TaxTMI 
TaxTMI 
2021 (10) TMI 643
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....ies 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 05.03.2018, this Adjudicating Authority had initiated the CIR Process against....
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....on 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 around Rs. 94 Crore. (x) That the additional documents filed in I.A. No. 2111 of 2020 substantiates the fact that the actual market value of t....
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.... 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 the claim by the Liquidator. No cogent explanation has been given. It appears that the liquidator has not carried out his duty diligently. Mail has been sent to the applicant to send documents. This Bench is un....
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....tor, 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 alia, in relation to the asset of the Corporate Debtor. (iii) When the Applicant realized that due to the state of the Corporate Debtor, no viable resolution plan was forthcoming, the Applicant started realizing that by virtue of the provisions unde....
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....ector 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 appropriate orders under section 230 of Companies Act, 2013. However, in the absence of a scheme within 90 days period as prescribed by the NCLAT in SC Sekaran, and Y. Shivram's case, the hands of the Liquidator are tied. It is an admitted position by the Applicant that the scheme was given in June 2020 much after ....
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.... 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 S. 230 (2) [in particular 230(2)(c)(i)] of CA 2013 and Rule 3(1) (iii) read with and rule 4 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, wherein a statement from the creditors is required that they are agreeable to the scheme prior to approaching the Tribunal. (xii) Even if the contentions of the Liquidator are disregarded and the contentions of....
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....a 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 in EMD and the reserve price of the property. 6. That the Applicant has filed its written submissions and has added the following additional submissions: (i) There is no time prescribed in law to propose compromise/arrangement. Reading of 90 days from the date of liquidation is incorrect, as Regulation 2B of IBBI (Liquidation Process) Regulation 2016, does not prescribe a timeline for submission of a sc....
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....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. In the light of the aforesaid provision, it has been submitted by the Liquidator that it has followed the provisions of law in dealing with the Scheme submitted by the Applicant after expiry of the period of 90 days. 10. Here, it is felt necessary to recapitulate the sequence of relevant events. The Liquidation of the Corporate Debtor was ordered on 31.05.2019. The Hon'ble NCLAT had permitted the Applicant to submit the Scheme under Section 230 on 05.09.2019. Evid....
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....hat 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. - (2007) 7 SCC 753", where it is observed and held that: "33. The argument that Section 391 would not apply to a company which has already been ordered to be wound up, cannot be accepted in view of the language of Section 391(1) of the Act, which speaks of a company which is being wound up. If we substitute the definition in Section 390(a) of the Act, this would mean a company liable to be wound up and which is being wound up. It also does not appear to be necessary to restrict the scope of ....