# 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-00499. 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-00499
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/cls-enterprises-pvt-ltd-ia-no-597-2020-in-cp-ib572-nclt-ahm-2019-741b113b

## 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), seeking liquidation of the Corporate Debtor, CLS Enterprise Private Limited. The Corporate Insolvency Resolution Process (CIRP) was initiated on 16.12.2019, and an IRP was appointed. Despite efforts to find a resolution plan, including inviting Expression of Interest (EoI), only one plan was received and rejected by the Committee of Creditors (CoC) due to insufficient value. The CoC then resolved to liquidate the Corporate Debtor.

## Facts

The Corporate Insolvency Resolution Process (CIRP) for CLS Enterprise Private Limited was initiated on 2019-12-16. An Interim Resolution Professional (IRP) was appointed, and efforts were made to invite resolution plans, including publishing Form-A in newspapers. The first meeting of the Committee of Creditors (CoC) was held on 2020-02-03, and Expression of Interest (EoI) was invited. Only one resolution plan was received from Mr. Sanjay Punglia, but it was rejected by the CoC because the offered amount was insufficient to address the claims of creditors and other stakeholders. The CoC then resolved to liquidate the Corporate Debtor, as no viable resolution plan was received. The CIRP period of 170 days was completed on 2020-06-28, exempting the lockdown period of 67

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## Issues and analysis

### Issue 1: Whether the application for liquidation of the Corporate Debtor, CLS Enterprise Private Limited, …

**Ratio:** The legal principle applied is that if no viable resolution plan is received during the

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**Reasoning:** The court reasoned that the CoC had resolved for liquidation after failing to receive a

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**Interpretation:** Section 33(1) of the I&B Code allows the CoC to resolve for liquidation if

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**Application:** The CoC resolved for liquidation with 100% voting in favor, and the

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## Parties

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

## Timeline

- **2019-12-16 — CIRP Init…**: Corporate Insolvency Resolution Process (CIRP) was initiated for CLS Enterprise Private…
- **2020-02-03 — First CoC M…**: The first meeting of the…

## 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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