Partly allowed

In the matter of Kohinoor Paper and Newspaper Private Limited [Interlocutory Application No. 209-KB-2024 in Company Petition (Ib) No. 1694-KB-2018]

NCLT23 Feb 2024Interlocutory Application No. 209-KB-2024 in Company Petition (IB) No. 1694-KB-2018

Case brief

AI extract

What is this about?

The National Company Law Tribunal granted various reliefs and waivers to a consortium that acquired a corporate debtor in liquidation. The court approved accounting recasting and extinguishment of liabilities incurred prior to acquisition, allowing the purchaser to proceed without prior encumbrances while retaining intellectual property rights.

What did the court decide?

Granted reliefs including recasting accounts, extinguishment of pre-acquisition liabilities, discharge of guarantees, and vesting of assets. Denied termination of proceedings pending before other cour

In the matter of Kohinoor Paper and Newspaper Private… — Insolvency and Bankruptcy | NCLT (2024)

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 In

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Company Petition (IB) No. 1694/KB/2018

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Under section 60 (5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016

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IN THE MATTER OF:

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Sendoz Commercials Private Limited

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… Operational Creditor.

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Verses

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Kohinoor Paper and Newspaper Private Limited … Corporate Debtor.

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And

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In the matter of : Dwarakapati Smelters Private Limited

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……Applicant No.1

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Bhagwati Vintrade Private Limited

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…….Applicant No. 2

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Verses

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Ms. Ranchana Jhunjhunwala

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…….Respondent

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Date of Pronouncement: February 23, 2024.

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CORAM:

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SMT. BIDISHA BANERJEE, HON’BLE MEMBER (JUDICIAL) SHRI D. ARVIND, HON’BLE MEMBER (TECHNICAL)

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Appearance:

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Ms. Shreya Choudhary, Adv. ] For the liquidator Mr. Priyadarshan Kumar, Adv. Ms. Rachna Jhunjhunwala, Liq.-in-person

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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Mr. Abhradip Maity, Adv. ] For GST Authority Ms. Shatabdi Sen, Adv.

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Ms. Rakhi Purnima Paul, Adv. ] For IFCI Ltd.

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Mr. Madhu Sudan Sarkar, Adv. ] For WBSEDC

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ORDER

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Per: Bidisha Banerjee, Member (Judicial):

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1. This Court is congregated through hybrid mode.

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2. Heard the Learned Counsels for both parties.

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3. Facts in a nutshell:

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3.1 The liquidation against the Corporate Debtor was initiated by this Hon'ble Tribunal on 12.07.2021 and Mr. Uday Narayan Mitra was appointed as the Liquidator.

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3.2 The Stakeholders Consultation Committee ("SCC") members decided to replace Mr. Uday Narayan Mitra as the Liquidator Ms. Rachna Jhunjhunwalal was appropriate liquidator, vide this Tribunals order dated 28.06.2023.

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3.3 Sometime in and around, 20.09.2023, a consortium was formed between Dwarakapan Smelters Private Limited and Bhagwati Vintrade Private Limited who submitted their EOI for acquiring the Corporate Debtor for a consideration of Rs. 53,45,00,000/and deposited an EMD of Rs. 5,34,00,000.

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3.4 To acquire the Corporate Debtor as a going concern by way of a private sale and only the assets the consortium was declared as the successful bidder.

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Page 2 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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3.5 The LOI was issued by the Liquidator on 25.09.2023 to the consortium for payment of the balance sale consideration amounting to Rs. 48,11,00,000/- after adjustment of the EMD amount of Rs. 5,34,00,000/-

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3.6 The Applicant consortium made the entire payments towards the said sale consideration for acquiring the Corporate Debtor as a going concern.

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4. The applicant consortium by way of this application to seek certain reliefs and waivers . The Applicants have also sought for approval of a scheme of demerger of the Corporate Debtor’s undertaking into the Applicant No. 1/Dwarakapati Smelters Private Limited pursuant to the provisions of the Sec 230-232 of the Companies Act, 2013.

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5. To support their prayers the applicants have relied upon the following judgements:

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a. Jasamrit Designers Pvt.Ltd vs. Mr. Gian Chand Narang & Anr2023 SCC Online NCLAT 334 Paragraphs 10 and 11 as the right of a successful bidder to seek reliefs and concessions.

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b. Gaurav Jain vs. Sanjay Gupta, Liquidator of Pipes and tubes Private Limited - 2021 SCC Online NCLT 489 paragraphs 20,25,26,28,29,30 and 34 on the nature of reliefs and concessions that are permitted.

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c. Nitin Jain, Liquidator of PSL Limited vs. Lucky Holdings Private Limited -2021 SCC Online NCLT 3108 paragraphs 15,29,30 and 36 to 42 as the nature of reliefs and concessions that are permissible.

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d. Ramesh Chaudhary &Anr. Vs. Anju Agarwal, Liquidator of Shree Bhawani Paper Mills Limited IA No. 195/2023 in C.P No.

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Page 3 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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110/ALD/ 2017, by NCLT, Allahabad Bench, vide its order dated 26.05.2023 paragraphs 11, 15, 16, 17, and 25 to 31 as the nature of reliefs and concessions that are permissible.

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e. Kashri Power & Steel Pvt. Ltd & Ors. vs. WBSEDCLS as WPA 6327 OF 2020 (12.08.21,) rendered by Hon’ble High Court at Calcutta an Regulation 32A of Liquidation Process Regulations 2016.

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6. The Applicants would submit that the reliefs and concessions, along with approval of the Scheme of Demerger as sought for by the Applicants are necessary for conducting the smooth operations of the Corporate Debtor. Further , by way of the Scheme of Demerger the Applicants are seeking to essentially, demerge the undertaking of the Corporate Debtor into the Applicant No. 1 thereby leading to reduction and cancellation of new equity shares to be issued by the Applicant No. 1 to the existing shareholders of the Corporate Debtor, as on 30.09.2023 and subsequently dissolution of the Corporate Debtor. That an approval of the reliefs and concessions, along with the Scheme of Demerger will aid in meeting the ends of justice.

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7. Reliance has been placed upon Ghanashyam Mishra and Sons Private Limited VS. Edelweiss Asset Reconstruction Company Limited 2021 SCC OnLine SC 313, that upon approval of the resolution plan, the claims as recorded in the plan stands frozen and will be binding on its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders.

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8. The Reliefs and Waivers:

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024

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Company Petition (IB) No. 1694/KB/2018

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Sl. Reliefs, waivers, Precedents cited Order
No concessions and
dispensation sought for
1. Direct that the status of the a. Gaurav Jain vs. Granted
Corporate Debtor in the Sanjay Gupta,
records of the Registrar of Liquidator
Companies and on the (Supra)
website of the Corporate
Debtor be reflected as
b. Nitin Jain,
"Active" from the status
Liquidator of PSL
being shown currently, as
Limited vs. Lucky
"Under Liquidation".
Holdings Private
Limited (Supra )
2. Grant the reliefs, a. Gaurav Jain vs.
concessions, waivers for the Sanjay Gupta,
successful implementation Liquidator
of the Acquisition Plan as set (Supra)
out in Schedule -A annexed b. Nitin Jain,
to the Present Application, Liquidator of PSL
including but not limited to Limited vs. Lucky
the following, that: Holdings Private
Limited (Supra )
• the Applicants shall Granted
acquire the Corporate
Debtor on a clean
slate/fresh slate with
a "clean break" from

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Page 5 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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the period prior to 30.09.2023 i.e., the date of its acquisition.
• any and all Liabilities	Ref.	Granted as Subsequent to
of the Corporate Debtor relating to any	1. Company Application (AT) (INS) 650 OF 2020.	distribution of sale proceeds under Section 53
period prior to the	2. Ghanshyam Mishra	of the Code, no
Effective Date including those	Essar Steel 2020(8) SCC 531.	other entity including any Government
resulting out of its		entity can claim
acquisition by the		any past unpaid or outstanding
Applicants shall		dues against the
immediately, unconditionally		purchaser of the CD as a going concern .Claims
irrevocably stand and extinguished,		not submitted either during CIRP or the
accordance with		Liquidation stage
Section 53 of the Code.		cannot be foisted upon the applicants/ purchaser of the Company.
• direct the requisite governmental/ non-		No blanket order can be issued. Applicant shall
authorities, agencies, e forums, to grant		seek relevant reliefs etc from such
reliefs, concessions, woul waivers, etc.		authorization who shall

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024

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Company Petition (IB) No. 1694/KB/2018

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			consider the prayers and grant the some in accordance with the law .
3.	Recasting of accounts and drawal of Balance Sheet:	a. Gaurav Jain vs. Sanjay Gupta, *Liquidator(Supra)***	Granted
	Based on the audited receipt	b. Nitin Jain,
	and payments along with	Liquidator of PSL
	the audited balance sheet as	Limited vs. Lucky
	on the liquidation	Holdings Private
	commencement date, that is	Limited (Supra)
	12.07.2021, as provided / to	c. Ghanashyam
	be provided by the	Mishra and Sons
	Liquidator, the Successful	Private Limited
	Bidder / CD shall be	vs. Edelweiss
	permitted to	Asset Reconstruction
	(1) recast the accounts and re-draw	Company Limited *(Supra)*
	the balance sheet of the CD (granted)
	(ii) claim all the reliefs	d. Gaurav Jain vs.
	and concessions	Sanjay Gupta,	Granted
	relating thereto,	*Liquidator(Supra)***
	including no penal

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Page 7 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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interest, charges etc. e. Nitin Jain,
to be levied or liability Liquidator of PSL
of whatsoever Limited vs. Lucky
(including any tax Holdings Private
liability) to accrue for Limited (Supra)
any non- compliance f. Ghanashyam
of any regulatory Mishra and Sons
provision including Private Limited
Companies Act or any vs. Edelweiss
non- filing under any Asset
statutory provisions Reconstruction
for the period prior to Company Limited
30.09.2023. (Supra)
4. Permission to restructure Gaurav Jain vs. Granted
the paid-up capital of Sanjay Gupta,
Gaurav the Corporate Liquidator (Supra)
Debtor by extinguishing the
existing Gupta, paid-up
capital and allow issuance of
new equity shares to the
Applicants in terms of the
Clause 15 Tubes of the Sale
Certificate dated 30.09.2023

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Page 8 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024

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Company Petition (IB) No. 1694/KB/2018

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The Tribunal may take on a. Gaurav Jain vs. Reconstitution of
record the reconstitution of Sanjay Gupta, Board not placed
the board of directors of the Liquidator (Supra) upon us.
Corporate Debtor and the b. Nitin Jain, ROC be
Registrar of Companies do Liquidator of PSL approached
take note of the relevant Limited vs. Lucky
forms when filed by the Holdings Private
Applicants in this regard. Limited (Supra)
6. Extinguishment of liabilities a. Gaurav Jain vs. Granted
Corporate Debtor: Sanjay Gupta,
a. All claims or demand Liquidator (Supra)
made by or liabilities or b. Nitin Jain,
obligations owed or Liquidator of PSL
payable to any actual or Limited vs. Lucky
potential creditors of Holdings Private
the Corporate Debtor Limited (Supra)
including Governmental c. Ghanashyam Granted in terms
of cited decisions
dues, whether direct or Mishra and Sons
indirect, whether Private Limited
admitted or not, due or vs. Edelweiss
contingent, asserted or Asset
unasserted, crystallised Reconstruction
or uncrystallised, Company Limited
known or unknown, (Supra)
secured or unsecured,
disputed or undisputed,

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Page 9 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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whether reflected in the books of accounts of the Corporate Debtor or not, in relation to any period prior to 30.09.2023 or arising on account of acquisition of the control by the Applicants over the Corporate debtor including those arising out of writing off the loans in its books will be written off in full and shall stand permanently exhausted. b. All pending litigations against the Corporate Debtor before any court and/or tribunal and/ or arbitration and/or any Quasi-Judicial authority shall ipso facto stand terminated without passing of any order in any manner adverse to the interest

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Page 10 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN

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Company Petition (IB) No. 1694/KB/2018

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of the Corporate Debtor/ Applicants and will no longer be permissible to be prosecuted or enforced against the Applicants or the Corporate Debtor. c. Any and all judgement, decree, order passed by any court and/or tribunal and/or arbitration and/or Quasi-Judicial authority shall ipso facto stand extinguished and shall become incapable of execution as against the Corporate Debtor/Applicants. The Corporate Debtor/Applicants shall not be answerable to any such judgement, decree or order.

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Not granted as this Tribunal cannot grant termination of proceeding pending before other Courts/Tribunals or Statutory Authorities.

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Page 11 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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d.	The charges registered with	Not granted
	concerned ROC in
	respect of
	encumbrances over
	the assets of the
	Corporate Debtor on
	or before the
	30.09.2023 shall
	stand discharged
	and satisfied.
e.	All proceedings
	initiated against the	Granted as
	Corporate Debtor for	Subsequent to
		distribution of
	recovery of monies by	sale proceeds
	all classes of	under Section 53
		of the Code, no
	creditors including	other entity
	secured creditors	including any
	and those who did	Government i li
		entty can cam
	not file their claims	any past unpaid
	with the Liquidator	or outstanding
	shall stand, in	dues against the purchaser of the
	respect of period on	CD as a going
	or before 30.09.2023	concern .Claims
		not submitted
	shall stand	either during
	dismissed and	CIRP or the
		Liquidation stage
	extinguished.	cannot be foisted

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Page 12 of 18

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN

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Company Petition (IB) No. 1694/KB/2018

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f. The secured creditors be directed to handover the title documents and related documents, deeds and papers duly noting discharge of all encumbrances in relation thereto.		upon the applicants/ purchaser of the Company. Grantedin terms ofGhanshyam Mishra Essar Steel 2020(8) SCC 531.
7. Extinguishment of	a. Gaurav Jain vs.	Grantedto the
Guarantees given by the	Sanjay Gupta,	extent
Corporate Debtor:	*Liquidator(Supra)***	permissible in
a. All liabilities and guarantees extended	b. Nitin Jain,	light of the judgements cited.
by the Corporate Debtor whether monetary and non- monetary, statutory, crystallised or uncrystallised,	Liquidator of PSL Limited vs. Lucky Holdings Private Limited (Supra) c. Ghanashyam Mishra and Sons
claimed or not claimed, disputed or undisputed,	Private Limited vs. Edelweiss Asset

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN

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Company Petition (IB) No. 1694/KB/2018

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confirmed or contingent or due or	Reconstruction Company Limited
future due, decrees	*(Supra)*
obtained for
satisfaction of debt
and all such
obligations of the
Corporate Debtor
shall stand
extinguished and
discharged in full
against the Corporate Debtor.
b. All shares of the
Corporate Debtor
pledged with any
party shall stand
extinguished and no
liability upon the
Corporate Debtor/
Applicants shall
accrue in terms of S 32A of the Code.
8. Extinguishment of Liability for past deeds:	d. Gaurav Jain vs. Sanjay Gupta,	Granted to the extent
a. The liabilities, if any,	*Liquidator(Supra)***	permissible in
arising out of non- compliance of provisions of any laws, rules,	e. Nitin Jain, Liquidator of PSL	terms of cited decisions as a, b and c.

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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Limited vs. Lucky Holdings Private Limited (Supra) f. Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited (Supra)

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regulations, directors, notifications, circulars, guidelines, policies, approvals, consents or permissions prior to effective date shall stand extinguished against the Corporate Debtor/ successful bidder. b. The Applicants/Corporate Debtor shall not be held responsible/liable for any past liabilities of the Corporate Debtor in enquiries, investigations, assessments, notices, criminal cases, civil eases, claims, disputes, litigations, arbitrations or other judicial, regulator, administrative proceedings or in relation to or in connection with the Corporate Debtor on or before 30.09.2023.

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN

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Company Petition (IB) No. 1694/KB/2018

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c. The Applicants shall not
be liable for any
action/responsibility of
the Corporate Debtor or
its erstwhile
management as per the
provisions of section 32A
of IBC 2016.
9. Vesting of all assets a. Gaurav Jain vs. Granted as
including Intellectual Sanjay Gupta, permissible in
Property rights and financial Liquidator (Supra) terms of
assets of the Corporate judgments cited.
b. Nitin Jain,
Debtor:
Liquidator of PSL
a. All rights, title and
Limited vs. Lucky
interest in whole and
Holdings Private
every part of the
Limited (Supra)
Corporate Debtor
c. Ghanashyam
Tube continue to vest
Mishra and Sons
in the Corporate
Private Limited
Debtor 2021 and the
vs. Edelweiss
assets, rights, titles
Asset
and interest of 489 the
Reconstruction
Corporate Debtor
Company Limited
shall become free from
(Supra)
encumbrances,
charges, security,
interest, claims and
counter claims.

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Interlocutory Application No. 209/KB/2024 IN

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Company Petition (IB) No. 1694/KB/2018

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b. All intellectual
property rights of the
Corporate Debtor
including in respect of
Trademark, Patent,
Design, whether
registered or
unregistered shall
continue to remain
vested with the
Corporate Debtor.
c. All financial assets
including receivables
and actionable claims
of the Corporate
Debtor shall remain
recoverable by the
Corporate Debtor in
accordance with their
respective terms.

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9. With the above directions, IA(IB)No. 209/KB/2024 is disposed of.

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10. The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

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11. Certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities.

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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D. Arvind Member (Technical)

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Interlocutory Application No. 209/KB/2024 IN Company Petition (IB) No. 1694/KB/2018

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Bidisha Banerjee, Member (Judicial)