NCLAT: Liquidation Proceedings Quashed On The Ground That Sole Decision Of Related Parties Financial Creditors Could Be Fatal For The Existence Of The Corporate Debtor
The Principal Bench of the National Company Appellate Law Tribunal at Delhi comprising of Justice A.I.S. Cheema and Justice V. P. Singh, quashed the liquidation proceedings against the Corporate Debtor- ‘INCAB Industries Limited and directed to appoint another IRP/ Resolution Professional in place while restoring the application u/S. 9 of the Insolvency Bankruptcy Code, 2016 to the NCLT. “An order for liquidation of corporate debtor based on the sole decision of related parties Financial Creditors could be fatal for the existence of the corporate debtor, cannot be sustained. It is also pertinent to mention that when the Constitution of the Committee of Creditors itself is found to be tainted, then the decision of that COC cannot be validated on the pretext of exercise of commercial wisdom.” The NCLT, Kolkata had initiated liquidation proceedings against the Corporate Debtor i.e. INCAB Industries Limited and the resolution was adopted on 5th December 2019 to liquidate the Corporate Debtor, thereby sabotaging the chances of revival of the Corporate Debtor and pushing the employees of the Corporate Debtor into an abyss with an uncertain future. It was contended by the Appellants that the Committee of Creditors consisted of Kamla Mills Private Limited and Fasqua Investment Private Limited, both were managed and owned by one of the Directors of the Corporate Debtor i.e. Mr Ramesh Ghamandiram Gowani, who had resigned from the management of the Corporate Debtor after the initiation of the Corporate Insolvency Resolution Process. The decision to liquidate the Corporate Debtor was taken with a majority of the entire Committee of Creditors and the said resolution was passed with an overwhelming majority of 90.83%.