V. Ramakrishnan vs Veesons Energy Systems Pvt. Ltd. Ors

V. Ramakrishnan ...Appellant

Vs.

M/s. Veesons Energy Systems Private Limited and Ors. ...Respondents

Present: For Appellant: - Mr. K.B.S. Bedi and Mr. Raghavachari, Advocates.

For 1st and 2nd Respondents: - Mr. B. Dhanaraj and Mr. G. Ananda Selvam, Advocates. Mr. R. Raghav Endran, Liquidator.

For 3rd Respondent: Ms. Madhusmita Bora and Mr. M. Anbalagan, Advocates.

JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

This appeal has been preferred by the Appellant- Shareholder of

M/s. Veesons Energy Systems Private Limited-('Corporate Debtor')

against an order dated 19th March, 2018, passed by the Adjudicating

Authority (National Company Law Tribunal), Chennai Bench, Chennai

in CA/61/2017 in CP/510/(IB)/2017, whereby and whereunder the

Company Appeal (AT) (Insolvency) No. 186 of 2018 2

Adjudicating Authority passed order of liquidation of the 'Corporate

Debtor'.

2. The 'Corporate Debtor'- M/s. Veesons Energy Systems Private

Limited filed an application under Section 10 of the Insolvency and

Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code"), which

was admitted on 19th June, 2017, the order of 'Moratorium' was passed

and the 'Interim Resolution Professional' was appointed.

3. On completion of 270 days, which ended on 12th March, 2018,

the Adjudicating Authority passed the order of liquidation on 19th

March, 2018.

4. Learned counsel for the Appellant submitted that the Appellant

being Director of the 'Corporate Debtor', had attended all the meetings

of the 'Committee of Creditors'. There are three 'Financial Creditors'

namely-- SBI having voting shares of 62.18%, IDBI having voting

shares of 35.2% and TIIC having voting shares of 2.5%. In the 1st and

2nd meetings no major decisions were taken. Some important decisions

were taken in the 3rd and 5th meetings of the 'Committee of Creditors'.

In the 3rd meeting of the 'Committee of Creditors' held on 21st

November, 2017, the State Bank of India voted against extension of

period of the 'Resolution Process'. Thereby, the 'Committee of Creditors'

had obstructed revival of the Company, which is against the spirit of the

'I&B Code'.

Company Appeal (AT) (Insolvency) No. 186 of 2018 3

5. It was submitted that 'IDBI Capital Markets Pvt. Ltd.' was in

favour of extension of period. The 'Resolution Professional' undertook to

file an application for the opinion of the Adjudicating Authority on the

subject, as there was less than 75% of the votes. Instead of seeking

opinion of the Adjudicating Authority on the subject, the 'Resolution

Professional' filed an application for liquidation on 15th December,

2017, which is against the earlier proceedings recorded by the

'Resolution Professional'.

6. It was further submitted by learned counsel for the Appellant that

the 4th meeting of the 'Committee of Creditors' was held on 11th

December, 2017 in which the representative of IDBI Capital Markets

Pvt. Ltd. was also invited to finalize the 'Resolution Plan', but because of

the objections of the 'State Bank of India', the other 'Financial Creditors'

could not express their views.

7. Learned counsel appearing on behalf of the Appellant while

highlighting the object of the 'I&B Code' submitted that the 'State Bank

of India' stalled implementation of the order of the Adjudicating

Authority and overturned the process of resolution till the end. It was

also alleged that the 'Resolution Professional' who is required to be a

neutral entity and was expected to perform his duties objectively,

without bias he had not acted in the manner and in accordance with

law.

Company Appeal (AT) (Insolvency) No. 186 of 2018 4

8. Learned counsel for the 3rd Respondent submitted that the 'Board

of Directors' always attempted to stall the 'Resolution Process' and

made all futile efforts to stall the proceedings, though nobody came

forward as a 'Resolution Applicant'. No 'Resolution Plan' was filed. It is

the 'Corporate Debtor' who of their own introduced that 'IDBI Capital

Markets Pvt. Ltd.', who had made only a presentation but had not

submitted any 'Resolution Plan'. This factor has also been deliberated

by the 'Committee of Creditors'. Learned counsel for the 3rd Respondent

relied on Page Nos. 153 and 169 of Vol. II of the paper book in support

of his submissions.

9. According to the learned counsel for 3rd Respondent one Mr. V.

Shankar, brother of the Appellant and Director (Finance) of the

'Corporate Debtor' also wanted to make proposal, effectively suggesting

sale of non-core assets, restructuring of existing credit facilities, etc.

Otherwise, no person applied as a 'Resolution Applicant' nor filed any

'Resolution Plan'.

10. It has been brought to our notice that the 'Corporate Debtor' had

been incurring huge loss every year and the 'Audited Balance Sheets' of

the 'Corporate Debtor' show that they had been incurring recurring

losses every year and the losses have eroded its reserves and surplus.

The operating loss of the 'Corporate Debtor' as on March, 2015 was Rs.

433.17 lakhs, which was increased to Rs. 2391.66 lakhs during March,

2016 and then Rs. 2553.87 lakhs in March, 2017. It is alleged that the

Directors have committed various falsification of accounts irregularities

Company Appeal (AT) (Insolvency) No. 186 of 2018 5

and discrepancies in accounts have been made. Waiver of debts to the

tune of Rs. 31.00 Crores, due to the 'Corporate Debtor' has been shown

as bad debts. This apart funds were collected from third parties by the

Director, which were not reflected in the books of accounts of the

'Corporate Debtor'.

11. From the record it is clear that the 'Information Memorandum'

was prepared by the 'Resolution Professional' which was published but

in the absence of any 'Resolution Applicants', there was no other option

for the Adjudicating Authority, but to go for liquidation on completion of

270 days.

12. We find no merit in this appeal. It is accordingly dismissed. Order

of stay passed earlier is vacated. However, there shall be no order as to

cost.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial)

NEW DELHI

31st May, 2018 AR

Company Appeal (AT) (Insolvency) No. 186 of 2018