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Judgment
Per: Ajay Kumar Vatsavayi, Member (Judicial)
ORDER
This application has been filed by Mr Amarnath, the Resolution Professional of M/s Karan Processors Pvt. Ld. (corporate debtor) under Section 33 (2) of the Insolvency and Bankruptcy Code, 2016 for passing an order of Liquidation in the matter of M/s Karan Processors Private Limited (Corporate Debtor).
CP (IB) No. 339/Chd/Hry/2019 filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by “Ultratreat Industrial Services” to initiate Corporate Insolvency Resolution Process (in short CIRP) against M/s Karan Processors Private Limited was admitted on 22.01.2020 and Mr. Sameer Rastogi was appointed as IRP. Subsequently, in the 1st meeting of CoC was held on 20.02.2020, it was resolved to change the IRP and Mr. Amarnath was appointed as RP and the same was approved by this Adjudicating Authority vide order Dated 11.03.2020 attached as Annexure-B of application.
It is submitted that when 3rd COC meeting was held on 06.07.2020, the RP proposed to issue “Expression of Interest” and presented Eligibility Criteria and Evaluation Matrix, for the prospective Resolution Applicants so that publication in prescribed “Form-G” could be issued in newspapers as per Section 25(2)(h) of the IBC Code. It is further submitted that after detailed deliberations/discussions by the COC members, it was resolved with 67.63% voting share that there is no possibility of revival of the company as all the machinery is in junk condition and so as to reduce the financial burden on COC, it is better to liquidate the Corporate Debtor (Annexure-C of the petition).
The applicant has filed a compliance affidavit vide Diary No. 00843/1 dated 05.10.2020 in which the photographs showing the condition of the plant and machinery have been attached as Annexure A-2 (Colly).
The Hon’ble NCLAT, in Praveen Kumar Nand Kumar Vs. VSL Securities Pvt. Ltd. in CA No. 1/2020 in CA No. 308/2000, dated 09.06.2020, observed as under:-
“Likewise, the decision of the COC recommending liquidation of the corporate debtor after proper evaluation of the assets and liabilities of corporate debtor with no Resolution Plan forthcoming would be a business decision falling within the domain of commercial wisdom of the COC which is not amenable to judicial review.”
We have carefully considered the submissions made in the application by the Resolution Professional and have also perused the records.
The relevant provisions of Section 33 (2) of the Code are as follows:-
“Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1).”
Prescribed period for filing application - In the present case, the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted on 22.01.2020 and the present application is filed by the Resolution Professional on 19.08.2020. The period of 180 days were completing on 19.07.2020 but as per Notification No. IBBI/2020-21/GN/REG059 dated 20.04.2020, the period of Lockdown is excluded for the purpose of calculating the timelines in CIR Process. Hence, after excluding the lockdown period, the present application is filed within the prescribed period.
Appointment of Liquidator – Section 34 (1) of the Code provides that where the Adjudicating Authority passes an order for liquidation of the corporate debtor under Section 33, the resolution professional appointed for the corporate insolvency resolution process shall, subject to submission of written consent act as the Liquidator for the purpose of liquidation. The COC in its fourth meeting held on 14.07.2020, with 70.21% voting share, resolved to appoint the RP, Mr. Amar Nath, as Liquidator (Annexure D). Mr. Amarnath, Resolution Professional with IBBI Registration No. IBBI/IPA-001/IP-P01639/2019-2020/12530, has filed his consent in Form AA dated 11.11.2020 of Diary No. 00677/2 dated 13.11.2020. The Law Researcher of this Tribunal has checked the credentials of proposed Liquidator and nothing adverse has been found on record. Therefore, Mr. Amarnath is appointed as the Liquidator.
Regulation 39B, 39C and 39D in the CIRP Regulations, 2016 have been inserted by Notification No. IBBI/2019-20/GN/REG/048 dated 25.07.2019.
Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) – The COC has not made compliance of Regulation 39B of the CIRP Regulations, 2016 regarding meeting of liquidation costs. The Liquidator is, therefore, directed to take necessary action under Regulation 2A of the CIRP (Liquidation Process) Regulations, 2016 regarding contributions to liquidation costs.
Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) – The COC has not made any recommendation regarding sale of the corporate debtor as a going concern. Therefore, the Liquidator is directed to refer to Regulation 32A of the CIRP (Liquidation Process) Regulation, 2016 and take necessary action.
Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) – In the 4th meeting of COC, it has been resolved that liquidation fee will be paid to the Liquidator as ₹3,00,000/- on lump sum basis for six months.
Pending applications, if any, and its effect – The RP has stated that there is no Interlocutory Application or Company Application pending in the matter before any Authority/Court and therefore, there is no bearing of any application on the decision of present application. The above said affidavit has been filed vide Diary No. 00677/3 dated 13.11.2020.
In view of the satisfaction of the conditions provided under Section 33(2) of the Code, the corporate debtor Karan Processors Private Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code. Some of the directions are noted as under:-
That as per Section 33(5) of the Code and subject to Section 52 of the Code, no suit or other legal proceedings shall be instituted against the corporate debtor; Provided that a suit or other legal proceedings may be instituted by the liquidator on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority;
That the provisions of sub-section (5) of Section 33 of the Code shall not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator; and
That this order of liquidation under Section 33 of the Code shall be deemed to be a notice of discharge to the officers, employees and workmen of the Corporate Debtor, except when the business of the Corporate Debtor is continued during the liquidation process by the liquidator; and
That all the powers of the Board of Directors, key managerial personnel and the partners of the Corporate Debtor, as the case may be, shall cease to have effect and shall be vested in the liquidator; and
That the personnel of the Corporate Debtor shall extend all assistance and cooperation to the Liquidator as may be required by him in managing the affairs of the Corporate Debtor and provisions of Section 19 of the Code shall apply in relation to voluntary liquidation process as they apply in relation to liquidation process with the substitution of references to the liquidator for references to the Interim Resolution Professional.
That the Liquidator shall publish public announcement in accordance with Regulation 12 of the CIRP (Liquidation Process) Regulations, 2016 and in Form B of Schedule II of these Regulations within five days from receipt of this order calling upon the stake holders to submit their claims as on liquidation commencement date and provide the last date for submission of claim which shall be 30 days from the liquidation commencement date.
That the announcement shall be published in accordance with Regulation 12(3) of the CIRP (Liquidation Process) Regulation, 2016.
That in accordance with Regulation 13 of the CIRP (Liquidation Process) Regulations, 2016, the ‘Liquidator’ shall file his preliminary report within 75 days and to file regular progress reports as per Regulation 15 every fortnightly thereafter.
Thus, IA No. 426/2020 stands disposed of.
Copy of this order be supplied to the counsel for the Liquidator as well as to the Registrar of Companies, Punjab and Chandigarh forthwith. The Registry is also directed to send a copy of this order to the Liquidator at his e-mail address.