2022 (4) TMI 262 - AT - Insolvency and Bankruptcy

Seeking Liquidation of Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Respondent No. 2 Company has availed three term loans facilities from Respondent No. 1 for an amount of ₹ 10 Crores each aggregating to ₹ 80 Crores. Accordingly, the Respondent No. 2 executed security documents for the grant of the loan amount by hypothecating the programme rights and pledging of its shares - the account of the Respondent No. 2 was declared NPA on 28.09.2017 when total outstanding in all loan accounts was a sum of ₹ 25.03 Crores. On 30.10.2018, the Respondent No. 1 Bank filed Petition under Section 7 of the IBC which was duly replied by the Respondent No. 2 Company and thereafter, the Ld. Adjudicating Authority vide its order dated 20.12.2019 admitted the Application filed by the Respondent No. 1 under Section 7 of the IBC and appointed Mr. Vijendra Kumar Jain as Interim Resolution Professional - It is also an admitted fact that during pendency of the Appeal behest of the Appellant that he wants to settle the matter with the Respondent No. 1 and further case was adjourned several times but no settlement arrived between the parties nor resolved the dispute. It is also an admitted fact that the 21st meeting of CoC was held at Mumbai on 24.08.2021, since the only Resolution Plan put forth by one M/s Pen India Ltd. was rejected by the CoC with 100% votes, a resolution was passed for liquidation of the Corporate Debtor and the CoC advised the Resolution Professional to circulate the resolution of approval of Liquidation through E-voting and accordingly, e-voting took place on 27.08.2021 and the Resolution was approved with 79.75% voting in favour of liquidation. Thus, it is directed that the Corporate Debtor be ordered and directed to go under liquidation as per Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - application allowed.

Summary

Issues Involved:
1. Validity of the order dated 20.12.2019 admitting the application under Section 7 of the IBC.
2. Allegations of arbitrary and illegal actions by the Respondent No. 1 Bank.
3. Conduct of the Interim Resolution Professional and Committee of Creditors (CoC).
4. Decision for liquidation of the Corporate Debtor.

Detailed Analysis:

1. Validity of the Order Dated 20.12.2019:
The Appellant, a shareholder of Sri Adhikari Brothers Television Network Ltd., filed an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, challenging the order dated 20.12.2019 by the National Company Law Tribunal (NCLT), Mumbai Bench. This order admitted the application filed under Section 7 of the IBC by the Central Bank of India and appointed Mr. Vijendra Kumar Jain as the Interim Resolution Professional.

2. Allegations of Arbitrary and Illegal Actions by the Respondent No. 1 Bank:
The Appellant alleged that the Respondent No. 1 Bank acted arbitrarily and illegally by declaring the account of Respondent No. 2 as a Non-Performing Asset (NPA) without proper notice and selling pledged shares at a price lower than the market value, thereby causing a downfall in the market prices of the shares. The Appellant also contended that the bank did not provide details of the sold shares despite multiple requests.

3. Conduct of the Interim Resolution Professional and Committee of Creditors (CoC):
The Appellant argued that the Resolution Professional and CoC violated the order dated 17.01.2020 by terminating the Leave and License Agreement with TV Vision and SAB Events, which was against the interest of the Corporate Debtor. This termination allegedly stopped the recurring source of income for the Corporate Debtor, exacerbating its financial difficulties.

4. Decision for Liquidation of the Corporate Debtor:
The Resolution Professional, in his affidavit, stated that the only Resolution Plan put forth was rejected by the CoC with 100% votes, leading to a resolution for liquidation of the Corporate Debtor. The CoC approved the liquidation with 79.75% voting in favor. Consequently, an application for liquidation under Section 33 of the IBC was filed and allowed by the Adjudicating Authority on 16.12.2021, ordering the Corporate Debtor to be liquidated.

Findings:
The Tribunal noted that the Respondent No. 2 Company availed three term loans from Respondent No. 1, aggregating to ?80 Crores, secured by hypothecating programme rights and pledging shares. The account was declared NPA on 28.09.2017 with total outstanding dues of ?25.03 Crores. The application under Section 7 of the IBC was filed on 30.10.2018 and admitted on 20.12.2019.

The Tribunal observed that despite multiple adjournments and attempts at settlement, no resolution was reached between the parties. The CoC's decision to liquidate the Corporate Debtor was based on the rejection of the only Resolution Plan and was approved by the Adjudicating Authority.

Order:
The Tribunal concluded that the Corporate Insolvency Resolution Process (CIRP) had failed, and the CoC's recommendation for liquidation was valid. Therefore, the appeal challenging the order dated 20.12.2019 was dismissed as infructuous, with no order as to costs. The Registry was directed to upload the judgment on the Appellate Tribunal's website and send a copy to the NCLT, Mumbai Bench.