TMI Blog2020 (11) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... ssolution of a Company takes place, its legal entity ceases to exists, neither it can sue nor it can be sued in its own name. Thus, it is clear that the dissolution puts an end to the legal existence of a Company. Once a company is dissolved, it becomes a non-existent party and therefore, no action can be brought in its name. Further, the Liquidator shall also not be able to represent the non-existent Corporate Debtor before any of the investigating forum. In order to facilitate completion of investigation, maximisation of assets and the value thereof and to ensure smooth distribution of the proceeds arising out of such investigation amongst various stakeholders of the Corporate Debtor, the judicial propriety demands that the Corporate Debtor should not be dissolved at this stage when the investigation as ordered by Hon'ble NCLAT is pending - the pendency of an investigation creates a bar in ordering dissolution of the company. Application dismissed as premature. - IA. 2823/2020 in Company Petition No. (IB)-250(ND)/2017 - - - Dated:- 7-9-2020 - Ch. Mohd. Sharief Tariq, Member (J) and L.N. Gupta, Member (T) For the Appellant : Pooja Bahry, Liquidator OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad misrepresented the assets and Debtors of approx. ₹ 191 Crore in their books of account. Thus, being the Resolution Professional, an application was filed before the NCLT under Sections 65, 66, 67, 70, 71, 72 read with Section 235 A of the Code, on 15th February 2018, being CA No 64/ C-11/2018 in CP(IB)-250/ND/2017 regarding : Fake debtors have been shown in the books of the Corporate Debtor. It appears that this has been done to inflate the balance sheets of the Corporate Debtor Tax evasion and defrauding tax authorities, such as by fraudulently availing Cenvat credit on the strength of fake invoices Inflated stock statements to dishonestly get credit from banks by showing them a false picture of ongoing operations of the Corporate Debtor Unauthorised rice trading Fund diversion including by way set off of steel sales against rice purchases Failure to maintain proper books of accounts, which, if maintained, could have given correct picture about the financial health of Corporate Debtor. 8. It is further submitted by the Applicant that this Adjudicating Authority vide its Order dated 19.07.2019 in an Application CA-64/C-II/2018 in CP(IB)-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be taken and if the Central Government subjectively opines that the subject matter in issue needs an investigation, through the Serious Fraud Investigation Office, it may proceed in accordance with Law. Suffice it for this court to make a relevant mention that the Tribunal/Adjudicating Authority on receipt of an application/complaint of breach of the relevant provisions of the IBC, 2016 and the Companies Act and after satisfying itself that there are attendant circumstances pointing out fraudulent/wrongful trading etc. was / which has been committed then, it is well within jurisdiction to refer the matter to Central Government for an investigation by Inspector(s) to be appointed by the Central Government. If an investigating authority after completion of investigation comes to a conclusion that any offence punishable in terms of Section 213 read with 447 of Companies Act or under Section 68,69,70,71,72,73 of the IBC Code is/are made out then, the Central Government, may refer the matter to the 'Special Court' itself or may even require the 'Insolvency and Bankruptcy Board of India' or to authorize any person as per Section 236(2) of the I B Code to file a complain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Kothari Liquidator of M/s. Suvarna Karnataka Cements Private Limited passed in IA-292/2018 in C.P No.15/BB/2017. The relevant extract is quoted below : 4.....As stated supra, there is no bar for dissolution of a company, irrespective of Applications are pending filed under Section 43, 45, 49, 66, 69 and other Applicable provisions of Code. In the instant case, IA No 241/2018 in CP (IB)No. 15/BB/2017 is filed u/s 43, 45, 49, 66, 69 and other applicable provisions of IBC, 2016 and it is disposed off by separate order dated 26th September 2019 by referring the matter for further investigation by SFIO. Therefore, we are of the considered view that the Liquidation of the Company is complete except the said IA 241/2018 and thus the instant Application deserves to be allowed as prayed for. 15. That the aforesaid decision of the NCLT Bengaluru Bench does not provide any explanation as to why the pendency of an investigation or an application filed under Section 43,45,49,66 and 69 does not create a bar in passing the dissolution order. Therefore, this issue needs to be addressed. 16. When we refer to The Companies Act, 2013, the Section 250 deals with the Effects of a comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the pendency of an Investigation creates a bar for RoC to strike off the name of the Company from the register of companies, as well as for making an application for removal of the name of the Company. 20. That it is an established fact that the moment the dissolution of a Company takes place, its legal entity ceases to exists, neither it can sue nor it can be sued in its own name. Here, it is worthwhile to refer to para 10 of the Judgment dated 11.02.2015 passed by Hon'ble High Court of Delhi in the matter of Commissioner of Income Tax-II vs. M/s. Micron Steels Pvt. Ltd. ITA 19/2014 : 10. Section 481 of the Companies Act provides for dissolution of the company. The Company Judge in the High Court can order dissolution of a company on the grounds stated therein. The effect of the dissolution is that the company no more survives. The dissolution puts an end to the existence of the company. It is held in M.H. Smith (Plant Hire) Ltd. Vs. D.L. Mainwaring (T/A Inshore), 1986 BCLC 342 (CA) that once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name. Thus, an insurance company which was subrogated to the rights of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) shall within seven days from the date of such order, be forwarded to the authority with which the corporate debtor is registered. However, the investigation as ordered by Hon'ble NCLAT against the Corporate Debtor in the instant case creates a possibility of infusion of more assets into the Corporate Debtor on completion of such an investigation, and which will be required to be liquidated amongst the stakeholders. 25. Furthermore, the Regulation 44 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 makes it mandatory for the Liquidator to Liquidate the Corporate Debtor within 1 year from the date of commencement of Liquidation, irrespective of pendency of an application for avoidance transaction. The contents of the Regulation 44 of IBBI (Liquidation Process Liquidation) are reproduced below : 44. Completion of liquidation. (1) The liquidator shall liquidate the corporate debtor within a period of one year from the liquidation commencement date, notwithstanding pendency of any application for avoidance of transactions under Chapter III of Part II of the Code, before the Adjudicating Authority or any action thereof: Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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