2022 (9) TMI 1291 - Tri - Insolvency and Bankruptcy

Seeking dissolution of the Corporate Debtor - Section 54(1) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 - HELD THAT - The ultimate objective of the Code is either to resolve by way of a Resolution Plan or to liquidate the Corporate Debtor, as expeditiously as possible. The facts and circumstances of present case justifies that no purpose would be served to keep the Corporate Debtor under CIRP and/ or under Liquidation Proceedings. The Adjudicating Authority is vested with inherent powers under Rule 11 of NCLT Rules, 2016 conferred under the Act, to pass appropriate order(s) in the interests of speedy justice. No useful purpose would be served by placing the Corporate Debtor under the Liquidation Process which will increase the cost without any fruitful result. The State Bank of India, the sole CoC member has already proceeded against the Corporate Debtor by approaching DRT and by taking possession. The Liquidation Process under the provisions of the Code can be considered to have been carried forward and thus it would be just and proper for the Adjudicating Authority to dissolve the Company, as proposed by the Resolution Professional, moreover when the sole CoC member in its commercial wisdom has passed a resolution seeking dissolution of the Corporate Debtor. This is a fit case for dissolving the Corporate Debtor without undergoing the liquidation process - Corporate Debtor, M/s. Nassco Trading India Private Limited is ordered to be dissolved with immediate effect - application allowed.

Summary

Issues:
1. Application for dissolution of Corporate Debtor under Section 54(1) of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:
1. The application was filed seeking dissolution of the Corporate Debtor under Section 54(1) of the Insolvency and Bankruptcy Code, 2016, along with Rule 11 of the NCLT Rules, 2016. The Resolution Professional was appointed after certain proceedings against the Corporate Debtor. The State Bank of India submitted a claim and became the sole member of the CoC. Subsequently, it was decided not to proceed with the Resolution Process due to lack of assets and statutory compliances.

2. The CoC, in its meetings, deliberated on the absence of assets and the impossibility of resolution due to various factors such as misappropriation of assets, lack of financial statements, and pending compliances. The decision was made to dissolve the company without delay, as no useful purpose would be served by initiating the liquidation process.

3. The Resolution Professional highlighted that the Secured Creditor had already taken action to recover debts from the mortgaged assets of the Corporate Debtor. Additionally, since the SBI had initiated proceedings against the Personal Guarantors, continuing with the CIRP of the Corporate Debtor was deemed unnecessary.

4. The Adjudicating Authority considered the provisions of Section 54 of the IBC, 2016, and Regulation 14 of the IBBI (Liquidation Process) Regulations, 2016. It was emphasized that the objective of the Code is to resolve or liquidate the Corporate Debtor promptly. In this case, it was concluded that keeping the Corporate Debtor under CIRP or liquidation would not serve any purpose, as decided by the CoC.

5. The CoC, with 100% voting share, passed a resolution to dissolve the Corporate Debtor based on the absence of tangible assets and the unlikelihood of successful resolution or liquidation. The Adjudicating Authority, invoking its inherent powers, allowed the application for dissolution under Section 54(1) of the IBC, 2016, along with relevant regulations and rules.

6. The final order directed the immediate dissolution of the Corporate Debtor, with copies of the order to be forwarded to relevant authorities. It was clarified that the personal liability of any Director/Promoter would not be absolved by this order. The Resolution Professional was discharged from duties effective from the date of the order.