Shreesha Merla JUDGMENT
Shreesha Merla, Member (T)
1. Aggrieved by the Impugned Order dated 09/01/2023 read with the Corrected Order dated 23/01/2023, passed by the 'Adjudicating Authority' / 'National Company Law Tribunal, Hyderabad Bench - II', in C.P.(IB) No. 102/7/HDB/2019, the Suspended Director and Promoter of the Corporate Debtor Company, preferred this Appeal, under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'the Code').
2. By the Impugned Order, the Adjudicating Authority has allowed the Application filed by the Resolution Professional ("RP") of the Corporate Debtor Company seeking direction to liquidate the Corporate Debtor and to appoint the Applicant as the Liquidator to administer the Liquidation Process. It is noted by the Adjudicating Authority that the CoC in its commercial wisdom, approved the Liquidation of the Corporate Debtor, with a 100 % majority. In view of the fact that the CIRP Period of 270 days was concluded on 28/08/2020, the Adjudicating Authority thought it fit to allow the Application.
3. The Learned Counsel for the Appellant submitted that the Corporate Debtor Company was affected by the misappropriation of huge sums of money by a former Director, against whom an FIR was also lodged at Central Crime Station, Hyderabad and that the forfeiture of funds due to non-operation of the Respondent's Banks in terms of non-renewal of limits, freezing the Company's accounts, not allowing the roll-over of import bills within the limits had caused immense financial distress to the Company and hence the loan account of the Corporate Debtor Company was declared as a 'Non Performing Asset' ("NPA") and the company went into CIRP. It is submitted that during the CIRP Proceedings, ten Applicants had showed their interest but only two Applicants had submitted their Resolution Plans. It is argued that despite objections raised by the Appellant, regarding collusion of the RP with the Resolution Applicants, the CoC had taken into consideration the offer made by the Resolution Applicants. The Learned Counsel drew our attention to the Minutes of the 10th CoC Meeting in which Meeting the Resolution Plan offered by the Appellant was rejected and the RP had kept two Resolution Plans for re-voting purpose. Apart from raising various allegations against the RP, it is submitted that in the 11th CoC Meeting held on 25/10/222, the RP had sought to file an Application seeking direction for Liquidation.
4. It is submitted by the Learned Counsel for the Appellant that the Appellant was kept in the dark about the initiation of Liquidation Proceedings and also regarding the Resolution of the e-voting of the two Resolution Applicants. It is contended that the RP ought to have taken adequate steps for recovering the Applicant's huge receivables but instead did not make any effort to revive the Company and went ahead to file an Application for Liquidation. In the 11th CoC Meeting, it was deliberated and also recorded in item 7.2 that all the CoC Members discussed in detail and decided to explore the possibility of 'Compromise or Arrangement' before passing any Liquidation Order, but the RP did not take any steps in this direction. It is strenuously argued by the Learned Counsel for the Appellant that prior to ordering Liquidation, the Resolution Plan of the Appellant ought to have been considered by the CoC and all possibilities ought to have been explored to keep the Corporate Debtor Company as 'a Going Concern' instead of ordering for Liquidation.
5. It is seen from the record that in the 6th CoC Meeting, only two Resolution Plans have been received and the last date for submission of the Resolution Plan was extended upto 22/06/2020. In the 7th CoC Meeting dated 24/06/2020, Prospective Resolution Applicants' Plans were examined. In the 8th CoC Meeting dated 21/07/2020 and in the 9th CoC Meeting dated 25/07/2020, some more time was given to the PRAs to improvise on their Plans. In the 10th CoC Meeting dated 29/07/2020, the improved Plans were once again reviewed and s........