# In the matter of CLS Enterprises Pvt. Ltd. IA No. 597-2020 in CP (IB)572-NCLT-AHM-2019

> NCLT judgment dated 2020-09-29. Citation: TCN-2020-NCLT-00494. The case pertains to an application filed under Section 33(1), 33(2), and 34(1) of the…

- **Court:** NCLT
- **Order date:** 29 Sept 2020
- **Citation:** TCN-2020-NCLT-00494
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/cls-enterprises-pvt-ltd-ia-no-597-2020-in-cp-ib572-nclt-ahm-2019-5fe24c5e

## Summary

### Background

The case pertains to an application filed under Section 33(1), 33(2), and 34(1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code) for the liquidation of CLS Enterprise Pvt Ltd. The Corporate Insolvency Resolution Process (CIRP) was initiated on 16.12.2019, and an IRP was appointed. The IRP made due diligence by publishing Form-A in the newspaper, inviting claims from creditors. During the CIRP, only one resolution plan was received from Mr. Sanjay Punglia, which was rejected by the CoC due to insufficient offered amount. The CoC approved initiating the liquidation process due to the absence of a viable resolution plan. The CIRP period of 170 days was completed on 28.06.2020, exempting the lockdown period of 67 days. The CoC resolved for liquidation in its

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## Facts

The Corporate Insolvency Resolution Process (CIRP) was initiated against CLS Enterprise Pvt Ltd on 16.12.2019 after the admission of CP (IB) No.572 of 2019. An Interim Resolution Professional (IRP) was appointed, who published Form-A in the newspaper to invite claims from creditors. During the CIRP, the IRP invited Expression of Interest (EoI) and received only one resolution plan from Mr. Sanjay Punglia. The Committee of Creditors (CoC) rejected this plan because the offered amount was insufficient to address the pending claims of creditors and other stakeholders. The CoC then decided to initiate the liquidation process due to the absence of any viable resolution plan. The 170-day CIRP period concluded on 28.06.2020, with a 67-day exemption for the lockdown period.

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## Issues and analysis

### Issue 1: Whether the application for liquidation under Section 33(1), 33(2), and 34(1) of the Insolvency and …

**Ratio:** The commercial wisdom of the Committee of Creditors (CoC) is paramount in deciding

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**Reasoning:** The CoC, after considering the lack of a viable resolution plan and the insufficiency of

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**Interpretation:** Section 33 of the Insolvency and Bankruptcy Code, 2016 allows for the

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**Application:** In this case, the CoC resolved for liquidation due to the absence of a viable

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## Parties

- **Judges:** Manorama…; Chockalingam…
- **Respondents:** CLS Enterprise…

## Timeline

- **2019-12-16 — CIRP Init…**: CP (IB) No.572 of 2019 was admitted, initiating the Corporate Insolvency Resolution…
- **2020-02-03 — First Me…**: The first meeting was held, and the IRP…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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