Yes Bank Ltd vs Mothers Pride Education Personna Pvt. Ltd.

PER: SH. MANNI SANKARIAH SHANMUGA SUNDARAM , MEMBER (J)

The interlocutory application i.e. I.A.(IBC)/3916/2023 is being preferred by M/s. AAA Insolvency Professionals, LLP through its authorized signatory Mr. Ankit Goel, Resolution Professional (‘applicant’) of M/s. Mothers Pride Education Personna Private Limited (‘Corporate Debtor’) under Section 12(2) of the Insolvency and Bankruptcy Code, 2016 (‘Code’) seeking the following prayer(s):-

Briefly stated facts of the present case as mentioned in the instant application, which are just and necessary for adjudication, are that this Adjudicating Authority vide order dated 04.01.2023 had initiated Corporate Insolvency Resolution Process against M/s. Mothers Pride Education Personna Private Limited (‘Corporate Debtor’) on a Section 7 application filed by M/s.Yes Bank and Mr. Ganga Ram Agarwal was appointed as Interim Resolution Professional. The Committee of Creditors (‘CoC’) in its first CoC Meeting dated 02.02.2023 had replaced the Interim Resolution Professional and appointed AAA, Insolvency Professionals (IPE) having Registration No. IBBI/IPE-002/IPA-1/2022-23/50001, through CA, Mr. Anil Goel, designated partner was appointed as the Resolution Professional of the Corporate Debtor.

It was further submitted that the IRP had made several request to the Suspended Directors of the Corporate Debtor to submit the required information which are required to prepare the Information Memorandum and carry out Valuation of the Corporate Debtor. Since, no response was received from the Suspended Directors, the IRP had preferred an Interlocutory Application i.e., I.A. No./1359/2023 under Section 19(2) of the Code, 2016 before this Adjudicating Authority on 24.02.2023 seeking cooperation from the Suspended Directors and Auditors of the Corporate Debtor. Moreover, it was submitted that as on the date of filing the present application, no information has been received by the applicant from the Corporate Debtor.

It was submitted that the Second CoC Meeting held on 06.03.2023 and Third CoC Meeting held on 01.04.2023 and the Corporate Debtor was attended by authorized signatory of the Suspended Directors and wherein the authorized signatory of the Suspended Directors had promised to provide the information required, however, no information were received from the suspended directors till the date, despite the emails dated 17.03.2023, 18.03.2023,21.03.2023,24.03.2023 and 29.03.2023 calling upon the representatives of the Suspended Directors to provide the requisite information. Further, Ms. Shruti, authorised representative of the Corporate Debtor had assured that the required documents/information will be provided to the Applicant by 17.07.2023.

It was submitted that the Form-G for inviting Expression of Interest was published on 19.03.2023 and EoI was received from one M/s. Hynite Farms Private Limited. Further, it was submitted that the Applicant has conducted meeting with the entities and person who are desirous to submit their EoI, however, the interested Prospective Resolution Applicants are hesitant to submit their EoI’s due to non-availability of the information.

The CoC in its 4^th CoC Meeting held on 09.05.2023, after deliberation and in view of non-availability of the relevant data at the time of issue of First EoI dated 19.03.2023 and with a view to maximize the value had with 100% voting in favour had passed the resolution for cancellation of Form G dated 19.05.2023 and for re-publication of Form G. The CIRP Period of the Corporate Debtor comes to an end on 03.07.2023.

The Applicant submitted that the CoC in its 5^th CoC Meeting dated 27.06.2023 had passed the (i) Resolution seeking exclusion of time from 24.02.2023 to 01.07.2023 and (ii) extension of CIRP Period by 90 days beyond 180 days if exclusion is not granted. The said resolutions were approved by Committee of Creditors with 97.30% vote in favour. The relevant extract of both the Resolution(s) are extracted below:-

We have heard Ld. Counsel for the Applicant and perused the averments made in the application. The relevant documents annexed with the applications have been examined in detail.

Coming to the factual matrix of the present case, the CIRP against the Corporate Debtor was initiated on 04.01.2023 by this Adjudicating Authority in C.P.(IB) No. 638/2021, The Applicant had filed one Interlocutory Application i.e., I.A./1359/2023 under Section 19(2) of the Code, 2016 against the Suspended Board of Directors and Statutory Auditor of the Corporate Debtor seeking cooperation in the Corporate Insolvency Resolution Process of the Corporate Debtor. The said Interlocutory Application i.e., I.A./1359/2023 is pending before this Adjudicating Authority for adjudication and the Suspended Directors had filed their reply.

The Applicant had not placed on record any document, correspondence to show his endeavours to retrieve the information with regard to the Corporate Debtor as available in the Public Domain. It is pertinent to note that every effort should be made by the Resolution Professional to expedite the CIRP of the Corporate Debtor and endeavours to gather the whereabouts of the Corporate Debtor as available in the Public Domain instead of waiting for the Suspended Board of Director’s cooperation to complete the CIRP. The Resolution Professional, CoC, Suspended Directors and other stakeholders should make every possible effort to complete the CIRP of the Corporate Debtor in a time bound manner for maximization of value of Corporate debtors.

From the record, it is observed that the Audited Financial Statements of the Corporate Debtor till the Financial Year 2018 – 2019 are filed with the RoC and available on the MCA Portal. Further, the details of the charges created against the assets of the Corporate Debtor are also available on the MCA portal. The details of the Trademark owned by the Corporate Debtor may be retrieved from the Trademark Registry.

The CIRP of the Corporate Debtor cannot be allowed to be hampered only on the mere ground of non-cooperation by the Suspended Director. This Adjudicating Authority is not inclined to allow the blanket exclusion for the period of 127 days from 24.02.2023 to 01.07.2023 only on account of Non-Cooperation from the Suspended Directors of the Corporate Director. Accordingly, prayer (b) of the present application is rejected.

However, the Suspended Directors and Statutory Auditor of the Corporate Debtor are directed to cooperate with the Resolution Professional and provide all the required documents and clarifications with respect to the Corporate Debtor.

As regard to the prayer (c) of the present application, to extend the period of CIRP by 90 days beyond 180 days from 03.07.2023, it will be relevant to refer Section 12 of the Code, 2016. The same is reproduced below:-

In the present case, the CoC of the Corporate Debtor in its 5^th CoC Meeting dated 27.06.2023 had with 97.30% vote in favour had resolved to extend the CIRP period by 90 days beyond 180 days from 03.07.2023. The CIRP is at nascent stage and the Applicant has to take forward the CIRP of the Corporate Debtor, duly complied with the procedure as prescribed under the Code for the purpose of Resolution of the Corporate Debtor. Accordingly, this Adjudicating Authority hereby allows the extension of 90 days beyond 180 days from 03.07.2023 in the Corporate Insolvency Resolution Process of the Corporate Debtor.

We also note that the present application (i.e.., I.A.(IBC)/3916/2023) seeking extension and exclusion was filed on 07.07.2023. For an effective conclusion of the resolution process, this Adjudicating Authority further allows the exclusion of the period from the date of filing of the present application till the date of pronouncement of the present order from the Corporate Insolvency Resolution Process period. The resolution professional is directed to take all steps to complete the resolution process within the further period allowed to him in the present order

After going through the record and giving consideration to the submissions made, this Adjudicating Authority orders as follows:-

For the sake of clarity, the tabular presentation of the timeline of Corporate Insolvency Resolution Process after considering the exclusion and extension granted by this Adjudicating Authority in the preceding paragraph of this order is represented herein below:-

In terms of the above direction, I.A./3916/2023 stands disposed.