(5) of the Code read with its proviso.

k. In terms of section 33(1)(b)(iii), the Liquidator shall file a copy of this Order with the Registrar of Companies, West Bengal, within whose jurisdiction the Corporate Applicant is registered.

The application bearing I.A (IB)(LIQ) No. 41/KB/2024 shall stand disposed of in accordance with the above directions.

List the main CP (IB) No. 1388/KB/2018 for reporting progress on 28.07.2025.

The Registry is directed to send e-mail copies of the order forthwith to all the parties including the liquidator appointed as above, and their Ld. Counsel for information and for taking necessary steps.

Certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities.