2023 (6) TMI 102 - AT - Insolvency and Bankruptcy

Dissolution of Corporate Debtor - contention of the Appellant is that, when he was taking necessary all possible endeavours to revive the business of the Company, the 1st Respondent had filed an Application for early Dissolution of the Corporate Debtor, in terms of Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, at the Corporate Insolvency and Resolution Process itself. HELD THAT - Section 54 of the I B Code, 2016, provides that once the affairs of the Corporate Debtor, have been wound up, its Assets, completely liquidated, the Liquidator, has to prefer an Application, before the Adjudicating Authority (National Company Law Tribunal) for the Dissolution of the Corporate Debtor. It is to be noted that the Account of the Corporate Debtor, was classified as Non Performing Asset, by the 2nd Respondent / Bank, on 18.09.2016. There is no two opinion of the primordial fact that in the absence of any Resolution Plan(s) or Saleable Assets of the Company, the 1st Respondent / Resolution Professional, had no option, but to seek a Relief, for the Dissolution of the Corporate Debtor, and the fact of the matter is that the same was approved, by the Committee of Creditors - It is to be remembered that the Appellant was issued with a No Objection Certificate, dated 27.09.2018, and it has No Nexus with the present Controversy / Dispute, that the said No Objection Certificate, was no way concerned with the Corporate Debtor, because of the simple fact that it was issued to the Appellant, in his personal capacity as Corporate Debtor. One cannot remain oblivious of the candid fact that the I B Code, 2016, does not envisage that the Adjudicating Authority / Tribunal, ought to provide a Hearing to the Promoter / Corporate Debtor of the Company, at the time of passing of an Order for Liquidation. The Insolvency Resolution Process under the I B Code, 2016, is a Time Bound Process, and the Appellant / Promoter, having failed to project the Resolution Plan, within the specified time limit and later, the 1st Respondent / Resolution Professional, is not to accept any Plan - Suffice it for this Tribunal, to make a pertinent mention that in the absence of any Asset(s) / the Resolution Plan(s), the Resolution Professional, had no other go, but to pray for an Order of Dissolution, to be passed by the Adjudicating Authority. After all, the end of Liquidation, requires complete Dissolution of an Entity. This Tribunal, taking note of the facts and circumstances of the instant case, in a conspectus fashion, comes to a consequent conclusion that the impugned order, dated 24.06.2020 in IA No. 198 of 2020 in CP (IB) No. 180 / BB / 2018, passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench), in passing an Order of Dissolution of the Corporate Debtor / Company (M/s. Air Pegasus Private Limited), with immediate effect, is free from any Legal Infirmities - Appeal dismissed.

Summary

Issues Involved:
1. Jurisdiction of the Adjudicating Authority.
2. Justification for Dissolution of the Corporate Debtor.
3. Appellant's Efforts and Contentions for Revival.
4. Respondents' Submissions and Counterarguments.
5. Commercial Wisdom of the Committee of Creditors (CoC).
6. Legal Precedents and Authorities Cited.

Summary:

1. Jurisdiction of the Adjudicating Authority:
The Adjudicating Authority, NCLT Bengaluru Bench, observed that under Section 60 of the Code, it has territorial jurisdiction over the place where the registered office of the Corporate Person is located. The ultimate objective of the Code is to either resolve the issue by way of a Resolution Plan or to dissolve the Corporate Debtor as expeditiously as possible. The Authority dissolved the Corporate Debtor, M/s. Air Pegasus Private Limited, and noted that the personal liability or guarantee of any Director or Promoter would not absolve them by virtue of this Order.

2. Justification for Dissolution of the Corporate Debtor:
The NCLT Bengaluru Bench justified the dissolution by stating that no useful purpose would be served by placing the Corporate Debtor under the Liquidation process since no assets exist in the Company. The liquidation process was deemed to have been completed, and the dissolution was approved by the Sole Committee of Creditors (CoC).

3. Appellant's Efforts and Contentions for Revival:
The Appellant, Managing Director of the Corporate Debtor, argued that he had sold properties and infused funds to keep the Company afloat. He contended that the high lease rental costs and huge advance security deposits affected profitability. The Appellant highlighted the reduced lease rentals due to the pandemic and the potential for revival given the existing infrastructure and No Objection Certificate from the Ministry of Civil Aviation. He secured a funding approval of approximately 29 Crores from a Dubai-based Corporation and argued that the lockdown period should be excluded from the CIRP timeline. The Appellant claimed he was unaware of the hearing before the Adjudicating Authority and sought to set aside the dissolution order to submit a Resolution Plan.

4. Respondents' Submissions and Counterarguments:
The 1st Respondent, Resolution Professional, argued that the No Objection Certificate did not equate to an Air Operator Permit and that the Corporate Debtor had no assets or operational activity since 2015-2016. The 2nd Respondent, Bank, noted the Corporate Debtor's account was classified as a Non-Performing Asset with an outstanding sum of over 42 Crores. Both Respondents contended that the dissolution was justified given the lack of realizable assets and the unanimous approval by the CoC.

5. Commercial Wisdom of the Committee of Creditors (CoC):
The Tribunal emphasized that the commercial wisdom of the CoC, which decided to dissolve the Corporate Debtor with 100% voting rights, should not be interfered with. The Tribunal cited several judgments, including the Supreme Court's decision in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta, which underscored minimal judicial interference in the commercial decisions of the CoC.

6. Legal Precedents and Authorities Cited:
The Tribunal referenced multiple Supreme Court judgments, including Maharashtra Seamless Limited v. Padmanabhan Venkatesh and K. Sashidhar v. Indian Overseas Bank, which reinforced the principle of respecting the commercial wisdom of the CoC and the limited scope of judicial review in such matters.

Conclusion:
The Tribunal concluded that the impugned order dated 24.06.2020, dissolving the Corporate Debtor, was free from legal infirmities. The appeal was dismissed, and the connected interim applications were closed.