NCLT terminates CIRP and issues a show cause notice u/s 65 of IBC to an Operational Creditor at whose instance the CIRP was initiated – Mr. Ashish Shah, RP of K-Mark Bizsol Pvt. Ltd. Vs. Mr. Bhagvanjibhai Devjibhai Kasundra – NCLT Ahmedabad Bench
NCLT Ahmedabad Bench held that:
(i) when the operational creditors (whose claims have been admitted) have withdrawn their claims, and neither the operational creditor nor the financial creditors, nor the suspended management of the corporate debtor are responding/interested in the conducting CIRP, and resolution professional is not in a position to continue the process due to non-cooperation but has to abide by the decision of the Committee of Creditors convened on 21.04.2023 to terminate or withdraw the CIRP Process.
(ii) The sequence of events narrated in the body of the order show that the intention of the Operational Creditor i.e. M/s. Nice Ceramic Private Ltd. at whose instance the CIRP was initiated, was not for the resolution of Insolvency. Instead, the Operational Creditor has used this forum for recovery and had initiated the CIR process with malicious intention for purpose other than the resolution of insolvency of the Corporate Debtor, which is not in accordance with the aim of IBC, 2016. As per the Code, if any person initiates the Insolvency Resolution Process fraudulently or with malicious intent for any purpose other than for the resolution of the insolvency, or liquidation, such an act is punishable under Section 65(1) of IBC 2016.