2020 (9) TMI 1172 - Tri - Insolvency and Bankruptcy

Tribunal denies consolidation of Corporate Debtors due to lack of locus standi. Liquidation application directed.

Radico Khaitan Limited Versus B.T. & F.C. Pvt. Ltd.

The Tribunal rejected the application for substantive consolidation of Corporate Debtors, as the Applicant lacked the locus standi and failed to establish ... Seeking substantive consolidation of the Corporate Debtors into a single proceedings - acceptance, confirmation and all other actions with respect to the resolution plan for the Corporate Debtors - whether the Applicant, being the Operational Creditor, initiating CIRP respect of Respondent No. 1, has any locus standi to maintain the instant Application? - HELD THAT:- Since COC of R1 Company has unanimously decided to liquidate it by appointing Ms. R. Bhuvaneswari as Liquidator in the place of Mr. Srivastava, we hereby permit and direct an appropriate Application can be filed by RP of 1st Respondent by seeking to liquidate the Corporate Debtor and for appointment of Liquidator. The instant Application is filed on misconception of facts and law, and the Applicant too has no locus to interfere in the CIRP of Respondent No.1 by filing the instant Application and it also lacks merits - Application rejected. Issues Involved:1. Substantive consolidation of Corporate Debtors.2. Locus standi of the Applicant to maintain the application.3. Prima facie case for relief sought by the Applicant.Issue-wise Detailed Analysis:1. Substantive Consolidation of Corporate Debtors:The Applicant, an Operational Creditor, sought the substantive consolidation of the Corporate Debtors into a single proceeding for the purposes of the Corporate Insolvency Resolution Process (CIRP). The Applicant argued that the businesses of Respondent No.1 and Respondent No.2 are inextricably interlinked and intertwined, given that Respondent No.2 operates as the landholding company for Respondent No.1, and both companies are promoted, owned, and controlled by the same family. The Applicant also highlighted that Respondent No.2 stood as the guarantor for the financial debt of Respondent No.1, thus interlinking their assets and liabilities.2. Locus Standi of the Applicant:The Tribunal examined whether the Applicant, being an Operational Creditor who initiated CIRP against Respondent No.1, had the locus standi to maintain the application for consolidation. The Tribunal noted that the Applicant had previously filed an application seeking to club the cases of Respondent No.1 and Respondent No.2, which was dismissed. The Tribunal emphasized that the Applicant had suppressed material facts and had come to the Adjudicating Authority with unclean hands. The Tribunal concluded that the Applicant had no locus standi to interfere in the CIRP of Respondent No.1 by filing the instant application.3. Prima Facie Case for Relief Sought:The Tribunal considered whether the Applicant had made out a prima facie case for the relief sought. The Tribunal observed that the Committee of Creditors (CoC) of Respondent No.1 had unanimously decided to liquidate the company and appoint a liquidator. The Tribunal also noted that the Applicant had cited various judgments to support its case but failed to substantiate how the ratio of those cases applied to the instant case. The Tribunal found that the facts of the cited cases were not applicable to the present case. Consequently, the Tribunal determined that the application was filed on a misconception of facts and law and lacked merit.Conclusion:The Tribunal rejected the application for substantive consolidation of the Corporate Debtors, concluding that the Applicant had no locus standi to maintain the application and had not made out a prima facie case for the relief sought. The Tribunal directed that an appropriate application could be filed by the Resolution Professional of Respondent No.1 to seek liquidation and appointment of a liquidator.