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TMI Blog2022 (4) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... es Private Limited, the Corporate Debtor, is allowed and the Corporate Debtor is ordered to be liquidated in terms of section 33(1) of the Code - moratorium declared. - I.A. No. 356 of 2021, I.A. No. 379 of 2021, IVN 4 of 2021, I.A No. 99 of 2022 and I.A. No. 193 of 2022 in CP (IB) No. 1634/KB/2018 - - - Dated:- 6-4-2022 - Rohit Kapoor, Member (J) And Harish Chander Suri, Member (T) For the Appearing Parties : Ratnanko Banerji, Jishnu Saha, Vivek Sibal, Joy Saha, Sr. Advs., Debendra Raut, PCS, Swapna Choubey, Kanishk Kejriwal, Ashika Daga, Deepti Priya, Bishwajit Dubey, Souvik Mazumdar, Sourojit Dasgupta, Madhav Kanoria, Surabhi Khattar, Manju Bhuteria, Rahul Auddy, Rachit Bigghe, Jatinder Singh Dhatt, Payal Kakra, Akash Tyagi, Rishav Banerjee, Sharath Sampath, Pratyaksh Sharma, Debapriya Gupta, Nitin Daga, Advs. and Party-in-Person ORDER Rohit Kapoor, Member (J) 1. The court convened by video conference today. 2. CP (IB) No. 1634/KB/201 was a company petition filed by Alliance Broadband Services Pvt. Ltd. under section 7 of Insolvency and Bankruptcy Code, 2016 against Manthan Broadband Services Pvt. Ltd. for initiation of Corporate insolvency Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor as a going concern as per section 33 of the Insolvency and Bankruptcy Code, 2016; b) appointment of Applicant Mr. Kuldeep Verma, the Resolution Professional of Manthan Broadband Services Pvt. Ltd. as liquidator of the corporate Debtor. 11. Subsequently, I.A. 379/KB/2021-2016 has been filed by Hathway Cable and Datacom Limited, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with rule 11 of the National Company Law Tribunal Rules, seeking the following reliefs: a. An order directing the Respondents to grant two weeks' time to the applicant to submit the resolution plan; b. An order directing the Respondents to consider the resolution plan submitted by the applicant; c. An order be made by this Tribunal, dismissing the application filed by the Respondent No. 1 seeking liquidation of the Corporate Debtor and pass necessary orders in relation thereto. 12. The Applicant in I.A. 379/KB/2021 has submitted that the Respondent RP has acted in a manner contrary to the of objects IBC. Resolution Professional has rejected the EOI without presenting it to the CoC and without appreciation on merits, in spite of the fact that 21 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay in the resolution process is delaying the realisation of its claims. 18. A Supplementary affidavit has been filed by the intervenor, wherein the intervenor has attempted to establish collusion between Hathway and Suspended director of Corporate Debtor by producing email dated 24.01.2021 (Annexure D of the Supplementary Affidavit) wherein the Suspended director, Mr. Rajib Dhamija is offering his personal shareholding (controlling interest) in Alliance Broadband Services Pvt. Ltd. (intervenor company) to Hathway. 19. Subsequently, I.A. 99/KB/2022 has been filed by Sony Pictures Network Pvt. Ltd. praying for: a. Imposing exemplary cost of ₹ 1 crore on Hathway for committing abuse of the court, delaying the liquidation of Corporate Debtor by 10 months, thereby deteriorating the assets of Corporate Debtor by filing IA. 379/KB/2021 with self-contradictory prayers. b. Resolution Professional to explain his delay of 10 months in filing IA 356/KB/2021 for liquidation when s. 33(2) of IBC is clear on the issue. c. Hearing of IA 356/KB/2021 and IA 379/KB/2021 together and disposal of both within 3 months as ordered by Hon'ble HC in WPO 1767 of 2021. 20. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, In January, 2022, IA 193 of 2022 has been filed by the Applicant, Indian Cable Net Company Ltd., engaged in similar business as that of Corporate Debtor seeking the following reliefs: a) Time to file Expression of Interest by the Resolution Applicant/Petitioner in connection with the instant matter be extended by two weeks from the date of the order; b) Time to file the Resolution Plan by the Resolution Applicant/Petitioner in connection with the above matter be extended by four weeks from the date of the order. 26. It is stated by the applicant that it has substantial reputation and goodwill in the market and has the necessary expertise, know how and finances to revive and rehabilitate the Corporate Debtor and to bring about a Resolution with regard to the affairs of the Corporate Debtor. 27. It is submitted by the applicant that it be allowed to file Resolution Plan at this stage and the delay in filing the Resolution Plan may be condoned, for the reasons mentioned in this application. It is also stated by the applicant that if permitted by the Adjudicating Authority, it will deposit a sum of Rs. 10 Crores to demonstrate the genuine, intent and motive of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viii. The Hon'ble Supreme Court, in Ebix Singapore Judgment, has reiterated that CIRP timelines must be followed. If CIRP timelines are not followed, then, the liquidation value will further go down. Timelines would have to be maintained, as also directed by the Hon'ble Supreme Court. 29. The following dates and events may be necessary to determine issues raised in present applications and for taking a decision to the relief prayed for in I.A. 379/KB/2021 and I.A. 193/KB/2022: S. No. Date Particulars 1. 18.09.2019 CIRP against the Corporate Debtor was initiated in Cp. 1634/KB/2018 2. 18.03.2020 180 day period scheduled to expire. 3. 24.03.2020 lockdown announced on 24.03.2020 4. 1.11.2020 extension of 90 days given w.e.f 1.11.2020 the 270 day time period now scheduled to expire on 28.01.2021 5. 10.11.2020 in IA 471/2020- order for extending the CIRP f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10th meeting held- Hathway s communication discussed. CISCO asked if there was any further communication from Hathway. The Resolution Professional replied that there was no further communication. The Resolution Professional informed the meeting regarding the pending IAs. Liquidation of Corporate Debtor was discussed but no resolution for liquidation was passed, due to CISCO not having internal permission. 18. 08.03.2021 11th meeting held. Hathway s interest was discussed again. However, it was decided that the Corporate Debtor should be liquidated. Accordingly, CoC voted on Liquidation by 100% votes 19. 17.03.2021 IA 356/kb/2021 filed by Resolution Professional for liquidation of Corporate Debtor 20. 19.03.2021 period of CIRP expired 21. 20.03.2021 Hathway again wrote to Resolution Professional for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the picture that emerges is summarized as under:- i. Hathway Cable and Datacom Ltd. hereinafter called as Hathway, expressed interest submitting Resolution Plan and requested for two weeks vide email dated 21th February, 2021. ii. The Resolution Professional rejected the request of applicant on the basis of having received it 30 days after expiry of last date of submission of EOI that is 25.01.2021. iii. In the 10th meeting of Committee of Creditors (hereinafter referred to as the CoC) at Internal Page 4 of the minutes under Item 4. It was observed and reproduced hereinafter; To take note of status of IA 408/KB/2020 and IA 1424/KB/2020 and two other applications filed by Resolution Professional a. Progress between last meeting of CoC held on 25.01.2021 onwards Date Events 27.01.2021 IA 142/KB/2021 filed by RP after seeking legal opinion for 50 days exclusion from CIRP 28.01.2021 Hon ble NCLT took on record progress report filed by RP. Next date of hearing 09.02.2021. 09.02.2021 Hon ble NCLT al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32. From the minutes of the 11th meeting of CoC it is emerges and is reproduced hereafter. i. At internal Page-4 of these minutes the CoC and other creditors deliberated in details all efforts put by the creditors to arrive at a successful and viable resolution plan within the framework of IBC, 2016 in spite of absolute non-cooperation from board of directors of the Corporate Debtor. The Operation Creditors (Sony/Star) even contributed costs/agreed to contribute certain costs (legal fees and 50% of RP fees) to run the CIRP along-with sole member of CoC (CISCO). The financials for FY 2017-18, FY 2018-19 and till insolvency commencement dated 18.09.2019 were never provided by the board of directors (suspended) till date, in spite of specific directions given by Hon'ble NCLT on an application by RP. The Board of Directors (suspend) of the Corporate Debtor never showed any seriousness other than false assurances at all times. It is further evident that most of the directors have not attended meeting of CoC of the Corporate Debtor except one or two meetings. The directors did not contribute any money for CIRP of the Corporate Debtor. ii. There are no operations in the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor to be the majority shareholder. The liquidation process is going to be long and painful and non-beneficial for all the creditors and it will kill any opportunity for revival of the Corporate Debtor. The 10.09 acres of the 13.5 acres Tajpur land is a converted land wherein the valuer has been informed that he should approach the local BLRO office to ascertain the same and arrive at the correct and proper valuation, considering the same as commercial land. The erstwhile Director of the Corporate Debtor had suggested that the CoC holds back its vote to understand and realize the full gamut of the Liquidation process and take an informed decision. a. Resolution for liquidation of the Corporate Debtor After deliberation and discussion above, the following agenda was put up for voting. RESOLVED THAT the Corporate Debtor, Manthan Broadband Services Private Limited, be liquidated as per provisions contained in Chapter III of the Insolvency and Bankruptcy Code, 2016 and applicable Regulation thereon and that Hon'ble Adjudicating Authority be informed of the decision of the Committee of Creditors of the Corporate Debtor. FURTHER RESOLVED THAT the Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o operations of the Company since mid of FY 2018-19 as per records. There is no running business of the Corporate Debtor. Hence the business of the Corporate Debtor cannot be sold off as a going concern within the meaning of Regulation 31(1) of the IBBI (Liquidation Process) Regulations, 2016. b. The CoC recommends to sell the Corporate Debtor under Regulation 32 C of the IBBI (Liquidation Process) Regulations, 2016. The following resolution was passed by CoC unanimously through voice voting RESOLVED THAT in pursuant to the provisions of Regulations 39C of IBBI (CIRP) Regulations, 2016, the CoC recommends sale of Corporate Debtor as a going concern under Regulation 32(e) IBBI (Liquidation Process) Regulations, 2016 with all its assets and liabilities. To approve the minutes of the previous meeting of the Committee of the Creditors The minutes of the meeting held on 08th March, 2021 were approved and taken on record. 33. At internal Page 9 of the minutes of the 12th meeting which was referred and the same is reproduced hereinafter; Mr. Gurmeet Singh pointed out that liquidation will detrimental for the stakeholders. As explained by RP, the security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dhar Vs. Indian Overseas Bank and Ors., the Hon'ble Supreme Court has held that the legislature while enacting the IBC, consciously does not provide any ground to challenge the commercial wisdom of the individual Financial Creditors or the collective decision of the CoC before NCLT and the decision of the CoCs commercial wisdom has been made non-justiciable. The Hon'ble Supreme Court re-emphasized the primacy of commercial wisdom of CoC in its ruling in Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta and Ors., wherein the Apex court held the following: there is no residual equity jurisdiction in the Adjudicating Authority or the Appellate Tribunal to interfere in the merits of a business decision taken by the requisite majority of the Committee of Creditors, provided that it is otherwise in conformity with the provisions of the Code and the Regulations, as has been laid down by this judgment. 36. In light of the above decisions, we reject the interlocutory applications IA 379/KB/2021 IA 193/KB/2022. 37. Further, in light of the dismissal of the abovementioned applications, I.A. 99/KB/2022 and IVN. 4/KB/2021 have become infructuous a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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