TaxTMI 
TaxTMI 
2024 (10) TMI 1552
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....ticed for deciding the Appeal are : (i) On an Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC") by AVB Global Ventures Pvt. Ltd., claiming dues of Rs.2,38,95,357/- the Adjudicating Authority passed an order on 09.11.2023 admitting Section 7 Application and appointing Janak Jagjivan Shah as the Interim Resolution Professional ("IRP"). Public announcement was made by the IRP on 11.11.2023, in pursuance of which, one claim was submitted by Financial Creditor - AVB Global Ventures Pvt. Ltd. claiming an amount of Rs. Rs.2,38,95,357/-, which was admitted by the IRP. The IRP constituted the CoC, consisting of AVB Global Ventures Pvt. Ltd. as 100% Member of the Committee of Creditors ("CoC"). The Report of the constitution of CoC was submitted on 30.11.2023. (ii) Income Tax Department also filed its claim vide letter dated 28.11.2023 in Form-B. However, the total amount of claim was mentioned in Form-B as 'NIL'. (iii) The first Meeting of the CoC was held on 08.12.2023. The CoC noticed the claims received from the Financial Creditors. The Suspended Director of the Corporate Debtor was also present....
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.... learned Counsel appearing for the CoC. 4. Learned Counsel for the Appellant in support of the Appeal contends that the CD having no assets and no business for last 2-3 years and the total bank balance of the CD being only Rs.1,451/- and the liquidation value of the CD being only Rs.1,535/-, CoC decided not to take steps for liquidation of the CD. The CoC decided not to bear any expenses on liquidation, hence, the dissolution of CD was approved. It is submitted that Form-G was twice published under the decision of the CoC and no EoI was received. The CoC rejected the resolution to initiate the liquidation and with 100% majority approved the resolution for direct dissolution. The learned Counsel for the Appellant in support of his submission relied on judgment of NCLAT Chennai Bench in the matter of Shyson Thomas vs. Mr. Madhugiri Venkatarayappa Sudarshan (TA (AT) No.8 of 2021 in CA(AT) (CH) (Ins.) No.925/2020) and submitted that the Adjudicating Authority committed error in rejecting Application for dissolution filed by the RP under the resolution of the CoC. It is submitted that when CoC is not ready to bear the liquidation cost and the CD has no assets to be liquidated, filing....
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.... was received lnspite of publication of form G for invitation of expression of interest twice, the COC is of the opinion that the CD should be dissolved instead of initiation of liquidation process. The member further stated that the CD has very small Authorised capital of Rs. 1 lac and as informed by the RP that carried forward loss of about Rs.31,500/- only therefore there is no contingent assets also. on the contrary if anybody take over the CD as going concern or otherwise huge income tax liabilities will arise due to written back of the creditors of more than 630 lacs due to amendment in income tax law with effect from AY 2023-24 however in earlier years the written off of loan given kind of liability was not allowable as was in the case of the CD as the entire loss in p&l a/c is related to written of off such kind of liability. After discussion the following resolution was put to vote:- "RESOLVED THAT THE CORPORATE DEBTOR BE LIQUIDATED AND AN APPLICATION IN THIS REGARDS SHOULD BE MADE BEFORE THE ADJUDICATING AUTHORITY FOR APPROPRIATE ORDER AND JANAK SHAH BE APPOINTED AS A LIQUIDATOR OF THE CD TO CARRY OUT LIQUIDATION PROCESS." The member of the COC ....
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.... have been completely liquidated, the liquidator shall make an application to the Adjudicating Authority for the dissolution of such corporate debtor. (2) The Adjudicating Authority shall on application filed by the liquidator under sub-section (1) order that the corporate debtor shall be dissolved from the date of that order and the corporate debtor shall be dissolved accordingly. (3) A copy of an order under sub-section (2) shall within seven days from the date of such order, be forwarded to the authority with which the corporate debtor is registered." 10. The Adjudicating Authority has referred to Regulation 14 of the IBBI (Liquidation Process) Regulations, 2016, which deals with early dissolution. Regulation 14 is as follows: "14. Early dissolution. Any time after the preparation of the Preliminary Report, if it appears to the liquidator that- (a) the realizable properties of the corporate debtor are insufficient to cover the cost of the liquidation process; and (b) the affairs of the corporate debtor do not require any further investigation; he shall consult the consultation committee and if it advises for early....
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....2020 to the date of commencement of the CIRP, which order is under challenge in this Appeal. 13. We may first notice the direction of Adjudicating Authority for transaction audit report as contained in paragraph 18 of the order, which direction is as follows: "18. In light of the observations noted in paragraphs 16(e) and 16(f), the applicant is hereby directed to carry out transaction audit from 01.04.2020 to the date of commencement of the CIRP." 14. The CoC in its second Meeting had already taken the decision not to conduct the transaction/ forensic audit of the Company. At Agenda Item No.6, following was resolved: "6) To conduct the Transaction/Forensic Audit of the Company; The Resolution Professional. informed that the company is not conducting/continuing the business from last 4-5 years Thus, it was decided that conducting a transaction/forensic audit may not be useful. This stance is based on the prescribed look-back period of 1*2 years from the commencement of Corporate Insolvency Resolution Process (CIRP) as specified in the provisions of the Insolvency and Bankruptcy Code (IBC) of2016." 15. In the CoC Meeting, it was noted that CIRP is....
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....under the provisions of Code, the Adjudicating Authority, by exercising its inherent powers conferred under the Code, can pass appropriate order(s) in the interest of speedy justice. 6. The above facts and circumstances of the Case fully justified, that there would be no useful purpose be served, by placing the Corporate Debtor under Liquidation process, under the extant provisions of Code. Since no assets exists in the Company, as declared by the Resolution Professional, the liquidation process under the provisions of Code, is deemed to have completed under Chapter III of Part II of Code, and thus it would just and proper for the Adjudicating Authority to dissolve the Company as prayed by the Resolution Professional. The instant Application is filed in accordance with law and the Resolution to dissolve the Corporate Debtor was approved by the Sole COC, as detailed supra.''" 18. The Promoter/ Director had challenged the order on the ground that they had already obtained No Objection Certificate from the Ministry of Civil Aviation Sector and there has been sufficient infrastructure to support the Corporate Debtor. This Tribunal after considering the submissions of the pa....