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2023 Supreme(Online)(NCLT) 2767
NATIONAL COMPANY LAW TRIBUNAL
Shammi Khan, Judicial Member, Sameer Kakar, Technical Member
Jigar Bhatt – Appellant
Versus
Vivekanand Dhaneshwar Jha – Respondent
IA/105(AHM)2022 in CP(IB) 173 of 2019|IA/25(AHM)2023 in IA/105(AHM)2022 in IA/10(AHM)2022 in IA/387(AHM)2021 in CP(IB) 173 of 2019|IA/94(AHM)2023 in IA/25(AHM)2023 in CP(IB) 173 of 2019
For the Appellants/Petitioners: Arjun Sheth, Rhea Sevak
For the Respondents: Dhruvkumar Chauhan
The decision of the Committee of Creditors to liquidate a Corporate Debtor, taken with the requisite majority under the Insolvency and Bankruptcy Code, is a commercial determination and is non-justiciable by the Adjudicating Authority, provided statutory requirements regarding the CIRP period and lack of a resolution plan are met.
Headnote:The applicant filed an application under S. 33 and S. 34 of the Insolvency and Bankruptcy Code, 2016 to initiate liquidation of the Corporate Debtor, as no resolution plan was received within the stipulated period. The suspended management filed a counter-application under S. 60(5) IBC alleging fraud and malicious proceedings by the bank and the Resolution Professional, seeking to set aside corporate insolvency resolution process (CIRP). The Adjudicating Authority found that the admission of the corporate debtor to insolvency attained finality after being upheld by the Supreme Court and issues regarding the conduct of the Resolution Professional are within the jurisdiction of the Insolvency and Bankruptcy Board of India. The main issue is whether the corporate debtor should proceed to liquidation and whether the allegations against the Resolution Professional and the financial creditor justify setting aside the CIRP. The court held that the Committee of Creditors passed the resolution for liquidation with a 100% majority, which is a commercial decision that is non-justiciable under the ratio of K. Sashidhar v. Indian Overseas Bank. Furthermore, since no resolution plan was received despite multiple extensions, the statutory requirements for liquidation are satisfied. The application for liquidation (IA/105(AHM)2022) is allowed and the application (IA/25(AHM)2023) is dismissed.
| Table of Content |
|---|
| 1. process of seeking liquidation due to failure in receiving a resolution plan. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 2. dismissal of allegations against the resolution professional and bank by the suspended management. (Para 13 , 14 , 15 , 16 , 17 , 18 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36) |
| 3. approval of liquidation based on the commercial decision of the committee of creditors. (Para 37 , 38 , 39 , 40) |
| 4. disposal of ancillary applications rendered infructuous by the main order. (Para 41 , 42) |
COMMON ORDER
(Per: Bench)
IA/105(AHM)2022
1. The IA/105(AHM)2022 is an application filed by the Resolution Professional (RP) under Sections 33 & 34 r.w. Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) seeking the following prayers:
“A. Pass an order directing the initiation of Liquidation of the Corporate Debtor in accordance with Chapter III of Part II of the IBC, 2016;
B. Appoint Applicant i.e., Mr. Jigar Bhatt, IBBI Registration No. IBBI/IPA-001/IP-P-01917/2019-2020/13005, as the liquidator of the Corporate Debtor.
C. Pass ad-interim and interim reliefs in terms of Clause A and B.
D. Pass such other order/directions as this Hon’ble Bench may deem fit and proper in the facts and circumstances of the case.”.
2. The Applicant herein is the Resolution Professional for M/s. Mithilanchal Industries Private Limited (Corporate Debtor). It is stated that the Corporate Debtor was admitted into the Corporate Insolvency Resolution Process (“CIRP”) vide order dated 15.04.2021 and 20.04.2021 and the Applicant herein was appointed as Interim Resolution Professional (“IRP”).
3. Post admission order, the IRP issued Form-A which was published on 23.04.2021 in ‘Economic Times’ and ‘Divya Bhaskar’ and on the IBBI website. Post receipt of the documents, the Committee of Creditors (“CoC”) was formed by the IRP and the first meeting was held on 15.05.2021. The CoC in its first meeting appointed the IRP as the Resolution Professional (“RP”). On 25.05.2021, the RP filed an application under Section 19(2) of the IBC, 2016 before this Tribunal seeking directions on the Suspended Management to extend cooperation.
4. Form-G was published on 29.06.2021 wherein the last date of submission of the Resolution Plan was 02.09.2021.
5. The 3rd meeting of the CoC was held on 28.07.2021 wherein the RP apprised the CoC regarding non-cooperation from the Suspended Management. The Applicant has apprised the CoC that the Suspended Management has not yet handed over the custody of assets or any details relating to the Corporate Debtor.
6. The RP further apprised the CoC that despite the order from this Tribunal dated 27.07.2021, the Suspended Management had not handed over the custody of the assets and documents within seven days from the order despite continuous follow-up.
7. Form-G was again published on 31.07.2021 with the last date for submission of the Resolution Plan as 29.09.2021. The 4th meeting of the CoC was held on 17.09.2021 whereat the RP apprised the CoC regarding the developments of the CIRP and the continuous non-cooperation from the Suspended Management.
8. Meanwhile, the RP has filed an IA bearing IA/707(AHM)2021 seeking extension of CIRP which was ordered on 27.10.2021 and thus CIRP period was extended till 13.10.2021.
9. It is submitted that the 5th meeting of the CoC was held on 06.01.2022 wherein the RP apprised the CoC that no Resolution Plan was received in the CIR of the Corporate Debtor. The CoC considered the various options and passed various resolutions. The relevant resolution and voting details are placed at page no. 114 of the application and the abstract of the same is reproduced below:-
“..2. To vote upon the Liquidation of the Corporate Debtor Mithilanchal Industries Private Limited under section 33(2) of The Insolvency and Bankruptcy Code, 2016 read with Regulation 39C of The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and
