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TMI Blog2020 (5) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations 2019 was required to be complied with and stakeholders' Consultation Committee constituted. It is noted that as per Regulation 31A(9), the advice of the Consultation Committee is not binding on the Liquidator and there is a proviso that where the Liquidator takes a decision different from the advice given by the Consultation Committee he shall record the reasons for the same in writing. The sole financial creditor is Oriental Bank of Commerce which has relinquished its security interest all the assets by e-mail dated 05.10.2019. However, there is no representation before us by Oriental Bank of Commerce that the stakeholders' Consultation Committee was not constituted and that this is prejudicial to the interest of Oriental Bank of Commerce. Similar representation has also not been made by any of the operational creditors. Therefore, no adverse inference is being drawn regarding non-constitution of the stakeholders' Consultation Committee. Regulation 44(1) of the Liquidation Process Regulations 2016 is as substituted by the Liquidation Process Amendment Regulations 2019 dated 25.07.2019. It would not be in the interest of justice to keep the liquidation p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Liquidation Process Regulations 2016). In the present case, application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (Code) was filed by Ashok Kumar and Brothers against K.T.C. Foods Pvt. Ltd. (K.T.C. Foods) and was admitted by the Tribunal by order dated 29.08.2018. Since no resolution plan was received till 15.04.2019, the Committee of Creditors (COC) in its meeting held on 25.04.2019 passed resolution with 100% voting rights approving liquidation of K.T.C. Foods. Vide order dated 31.05.2019, K.T.C. Foods was directed to be liquidated in the manner as laid down in Chapter III of the Code and Shri Anup Kumar Singh then Resolution Professional (RP) was appointed as the Liquidator. It is submitted that after inviting proof of claims, receiving the claims, preparing the list of stakeholders and submitting the preliminary report and asset memorandum, it was found that there was one claim in Form D by financial creditor .e. Oriental Bank of Commerce, NCB Branch, Haryana, as well as claims of 8 operational creditors. It is stated that vide e-mail dated 05.10.2019, Oriental Bank o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,00,00,000/-respectively). 5. Sale certificate is stated to be issued on 26.11.2019 and the proceeds distributed as per the provisions of Section 53 of the Code on 26.11.2019. 6. It is submitted that post distribution of funds in compliance of Section 53 of the Code, the applicant handed over the possession of all assets of K.T.C. Foods as a going concern to Shiv Shakti. 7. Copy of compliance certificate in Form H and final report are stated to be attached as Annexure M of the application. The following reliefs have been sought:- a. That the Hon'ble Tribunal may graciously be pleased to approve the closure of Liquidation Process of the Corporate Debtor under Regulation a5(3)(a) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and Sale of Corporate Debtor as a Going Concern to M/s. Shiv Shakti Inter Globe Exports Private Limited, the highest bidder without any liabilities including contingent liabilities and with immunity from existing litigations, if any, against the Corporate Debtor by way of E-Auction at a total consideration of INR 18,45,86,646/- (Rupees Eighteen Crores Forty Five Lacs Eighty Six Thousand Six Hund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,45,86,646/- being 100% of the reserve price. Post receipt of the proceeds from the sale as a going concern of K.T.C. Foods, the applicant has submitted that distribution was made as per Section 53 of the Code on 26.11.2019. 11. However, the present application is not filed for dissolution of K.T.C. Foods. It has been pleaded during the course of hearing that Regulation 45 of the Liquidation Process Regulations 2016 provides for closure of the liquidation process of the corporate debtor where the corporate debtor is sold as a going concern. The provisions of Regulation 45 of the Liquidation Process Regulations 2016 as under:- 45. Final report prior to dissolution. (1) When the corporate debtor is liquidated, the liquidator shall make an account of the liquidation, showing how it has been conducted and how the corporate debtor's assets have been liquidated. (2) If the liquidation cost exceeds the estimated liquidation cost provided in the Preliminary Report, the liquidator shall explain the reasons for the same. (3) [The liquidator shall submit an application along with the final report and the compliance certificate in form H to the Adjudicating Authority for - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the Board with registration number IBBI/IPA-001/IP-P00153/2017-2018/10322, am the Liquidation Process of K.T.C. Foods Private Limited. 2. The details of the Liquidation Process are as under: Sl. No. Particulars Description (1) (2) (3) 1 Name of the corporate debtor K.T.C. Foods Private Limited 2 Case No. NCLT Bench CA No. 387/2019 in C.P. (IB) No. 136/Chd/Hry/2018 Chandigarh Bench 3 Date of initiation of liquidation 31.05.2019 4 Date of appointment of liquidator 31.05.2019 5 Date of commencement of CIRP 07.09.2018 6 Name of RP during CIRP and his registration No. as IP Anup Kumar Singh IBBI/IPA-001/IP-P00153/2017-2018/10322 7 Name of Liquidator and his registration No. as IP Anup Kumar Singh IBBI/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable to the liquidation processes, which had commenced before coming into force of he said Amendment Regulations and that they are applicable only to liquidation processes, which commenced on or after 25th July, 2019. 17 No. of meetings of consultation committee N.A. 18 Date of submission of list of stakeholders to AA 13.08.2019 19 Date of public announcement of list of stakeholders 20.08.2019 20 Date of filing of preliminary report assets memorandum of AA 13.08.2019 21 Fair value INR 24,64,41,574.50 22 Liquidation value INR 18,45,86,646 23 Date of public announcement for auction (please add additional rows, if required) 05.11.2019 24 Date of order of AA to dispense with the public announcement for Auction N.A. 25 Date of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. 44 Date of application to AA as per Reg 46(1) N.A. 45 Date of transfer of undistributed/unclaimed assets or proceeds of liquidation to public Account of India N.A. 46 Date of intimation as per Reg 46(3) N. A. 47 Date of Final Report to AA (prior to dissolution application) 29.11.2019 3. The details of the assets as per Asset Memorandum and Final Sale Report are as under: Sl. No. Assets Mode of Sale Estimated Liquidation Value Realisation Amount (Rs.) Date of transfer to liquidation Account 1. Sale of Corporate Debtor as a Going Concern as per Regulation 32(e) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 E-Auction INR 18,45,86,646 INR 18,45,86,646 25.11.219 4. (a) Liquidation value of the liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n regulation 47 as under: Section of the Code/Regulation No. Description of Task Timeline as per regulation 47 Actual Timeline (1) (2) (3) (4) Section 33` Commencement of LCD and Appointment of Liquidator T 31.05.2019 Section 33(1)(b)(ii)/Reg. 12 (1, 2, 3) Public announcement in Form B T + 5 04.06.2019 Reg. 35(2) Appointment of registered valuers T+7 N.A. Section 38(1) and (5), Reg. 17, 18 and 21A Submission of claims; T+30 30.06.2019 Intimation of decision on relinquishment of security interest: 05.10.2019 (Since Amended Regulations were not applicable) Intimation of decision on relinquishment of security interest Section 38(5) Withdrawal/modification of claims T+44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 27.11.2019 i.e., on the 180th day from the date commencement of Liquidation Proceedings Reg. 46 Time period to H1 bidder to provide balance sale consideration As per term sheet the timeline for payment post being declared H1 was 15 days of the date when he is invited to provide the balance sale consideration. 6. The following are deviations/non-compliance with the provisions of the Insolvency and Bankruptcy Code, 2016 regulations made, or circulars issued there under (If any deviation/non-compliances were observed, please state the details of reasons for the same): Sl. No. Deviation/Non-compliance observed Section of the Code / Regulation No. / Circular Reasons Whether rectified or not No. (1) (2) (3) (4) (5) 1 N.A. N.A. N.A. N.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmenced with 31.05.2019 and the Liquidation Process Amendment Regulations 2019 were notified on 25.07.2019. Reference has been made to IBBI Circular No. IBBI/LIQ/024/2019 dated 26.08.2019 (supra) clarifying that the provisions of the Liquidation Process Amendment Regulations 2019 are not applicable to the liquidation processes. We however, find that in the present case, the application is filed under Regulation 45(3)(a) read with Regulation 32A and 33(1) of the Liquidation Process Regulations 2016. Regulation 32A relating to selling as a going concern was inserted by the Liquidation Process Amendment Regulations 2019 and inter alia requires the Liquidator to identify and group the assets and liabilities to be sold as a going concern, in consultation with the Consultation Committee. Therefore, the response given in Column 2 Sr. No. 16 does not appear to be correct. In view of the reliance in the application on the Regulations of the Liquidation Process Regulations 2016 as amended by the Liquidation Process Amendment Regulations 2019, Regulation 31A of the Liquidation Process Regulations 2016 as inserted by the Liquidation Process Amendment Regulations 2019 was required to be complie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired for liquidation. 19. It has also been submitted that as per Clause 9.3 of the e-auction process information document dated 05.11.2019, it is stated that the Liquidator has filed an application with Hon'ble NCLT Chandigarh Bench seeking directions on account of transactions identified by the auditor as per his audit report. Any amount recovered from the respondents upon Hon'ble NCLT directions, will be distributed to the financial creditors only and will not form part of the assets to be taken over by the successful bidder. It is further submitted that as per Section 43, 44, 45 and 66 of the Code, the Liquidator or Resolution Professional has to pursue the application filed by the Resolution Professional/Liquidator and in the present case, the application is to be pursued by the Liquidator. 20. We find that Regulation 44(1) of the Liquidation Process Regulations 2016 (supra) is as substituted by the Liquidation Process Amendment Regulations 2019 dated 25.07.2019. It would not be in the interest of justice to keep the liquidation process of the corporate debtor ongoing, till the time the application for avoidance of transactions is finally decided, especially s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidation Process Regulations 2016, we direct that since the corporate debtor K.T.C. Foods is sold as a going concern, the liquidation process of the corporate debtor K.T.C. Foods Private Limited be closed without dissolution of K.T.C Foods Private Limited and that Application 510/2019 for avoidance of transactions under Chapter III/ VI of Part II of the Code shall continue to be adjudicated upon by the Adjudicating Authority. CA No. 1189/2019 is accordingly disposed. Copy of this order be sent to the Liquidator, Shiv Shakti and all the respondents in CA No. 510/2019 at the latest addresses given in that CA. IA No. 132/2020 23. We have noted above that the application under Section 9 of the Code for initiation of CIRP in the case of K.T.C. Foods was filed by an operational creditor Ashok Kumar and Brothers. IA No. 132/2020 is filed by Ashok Kumar and Brothers under Section 60(5) of the Code for directions to Shiv Sakti to make payment to the applicant as per his claim as Shiv Shakti has acquired K.T.C. Foods as a going concern and also to take appropriate action against the Liquidator for not performing his duties as Resolution Professional and for wilfully disobeyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82/KB/2017 dated 11.01.2018 of NCLT Kolkata Bench in the matter of Gujarat NRE Coke Limited. On a careful consideration, we find that the judgment of the Hon'ble Supreme Court in Allahabad Bank Vs. ARC Holding Ltd. and others (supra) in a case relating to Official Liquidator appointed by the Hon'ble High Court, was relied upon by the Hon'ble NCLT Kolkata in CP (IB) No. 182/KB/2017 and it was directed that the Liquidator shall try to dispose of the corporate debtor company as a going concern after publication of notice in newspaper with the reserve price which shall be equal to the total debt amount including interest and maximum period applicable for trying the sale of the corporate debtor as a going concern will be only three months from the date of the order. 28. We further find that the judgment of the Hon'ble NCLT Kolkata is with reference to Regulation 32 of the Liquidation Process Regulations 2016 as it then stood, in which the prescribed manner of sale was that the Liquidator may (a) sell and asset on a stand alone basis; or (b) sell (i) the assets in a slump sale, (ii) a set of assets collectively, or (iii) the assets in parts (page 8 of the judgment). Th ..... 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