Tribunal Orders Liquidation of Tecpro Systems Limited for Non-Compliance with Resolution Plan

The Tribunal ordered the liquidation of the Corporate Debtor, Tecpro Systems Limited, due to non-compliance with the approved Resolution Plan by the successful Resolution Applicant. The Resolution Professional's application for annulment of the Resolution Plan was granted, leading to the forfeiture of the Performance Security of Rs. 5 Crore. The Tribunal discharged the erstwhile Resolution Professional, appointed a new Liquidator, and provided detailed directions for the liquidation process, including issuing a Public Announcement and investigating financial affairs within seventy-five days.

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Issues Involved:
1. Annulment of the approved Resolution Plan.
2. Forfeiture of Performance Security.
3. Liquidation of the Corporate Debtor.
4. Discharge of the erstwhile Resolution Professional.
5. Appointment of a new Liquidator.
6. Non-encashment of Bank Guarantees.

Issue-wise Detailed Analysis:

1. Annulment of the Approved Resolution Plan:
The application was filed under Section 60(5) read with Section 33 of the Insolvency and Bankruptcy Code, 2016. The Resolution Professional sought the annulment of the Resolution Plan approved on 15-5-2019 due to non-compliance and non-implementation by the successful Resolution Applicant, M/s. Kridhan Infrastructures Private Limited. The Tribunal noted that the Resolution Applicant failed to infuse equity funds and take control of the management, leading to a significant delay of about 8 months. The Committee of Creditors (CoC) resolved to liquidate the Corporate Debtor due to the inordinate delay and non-compliance.

2. Forfeiture of Performance Security:
The Tribunal addressed the prayer for forfeiture of the Performance Security of Rs. 5 Crore provided by the Resolution Applicant. Regulation 36B (4A) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 mandates that performance security shall be forfeited if the Resolution Applicant fails to implement the approved plan. The Tribunal upheld this regulation and ordered the forfeiture of the Rs. 5 Crore performance guarantee.

3. Liquidation of the Corporate Debtor:
The Tribunal ordered the liquidation of the Corporate Debtor, Tecpro Systems Limited, under Section 33(1) of the Insolvency and Bankruptcy Code, 2016. The CoC had passed a resolution with a 99.28% majority for liquidation due to the non-implementation of the Resolution Plan. The Tribunal cited Section 33(3) of the Code and the precedent set by the Hon'ble NCLAT in Yavar Dhala v. JM. Financial Asset Reconstruction Co. Ltd., emphasizing that liquidation must follow upon the failure of the Resolution Applicant to implement the plan.

4. Discharge of the Erstwhile Resolution Professional:
The Tribunal ordered the discharge of the erstwhile Resolution Professional for the purposes of liquidation. The CoC had authorized the Resolution Professional to file for liquidation and take necessary steps to annul the Resolution Plan.

5. Appointment of a New Liquidator:
The Tribunal appointed Mr. Ramchandran Subramanian as the Liquidator for the Corporate Debtor, as proposed by the CoC. The Liquidator was directed to issue a Public Announcement and proceed with the liquidation process as per the Insolvency and Bankruptcy Code, 2016, and relevant regulations.

6. Non-encashment of Bank Guarantees:
The Tribunal noted the prayer to restrain the encashment of bank guarantees submitted by the Corporate Debtor. However, as the concerned banks and recipients were not made parties to the application, this prayer could not be considered. The Liquidator was given liberty to file a proper application on this issue if advised.

Conclusion:
The Tribunal ordered the liquidation of Tecpro Systems Limited, appointed a new Liquidator, and directed the forfeiture of the Rs. 5 Crore performance guarantee. The Tribunal also provided detailed directions for the liquidation process, including the issuance of a Public Announcement, investigation of financial affairs, and submission of a Preliminary Report within seventy-five days. The application was partly allowed, and the Tribunal disposed of C.A. 2683 (PB)/2019 in IB-197 (PB)/2017 accordingly.

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