CoC decision to liquidate accepted as Corporate Debtor has no assets: NCLAT Delhi

Amrit Rajani Vs Pegasus Assets Reconstruction Private Limited (NCLAT Delhi)

NCLAT Delhi held that CoC decision to liquidate the Corporate Debtor is acceptable as corporate debtor has no assets and thus CIRP Period only implies zero returns. Thus, adjudicating authority order accepting liquidation upheld.

Facts- M/s Pegasus Assets Reconstruction Private Limited, the Financial Creditor, is the Respondent No. 1 herein, who filed an application u/s. 7 of the Code for initiating Corporate Insolvency Resolution Process (‘CIRP’) against Shri Balaji Entertainments Pvt Ltd (“Corporate Debtor”) and Respondent No. 2.

The Appellant submitted that on 18.05.2021, Respondent No. 1 filed Company Petition u/s. 7 of the Code against the Corporate Debtor which was admitted by the Adjudicating Authority and Mortarium was declared. The Appellant submitted that, through the Impugned Order dated 03.02.2023, the Adjudicating Authority allowed the application of the Resolution Professional and appointed a liquidator, following just four meetings of the Committee of Creditors (‘CoC’), which unanimously resolved to liquidate the Corporate Debtor with a 100% vote.

Notably, Pegasus Asset Reconstruction Private Limited – amount claimed: – 40,67,84,523/- and NKGSB Co-operative Bank Limited – amount claimed – 10,78,93,356/-. The Appellant submitted that the entire amount claimed had been treated as admitted by the Interim Resolution Professional without any details being provided regarding the verification process. The Appellant contended that the Interim Resolution Professional has demonstrated gross negligence by failing to make any effort to verify or scrutinize the said claims to assess their veracity. The Appellant submitted that the Interim Resolution Professional, upon receiving the order of his appointment, was fully aware of the contest raised by the Appellant before the Adjudicating Authority and yet neglected to undertake a thorough examination of the claims of the Financial Creditors.