NCLT New Delhi: Orders Liquidation of M/s. Hema Automotive Pvt. Ltd. under Section 33 of IBC

NCLT New Delhi: Orders Liquidation of M/s. Hema Automotive Pvt. Ltd. under Section 33 of IBC

The National Company Law Tribunal (NCLT), Delhi by its division member bench of Bachu Venkat Balram Das (Judicial Member) and Rahul Bhatnagar (Technical Member) ordered the liquidation of the Corporate Debtor, namely M/s. Hema Automotive Pvt. Ltd.

In the present case the, Operational Creditor- M/s. Five Ess Precision Components Pvt. Ltd had filed an application under Section9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as Code) for initiation of Corporate Insolvency Resolution Process (CIRP), against the Corporate Debtor.

The said application was admitted by this Tribunal on 8 July, 2022, thereby initiating CIRP against the Corporate Debtor and therein, appointing Mr. Vivek Sharma as the Interim Resolution Professional (IRP).

That based upon the unanimous resolution passed by the 3rd Committee of Creditors (COC) meeting of the Corporate Debtor, consisting of sole Financial Creditor i.e., Hero Fincorp Limited (an NBFC company), the Applicant/ Resolution Professional had earlier filed an application under section 33(2) read with Section 34 of the Code before this Tribunal.

the Tribunal vide its Order dated 23 November, 2022 directed the COC to “reconsider” the Liquidation application as the same had been recommended before the elapse of time period for seeking Expression of Interest.

In accordance with the directions of the Tribunal, the matter was duly reconsidered at the 4th COC meeting of the Corporate Debtor held on 7 December, 2022, wherein post examining the Order of this Tribunal dated 23 November, 2022, the COC (with Hero Fincorp Ltd being sole member) with 100% voting, directed the RP to file the fresh application re-seeking liquidation of the Corporate Debtor as the Corporate Debtor has not been a Going Concern since last two years before the initiation of CIRP proceedings via Order of this Tribunal dated 8 July, 2022 and the entire Machinery of the Corporate Debtor had already been realized by Hero Fincorp Ltd.(Financial Creditor, also being sole member of COC) before the commencement of the CIRP proceedings, under SARFAESI Act, 2002.

Therefore, it was submitted that the CoC shall only be incurring additional costs under CIRP process.

The NCLT highlighted that it is a well settled position that decision taken by CoC for liquidation in commercial wisdom of the CoC should not be interfered with by the Adjudicating Authority.

While averting to the present case, the NCLT opined that extension of time will only result in unnecessary expenses. Further the resolution for liquidation of CD was approved by COC with 100% voting. Therefore, the bench saw no merit in interfering with the commercial wisdom of the COC.

Accordingly, the NCLT allowed the application by ordering liquidation of the Corporate Debtor, namely M/s. Hema Automotive Pvt. Ltd.