Tribunal Rules on CIRP Liquidation, Rejects Impleading Govt

The Tribunal rejected the impleading of the Government of Jharkhand in the Corporate Insolvency Resolution Process (CIRP) proceedings, upheld the Resolution Professional's actions as compliant with the Insolvency and Bankruptcy Code, 2016, supported the decision to liquidate the Corporate Debtor due to non-operational status, approved the validity of debt assignments and related party transactions, and dismissed objections from workers and operational creditors. The Tribunal ordered the liquidation of the Corporate Debtor, appointing a Liquidator to proceed with the process in accordance with the IBC, 2016, prioritizing workers' interests and upholding the CoC's decision.

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Issues Involved:
1. Impleading the Government of Jharkhand in the CIRP proceedings.
2. Validity of the Resolution Professional’s actions.
3. Decision to liquidate the Corporate Debtor.
4. Validity of debt assignments and related party transactions.
5. Workers' and operational creditors' objections to the liquidation process.

Analysis:

1. Impleading the Government of Jharkhand in the CIRP proceedings:
The applicant sought to implead the Government of Jharkhand, arguing that the land in question belonged to the government and was central to the resolution of the corporate debtor's insolvency. The Tribunal concluded that the issue of land ownership between Tata Steel Ltd. and the Government of Jharkhand was outside its jurisdiction, as it was not directly connected to the insolvency resolution or liquidation process. The Tribunal relied on the Supreme Court's decision in Embassy Property Developments (P.) Ltd. v. State of Karnataka, which demarcates the boundaries of the Adjudicating Authority's role. Consequently, the Tribunal rejected the contention to implead the Government of Jharkhand.

2. Validity of the Resolution Professional’s actions:
The Tribunal examined the actions of the Resolution Professional (RP) and found no negligence or non-compliance with the Insolvency and Bankruptcy Code (IBC), 2016. The RP had made efforts to prepare the Information Memorandum despite the lack of statutory records and cooperation from suspended directors. The Tribunal noted that the RP's actions were in line with the Code's requirements and that the RP had sought necessary approvals from the Committee of Creditors (CoC).

3. Decision to liquidate the Corporate Debtor:
The CoC decided to liquidate the Corporate Debtor due to several reasons, including the non-operational status of the business, outdated technology, lack of financial records, and expired lease of land. The Tribunal upheld the CoC's decision, emphasizing that the commercial wisdom of the CoC is supreme and should not be interfered with unless it contravenes any law. The Tribunal also noted that the corporate debtor was not a going concern and that liquidation was the only viable option.

4. Validity of debt assignments and related party transactions:
The Tribunal addressed the objections regarding the validity of debt assignments to Kamala Mills Ltd. and Fasqua Investment Pvt. Ltd., and whether these entities were related parties. It was concluded that the assignments were valid under the Transfer of Property Act, 1882, and that the Factoring Regulation Act, 2011, did not apply retrospectively. The Tribunal also found that Mr. Ramesh G. Govani was not a director of the corporate debtor, thus negating the related party argument. The Tribunal rejected the contention that only operational creditors could assign debts and upheld the inclusion of Kamala Mills Ltd. and Fasqua Investment Pvt. Ltd. in the CoC.

5. Workers' and operational creditors' objections to the liquidation process:
The Tribunal considered the objections raised by the workers and operational creditors, including the proposal to revive the company and the alleged bias of the RP. The Tribunal found that the workers' proposal was not concrete and that the RP had acted in accordance with the Code. The Tribunal emphasized that the interests of the workers would be protected during the liquidation process, and they could submit a proposal under Section 230 of the Companies Act, 2013, or to the Liquidator.

Conclusion:
The Tribunal ordered the liquidation of the Corporate Debtor, appointing Mr. Shashi Agarwal as the Liquidator. The Liquidator was directed to proceed with the liquidation process as per the IBC, 2016, and to prioritize the interests of the workers. The Tribunal dismissed all applications challenging the liquidation process and upheld the CoC's decision based on commercial wisdom.

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