Vijaya Kumar vs Gopalsamy Ganesh Babu. Liquidator

[Arising out of Order dated 17th September, 2019 passed by National Company Law Tribunal, Special Bench, Chennai in MA/918/2019 in IBA/308/IB/2019]

IN THE MATTER OF: Before NCLT Before NCLAT Mr. Vijayakumar ... Appellant 5-4-40, Kalaignar 3rd Main Road Madurai - 625 017

Versus

1. Mr. Gopalsamy Ganesh Applicant/ Respondent No.1 Babu, Resolution Professional Liquidator Quantum Coal Energy Pvt. Ltd. 986-H Block, 24th Street Anna Nagar (West) Chennai - 600 040

2. ICICI Bank ... Respondent No.2 represented by its Authorised Officer ICICI Bank Tower, DSMG-Blg, Arihant Insight, Plot No.24, Block No.1 Ambattur Industrial Estate, Chennai - 600 058

3. Income Tax Officer ... Respondent No.3 Corporate Ward 2 No.2, VP Rathinasamy Nadar Road CP Building, Bibikulam Madurai - 625 002 2

For Appellant: Shri Kaushik N. Sharma and Shri Sudhanshu Sharma, Advocates For Respondents: Shri Rohan Narula and Shri T.N. Durga Prasad, Advocates (R-1) Shri Gautam Singhal and Ms. Richa Chopra, Advocates (R-2)

ORDER

19.02.2020 Learned Counsel for the Appellant submits that in this

matter, the Application under Section 9 of Insolvency and Bankruptcy Code,

2016 (IBC - in short) was admitted on 15.07.2019 vide Order which is at

Annexure A-2 against Quantum Coal Energy Pvt. Ltd. - Corporate Debtor. The

IRP was appointed. IRP gave public announcement on 20th July, 2019 and

first COC (Committee of Creditors) meeting was held on 13th August, 2019.

The Affidavit of the RP - now Liquidator (Diary No.19066) shows in the first

meeting, IRP was confirmed as RP and on that date itself, the COC decided

that the Corporate Debtor is only a trading business and there is no possibility

of making Corporate Debtor a going concern and resolved to liquidate the

Corporate Debtor rather than going for resolution. Counsel for the Appellant

states that this was not correct as the Corporate Debtor in the earlier year,

had turnover of Rs.19 Crores. The learned Counsel for the Appellant - Shri

Kaushik N. Sharma and the learned Counsel for the Liquidator - Shri Rohan

Narula state that because of such decision of the COC, the matter was placed

before the Adjudicating Authority (National Company Law Tribunal, Chennai

Bench) and on 17th September, 2019, the Adjudicating Authority passed

Order of liquidation.

2. This Appeal has been filed against the Order of liquidation. The

Counsel states that the MA which was filed by Resolution Professional, was

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under wrong Section 33(1)(a) as the CIRP did not go through the regular

process and no Resolution Plans were invited or considered and within a

month of admission of the Application under Section 9, abruptly, COC had

taken decision on liquidation. The learned Counsel for the Appellant states

that if at all RP could rely, it was Section 33(2). The Adjudicating Authority

acted under Section 30(6) if Para - 10 of Impugned Order is seen which again

is wrong and thus, the liquidation Order passed is under wrong provision.

3. The learned Counsel for Appellant states that COC consisted of only

one Financial Creditor which is ICICI Bank. It is stated that the Appellant has

already settled with ICICI Bank on 12.12.2019. Ms. Richa Chopra - Advocate

appears on behalf of ICICI Bank (Respondent No.2). She states that the

Appellant has settled the dues with the Respondent No.2 - ICICI Bank.

4. The Counsel for RP/Liquidator states that in the CIRP process, there

were claims received only from Financial Creditor - ICICI Bank and the

Appellant has already settled the dues of ICICI Bank. It is stated that there

were claims received from four Operational Creditors out of which, one was

Operational Creditor who had moved Application under Section 9 namely,

ENP IMPEX Pvt. Ltd. The learned Counsel has referred to the Affidavit filed by

the original Operational Creditor - ENP IMPEX Pvt. Ltd. through Director -

Mr. Rajesh Khetan which is Annexure A-27 (Diary No.18363) to submit that

dues of ENP IMPEX have been already settled. It is stated that the settled

Operational Creditor has already filed Form FA (Page 11 Diary No.18363).

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5. Learned Counsel for the Appellant submits that there were three more

Operational Creditors namely, Carbone International PTE Ltd., Agarwal Coal

Corporation Pvt. Ltd. and Penta Coal Pvt. Ltd. The Affidavit filed by the

Appellant is referred at Diary No.17031 to claim that the Appellant has settled

with these three Operational Creditors also and obtained their consent for

revival of CIRP process and willing to start business with Corporate Debtor

and settle their debts payable to them in instalments. The documents are

referred as Annexure A-24 to A-26. Counsel states that while filing Affidavit

now vide Diary No.19077, the Appellant has again taken letters from these

Operational Creditors consenting to restoration of the Company. The learned

Counsel for Appellant states that in the Affidavit now filed, in Para 6(vi), the

Appellant has stated that all outstanding dues payable to all stakeholders in

relation to the liquidation of Corporate Debtor are settled.

6. The Counsel for the RP/Liquidator also accepts that the dues have

been settled of the only Financial Creditor and the four Operational Creditors.

Both sides have filed Affidavits as referred.

7. Considering the object of IBC which is resolution and that effort

should be made to revive the Corporate Debtor rather than to eliminate the

same, we find that this is a fit case for us to exercise inherent powers under

Rule 11 of National Company Law Appellate Tribunal Rules, 2016 (NCLAT

Rules, 2016 - in short), to do justice. It is necessary to set aside the liquidation

Order as well as the CIRP proceedings.

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8. The learned Counsel for RP/Liquidator states that the dues of the

RP/Liquidator have already been settled by the Appellant.

9.(A) For the above reasons, we set aside the Impugned Order of liquidation

and the earlier proceedings of CIRP initiated on admission of Application

under Section 9 of IBC, exercising powers under Rule 11 of NCLAT Rules,

2016.

(B) The Corporate Debtor is released from the rigour of law and is allowed

to function independently through its Board of Directors. The Liquidator will

hand back the records and management of the affairs of the Corporate Debtor,

to the Board of Directors.

(C) The Corporate Debtor will ensure compliance of Annexure A-24,

Annexure A-25 and Annexure A-26, the consent letters taken from (1)

Carbone International PTE Ltd., (2) Agarwal Coal Corporation Pvt. Ltd. and

(3) Penta Coal Pvt. Ltd. (Diary No.17031). If any grievance is received from

any of these Operational Creditors regarding non-receipt of the amounts or

part of the same, we would recall the present Orders.

The Appeal is disposed accordingly.

[Justice A.I.S. Cheema] Member (Judicial)

(Justice A.B. Singh) Member (Judicial)

[Kanthi Narahari] Member (Technical)

/rs/md

Company Appeal (AT) (Ins) No.1207 of 2019