NCLT Orders Liquidation After CoC Rejects All Resolution Plans With Majority Vote

State Bank of India Vs Shreem Corporation Limited (NCLT Mumbai)

The National Company Law Tribunal, Mumbai Bench, considered an application filed by the Resolution Professional of Shreem Corporation Limited seeking initiation of liquidation proceedings under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 (IBC).

The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor had commenced through an order dated 22.09.2021, and the applicant was appointed as the Interim Resolution Professional. Public announcements inviting claims from creditors were published on 07.10.2021 in Financial Express and Navshakti newspapers.

During the CIRP, Axis Bank challenged the admission order before the NCLAT through Company Appeal No. 930 of 2021. However, the appeal was dismissed on 04.01.2022. The matter was subsequently taken to the Supreme Court through Civil Appeal No. 2085 of 2022, which was also dismissed on 12.09.2023.

The Resolution Professional later moved the Bombay High Court seeking discharge of the Sheriff and handover of control and custody of the Corporate Debtor’s property. By an order dated 06.09.2024, the Bombay High Court directed removal of attachment from the ground floor up to the 10th floor and ordered delivery of physical possession to the Resolution Professional within two weeks.

Subsequently, Form G inviting Expressions of Interest (EOI) was issued on 02.09.2024. Out of eight prospective resolution applicants, three submitted resolution plans.

The Committee of Creditors (CoC) conducted several meetings during the CIRP. In the 24th CoC meeting held on 21.03.2025, the CoC resolved to seek a 30-day extension of the CIRP period up to 28.04.2025. Thereafter, in the 25th CoC meeting held on 05.05.2025, the CoC passed a resolution with 95.63% voting share to proceed with liquidation of the Corporate Debtor.

The Tribunal also noted various extensions and exclusions granted during the CIRP period through different interlocutory applications. These included extensions of 90 days, exclusions of 530 days and 119 days, and further extensions of 30 days and 15 days.

The Tribunal recorded that, pursuant to e-voting results dated 30.04.2025 for the 22nd and 23rd CoC meetings, State Bank of India, holding a 95.63% voting share, voted against both resolution plans placed before the CoC. Punjab National Bank, which held a 4.37% voting share, abstained from voting. As a result, the plans submitted by Suntech Realty Ltd. and the consortium comprising Surender Kumar Bansal, Hindon Mercantile Limited, and Radha Madhav Corporation Ltd. stood rejected under Section 30(4) of the IBC.

Following rejection of the plans, the CoC resolved in its 25th meeting to liquidate the Corporate Debtor, and the Resolution Professional filed the present application under Section 33(2) of the IBC seeking liquidation.

After hearing the Resolution Professional and examining the records, the Tribunal observed that the CoC had rejected all resolution plans and had approved liquidation with the required majority voting share. The Tribunal referred to Section 33(2) of the IBC, which mandates that where the CoC decides to liquidate the Corporate Debtor with not less than 66% voting share before approval of any resolution plan, the Adjudicating Authority shall pass a liquidation order.

The Tribunal held that, since no resolution plan remained for consideration and the CoC had resolved to liquidate the Corporate Debtor, the provisions of Section 33 of the Code were clearly attracted. The Tribunal stated that it had no option except to order liquidation in accordance with Chapter III of the IBC.

Accordingly, the Tribunal ordered liquidation of Shreem Corporation Limited and appointed Ritu Rastogi as the Liquidator under Section 34 of the IBC. The Tribunal further directed commencement of a fresh moratorium under Section 33(5), declared the order as notice of discharge to officers, employees, and workmen under Section 33(7), and directed the Liquidator to proceed with the liquidation process and submit a preliminary report within 75 days.

FULL TEXT OF THE NCLT JUDGMENT/ORDER

1. The present Application has been filed by Naren Sheth, Applicant/Resolution Professional of Shreem Corporation Limited (“Corporate Debtor”) seeking initiation of Liquidation Process of the Corporate Debtor in terms of Section 33(2) of Insolvency and Bankruptcy Code, 2016 (“Code”).

Facts as per the Application

2. The Corporate Insolvency Resolution Process (“CIRP”) was initiated against Corporate Debtor by this Tribunal vide Order dated 22.09.2021 and in terms of the said order, the Applicant herein was appointed as the Interim Resolution Professional (“IRP”) of the Corporate Debtor. The order was received by the Applicant on 05.10.2021. In accordance with Sections 13 and l5 of the Code, the Applicant published ‘Form A’ (Public Announcement) on 07.10.2021 in two newspapers namely, Financial Express (English) and Navshakti (Marathi) for the purpose of inviting claims from the Creditors of the Corporate Debtor.

3. It is submitted that Axis Bank had filed a Company Appeal bearing No. 930 of 2021 before the Hon’ble NCLAT appealing against the Admission Order dated 22.09.2021 passed by this Tribunal. However, the Hon’ble NCLAT dismissed the said appeal vide Order dated 04.01.2022. The Axis Bank thereafter pursued the matter with the Hon’ble Supreme Court Vide Civil Appeal No.2085 of 2022, which was dismissed by the Hon’ble Supreme Court vide order dated 12.09.2023.

4. The Applicant filed an Interim Application No. (L) 27156 of 2023 in Commercial Execution Application No. 27 of 2016 in Summary Suit No. 65 of 2014 on 30.09.2023, seeking discharge of the Sherriff and handover of the Control and custody of the property of the Corporate Debtor to the Applicant.

5. It is submitted that the Hon’ble Bombay High Court vide Order dated 06.09.2024, directed the Sherriff to remove attachment from the ground floor up to the 10th floor and to further hand over physical possession thereof to the Applicant within two weeks.

6. Thereafter, the Applicant published Form G, inviting Expression of interest (“EoI”) on 02.09.2024, wherein the last date for submission of EoI was up to 17.09.2024. It is submitted that out of the 8 Prospective Resolution Applicants (PRAs), 3 PRAs submitted Resolution Plans.

7. Given below is the summary of the CoC meeting held during the CIRP period: –

8. The following orders were passed by the Hon’ble High Court and Tribunal relating to the CIRP of the Corporate Debtor: –

9. Pursuant to e-voting results dated 30.04.2025 of the 22ⁿd & 23^rd CoC meetings convened on 08.01.2025, the State Bank of India having a voting share of 95.63%, voted against both the resolution plans put up for voting. Further, Punjab National Bank having a voting share of 4.37% abstained from voting on the plans. Therefore, the plans submitted by Suntech Realty Ltd. and Consortium of Surender Kumar Bansal, Hindon Mercantile Limited and Radha Madhav Corporation Ltd. stood rejected under Section 30(4) of the Code.

10. Thereafter, in its 25^th meeting held on 05.05.2025, the CoC, with 95.63% voting share, resolved to proceed with the liquidation of the Corporate Debtor. Accordingly, by way of the present Application, the Resolution Professional seeks initiation of liquidation proceedings under Section 33(2) of the Insolvency and Bankruptcy Code, 2016.

Analysis & Findings

11. Heard Ld. Counsel for the RP and perused documents available on record. It is noted that the CoC has voted against both the Resolution Plans submitted by the Prospective Resolution Applicants and the CoC in its 25^th meeting dated 05.05.2025, passed resolution for initiation of liquidation process of the Corporate Debtor. Therefore, in the absence of any Resolution Plan on the table, and considering the resolution passed by the CoC to liquidate the Applicant Company, provisions of section 33 of the Code are clearly attracted. The relevant extract of Section 33 is reproduced below for the ready reference:

“Section 33: Initiation of liquidation

(2) Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors ¹[approved by not less than sixty-six per cent. of the voting share] to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1).”

12. Given the facts and circumstances of the case and discussions hereinabove, this Bench is of the considered opinion that the present Interlocutory Application is in consonance with Section 33(2) of the Code. Accordingly, this Authority is left with no option except to pass an order for Liquidation of the Corporate Debtor in the manner laid down in Chapter III of the Code considering the fact that the CoC has rejected both the Resolution Plans and passed resolution for liquidation of the Corporate Debtor. Therefore, the following order is passed in I.A. No. 35 of 2025 in C.P. (IB) No.1382 of 2020:

ORDER

a. The Corporate Debtor, Shreem Corporation Limited is directed to be liquidated in accordance with the provisions of the IBC and applicable regulations.

b. As proposed by the CoC, we hereby appoint, Ritu Rastogi, bearing Registration No. IBBI/IPA-00l/IP-P00204/2017-2018/10393; having address at D-1 B, 9 A, D Block Janak Puri, New Delhi, National Capital Territory of Delhi, 110058, e-mail id: ritu rastogi1@yahoo.co.in, is appointed to act as the Liquidator in terms of Section 34 of the Code.

c. The Liquidator for conduct of the liquidation proceedings would be entitled to the fees as per Regulation 4 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016.

d. A fresh moratorium shall commence under Section 33(5) of the Code.

e. This order shall be deemed to be a notice of discharge to the officers, employees and the workmen of the Corporate Debtor as per Section 33(7) of the IBC Code, 2016.

f. The Liquidator is directed to proceed with the process of liquidation
as laid down under Chapter III of the Part II of Insolvency and Bankruptcy Code, 2016 and the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

g. The Liquidator shall submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date as per Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) regulations, 2016.

h. The Liquidator appointed under section 34 of the Code shall have all the powers of the Board of Directors, Key Managerial Personnel and the existing Board of the Corporate Debtor, the Key Managerial Persons and the partners shall cease to have effect.

i. The personnel of the corporate debtor shall extend all co-operation to the Liquidator as required by him in managing the Liquidation process of the Corporate Debtor.

j. Registry shall furnish a copy of this Order to:

a. Insolvency and Bankruptcy Board of India, New Delhi;

b. Regional Director (Western Region), Ministry of Corporate Affairs;

c. Registrar of Companies & Official Liquidator, Maharashtra;

d. Erstwhile Resolution Professional, Mr. Naren Sheth.

e. Liquidator, Ms. Ritu Rastogi.

13. Accordingly, the I.A. No. 35 of 2025 is allowed in above terms.