2020 (8) TMI 455 - AT - Insolvency and Bankruptcy

Liquidation Order - appellant submits that without deciding the applications of the Appellants, the Adjudicating Authority proceeded to pass orders of Liquidation as period for completing CIRP had come to an end and no Resolution Plan had been received - HELD THAT - We do not find that only because Mr. Uttam Chand Chauodhary was CA of the Corporate Debtor and happens to be CA also of the Original Financial Creditor who filed Application under Section 7 of the IBC, one can jump to a conclusion of collusion especially, when nothing is shown that the said Uttam Chand Choudhary has any shares or is Director of the Original Financial Creditor. Still, further material would be required to be shown to claim collusion between the Said Financial Creditor and the Directors of the Corporate Debtor. Merely on assumption, fraud can not be said to have been prima facie indicated for the Adjudicating Authority to further take cognizance of the averment made. The Learned Counsel states that the Appellant had filed Application before the Adjudicating Authority to consider Appellants as Resolution Applicants. It is stated that the Adjudicating Authority did not pass orders even on that application. It appears to us that the Provisions of IBC require that a prospective Resolution Applicant must approach the Resolution Professional by filing expression of interest and then following the procedures of IBC and the Regulations and complete compliances regarding the tendering of the Resolution Plan. Nothing of this sought has admittedly been done. Without moving Resolution Professional CoC filing of application to Adjudicating Authority is not the solution - When admittedly, the necessary procedure was not followed during the course of CIRP as required by the Provisions of IBC and the Regulations, such belated offer can not be said to be bona fide. Merely expressing that I am ready to file Resolution Plan is not sufficient for taking cognizance of such offer. There are no reason to interfere in the Impugned Order by which the Liquidation Orders have been passed - appeal dismissed.

Summary

Issues involved:
1. Challenge to liquidation orders passed by the Adjudicating Authority.
2. Allegations of fraud in the insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.
3. Dispute over the ownership of a property belonging to the Corporate Debtor.
4. Claim of collusion between the Financial Creditor and Directors of the Corporate Debtor.
5. Request to be considered as Resolution Applicants under the IBC.
6. Interpretation of provisions of the IBC regarding Resolution Applicants and Resolution Plans.

Detailed Analysis:
1. The Appellants challenged two orders passed by the Adjudicating Authority, Kolkata Bench, for liquidation. The Appellants filed applications for impleadment, consideration as Resolution Applicants, and alleged fraud in the insolvency proceedings under the IBC. The Adjudicating Authority proceeded with liquidation without deciding the applications, citing the end of the CIRP period and no receipt of a Resolution Plan.

2. The dispute centered around a property in Kolkata claimed by the Appellants, not being shareholders or directors of the Corporate Debtor. The Financial Creditor's application under Section 7 of the IBC led to the Adjudicating Authority's actions, with the Appellants resisting as they believed the property did not belong to the Corporate Debtor.

3. The Respondent argued that the property belonged to the Corporate Debtor, and the Appellants had no right to retain it. The Court referred to a Title Suit where the property was mentioned as belonging to the Corporate Debtor, leading to the dismissal of the Appellants' claim.

4. The Appellants alleged collusion between the Financial Creditor and the Corporate Debtor's Directors, citing shared personnel and claimed assets. The Respondent denied collusion, stating the shared personnel acted in a professional capacity.

5. The Appellants sought to be considered as Resolution Applicants, but the Court found their belated offer without following IBC procedures insufficient. The Court emphasized the importance of following the Resolution Plan submission process.

6. The Court dismissed the appeal, finding no reason to interfere with the liquidation orders. It held that the Appellants failed to prove their claims, including collusion and ownership disputes, and did not follow proper procedures to be considered as Resolution Applicants under the IBC. The appeal was dismissed, upholding the liquidation orders.