2022 (4) TMI 938 - Tri - Insolvency and Bankruptcy

Initiation of Liquidation proceedings - Section 33 of the IBC, 2016 - HELD THAT - From the mail, it is very clear that the CoC member was actively participating in the CoC meeting and taking steps for revival of the Corporate Debtor and it also emerges from this mail that the CoC member was trying to contact various people to sell the Corporate Debtor as a going Concern. Since the attempt made by the CoC member appears to have been failed, this Application under Section 33 filed by the RP in IA/1146/2021 - Therefore, it is very unfortunate that the Learned Counsel for the CoC member states today that the CoC will not contribute towards the CIRP cost. Having participated in all the meetings and have been part of the CoC till date, the CoC members shall satisfy the expenses of the CIRP cost. List all these matters on 11.04.2022 for further hearing.

Issues Involved: Application under Section 33 of the IBC for return of possession and rental dues, refusal of CoC member to contribute towards CIRP cost, failure of suspended Board of Directors to cooperate with CIRP process, non-payment of CIRP expenses by CoC, submission of claims by statutory authorities and employees, need for RP to file detailed affidavit of work done, need for CoC to pay RP, need for RP to file contempt application against uncooperative respondent.

Analysis:

1. Application under Section 33 for Possession and Rental Dues:
The application was filed seeking the return of physical possession of the property along with rental dues. The lease deed was between the Applicant and R2, the sister concern of the Corporate Debtor. Despite the Corporate Debtor being under CIRP, it had not paid rental dues or vacated the premises. The RP, representing the Corporate Debtor, argued that due to the moratorium, the Corporate Debtor was not obligated to vacate. However, the RP had not recognized the lease agreement, paid rental dues, or handed over the property, raising questions about the authority of possession.

2. Refusal of CoC Member to Contribute towards CIRP Cost:
A CoC member with a significant voting share refused to contribute towards the CIRP cost, leading to a dispute. The CoC was directed to settle the claim amount within a specified period. The failure of the CoC to pay any amount towards the CIRP expenses was noted, highlighting the CoC's obligation to finance the CIRP process.

3. Failure of Suspended Board of Directors to Cooperate:
The suspended Board of Directors did not cooperate with the CIRP process, as no accounts or books were handed over to the RP. The RP was directed to file an application for contempt against the uncooperative respondent, with these expenses considered part of the CIRP cost. The RP's lack of action to ensure compliance with the order passed under Section 19 was also noted, indicating a need for further legal steps.

4. Submission of Claims by Statutory Authorities and Employees:
Claims were submitted by statutory authorities and employees, including the Employees Provident Fund Organisation, State Tax authorities, and the Employees State Insurance Corporation. Despite the significant dues, employees and workmen had not submitted claims, raising concerns about the process.

5. RP's Obligations and Directions:
The RP was directed to file a detailed affidavit of the work done for the Corporate Debtor and to ensure that the CoC paid the required amount promptly. An email indicated the CoC member's prior efforts to revive the Company, emphasizing the need for financial contributions. The RP was directed to file a contempt application and ensure compliance with orders, with all expenses considered part of the CIRP cost.

In conclusion, the judgment addressed various critical issues related to the CIRP process, including possession disputes, financial contributions, cooperation of stakeholders, and statutory obligations. The directions provided aimed to streamline the proceedings, ensure compliance, and protect the interests of all parties involved.

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