Allowed

In the matter of Saga Automotive India Pvt. Ltd. Ia No. 51-JPR-2021 in Cp No. 177-9-JPR-2019

NCLT16 Mar 2021

Case brief

AI extract

What is this about?

The tribunal accepted the Resolution Professional's application for liquidation. Findings registered on the Adjudicating Authority for liquidation of Saga Automotive India Pvt. Ltd. and appointed the RP as Liquidator.

What did the court decide?

Liquidation of Corporate Debtor directed; RP appointed as Liquidator; directions issued for cost, sale, and claim filing.

In the matter of Saga Automotive India Pvt. Ltd. Ia No… — Insolvency and Bankruptcy | NCLT (2021)

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I1\ THE NATIONAL COMPANY I.,AW TRIBUNAI, JAIPUR BENCII

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CoTam: MR. AJAY KUMAR VATSAVAYI, HON'BLE JUDICIAL MEMBER

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MR. RAGHU I{AYYAR, HON'RI.E TECIINICAI- MEMBER

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IA No. 5llJPR/2021

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CP No. l77l9lJPR/2019

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tiNDER SECTION 33 and 34 OF TIIE INSOLVENCY AND BANKRUPTCY CODE,2016

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IN THE MATTER OF

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Yash Productions

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...C)perational C reditor

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VERST]S

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Saga Automotive India Pvt. Ltd.

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...Corporate f)ebtor

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.,\ND TN THE MATTER OF

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IA No. sllJPRlz0zl

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Prashant Agrawal

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Resolution Professional of Saga Automotive (India) Private Limited Office at; F-105. i't Floor, Sumer Complex,

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Gautam Marg. Behind Bagadia Bhawan, C-Scheme, Jaipur-302001, Rajasthan

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...Applicant

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For the Applicant: Mr. Prashant Agrawal. Adv.

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Order Pronounced On: 16.03.2021

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IA No. 5111PW2021 In CP No.. 1771911PN2019

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ORDE,R

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Per: Shri Raghu Nay)rar. Technical Member

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This Application bearing IA No. 51/JP22021 is filed by the Resolution Professionai ('Applicant' 1 'RP') for Saga Automotive India Pvt. Ltd" under Section 33 and 34 of the Insolvency and Bankruptcy Code^{('lBC' /} 'Code'), 2016 for initiation of liquidation proceedings against Saga Automotive India Pvt. Ltd. ('Corporate Debtor').

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The Adjudicating Authority vide order dated 04.03 "2020 had admitted the application filed by Mr. Yash Bhardwaj, proprietor of .Yash Productions under Section 9 of the Code for initiation of Corporate Insolvency Resolution Process ('CIRP') of the Corporate Debtor and as a consequence thereof appointed Mr. Prashant Agrawal as Interim Resolution Professional (' IRP' )"

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ln compliance with provisions of the Code, the IRP constituted the CoC. The I't meeting of the CoC was held on 03.06"2020, wherein the CoC unanimously resolved to appoint the IRP, i.e. Mr. Prashant Agrawal. as the Resolution Professional ('RP') of the Corporate Debtor. Copy of Minutes of 1't CoC meeting is enclosed as Annexure-2 of the Application. In the minutes of 2nd CoC meeting held on 18"07.2020, it is seen that the RP had appointed registered valuers to determine fair and liquidation values in accordance with Regulation 35 of the CIRP Regulations, 201 6.

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IA No. 51lJPFJ2Ozl ln CP No. I77l9lJPN20l9

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It is submitted that the RP had effected^{publicationof Form G on} L5"07.2A20 and invited Expression of Interest^{('EOI') for submissionof} resolution plan for the Corporate Debtor and thereafter,^{8 EOIs were} received out of which only 3 resolution applicants^{were successfullrr,'} qualified under the eligibility criteria and were includei in the^{final list of} prospective resolution applicants. In the 3'd CoC meeting, held^on 25.09.2020 it was resolved to seek extension of CIRP^period of^the Corporate Debtor by 90 days. Subsequently" this Adjudicating^Authority vide order dated 10J2.2020 allowed IA 37l1JPPU2020 seeking extcnsion of CIRP period by 90 days, excluding lockdown^period from^25.03.2020 to 24.05.2020" The extended period of CIRP was to expire on^29.01 "2021^.

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Thereafter, the RP received a resolution plan from one Mr. Sanjay Dhagga on 02.0 | "2021 . In the 6th CoC meeting held on 12.01 .2021, the CoC^asked the Resolution Applicant to consider increasing the amount of^resolution plan; however, the Resolution Applicant did not agree. In view of this. the CoC decided to open voting period for approval of resolution^{pian but this} did not lead to approval of the Resolution Plan. In the^7th CoC^meeting held on 28.01 .2021, the CoC with 98.91% voting rights resolved^to liquidate the Corporate Debtor" Copy ofthe minutes of 7th meeting of CoC is annexed as Annexure I0 of the Application.

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IA No. 5llJPFJ202l In CP No^ l77l9lJPW2A1.9

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6" We have carefully heard and considered the arguments of the^learned counsel for the RP; and have also perused the records and taken into

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sonsideration the above facts in relation to the affairs of the Corporate

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Debtor. The provisions of Section 33 o1'IBC, 2016 are as follow's:^-

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"33. Initiation of liquidation. -

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(l) Where the Adjudicating AuthoriQ, -

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{a)^{before the expiryof the insolvency resolution process period} or the maximum period permittedfor completion of the corporate insolvency resolution process under section l2 or the Jast-track corporate insolvency resolution process under section 56, as the cqse may be, does not receive a resolution plan under sub-section (6) of section 30;

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(b) rejects the resolution plan under section 3l for the noncompliance of the requirements specified therein, it shall -

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(i) pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;

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(ii) issue a public announcement stating that the corporate debtor is in liquidation;

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and

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(iii) require such order to be sent to the authority with which the corporate debtor is registered.

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(2) where the resolution professional at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the adjudicating authoriQ of the decision of the committee of creditor approved by not less than sixty-six percent of the voting share to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as refercedto in sub-clause (i),^(iil and⁽ⁱⁱⁱ⁾ of clause^(b) of SubSection (l)"

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7 " The Hon?ble National Company Law Appellate Tribunal ('NCLAT'), in

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lA No. 5l/JPR/2021 In CP No.. Ml9lJPW2019

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praveen Kumar Nanda Kumar Vs. VSL Securities Pvt. Ltd. in CA^No.

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ll2O20 in CA No. 308/2000,^{dated A9.06.2020, observedas under: -}

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"Likewise, the decision ,/ the coc^recommending liquidation of the corporate^{debtor after properevaluation of the} assets and liabilities^{of corporate debtorwith no ResolutionPlan} forthcoming^{would be a businessdecision fallingwithin the} domain of commercial^{wisdom of the COC which is not amenable} toiudicial review""

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However, it is to be^{seen r,l,hetherthe relevant application is flled within}

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stipulated time lines and^{as per applicable procedure'}

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8" Prescribed period for^{filing apptication- In the present case, the} Application under Section^{9 of the Codewas admitted on 04.03 .2020 and} the period of 180 days^{was ending on 31.08.2020. Thereafter, vide order} dated 10.12"2020, CIRP^{period was extended by 90 daysbeyond180} days after excluding the^{period of lockdownfrom 25-03-2020 to} 24.05 "2020. Accordingly, the CIRP^{periodwas to expire on 19.0 i .l0l i .} It is noted that the CoC resolved^{to liquidate the CorporateDebtor on} 28"A("ZAZ(and, as a consequence thereoC the insGn( app(ication is filed by the RP on 08.02.2021. It is seen that there is no prayer for further extension or exclusion in the instant or any other application(s). In view thereof the Application under consideration is taken up under Section 33(l). Irrespective of the applicable sub-section under Section 33" this leads to liquidation of the Corporate Debtor.

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lA No. 511JPN2021 In CP No" .177l9lIPN20|9

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Appointment of Liquidator and fee to be paid- Section 34( 1) of the Code provides that where the Adjudicating Authority^passes an order^for liquidation of the Corporate Debtor under Section 33, the resolution professional appointed for the corporate insolvency resolution process shall. subject to submission of written consent act as the Liquidator for the purpose of liquidation. The relevant provisions of Sections 34( t ) of the Code are as follows: -

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"(l) Ll/here the Adjudicating Authority passes en order .fbr

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liquidation of the corporate debtor under Section 33, the resolution professional appointed for the corporate insolvency resolution process under Chapter II shall, subject to submission of written consent by the resolution professional to the Adjudicating Authority in specified form, shall oct as the liquidator for the purpose of liquidation unless replaced by the Adjudicating Authorit,* under sub-section^(4)""

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The present RP Mr" Prashant Agrawal is eligible to be appointed as Liquidator" The CoC had resolved to appoint the RP as the Liquidator. We do not find any reason to replace the existing RP. Mr" Prashant Agrawal, Resolution Professional with IBBI Registration No. IRBI/IPA001/P-P0005312017-18110127 has filed his consent in format / Form - AA dated 06.02.2021 as Annexure 11. The credentials of the proposed Liquidator have been checked from IBBI website (www,-tb-_bi.go*vjn) and nothing adverse is found on record. Therefore, Mr. Prashant Agrawal is appointed as the Liquidator.

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lA No. 5llJPN202l In

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CP No. 177191JPFJ2019

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It is seen that Regulation 39B, 39C and 39D in the CIRP Regulations, 2016 have been inserted by Notification No" IBBIl20l9-20lGN/REG/048 dated 25.A7 .2}lg. Relevant aspects in this respect are examined hereunder.

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t2. Liquidation Cost (Regulation 39I} of CIRP Regulations' 2016) -^'I'he RP apprised the CoC in the 7th meeting about Regulation 39B of CIRP Regulation,20l6 and estimated the liquidation cost to be at Rs. 8,20,000/plus GST, if any. The CoC with 98"910% voting rights approved the estimated liquidation cost along with applicable GST, except for the fees for registered valuer. The Liquidator is, therefore, directed to take necessary action under Regulation2A of the IBBI (Liquidation Process) Regulations, 2016 regarding contributions to liquidation costs.

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Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - The RP apprised the CoC in its 7'h meeting about Reguiation 39C of CIRP Regulation. 2016. The members of CoC discussed and resolved to sell the Corporate Debtor as a going concern, as first option, or sell the business(s) of the Corporate Debtor as a going concern, as second option, before exploring other options as per Regulation 32 8. 32A of IBBI (Liquidation Process) R.egulations, 2016 and Regulation 39C of CIRP Regulations, if an order of liquidation is passed by the Adjudicating Authority.

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lA No 5l/JPRI202l In CP No. 17'||9/JPN2019

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t4. Fees of the Liquidator (Regulation 39D of CIRP Regulations,²⁰¹⁶⁾ - tn the 7th meeting of the CoC, the members with 98"9104^votingrights resolved that the fees of the Liquidator will be fixed at Rs. 50.000/-^plus GST per month during the entire process of liquidation.

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In view of the satisfaction of the conditions provided under Section³³ of the Code, the Corporate Debtor, Saga Automotive India Pvt. Ltd"^is directed to be liquidated in the manner as laid down in Chapter III of^the

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Code. The contextual directions inter-alia include:^-

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(i) As per Section 33(5) of the Code and subject to Section 52 of the Code, no suit or other legal proceedings shall be instituted bv or against the Corporate Debtor,

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Provided that a suit or other legal proceedings may be instituted by the Liquidator on behalf of the Corporate Debtor, with the prior approval of the Adjudicating Authority; and

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(ii1 The provisions of sub-section (5) of Section 33 of the Code shall not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator; and

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(iii) This order of liquidation under Section 33 of the Code shall be deemed to be a notice of discharge to the officers. employees and workmen of the Corporate Debtor. except when the business

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IA No. 51|JPN2021 In CP No. n77l9lJPW20l9

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of the Corporate Debtor is continued during the liquidation process by the Liquidator; and

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(i") All the powers of the Board of Directors, key managerial personnel and the partners of the Corporate Debtor, as the case may be, shall cease to have effect and shall be vested in the Liquidator; and

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(v) The personnel of the Corporate Debtor shall extend all assistance and cooperation to the Liquidator as may be required by him in managing the affairs of the Corporate Debtor and provisions of Section 19 of the Code shall apply in relation to liquidation process as they apply in relation to CIR process with the substitution of references to the Liquidator for references to the Interim Resolution Professional; and

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(vi) The Liquidator shall publish public announcement in accordance with Regulation 12 of the IBBI (t.iquidation Process) Regulations,, 2016 and in Form B of Schedule II of these Regulations within five days from receipt of this order

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calling upon the stakeholders to submit their claims as on the liquidation commencement date and provide the last date for submission of claim which shall be 30 days from the liquidation commencement date; and

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IA No" 51lJPW202l In CP No 177l9lIPW20l9

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(vii) In accordance with Regulation 13 of the IBBI^(Liquidation Process) Regulations, 2016, the Liquidator^{shall file his} preliminary report within 75 days and shall file regular^progress reports as per Regulation 15.

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Pending Apptications, if any, and its / their^{effect- It is seenthat the} RP had filed IA No. 58/JPN2O21 to report the^{minutesof 4th CoC} rneeting. Relevant items of the said report and^{aspects relatedthereto} have been considered in these proceedings. The^{sameare not required} for any further reference. Thus, IA No. 58/JPR/2021 is also^{disposed of} along with this order in IA No. 5IIJPR/2021.

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In view of the foregoing, IA No. 51/JPRI202l^is disposed^{of. Copy of this} order be supplied to the counsel for the Liquidator^{as well as to the} Registrar of Companies forthwith. The Registry is also directed^{to send a} copy of this order to the Liquidator at his e-mail^address.

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9J-

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MT" RAGHU NAYYAR, TECTINICAL MEMBER

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Mr. AJAY KUMAR VAI'SAVAYI, JT]DICIAI, MEMBT]R

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IA No. 5llJPR/2021 ln CP No. l77l9lIPW2019