2021 (1) TMI 1231 - Tri - Insolvency and Bankruptcy

Seeking liquidation of the Corporate Debtor as a going concern - forfeiting the performance security and to initiate penal action as per section 74 (3) of The Insolvency and Bankruptcy Code, 2016 - Resolution Plan has been already approved by this Tribunal - whether the applicant has any locus standi to file the applications, especially for liquidating the Corporate Debtor when a Resolution Plan has been already approved by this Tribunal and the Resolution Applicant has taken over the Corporate Debtor and its properties, as also the revival of the Corporate Debtor factory is under process? HELD THAT - If the Corporate Debtor acts in a manner that infringes the norms of the Resolution Plan, then that can be contested. Moreover, any stakeholder s right stands violated as a consequence of this infringement, he can make an application to the Adjudicating Authority for liquidation of the Corporate Debtor as per Section 33 (3) of the Code - A liquidation proceeding shall be initiated only when the Corporate Insolvency Resolution Process fails. Section 33 of the Insolvency and Bankruptcy Code, 2016 sets out the conditions laying down three scenarios wherein liquidation proceedings can be initiated against the Corporate Debtor. In a situation where a Resolution Applicant succeeds as Corporate Debtor but it fails to comply with its assurance in terms of the resolution plan, what step is to be taken has already been laid down in Sub-Section (3) of Section 33 of the I B Code. The expression person aggrieved does not include a person who suffers from a psychological or an imaginary injury; a person aggrieved must, therefore, necessarily be one, whose right or interest has been adversely affected or jeopardized - It is significant to point out that pre-occupation of the I B Code with timely resolution of insolvency is an important factor. In so far as Liquidation is concerned, it destroys the organizational capital etc. I B Code allows Liquidation only on failure of CIRP and it facilitates/encourages resolution in several manners. This Bench approved the Resolution Plan submitted by Kerala Industrial Infrastructure Development Corporation (KINFRA), a Statutory authority of the Government of Kerala pursuant to the approval of the Resolution Plan by the COC with 92.72% voting rights - the claim of the applicant was also settled in accordance with the Resolution Plan on 19th March 2021 paying ₹ 12,87,926 within 45 days as provided under the Resolution Plan. The mere allegation that CoC has not constituted the Monitoring Committee and that the conduct of the first meeting of the purported Board would not hold water. This Tribunal, taking note of the entire conspectus of the attendant facts and circumstances of the instant case in an encircling manner and also keeping in mind the plea taken by the ex- Resolution Professional that out of 145.60 Crores, 144.96 Crore has been disbursed to the stakeholders immediately and balance 0.64 Crore is pending in the accounts of Hindustan Newsprint Limited due to incorrect account details of certain claimants, returned amount due to dormant account details, for which the communication has been sent to claimants to the available Email. The ex-Resolution Professional to disburse the balance amount finding out the correct account details and complete the process without further delay. Application dismissed.

Summary

Issues Involved:
1. Application for liquidation of the Corporate Debtor.
2. Interim order restraining the utilization of land belonging to the Corporate Debtor.
3. Impleadment of Central Bank of India as an additional respondent.

Issue-wise Detailed Analysis:

1. Application for Liquidation of the Corporate Debtor:
The ex-employee of the Corporate Debtor filed an application under Section 33(3) of the Insolvency and Bankruptcy Code, 2016, seeking liquidation of the Corporate Debtor as a going concern and penal action under Section 74(3) of the Code. The applicant contended that the Resolution Applicant, KINFRA, contravened the Resolution Plan approved by the Tribunal by not running the Corporate Debtor as a going concern and failing to adhere to the implementation timeline. Specific allegations included the delay in constituting the Monitoring Committee and Board, non-payment of agreed debts to workmen and employees, and unauthorized utilization of land for a rubber factory. The respondents argued that the applicant had no locus standi as he had already received his claim amount and that liquidation would result in a nil payout for the applicant. They emphasized that the primary objective of IBC is resolution, not liquidation, and cited several case laws to support their argument. The Tribunal found that the applicant's interests were not prejudicially affected and noted that liquidation should only be a last resort. The Tribunal dismissed the application, stating that KINFRA had complied with the financial commitments under the Resolution Plan and that the applicant had already received his dues.

2. Interim Order Restraining Utilization of Land:
The applicant sought an interim order to restrain the 1st Respondent from utilizing the land belonging to the Corporate Debtor for running a rubber industry. The applicant argued that the utilization of the land for Kerala Rubber Limited was contrary to the approved Resolution Plan. The respondents countered that Kerala Rubber Limited was a separate entity and that the land utilization was part of the approved action plan to generate more revenue and keep the Corporate Debtor as a going concern. The Tribunal found that the utilization of land for a new industrial establishment was part of the action plan approved by the CoC and the Tribunal and did not constitute a deviation from the Resolution Plan. Consequently, the Tribunal dismissed this application as well.

3. Impleadment of Central Bank of India as Additional Respondent:
The applicant sought to implead the Central Bank of India as an additional respondent in the Miscellaneous Application for restraining the utilization of the land. The Tribunal did not find it necessary to address this issue separately, given the dismissal of the primary application for liquidation and the application for an interim order.

Conclusion:
The Tribunal dismissed the application for liquidation of the Corporate Debtor, finding no merit in the applicant's claims and emphasizing the primary objective of resolution under the IBC. The Tribunal also dismissed the applications for an interim order and impleadment, as they were interconnected and dependent on the primary application for liquidation.