In the present case, the insolvency resolution Professional filed an application under section 33(2) of the Code to initiate Liquidation proceedings and appoint Resolution professional as the Liquidator of the Corporate Debtor.

Decision of Adjudicating Authority: The Adjudicating authority while reaching on the conclusion cited the decision passed in the matter of Jayanta Banerjee Vs. Shashi Agarwal & another, that all the statutory provisions to conduct CIRP are inter-connected and it does not leave any scope for the IRP/RP to skip any of the provisions as mentioned under the Code.

In the instant petition Hon’ble NCLT observed that during the conduct of the CIRP, after receiving and collating the claims, it is the duty of the IRP to constitute CIRP. However, on careful observation of the facts and circumstances of the case, it was found that the claim filed by one of the creditor namely “BMW India Pvt Ltd” was rejected on the ground that it does not fall within the abmit of section 5(8) of the Code. Further, it came to the notice of the AA that during the proceedings of the CIRP, only three CoC meetings were held. The AA noted that IRP/RP had failed to publish Form G on the 75th day of the Model Time line as prescribed and mandated under the Code and Coc resolved to file application to initiate Liquidation proceedings as per the advice of the IRP. The IRP being fully aware of the statutory complainces, as mandated under the Code, opted for the procedure which was against the statutory guidelines under the Code. The Court observed that the IRP had failed to appoint valuers as required under Regulation 27 of the Code in order to determine the fair market value of the assets of the Corporate debtor, neither Information memorandum was prepared as required under section 29 of the Code. The AA held that the CoC is not been empowered to prevent the IRP/RP from the issuance of EOI. In view of the above mentioned facts and circumstances, it was considered appropriate to note that the constitution of the CoC itself is found to be tainted, then the decision of that CoC cannot be considered valid and legitimated on the context of the excercise of commercial wisdom. Therefore, the hon’ble Tribunal suspects that there may be the existence of the situation where the CoC does not agree to the parameter as set by the IRP/RP for the consideration of the EOI. In such a situation, CoC is expected to render its valuaable suggestions for improving the basis for issuance of EOI but cannot stop the issuance of EOI because it was mandatory obligation on the IRP/RP to follow the CIRP time line as prescribed in Regulation 40A of the CIRP Regulations.

Branch: NCLT, Kochi Bench

Link: https://ibclaw.in/satiq-buhari-rp-vs-platino-classic-motors-india-pvt-ltd-nclt-kochi-bench/