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Judgment
IA(LIQ)/3(CHE)/2025 has been filed under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 r/w Rule 11 of the National Company Law Tribunal Rules, 2016 by Mr. T. Ranganathan, Interim Resolution Professional of Hyflux Engineering (India) Private Limited seeking liquidation of the Corporate Debtor. IA(IBC)/458(CHE)/2025 has been filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 r/w Rule 11 of the National Company Law Tribunal Rules, 2016 by Mr. T.K. Sudharakaran, Suspended Director of Hyflux Engineering (India) Private Limited seeking impleadment as a Respondent in IA(IBC)(Liq)/3(CHE)/2025.
Briefly the facts are that the Company Hyflux Engineering India Private Limited, the Corporate Debtor herein was admitted to the CIRP on 18.04.2024 in CP(IB)/3/(CHE)/2023 and the Applicant Mr. T. Ranganathan was appointed as the Interim Resolution Professional (“IRP”). He invited the claims by making publication on 23.04.2024 with last date of submission of claims as 02.05.2024. He also sent mails to the Creditors, Regulatory Authorities, Suspended Board of Directors, Statutory Auditor etc. He opened an account with IDBI Bank on 19.05.2024. He received two claims from the Operational Creditors viz., Hyflux Limited and Hyflux Membrane Manufacturing (S) Pte. Limited, however, the said creditors did not furnish essential details as required for the claims. The Applicant provisionally admitted the claims based on the figures for the period from 01.04.2020 to 18.04.2024 furnished by SBoD. He prepared the List of Creditors and submitted report to the Tribunal.
It is stated that as the provisional claims belonged to the two related parties being the Operational Creditors, and that there was no Financial Creditor, he moved an application IA(IBC)1385(CHE)2024 on which the Tribunal passed an order on 11.06.2024 granting permission to the IRP to constitute CoC at a later date upon receipt of claim and file the updated status after the last date of receipt of claim was over. He filed another report intimating that he did not receive any claim from the Financial Creditors or the Operational Creditors except one claim from the P.F. Department. It was stated that since the claim was received after the CIRP commencement date of 18.04.2024, he did not collate the same. In the meantime, SBoD filed an application IA(IBC)/2100(CHE)/2024 seeking impleadment in IA/1612/2024 giving status of the proceedings which the Tribunal disposed of on 09.12.2024 with the directions to the IRP to constitute the CoC with the Operational Creditors since Regulation 16 is silent on the constitution of CoC with the Operational Creditors.
It is stated the IRP constituted the CoC with two related party Operational Creditors having voting share of 14.52% and 85.48% respectively for a total amount of Rs.19,54,90,065.47. The report in this respect was filed which was taken on record vide an order dated 19.12.2024. He conducted the 1st CoC on 17.12.2024 where CoC recommended to liquidate the Corporate Debtor and authorised the IRP to file an application for the liquidation (Minutes annexed as Annexure-7).
It is stated that the members of CoC are also under liquidation. They are based in Singapore. He placed on record the email communications between the CoC members and the IRP during the period from 19.12.2024 to 21.01.2025 as Annexure-8 as well as the voting sheet as Annexure-9 & 10. He also filed a memo vide S.R. No. 1496 dated 15.04.2025 giving the breakup of the amount lying in the Corporate Debtor’s account, CIRP expenses and approximate expenses to be incurred to carry out the liquidation process as tabulated below:
| S.No | Description | Amount in Rs. |
|---|---|---|
| 1 | Balance amount available in the CD's bank account as 31/03/2025 (A) | 754691 |
| 2 | Balance CIRP Expenses to be paid as on 31/03/2025. (B) | 844031 |
| 3 | Less : IRP Fees included in the above as part of the CIRP expenses.(C) | 650000 |
| 4 | CIRP Expenses other than the IRP Fees ( Rs.650000) to be paid as on 31/03/2025. D = (B-C) | 194031 |
| 5 | IRP is willing to withdraw only the part fees now and balance fees after the realization of the dues from the BHEL / other any receivables. ( E ) | 200000 |
| 6 | Balance available in the CD's Bank account after payment of the CIRP cost as 31/3/2025. E = (A-D-E) | 360660 |
| 7 | Approximate Expenses to be incurred to carry out the Liquidation Process. | 1504860 |
| 8 | Approximate Receivables: By Sale of Scrap Materials Rs. 200000 and Rs.53,89,531 towards BG (10% of the PO Value ) retained by the BHEL (IA/2313/2024 ) | 5589531 |
HYFLUX ENGINEERING INDIA PVT LTD., - STATEMENT AS ON 31-03-2025
| RENT DEPOSIT-ADJUSTED-BALANCE STATEMENT | |
| Total Rent deposit | 450000 |
| Rent paid upto Nov 24 | 296550 |
| 153450 | |
| Rent payable Dec24- March 25 | 100000 |
| Balance deposit as on 31-03-2025 | 53450 |
| (sufficient for 2 months upto May 25) | |
| Bank Balance as on ICD as 18/04/2024 | 1304411 |
| IRP period expenses already paid and ratified by CoC | 149981 |
| Bank Balance as on CoC meeting as on 17/12/2024 | 1154430 |
| CIRP Expenses approved by the COC in the First COC Meeting Held on 17/12/2024 | |
| Total CIRP Expenses approved by CoC other than Rent. | 1113660 |
| CIRP Expenses paid as on 31/03/2025 | 366789 |
| Balance CIRP expenses to be paid as on 31/03/2025 (A) | 746871 |
| Expenses incurred Post First COC Meeting held on 17/12/2024 | |
| LIQUIDATION APPLICATION FEES | 25600 |
| Filing of DIR 12 | 6720 |
| Electricity charges for Jan 25 and Mar 25 | 2040 |
| EPF ADMN CHARGES | 300 |
| CONSULTANT FEES FOR GST NOV 24 TO MARCH 25 | 12500 |
| CONSOLIDATED FEES OF IRP UPTO ORDER OF LIQUIDATION | 50000 |
| Sub Total (B) | 97160 |
| Total CIRP Expenses to be paid (A+B) | 844031 |
| Less : IRP part fees of Rs.2,00,000 /- approved and to be paid | 200000 |
| Other CIRP Expenses to be paid | 194031 |
| Sub Total - Payment to be released | 394031 |
| BALANCE IN BANK ACCOUNT IDBI ACCOUNT AS ON 31/03/2025 | 754691 |
| Balance amount left for liquidation as on 31/03/2025 | 360660 |
| Note : The total IRP Fee approved by the COC is Rs.6,50,000 /- and he is willing to avail a part payment of Rs.2,00,000 now, balance to be claimed out of the realisation from the liquidation estate. |
HYFLUX ENGINEERING INDIA PRIVATE LTD., (UNDER cirp) - ESTIMATED LIQUIDATION COST
| Sl.No. | Estimated Liquidation expenses for 6 months completion of Liquidation as suggested by CoC | Amount in Rs. | Remarks |
|---|---|---|---|
| 1 | Cost of paper publication for e-auction - Commencement of liquidation | 25,000.00 | |
| 2 | Local conveyance of Liquidator. | 10,000.00 | |
| 3 | Liquidator remuneration | 6,00,000.00 | |
| 4 | professional fees for filing preliminary report asset memorandum | 25,000.00 | |
| 5 | legal fees for filing PUFE application and it follow up | 50,000.00 | |
| 6 | Legal fees for filing 3 progress report one each quarter | 45,000.00 | |
| 7 | paper publication for e-auction of assets | 25,000.00 | |
| 8 | Professional fees payable to Chartered Accountants for certification of one Receipt and payment and the final report receipt and payment | 40,000.00 | |
| 9 | Legal fees for filing dissolution application & MCA filing thereafter | 50,000.00 | |
| 10 | NRRA asset e auction paper publication | 25,000.00 | |
| 11 | e-auction portal fees for NRRA assets | 4,500.00 | |
| 12 | Expenses on E-auction website payable to e-procurement technologies | 4,500.00 | |
| 13 | Zoom expenses @ Rs.1624 per month | 11,368.00 | |
| 14 | printing & stationery | 5,000.00 | |
| 15 | postage | 2,000.00 | |
| 16 | Xerox | 7,500.00 | |
| 17 | Professional fees for GST notices , if any | 50,000.00 | |
| 18 | Filing of IT Returns | 15,000.00 | |
| 19 | Filing of annual returns | 10,000.00 | |
| 20 | storage of records - for statutory period after liquidation - warehouse cost - tentative | 4,00,000.00 | |
| 20 | contingencies | 1,00,000.00 | |
| 15,04,868.00 |
The Suspended Director / Applicant in his Application IA(IBC)/458/2025 has stated that the IRP did not make any effort to issue Form-G inviting the Expression of Interest ("EOI"); he had brought this fact to the notice of the Tribunal as to the non-constitution of CoC and filed a complaint before the IBBI on which, show cause notice was given to the IRP; the Tribunal also dismissed an application IA/2055/2024 vide order dated 24.10.2024 observing that since there is no constitution of CoC and nothing has happened during CIRP and the application for liquidation is pending consideration, the application has no merits. It is stated that the IRP also filed an application under Section 19(2) of IBC which was disposed of on 26.11.2024. It was, thereafter, the IRP constituted the CoC on the orders of the Tribunal dated 09.12.2024 after about 8 months of the commencement of CIRP. It is stated that the delay caused in the constitution of CoC has reduced the prospects of revival and pushed the Corporate Debtor into liquidation. It is stated that the Corporate Debtor has a longstanding brand value and reputation in the market for Wastewater Treatment Plants, Desalination Plants and supply of Water Purification Equipment and could have received interest from potential Resolution Applicants. It is alleged that the Applicant is a non-promoter Professional Director of the Corporate Debtor. The IRP has not shared any information with him and as such, he is a necessary and proper party to be impleaded in the present application.
We have heard Ld. Counsel for the IRP, Ld. Counsel for the Applicant/Promoter-Director and perused the record.
The petition CP/IB/3(CHE)/2023 was filed by the Corporate Debtor, Hyflux Engineering India Private Limited under Section 10 of IBC, 2016. There were two promoters of the company viz., Spring Environment Ltd. having 99.98% shareholding and Hyflux International Ltd. having 0.002% shareholding. Both are situated at British Virgin Islands. Some of the creditors of the company / Corporate Debtor have gone into liquidation. It is reported that there is no Secured Financial Creditor of the Corporate Debtor and there are nine Operational Creditors, some of them are in liquidation and the Operational Creditors are the related parties of the Corporate Debtor. During the proceedings on 09.02.2024, it was observed from the statement of affairs dated 10.11.2022 that there are receivables from the sundry debtor “BHEL” amounting to Rs. 1,17,49,178.94 and there are loans, advances and deposits, recoverable amounting to Rs.9,30,67,621.90. On 20.02.2024, it was reported that although there are receivables against the companies Hyflux Lifestyle Products (India) Pvt. Ltd. and M/s. Hyflux Engineering Pvt. Ltd., but these companies are dormant and there are no balances in their accounts.
This Tribunal vide an order dated 18.04.2024 after considering the submissions and the records, admitted the petition under Section 10 of IBC, 2016 and appointed the Applicant Mr. G. Ramachandran as the IRP. He filed the Status Report, List of Creditors and Report regarding non-constitution of the CoC. He also sought permission to constitute CoC at a later stage upon receipt of claims stating that the parties which have submitted the claims are the related parties and for this reason, the CoC was not constituted. On 13.08.2024, he informed that the Corporate Debtor has a bank balance of Rs.11,54,430.90 and he has received a claim from EPFO towards penal damages and interest which he did not consider.
On 26.11.2024, it was informed by the Suspended Director that the holding company of the Respondent is based in Singapore and is in liquidation.
This Tribunal vide an order dated 09.12.2024 after hearing the counsels for the parties, directed the IRP to constitute the CoC with the Operational Creditors giving reference to Regulation 16 of CIRP Regulations observing that revival of the Corporate Debtor is the objective of the IBC for value maximization. CoC was accordingly constituted. 1stCoC meeting was held on 17.12.2024 where the representatives of the Operational Creditors were present. The Applicant/Suspended Director Shri. T.K. Sudhakaran was also present. The IRP had informed the CoC about the two claims, received from the related party Operational Creditors and one claim from the P.F. Department as well as the various activities undertaken by him including taking over of custody of assets from SBoD, appointment of Valuer and opening of CIRP Bank account with IDBI Bank. He also appraised the CoC of the developments in respect of the dues outstanding to the Corporate Debtor from BHEL. The IRP also informed the CoC that during the CIRP, he prepared Information Memorandum and Form-G but due to non-constitution of CoC, he could not proceed with the same.
The CoC after deliberations, approved and ratified the expenses incurred by the IRP including the IRP fee to be paid from the Corporate Debtor's fund. It also approved the IRP fee and other expenses. It also approved the appointment of the Valuer and Forensic Auditor to conduct the forensic audit including professionals as well as the rent payable to the Landlord Mr. P.V. Prasad.
The CoC meeting also had agenda as Item-B 19 whether to continue CIRP or file an application for liquidation considering the assets available and prospects for resolution. The CoC was informed that the Corporate Debtor is not a going concern and has stopped its operation much before CIRP commencement. There are no employees, no patent, no trademark or brand as per the Balance Sheet of the Corporate Debtor which can be made use of by the Resolution Applicant. There are only few old Computer Laptops, furniture etc. and the company has accumulated carry forward loss of about Rs.20,00,00,000/- It was expressed that prospects of getting resolution are very low. The Corporate Debtor does not have sufficient funds except the receivables from BHEL which are also uncertain.
The CoC after deliberations, decided to go for the liquidation without any further CIR process stating that CoC Shareholders and Directors would not be in a position to contribute towards the CIRP cost or the liquidation cost which has to be funded from the current cash and realisation of assets of the Corporate Debtor. It was resolved that in view of the lack of tangible assets, lack of human resources and lack of intangible assets like brand, patent, trademark etc. and that the company does not have sufficient funds to carry forward the CIR process and that the CoC members are not in a position to contribute to the cost of CIR process as they themselves are undergoing liquidation and that the receivables from BHEL are uncertain, the Corporate Debtor be liquidated. It was also resolved to file an application for liquidation of the Corporate Debtor. The issue regarding appointment of Liquidator was also discussed. However, the CoC did not propose any name of the Liquidator nor fixed his fees. It was however resolved that the Liquidator may first explore sale of the Corporate Debtor as a going concern under Clause (e) of Regulation 32 of IBBI Liquidation Regulations. The CoC also took a decision not to seek compromise or arrangement under Regulation 2B.
On a perusal, we find that the meeting was attended by both the Operational Creditors i.e. members of the CoC as well as the Suspended Director Mr. T.K. Sudhakaran, the Applicant in IA/458/2025. In that meeting, detailed discussions about the assets and the expenses were held. The CoC was apprised that there is no patent, no trademark and no brand as per the Balance Sheet of the Corporate Debtor which can be made use of by the Resolution Applicant. The company has stopped its operation and there are no employees. The prospects of getting resolutions are very low. The Corporate Debtor does not have sufficient funds except receivables from BHEL which are also uncertain. The CoC, the shareholders and the Directors would not be in a position to contribute towards the CIRP and the liquidation costs.
From the aforesaid minutes and resolutions, it is clear that every aspect about the resolution of the Corporate Debtor was discussed before taking a decision to liquidate the Corporate Debtor. We do not find any merits in the contention of the Suspended Director that the Corporate Debtor has a brand value or that the IRP delayed the process of constitution of CoC to stifle the purpose of resolution of the Corporate Debtor by its revival. He filed the reports to the Tribunal time to time, and it was only after the order of the Tribunal, he constituted the CoC and placed the matter before the CoC which in its 1st meeting, took a decision to go for the liquidation. This decision has been taken by the CoC in its commercial wisdom which cannot be questioned. This decision of the CoC was never questioned / objected by the Applicant / Suspended Director during the meeting where he was present.
We are of the view that this application has been filed as an afterthought to delay the process. Further, the CoC while taking the decision for liquidation, has proposed to sell the Corporate Debtor as a going concern. If the Corporate Debtor has any trademark or brand value, that can also be considered during the sale of the Corporate Debtor as a going concern. The said resolution has been approved by 100% voting.
In the light of above discussions, we find no reason to implead the Suspended Director Mr. T.K. Sudhakaran as Respondent in the application filed by the Liquidator vide IA(IBC)/3(CHE)2025 seeking liquidation of the Corporate Debtor. We therefore dismiss the application IA(IBC)/458(CHE)/2025 with no order as to cost.
As resolved by the CoC that there are no prospects of revival of the Corporate Debtor during CIRP, we allow the application filed by the IRP for liquidation of the Corporate Debtor.
In the instant case, the CoC has not proposed anyone’s name as the Liquidator nor has fixed any fees for the Liquidator. However, it has expressed its disagreement with the fixing of monthly fees. The minutes finds mention that the CoC in consultation with the IRP, has made the best tentative cost estimate of an amount of liquidation cost of Rs.25,00,000/- approximately which may be revisited by the SCC after appointment of Liquidator. It was resolved that the liquidation cost be met from the amounts to be received from BHEL to the tune of Rs.53.89 Lakhs. The CoC has also recommended that the Liquidator may first explore sale of the Corporate Debtor as the going concern under Regulation 32(e) of IBBI Liquidation Regulations, 2016 or sale of the business of the Corporate Debtor as going concern under Regulation 32(f). The CoC also passed a resolution taking a decision not to seek compromise or arrangement under Regulation 2(B)(i) of IBBI Regulations.
We hereby appoint Mr. G.S. Sudhir, with Reg. No. IBBI/IPA-001/IP-P-02744/2022-2023/14183 (AFA valid till 31.12.2025) as the Liquidator of the Corporate Debtor, to carry out the liquidation process subject to the following terms of the 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 her.
The Liquidator shall issue the public announcement in leading newspapers having wide circulation, one in English “Business Standard” and another in vernacular “Dina Thanthi” 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 suitable application before this Adjudicating Authority.
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 first explore sale of the Corporate Debtor as the going concern under Regulation 32(e) of IBBI Liquidation Regulations, 2016 or sale of the business of the Corporate Debtor as going concern under Regulation 32(f) and not to seek compromise or arrangement under Regulation 2(B)(i) of IBBI Regulations.
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 file its response for disposal of any pending Company Applications during the process of liquidation.
The Liquidator shall submit a 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 report as is required to be filed under the relevant Regulations, in addition, shall also be duly filed by him with this Adjudicating Authority.
The Registry is directed to communicate this order to the Registrar of Companies, concerned and to the Insolvency and Bankruptcy Board of India.
The order of Moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cease to have its effect and that a fresh Moratorium under section 33(5) of the Insolvency and Bankruptcy Code shall commence.
In the instant case, the CoC has not fixed the monthly fee of the Liquidator. We fix a sum of Rs.2,00,000/- (Rupees Two Lakhs only) to be paid to the Liquidator to meet the initial expenses to perform the functions assigned to him in accordance with the Regulations.
Copy of this order be sent to the Operational 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.
In terms of the above, both the IA(LIQ)/3(CHE)/2025 & IA(IBC)/458(CHE)/2025 are disposed of.