IN THE NATIONAL COMPANY LAW TRIBUNAL
COURT 1, MUMBAI BENCH
MA 167/2020 in CP(IB)2096 (MB)/2019
(Under Section 33(2) of the IBC, 2016)
Mr. Ram Ratan Kanoongo
…Applicant/
Interim Resolution Professional
In the matter of
Corporation Bank
…Financial Creditor
Vs
Firestar Diamond International Pvt Ltd
… Corporate Debtor
Order delivered on 26th February 2020
Coram:
Hon’ble Member (Judicial) Smt Suchitra Kanuparthi
Hon’ble Member (Technical)Shri V Nallasenapathy
For the Applicant: Adv. Pulkit Sharma i/b Adv. Payal Upadhyay, ANP
Chambers and Adv. Anant Upadhayay.
Per: Suchitra Kanuparthi , Member(Judicial)
ORDER
1. MA 167/2020 is filed by the Interim Resolution Professional, seeking
the following reliefs:
a. Liquidation order as provided under sub clauses (i), (ii) and (iii) of
Clause (a) of sub-section (1) of Section 33 of the Code thereby
requiring the Corporate Debtor to be liquidated in the manner as
laid down in Chapter III of the IBC, 2016
b. To appoint Mr. Santanu T Ray having Registration No.IBBI/IPA-
002/IP-N00360/2017-2018/11055 as Liquidator of the Corporate
Debtor as per the provisions of Section 34 of the IBC, 2016
c. To direct the Corporate Debtor and its personnel, employee, staff,
agents etc to extend all assistance and co-operation to the
liquidation as may be required in discharging his functions as
IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH, MUMBAI
MA 167/2020 in CP(IB) 2096(MB)/2019
Liquidator of the Corporate Debtor as specified under the provisions
of IBC, 2016.
2. Applicant Interim Resolution Professional, Mr. Ram Ratan Kanoongo
has filed this application stating that Petition filed under Section 7 of
IBC, 2016 was admitted by order of this Bench dated 25.9.2019 and
the applicant was appointed as the Interim Resolution Professional.
3. The applicant submits that the Public Announcement in ‘Form A’ under
Regulation 6 of the IBBI (IRP for Corporate Persons) Regulations, 2016
interalia calling upon the creditors of the Corporate Debtor to submit
a proof of their claims on or before 24.10.2019 was updated on the
website of IBBI and was also released in the newspapers.
4. Thereafter, the CoC was constituted on 1.11.2019. In the second CoC
meeting held on 16.11.2019, the CoC informed the Applicant that the
CoC does not wish to appoint a RP as they wish to take the Corporate
Debtor into liquidation in line with Section 33(2) of IBC, 2016 without
going through the Resolution Plan for the following reasons:
(a) There are no business prospects with the Corporate Debtor;
(b) There is no substance in chasing the legal suits and cases of
recovery;
(c) There is no point in spending goods money to make efforts to recover
bad money, having very remote chance of recovery;
(d) The assets with the company are not sufficient to repay the amounts
of creditors;
(e) Any resolution plan is not possible, which could enable the company
to pay the entire debts.
5. In the said second meeting, the CoC further informed that a decree has
already been passed by the DRT against the Corporate Debtor and
Recovery Certificate (RC) also issued. Corporate Debtor is not a running
concern and recovery action has already been initiated by the Banks
against the Corporate Debtor and guarantors. Furthermore, all secured
and unsecured assets are attached by the ED and under the
Adjudication before various forums. Banks are contesting the PMLA
cases for releasing the secured assets and to take the unsecured assets
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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH, MUMBAI
MA 167/2020 in CP(IB) 2096(MB)/2019
as per the provisions of PMLA Act. As per CoC, getting possession of
those assets by RP is very time consuming/expensive exercise and will
have to go through multifarious litigations which the bank is already
going on with the respective agencies. Hence, no resolution looks
possible, therefore, moving ahead with the resolution process will not
serve the purpose in any manner. Copy of the minutes of the 2nd CoC
meeting is annexed with this application as Exhibit 7.
6. In the 3rd CoC meeting held on 20.11.2019, a resolution for liquidation
of the Corporate Debtor was put for voting. Since the requisite 66% of
votes were not received in the said meeting, the said resolution was
again put for voting in the 4th CoC meeting held on 2.12.2019. In the
said 4th CoC meeting, the resolution for liquidation of Corporate Debtor
for put for voting and got passed with 98.25% voting share. The CoC
approved the appointment of Mr. Santanu T Ray having Registration
No.IBBI/IPA-002/IP-N00360/2017-2018/11055 to act as the
Liquidator of the Corporate Debtor. The written consent in the
prescribed consent form under Section 34(1) of IBC, 2016, read with
Rule 3 of the IBBI (Liquidation Process) Regulations, 2016 was
obtained and is annexed with the application as Exhibit 11.
7. It is further submitted that in the 4th CoC meeting, pursuant to
Regulation 39B(3) of the IBBI (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016 and relevant provisions of the
IBC, 2016, the CoC resolved and approved the best estimate made by
them of Rs.50 lacs as liquidation cost. The CoC further approved that
the amount of Rs.50 lacs and further cost overruns, if any, will be
contributed as per Regulations 2A of IBBI (Liquidation Process)
Regulations, 2016. The said resolution received 98.24% votes and got
passed by the CoC.
8. On hearing the submissions of the Applicant and on reading the Application
and the documents enclosed therein, we are of the view that this case is fit
to pass liquidation order under sub-section 1 of section 33 of the Code as
no resolution plan has been submitted before the Adjudicating Authority by
the Resolution Professional, and accordingly, this Bench orders;
a. that the Corporate Debtor to be liquidated in the manner as laid
down in the Chapter by issuing Public Notice stating that the
Corporate Debtor is in liquidation with a direction to the
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IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH, MUMBAI
MA 167/2020 in CP(IB) 2096(MB)/2019
Liquidator to send this order to the ROC under which this
Company has been registered.
b. that Mr. Santanu T Ray, having Registration No.IBBI/IPA-
002/IP-N00360/2017-2018/11055 is hereby appointed as
Liquidator as provided under Section 34(1) of the Code.
c. all the powers of the Board of Directors, key managerial persons,
the partners of the Corporate Debtor hereafter ceased to exist.
All these powers henceforth vest with the Liquidator.
d. that the personnel of the Corporate Debtor are directed to extend
all co-operation to the Liquidator as required by him in managing
the liquidation process of the Corporate Debtor.
e. that the Liquidator will charge fees for conduct of the liquidation
proceedings as provided in Regulation 4(3) of the IBBI
(Liquidation Process Regulations), 2016.
f. that on having liquidation process initiated, subject to section 52
of the Code, no suit or other legal proceeding shall be instituted
by or against the Corporate Debtor save and except the liberty to
the liquidator to institute suit or other legal proceeding on behalf
of the corporate debtor with prior approval of this Adjudicating
Authority.
g. This liquidation order shall be a deemed to be notice of discharge
to the officers, employees and workmen of the Corporate Debtor
except to the extent of the business of the Corporate Debtor
continued during the liquidation process by the Liquidator.
9. The Liquidator appointed in this case is directed to initiate liquidation
process as envisaged under Chapter-III of the Code by following the
liquidation process given in the Insolvency & Bankruptcy Board of India
(Liquidation Process) Regulations, 2016.
10. The registry is directed to communicate this order to the Liquidator.
11. MA 167/2020 is hereby allowed and disposed of with the above directions.
Sd/- Sd/-
V NALLASENAPATHY SUCHITRA KANUPARTHI
Member (Technical) Member (Judicial)
