TaxTMI 
TaxTMI 
2021 (10) TMI 643
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....he Applicant, in terms of Section 230 of the Companies Act, 2013. 2. Restrain the Respondent from proceeding with the auction of the Corporate Debtor's property situated at D-13, Peera Garhi, New Rohtak Road, Delhi 110041 on 05.02.2020. 3. Fix the reserve price at Rs. 77.77 Crores, in consonance with the market value of the property and other similarly placed commercial plots in close vicinity of the Corporate Debtor's property, or 4. Pass any other order/grant any relief as the Hon'ble Tribunal may deem fit, in the interest of justice, equity and good conscience..." 2. That during the course of hearing on 06.08.2021, it was submitted by the Ld. Counsel for the Applicant that the Applicant does not wish to press the prayer no. 2 and 3. Therefore, the only prayer, which requires to be adjudicated is the prayer no. 1. 3. To put succinctly, facts of the case are that the Financial Creditor, M/s. Small Industrial Development Bank of India (SIDBI) had filed an application bearing no IB-575(ND)/2019 under Section 9 of IBC 2016 for initiation of CIR Process against the Corporate Debtor M/s. Delicious Coco Water Pvt. Ltd. That vide Order dated 0....
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....was received thereto. (vi) On 07.02.2020, this Tribunal, on being apprised by the Applicant about non-cooperation of the Respondent, granted liberty to the Applicant to submit a Scheme of Arrangement to the Liquidator. (vii) That while the Applicant was under the process of concluding a Scheme of Arrangement for submission to the liquidator, this Tribunal vide order dated 04.03.2020, allowed the Respondent/Liquidator to proceed with the Liquidation proceedings. (viii) The Respondent thereafter, issued advertisement for the e-auction of the Corporate Debtor's property at D-13, Peera Garhi, New Rohtak Road, Delhi 110041. However, due to Covid-19 pandemic and consequent lockdown, the auction could not be held successfully. (ix) Thereafter, the applicant filed I.A. No. 2111 of 2020 before this Tribunal seeking restraint on the liquidation proceedings, as the Respondent had miserably failed to comply with the Order dated 05.09.2019 passed by the Hon'ble NCLAT in Company Appeal (AT) (Ins) No. 628/2019 and the reserve price of Rs. 46 Crore fixed for the auction was much lower than the fair market value of the property, which is approximately aro....
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....y infructuous. Thus, the Application was dismissed as withdrawn with a liberty to the Applicant to file an appropriate application in accordance with the provisions of law. (xvi) On 18.12.2020, the Respondent yet again issued an advertisement for sale of the aforementioned property via an auction scheduled on 05.02.2021, at a terribly low price of Rs. 37,50,00,000/-. It is submitted that the said amount is less than half of the fair market value of the property. (xvii) The auction of the Corporate Debtor's assets at such a throwaway price goes against the objective of the IBC, being maximization of the assets of the Corporate Debtor. Further, the primary duty entrusted to a Resolution Professional is to ensure that the Corporate Debtor remains a going concern and is sold as such, when the resolution process fails, thereby preventing massive loss of employment and ensuring continuity of business. (xviii) The doubts on the conduct and efficiency of the Respondent has been noticed even by this Tribunal, which in the order dated 21.10.2019 observed as follows: "CAs 115272019, 115372019 has been filed by the claimants aggrieved by the rejection of....
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....s submitted that: (i) The CIRP of the Corporate Debtor was commenced vide an order of this Tribunal dated 06.03.2018 and the Liquidator was appointed the IRP, who was later confirmed as the RP. The original applicant/Financial Creditor, Small Industries Development Bank of India ('SIDBI') is the sole financial creditor having 100% share in the CoC. (ii) Since the inception of the CIRP, the Applicant, against the true spirit of the Insolvency and Bankruptcy Code, 2016 ('Code'), has been trying to interfere with the process of CIRP and now, with the process of liquidation. That a transaction audit conducted has made scathing remarks against the Applicant in terms of fraudulent transactions and availing the present loan by concealing material facts, so much so that in relation to the only asset of the corporate debtor and the loans taken by the Applicant from the sole financial creditor SIDBI, an FIR was registered against the Applicant by the Central Bureau of Investigation u/S. 420, 467, 468, 471 IPC r/w S. 120B IPC and S. 13(2) and 13(1)(d) of the Prevention of Corruption Act on 31.12.2018, specifying the fraud conducted by the Applicant, inter ali....
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....spondent to proceed with the auction. The said order attained finality as the Applicant went to the Delhi High Court, which granted 15 days' time to approach the NCLAT, but no such appeal was filed as the scheme stood time barred and rejected by the sole financial creditor. (vii) The Ex-Director has only a single intention to stall the process of liquidation and ensure that the asset becomes completely unviable and the efforts of the Liquidator and Creditor are nullified. The Liquidator has no personal stake in the present matter. Even today, subject to the order of the Hon'ble Bench, suitable steps may be taken for liquidation of outstanding amount of the sole financial creditor. (viii) The Hon'ble NCLAT has directed the Liquidator to follow the provisions of law and it is submitted that the Liquidator in accordance with provisions of law has awaited for a Scheme to be submitted by the Applicant, but none came till June 2020. It is not a duty of the Liquidator to formulate a scheme or even to facilitate creation of the said 'scheme'. Once the Liquidator receives a Scheme which is viable, the liquidator is to approach the Tribunal for appropria....
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....rore, lying in the account of the CD, received as rent from the tenant at the only asset of the Corporate Debtor; and (ii) balance 29 crore, to be arranged from 'friends and family'. There is not a whisper on how the said funds will be arranged or letter of intent from anyone thereof. Earlier too, the Applicant had given OTS to the sole financial creditor with similar sources of funds (being HNIs, family friends) and the sole financial creditor had rejected the proposal. (xi) The proposal or scheme of the Applicant is not a scheme under the Companies Act 2013. That further, the Liquidator cannot be compelled to move the Tribunal pursuant to mere submission of a document that may be titled scheme under Section 230 CA 2013. There has to be a concrete proposal and the same must be approved by the financial creditor. In its present form the 'scheme' cannot be considered and has to be disregarded at the threshold. For the Liquidator or any member to move an application under S. 230 CA 2013, it is a requirement as per the CA 2013 and the rules therein that an affidavit showing the consent of 75% of the creditors is required. Reference is made to....
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....n officials and the Applicant. One of the grievances of SIDBI is that the tenancy of the property was never disclosed to them. In such circumstances, it is not reasonable for a scheme of compromise to be accepted and therefore, this Tribunal may direct the Liquidation process to proceed. (xiv) The sole asset of the Corporate Debtor in liquidation is a Banquet Hall at D-13, Udyog Nagar, Peera Garhi, New Delhi. The said property is being run by Respondent No. 1, M/s. RPM Banquet under their name and Style of 'Lavanya Dreams' built on Plot area of approx. 3171.40 sq. yds. having a superstructure/covered area of approx. 77,000 sq. ft (hereinafter the "sole asset"). (xv) The Respondent/Liquidator has made multiple attempts to sell the property of the Corporate Debtor via public auction. However, the same got failed. It is added that the Reserve price of the property was fixed in accordance with Schedule 1 of the Liquidation Rules. The Liquidator, acknowledging the value of the asset, has reduced the reserve price lesser than the maximum extent permissible under the Liquidation Rules. Liquidator has placed the following tabular representation, indicating change ....
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.... of 2018' after calling for such schemes offered by creditors/class of creditors (Committee of Creditors)." 9. That it is pointed out by the Liquidator in its reply that the scheme was submitted by the applicant on 19.06.2020. The Liquidator did not consider the 'Scheme' mainly on the ground that the Applicant did not submit the scheme within 90 days from the order of Liquidation as prescribed by the Hon'ble NCLAT in SC Sekaran, and Y. Shivram's case. Therefore, it was submitted by the Liquidator that the hands of the Liquidator are tied. The Liquidator/Respondent has further placed emphasis on the Regulation 2B(1) of IBBI (Liquidation Process) Regulations, 2016, which is reproduced below: 2B. Compromise or Arrangement (1). Where a compromise or arrangement is proposed under section 230 of the Companies Act, 2013, it shall be completed within ninety days of the order of liquidation under sub-sections (1) and (4) of section 33. Provided that a person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor, shall not be a party in any manner to such compromise or arrangement. ....
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....e sole financial creditor, SIDBI. 14. That it is also a matter of record that the Liquidator has made multiple attempts to sell the assets of the Corporate Debtor via Public Auction. However, these attempts have not yielded results. The Liquidator has not been successful in selling the assets of the Corporate Debtor. It is also a fact that the Liquidator, who was also the RP, had failed to bring a Resolution Plan for the Corporate Debtor resulting in Liquidation of Corporate Debtor. That as on date, there is a situation of a deadlock and no progress has been made by the Corporate Debtor in the last 2 years. That the Liquidator has neither been able to auction the assets of the Corporate Debtor nor it has placed the Scheme of the Corporate Debtor before the COC or the sole financial creditor SIDBI. 15. That in the circumstances, the only route available to the Corporate Debtor to come out of the clutches of the Liquidation is via the Scheme of Compromise and Arrangement proposed under Section 230 of Companies Act, 2013. That here, it is worthwhile referring to the Judgment of Hon'ble Supreme Court in 'Meghal Homes Pvt. Ltd. vs. Shree Niwas Girni K.K. Samiti & Ors. - (2....
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....ected the 'Liquidator' to consider the same in accordance with the guidelines laid down by this Appellate Tribunal in 'Y. Shivram vs. S. Dhanapal & Ors.' (iii) The Regulation 2B(1) of IBBI (Liquidation Process) Regulations, 2016 is directory in nature, (iv) The Scheme proposed by the Applicant has not been considered on merits by the Creditors, and (v) Liquidator has not succeeded in selling the assets of the Corporate despite Debtor despite multiple attempts. Since the objective of the IBC is to prefer resolution over liquidation and maximisation of the value of assets of the Corporate Debtor at any stage, it would be in fitness of the scheme of IBC to make all possible efforts to revive the Corporate Debtor. 18. In sequel to the above, we hereby allow the Application and direct the Liquidator to place without further delay, the Scheme in accordance with Section 230 of the Companies Act, 2013 submitted by the Applicant, before the Creditors in compliance of the directions of the Hon'ble NCLAT. 19. That the Liquidator shall file its status report in compliance of this order within 30 days from today. In case the scheme is reje....
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....tor stating that no proposal has been received and if he is interested, he should submit a proposal under S. 230 of CA 3102 Email already annexed as Annexure A/2 to CA 412/2021 Document 3 10. 11. 26.09.2019 Email from ex For over 10 Email director asking the months the Ex- already Liquidator to call a Director has annexed as with not given any Annexure and proposal under A/2 to CA meeting creditors shareholders of the S. 230 CA 2013 412/2021 CD so that terms other than the and conditions of the OTS which was scheme of rejected compromise can be finalised' 07.02.2020 Noting the NCLAT Still no scheme Copy order, the NCLT is received by order dated records that no the Liquidator 07.02.2020 is annexed scheme has been given by the Ex- Director and grants him another opportunity to submit a scheme as R6 within 1 week 12. 04.03.2020 The NCLT Despite Copy of categorically stated repeated order dated that the only extension by 04.03.20 proposal received NCLAT and annexed as was an OTS which NCLT to R7. 13. has been....