2019 (9) TMI 1425 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - The applicant filed this application without applying its mind raising frivolous and misconceived pleadings and the application is liable to be dismissed with costs. The peculiar circumstances that the assets of the CD not excluded by the DEO WB/the applicant in this application despite earnest effort on the side of the RP the DEO WB failed in giving access to the office premises which was sealed by it that the non cooperation of the DEO WB despite direction by the Hon ble High Court Calcutta in the W.P. No. 24110 (W) of 2016 it is fair and just to impose a cost of Rs. 5 lacs on the applicant which would be recoverable from the erring officers. Accordingly this application is liable to be dismissed with cost of Rs. 5 lacs. Being found that initiation of CIRP process as against the Corporate Debtor company under the provisions of the Code is perfectly legal and proper and being satisfied that CoC with majority vote share approved the decision for liquidating the Corporate Debtor company we have no other alternative other than to pass an order of Liquidation. The application is allowed by ordering liquidation of the Corporate Debtor namely Pincon Spirits Limited in the manner laid down in the Chapter III of Part II of the Insolvency and Bankruptcy Code 2016.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Replacement of Interim Resolution Professional (IRP)
3. Recommendation for liquidation by the Committee of Creditors (CoC)
4. Various applications filed by the Resolution Professional (RP)
5. Attachment of properties by Directorate of Economic Offences (DEO), West Bengal
6. Non-admission of claims by operational creditors
7. Application for dismissal of CIRP proceedings by DEO, West Bengal
8. Determination of Corporate Debtor's status under the West Bengal Protection of Interest of Depositors in Financial Establishments Act, 2013 (WBPIDFE Act)

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
CP(IB) No. 93/KB/2018 was filed by Bengal Polypet/Operational Creditor to initiate CIRP against the Corporate Debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I & B Code). The application was admitted on 19/07/2018, appointing Mr. Partha Kamal Sen as the Interim Resolution Professional.

2. Replacement of Interim Resolution Professional (IRP):
Mr. Partha Kamal Sen was replaced by Mr. Binay Kumar Singhania as the Resolution Professional following an application by the Financial Creditor/State Bank of India.

3. Recommendation for Liquidation by the Committee of Creditors (CoC):
The RP convened seven meetings of the CoC. In the 7th meeting held on 05/04/2019, the CoC decided to recommend liquidation with a 66% majority vote. The extended CIRP period of 270 days expired on 14/04/2019, and the RP filed the Final Progress Report on 16/04/2019, consenting to continue as the Liquidator.

4. Various Applications Filed by the Resolution Professional (RP):
Several applications were filed by the RP, including:
- CA(IB) No. 412/KB/2019 for demarcation of property.
- CA(IB) No. 453/KB/2019 against the transfer of shares.
- CA(IB) No. 422/KB/2019 for taking custody of assets.
- CA(IB) No. 1122/KB/2018 for lifting attachment of properties by the DEO, WB.
The Tribunal found these applications infructuous due to the expiry of the CIRP period and recommended that the Liquidator determine the disputed property ownership.

5. Attachment of Properties by Directorate of Economic Offences (DEO), West Bengal:
The DEO, WB, had attached the properties of the Corporate Debtor under the WBPIDFE Act, 2013. The Tribunal noted that the provisions of the I & B Code do not prevail over the WBPIDFE Act, and the Liquidator could appeal the attachment orders before the High Court at Calcutta.

6. Non-admission of Claims by Operational Creditors:
CA(IB) No. 612/KB/2019 was filed by Durga Paper Products, an Operational Creditor, for non-admission of its claim. The Tribunal noted the belated submission of the claim and left the right to claim the amount due to the Liquidator.

7. Application for Dismissal of CIRP Proceedings by DEO, West Bengal:
CA(IB) No. 577/KB/2019 was filed by the DEO, WB, alleging that the Corporate Debtor was a financial service provider and thus not subject to CIRP. The Tribunal found no evidence supporting this claim and dismissed the application with a cost of Rs. 5 lacs.

8. Determination of Corporate Debtor's Status under WBPIDFE Act, 2013:
The Tribunal analyzed whether the Corporate Debtor fell under the purview of the WBPIDFE Act. It concluded that the Corporate Debtor did not qualify as a financial establishment under Section 2(e) of the Act and thus, the proceedings initiated were legal and proper.

Order:
The Tribunal ordered the liquidation of the Corporate Debtor, Pincon Spirits Limited, under Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016, appointing Mr. Binay Kumar Singhania as the Liquidator. It directed the Liquidator to issue a public announcement, proceed with the liquidation process, and submit a Preliminary Report within seventy-five days. Various applications were dismissed, and a cost of Rs. 5 lacs was imposed on the DEO, WB, for filing a frivolous application.