Synchronise Scientific Glass Works Pvt. Ltd. Vs Martina Bio Genics Private Limited (NCLT Kolkata)
Conclusion: Section 7 insolvency application filed by State Bank of India (SBI) was admitted against Martina Bio Genics Private Limited and held that pending winding-up proceedings could not override the objective of corporate revival under the Insolvency and Bankruptcy Code, 2016 (IBC).
Held: The Corporate Debtor Martina Bio Genics had availed credit facilities from the Applicant State Bank of India, the said credit facilities had been reviewed, renewed and enhanced from time to time. Pursuant to such sanction, the Corporate Debtor had also executed security documents to secure the Loan sanctioned. The corporate debtor allegedly failed to comply with the repayment obligations which resulted in classification of the account as a Non-Performing Asset (NPA). The bank also issued notices under Sections 13(2) and 13(4) of the SARFAESI Act after the borrower defaulted on its repayment commitments. However, prior to the insolvency proceedings, winding-up petitions had been filed against the company before the Calcutta High Court under the Companies Act, 1956. High Court had passed winding-up orders and appointed the Official Liquidator. However, subsequent proceedings revealed that the Official Liquidator remained only in symbolic possession of the company’s assets and had not undertaken any effective steps for sale or realisation of assets. Arguing for admission of the petition, SBI argued that the principal objective of the IBC was revival and continuation of the corporate debtor rather than liquidation. It further submitted that winding-up proceedings may be transferred and treated as insolvency proceedings where no irreversible liquidation steps had been taken. It was held that Adjudicating Authority found that Applicant–Financial Creditor had successfully established the existence of a financial debt and the occurrence of default well beyond the statutory threshold prescribed under Section 4 of the Insolvency and Bankruptcy Code, 2016. The documentary evidence placed on record, including the sanction letters, loan documents, demand notices issued under the SARFAESI Act, 2002, and the material demonstrating continued non-payment by the Corporate Debtor, conclusively establish the debt and default. Further, upon a conjoint reading of Section 434 of the Companies Act, 2013, particularly the fifth proviso thereto, Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, and the law laid down by the Hon’ble Supreme Court in Forech India Ltd. v. Edelweiss Assets Reconstruction Co. Ltd., it was evident that this Adjudicating Authority was fully empowered to entertain and adjudicate the transferred winding-up proceedings as an application under Section 7 of the IBC. The legislative intent underlying the transfer provisions was to ensure that viable corporate debtors were dealt with under the comprehensive insolvency framework established by the Code rather than through parallel winding-up proceedings. Consequently, continuation of the winding-up proceedings before the Company Court would not advance the objective of value maximisation or resolution envisaged under the IBC. On the contrary, commencement of the Corporate Insolvency Resolution Process would serve the interests of all stakeholders by providing an opportunity for resolution of the Corporate Debtor as a going concern. Applying the principles laid down by the Hon’ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank Ltd., once the Adjudicating Authority is satisfied regarding the existence of a financial debt and the occurrence of default, admission of the application under Section 7 follows as a necessary consequence. No legal or factual impediment has been demonstrated which would warrant rejection of the application. Accordingly, the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted; Corporate Insolvency Resolution Process is initiated against the Corporate Debtor; moratorium under Section 14 of the Code is declared; and the Interim Resolution Professional is appointed to undertake the CIRP in accordance with law. The Official Liquidator attached to the Hon’ble High Court at Calcutta stands discharged and is directed to hand over all records, assets and possession of the Corporate Debtor to the Interim Resolution Professional forthwith.
1. I.A. (Companies Act) No. 76/2025
1.1 This I.A. is filed by the applicant claiming following relief-
a. This Hon’ble Tribunal may be pleased to initiate Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 of M/s. Martina Bio Genics Pvt ltd;
b. This Hon’ble Tribunal may be pleased to appoint Mr. Surya Kanta Satapathy having IBBI/IPA-001/IPP00598/2017-2018/11050 as the Interim Resolution Professional of the Corporate Debtor/ M/s. Martina Bio Genics Pvt ltd;
c. The Official Liquidator, High Court Calcutta be discharged as liquidator of Martina Bio Genics Private Limited and be directed to make over all documents, records and handover possession of all the movable and immovable properties of the Corporate Debtor to the incoming Interim Resolution Professional.
d. The provision for making compliant of Insolvency and Bankruptcy Code in TP No.26 of 2023 be dispensed with;
e. Such further Order/Orders and/or direction/directions be passed as this Hon’ble Tribunal may deem fit and proper;
2. Background of the case-:
2.1 The Corporate Debtor has availed credit facilities from the Applicant State Bank of India, the said credit facilities have been reviewed, renewed and enhanced from time to time and lastly on 04.02.2014. Pursuant to such sanction, the Corporate Debtor had also executed security documents to secure the Loan sanctioned.
2.2 Subsequently, the Corporate Debtor undertook to strictly adhere to the Terms & Conditions of the sanction as entered into by and between the Applicant and the Corporate Debtor respectively. The Corporate Debtor therein was mandated to repay the loan at an agreed interest rate or as per the RBI/ Bank’s Directives from time to time, according to the stipulated Terms and Conditions as envisaged in the sanction. Further under the sanctions the Corporate Debtor was mandated to repay the sum, but the Corporate Debtor has failed and/or neglected to make repayments of the principal debt and interest thereon in accordance with the Terms and Conditions as enshrined in the sanctions and thereby committed breach of the said sanctions extended by both the Assignor Banks respectively.
2.3 By reason of the failure and/or inability of the said company to repay the said credit facilities the account of the Company was classified as N.P.A on 28.03.2015 by the Applicant and the date of default is 28.12.2014. It is pertinent to note that in terms of the loan agreement, the State Bank of India and/or its Authorized Officer on or about 12.07.2016 issued a notice1 to the said Company and its guarantors under Section 13(2) of the SARFAESI Act 2002 indicating the dates on which the accounts of the said company had become NPA with each of the said banks. The Applicant had also thereafter, issued Notice under Section 13(4)(a) of SARFAESI Act 2002.
2.4 On the facts and circumstances more fully and particularly stated therein one Synchronise Scientific Glass Works Private Limited being the Petitioning Creditor had instituted Company Petition No 347 of 2015 against the Corporate Debtor under the Provisions of Section 433, 434 and 439 of the Companies Act, 1956 before the Hon’ble High Court of Calcutta praying inter alia that the Corporate Debtor be wound up. That another Petitioning Creditor being Manish Kumar Jajodia had also instituted Company Petition No 49 of 2016 against the Corporate Debtor under the Provisions of Section 433, 434 and 439 of the Companies Act, 1956 before the Hon’ble High Court of Calcutta praying inter alia that the Corporate Debtor be wound up.
2.5 Thereafter, the said C.P 49 of 2016 was admitted vide Order dated 10.03.2016 and C.P 347 of 2015 was admitted vide Order dated 04.01.2016 and the direction2 to wind up was passed by Order dated 26.09.2016 in CP No. 347 of 2015 and order dated 21.11.2016 in CP No. 49 of 2016.
3. Facts of the Case-:
3.1 Thereafter, the matters were heard by the Hon’ble High Court at Calcutta on 20.04.2017 and 12.09.2017. By the order dated 04.01.2017, the Official Liquidator was directed not to take possession of the assets and effects of the company (In Liquidation) provided the Corporate Debtor paid certain sums of money to the Petitioning Creditor and the Supporting creditor. By order dated 20.04.2017, the Corporate Debtor submitted that it is framing a payment schedule for payment of dues. The Official Liquidator was directed to continue to be in symbolic possession of the assets and the CD may carry its operations under the Official Liquidator. Thereafter, the corporate debtor committed default. By subsequent Order dated 12.09.2017 the Official Liquidator was directed to immediately ensure that security guards are employed to protect the assets of the CD. After several hearings, the respondent company has been able to formulate a payment schedule for payment of all petitioning creditors by instalment The Hon’ble High Court further clarified that this order3 would not prevent the company from making further payment to creditors in this intervening period.
3.2 That thereafter by an order dated 26.09.2022, the Hon’ble High Court at Calcutta, upon an application by the Applicant herein holding that the Hon’ble Court had no jurisdiction to entertain the matter directed that the said CP No. 347 of 2015 along with all connected applications to be transferred4 to this Learned Tribunal.
3.3 Its appears that the records the said C.P No. 347 of 2015 have been transferred to this Learned Tribunal and the same have been registered as TP/26(KB)2023. Such registration has been made on 30.03.2023. The said TP/26(KB)2023 appeared in the cause list of this Hon’ble Tribunal from time to time. It is pertinent to note that on 26.04.2023 when the said matter had appeared in the cause list of this Tribunal and was taken up for the first time, this Tribunal was pleased to direct the Registry to issue notice to the other Respondents by way of speed post and by email and file tracking information on record.
3.4 That on 29.09.2023 the learned advocate for the Official liquidator sought two weeks time to file status report.
3.5 The CD in the present case, was directed multiple times by the Hon’ble High Court to clear its dues and has failed to do the same. The 13(2) Notice issued by the Applicant also indicated the loan of the Respondent Company has been declared as NPA on 17.03.2013. As such, the debt and default stands established. Further, since the application has been filed by State Bank of India in respect of loan dues, the Applicant shall be deemed to be a ‘financial creditor’ within the meaning of section 5(7) of the Code and the instant petition shall be treated as a petition under section 7 of the Code. It may be noted that the account was restructured and NPA date backdated to 17.03.2013 which is the date of implementation of the plan, from the actual date of default which is on 28.03.2015 on account of failure of restructuring.
3.6 That the Official Liquidator has not taken any steps and/or actions to the extent the applicant is aware, the Factory Unit of the company/Corporate Debtor being Land situated within the local limits of Rajpur Sonarpur Municipality, West Bengal is still under the physical possession of the erstwhile directors as per Direction of the Hon’ble High Court and the same shall be evinced by the status report5 dated 17.10.2023 of the Official Liquidator, High Court at Calcutta.
3.7 Furthermore, the Applicant has conducted valuation of the properties of the Company and a valuation report has been prepared on 20.04.2023.
3.8 In complete dereliction and breach of its duties the official liquidator has failed and/or neglected to take appropriate steps to sell of the assets and properties of the said company (in liquidation). Having regard to the complete inaction of the official liquidator in the matter since the year 2016 it is just, proper and necessary that Corporate Insolvency Resolution Process of the Corporate Debtor is initiated.
3.9 That by dint of such Order passed by the Hon’ble High Court at Calcutta dated 26.09.2022 the Applicant is making this application before this Tribunal inter alia, seeking to initiate the Corporate Insolvency Resolution Process of the Corporate Debtor.
3.10 It is humbly submitted herein that the primary focus of the IBC, 2016 is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors.
3.11 It is further submitted herein that it is not the case that once a winding up petition is admitted, the winding up petition should trump any attempt at revival of the company through a Section 7 or Section 9 petition under the IBC. The use of the term “nothing irreversible in judgement passed by the Apex Court in the case of Action Ispat and Power Pvt. Ltd. v. Shyam Metalics and Energy Ltd., 2020 SCC OnLine SC 1025 inevitable and unambiguously connotes that the intent to transfer a winding up petition to the NCLT is to resuscitate the Corporate Debtor as long as no irreversible step has been taken by the Official Liquidator as there exists all and/or every hope to bring the Corporate Debtor back on its feet and reinvigorate the Corporate Debtor.
3.12 Furthermore, in the judgement of A Navinchandra Steels Pvt Ltd -vs- SREI Equipment Finance Limited & Ors has been observed by the Hon’ble Apex Court that, given the object of the IBC as delineated in the judgement of Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17, it is clear that the IBC is a special statute dealing with revival of companies that are in the red, winding up only being resorted to in case all attempts of revival fail.
3.13 It is pertinent to mention herein that the proceedings for winding up of a company are actually proceedings in rem to which the entire body of creditors is a party. The proceeding might have been initiated by one or more creditors, but by a deeming fiction the petition is treated as a joint petition. Therefore, apropos the same, the Applicant Bank intends to make this instant application before this Hon’ble Tribunal under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016 in T.P. No 26 of 2023.
3.14 The present claim of the Applicant against the Corporate Debtor is Rs. 178,05,45,766.81/-as on December 2024 which is within the stipulated threshold limit. Furthermore, as far as the applicant is aware, the applicant bank is the highest stake holder and only secured creditors and as such proposes the name of Mr. Surya Kanta Satapathy having IBBI Registration No. IBBI/IPA-001/IP-P00598/2017-2018/11050 to act as the Interim Resolution Professional (IRP) of the Corporate Debtor in terms of the Insolvency and Bankruptcy Code 2016. The said Mr.Surya Kanta Satapathy has given his consent in writing. A copy of the statement of accounts duly certified by the Financial Creditor under the Information Technology Act, 2000 and the Bankers Book of Evidence Act 1891 and the Form 2 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 along with the authorization for assignment and certificate of registration is annexed6 herewith.
4. Findings & Analysis-:
