TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 609
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....cating Authority, National Company Law Tribunal, Principal Bench, New Delhi in I.A. No.9010/2021 in (IB)/470(ND)/2019 (hereinafter referred to as NCLT). By the said order learned NCLT has allowed an application i.e. IA No.9021/2021 filed under Section 33(2) of the IBC Code. The said application was filed by Resolution Professional (hereinafter referred to as 'RP') namely Mr. Aishwarya Mohan Gahrana. It is appropriate to reproduce the order dated 31.05.2021 as follows:- "ORDER It is an IA filed u/s 33(2) of the Insolvency & Bankruptcy Code, 2016 ("the Code") by the Resolution Professional (RP) seeking liquidation order based on the resolution passed by the CoC in its 6th meeting held on 28.01.2021 with a requisite majority as contemplated under I&B Code, 2016. 2. On perusal of this application, it appears that this (IB)- 470(ND)/2019 was admitted on 08.11.2019 and this Applicant was appointed as IRP and he invited claims from the creditors and constituted CoC only of one Financial Creditor i.e. LIC Housing Finance Limited as the other Financial Creditor i.e. Dr. Arinjaya Jain was a related party to the Corporate Debtor. Subsequently, IRI' was appointed as RP in the First M....
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....liquidation of the company with directions as follows: a. The Mr. Aishwarya Mohan Gahrana, holding Registration No.IBBI/IPA-002/1P-N00135/2017- 2018/10351 having [email protected] is appointed as the Liquidator in terms of Section 32 of the Code; b. Registry is directed to communicate this Order to the Registrar of Companies, NCT of Delhi & Haryana and to the Insolvency and Bankruptcy Board of India; c. The Order of Moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cease to have its effect and a fresh Moratorium under Section 33(5) of the Insolvency and Bankruptcy Code shall commence; d. This order shall be deemed to be a notice of discharge to the officers, employees and the workmen of the corporate debtor as per Section 33(7) of the Insolvency and Bankruptcy Code, 2016; e. The Liquidator is directed to proceed with the process of liquidation in a manner laid down in Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 and in accordance with the relevant rules and regulations. f. The Liquidator shall follow up and continue to investigate the financial affairs of the Corporate Debtor in accordance with pr....
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.... 4 July, 2019 43,02,166/- 19,63,676/- 62,65,842/- 5 August, 2019 45,10,666/- 19,68,947/- 64,79,613/- 6 Sep 2019 25,84,228/- 14,81,812/- 40,66,040/- 7 Oct 2019 20,92,020/- 14,09,413/- 35,01,433/- 8 01.11.19 - 15.11.19 87,33,348/- 92,517/- 88,25,865/- 9 16.11.19 - 30.11.19 6,20,223/- 21,563/- 6,41,786/- 10 01.12.19 - 15.12.19 7,05,052/- 6,634/- 7,11,686/- It is further case of the appellant that at the time when IRP took over the Corporate Debtor the hospital was having a strength of approximately 100 employees and doctors. The doctors strength has been reflected in a chart at running page 7 which is as follows:- S. No. Month/Period No. of Doctors 1 October 2019 17 2 1.11.19 to 15.11.19 15 3 15.11.19 to 30.11.19 8 4 December 19 5 It is further case of the appellant that during CIRP the RP instead of taking step to continue the hospital as going concern was taking all steps to create a situation for liquidation. Even the RP had not taken any step to get certain dues of the Corporate Debtor recovered from the concerned Govt Departments/Agencies. Without adhering to provisions contained in Section 25 of the IBC Code the RP in connivanc....
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....he RP for the reasons best known to the RP. The fact that the payment was to be received to the tune of Rs. 1,78,50,211 Crores (approx.) from the Government Departments namely Delhi Police, Municipal Corporation of Delhi, Delhi Govt Employees Health Scheme, Central Industrial Security Force, Central Government Health Scheme, etc was simply ignored and no steps till date has been taken by the RP in this regard. The RP mentions the concern in the Minutes of the Meeting but fails to take any steps in support of the continuation of the operations of the Hospital." Learned counsel for the Appellant has also drawn our attention to running page 60 of the Memo of Appeal to show that in the Hospital upto month of October, 2019, there were 17 doctors. He further by way of referring to Page 61 of the Memo of Appeal tried to persuade the Court that till 15th November, 2019 there were 15 doctors. However, immediately after the RP took over the charge of the hospital, number of doctors started drastically decreasing. Learned counsel for the appellant has drawn our attention to running page 62 to show that till 30th November, 2019 the number of doctors was reduced to 8, by December 15, it came d....
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....alafide intention right from the very beginning was proceeding to see that the CD may proceed in liquidation instead of revival of the same. To substantiate his submission learned counsel for the appellant has referred to his written submission filed on 14.7.2022 wherein relevant portion of the Judgement of the Hon'ble Supreme Court reported in (2019) 4 SCC 17 in the matter of Swiss Ribbons Pvt Ltd and Anr Vs UOI & Others has been mentioned which is reproduced hereinbelow: "Therefore, maximization of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corporate debtor itself becomes a beneficiary of the resolution scheme - workers are pai....
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....filed under Section 19(2) of IBC against the following a. Rajesh Narang( ex director of CD) b. Dr. Rakesh Saxena (ex director of CD) c. Gulshan Bansal (Chartered Account of CD) d. Krishna Kumar Jha (CEO of CD) The ex directors of the CD have not even filed their reply till date. RP Around January 02, 2020 2 IA No.5150/2020 filed under Section 60(5) of IBC with the prayer for providing relevant information/documents to the RP pertaining to the CD CoC November 23, 2020 Despite the evident non-corporation on the part of the ex-directors of the CD, the RP made his best efforts to revive the CD and prepared an Information Memorandum (IM) after collection of information from various sources and issued Expression of Interest on 2 (Two) occasion being on August 16, 2020 and again on September 14, 2020, at the instance of Committee of Creditors." He further submits that CIRP was commenced on 08.11.2019. At the time of initiation of CIRP, the CD was having only Rs.12858/- in its account and its CD unit i.e. Febris Multispeciality Hospital was having Rs.15300/- only in its account. The aforesaid accounts were lying in the Axis Bank. On 6.11.2019 total amount of Rs.4138/- of CD/Hospi....
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....ial intervention for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. 155. It would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B code." Similarly in the same para i.e. para 19 of the joint reply reference has been made to para 46 of a judgement of Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Ltd through Authorised Signatory Vs Mr. Satish Kumar Gupta and other Civil Appeal No.8766-67 of 2019, which is quoted hereinbelow: "46................Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors." By way of referring to aforesaid judgement it has been argued that decision for liquidation was commercial wisdom and as such the order impugned may not be i....
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.... of M/s LIC Housing Finance Ltd, Regional Office, 2nd floor, Jeevan Deep Building, Sansad Marg, New Delhi. In the said COC Meeting there was only one financial creditor, i.e. LIC Housing Finance Ltd. 2nd CoC Meeting was again held at the same place i.e. Meeting Room of LIC Housing Finance Ltd on 14.1.2020. At running page 94 of Memo of appeal it is evident from the resolution on 14.1.2020 i.e. 2nd Meeting of CoC that Committee expressed its intention to meet again on 25.1.2020 morning at 10 AM at the same place for 3rd Meeting of CoC. Meaning thereby that Meeting was to be held at Meeting room of M/s LIC Housing Finance Ltd. However, the proceeding of 3rd CoC which was held on 25.1.2020 indicates that Meeting of 3rd CoC was held at room of M/s Fair and Just Legal solution LLP, Sector 62, Noida. Page 95 i.e. 1st page of the Meeting CoC reflects Members of the CoC and their authorized representative presence. This chart reflects that in the said Meeting only financial creditor i.e. M/s LIC Housing Finance Ltd was represented by its five representatives whereas in respect of other two financial creditors namely Siemens Financial Services Pvt Ltd and HDFC Bank Ltd whose voting share wa....
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....t from the fact disclosed in the Memo of Appeal that the strength of Doctors and staff/employees were also sufficient till the initiation of CIRP. However, immediately after IRP took charge it started reducing and within one or two months it was reduced to a negligible number. These facts are itself enough to draw an inference that the RP had given incorrect picture to the CoC in the Meeting. Moreover, in the 1st Meeting there was only one financial creditor i.e. LIC Housing Finance Ltd and this meeting was attended by both suspended directors of the CD in presence of Mr. Aishwarya Mohan Gaharana and Mr. Sharda Tyagi, legal advisor. In the 2nd CoC Meeting which was held on 14.01.2020 besides LIC Housing Finance Ltd two other financial creditors namely Siemens Financial Services Pvt Ltd and HDFC Bank Limited were represented through their representatives and one of the director from the CD, Mr Rajesh Narang was also present. Even during 2nd CoC the RP placed before the committee measures required before the Committee. The committee discussed the same in detail. The committee noted that presently there are no chance for functioning of the hospital due to the negative public image, m....
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.... law, we require two valuers for each class. So we need to pay a total of six valuers. All valuers are required to value corporate debtor as a whole for their values as going concern as well as liquidation values. The work involved is not comparable to the routine valuation of certain and limited assets. Therefore, it seems a high cost." Item No.9 :To take note of the status of Forensic audit. The Resolution Professional informed that he received three proposals and appointed M.K. Agarwal & Company, New Delhi with the least amount of fee quotation. The auditor communicated to the Resolution Professional earlier about completion of about 70% work as of now. It is also informed that forensic auditor started work even when the advance of the fee has not been provided but seeking advance amount at earliers. The RP on the one hand without the approval of the CoC was taking major decision but on the other hand before the CoC he was giving a picture that he was not getting any information. It is reflected from Page 105, Item No.9, that the RP informs the CoC that he had received three proposals and appointed one M.K. Agarwal and Co, New Delhi. However, even there were some proposals ....
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....ning page 109 of the Memo of Appeal i.e. part of the 4th CoC Meeting dated 29th July, 2020 depict regarding fixation of eligibility criteria which are as follows:- "a. A net-worth of Rs.5 Crores as per last audited balance sheet and turnover of Rs.10 crores as per last financial year and a record of profitability of last 3 financial years; or b. In case of any other person having net worth 5 crores of their own or holding company or promoters and having a sufficient means of finance in form of a bank balance or fixed deposit or sufficient fund from a committed source of finance of Rs.1 crore or more; Each person submitting an expression of interest shall submit a non-refundable earnest money deposit of Rs.15 lakhs in case of a plan not accepted or approved, which will be adjustable in case plan accepted and approved. However, this amount shall be refunded in case the person withdraws before finalization of Final List of Prospective Resolution Applicants." The condition of forfeiture of Rs.15 lakh even in case of non-acceptance and/or approval of the expression of interest itself reflects that the very invitation of expression of interest was to frustrate or deter the partici....
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....uge hospital building was maintained during said period. Since for such a long period the hospital building, plant and machinery all had remained stand still naturally it suffered a lot, which can be one of the reasons for decrease in the value of the CD property. In the present case we have noticed that even during initial period of CIRP the appellant had offered Rs.32.5 crore. However, the said proposal was outrightly rejected. The proceeding of 2nd CoC held on 14.1.2020 reflects that the appellant had orally proposed its intention for making an offer of Rs.32.5 crores lump sum. It has been discussed in Item No.11 at running page 92, 93 of Memo of Appeal which is quoted hereinbelow: "The member of the suspended board of directors Mr. Narang made a proposal orally and communicated his intention to place it in on record in writing that promoters of the corporate debtors are indented to make an out of court settlement with one of the financial creditors and member of the committee M/s LIC Housing Finance Ltd by making an offer of Rs.32.5 crores lump sum. The proposal was not consented by the members of the committee unilaterally and same has been communicated to Mr. Narang. The....
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....nd circumstances of the case, we hereby direct Respondent No.1 to take a decision with respect to the aforesaid offer of the Petitioner, subject to the undertaking given by him with regard to the contribution of funds and the control over the running of the hospital and also looking to the reply affidavit of Respondent No. 3 file in this petition. These aspects of the matter will be kept in the backdrop while taking a decision in the matter by Respondent No.1. Since the offer, if accepted, can be useful in the present circumstances, we hope and expect Respondent No.1 to take a decision as expeditiously as possible as and not later than three weeks from today. 4. With these observations, the writ petition and the application are disposed of." The entire record and proceeding of the CoC Meeting, which we have discussed hereinabove, reflects that even the order of the Hon'ble Delhi High Court was also not complied with whereas the order was very much specific. We can take judicial notice of the fact that during the peak period of Corona when such offers were made to run the hospital, all the citizens were crying for medical help and running for getting bed in hospitals. Number of ....
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....eld in the fifth CoC meeting held on 07.09.2020. This authority also extended the CIR Period for further 90 days and excluded the period from 25.03.2020 to 31.07.2020 due to Covid-19. In furtherance to the publication of Form G, the resolution professional received an expression of interest from 4 prospective resolution applicants. However, the resolution professional received two proposed resolution plan pursuant to the final list of prospective resolution applicants. In the 6th CoC dated 28.01.2021, the CoC discussed the resolution plans received and was not inclined to consider any resolution plan considering them to be not feasible and viable and pass resolution for initiation of liquidation process of the Corporate Debtor which is as follows:- "RESOLVE THAT pursuant to Section 33(2) of the Insolvency and Bankruptcy Code, 2016 and the rules made thereunder, the consent of members of the Committee of Creditors be and is hereby accorded to approve the filing of an application with Hon'ble Adjudicating Authority, regarding the initiation of liquidation of Corporate Debtor and to appoint existing Resolution Professional, subject to given consent to act as liquidator, as the l....
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....ancial creditors, corporate debtor and the Liquidator for taking necessary steps; j. IA-901/2021 filed in IB-470/(ND)/2019 is disposed of in terms of the aforesaid terms." (B.S.V Prakash Kumar) Acting Chairperson (Hemant Kumar Sarangi) Member (Technical)". "Order dated 25.05.2021: It is an application filed by an ex-director Mr. Rakesh Saxena stating that the order dated 20.05.2021 mistakenly released in the name of Acting President and the Hon'ble Member (Technical) Shri Hemant Kumar Sarangi, but the matter was heard and had been ordered by the Acting President and the Hon'ble Member (Technical) Dr. V.K. Subburaj, therefore, sought for rectification of the mistake crept in the said order. On realising the mistake crept in, since the Hon'ble Member (Technical) Dr. V.K. subburaj with whom this matter was heard has already demitted Office, the order that has come in the name of Acting President and Technical Member Shri Hemant Kumar Sarangi is hereby declared as void and the matter is reopened for hearing by the Regular Principal Bench i.e. the Acting President and the Hon'ble Member (Technical) Shri Hemant Kumar Sarangi. List IA 2323/2021 for hearing on 31.05.2021.....