NCLT Bengaluru Orders Liquidation Under Section 33 of IBC Due to Absence of Claims

NCLT Bengaluru Orders Liquidation Under Section 33 of IBC Due to Absence of Claims

Introduction

The National Company Law Tribunal (NCLT), Bengaluru Bench has ordered the liquidation of a corporate debtor under Section 33 of the Insolvency and Bankruptcy Code (IBC) due to the complete absence of claims from both financial and operational creditors.

Factual Background

The application was filed under Section 33(2) of the IBC by the Interim Resolution Professional (IRP), seeking initiation of liquidation proceedings. The applicant submitted that no claims were received from financial or operational creditors, and that the only claims submitted were from the petitioners themselves, who were directors and related parties. Given these circumstances, the applicant argued that continuing the Corporate Insolvency Resolution Process (CIRP) and constituting a Committee of Creditors (CoC) would serve no useful purpose.

Procedural Background

During the CIRP, the IRP invited claims from all creditors. Despite repeated reminders, no claims were received from operational creditors, and financial creditors failed to submit any claims. Additionally, the suspended board did not provide the necessary documents for verification, rendering it impossible to constitute the CoC.

Faced with these obstacles, the IRP filed the present application seeking liquidation of the corporate debtor under Section 33 of the IBC.

Issues Considered

1. Absence of Claims – Whether the complete lack of claims from financial and operational creditors, combined with the inability to form the CoC, justified terminating the CIRP.

2. Liquidation Under Section 33 – Whether such circumstances warranted ordering liquidation directly under Section 33 of the IBC.

Contentions of the Parties

• Applicant’s Contentions: No claims were received against the corporate debtor from any genuine financial or operational creditors. The applicant maintained that continuing the CIRP without claims would be futile and a waste of judicial and administrative resources.
• Counter Contentions: No counter-arguments were recorded in the order.

Reasoning & Analysis

The coram of Shri Sunil Kumar Aggarwal (Judicial Member) and Shri Radhakrishna Sreepada (Technical Member) observed that:

• No claims were filed by operational creditors.
• Financial creditors did not file claims despite reminders.
• The suspended board failed to provide documents for claim verification.

Citing the precedent Sarthak Gupta & Dolly Gupta v. MLP Developers and Promoters Pvt. Ltd, the Tribunal held that proceeding with the CIRP in such circumstances served no purpose. It therefore treated the application under Section 33(1) of the IBC and ordered liquidation.

Outcome

The NCLT allowed the application and ordered liquidation of the corporate debtor under Section 33(1) of the IBC.

In this case, the applicant was represented by Shri Shrinath Bhat, Advocate.