Mumbai NCLT allows initiation of liquidation process of  Bombay Stock Exchange-listed company, NFPIL

The National Company Law Tribunal (NCLT), Mumbai allowed initiation of liquidation process of  Bombay Stock Exchange-listed company, M/s Nitin Fire Protection Industries Limited (NFPIL).

Background 

The applicant mentioned that the tribunal in Company Petition admitted the petition under Section 7 of the Code, filed by Dena Bank (“Financial Creditor”) and Corporate Insolvency Resolution Process (“CIRP”) was initiated against M/s Nitin Fire Protection Industries Limited, (“Corporate Debtor”). The applicant herein was appointed as the Interim Resolution Professional (“IRP”) of the Corporate Debtor by this Tribunal.

Arguments

The Applicant contended that as there was no Resolution Plan for the Corporate Debtor and Statutory Period of 270 days had also expired. Therefore, the Corporate Debtor should be ordered and directed to be liquidated under the provisions of Section 33 (1) (a) of the Code. 

Decision 

The two member bench of Justice H.V. Subba Rao and Mr. Chandra Bhan Singh observed that the CoC has with 97.58% majority decided to liquidate the Corporate Debtor, the CoC also approved the Liquidation Cost of the Applicant /Resolution Applicant of Rs. 2,21,75,000/- with a cap on remuneration of upto Rs. 45 lacs in the above mentioned meeting. Further the Applicant/ Resolution Professional Mr. U. Balakrishna Bhat has agreed to act as liquidator to carry on the process of Liquidation and given his consent to act as Liquidator. This bench has no option except to allow the above Miscellaneous Application.

The tribunal ordered that the Corporate Debtor M/s Nitin Fire Protection Industries Limited to be liquidated and appointed Mr. U. Balakrishna Bhat as a liquidator.

The tribunal further ordered that the Liquidator for conduct of the liquidation proceedings would be entitled to the fees as provided in Regulation 4(2)(b) of the IBBI (Liquidation Process Regulations), 2016. The Liquidator appointed under section 34(1) of the Code, will have all powers of the board of directors, key managerial personnel and the partners of the Corporate Debtor, as the case may be, shall cease to have effect and shall be vested with the liquidator.

The Corporate Debtor to be liquidated in the manner as laid down in the Chapter by issuing Public Notice stating that the Corporate Debtor is in liquidation with a direction to the Liquidator to send this order to the ROC under which this Company has been registered; on having liquidation process initiated, subject to Section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor save and except the liberty to the liquidator to institute suit or another legal proceeding on behalf of the Corporate Debtor with prior approval of this Adjudicating Authority.

Lastly the court ordered that this liquidation order shall be deemed to be a notice of discharge to the officers, employees and workmen of the Corporate Debtor except to the extent of the business of the Corporate Debtor continued during the liquidation process by the Liquidator.

Case title: Dena Bank v/s M/s Nitin Fire Protection Industries Limited 

Citation: M.A. 2727 OF 2019

Click here to read the Order/Judgment