Rajesh Narang Vs Durha Vitrak Pvt Ltd (NCLAT Delhi)
NCLAT Delhi held that impugned order is liable to be set aside as resolution professional didn’t took reasonable step to get the Corporate Debtor as going concern which is mandated as per Section 25(2)(h) of the Insolvency & Bankruptcy Code, 2016.
Facts- The present appeal has been preferred by an ex-Director of Durha Vitrak Pvt Ltd who was running a full operational hospital namely Febris Multispeciality Hospital of 150 beds (hereinafter referred to as ‘Corporate Debtor’) which was earlier under Corporate Insolvency Resolution Process (hereinafter referred to as ‘CIRP’). The appeal has been preferred under Section 61 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as IBC).
It is the case of the applicant that the application for liquidation was first heard by the Division Bench of NCLT consisting Hon’ble Justice BSV Prakash Kumar, Acting President and Mr. V.K. Subburaj Member (Technical) and order was reserved. However, before passing of the order one of the Member of the Bench i.e. Member (Technical) demitted the office. Even thereafter order was passed by a Bench consisting of Hon’ble Justice Mr. BSV Prakash Kumar, Acting President sitting with Hon’ble Mr. Hemant Kumar Sarangi, Member (Technical).
Since it was against principle of natural justice a rectification petition was filed by one of the ex-Director with a prayer to rectify the order.
After noticing the fact that before the pronouncement of order Mr. V.K. Subburaj had already demitted the officer the said order was declared as void and matter was directed to be reopened for hearing by the regular Principal Bench i.e. Acting President and Hon’ble Member (Technical) Mr. Hemant Kumar Sarangi and it was directed to be listed on 31.05.2021 for hearing. Thereafter the impugned order was passed.
Conclusion- We can take judicial notice of the fact that during the peak period of Corona when such offers were made to run the hospital, all the citizens were crying for medical help and running for getting bed in hospitals. Number of Covid patients died due to non-availability of beds in the hospital. However, even during such a situation the behaviour of RP was detrimental to the entire society. It is common knowledge that during Covid period number of hospitals besides rendering service to society generated huge funds, however, even in such situation in the present case, to the reasons best known to him, the RP did not allow anyone to run the hospital as going concern.
It is evident that the RP had not taken any reasonable step to get the CD as going concern which is mandated as per Section 25(2)(h) or he acted in accordance with Section 24 of the Code and as such there is no reason to allow the impugned order to further continue. According the order dated 31.5.2021 passed in IA No.901/2021 in (IB)-470(ND)/20 19 by National Company Law Tribunal, Principal Bench, New Delhi is hereby set aside and matter is remitted back to the NCLT to reexamine the issue and consider to change the RP.
FULL TEXT OF THE NCLAT DELHI JUDGMENT/ORDER
The present appeal has been preferred by an ex-Director of Durha Vitrak Pvt Ltd who was running a full operational hospital namely Febris Multispeciality Hospital of 150 beds (hereinafter referred to as ‘Corporate Debtor’) which was earlier under Corporate Insolvency Resolution Process (hereinafter referred to as ‘CIRP’). The appeal has been preferred under Section 61 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as IBC).
The appellant herein has assailed the order dated 31.05.2021 passed by the Adjudicating Authority, National Company Law Tribunal, Principal Bench, New Delhi in I.A. No.9010/2021 in (IB)/470(ND)/2019 (hereinafter referred to as NCLT). By the said order learned NCLT has allowed an application i.e. IA No.9021/202 1 filed under Section 33(2) of the IBC Code. The said application was filed by Resolution Professional (hereinafter referred to as ‘RP’) namely Mr. Aishwarya Mohan Gahrana. It is appropriate to reproduce the order dated 31.05.2021 as follows:-
“ORDER
It is an IA filed u/s 33(2) of the Insolvency & Bankruptcy Code, 2016 (“the Code”) by the Resolution Professional (RP) seeking liquidation order based on the resolution passed by the CoC in its 6th meeting held on 28.01.2021 with a requisite majority as contemplated under I&B Code, 2016.
2. On perusal of this application, it appears that this (IB)- 470(ND)/2019 was admitted on 08.11.2019 and this Applicant was appointed as IRP and he invited claims from the creditors and constituted CoC only of one Financial Creditor i.e. LIC Housing Finance Limited as the other Financial Creditor i.e. Dr. Arinjaya Jain was a related party to the Corporate Debtor. Subsequently, IRI’ was appointed as RP in the First Meeting of CoC held on 12.2019, and he appointed two Registered Valuers to value the assets of the Company.
3. In furtherance of it, the RP prepared the Information Memorandum and apprised the CoC in its 4th meeting dated 04.2020 that the Copy of Information Memorandum may be obtained after submitting the confidential undertaking and Form G for inviting the expression of interest was published on 17.08.2020 after the approval of the CoC in same meeting. The Form-G was again issued on 14.09.2020 after the discussion held in the fifth CoC meeting held on 07.09.2020. This authority also extended the CIR Period for further 90 days and excluded the period from 25.03.2020 to 31.07.2020 due to Covid-19. In furtherance to the publication of Form G, the resolution professional received an expression of interest from 4 prospective resolution applicants. However, the resolution professional received two proposed resolution plan pursuant to the final list of prospective resolution applicants. In the 6th CoC dated 28.01.2021, the CoC discussed the resolution plans received and was not inclined to consider any resolution plan considering them to be not feasible and viable and pass resolution for initiation of liquidation process of the Corporate Debtor which is as follows:-
“RESOLVE THAT pursuant to Section 33(2) of the Insolvency and Bankruptcy Code, 2016 and the rules made thereunder, the consent of members of the Committee of Creditors be and is hereby accorded to approve the filing of an application with Hon’ble Adjudicating Authority, regarding the initiation of liquidation of Corporate Debtor and to appoint existing Resolution Professional, subject to given consent to act as liquidator, as the liquidator of the Corporate Debtor.
“RESOLVE FURTHER THAT in pursuant to Regulation 4(2) of 1BBI (Liquidation Process) Regulations, 2016, the liquidator shall be entitled to a fee of Rs. 1,25,000/- (Rs. One Lakh Twenty-Five Thousand only per month).
“RESOLVED FURTHER THAT the Resolution Professional be and is hereby authorized to submit an application before the Hon’ble Adjudicating Authority and to do all such acts, deeds and things as may be required or considered necessary or incidental thereto.”
4. Looking at the application and averments thereof, we are of the considered opinion that this is a fit case for liquidation, therefore, we hereby order for liquidation of the company with directions as follows:
a. The Mr. Aishwarya Mohan Gahrana, holding Registration IBBI/IPA-002/ 1P-N00135/201 7- 2018/10351 having [email protected] is appointed as the Liquidator in terms of Section 32 of the Code;
b. Registry is directed to communicate this Order to the Registrar of Companies, NCT of Delhi & Haryana and to the Insolvency and Bankruptcy Board of India;
c. The Order of Moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cease to have its effect and a fresh Moratorium under Section 33(5) of the Insolvency and Bankruptcy Code shall commence;
d. 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 Insolvency and Bankruptcy Code, 2016;
e. The Liquidator is directed to proceed with the process of liquidation in a manner laid down in Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 and in accordance with the relevant rules and regulations.
f. The Liquidator shall follow up and continue to investigate the financial affairs of the Corporate Debtor in accordance with provisions of Section 35(1) of the Code.
g. The liquidator shall also follow up the pending applications for their disposal during the process of liquidation including initiation of steps for recovery of dues of the Corporate Debtor as per law.
h. 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;
i. Copy of this order be sent to the financial creditors, corporate debtor and the Liquidator for taking necessary steps;
j. IA-901/2021 filed in IB-470/(ND)/2019 is disposed of in terms of the aforesaid terms.
(B.S.V Prakash Kumar)
Acting Chairperson
(Hemant Kumar Sarangi)
Member (Technical)”.
It is the case of the appellant that the Febris Multispeciality Hospital was fully operational since July, 2017. The Hospital spread over 7 floors and having capacity of 150 beds. The said hospital with all installations of machines/equipments/facility were ready in all respect in July 2016. The registration of the said hospital was granted by the Directorate of Health Services. Since 2017 it was in full operation and able to generate business. However, on an application filed by the Financial Creditor, on an allegation of default in payment despite the account being declared as NPA, CIRP proceeding was initiated and by order dated 8.11.2019 NCLT appointed Mr. Aishwarya Mohan Gahrana as Interim Resolution Professional (hereinafter referred to as ‘IRP’) for Durha Vitrak Pvt Ltd, Respondent No.1 herein. The same IRP was
made Resolution Professional (hereinafter referred to as ‘RP’). After being appointed as IRP, Mr. Gahrana on 16.11.2019 took over the Corporate Debtor. As per the appellant at that time when IRP took over the Corporate Debtor it was generating a revenue of Rs.87 lakhs in the month of November, 2019. The appellant offered unconditional support to RP to continue the operation of the Hospital to maximise the value of the Corporate Debtor. In the Paper Book at Page 6 monthwise revenue of the Corporate Debtor is reflected in chart which is reproduced hereinbelow:
