2020 (2) TMI 1504 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - time limitation - HELD THAT - The date of default as well as question of extended period of limitation upon production of balance-sheet were all considered at length by this Bench in deciding the points raised upon the submission on both the sides. It appears that, it is not committed any error apparent on the face of records or mistake in applying the law of the land as on the date of passing of the order and therefore, the application filed at the fag-end of the expiry of CIRP period of 180 days praying for recalling the order for re-agitating the already entertained issues could not be allowed. This Adjudicating Authority has no power to recall or re- appreciate the evidence already led. Even if this Adjudicating Authority has committed any judicial mistake, it was right of the applicant to approach the higher authorities by preferring an appeal, the attempt of the corporate debtor is to abuse the process of law without exhausting its remedy. RP submits that since the period has elapsed, there is no chance of getting prospective resolution applicant who turned up or it is fair and just to pass an order of liquidation. The CoC consists of only one financial creditor, who is the applicant-State Bank of India. It opted not to get an order of extension and it further submits that the CoC has decided to replace the existing RP by Mr. Sanjay Kumar Agrawal, whose written consent has been given for continuing as the liquidator and that the RP Mr. Balasubramanium Govindarajan showed his unwillingness to continue due to health reasons. Accordingly, Mr. Sanjay Kumar Agrawal is to be appointed as the liquidator and since no resolution plan is forthcoming within the period of CIRP which expired on February 4, 2020, we have no other alternative but to pass an order of liquidation under section 33(1)(a) of the Code. Application allowed.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Filing of Application for Liquidation
3. Objections Raised by Corporate Debtor
4. Limitation Period for Filing Proceedings
5. Non-Cooperation by Corporate Debtor
6. Appointment of Liquidator

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP)
The State Bank of India filed Company Petition (IB) No. 1111/KB/2018 under section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against the corporate debtor, M/s. Hanumanta Engineering P. Ltd. The application was admitted on August 19, 2019, appointing Mr. Balasubramanium Govindrajan as the Interim Resolution Professional (IRP), who later became the Resolution Professional (RP).

2. Filing of Application for Liquidation
The RP, unable to obtain a resolution plan, filed a final progress report on February 13, 2020, recommending the liquidation of the corporate debtor's assets. This was due to the absence of any resolution plan forthcoming for resolving the debtor's assets.

3. Objections Raised by Corporate Debtor
A director of the suspended board of the corporate debtor filed C.A. (IB) No. 1633/KB/2019, seeking to recall the admission order by reiterating objections previously raised. The corporate debtor argued that the Adjudicating Authority committed an error apparent on the face of the records by holding that the period of limitation for filing proceedings under section 7 of the Act was beyond three years.

4. Limitation Period for Filing Proceedings
The corporate debtor contended that the application should be dismissed as it was barred by limitation, arguing that the default occurred on August 30, 2011, and the application was filed on August 10, 2018, which is a lapse of seven years. The Adjudicating Authority had considered whether the application was within the limitation period and whether an interim order from the Calcutta High Court prevented the financial creditor from instituting the present petition. Both points were answered in favor of the financial creditor, with the Authority holding that the balance-sheet acknowledgment extended the limitation period under section 18 of the Limitation Act, 1963.

5. Non-Cooperation by Corporate Debtor
The RP highlighted deliberate non-cooperation from the directors of the suspended board of the corporate debtor, who failed to provide necessary information and documents. Despite directions from the Adjudicating Authority, the corporate debtor did not furnish adequate materials, which hindered the RP's ability to continue the corporate debtor as a going concern.

6. Appointment of Liquidator
Given the absence of any resolution plan and the non-cooperation from the corporate debtor, the RP recommended liquidation. The CoC, consisting solely of the State Bank of India, opted not to extend the CIRP period and decided to replace the existing RP due to health reasons. Mr. Sanjay Kumar Agrawal was appointed as the liquidator.

Orders:
1. The corporate debtor is ordered to be liquidated, with Mr. Sanjay Kumar Agrawal appointed as the liquidator.
2. The registry is directed to communicate the order to the Registrar of Companies, West Bengal, and the Insolvency and Bankruptcy Board of India.
3. The moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016, shall cease, and a fresh moratorium under section 33(5) shall commence.
4. The order serves as a notice of discharge for the officers, employees, and workmen of the corporate debtor as per section 33(7) of the Code.
5. A copy of the order is to be sent to the financial creditor, corporate debtor, and the liquidator.

Conclusion:
The application for recalling the admission order (C.A. (IB) No. 1633/KB/2019) was dismissed with a cost of ?1,00,000 payable to the corporate debtor. The corporate debtor is ordered to be liquidated, and Mr. Sanjay Kumar Agrawal is appointed as the liquidator to proceed in accordance with the Insolvency and Bankruptcy Code, 2016.