# In the matter of Synew Steel Private Limited I.A. 435-2020 in C.P.(IB)No. 96-BB-2020

> NCLT judgment dated 2020-11-16. Citation: TCN-2020-NCLT-00249. The case involves an application (I.A. No.435/2020) filed in C.P. (IB) No.96/BB/2020 by the…

- **Court:** NCLT
- **Order date:** 16 Nov 2020
- **Citation:** TCN-2020-NCLT-00249
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/synew-steel-private-limited-ia-435-2020-in-cpibno-96-bb-2020-bd603a13

## Summary

### Background

The case involves an application (I.A. No.435/2020) filed in C.P. (IB) No.96/BB/2020 by the Interim Resolution Professional (IRP) of M/s. Synew Steel Private Limited, seeking the dissolution of the Corporate Debtor under Section 54 read with Section 60(5) of the IBC, 2016. The Corporate Insolvency Resolution Process (CIRP) was initiated based on a default of Rs. 1,18,56,964/-, including financial and operational creditors. However, the IRP was unable to constitute a Committee of Creditors (COC) as all financial creditors were related parties. The corporate debtor had minimal assets (Rs. 729/- cash balance) and no business activity in the last three years.

## Facts

M/s. Synew Steel Private Limited faced Corporate Insolvency Resolution Process (CIRP) due to a default of Rs. 1,18,56,964/-. The CIRP was initiated under Section 10 of the IBC, 2016. The Interim Resolution Professional (IRP), initially Ms. Tanuja Jalan and later Mr. Mandar Shrikat Wagh, was unable to form a Committee of Creditors (COC) because all three financial creditors, totaling Rs. 27,84,394/-, were related parties as defined under Section 5(24) of the IBC. The company's assets were minimal, with only Rs. 729/- in cash, and it had no business activity in the last three years. Consequently, the IRP filed an application (I.A. No.435/2020) seeking the dissolution of the Corporate Debtor, as continuing the CIRP or initiating liquidation was deemed impossible. The IRP

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority can order the dissolution of a Corporate Debtor when the CIRP …

**Ratio:** Section 54 of the Code allows the Adjudicating Authority to order the dissolution of a

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**Reasoning:** The court reasoned that since all financial creditors were related parties, a COC could

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**Interpretation:** The interpretation of Section 54 and Rule 14 allows for the dissolution of a

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**Application:** In this case, the IRP was unable to form a COC because all financial creditors

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## Parties

- **Judges:** Ashok Kumar…; Ashutosh C…
- **Respondents:** Synew Steel…

## Timeline

- **2020-06-30 — CIRP Init…**: Adjudicating Authority admitted the case by an Order dated 30.06.2020, by initiating CIRP…
- **2020-08-21 — IRP Repla…**: The existing IRP was replaced and Mr. Mandar Shrikat Wagh was appointed as IRP, and the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(24) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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