Tribunal Orders Liquidation of SSB Retail India Pvt Ltd, Calls for IBC Amendment

The Tribunal ordered the liquidation of the Corporate Debtor, SSB Retail India Private Limited, due to a deadlock in voting share, with only 55.87% in favor of liquidation and the absent member's share not counted. The Tribunal emphasized the need for amending Section 33(2) of the IBC to address such deadlock situations. Mr. Pavan Kankani was appointed as the Liquidator, with specific directions for the liquidation process, including issuing a public announcement, ceasing the moratorium, and cooperation from all personnel. The Tribunal highlighted the importance of ensuring the objectives of the IBC are met.

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Issues Involved:
1. Whether the Adjudicating Authority can order the liquidation of the Corporate Debtor with only 55.87% voting share.
2. Interpretation of Section 33(2) of the Insolvency and Bankruptcy Code (IBC), 2016 regarding the required voting share for liquidation.
3. Applicability of the ruling in Tata Steel Limited v. Liberty House Group Pte. Ltd. & Ors. to the present case.
4. The impact of absenteeism of Committee of Creditors (CoC) members on the voting process.

Detailed Analysis:

1. Whether the Adjudicating Authority can order the liquidation of the Corporate Debtor with only 55.87% voting share:
The core issue is whether the liquidation of the Corporate Debtor can be ordered when only 55.87% of the voting share, represented by one of the two CoC members, voted for liquidation, while the other member remained absent. The Tribunal noted that Section 33(2) of the IBC mandates a minimum of 66% voting share for liquidation. However, the absence of the second CoC member, who did not vote, created a deadlock, preventing the required 66% threshold from being met.

2. Interpretation of Section 33(2) of the Insolvency and Bankruptcy Code (IBC), 2016 regarding the required voting share for liquidation:
Section 33(2) states that the decision to liquidate must be approved by not less than 66% of the voting share. The Tribunal highlighted that the section is silent on whether the 66% must include only members present in person or via video conference or also those absent. The Tribunal emphasized that the absence of a clear directive in this regard led to ambiguity in the current case.

3. Applicability of the ruling in Tata Steel Limited v. Liberty House Group Pte. Ltd. & Ors. to the present case:
The Tribunal referred to the ruling in Tata Steel Limited, where it was held that only the voting shares of CoC members present in the meeting should be counted. The Tribunal found this ruling applicable to the present case, as both Section 30(4) (related to the approval of a resolution plan) and Section 33(2) (related to liquidation) of the IBC require a minimum voting share. The Tribunal concluded that the 55.87% voting share of the member present should be considered as 100% for the purpose of the resolution, as the absent member's voting share should not be counted.

4. The impact of absenteeism of Committee of Creditors (CoC) members on the voting process:
The Tribunal observed that the absenteeism of the second CoC member, who neither attended the meetings nor voted, created a stalemate. This situation hindered the liquidation process and defeated the timelines set under the IBC. The Tribunal suggested that the Insolvency and Bankruptcy Board of India (IBBI) consider amending Section 33(2) to address such deadlock situations, ensuring that the liquidation process is not stalled due to the absence of CoC members.

Conclusion:
The Tribunal ordered the liquidation of the Corporate Debtor, SSB Retail India Private Limited, in accordance with Chapter-III of the IBC. The Resolution Professional, Mr. Pavan Kankani, was appointed as the Liquidator. The Tribunal directed the Liquidator to issue a public announcement of the liquidation, cease the moratorium under Section 14, and ensure that no new legal proceedings are initiated against the Corporate Debtor. The Tribunal emphasized the need for cooperation from all personnel connected with the Corporate Debtor and specified the Liquidator's duties and entitlements.

Order:
The application for liquidation was allowed with specific directions, including:
- Liquidation of the Corporate Debtor in the manner laid down in Chapter-III of the IBC.
- Continuation of Mr. Pavan Kankani as the Liquidator.
- Issuance of a public announcement of the liquidation.
- Cessation of the moratorium under Section 14.
- Vesting of all powers of the Board of Directors, Key Managerial Personnel, and partners in the Liquidator.
- Cooperation from personnel connected with the Corporate Debtor.
- Entitlement of the Liquidator to specified fees.
- Notice of discharge to the Officers, employees, and workmen of the Corporate Debtor, except when the business is continued during the liquidation process.
- Communication of the order to relevant authorities and the IBBI for consideration of amending Section 33(2) to prevent misuse and ensure the objectives of the IBC are met.

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