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2019 (9) TMI 1435 - Tri - Insolvency and BankruptcyInitiation of Liquidation Process - Section 33(1)(a) of Insolvency and Bankruptcy Code, 2016 (IBC) read with Section 60(5) of the said Act - HELD THAT - This Petition has been initiated by the CD itself under Section 10 of IBC, 2016 and IRP proposal made by CD itself, However, it is also brought to the notice of this Tribunal by way of the minutes of the 4th CoC meeting held on 25.09.2018, that the IRP proposed by the CD and appointed had not acted as required of him under IBC and CIRP Regulations as framed by Insolvency and Bankruptcy Board of India (IBBI) which had resulted in an impasse being created even after the expiry of more than 130 days as in the meanwhile even EOI was not called for. In the circumstances, this Tribunal was compelled to pass an order dated 24.10.2018 in relation to the conduct of the said IRP and the said order to be communicated to IBBI for taking necessary action against him. The CD and its management prima facie from the averments in these Applications seem to have carefully and in a premeditated manner seem to have arranged the affairs and assets of the CD in such a manner so as to secrete away the assets from the grasp and benefit of the general body of creditors which this Tribunal cannot permit and the provisions of IBC being misused more particularly when the Petition has been filed under Section 10 of IBC by the CD itself emphasized at the cost of repetition. However, in this connection we are not coming to any conclusion unless a detailed enquiry is con ducted in relation to these Applications. At the same time, it will not detract this Tribunal from initiating the process of liquidation of the CD, as these Applications can survive even after the order of liquidation, as may be passed by this Tribunal and as envisaged under the provisions of IBC. In the circumstances, all the above pending Applications shall survive this order of liquidation and continue to be proceeded with by this Tribunal and the liquidator named herein will be required to diligently proceed with these Applications in order to attain finality and conclusion. In terms of section 178 of the Income Tax Act, 1961, the Liquidator shall give necessary intimation to the Income Tax Department. In relation to other fiscal and regulatory authorities which govern the Corporate Debtor, the Liquidator shall also duly intimate about the order of liquidation - order of Moratorium passed under Section 14 of the IBC shall cease to have its effect and a fresh Moratorium under section 33(5) of the IBC shall commence. Application disposed off.
Issues Involved:
1. Initiation of the liquidation process under Section 33(1)(a) of IBC 2. Expiry of the Corporate Insolvency Resolution Process (CIRP) 3. Rejection of the resolution plan by the Committee of Creditors (CoC) 4. Appointment and actions of the Resolution Professional (RP) 5. Financial affairs and transactions of the Corporate Debtor (CD) 6. Appointment of the Liquidator and subsequent actions Issue-wise Detailed Analysis: 1. Initiation of the Liquidation Process: The application for initiating the liquidation process of the Corporate Debtor (CD) was filed under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 (IBC), due to the expiry of the Corporate Insolvency Resolution Process (CIRP) on 16.2.2019 and the rejection of the resolution plan by the Committee of Creditors (CoC) on 12.02.2019. 2. Expiry of the CIRP: The CIRP commenced on 2.5.2018 based on a petition by the CD itself under Section 10 of IBC. The process included the appointment of Mr. Arun Chadha as the Interim Resolution Professional (IRP) and subsequent steps such as publication for claims, constitution of CoC, and meetings. The CIRP period was extended up to 16.2.2019 as per Section 12 of IBC, but no successful resolution plan was finalized within this period. 3. Rejection of the Resolution Plan by the CoC: The CoC rejected the sole resolution plan presented by Designers Point (India) Pvt. Ltd. (DPIPL) on 12.2.2019 with a voting share of 58.18% against the plan. The reasons for rejection included: - The resolution plan was below the liquidation value of the CD. - The amount offered was lower than that offered by another resolution applicant. - The plan scored lower marks in quantitative and qualitative aspects as per the evaluation matrix approved by the CoC. 4. Appointment and Actions of the Resolution Professional (RP): Mr. S.K. Mathur was appointed as the RP after the initial IRP, Mr. Arun Chadha, was not confirmed by the CoC. Subsequent actions by the RP included appointing valuers, publishing Expression of Interest (EoI), and extending deadlines to maximize resolution applicants. The RP also filed various applications regarding the surrender of vehicles, preferential transactions, fraudulent trading, and fraudulent sale of property. 5. Financial Affairs and Transactions of the CD: The financial affairs of the CD revealed claims amounting to ?38,59,98,147.08 against available assets valued at ?10.71 crore. The RP highlighted transactions by the CD's management that appeared to be detrimental and prejudicial to the interests of creditors, including allegations of fraudulent sale of property. The Tribunal noted that these transactions seemed to have been arranged to secrete away assets from creditors. 6. Appointment of the Liquidator and Subsequent Actions: The Tribunal appointed Mr. S.K. Mathur as the Liquidator, as proposed by the CoC, and in view of his consent to act as such. The Liquidator is directed to: - Issue a public announcement of the CD's liquidation. - Investigate the financial affairs of the CD, particularly in relation to preferential and undervalued transactions. - Communicate the order to the Registrar of Companies and the Insolvency and Bankruptcy Board of India. - Intimate the Income Tax Department and other regulatory authorities about the liquidation order. - Proceed with the liquidation process as per Chapter III of Part II of IBC. - Submit a preliminary report to the Tribunal within seventy-five days from the liquidation commencement date. The Tribunal ordered the liquidation of the CD, taking into account the rejection of the resolution plan by the CoC based on commercial decisions, and in line with the provisions of IBC and the Supreme Court's decision in K. Sashidhar vs. Indian Overseas Bank & Ors.
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