NCLT rules on Insolvency and Bankruptcy Code

NCLT rules on Insolvency and Bankruptcy Code

Tribunal says Liquidation Application can be moved before Adjudicating Authority even before expiry of the Insolvency Resolution Period.

In this case, an application was filed by the Applicant (Hemant Raykumar Khinvasara) seeking an order under Section 30(1) r. w. Section 60(5)(C) Insolvency and Bankruptcy Code, 2016. The Applicant pleaded in the application that the first EOI was published by the on 23 October 2020, but as per the Regulations, the publication for inviting EOI(Expression of Interest)was to be published not later than 75 days from the date of the commencement of CIRP.

According, to the Applicant, in this case, CIRP commenced on 10 July 2019, and the notice inviting the interest for submitting a Resolution Plan was to be published on or before 25 September 2019. However, the notice for EOI was published on the 103rd day after the commencement of the CIRP.

The Applicant stated that the Applicant was under a reasonable belief that someone will definitely come forward to submit a Resolution Plan for the Corporate Debtor namely M/s. Panama Systems Pvt. Ltd. However, the CoC has resolved for the Liquidation of the Corporate Debtor before completing the CIRP period and therefore, the applicant felt this is the right time to intervene in the Application for liquidation of the Corporate Debtor.

The Applicant also stated that the Applicant was truly interested in the revival of the Corporate Debtor since the applicant had taken lots of efforts in setting up and building the business. The Applicant had invested huge sums of money without any outside borrowing, had goodwill in the market and the corporate debtor had earned reputation.

Herein, the CoC in its 4th meeting held on 20 November 2019, unanimously passed a resolution for liquidating the company. Accordingly, the Resolution Professional filed an application for the liquidation of the Company as provided u/s. 33 of the Insolvency & Bankruptcy Code, 2016 (Code).

The National Company Law Tribunal (NCLT), Mumbai Bench referring to Section 33(1), observed that an application for liquidation can be moved before Adjudicating Authority even before the expiry of the insolvency resolution period if no resolution plan is received. Since no resolution plan had been received by Resolution Professional in this case, the CoC in its commercial wisdom thought it fit to liquidate the Company with the required majority of voting and such decision of the CoC cannot find fault with by the Adjudicating Authority.

Even otherwise, the Miscellaneous application was pending before this Adjudicating Authority even though it was filed long before and no resolution applicant came forward even at this juncture. Therefore, the entire argument of the applicant that the Resolution Professional and CoC prematurely resolved to liquidate the Corporate Debtor had no force.

It was found, that the Applicant had not even enclosed a copy of the proposed Resolution Plan and value thereof. The Tribunal was of the considered opinion that the above application was nothing but a ploy on the suspended Director to stall the liquidation proceedings. Accordingly, the Miscellaneous application filed by the Applicant was disposed of making it clear that the last date for receipt of expression of interest had already expired.