2020 (2) TMI 498 - Tri - Insolvency and Bankruptcy

Voluntary Liquidation and Dissolution of applicant company - Section 59 of the IBC 2016 - HELD THAT - The Petitioner Company does not have any pending litigations or any outstanding debts or liabilities which could impact its financial position, further, proper books of account of the company as per law have been maintained, the company did not have any long-term contracts including derivatives contracts for which there were any foreseeable material losses and that there are no amount require to be transferred to the creditors/ debtors by the company. The petitioner Liquidator has duly complied with the prescribed procedure seeking for voluntary liquidation and dissolution of the petitioner company. It is also found that affairs of the company are completely closed down and the assets of the company have been completely liquidated. Thus, the petitioner company stands wound-up. The Petitioner Company deserves to be dissolved - petition allowed.

Issues Involved:
1. Reason for voluntary liquidation and dissolution.
2. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC), 2016.
3. Financial status and solvency of the company.
4. Notification and communication with stakeholders.
5. Final liquidation process and distribution of assets.

Detailed Analysis:

1. Reason for Voluntary Liquidation and Dissolution:
The applicant company, M/s. Madhumalti Capital Pvt. Ltd., sought dissolution under Section 59(7) of the Insolvency and Bankruptcy Code, 2016. The company was incorporated as a Non-Banking Finance Company (NBFC) in 1999. Due to policy changes by the Reserve Bank of India (RBI) in 2015, which required a minimum net owned fund of Rupees Two Crores by April 1, 2017, the company, unable to meet this requirement, decided to surrender its NBFC license and initiated voluntary liquidation due to lack of business prospects and financial viability.

2. Compliance with Procedural Requirements Under the IBC, 2016:
The company followed the necessary procedures for voluntary liquidation. The Board of Directors resolved for voluntary liquidation on July 18, 2018, ratified in an Extra-Ordinary General Meeting on August 10, 2018, appointing Mr. Gyaneshwar Sahai as the Liquidator. The petition for voluntary liquidation was filed under Section 59(7) of the IBC, 2016.

3. Financial Status and Solvency of the Company:
The company’s authorized share capital was Rupees Eighty Lakhs. Solvency declarations were made by the directors, affirming no intent to defraud creditors. Audited financial statements for the past two years were submitted, showing no outstanding debts or liabilities. The company had assets valued at approximately Rupees One Crore Twenty-Seven Lakhs and minimal liabilities of Rupees Ten Thousand. The final report confirmed all assets were liquidated, and no creditors were present.

4. Notification and Communication with Stakeholders:
The liquidator published a public announcement in newspapers and informed the Registrar of Companies and the Insolvency and Bankruptcy Board of India (IBBI). No claims were received from creditors, confirming the absence of stakeholders other than equity shareholders. The liquidator also communicated with the Income Tax Officer regarding the liquidation process.

5. Final Liquidation Process and Distribution of Assets:
The final report dated January 18, 2019, detailed the liquidation process, including payments towards legal charges, liquidator’s remuneration, and income tax liabilities. The remaining funds were to be disbursed to shareholders. The auditor’s final report confirmed that all assets were disposed of, no creditors existed, and no litigation was pending against the company.

Conclusion:
The tribunal found that the company had complied with all procedural requirements for voluntary liquidation under Section 59 of the IBC, 2016. The company’s affairs were completely wound up, and its assets liquidated. Consequently, the tribunal ordered the dissolution of the company effective from the date of the order. The liquidator was directed to inform the Registrar of Companies, who was instructed to take necessary action as per law.

Order:
The petition for the voluntary liquidation and dissolution of M/s. Madhumalti Capital Pvt. Ltd. was allowed, and the company was ordered to be dissolved. The liquidator was instructed to serve a copy of the order to the Registrar of Companies within fourteen days.

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