2021 (3) TMI 461 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - no Resolution Plan was received - HELD THAT - Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the resolution professional, at any time during the CIRP but before confirmation of the resolution plan, intimates the Adjudicating authority of the decision of the CoC approved by not less than sixty-six percent of the voting share, to liquidate the Corporate Debtor - In the present case, the CoC has resolved by 93.21% voting share to liquidate the Corporate Debtor. In the present case, the RP wanted to continue as the liquidator. This fact finds its support first from the Resolution No.1 under Agenda Item No. 2 of the twelfth CoC meeting for appointment of the RP as the Liquidator which was voted against by 93.21% votes of the members of the CoC.1 Resolution No. 2 which was for the appointment of Mr. Pratim Bayal as the Liquidator was approved by 93.21% votes. Second, from the submission made by the Ld. Counsel appearing for the Applicant during the hearing of this Petition that if there is any objection to the appointment of the proposed professional as Liquidator then the present Applicant, i.e., the RP, may be appointed as the Liquidator. However, instead of filing his written consent to be appointed as the Liquidator of the Corporate Debtor with this Adjudicating Authority, the RP chose to seek approval from the CoC that has no authority to appoint the Liquidator in the first place. Therefore, under the said circumstances, neither Mr. Pratim Bayal, whose appointment has been approved by the CoC by drawing authority from a source that is certainly not the Code, nor Mr. Pankaj Kumar Tibrewal, who has failed to submit his written consent under sub-section (1) of section 34 of the Code, can be appointed as the Liquidator of the corporate debtor in the present case. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - Application allowed.

Summary

Issues Involved:
Liquidation of Corporate Debtor - Appointment of Liquidator - Role of CoC in Liquidator Appointment - Compliance with Code - Dispute over Liquidator Appointment - Order for Liquidation - Appointment of Liquidator

Liquidation of Corporate Debtor:
The application filed by the Resolution Professional (RP) sought the liquidation of the corporate debtor, Amrit Feeds Limited, as no Resolution Plan was received. The Corporate Insolvency Resolution Process (CIRP) was initiated earlier, and despite various attempts to solicit Resolution Plans, none were received. The Committee of Creditors (CoC) approved the liquidation with a significant majority vote, leading to the decision to liquidate the Corporate Debtor.

Appointment of Liquidator:
The CoC approved the appointment of Mr. Pratim Bayal as the Liquidator with a substantial majority vote. However, a dispute arose regarding the appointment process, with objections raised by the members of the suspended board of directors. The legal counsel representing the suspended board sought the appointment of an independent person from the Insolvency and Bankruptcy Board of India (IBBI). The RP also expressed willingness to be appointed as the Liquidator if objections were raised against the proposed professional.

Role of CoC in Liquidator Appointment:
The decision to appoint the Liquidator was challenged based on the composition of the CoC, primarily comprising Punjab National Bank. However, the Adjudicating Authority emphasized that the appointment was based on a resolution with a significant majority vote, not influenced solely by one member. The Authority differentiated this case from a previous order where a similar scenario had different implications due to the majority share held by a single member.

Compliance with Code - Dispute over Liquidator Appointment:
The legal framework under the Insolvency and Bankruptcy Code was scrutinized concerning the appointment of the Liquidator. Section 34(1) of the Code mandates the appointment of the RP as the Liquidator unless replaced by the Authority. The Authority highlighted procedural errors in the appointment process, emphasizing the RP's failure to submit written consent for the role. Consequently, the appointed Liquidator and the RP were deemed ineligible for the position.

Order for Liquidation - Appointment of Liquidator:
The Bench ordered the liquidation of the Corporate Debtor in compliance with the Code. Mr. Sunil Mohan Acharya was appointed as the Liquidator by the Adjudicating Authority. The Liquidator was directed to initiate the liquidation process as per the relevant regulations. Additionally, the Authority issued instructions regarding the cessation of powers of the Board of Directors, cooperation with the Liquidator, and the filing of necessary documents with the Registrar of Companies.

Conclusion:
The judgment addressed the issues surrounding the liquidation of the Corporate Debtor, the appointment of the Liquidator, and the compliance with the legal provisions of the Insolvency and Bankruptcy Code. The decision clarified the role of the CoC in the appointment process and emphasized adherence to the statutory requirements for liquidation proceedings.