NCLT Mumbai Allows Withdrawal Of Liquidation Application On Receipt Of Resolution Plan

Background Facts:

Rubique Technologies India Pvt. Ltd. (Corporate Debtor) entered into a Corporate Insolvency Resolution Process ('CIRP') with Blacksoil Capital Pvt. Ltd. ('BPCL') constituting the CoC as the sole Financial Creditor. During the CIRP, the CoC decided to commence liquidation proceedings against the Corporate Debtor without inviting Expression of Interest ('EoI').

During the pendency of the liquidation application before NCLT, the Interim Resolution Professional ('IRP') received an interest from an individual resolution applicant to acquire the Corporate Debtor as a going concern. Despite repeated requests, the IRP did not file the application for withdrawal of the liquidation application and for an extension of time period. Post the appointment of Mr. Pranav J. Damania (Applicant) as the Resolution Professional, BPCL advised the filing of such an application.

The present interlocutory application has been filed by the Applicant to seek an extension of the CIRP period and withdrawal of the liquidation application to consider the resolution plan.

NCLT Verdict:

The NCLT Mumbai allowed the interlocutory application and allowed the withdrawal of liquidation application since one resolution plan was received by CoC during the pendency of liquidation application.

The Tribunal noted that the Supreme Court in Essar Steel India Ltd. vs. Satish Kumar Gupta & Ors. has recognized that the object of IBC is to maximize the value of assets for the benefit of stakeholders.

It observed that the primary object of IBC is value maximization as well as revival/resolution of the financially stressed corporate debtors. Thus, in the present case, since CoC has received one resolution plan during the pendency of the liquidation application. The CoC also intends to consider saving the Corporate Debtor from liquidation, it would be just and proper to give another chance which may help revive/resolve the Corporate Debtor.

The Tribunal took note that considerable time has elapsed. However, in the Essar Steel India Ltd vs. Satish Kumar Gupta's case, the time frames are directory and not mandatory in nature.

Thus, NCLT concluded that a last-ditch effort can be afforded to the CoC keeping in view the overall interests of all the stakeholders involved.

Case Title: Pranav J. Damania

Case No.: I.A. No. 4372 of 2023 in CP (IB) No. 4304 (MB) of 2019

Counsel for Applicant: Counsel Mr. Aman Kacheria a/w Harshad R. Vyas.

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