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2021 (4) TMI 144 - AT - Insolvency and BankruptcyConsolidation of two Corporate Insolvency Resolution Process (CIRP) - fulfilment of criteria of consolidation of CIRP or not - Common Control - Common Directors - Common Assets - Common Liabilities - Inter-dependence - Pooling of Resources - Intricate links between the Companies - Common Financial Creditors - HELD THAT:- The Ld. Adjudicating Authority Mumbai Bench in the case of STATE BANK OF INDIA AND MR. VENUGOPAL DHOOT VERSUS VIDEOCON INDUSTRIES LIMITED, VIDEOCON TELECOMMUNICATIONS LIMITED, KAIL LTD., EVANS FRASER & CO. (INDIA) LTD., MILLENNIUM APPLIANCES (INDIA) LTD., APPLICOMP INDIA LTD., ELECTROWORLD DIGITAL SOLUTIONS LTD., TECHNO KART INDIA LTD., TREND ELECTRONICS LTD., CENTURY APPLIANCES LTD., TECHNO ELECTRONICS LTD., VALUE INDUSTRIES LTD., PE ELECTRONICS LTD., CE INDIA LTD. AND ORS. [2019 (8) TMI 1654 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH] rightly laid down certain parameters while ordering for consolidation of CIRP. The said order was cited before Ld. Adjudicating Authority Bengaluru Bench, However, while passing the impugned order there is no finding whether these parameters are fulfilled or not in this case. Common Control - HELD THAT:- Both Companies are promoted by the same family and there is unity of ownership and interest - The Respondent No. 1 is controlling company of Respondent No. 2. Common Directors - HELD THAT:- Mr. M.V. Murlidher and Padma Murlidher both are Directors in Respondent Nos. 1 and 2 Company. Thus, the Directors of the both Companies are Common and there is common control of companies. Common Assets - HELD THAT:- There is inter-dependency between two Companies and the assets are common to such an extent that the Respondent No. 2 Company has provided its land and warehouse to the Respondent No. 1 Company to carry on its business activity. Common Liabilities - HELD THAT:- The liabilities of the Companies are also common and Companies had made themselves jointly and severally liable for the loans. Respondent No. 1 and 2 have common creditors i.e. Respondent Nos. 3 and 4. Directors of both the Companies have given personal guarantees for the loans. Inter-dependence - HELD THAT:- The Respondent No. 1 Company was running a Distillery Unit in the Peenya land and warehouse building belonging to the Respondent No. 2 Company as stated by Respondent No. 6 (RP) in its Status Report filed before this Appellate Tribunal. Thus, the Respondent Nos. 1 and 2 are interdependence. Pooling of Resources - HELD THAT:- Undisputedly the Directors are common using their contacts and relationship to run both the Companies. For the sanction of the loan facility for the Respondent No. 1 Company. The Respondent No. 2 Company has mortgaged Peenya land and warehouse and also stood as guarantor for the Respondent No. 1 Company. Intricate links between the Companies - HELD THAT:- It is clear that the Respondent No. 2 Company is associated company of Respondent No. 1. In the I&B Code, the word associate company has not been defined. Section 3 (37) of the I&B Code, provides that word and expressions used but not defined in this Code but defined in the Companies Act, 2013 shall have the meaning assigned in the Companies Act, 2013. Common Financial Creditors - HELD THAT:- The Respondent Nos. 1 and 2 have Common Financial Creditors i.e. the Respondent Nos. 3 and 4 - Apart from this Financial Creditors i.e. Respondent Nos. 3 and 4 in their written submissions have not pointed out that how the consolidated CIRP shall prejudice their rights. Even if the combined CIRP is ordered the balance of convenience is squarely on Respondent Nos. 3 and 4 herein who are secured Financial Creditors and whose interest will remain protected even during the combined Insolvency as secured Financial Creditors. The Appellant being an Operational Creditor is placed sixth in hierarchy for the liquidation process in the I&B Code. The Respondent Nos. 1 and 2 fulfilled the criteria of consolidation. Ld. Adjudicating Authority has not appreciated the facts of this case in right perspective - the Ld. Adjudicating Authority are directed to appoint a single common Resolution Professional/Liquidator who will carry on the duties and perform the function of the Resolution Professional/Liquidator in accordance with the I&B Code for the consolidated CIRP. Appeal allowed.
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