2024 (10) TMI 156 - Tri - IBC

Corporate debtor liquidation ordered under Section 33 IBC after 90.16% creditor committee vote citing enforcement attachment

MR. VIJAY KUMAR GARG, RESOLUTION PROFESSIONAL OF GITANJALI GEMS LTD, ICICI BANK LIMITED Versus GITANJALI GEMS LIMITED

The NCLT Mumbai ordered liquidation of a corporate debtor under Section 33 of the IBC, 2016. The CoC resolved to liquidate with 90.16% majority voting, ... Liquidation of the Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The assets of the Corporate Debtor were under attachment by the Directorate of Enforcement under the provisions of the PMLA, 2002 and considering the bleak chances of insolvency resolution amid the ongoing investigations and attachment of assets, the CoC had resolved in its 06th Meeting held on 05th April, 2019 to liquidate the Corporate Debtor by a majority of 90.16% voting in favour. The Applicant informed the CoC about his personal difficulty to act as a Liquidator and it was thus decided by the members of CoC in the 7th Meeting that if the Resolution Professional did not provide his consent, then the appointment of liquidator will be in the manner as envisaged u/s 34 of the Code. Accordingly, in the Eighth CoC Meeting held on August 01, 2019, the committee resolved to appoint Mr. Santanu T. Ray to act as the Liquidator of the Corporate Debtor and the written consent of Mr. Santanu T. Ray to act as the Liquidator of the Corporate Debtor has also been placed on record. The Financial Creditor has also filed M.A. No. 2740 of 2019 before this Tribunal proposing the name of Mr. Santanu T. Ray in place of Mr. Vijay Kumar Garg, to act as Liquidator of the Corporate Debtor. The Hon’ble Supreme Court in the matter of K. Sashidhar Versus Indian Overseas Bank & Ors [2019 (2) TMI 1043 - SUPREME COURT] has held that the decisions of CoC based on its commercial wisdom are non-justiciable. The CoC with requisite voting as given under Section 33(2) has approved the liquidation of Corporate Debtor in view of bleak chances of receiving any resolution plan for the reasons discussed hereinbefore. This Tribunal has very limited powers of judicial review in such matters of commercial wisdom. This Bench is of the opinion that the Corporate Debtor is required to be liquidated in the manner as laid down under the Insolvency & Bankruptcy Code, 2016 - Application allowed. Issues:Liquidation of Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016.Detailed Analysis:1. Application for Liquidation:The Applicant, as the Resolution Professional of the Corporate Debtor, filed an application for liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process and the Resolution Professional was appointed by the Committee of Creditors.2. Attachment of Assets:Due to alleged fraud by the Corporate Debtor and its officers, law enforcement agencies like CBI and ED probed the affairs of the Corporate Debtor and attached its properties. The Applicant faced challenges in accessing the assets for the insolvency resolution process, leading to the denial of extension of the CIRP period by the CoC.3. CoC Decision for Liquidation:The CoC, in its meetings, discussed the bleak chances of insolvency resolution due to the ongoing investigations and attachment of assets. The CoC, with a majority vote, resolved to liquidate the Corporate Debtor as the assets were seized, and the Company had no running business.4. Appointment of Liquidator:The Resolution Professional expressed personal difficulty in acting as a Liquidator, and Mr. Santanu T. Ray was appointed as the Liquidator of the Corporate Debtor by the CoC. The Tribunal approved this appointment and directed the Liquidator to conduct the liquidation process as per the IBBI regulations.5. Judicial Review and Liquidation Order:The Tribunal cited the limited powers of judicial review in matters of commercial wisdom of the CoC. Considering the CoC's decision and the circumstances, the Tribunal ordered the liquidation of the Corporate Debtor under Section 33(2) of the Code. Various directives were issued regarding the liquidation process, powers of the Liquidator, contribution to liquidation costs, and communication of the order to relevant stakeholders.6. Conclusion:The Tribunal allowed the application for liquidation, appointed Mr. Santanu T. Ray as the Liquidator, and provided detailed instructions for the liquidation process, including communication of the order to concerned parties and discharge of officers and employees of the Corporate Debtor. The Resolution Professional was directed to hand over relevant documents to the newly appointed Liquidator.This comprehensive analysis covers the key issues and details of the judgment regarding the liquidation of the Corporate Debtor under the Insolvency and Bankruptcy Code, 2016.