NCLT Cases-Limited Insolvency Examination w.e.f. 1st January, 2021

NCLT Cases-Limited Insolvency Examination w.e.f. 1st January, 2021

 

1. In the matter of Amtek Auto Limited [CA.Nos.567/2018 & 601/2018 in CP(IB)No.42/Chd/Hry/2017]

Case Citation: (2019) ibclaw.in 14 NCLT

Corporation Bank as a financial creditor filed a petition under Section 7 of the Code against M/s Amtech Auto Limited, for having made a default in making payment of the outstanding dues. The petition was admitted on 24.07.2017, declaring the moratorium in terms of sub-section (1) of Section 14 of the Code and by order dated 27.07.2017, Mr. Dinkar T. Venkatasubramanian, was appointed as Interim Resolution Professional with the necessary directions. It is borne out from the record that the Interim Resolution Professional was confirmed as a Resolution Professional by Committee of Creditors. In the meanwhile, certain miscellaneous applications came to be filed, which were disposed of from time to time.

The Resolution Professional filed CA No.8 of 2018, seeking extension of time in completion of the Resolution Process as borne out from the order dated 17.01.2018. The initial period of 180 days, prescribed for completion of the Resolution Process under Section 12(1) of the Code, expired on 19.01.2018. For the reasons stated in the order dated 17.01.2018, the period of completion of Resolution Process was extended by 90 days. As such, the total period of CIRP process would have expired in the middle of April, 2018.

The Resolution Plan submitted by respondent No.1 Liberty House Group Pte Ltd. (for brevity ‘LHG‘), was approved by this Tribunal, vide order dated 25.07.2018. The successful resolution applicant is said to have failed to honour its commitment to comply with the requirements for implementation of the approved plan and expressed its inability to comply with the commitments on one pretext or the other. The respondent No.1 has intentionally evaded to fulfil the following financial commitments made in the Resolution Plan:-

a. Failure to pay a sum of INR 3,310 Crores upfront along with the fresh infusion of INR 350 Crores and compliance of the terms of ninety (90) days, extendable by another 30 days (in case the CCI approval is not received within a period of 60 days from the NCLT approval date) from the NCLT approval date, i.e. November 22, 2018.

b. Failure to fulfil commitments prescribed under the process note dated 07.12.2017, prepared under the mandate of Section 25(2)(h) of the Code (“Process Note“) including (i) furnishing a performance guarantee of an amount of ₹100 Crore (Performance Guarantee) against the committed amounts of ₹ 4404 Crores; and (ii) creation of the escrow equivalent to 15% of the upfront cash pay-out contemplated under the terms of the approved Resolution Plan as an alternative to the provision of the performance bank guarantee in favour of the Committee of Creditor (in the form acceptable to the Committee of Creditors).

Various steps taken by the Resolution Professional in inviting the prospective Resolution Applicants, release of the detailed process note dated 07.12.2017 and other conditions required for a binding resolution plan have been detailed. The objective evaluation criteria was also approved by the Committee of Creditors. The binding Resolution Plans were received only from two prospective applicants, being respondent No.1 and Deccan Value Investors LP (DVI). The applicant was the highest bidder and its bid was approved by the Committee of Creditors. It was conveyed by the Resolution Professional to both the prospective Resolution Applicants, vide e-mail dated 26.02.2018 that the Resolution Applicant should undertake to create an escrow equivalent to 15% of the upfront cash pay-out in the event the Committee of Creditors approving the Resolution Plan. The final plan was submitted by respondent No.1 (LHG) on 26.03.2018.

The instant application has been filed on behalf of all the Financial Creditors of the corporate debtor through the Corporation Bank under Section 60(5) read with Section 74(3) of the Insolvency and Bankruptcy Code, 2016, (for short to be referred hereinafter as the `Code‘), with the prayer to declare that the Resolution Applicant M/s Liberty House Group Pte Limited (respondent No.1 herein) and its promoters upon whom the Resolution Plan is binding under Section 31 of the Code, have knowingly contravened the terms of the Resolution Plan, having failed to implement the same. The further prayer made is that the Committee of Creditors be reinstated to run the corporate debtor, as a going concern and to grant minimum of 90 days for the Resolution Professional to make another attempt for a fresh process rather than forcing the corporate debtor into liquidation on account of fraud committed by respondent No.1. It has also been prayed that respondent No.1 be debarred from applying for a fresh resolution plan and the Insolvency and Bankruptcy Board of India, may be directed to initiate the process under Section 74(3) of the Code.

Contentions of the parties

Petitioners

The basic ground that has been highlighted is that the Resolution Process needs to be restarted as respondent No.1 has failed to make payment of the upfront amount as required under the approved Resolution Plan. The Corporation Bank, a financial creditor also invoked the bid bond guarantee, against which respondent No.1 has filed the Civil Suit, CS (Comm) 1245 of 2018 before the Hon’ble High Court of Delhi, inter alia, seeking a permanent injunction of the invocation of the bid bond guarantee, which is pending adjudication.

Resolution Professional

Respondent No.2-Resolution Professional has filed his reply by way of affidavit vide Diary No. 320 dated 21.01.2019 and the stand of the Committee of Creditors is adopted. It is stated that the Resolution Professional is also a member of the Monitoring Committee to implement the Resolution Plan. The Resolution Professional has also prayed that relief sought by the applicant is not only necessary for the effective resolution of the corporate debtor and protecting the interest of all the stakeholders, but to avoid the liquidation of the corporate debtor. It is stated that despite repeated attempts, discussions and accommodation by the Members of the Committee of Creditors and the Resolution Professional, respondent No.1 has failed to honour its commitments and faltered in implementing the Resolution Plan.

Successful Resolution Applicant

A detailed reply has been filed by LHG. The respondent has tried to build a case that there has been gross misrepresentation/mistake of facts/irregularities in the information relating to the corporate debtor and the fraud allegedly played by the Resolution Professional, has resulted in the entire Insolvency Resolution Corporate Process, being vitiated. It is denied that respondent No.1 has knowingly or wilfully contravened the terms of the Resolution Plan or acted blatantly. It is otherwise stated that the Adjudicating Authority being the creature of the statute is not entitled to grant the reliefs, being prayed for. It is stated that after the approval of the Resolution Plan under Section 31 of the Code, the role of the Adjudicating Authority comes to an end. Further, there is no power for the Adjudicating Authority to recommend an action under Section 74(3) of the Code or to declare that the Resolution Applicant has knowingly or wilfully contravened any of the terms of the Resolution Plan. The offences for contravention are exclusively triable by the Special Court.

Decision of the Tribunal

Jurisdiction of NCLT 

Before disposing of the application, it would be necessary to consider the issue as to whether the Corporation Bank, stating itself to be representing the Committee of Creditors, is competent to file the application. It is submitted that Committee of Creditors is non-existent after the Resolution Plan is approved.

In any case, it was the Corporation Bank as a Financial Creditor, which initiated the process against the respondent under Section 7 of the Code, resulting into its admission, declaration of moratorium and appointment of Interim Resolution Professional. No other financial creditor has approached this tribunal taking a contrary stand. So the instant applicant is competent.

Section 60(5) falls in Chapter VI of the Code, after the chapter dealing the provisions relating to CIRP and Liquidation process. This is a non-obstante clause and the Tribunal is vested with the power to entertain and dispose of any question of law or facts arising out of or in relation to the insolvency process, liquidation proceeding, of corporate person under the Code. The process cannot be kept in a limbo, especially when the approved Resolution Plan has not been implemented and various objections have been raised over various terms and conditions and about the allegations constituting misrepresentation and fraud.

The provisions of the Code provide for a definite timeline for strict implementation of the Resolution Plan. If the timelines as provided in the Resolution Plan, duly approved by this Tribunal, are not adhered to, the only conclusion would be that there has been a default in implementing the Plan for whatever reason. We are not going into the question of the Resolution Applicant being intentionally or wilfully contravening any of the terms of the Plan, as such the matter is to be tried by Special Court, as the offence under Section 74(3) of the Code, is triable before a Special Court.

By virtue of Section 236 of the Code, the cognizance of the offence can be taken on a complaint made by the Board or the Central Government or any person authorized by the Central Government on its behalf.

There being a clear default in implementing the Plan within the time stipulated in the Resolution Plan, the instant application deserves to be allowed with liberty to any Member of the Committee of Creditors or the Resolution Professional file a complaint before the Insolvency and Bankruptcy Board of India or the Central Government with a prayer to file the criminal complaint on the ground of corporate debtor having intentionally and wilfully contravened the terms of the Resolution Plan, for which we are restraining ourselves from making any observation either way. However, for LHG to say that the Tribunal was not properly assisted at the time of hearing on the application for approval of the Resolution Plan, would be a misplaced allegation. The order dated 25.07.2018 by which the Resolution Plan was approved shows that DVI had raised the issue of eligibility of LHG, which was opposed by LHG tooth and nail.

Exclusion of the time & Fresh process for resolution

The only issue that requires consideration is the exclusion of time in calculating the maximum period of 270 days permissible under Section 12 of the Code for completion of the Insolvency Resolution Process. As we are not going into the question and detailed assertions of the parties with regard to the wilful or intentional contravention of the terms of the approved Resolution Plan in view of the ultimate submissions made at the stage of final arguments.

Reference may be made to the judgment in Company Appeal (AT) (Insolvency) No.185 of 2018, reported as Quinn Logistics India Pvt. Ltd. Versus Mack Soft Tech Pvt. Ltd., passed by Hon’ble National Company Law Appellate Tribunal, wherein it was held that if an application has been filed by the ‘Resolution Professional’ or the ‘Committee of Creditors’ or ‘any aggrieved person’ for justified reasons, it is always open to the Adjudicating Authority/Appellate Tribunal to ‘exclude certain period’ for the purpose of counting the total period of 270 days, if the facts and circumstances justify exclusion, in unforeseen circumstances. It is admitted proposition of fact that LHG being the highest bidder, DV1 did not participate in the later proceedings before the Committee of Creditors for seeking a chance to modify its Plan.

The Hon’ble Appellate Tribunal in Quinn Logistics India’s case (supra) held that the following good grounds and unforeseen circumstances, the intervening period can be excluded for counting of the total period of 270 days of resolution process:-

(i) If the corporate insolvency resolution process is stayed by ‘a court of law or the Adjudicating Authority or the Appellate Tribunal or the Hon’ble Supreme Court.

(ii) If no ‘Resolution Professional’ is functioning for one or other reason during the corporate insolvency resolution process, such as removal.

(iii) The period between the date of order of admission/moratorium is passed and the actual date on which the ‘Resolution Professional’ takes charge for completing the corporate insolvency resolution process.

(iv) On hearing a case, if order is reserved by the Adjudicating Authority or the Appellate Tribunal or the Hon’ble Supreme Court and finally pass order enabling the ‘Resolution Professional’ to complete the corporate insolvency resolution process.

(v) If the corporate insolvency resolution process is set aside by the Appellate Tribunal or order of the Appellate Tribunal is reversed by the Hon’ble Supreme Court and corporate insolvency resolution process is restored.

(vi) Any other circumstances which justifies exclusion of certain period.

The facts of the present case are not covered under various circumstances from Point No. (i) to (v) as laid down by the Hon’ble National ‘company Law Appellate Tribunal, but the matter in this case is required to be considered under principal Point No. (vi) to see whether the circumstances in the present case are such which would justify the exclusion of certain period.

The principle laid down thus emerges is that certain period can be excluded from the total period of 270 days permissible under Section 12 of the Code for the purpose of exclusion, and there is no scope of granting extension beyond 270 days under any circumstances. The contention of Learned Senior Counsel for the applicant and that of the learned counsel for the Resolution Professional that there are so many prospective applicants, who now intend to jump into the field and that there are bright chances of a much better Resolution Plan therefore, the Committee of Creditors, be reconstituted and the matter be remitted for starting fresh process of advertisement, inviting expression of interest etc., is not permissible. There is no dispute of the fact that originally Insolvency Resolution Process was concluded within a period of 270 days. The Committee of Creditors fixed the evaluation matrix of inviting expression of interest, and the proposed applicants were supposed to fulfil the condition of the bond to make other eligible for submitting the Resolution Plan. As already discussed, there were only two binding Resolution Plan, one submitted by respondent No.1 (LHG) and other by DVI. DVI only backtracked because there was some better amount of bid offered by respondent No.1-LHG. Since the approved Resolution Plan cannot be now implemented because of the default in making payment as per the terms of the Resolution Plan, the period when the Resolution Plan was submitted by DVI till the disposal of the instant application can only be reconsidered by the Committee of Creditors by reconstituting it and not by initiating fresh process, which would defeat the fresh binding timelines provided under the Code to complete the process. No matter if the corporate debtor ultimately has to face liquidation, but the permission to restart the process, make advertisement and invite fresh plans etc., would defeat the very mandate of Section 12 of the Code. The Committee of Creditors can only discuss the Resolution Plan which was submitted by DVI only by exclusion of certain period of time while calculating 270 days.

From the order dated 25.07.2018, passed in CA No.114/2018, by which the Resolution Plan was approved, it was observed in Paragraph No.10 that only two bindings Resolution Plans were received from two applicants namely LHG and DVI. So if that was the state of fact, there is no question of giving opportunity to so many interested persons, who may join at this stage as they had not submitted the binding Resolution Plan within the period already fixed by the Committee of Creditors. It was also observed in the said order that there were four more Resolution Applicants, who neither submitted the Resolution Plan nor bid bond guarantee. So looking into the object of the Code and the principle laid down by the Hon’ble Supreme Court, the prayer made in the instant application for starting the fresh process for resolution of the corporate debtor cannot be accepted. However, in the facts of this case, the Committee of Creditors is reconstituting for the purpose of making a decision on the plan submitted by DVI.

With the aforesaid discussion and holding that the approved Resolution Plan submitted by LHG is not capable of implementation due to default in adhering to the payment schedule, we dispose of this application by directing that the period from the date when DVI submitted its final plan i.e. on 05.03.2018 as given in Paragraph No.8 of CA No.140 of 2018 upto the date of the receipt of copy of this order be excluded while calculating the period of 270 days for completion of the Resolution Plan with liberty to the financial creditor and/or Resolution Professional to make appropriate complaint with the Insolvency and Bankruptcy Board of India or the Central Government on the allegation of wilful or intentional default and to pursue the appropriate remedy for the offence, if any, committed by the respondent with right to respondent No.1 to defend the action. The period of 10 days in addition would also stand excluded for serving the notice to DVI for representing its case before the Committee of Creditors and for which the Committee of Creditors is reconstituted. The Resolution Professional and the Committee of Creditors would take a final decision and report to the adjudicating authority about the final outcome. The progress reports shall be sent by the Resolution Professional regularly after 10 days from the date of receipt of copy of this order. Rest of the prayers are declined. 

With the aforesaid observation and directions,  CA No. 567/2018 stand disposed of.

CA No.601/2018

The learned Senior Counsel for the applicant-LHG however, contended that the Adjudicating Authority must lay down the guidelines for compliance by the Resolution Professionals in such matters and the adjudicating authority is vested with such a right. We have already held that there has been a default in implementing the Resolution Plan submitted by the applicant. The application of the financial creditor has been disposed of with liberty to the Resolution Applicant or the financial creditors to file a complaint before the Insolvency and Bankruptcy Board of India or the Central Government, claiming that the LHG intentionally and wilfully contravened the terms of the Plan. No effective order therefore, can be passed in this application as the matter would be within the purview of the Competent Authority. The Adjudicating Authority under the Code without passing an effective order cannot lay down the guidelines in the exercise of its jurisdiction, which is to adjudicate the matters under the Code and the Rules and Regulations framed thereunder.

In view of the above, we reject this application in limine. CA No.601/2018 stands disposed of.

 

2. In the matter of Sterling SEZ and Infrastructure Limited [M.A 1280/2018 in CP 405/ 2018]

Case Citation : (2019) ibclaw.in 15 NCLT

This Tribunal admitted a Section 7 petition against the Corporate Debtor on 16.07.2018 and appointed the Applicant herein as the Interim Resolution Professional who was subsequently confirmed as Resolution Professional.

The office of the Enforcement Directorate has provisionally attached the assets belonging to the Corporate Debtor vide order/notice dated 29.05.2018 and corrigendum dated 14.06.2018 as part of certain proceedings initiated by the office of the Enforcement Directorate against the Corporate Debtor.

On 05.09.2018, the Applicant intimated the Directorate of Enforcement about the initiation of CIRP and imposition of moratorium as mentioned in this Tribunal’s order. The Applicant also requested the Directorate of Enforcement to withdraw the attachment, if any, on the properties and assets of the company as the IRP is required to take charge and custody of the same under the provisions of the Code. Now the applicant came before this Tribunal for the above said reliefs.

Contentions of the parties

Applicant

  • As per the provisions of the Code, the entire management of the Corporate Debtor and the responsibility of running the business as a going concern vests with the Resolution Professional. Under Section 18 of the Code, an IRP is required to take control and custody of all the assets of the Corporate Debtor including those assets which may not be in the possession of the Corporate Debtor.
  • The Applicant cited Sec. 14 & 238 of IBC to draw home the point that during CIRP, the Resolution Professional should decide how the properties and assets of the Corporate Debtor can be appropriated.
  • Further, the Applicant cited a judgment pronounced by the Hon’ble NCLT, Kolkata bench in Surendra Kumar Joshi v. REI Agro Limited, C.A (IB) No. 453/KB/2018 in C.P (IB) No. 73/KB/2017 wherein a liquidator had filed an application under Section 35(1) (n) of the Code seeking orders against the Directorate of Enforcement, New Delhi to release the attachment on the assets of the Corporate Debtor which was allowed.
  • The Hon’ble Supreme Court in Solidaire India Ltd v. Fairgrowth Financial Services Pvt. Ltd., (2001) 3 SCC 71 held that where there are two special statues which contain non-obstante clauses, the later statute must prevail. This is because at the time of enactment of the later statute, the Legislature was aware of the  earlier legislation and its non-obstante clause. If the Legislature still confers the later enactment with a non-obstante clause it means that the Legislature wanted that enactment to prevail. If the Legislature does not want the later enactment to  revail then it could and would provide in the later enactment that the provisions of the earlier enactment continue to apply.
  • The Applicant further contended that the Tribunal established under the Prevention of Money Laundering Act, 2002 (PMLA) being a criminal court can only decide whether the properties attached during investigation from the possession of the Corporate Debtor could be said to be the properties acquired by them by using the proceeds of crime. It is for the NCLT to decide how the properties and assets of the Corporate Debtor under liquidation can be appropriated and held that the liquidator must get possession of the properties attached by the Enforcement Directorate.
  • The Applicant further contended that the properties attached cannot be said to be acquired by using proceeds of crime or by diversion of funds. All the properties which were attached were in the name of the company and they should be available for legitimate distribution to the various creditors for settlement, resolution or recovery of their claims.
  • The Applicant submits that unless the attachment is withdrawn and properties are set free, he cannot proceed with the CIRP process.

Enforcement Directorate

  • That Sterling Biotech Limited (SBL) is a Baroda based public limited company listed in BSE/NSE and is engaged in manufacturing of gelatin. The SBL group consist of Sterling International Enterprise Limited, PMT Machines Limited, Sterling SEZ and Infrastructure Limited, Sterling Oil Resources Limited, Sterling Port Limited etc. The SBL group obtained credit facilities of more than 5000 Crores from Banks and Financial Institutions and those loan turned into Non Performing Assets. The Banks/Financial Institutions conducted forensic audit to ascertain the end use of loans availed by SBL Group.
  • The Enforcement Directorate received forensic audit report from Andhra Bank and State Bank of India which shows the use of loan funds for non mandated purposes, payments made to non existant parties and non justificatory payments to Directors, etc. e. As on date, credit facilities availed by the SBL group to the extent of Rs.8100 Crores was declared as fraud account by the concerned Banks.
  • CBI, BS&FC, New Delhi registered an FIR RCBD1/2017/E/007 dated 25.10.2017 u/s 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 and 120-B r/w 420, 467, 468, 471 and 469 of IPC against various accused persons including the promoters of SBL group, on the basis of which the Enforcement Directorate, Headquarters Investigation Unit recorded an ECIR bearing number ECIR/HQ/17/2017 to investigate into the offences under PMLA. As the investigation kept unfolding the role of different accused persons and determination of various assets which are proceeds of crime/laundered money led to attachment of properties involved in money laundering which were nothing but proceeds of crime to the tune of Rs.4274 Crores and filing of different prosecution complaints, the last being filed on 23.10.2018 before special PMLA Court, Patiala House, New Delhi. On the said Court taking cognizance of the matter, issued nonbailable warrants against the accused persons/promoters of SBL group on 25.10.2018.
  • The Promoters of SBL group left the country under suspicious circumstances and evaded the process of law to face criminal prosecution.
  • The property in question constitute the value of proceeds of the crime as defined u/s 2(1)(u) of PMLA which provides that even if the direct link between the crime proceeds and the property is not available/determinable the value thereof (equivalent value of such proceeds of crimes) can be attached.
  • The properties provisionally attached constitute the value of such proceeds of crime. The PMLA is a special act and have overriding effects in terms of section 71 of the PMLA. The main object of Insolvency and Bankruptcy Code, 2016 (Code) and PMLA are different from each other. The Code being a civil law cannot be given precedence over PMLA, 2002 and hence NCLT lacks jurisdiction in the matter.
  • The moratorium declared by this adjudicating authority is not applicable to the criminal case initiated under the PMLA by the enforcement directorate and to the criminal case initiated by the CBI.

Amicus Curiae

The learned amicus-curiae filed his written submissions highlighting the following:-

Overriding effect of IBC: Writ Petition no. 1238/2018 was filed on behalf of the Corporate Debtor challenging the virus of the PMLA as well as provisional attachment and the corrigendum dated 29th and 14th June, 2018. The Writ Petition appears to have been filed and affirmed by the erstwhile directors and does not indicate any authority, either of the RP or the CoC, to institute any such Petition for and on behalf of the Corporate Debtor after initiation of CIRP. The Petition does not disclose the fact that the NCLT has already admitted the Petition and initiated CIRP.

In the case of Surender Kumar Joshi (supra), NCLT, Kolkata has directed ED to hand over the possession of the attached properties of the Corporate Debtor under liquidation to the liquidator along with the title deeds thereof. It is, however, clarified by the NCLT that the Court established under PMLA could decide whether the properties attached could said to be properties acquired out of proceeds of crime.

In the present MA, the Resolution Professional have sought release of attachments as well as handing over possession of the assets. However, there is nothing on record to indicate that the possession of these assets in question have been taken over by the ED under PMLA. In absence of such material, it is obligation/duty of the Resolution Professional to take control and custody of assets of the Corporate Debtor in terms of Section 18(1)(f) of the Code. However, it is required to be noted that the provisions of PMLA permit possession to be taken by the ED under Section 8(4) of the PMLA only after confirmation of the provisional order of attachment under Sub-Section 3 thereof. There is nothing on record to indicate that ED has taken any such steps after passing of the order of confirmation of attachment dated 20.11.2018.

It is pertinent to note that the order dated 20.11.2018 passed by the Adjudicating Authority (under PMLA) has been passed after the order of admission of the Petition against the Corporate Debtor and during CIRP as well as moratorium. The issue as to whether the proceedings before the Adjudicating Authority under the PMLA would be stayed by virtue of Section 14 of the IBC has already been considered by the Appellate Tribunal under the PMLA Act in two recent judgments, one in the case of “Bank of India Vs Deputy Director, Enforcement Directorate” and another in the case of “Punjab National Bank Vs Deputy Director, Directorate of Enforcement, Raipur”. Hon’ble Justice Manmohan Singh speaking for the Appellate Tribunal in both the above cases has held as below:

i. In view of the non-obstante clause contained in Section 238 of IBC, the Adjudicating Authority under the PMLA could not have continued with the attachment after declaration of  moratorium.

ii. The non-obstante clause contained in IBC, which is a later statute shall prevail over the non-obstante clause contained in Section 71 of PMLA. 

iii. The proceedings before the Adjudicating Authority under PMLA is civil in nature and hence, in view of Section 14 of IBC, the proceedings before the Adjudicating Authority of PMLA cannot continue.

iv. In the case of Punjab National bank (supra), the Secured Creditor being lead Banker of Consortium of Banks had applied for raising of the attachment which was granted by the Appellate Tribunal. The facts of that case are similar to the case on hand except that the Secured Creditors in the  resent case have not filed any such application before the Adjudicating Authority under PMLA for raising attachment.

Provisional attachment under PMLA:– It is submitted that attachment under the provisions of PMLA cannot be raised by NCLT under the provisions of IBC. The attachment can only be raised in accordance with the procedures laid down in the concerned statue under which it was levied. The only exception to this is the constitutional courts i.e. the Hon’ble Supreme Court and High Court in exercise of power under Article 32 and 226 of the Constitution of India. However, there is precedent where NCLT, Allahabad in the case of Raman Ispat Pvt. Ltd. (Supra) has in exercise of power u/s 35(1)(n) of IBC directed the District Magistrate and Tehsildar, Muzaffarnagar to release the attached properties in favour of liquidator. However, in the present case the provisional attachments were levied prior to the commencement of CIRP. Also, Section 35(1) of the Code only applied in the case of liquidation and hence such recourse cannot be applied in the present case.

The only other provisions which may be applicable for considering raising of attachment would be section 60 (5) of IBC where under NCLAT would have jurisdiction to pass appropriate orders and decide all such issues relating to the Corporate Debtor or as regards any claim against the same. It was further submitted that the Resolution Professional to take out an appropriate application before the adjudicating authority under PMLA for raising the attachment. However, in the interregnum the Resolution Professional can take physical possession of the properties attached in terms of Section 18(1)(f)  of the Code. The Hon’ble Supreme Court and several High Courts have consistently held that an order of attachment is passed for achieving a limited purpose. The attachment is used for two purposes (1) to compel the appearance of the Defendant and (2) to cease and hold his property for the payment of debt. The Hon’ble High Court of Andhra Pradesh in W.P. No. 8560 of 2018 by an order dated 26.07.2018 held that a prior attachment under the Income tax Act long before the commencement of proceedings under IBC before NCLT would yield to the provisions of IBC.

Under the provisions of PMLA, there are three stages of attachment. Initially a provisional attachment is levied under Section 5(1), which is then confirmed after enquiry under Section 8(3). However, this attachment attains finality only after proceedings before Special Court are proved as per Section 8(5) thereof. Furthermore, Section 4 of PMLA provides for punishment of imprisonment and fine for money laundering. If charges of ED are proved, then, the Corporate Debtor being an artificial person would be awarded an appropriate fine, whereas Directors of the Corporate Debtor would be liable for imprisonment as well as fine. Assuming any such fine is imposed on the Corporate Debtor, the same can be recovered in accordance with Section 69 of PMLA which contemplates recovery in the manner as prescribed under Schedule 2 of the Income Tax Act. In case the Corporate Debtor is in CIRP/liquidation, ED be entitled to make necessary claims in before RP or the liquidator in case of liquidation.

Proceeds of Crime:- It is submitted that if it is found by the Special Court under PMLA that any such property is involved in Money Laundering are the proceeds of crime and such is liable to be confiscated by and vested in the Central Government u/s 8 (5) and 9 of the PMLA and this aspect has to be born in mind by the Resolution Professional and appropriate disclosures have to be made to the Resolution Applicant in relation to the said properties. The finding and decision by the Special Court under PMLA that an asset is a proceeds of crime erodes the very title of the Corporate Debtor and the Resolution Applicant will not be entitled to claim a higher right on the basis of approval of resolution plan by NCLT or sale of assets in liquidation under IBC. It is also required to be clarified that non-obstante class contained in IBC will not apply to pending proceedings against other group companies of Corporate Debtors and Directors of all concerned companies.

Secured Creditors beneficiaries under both statutes:- It is submitted that the ultimate beneficiaries under both statutes are the secured Creditors/ Financial Institutions who have filed claim before the Resolution Professional. Section 31 of IBC provides for Resolution Plan in CIRP whereas Section 53 of PMLA provides for distribution in case of liquidation. Similarly, under Section 8(8) of PMLA the Special Court may direct the Central Government to restore the confiscated property or part thereof to the claimant with legitimate interest therein. Thus in both situations the ultimate beneficiaries are financial creditors/secured creditors. The object of IBC is to expedite the insolvency process and to secure maximization of value of assets of Corporate Debtor for distribution to all stake holders. PMLA contemplates restoration of confiscated property to the claimants who have legitimate interest. The Appellate Tribunal for PMLA in the case of Punjab National Bank (supra) held as below:-

“The Adjudicating authority is bound by the law laid down by the higher courts. No authority has any justification to ignore the law laid down by the Supreme Court and various High Courts and this Tribunal, who on the basis of decisions of the Hon’ble Supreme Court and various High Courts has delivered orders. Unless each and every judgment is distinguished or are on different facts and legal issues are almost same and the Adjudicating Authority has incorrectly passed by impugned order by saying that “it cannot “Concur” with the law laid down by this Tribunal. The appellate is a public Sector Bank. The money must come to the public forthwith not after the trial of criminal case against the borrowers which may take may years. The banks are in crisis, no attempt should be made to block the loan amount in order to avoid worsen positions in the commercial market. The trial may continue against the borrowers. One is failed to understand why the Bank loan amount be blocked in view of settled law.”

Decision of the Tribunal

a. The purpose and object of IBC is for resolution of the Corporate Debtor by maximizing the value that can be received by the Creditors and stake holders. The IBC provides for timelines within which the resolution has to be arrived at. The PMLA’s object is also to recover the property from wrong doers and compensate the affected parties by confiscation and sale of the assets of the wrong doer apart from imposing punishment. Here the beneficiaries are the creditors of the Corporate Debtor. The criminal proceedings before PMLA will take a longer time and by the time there will be an eroison in the value of assets. However, considering the overriding provisions of Section 238 of IBC which is the later legislation, when compared to the earlier legislation of PMLA, the provisions of IBC will prevail and hence considering the economic interest of the beneficiaries, the IBC will provide solution at the earliest to the Corporate Debtor as well as to the Creditors. The case laws cited above also favours a resolution by IBC instead of waiting for a long period to get the benefit under the PMLA. Further, the quantum of amount locked in the assets of the Corporate Debtor can be released at the earliest when resolution is found through IBC instead of taking a long route under PMLA. This is the economic aspect of the case.

b. As per the provisions of Section 14(1)(a) of IBC, where moratorium on any kind of proceedings is imposed by the Adjudicating Authority, particularly this attachment is a legal proceedings which squarely falls under the ambit of the said Sections of IBC. Since, the attachment order passed by the PMLA court is hit by the provisions of Section 14 of the Code and considering the overriding effect of IBC under Section 238 of the Code, this Tribunal is of the considered view that the attachment order under PMLA Act is a nullity and non-est in law and hence it will not have any binding force.

c. Section 63 of the IBC provides that, no Civil Court or Authority shall have jurisdiction to entertain any suit or proceeding in respect of any matter on which NCLT or NCLAT has jurisdiction under this Code. In view of the ruling by the Appellate Authority under PMLA in “Bank of India vs Deputy Directorate Enforcement, Mumbai” supra, that the proceedings before Adjudicating Authority under PMLA in respect of attached properties is a civil proceedings, the Adjudicating Authority under PMLA does not have jurisdiction to attach the properties of the Corporate Debtor undergoing Corporate Insolvency Resolution Process.

d. The suggestion made by the amicus curiae that the resolution professional or other creditors can approach the adjudicating authority under PMLA for raising the attachment though seems plausible but will definitely further delay the CIRP which will be against the spirit of the Code. If that route is followed it may take a considerable time and the assets were to be locked in the proceedings. Considering the economic factors associated with the case and the object of both legislations, it is advisable to take a route where assets can be utilized in a speedy manner rather waiting and lose the value of assets over a period of time.

In view of the above discussion the attachment order dated 29.05.2018 and the Corrigendum dated 14.06.2018 issued by Respondent and as confirmed Adjudicating Authority under PMLA Court is a nullity and nonest in law in view of Sections 14(1)(a), 63 and 238 of IBC and the Resolution Professional can proceed to take charge of the properties and deal with them under IBC as if there is no attachment order. The concerned sub-registrars are directed to give effect to this order and remove their notings of attachment, if any, in their file in respect of properties belonging to the Corporate Debtor. It is needless to mention that the attachments in respect of the properties of the Corporate Debtor only are covered in this order. Consequently, the sub-registrar at Jambusar is directed to register and hand over the two Original lease deeds entered into between Sterling SEZ and Infrastructure Ltd. and P. I. Industries Ltd. on 28.08.2018, as prayed for in this application. Accordingly, the application is ordered in above terms, but no cost.

 

3. In the matter of Aircel Limited [MA-337/2018 in C.P. (IB)-298/(MB)/2018 and MA-336/2018 in C.P. (IB)-302/(MB)/2018]

Case Citation : [2019] ibclaw.in 09 NCLT

Facts of the Case

  • Facts of the case are that an Application/Petition was moved by Aircel Limited, Corporate Debtor/Petitioner U/s 10 of Code to declare itself insolvent. The said Petition under section 10 of Code was ‘Admitted’ vide an Order dated 12.03.2018 by declaring Moratorium and appointing Interim Resolution Professional. This is a case where the Corporate Debtor is under heavy debt i.e. operational debt of about Rs. 19,889 Crores and financial debt of about Rs. 7,378 Crores. On appointment, the Resolution Professional has taken charge over the debtor company so as to commence the Corporate Insolvency Resolution Process proceedings ( CIRP ).
  • The present application is revolving around the fundamental question of Telecom License granted by Department of Telecommunication/ DoT (Licensor) to the Petitioner /Aircel ( Licensee ) under the provisions of Section 4 of Indian Telegraph Act, 1885. The Petitioner Company also holds spectrum of 900 MHz, 1800 MHz and 2100 MHz frequency across various circles in India (“Spectrum“), which has been allotted to it by the Department of Telecommunication (DoT). The Petitioner Company along with group entities i.e. Dishnet Wireless Limited and Aircel Cellular Limited operated under the brand name “AIRCEL” offering 2G and 3G Services across India.
  • Therefore, the Petitioner Company happened to be the holder of Telecom Licenses (Unified Access Service License/UASL) granted by Respondent for various circles across India which includes Andhra Pradesh, Delhi, Gujarat, Karnataka, Maharashtra, Mumbai, Rajasthan and Tamil Nadu. However, licenses of Gujarat and Maharashtra were stated to be surrendered in the past. The acquisition of spectrum in 900 Mhz, 1800 Mhz and 2100 Mhz was procured through an auction process which was in terms of “Notice inviting Auction of Spectrum”. At present the Petitioner Company is holding the Spectrum and the Spectrum Rights are available to circles viz. AP, Delhi, Karnataka, Mumbai etc. The most important feature of holding the Spectrum and the license is that the Telecom Licenses and Spectrum are required for operation of the Petitioner Company as a going concern. The Telecom License is a valuable asset for the Telecom Company; as vehemently pleaded by the Resolution Professional. Furthermore, Petitioner Company also holds “Spectrum” across various circles in India, that too, is a valuable asset of the Petitioner Company.

Contention of the parties

Applicant/Resolution Professional

  • The apprehension is that “Telecom Licenses” and grant of “Spectrum” may be terminated during the ‘Moratorium’ Period because the Debtor Company had defaulted in payment of annual installments. The apprehension is that DoT may take steps against the Company. However, at this juncture Learned Counsel of the Resolution Professional has informed that up till the commencement of the CIRP the Company had paid the license fees.
  • It is vehemently pleaded that during “Moratorium” in operation the Telecom License and Spectrum cannot be terminated as prescribed U/s 14 of I&B So the prayer is that the DoT be directed not to take any action against the Company such as termination of Telecom License and Spectrum Allocation. Learned Counsel has raised a serious concern that in case of termination the value of the Petitioner should get severely eroded. A great prejudice shall be caused if any action is taken by the said department.
  • Further it is informed that the Company had made a huge investment of Rs. 6249.27 Crores for procuring the license. It is further pleaded that the terms and conditions of “License Agreement for Provision of Unified Access Services” do not permit for revocation of license when the period has not expired.

DoT / U.O.I

  • On the other hand from the side of the Department, Learned Additional Solicitor General Mr. Anil Singh appeared and pleaded that the Union of India has exclusive ownership right over the Spectrum. According to him in this case the default of non-payment of license fees had already occurred therefore, the licensor/DoT otherwise has right to terminate the impugned facility to the Company. The moment ‘licensee’/ AIRCEL fails to pay the fees, the ‘licensor’/DoT has every right to deprive of the licensee from the ‘License’. The ownership and the control over the Spectrum at all times is the property of Union of India and never vested with the Licensee. The terms of the said license also confirm the same that the Licensor reserves the right to suspend the operation of the license in whole or in part at any time if in the opinion of the Licensor it is necessary or expedient to do so in public interest. The Spectrum had never been sold as per the Agreement because this a natural resource of the country which belongs to the people of India. Reliance was placed on W.P. (C) 423 of 2010 Centre for Public Interest Litigation and others V/s Union of India and Others with Writ Petition (C) No. 10 of 2011 Subramanian Swamy V/s Union of India and Others.
  • Learned ASG has further pleaded that the Petitioner Company was granted “Right to use” and not the “Right to own” the Spectrum. Through an auction held in the year 2010 it was advertised as under :-

1.1 The Government of India (the “Government”) through the Department of Telecommunications (“DoT”), proposes to allot the rights to use certain specified radio spectrum frequencies in the 2.1GHz band (the “3G Spectrum”) and in the 2.3GHz band (unpaired) (the “BWA Spectrum”) by means of auction in various telecom service areas in India.”

  • In the “Notice Inviting Applications” (NIA) for Spectrum Auction 2010 had granted only Transfer of “Right to use” and in case of breach of condition the revocation has also been specified as per the terms.
  • One of the legal argument is that as per the provisions of Section 18 (1)(f) of the I&B Code, 2016 to be read along with “Explanation” an asset if owned by the Third Party but in possession of the Corporate Debtor, can be repatriated back to the owner. In this regard reliance was placed on the decision NCLT Chandigarh dated 26.04.2019 in the case of Weather Makers Pvt. Ltd. V/s Parabolic Drugs Ltd. in CA-206/2019 In C.P.(IB)-102/CHD/2018 Order was passed on 26.04.2019 wherein it was held that although vide Section 18 of the Code Resolution Professional is authorized to take control and custody of any asset over which the Corporate Debtor has ownership right or an asset which is in possession of the Corporate Debtor, whether tangible, moveable, immoveable, intangible etc., however, an exception is carved out by inserting “Explanation” to Section 18(1)(f) of the Code that an asset owned by a Third Party but in possession of the Corporate Debtor held under contractual arrangement shall not be an asset over which the Resolution Professional can take control. So the Argument is that once it is an admitted factual position that the asset in question i.e. “Spectrum” is under ownership of Union of India thus at any time can be taken back from the possession of the Debtor Company. Hence it is intensely pleaded that the Company had breached the terms of the license agreement hence the DoT is authorized to cancel the usage of license.
  • Reliance has also been placed on a decision of NCLAT in the case of Rajendra K. Bhuta V/s Maharashtra Housing and Area Development Authority, Order dated 14.12.2018 [2018] ibclaw.in 109 NCLAT it was held that :-

“On perusal of record it was found that the land of MHADA was handed over to the Corporate Debtor over which no right had accrued to the Corporate Debtor and the land belonged to MHADA thus cannot be treated as an asset of the debtor company hence out of the ambits of the provisions of section 14(1)(d) of the Code.”

  • The Learned Counsel has therefore pleaded that this case law is squarely applicable on the facts that the Spectrum being not the asset of the Corporate Debtor thus out of the ambits of Moratorium.
  • Reliance has also been placed on an Order of Hon’ble Supreme Court dated 14th May, 2015 pronounced in the case of Bharti Airtel Limited and others V/s Union of India in C.A. No. 2803 of 2014 with C.A. 1969 of 2014 for the legal proposition that the Licensee has no automatic right of renewal or extension on expiry of original tenure of license. Renewal is at sole discretion of Licensor/ DoT. It is the exclusive privilege of the Government of India which could be permitted to be exercised by others only by way of grant from the Government of India. Therefore, the argument is that the license/Spectrum is a National Asset, therefore, no individual or a corporate body can demand a claim over this property. Almost on identical lines a legal proposition has been laid down by the Hon’ble Supreme Court in the case of (2012) 3 Supreme Court Cases 1 (Writ Petition No. 423 of 2010) in Centre for Public Interest Limitation and others V/s Union of India and Others with Writ Petition (C) No. 10 of 2011 Subramanian Swamy V/s Union of India and Others dated 02.02.2012 that :-

Natural resources belong to the people but the State legally owns them on behalf of its people and from that point o view natural resources are considered as national assets, more so because the State benefits immensely from their value. The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to the public interest.”

Decision of the Tribunal

Decision of the Adjudicating Authority as under:

  • The Corporate Debtor i.e. Aircel Limited had paid a sum of 6249.27 Crores to get License and Spectrum. These licenses are being used across India being Telecom License is required to run the business of the Company. The apprehension is that by issuance of demand notice for a sum of Rs. 55.70 Crores dated 13.04.2018 by DoT, that notice may lead to cancellation of license. Cancellation of license shall adversely affect the business of the Company. Only on the basis of license the Company is running the telecom business in the Country. Therefore, license is an essential requirement for the business of the Corporate Debtor.
  • The facility of Spectrum and License was obtained by the Petitioner after huge payment. Since presently the Company is in Insolvency, the expectation is to get a reasonably good Resolution Plan. Any Resolution Applicant shall show interest in the business of the Company if the Company holds license. Without license, since no other valuable asset is available to the Company, no Resolution Applicant may show any interest in the business of this Debtor Company for it’s revival. Without License this Company be as good as a shell company. Resolution Professional has informed that in response to advertisement inviting EOI, few parties have shown interest but all are interested in running the Telecom Business. Therefore, the presence of the license is a sine qua non for getting good Resolution Plan.
  • As far as the legal question is concerned, the Application of Section 14(1)(d) of the Code is in respect of a property by an owner and the restriction is that on commencement of Insolvency the Adjudicating Authority shall declare Moratorium for prohibiting recovery of any property by an Owner or Lessor in the possession of the Corporate Debtor.
  • As a fundamental principle, if a property is in possession of the Corporate Debtor the same cannot be demanded back by the Owner/Lessor/DoT of the property as long as the same is in use and in possession of the Corporate Debtor/ Licensee. To this extent there should not be any controversy that since the intangible asset is used for business purpose by the Corporate Debtor, the provisions of Moratorium must apply. The Licensor/DoT can be prohibited from taking any step which may be prejudicial to the interest of the Licensee/ Aircel.
  • An exception to this general rule is that if an asset is in possession of the Corporate Debtor under contractual arrangement the same can be demanded back by the owner of the asset, refer Section 18(1)(f) of the Code. In this regard a decision of NCLT Chandigarh has also been relied upon by UOI. On examination of facts we have noticed that while admitting the Petition of the Corporate Debtor (Aircel Limited) under section 10 of the I&B Code, vide Order dated 12.03.2018 it was duly acknowledged that on one hand the employees of the debtor company and other Trade Creditors are regularly demanding their outstanding dues, however, on the other hand there was an apprehension of suspension of Telecom License. 
  • Therefore, since inception of the Insolvency Proceedings the advantage of having license to run telecom business has been acknowledged by this Bench. Without such an asset, no party shall take interest in acquiring this Debtor company, hence approved the commencement of CIRP.
  • As far as the apprehension of cancellation of license by DoT is concerned, on examination we have noticed that there is a clause of “Force Majure” which prescribes that in addition to any act of God even by an act of State or direction from Statutory Authority the licensor shall not be entitled to terminate the license. Since the signing parties have duly agreed upon the terms and conditions, therefore, it shall be unfair on the part of the DoT to suspend the license at this juncture.
  • An important point which has been brought to our notice is that the Applicant or the Resolution Professional is not demanding the ‘ownership’ of the license as a product but simply seeking uninterrupted use of the said intangible asset. Otherwise also, through agreements only ‘right to use’ is granted and not the ‘right to ownership”. Therefore, ‘right to use’ should remain, during the period agreed upon, with the Corporate Debtor which is always beneficial for the company as well as for all stake holders. This argument can further be buttressed by placing reliance on Sub-sec. (2) of Section 14 of the I&B Code which prescribes that the supply of essential goods or services to the Corporate Debtor shall not be terminated or suspended or interrupted during Moratorium Period. The usage of license/spectrum is akin to “Essential Goods or Services” because without usage the Company cannot run its Telecom Business. This prohibition shall, therefore, also applicable on DoT.

To conclude this Bench is of the view that, admittedly the License/Spectrum is an asset of State over which the Corporate Debtor has no right of ownership, therefore, up to this extent the argument of the Government is hereby accepted. The relief sought by the Corporate Debtor is that due to issuance of Demand Notice by DoT an apprehension is that the same may be suspended. We hereby direct that the clauses of “Moratorium” are squarely applicable on this CIRP Proceedings, hence need not be interrupted or hampered by any authority. It has also been brought to our notice that worst come if the department is aggrieved then it can approach TRAI or TDSAT, regulatory authorities constituted to supervise the functioning of Telephone Companies. As far as the Insolvency Proceedings are concerned, we are governed by the object set out in the ‘Preamble’ of the Insolvency Code wherein it is prescribed to maximize the assets of the Company as well as to protect the value so as to get good Resolution Plan for the revival of the debtor company. Our objective is limited to this extent that too governed by the Code, therefore, within the scope and ambit of Insolvency and Bankruptcy Code, 2016 hereby instruct the concerned DoT authority not to make any attempt to cancel the impugned license issued in favour of the debtor company. Both the applications are disposed of and Ordered accordingly.

 

4. In the matter of M/s. GNB Technologies (India) Private Limited [C.P.(IB) No. 167/BB/2019]

Case Citation : (2019) ibclaw.in 16 NCLT

C.P.(IB)No.167/BB/2019 is filed by M/s. GNB Technologies (India) Private Limited (Petitioner/Corporate Debtor), U/s 10 of the Code, R/w Section 33 of the Code, by inter-alia seeking to initiate CIRP/Liquidation in respect of M/ s. GNB Technologies (India) Private Limited, on the ground that the Company has become insolvent with a debt of Rs.49,97,96,558/- (Rupees Forty Nine Crores Ninety Seven Lakhs Ninety Six Thousand Five Hundred and Fifty Eight only) with mere current assets are to the extent of INR 65,000/.

As per the Independent Auditor’s report dated 25.10.2017, namely Shri T. Shrinivasa Rao & Co., Chartered Accountants, has interalia stated that the Company’s net worth is eroded (Net worth as at 31st March 2017 is (-) Rs.38,59,81,079.37), which cast significant doubt on the ability of the Company to continue as a going concern. VAT Tax of Rs.1,12,53,958/- has been paid during the year on account of non collection of C forms pertaining to earlier years. The Company has not granted any loans to bodies corporate covered in the register maintained under Section 189 of the Companies Act, 2013. The Company has not accepted any deposit. Therefore, the provisions of Clause (v) of paragraph 3 of the Order are not Applicable to the Company. According to the information and explanations given to them and on the basis of their examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. Ax explained to us, the Company did not have any dues on account of employees’ state insurance and duty of excise; according to the information and explanations given to them, there are no dues in respect of sales tax, income tax, custom duty, wealth tax, excise duty and cess have been deposited with the appropriate authorities on account of any dispute.

As per another the Independent Auditor’s report dated 30.08.2018, issued by Shri T. Shrinivasa Rao 86 Co., Chartered Accountants, has inter-alia states that the Company has accumulated losses of Rs.584,043.854 and negative net worth of Rs.503,859,674 on March 31, 2018. During FY 2017-18 the Company has incurred net loss of Rs.111,380,969/-, which cast significant doubt on the ability of the Company to continue as a going concern. The Company has suspended its operations more than 5 years ago and the management has no plan to restart the production in near future.

The holding Company M/ s. Exide Technologies has issued a demand notice dated 07.10.2019, to the Petitioner/ Corporate Debtor, by inter stating that the Exide Technologies was responsible for supplying the raw materials to the GNB Technologies (India) Private Limited, and thus GNB India owes an amount of Rs.42,89,04,336/- (i.e. approx. INR 42.89 Crores) to Exide Technologies on account of various payables including sale of raw materials to GNB Technologies (India) Private Limited. Thus, demanded to pay this amount (Approx. 42.89 Crores) within 5 (five) days). Accordingly, the Corporate Applicant has given reply dated 15.10.2019 by inter alia stating that they could not revive its business operations and the Company was forced to sell its plant and machinery and closed down its operations entirely and thus they are initiating insolvency proceedings before NCLT.

As stated supra, the current assets of the Company is only whereas it current liabilities are approximately INR 49.98 and there is no possibility to revive the Company as the Company sold its plant and machinery long time back and closed down its operations for more than 5 years back. Moreover, the Corporate Applicant owes the liability to its holding Company which supplies all the raw materials to the Corporate Debtor and the Holding Company was also not interested to revive the Company. Therefore, there is hardly any possibility of any Resolution plan likely to be received during first stage of CIRP, if initiated, and thus it would be just and proper to put the Corporate Applicant Debtor under the liquidation process, in order to liquidate the Company, rather than to put it in CIRP in the first instance. The Petitioner has suggested Shri Malay Jitendra Ajmera, bearing IP registration number IBBI/IPA-001/IP-P01190/2018-2019/ 11908, to appoint as IRP, who has also filed his Written Consent in Form-2 dated 14.03.2019, by inter alia affirming that he is eligible to be appointed as a liquidator in respect of the Corporate Debtor herein and that there are no disciplinary proceedings pending against him with the Board or Indian Institute of Insolvency Professional of ICAI; he is currently serving as an Interim Resolution Professional/ Resolution Professional/ Liquidator in NIL proceedings. He can be appointed as Liquidator instead of IRP, in order to liquidate the Corporate Applicant U/s.33 of the Code.

In view of the facts and circumstances of the case, the Adjudicating Authority, by exercising its powers conferred under Section 10 R/w Section 33 of the IBC, 2016 and Rule 11 of NCLT Rules, 2016, the Company petition bearing C.P(IB)No.167/BB/2019 is hereby admitted with following consequential directions:

(1) We hereby order that M/s. GNB Technologies India Private Limited, Petitioner/ Corporate Applicant to be liquidated in the manner as laid down in Chapter III (Liquidation Process) of Part II of the Code.

(2) We hereby appointed Shri Malay Jitendra Ajmera, Regs. No. IBBI/IPA-001/IP-P-01190/2018-19/11908 as Liquidator subject to the terms and conditions to be agreed upon by the parties in the light of the extant provisions of the IBBI.

(3) We hereby directed the Liquidator to issue immediate public announcement by stating that the Corporate Debtor is in liquidation

(4) The Registry is directed to communicate this order to the Registrar of Companies, Karnataka for information and necessary action.

(5) The liquidator is directed to strictly adhere to the extant provisions of the Code and the Rules made there under framed by IBBI from time to time and also directed to take expeditious steps to complete the liquidation process in the light of various orders.

(6) Post the case on 06.12.2019 for report of the Liquidator.

 

5. In the matter of Videocon Industries Limited & Ors. [MA 1306/2018 & Ors. CP 543/2018 & Ors.]

Case Citation: (2019) ibclaw.in 17 NCLT

Facts of the Case