2022 (2) TMI 415 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - Termination of Corporate Insolvency Resolution Process of Nesa India Producer Limited - discharge of applicant as an IRP of the Corporate Debtor - reimbursement of expenses incurred on the CIR process - IRP has not received any claim even after the expiry of the 365 days from the Corporate Insolvency Resolution Period - HELD THAT - It is an admitted fact that CIRP was initiated on 25th November, 2019 and the applicant was appointed as IRP, and the present application is filed on 20th February, 2021, i.e. after more than one year from the date of initiation of the CIRP. If the IRP has not received any claim even by the applicant, on whose application, the CIRP was initiated against the Corporate Debtor, in that case, after the expiry of more than one year, can CIRP be terminated on the request of the IRP? - HELD THAT - Under section 33 sub-Section 1, where the Adjudicating Authority before the expiry of the Insolvency Resolution Process or the maximum period permitted for completion of the CIRP under Section 12 of the fast track CIRP under Section 56, as the case may be, does not receive a resolution plan under sub-Section 6 of Section 30 or reject the resolution plan under Section 31 for non-compliance of requirement specified therein, in that case, the Adjudicating Authority shall pass an order for liquidation and under Section 33 sub-Section 2 of the IBC, the resolution professional at any time during the Corporate Insolvency Resolution Process but before the confirmation of resolution plan intimate the Adjudicating Authority of the decision of the CoC to liquidate the Corporate Debtor, then the Adjudicating Authority shall pass an order for liquidation - Here in the case in hand, admittedly, the CoC is not constituted even after the expiry of more than 365 days and the IRP has also not received any claim during the CIRP. Rather, the IRP has prayed for termination of the CIRP on the ground that he has not received any claim. There is no such provision under the IBC to terminate the CIRP once it is initiated, the only way is either to complete the CIRP by approval of the resolution plan or pass the order of liquidation under Section 33 of the IBC. Here in the case in hand, admittedly, there is no resolution plan as there was no claimant and the CoC was not constituted till the date of filing the application. Under such circumstances, in terms of Section 33 sub-Section 1, the Adjudicating Authority is empowered to pass the liquidation order after the completion of the maximum period. Since, 330 days has already been completed and no resolution plan is received even the CoC is not constituted, therefore, instead of termination in the CIRP on the request of the applicant, we think it proper to pass an order under Section 33 of sub-Section 1 of the IBC to pass the liquidation order. The Corporate debtor is liquidated with immediate effect in the manner provided under Chapter III Part II of the IBC 2016 - Application allowed.

Summary

Issues Involved:
1. Termination of Corporate Insolvency Resolution Process (CIRP).
2. Non-cooperation and non-submission of claims by the Operational Creditor and other creditors.
3. Non-constitution of the Committee of Creditors (CoC).
4. Liquidation of the Corporate Debtor.

Issue-wise Detailed Analysis:

1. Termination of Corporate Insolvency Resolution Process (CIRP):
The application was filed under Rule 11 of the National Company Law Tribunal Rules, 2016 by the Interim Resolution Professional (IRP) for terminating the CIRP of Nesa India Producer Limited, discharging the IRP, and reimbursing the expenses incurred on the CIRP. The Tribunal noted that the CIRP was initiated on 25th November 2019, and the application for termination was filed on 20th February 2021, more than one year after the initiation. The Tribunal emphasized that there is no provision under the Insolvency and Bankruptcy Code (IBC) to terminate the CIRP once initiated; the only way is to either complete the CIRP by approval of a resolution plan or pass a liquidation order under Section 33 of the IBC.

2. Non-cooperation and non-submission of claims by the Operational Creditor and other creditors:
The IRP had made several attempts to communicate with the directors of the suspended Board of the Corporate Debtor and the Operational Creditor, Mr. Sunil Kumar, but received no cooperation. Despite public announcements and follow-ups, no claims were received from any creditors, including the Operational Creditor. The IRP faced significant difficulties due to the lack of requisite information and documents, and the Operational Creditor did not deposit the sum of ?2 lakhs as directed by the Tribunal for meeting the immediate expenses of the CIRP.

3. Non-constitution of the Committee of Creditors (CoC):
Due to the non-receipt of any claims, the IRP could not constitute the CoC even after the expiry of 365 days from the date of initiation of the CIRP. Without the CoC, the IRP could not proceed with the resolution process, and no resolution plan was received.

4. Liquidation of the Corporate Debtor:
The Tribunal referred to Section 33 of the IBC, which provides for the initiation of liquidation under certain circumstances. Since no resolution plan was received, and the CoC was not constituted, the Tribunal decided to pass a liquidation order under Section 33(1)(a) of the IBC. The Tribunal ordered the liquidation of the Corporate Debtor with immediate effect and directed the liquidator to take custody and control of the assets and property of the Corporate Debtor. A public announcement was to be made, and the provisions of Section 33(5), (6), and (7) of the IBC were to come into force immediately. The order of moratorium under Section 14 of the IBC ceased to have effect, and a fresh moratorium under Section 33(5) commenced. The Tribunal also directed the Registry to communicate the order to the Operational Creditor, the Corporate Debtor, the Registrar of Companies (RoC), and the Insolvency and Bankruptcy Board of India (IBBI). Since the IRP did not consent to work as the Liquidator, the matter was listed for the appointment of a Liquidator on 31.01.2022.