Case Note & Summary
This case arose from an appeal against an order of the National Company Law Appellate Tribunal (NCLAT) dated 8 September 2020, which upheld the liquidation of Tecpro Systems Limited under the Insolvency and Bankruptcy Code, 2016 (IBC). The appellant, Kridhan Infrastructure Pvt Ltd (now known as Krish Steel and Trading Pvt Ltd), submitted a Resolution Plan that was approved by the Committee of Creditors (CoC) on 8 March 2019 and by the National Company Law Tribunal (NCLT) on 15 May 2019. However, the appellant failed to fulfill its obligations under the plan, including a required equity infusion, leading the CoC to vote for liquidation on 11 November 2019. The NCLT allowed the liquidation to proceed on 16 January 2020, a decision that was later upheld by the NCLAT. The appellant sought to appeal this decision, claiming it was willing to deposit Rs 50 crores to comply with the Resolution Plan. The Supreme Court granted the appellant an opportunity to demonstrate its bona fides by depositing the amount by 10 January 2021, which was later extended to 25 February 2021. Despite these extensions, the appellant failed to make the required deposit, leading to the dismissal of the appeal. The court noted that the appellant's inability to raise funds was linked to its status as a company under liquidation, which was unacceptable. The court emphasized the importance of timely compliance with the IBC and the need for good faith efforts in resolving corporate insolvencies. Ultimately, the appeal was dismissed, and the management was reverted to the liquidator for further action.
Headnote
A) Insolvency Law - Corporate Insolvency Resolution Process - Compliance with Resolution Plan - Insolvency and Bankruptcy Code, 2016, Section 33 - The appellant failed to implement the Resolution Plan despite multiple opportunities, leading to the approval of liquidation by the NCLT and upheld by the NCLAT. The court emphasized that liquidation should be a last resort and directed the appellant to deposit Rs 50 crores to demonstrate bona fides (Paras 1-10).
Issue of Consideration
Whether the appellant's failure to comply with the Resolution Plan justified the order of liquidation.
Final Decision
The Supreme Court dismissed the appeal, emphasizing the appellant's failure to comply with the terms of the Resolution Plan and the need for timely action under the IBC. The management was reverted to the liquidator for further proceedings.
Law Points
- Corporate insolvency resolution process
- Liquidation
- Insolvency and Bankruptcy Code
- 2016
- Compliance with Resolution Plan
- Forfeiture of deposits
