2022 (4) TMI 1485 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor as a going concern - section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - From the minutes of the meetings of the CoC it is apparent that in spite of their being a request by applicant to put in a Resolution Plan and request by one director of the Corporate Debtor to consider this request to save the Corporate Debtor from liquidation, the CoC by 100% voting in its commercial wisdom took a conscious decision to go in for liquidation of the Corporate Debtor. In the matter of Shashi Dhar Vs. Indian Overseas Bank and Ors. 2019 (2) TMI 1043 - SUPREME COURT , the Hon'ble Supreme Court has held that the legislature while enacting the IBC, consciously does not provide any ground to challenge the commercial wisdom of the individual Financial Creditors or the collective decision of the CoC before NCLT and the decision of the CoCs commercial wisdom has been made non-justiciable. Prayers as filed by Mr. Kuldeep Verma, RP of Manthan Broadband Services Private Limited, the Corporate Debtor, is allowed and the Corporate Debtor is ordered to be liquidated in terms of section 33(1) of the Code - moratorium declared.

Summary

Issues Involved:
1. Initiation and extension of Corporate Insolvency Resolution Process (CIRP).
2. Expression of Interest (EOI) submissions and withdrawals.
3. Liquidation decision by Committee of Creditors (CoC).
4. Applications for extension of time to submit resolution plans.
5. Allegations of collusion and abuse of process.
6. Appointment and remuneration of the Liquidator.
7. Legal proceedings and costs during CIRP.

Detailed Analysis:

1. Initiation and Extension of CIRP:
The CIRP against the Corporate Debtor was initiated on 18.09.2019 under section 7 of the Insolvency and Bankruptcy Code, 2016. The initial 180-day period expired on 18.03.2020, and subsequent extensions were granted due to the COVID-19 lockdown, extending the period by 90 days from 1.11.2020. Further exclusions extended the period to 19.03.2021.

2. EOI Submissions and Withdrawals:
Atria Convergence Technologies Ltd. submitted an EOI but withdrew on 21.01.2021. India Cable Network Company Limited (ICNCL) expressed interest but backed out on 24.02.2021. Hathway Cable & Datacom Ltd. expressed interest after the deadline and was not accepted by the Resolution Professional.

3. Liquidation Decision by CoC:
In the 10th CoC meeting, liquidation was discussed but deferred due to Hathway's interest. In the 11th CoC meeting, the CoC, by 100% votes, approved the resolution for liquidation. The CoC's decision was based on the non-submission of any viable resolution plan and the non-cooperation from the Corporate Debtor's board.

4. Applications for Extension of Time to Submit Resolution Plans:
Hathway Cable and Datacom Limited filed IA 379/KB/2021 seeking two weeks to submit a resolution plan, which was rejected. ICNCL filed IA 193/KB/2022 seeking similar relief, which was also opposed and ultimately dismissed.

5. Allegations of Collusion and Abuse of Process:
Alliance Broadband Services Pvt. Ltd. alleged collusion between Hathway and the suspended director of the Corporate Debtor. Sony Pictures Network Pvt. Ltd. filed IA 99/KB/2022 seeking exemplary costs against Hathway for delaying the liquidation process.

6. Appointment and Remuneration of the Liquidator:
Mr. Kuldeep Verma was appointed as the Liquidator. The CoC discussed and recommended the fees for the Liquidator in accordance with the relevant regulations.

7. Legal Proceedings and Costs During CIRP:
The Tribunal noted the substantial delays and legal costs incurred during the CIRP. The CoC and other creditors expressed reservations about further contributions to the legal costs.

Judgment:
The Tribunal rejected the applications IA 379/KB/2021 and IA 193/KB/2022 seeking extensions to submit resolution plans. Consequently, IA 99/KB/2022 and IVN. 4/KB/2021 were also dismissed as infructuous. The Tribunal ordered the liquidation of the Corporate Debtor in terms of section 33(1) of the Code, appointed Mr. Kuldeep Verma as the Liquidator, and directed the initiation of the liquidation process. Public notices were to be issued, and all powers of the Board of Directors and key managerial persons were to cease, vesting in the Liquidator. The order also provided for the discharge of officers, employees, and workmen, except for those involved in the continued business during liquidation. The Liquidator was to file a copy of the order with the Registrar of Companies, West Bengal, Kolkata.

Conclusion:
The Tribunal upheld the CoC's decision for liquidation, emphasizing the primacy of the CoC's commercial wisdom and the necessity to adhere to the timelines prescribed under the Insolvency and Bankruptcy Code, 2016.