2021 (9) TMI 1245 - Tri - Insolvency and Bankruptcy

Seeking dissolution of M/s. BSM India Private Limited - voluntary liquidation - section 59 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - HELD THAT - The Special Resolution was passed by members on 17.02.2020 after a gap of 101 days from Declaration by Directors (08.11.2019) as against requirement of 28 days as per Section 59(3)(c) of the Code. After special resolution, petition with NCLT was filed after 17 months as against requirement of 12 months. It was orally submitted by the Counsel that the reasons for delay in conducting the liquidation process and the statutory compliance U/s. 59(3)(c) was neither intentional nor deliberate. Accordingly, the delay is condoned in completing the process of liquidation. There is no legal impediment in allowing the prayer of the applicant - the Liquidator is allowed to dissolve the Company U/s. 59 of the Code and the said company is hereby dissolved with effect from the date of the present order.

Issues:
1. Application for dissolution of a company under the Insolvency and Bankruptcy Code, 2016.
2. Compliance with statutory requirements for voluntary liquidation process.
3. Delay in conducting the liquidation process and statutory compliance.
4. Condonation of delay in completing the liquidation process.
5. Dissolution of the company and preservation of relevant documents.

Analysis:

Issue 1: Application for dissolution of a company under the Insolvency and Bankruptcy Code, 2016
The application was filed by the Voluntary Liquidator seeking dissolution of the company under section 59 of the Insolvency and Bankruptcy Code, 2016, and the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017. The company in question was a private limited company incorporated under the Companies Act, 1956, with the objective of acting as management consultants and agents of other companies.

Issue 2: Compliance with statutory requirements for voluntary liquidation process
The petition outlined various steps taken in compliance with the statutory requirements for voluntary liquidation. This included passing a special resolution appointing the Voluntary Liquidator, publishing notifications in newspapers, submitting a Declaration of Solvency, changing the name of the bank account, receiving and verifying claims from creditors, filing preliminary and final reports, and closing the Liquidation Account. The Liquidator also informed relevant authorities like the Registrar of Companies, Income Tax Department, and GST Authorities about the initiation of voluntary liquidation.

Issue 3: Delay in conducting the liquidation process and statutory compliance
During the proceedings, it was noted that there were delays in certain aspects of the liquidation process. The Special Resolution was passed after a significant gap from the Declaration by Directors, and the petition with the National Company Law Tribunal (NCLT) was filed after a longer period than required by law. The Counsel explained that the delays were not intentional or deliberate, leading to a request for condonation of the delays.

Issue 4: Condonation of delay in completing the liquidation process
Considering the explanations provided and the steps taken by the Voluntary Liquidator, the Tribunal decided to condone the delays in conducting the liquidation process and statutory compliance. The Tribunal found no legal impediment in allowing the dissolution of the company under section 59 of the Code, and the company was dissolved with immediate effect. The Liquidator was directed to preserve relevant documents for a specified period post-dissolution.

Issue 5: Dissolution of the company and preservation of relevant documents
The Tribunal granted the prayer of the Liquidator to dissolve the company under section 59 of the Code. It directed the preservation of essential reports, registers, and books of account for a specified period after dissolution, either physically or electronically. A copy of the order was to be filed with the Registrar of Companies within the statutory period, and the file was to be consigned to the Record Room.

This comprehensive analysis covers the key issues addressed in the judgment regarding the application for dissolution of the company under the Insolvency and Bankruptcy Code, 2016, and the compliance, delays, and final dissolution process involved.

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