Nilesh Sharma vs Dynamic Shells (India) Pvt. Ltd.

M.M. Kumar, CJ

This is an application filed by the Resolution Professional under Section 33(1)(a) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred as the "Code") for issuance of directions for liquidation of the corporate debtor, M/s. Dynamic Shells (India) Private Limited.

The facts in brief are that the financial creditor, Punjab National Bank, had filed an application under Section 7 of the Code bearing number IB-718 (PB) /2018 for initiation of Corporate Insolvency Resolution Process against the corporate debtor. The said application was admitted by this Tribunal on 27.09.2018 initiating Corporate Insolvency Resolution Process against the corporate debtor M/s. Dynamic Shells (India) Private Limited and there in appointed Mr. Nilesh Sharma as Interim Resolution Professional (IRP).

Thereafter, in terms of Regulation 6(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) the Interim Resolution Professional made paper publication inviting claims from the creditors of the corporate debtor. Subsequently in compliance of Section 21 of the Code read with Regulation 17 of the CIRP Regulations, Committee of Creditors was constituted.

In the first meeting of Committee of Creditors convened on 29.10.2018 the Interim Resolution Professional was appointed as the Resolution Professional to conduct Corporate Insolvency Resolution Process in respect of the corporate debtor.

Pursuant to the discussion held in second and third meeting of CoC held on 02.01.2019 and 25.02.2019 respectively, the Resolution Professional invited Expression of Interest ("EoI") from the Prospective Resolution Applicants through publication of Form-G (Invitation for EoI) in the newspapers on 02.03.2019.

It is submitted that pursuant to the publication of Form G dated 02.03.2019, the Resolution Professional received Expression of Interest and RFRP document from only one Prospective Resolution Applicant viz. Mr. Shailendra Kumar Singhal ("PRA") by the last date of submission of EoI i.e. 17.03.2019.

As the initial 180 days of CIRP period was going to be over on 24.06.2019, the CIRP period was extended by further 90 days vide order dated 28.03.2019.

Subsequently expression of Interest was again invited through paper publication on 25.04.2019 and on 18.05.2019. The EOIs received from Vir Kapur and Shailendra Kumar Singhal were consider by CoC but were rejected by the Committee of Creditors ("CoC") of the Corporate Debtor being non-compliant and non-responsive, as the prescribed Earnest Money Deposit (EMD) amounting to Rs. 50 Lakh was not deposited by the PRA and that it was non-compliant with various requirements laid down under IBC and IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations").

It is submitted in the application that the time period for completion of CIRP of the Corporate debtor has expired on 24.06.2019 (270 days) and that the resolution plan received was found to be non-compliant and non-responsive by the CoC.

It is therefore seen that in the absence any viable and feasible resolution plan and for want of time beyond the statutory CIRP period of 270 days, there is no option left but to order for liquidation of the corporate debtor under Section 33 of the Code in conformity with the 100% voting decision of the CoC.

It is pertinent to refer here the case of Palash Goswami vs. M/s. Alloys & Metals (India) & Anr. in Company Appeal (AT) (Insolvency) No. 589 of 2019 wherein Hon'ble NCLAT has held that:

"Admittedly, more than 270 days have crossed and in absence of any viable and feasible 'Resolution Plan', the Adjudicating Authority had no option, but to pass order under Section 33 of the I&B Code."

Even the statutory provisions as envisages in Section 33(1) (a) of the Code mandates that "where the Adjudicating Authority before the expiry of the maximum period permitted for completion of the corporation insolvency resolution process under Section 12 does not receive a resolution plan under sub-section (6) of Section 30, it shall pass an order requiring the corporate debtor to be liquidated in the manner as laid down in the Chapter."

Therefore, upon failure of resolution process there being no resolution plan and on completion of the statutory period of 270 days; Liquidation has to follow. Adherence to statutory requirement has to be in toto. When the language of the Code is clear and explicit the Adjudicating Authority must give effect to it whatever may be the consequence.

It is pertinent to mentioned here that in the Seventh CoC meeting, (PNB) the sole Financial Creditor of the Corporate Debtor holding 100% of the financial debt, has proposed the name of Mr. Ashok Kumar Gupta, Insolvency Professional, having IBBI Registration No. IBBI/IPA-03/IP-N00010/2016-17/10072, to act as the liquidator in the liquidation process of the Corporate Debtor. Sh. Ashok Kumar Gupta has given his consent to act as Liquidator on 24.06.2019 in terms of Section 34(1) of the Code.

In the factual background and in the absence of any resolution plan and for want of time beyond statutory CIRP period; there is no other alternative but to order in conformity with the majority decision of the Committee of Creditors for liquidation of the corporate debtor under Section 33(1) (a) of the Code.

In the result the application is allowed by ordering liquidation of the corporate debtor, namely M/s. Dynamic Shells (India) Private Limited in the manner laid down in the Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 along with following directions:

a. Mr. Ashok Kumar Gupta, having registration no. IBBI / IPA-003 / IP-P000010 / 2016 -17/10072, is appointed as Liquidator in terms of Section 34(1) of the Code.

b. Mr. Ashok Kumar Gupta, is directed to issue Public Announcement stating that the corporate debtor is in liquidation, in terms of Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016;

c. The Registry is directed to communicate this Order to the Registrar of Companies, NCT of Delhi & Haryana and to the Insolvency and Bankruptcy Board of India;

d. The Order of Moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cease to have its effect and that a fresh Moratorium under Section 33(5) of the Insolvency and Bankruptcy Code shall commence;

e. The Liquidator is directed to proceed with the process of liquidation in the manner laid down in Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 and in accordance with the relevant regulations.

f. The liquidator shall follow up and investigate the financial affairs of the corporate debtor in accordance with provisions of Section 35(1) of the Code.

g. The liquidator shall also follow up the pending applications for its disposal during the process of liquidation including initiation of steps for recovery of dues of the Corporate Debtor.

h. The Liquidator shall submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date as per Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016.

i. Copy of this order be sent to the financial creditors, corporate debtor and the Liquidator for taking necessary steps.

j. C.A. 1378 (PB) /2019 filed in IB 718(PB)/2018 is disposed of in the aforesaid terms.