IN THE NATIONAL COMPANY LAW TRIBUNAL,
DIVISION BENCH – I, CHENNAI
IA/1215/CHE/2021 in CP/699/IB/2017
(filed under Section 35(1)(n) r/w Section 60(5) of the Insolvency & Bankruptcy Code, 2016 and Regulation 32(e) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 r/w
Rule 11 of the NCLT Rules, 2016)
In the matter of Gemini Communication Limited
M.S. Viswanathan, Liquidator of Gemini Communication Limited, 15/35, Musafer Jung Bahadur Street, Triplicane, Chennai – 600 005.
Applicant/Liquidator
-VS Pixtronic Global Technologies Pvt. Ltd, 122A, CASA Grande Pavilion, Thalambur, Chennai – 603 103.
… Successful Auction Purchaser/Respondent
Along with
IA/1280/CHE/2021 in CP/699/IB/2017
(filed under Rule 11 of the NCLT Rules, 2016)
In the matter of Gemini Communication Limited
M.S. Viswanathan, Liquidator of Gemini Communication Limited, 15/35, Musafer Jung Bahadur Street, Triplicane, Chennai – 600 005.
… Applicant/Liquidator
Order pronounced on 15th February, 2022
CORAM: R. SUCHARITHA, MEMBER (JUDICIAL) SAMEER KAKAR, MEMBER (TECHNICAL).
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For Applicant For Respondent
: Mr. R. Venkatavaradan Advocate : Mr. B. Gopinath
COMMON ORDER
Per: R. SUCHARITHA, MEMBER (JUDICIAL)
IA/1215/2021 is an application filed by the Liquidator of
Gemini Communications Limited under section 35(1)(n) read with
60(5) of the IBC, 2016 and Regulation 32(e) of the IBBI (Liquidation
Process) Regulations, 2016 seeking relief as follows;
a. To approve the sale of Corporate Debtor as going
concern in accordance with the relief as sought set out in paragraph 16 of this application.
b. To pass such other orders as it deems fit in the above
circumstances of the case and thus render justice.
2.
IA/1280/2021 is an application filed by the Liquidator of
Gemini Communications Limited under Rule 11 of NCLT Rules, 2016
seeking relief as follows;
a. To condone the delay in distribution of the proceeds
immediately of the realization of the Corporate Debtor within 90 days, which ends on 22.12.2021.
b. To grant further time for distribution of the proceeds
immediately upon the disposal of the applications filed by the Applicant seeking approval of the modified list of stakeholders numbered as IA/1168/2021 and the application seeking approval of the sale of the Corporate Debtor as a going concern numbered as IA/1215/2021
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3. The Corporate Insolvency Resolution Process in respect of the Corporate Debtor was ordered by this Tribunal vide order dated 20.06.2018 and one Aishwarya Mohan Gahrana was appointed as
Interim
Resolution Professional. Since no Resolution Plan was
received during the CIRP, based upon an Application filed by the RP,
this Tribunal vide its order dated 26.02.2019 passed in MA/139/2019
has ordered for Liquidation in respect of the Corporate Debtor and
appointed one Mr. S. Kasi Viswanathan as the Liquidator. Since the
said Mr. S. Kasi Viswanathan has expressed his inability to continue as the Liquidator, the Applicant herein was appointed as the Liquidator in respect of the Corporate Debtor on 20.02.2020.
4.
It is averred in the Application that after appointment of the
Applicant herein as the Liquidator in respect of the Corporate Debtor,
the Applicant had published an advertisement in ‘Business Standard
(English) and ‘Makkal Kural’ (Tamil) on 22.02.2021 to sell the
Corporate Debtor inter alia as a “going concern” in one lot and also
to sell the other assets of the Corporate Debtor in other individual
lots through an e-auction which was conducted on 10.03.2021.
However, it was submitted that no bidders participated in the said
e-auction.
5.
Thereafter, it was submitted that another e-auction notice was
published on 30.03.2021 by fixing the date as 16.04.2021. In the
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said e-auction, one M/s. Pixtronic Global Technologies Private
Limited participated as a sole bidder for Lot 1 and emerged as a
successful bidder for a bid amount of Rs.3,55,61,750/-. It was submitted that in pursuance of the same, the successful bidder
remitted the 15% of the bid amount on 19.04.2021 and together
with EMD, the successful bidder deposited 25% of the bid amount.
6.
In the meantime, it is seen that the success bidder has filed
an Application before this Tribunal under Regulation 47A of the IBBI
(Liquidation Process) Regulations, 2016 seeking exclusion of time
for payment of the balance amount. This Tribunal vide its order
dated 14.09.2021 passed in IA/632/CHE/2021 has granted a 90 day
extension for the successful bidder to pay the balance amount, i.e. on or before 24.09.2021. In pursuance of the same, it was submitted that the successful bidder has paid the balance sum of
Rs.2,66,71,312/– to the Liquidator on 23.09.2021 within the time
stipulated by this Tribunal. Also, the Applicant has issued a Sale
Certificate dated 15.10.2021 to the successful bidder for the sale of
the Corporate Debtor as a going concern.
7.
It is averred in the application that as on 30.09.2021, a sum
of Rs.3,67,53,569/– is lying in the Liquidation account of the
Corporate Debtor which will be distributed amongst the stakeholders
as per the waterfall mechanism as stipulated under Section 53 of
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IBC, 2016. Further, it was submitted that there are receivables due
to be paid to the Corporate Debtor which are yet to be recovered by
the Applicant to the Liquidation Estate of the Corporate Debtor.
8.
It is further averred that Applications viz. MA/127/2019 and
MA/1181/2019 filed by the erstwhile RP under Section 66 of IBC,
1
2016 is pending adjudicating before this Tribunal. Also, it was
submitted that the Corporate Debtor has accounts in various banks
which are attached by the EPFO and ESI authorities and the
Applicant is currently in correspondence with the said banks and other institutions to recover the money from those accounts and
transfer the same to the Liquidation account.
9.
Under such circumstances, the present Application has been
filed by the Liquidator under Regulation 32(e) of the IBBI
(Liquidation Process) Regulations, 2016 seeking approval from this
Tribunal for sale of the Corporate Debtor as a going concern.
10. Heard the submissions made by the Learned counsel for the
Liquidator and Learned Counsel for the successful bidder. It is seen
that the Liquidator has already sold the Corporate Debtor as a going
concern to the Respondent herein and has filed this approval seeking
approval of the same.
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11.
In so far as Sale as a going concern is concerned, the term
‘going concern’ means all such assets and the liabilities, which constitute an integral business or the Corporate Debtor, that must
be transferred together, and the consideration must be for the
business or the Corporate Debtor. The buyer of the assets and
liabilities should be able to run business without any disruption.
12.
There are two going concern sales defined under Regulation
32 of IBBI (Liquidation Process) Regulations, 2016. The first one
pertains to Sale of “Corporate Debtor as a going concern” under Regulation 32(e) and sale of “Business of Corporate Debtor as a
going concern” under Regulation 32(f).
13.
In the sale of “Corporate Debtor as a going concern” under
Regulation 32(e) of IBBI (Liquidation Process) Regulations, 2016 the
Corporate Debtor will not be dissolved. In this part of sale, the entire
business, assets and liabilities, including all contracts, licenses,
concessions, agreements, benefits, privileges, rights or interests of
the Corporate Debtor will be transferred to the acquirer. The existing
shares of the Corporate Debtor will not be transferred and shall be
extinguished.
14. In the sale of “Business of Corporate Debtor as a going concern” under Regulation 32(f) of IBBI (Liquidation Process)
Regulations, 2016, the entire business(s) along with assets and
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liabilities, including intangibles, will be transferred as a going
concern to the acquirer, without transfer of the Corporate Debtor,
and therefore, the Corporate Debtor will be dissolved. The existing
shares will be extinguished. The remaining assets, other than those
sold as part of business will be sold and the proceeds thereof will be
used to meet the claims under Section 53 of IBC, 2016
15. Sale of a Company as a ‘Going Concern’ means sale of both assets and liabilities, if it is stated on ‘as is where is basis’. The Hon’ble NCLAT in the matter of M/s. Visisth Services Ltd. Vs. Mr.
S. V. Ramani, Liquidator of United Chloro-Paraffins Pvt.
Ltd. Company Appeal (AT)(Ins) No. 896 of 2020 held that as per Regulation 32A of the IBBI (Liquidation tProcess) Regulations, 2016
the Sale as a ‘Going Concern’ means sale of assets as well as liabilities and not assets sans liabilities. We conclude that Sale of a
Company as a ‘Going Concern’ means sale of both assets and
liabilities, if it is stated on ‘as is where is basis’.
16.
The present Application has been filed under Regulation 32(e)
of IBBI (Liquidation Process) Regulations, 2016 seeking approval for
sale of the “Corporate Debtor as a going concern”. Apart from the above, the Liquidator has also sought for certain relief and concession, which is set out in para 16 of the Application. These
relief are ordered as follows;
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RELIEF | CONCESSIONS SOUGHT FOR
ORDERS THEREON
SL. No.
The rights and title and interest in whole and every part of the Corporate Debtor including but not limited to intellectual property rights continue to vest in the Corporate Debtor and furthermore the assets, rights, titles and interest of the Corporate Debtor shall become free from charges, security interest, claims and counter claims.
Granted, subject to the provisions of IBC, 2016 and other Applicable
laws
2.
All permits, licenses, copyrights, trademarks or other statutory rights shall remain vested with the Corporate Debtor as it is being sold as a going concern
Granted, subject to the provisions of IBC, 2016 and other Applicable
laws
Granted, subject to the provisions of IBC, 2016 and other Applicable
laws,
Issuance of equity shares or any other security / investment of the Corporate Debtor on or after the effective date and the same shall be subscribed and allotted to the successful bidder or any of its nominee in lieu of the “Liquidation Sale Amount” received by the Liquidator in the Liquidation account of the Corporate Debtor. Further that, no further approval should be required under Companies Act, 2013 or SEBI Regulations, however, procedural compliances, if any, in terms of SEBI Regulations or listing agreement with the respective stock exchange in relation thereto shall be done by the Liquidator / Successful Auction Bidder.
That the Auction purchaser shall be entitled to Granted, subject reconstitute the existing share capital held by the to the provisions promoters / their associate concerns and non- of IBC, 2016 and public shareholders including Institutional other Applicable shareholdings and the existing public shareholding laws. & shareholding pattern in the Corporate Debtor in accordance with the norms and relevant guidelines of SEBI and / or IBBI and any other applicable law.
That the Board of Directors of the Corporate Debtor Granted, subject would be reconstituted by removing the erstwhile to the provisions board of Directors as existing on effective date and of IBC, 2016 and appointment of new Board of Directors nominated by the Successful Auction Bidder subject to the
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affidavit and undertaking that none of such other Applicable directors of Board of Directors are disqualified laws under Section 29A of IBC, 2016
That the Registrar of Companies to change the status of the Corporate Debtor in its records from the effective date as “Active” from the status of “under Liquidation”.
Granted
Granting exemption to the Corporate Debtor from the use of the work “and reduced” in its name as required under the provisions of Companies Act, 2013
Granted
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That the charges registered with concerned RoC in respect of encumbrances over the assets of the Corporate Debtor shall stand satisfied and vacated.
Granted, subject to the provisions of IBC, 2016 and other Applicable
laws
9
To satisfy the charges on secured assets in the Granted in terms records of RoC and other statutory and regulatory of the judgment authorities, if any, from the effective date. The of the Hon’ble Liquidator / successful auction bidder shall do Supreme Court in necessary filings and comply with procedural Ghanashyam formalities in this regard as per the provisions of | Mishra and Sons the Companies Act, 2013 or under other relevant v. Edelweiss statutes, if any.
Asset Reconstruction Company Limited.
2021 SCC Online
SC 313
10
That all claims of the Corporate Debtor against third Granted in terms parties and its related parties, shall remain of the judgment outstanding, due and recoverable in accordance of the Hon’ble with their respective terms. Corporate Debtor / Supreme Court in successful bidder shall have full right to recover / Ghanashyam proceed against the party, whose account is Mishra and Sons recoverable in the books of the Corporate Debtor v. Edelweiss as on the Effective Date.
Asset Reconstruction Company Limited.
2021 SCC Online
SC 313
11
All liabilities and guarantees extended by the Corporate Debtor whether monetary or non-
Granted, subject to the provisions
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of IBC, 2016 and other Applicable
laws
monetary, statutory, crystallized or not crystallized, claimed or not claimed, admitted or not admitted, disputed or undisputed, confirmed or contingent or due or overdue or future due, decrees obtained for satisfaction of debt and all such obligations of the CD shall stand extinguished and discharged in full without any recourse to the CD.
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Allowed, subject to the provisions
of IBC, 2016
That successful auction bidder shall have a right to review and terminate any contract that was entered into prior to the commencement of CIRP during the time of CIRP / Liquidation process of the Corporate Person in accordance with the terms and conditions specified in such contract.
To issue directions to the banks to change the operating signatories of bank account of the Corporate Debtor on or after the effective date for smooth transition of the Corporate Debtor to the successful bidder.
This is for the
appropriate authorities to
consider
The liabilities, if any, arising out of non-compliance of provisions of any laws, rules, regulations, directions, notifications, circulars, guidelines, policies, licenses, approvals, consents or permissions prior to effective date shall stand extinguished for the successful auction bidder and the same shall be settled by the Liquidator in accordance with the provisions of Section 53 of IBC, 2016
Allowed, subject to the provisions
of IBC, 2016
The successful auction bidder / Corporate Debtor Granted in terms shall not be held responsible / liable for any past of the judgment liabilities of the Corporate Debtor in enquiries, of the Hon’ble investigations, assessments, notices, criminal Supreme Court in cases, civil cases, suits, claims, disputes, Ghanashyam litigations, arbitrations or other judicial, regulatory, Mishra and Sons administrative proceedings or in relation to or in v. Edelweiss connection with the Corporate Debtor prior to Asset effective date.
Reconstruction Company Limited.
2021 SCC Online
SC 313
16
| The successful auction bidder shall not be liable for any action / responsibility of the Corporate Debtor or its erstwhile management as per provisions of Section 32A of IBC, 2016.
Granted
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As regards to carry forward of losses under the Income Tax Act, 1961, we hold that the Corporate Debtor under the new management under Section 79(2) of the Income Tax Act, 1961 would have to approach he concerned Income Tax Authority who may grant such relief, as permissible under law. The Corporate Debtor must be allowed to carry forward and set-off depreciation and losses under applicable provisions of Income Tax Act 1961 notwithstanding the change in the shareholding pattern of the Corporate Debtor.
This is for the
appropriate authorities to
consider
The Auction purchaser shall enter in their books of account to give effect to the transaction entered into and executed for the purpose of sale of the Corporate Debtor as a going concern.
Allowed, subject to the provisions
of IBC, 2016
Liquidator to provide all support and assistance to the successful auction bidder for smooth implementation of sale of Corporate Debtor as a going concern.
Granted
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The rating agencies like CRISIL, CIBIL., etc., must be informed by the Auction purchaser to delete all negative ratings for the CD and not to consider them as defaulters.
Granted
All liabilities and guarantees extended by the Granted in terms Corporate Debtor whether monetary or non- of the judgment monetary, statutory, crystallized or not of the Hon’ble crystallized, claimed or not claimed, admitted or Supreme Court in not admitted, disputed or undisputed, confirmed or Ghanashyam contingent or due or overdue or future due, decrees Mishra and Sons obtained for satisfaction of debt and all such
Edelweiss obligations of the CD shall stand extinguished and Asset discharged in full without any recourse to the CD Reconstruction
Company Limited.
V.
2021 SCC Online
SC 313
22
That
| That no liability shall arise out o all or any notices Granted in terms issued by or pending proceedings before any of the judgment judicial, quasi – judicial, administrative, tax or any of the Hon’ble regulatory body or local authority against the Supreme Court in Corporate Debtor, whatsoever to the Corporate Ghanashyam Debtor or the successful bidder on or after the Mishra and Sons effective date.
Edelweiss Asset
V.
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Reconstruction Company Limited.
2021 SCC Online
SC 313
23
All proceedings initiated against the Corporate Granted in terms Debtor for recovery of monies by the claimants of the judgment including the Secured Creditors and those who did of the Hon’ble not file their claims with the Liquidator shall stand Supreme Court in dismissed and extinguished.
Ghanashyam Mishra and Sons v. Edelweiss Asset Reconstruction Company Limited.
2021 SCC Online
SC 313
24
All liabilities or debt whether crystalized, Granted in terms contingent, filed, not filed, admitted or not of the judgment admitted by the Liquidator, disputed or undisputed of the Hon’ble or otherwise including those pertaining to statutory Supreme Court in dues and penalties shall be deemed as having been Ghanashyam fully discharged in accordance with the provisions Mishra and Sons of the Code and the Corporate Debtor and the v. Edelweiss successful bidder shall not be liable for the same. Asset
Reconstruction Company Limited.
2021 SCC Online
SC 313
That all Creditors of the Corporate Debtor are to discharge and hand over all agreements, securities, instruments, collateral and third-party guarantees provided to them for the facilities they had extended to the Corporate Debtor.
Granted, subject to the provisions of IBC and other Applicable laws
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The successful auction bidders / CD shall not be Granted in terms held responsible / liable for any past liabilities of of the judgment the Corporate Debtor in enquiries, investigations, of the Hon’ble assessments, notices, criminal cases, civil cases, Supreme Court in suits, claims, disputes, litigations, arbitrations or Ghanashyam other judicial, regulatory, administrative Mishra and Sons proceedings or in relation to or in connection with v. Edelweiss the Corporate Debtor prior to effective date.
Asset
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Reconstruction
Company Limited.
2021 SCC Online
SC 313
The Liquidator shall execute any further document in order to complete the sale of the Corporate Debtor as a going concern in all respects and requirements with the said purchase company.
Granted
17.
Thus, the Application filed by the Liquidator for sale of
“Corporate Debtor as a going concern” stands allowed. The
Liquidator, after distributing the proceeds to the stakeholders as per Section 53 of IBC, 2016 may file an Application under Regulation
45(3) of the IBBI (Liquidation Process) Regulations, 2016 for closure
of Liquidation process.
18. In so far as IA/1280/2021 is concerned, it is averred that the
Liquidator has received the entire Sale consideration on 23.09.2021 and within a period of 90 days the Liquidator is required to distribute
the same to the stakeholders. However, it is averred that the
Liquidator is unable to distribute the sale proceedings for the reason
that the approval of the modified list of stakeholders in
IA/1168/2021 is pending before this Tribunal. Thus, for the
aforestated reasons, the delay is hereby condoned and the Liquidator is directed to distribute the sale proceeds to the stakeholders, within a period of 30 days from the date of the order
approving the modified list of stakeholders.
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18.
With the above said directions, both the Application stands
allowed.
-sd SAMEER KAKAR MEMBER (TECHNICAL)
-sd R. SUCHARITHA MEMBER (JUDICIAL)
Hier vernuwivinu,
Raymond
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