WHETHER INTERIM RESOLUTION PROFESSIONAL CAN CONSTITUTE THE COMMITTEE OF CREDITORS WITH A SINGLE OPERATIONAL CREDITOR?
In the present case, vide Order dated 20.01.2019, the National Company Law Tribunal, Chennai Bench (“NCLT”), initiated the Corporate Insolvency Resolution Process (“CIRP”) of M/s H.G S Diaries and Argo Limited (“Corporate Debtor”) and the Interim Resolution Professional (“IRP”) was appointed. Subsequently, the IRP discovered from the Master Data of the Corporate Debtor that on 02.02.2020 the Corporate Debtor was struck off by the Registrar of Companies for non-filing of returns. Further, only one claim was filed by an Operational Creditor in pursuance to the public announcement made by the IRP.
Pursuant thereto, the IRP filed an application under section 60(5) of the Code before the NCLT seeking dismissal of the CIRP proceedings of the Corporate Debtor. The NCLT was of the view that the IRP did not take enough steps in the CIRP proceedings of the Corporate Debtor. Therefore, vide Order dated 06.12.2021, the NCLT dismissed the aforementioned application and directed the IRP to constitute the Committee of the Creditors (“CoC”) with the sole Operational Creditor. The NCLT further directed the IRP to restore the name of the Corporate Debtor Company under section 252 of the Companies Act, 2013.
Aggrieved by the Order dated 06.12.2021, the IRP filed an appeal before the National Company Law Appellate Tribunal, Chennai Bench (“NCLAT”)
DECISION OF THE NCLAT
The NCLAT held that there is no provision in the Insolvency and Bankruptcy Code, 2016 (“Code”) for the IRP to constitute the COC with a single operational creditor, hence the NCLT erred in directing the constitution of the CoC with a single operational creditor.
Furthermore, in light of the fact that the company was struck off and a single claim was received from an operational creditor, the NCLT erred in directing the IRP to continue with the CIRP proceedings of the Corporate Debtor.
In light of the above, the Hon’ble NCLAT allowed the appeal filed by the IRP, and the Order dated 06.12.2021 passed by the NCLT was set aside and therefore, the Corporate Debtor was released from the rigors of CIRP.
Reference: V. Duraisamy IRP of M/s. H G S Diaries and Agro Ltd. Vs. Jeyapriya Fruits and Vegetables Commission Agent [Company Appeal (AT)(CH)(Ins) No.25/2022]