2020 (5) TMI 274 - Tri - Insolvency and Bankruptcy

Voluntary liquidation of the corporate person - compliance with the provisions of section 59 of the Insolvency and Bankruptcy Code, 2016 read with regulation 3 of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 before dissolution of the company or not - HELD THAT - As per section 59(3)(a) of the Code, a declaration from the majority of the directors of the company verified by an affidavit to the effect that, they have made a full inquiry in to the affairs of the company and they have formed an opinion that, either the company has no debt or that it will able to pay its debt in full from the proceeds of the assets to be sold in the voluntary liquidation and the company is not being liquidated to defraud any person has to be filed - The directors of the company passed a resolution for voluntarily liquidating the company. The liquidator also filed the declaration of solvency by directors dated March 31, 2018, i. e., Mr. Gunupati Venkateswara Prasad and Ms. Gunupati Anuradha, who have given their declaration of solvency as contemplated under section 59(3)(a) of the Insolvency and Bankruptcy Code, 2016. The concerned Income-tax Officer vide his letter dated October 22, 2019 has conveyed to the liquidator stating that there are no tax arrears out-standing against M/s. Good Earth Properties and Services P. Ltd., and the said office has no objection to the liquidation process involving the said assessee - The liquidator stated in its application that company did not have any creditors as on the date of liquidation commencement. The liquidator has complied with the liquidation process as per the provisions of section 59 of the Code and also as per the IBBI (Voluntary Liquidation Process) Regulations, 2017 and moved this application under section 59(7) for seeking dissolution of the corporate person Good Earth Properties and Services P. Ltd. . Therefore, the said corporate person stands dissolved - Good Earth Properties and Services P. Ltd. is ordered to be dissolved with effect from November 6, 2019 - Application allowed.

Issues:
Voluntary liquidation of a corporate person under the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Compliance with Section 59 of the Insolvency and Bankruptcy Code, 2016:
- The liquidator filed an application for the voluntary liquidation of M/s. Good Earth Properties and Services P. Ltd. under section 59 of the Code.
- The Tribunal assessed whether the liquidator adhered to the provisions of section 59 of the Code and regulation 3 of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 before ordering the dissolution of the company.

2. Declaration of Solvency:
- Section 59(3)(a) of the Code mandates a declaration from the majority of directors verifying that the company has no debt or can pay its debts in full from asset proceeds.
- The directors of the company, Mr. Gunupati Venkateswara Prasad and Ms. Gunupati Anuradha, provided a declaration of solvency as required by the Code.

3. Approval for Voluntary Liquidation:
- Shareholders approved the voluntary liquidation at an extraordinary general meeting, appointing Ms. M. S. Mano Ranjani as the liquidator initially, later replaced by advocate Dr. Rajkumar Adukia.
- The Registrar of Companies was duly notified about the resolution for voluntary liquidation.

4. Compliance with Regulations:
- The liquidator fulfilled regulatory requirements by issuing public announcements in newspapers as per IBBI (Voluntary Liquidation Process) Regulations, 2017.
- The Income-tax Department issued a no objection certificate for the liquidation process.

5. Creditors and Dissolution:
- The company had no creditors at the commencement of liquidation.
- The liquidator completed the liquidation process in accordance with statutory provisions and regulations, leading to the dissolution of "Good Earth Properties and Services P. Ltd." effective from November 6, 2019.

6. Order for Dissolution:
- The Tribunal granted the order for dissolution based on the liquidator's compliance with the Code and regulations, directing the forwarding of the order to the relevant authority within 14 days.

This detailed analysis highlights the procedural steps, declarations, approvals, compliance with regulations, absence of creditors, and the final order for dissolution in the voluntary liquidation process of M/s. Good Earth Properties and Services P. Ltd. under the Insolvency and Bankruptcy Code, 2016.

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