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2020 (1) TMI 1403 - Tri - Insolvency and BankruptcyLiquidation of Corporate Debtor - it was claimed that CoC was not conversant with the procedure to be followed under the provisions of the IBC and the regulations made thereunder - HELD THAT - The Counsel for the CoC failed to show any of the contents of the application i.e. C.A-962 which may point out anything about the lack of the knowledge on the part of the CoC. It is worthwhile to mention that the Hon'ble Supreme Court in K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS 2019 (2) TMI 1043 - SUPREME COURT has observed that CoC is mainly responsible for taking commercial decisions. Therefore, it cannot be argued that the CoC was ignorant about procedure and law. Otherwise also, the ignorance of law is no excuse, the arguments submitted by the counsel for the CoC seem to befar fetched and afterthought as the COC has taken decision to liquidate the Corporate Debtor on 19-6-2019 with 100% voting right. This Authority hereby orders for liquidation of the Corporate Debtor viz., M/s. Newgen Specialty Plastics Limited which shall be conducted in the manner as laid down in Chapter III of part II of the l B Code, 2016 - application allowed.
Issues involved:
1. Misrepresentation by Committee of Creditors (CoC) in passing resolution for liquidation. 2. Lack of knowledge about procedure and law by CoC. 3. Liquidation order for Corporate Debtor (CD) M/s. Newgen Specialty Plastics Ltd. Issue 1: Misrepresentation by Committee of Creditors (CoC) in passing resolution for liquidation The judgment addresses the misrepresentation by the CoC in passing a resolution for the liquidation of the Corporate Debtor. The CoC claimed ignorance about the procedure to be followed under the Insolvency and Bankruptcy Code (IBC) and the regulations. However, the Resolution Professional clarified that the agenda presented to the CoC was clear, and the decision for liquidation was made after the maximum time period for Corporate Insolvency Resolution Process (CIRP) was utilized. The CoC's argument of ignorance was dismissed by referring to a Supreme Court observation that the CoC is primarily responsible for making commercial decisions. The judgment concluded that the CoC's decision to liquidate the Corporate Debtor with 100% voting share was valid, and the application related to this issue was dismissed. Issue 2: Lack of knowledge about procedure and law by Committee of Creditors (CoC) The judgment highlights the CoC's claim of not being conversant with the procedure under the IBC and its regulations. The CoC's failure to provide evidence supporting their lack of knowledge was noted. Referring to the Supreme Court's observation that the CoC is responsible for commercial decisions, it was emphasized that ignorance of the law is not an excuse. The CoC's argument was considered far-fetched, especially since they had decided to liquidate the Corporate Debtor with full voting rights. Consequently, the application related to this issue was dismissed, reinforcing the CoC's accountability for understanding and adhering to legal procedures. Issue 3: Liquidation order for Corporate Debtor (CD) M/s. Newgen Specialty Plastics Ltd. The judgment details the process leading to the liquidation order for the Corporate Debtor, M/s. Newgen Specialty Plastics Ltd. It outlines the initiation of the Corporate Insolvency Resolution Process (CIRP), appointment of the Resolution Professional, and subsequent meetings of the CoC. Despite extensions granted for the submission of resolution plans, no viable plan was received within the stipulated time frame. As a result, the CoC unanimously passed a resolution for liquidation through e-voting with 100% voting rights. The judgment authorizes the liquidation of the Corporate Debtor, appoints a Company Liquidator, and outlines the cessation of powers of the Board of Directors and other key personnel. Additionally, it specifies the procedures and responsibilities to be followed during the liquidation process, including the communication of the order to relevant authorities for compliance. This detailed analysis of the judgment provides insights into the issues of misrepresentation by the CoC, lack of knowledge about legal procedures, and the subsequent liquidation order for the Corporate Debtor, M/s. Newgen Specialty Plastics Ltd.
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