NCLT Ahmedabad Dissolves Captivate Foods After Finding No Traceable Assets Despite Pending Tax Dues

The Ahmedabad Bench of the National Company Law Tribunal (NCLT) on 8 October ordered the dissolution of Captivate Foods Private Limited after finding that its assets were untraceable and no assets were available for realization and distribution.

A Bench comprising Judicial Member Chitra Hankare and Technical Member Dr. V. G. Venkata Chalapathy passed the order on an application filed by Liquidator Atul Jashwantrai Sheth. It held:

“M/s. Captivate Foods Private Limited, the Corporate Debtor, is hereby dissolved with effect from the date of this order in terms of Section 54 of the Insolvency and Bankruptcy Code, 2016.”

Captivate Foods was admitted into the Corporate Insolvency Resolution Process (CIRP) on 25 April 2022 following a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) filed by Givaudan (India) Private Limited.

Sheth was initially appointed as the Interim Resolution Professional. After finding no prospects of revival, the Committee of Creditors approved the company's dissolution with 100% voting share, and the Tribunal ordered liquidation on 13 January 2024.

During liquidation, Sheth invited claims from stakeholders and convened meetings of the Stakeholders' Consultation Committee. The process revealed that the company had no realizable assets. Its registered office was in rented premises, and its directors were untraceable. Sheth also lodged a police complaint regarding their whereabouts.

Sheth submitted that Bank of India, the sole secured stakeholder, had borne the entire CIRP and liquidation costs. The amounts required during liquidation were dealt with in accordance with Sections 52 and 53 of the IBC. He also informed the Tribunal that the liquidation account in the company's name had been closed and the prescribed compliance certificate in Form H under Regulation 45(3) of the IBBI (Liquidation Process) Regulations, 2016, had been filed.

The Registrar of Companies informed the Tribunal that no prosecution, complaint or compounding proceedings were pending against Captivate Foods. The Income Tax Department opposed dissolution, citing unpaid demands of Rs. 280 for Assessment Year 2015-16 and Rs. 8,140 for Assessment Year 2016-17. It stated that these outstanding dues prevented it from issuing a No Objection Certificate.

Bank of India clarified that although its charges continued to appear in the records of the Registrar of Companies, the secured assets were no longer traceable. The bank had sanctioned credit facilities of approximately Rs. 1.95 crore and created security interests over the assets. However, an inspection in August 2021 revealed that the machinery had been removed from the rented premises and the directors had sold their houses. The bank also stated that the stock and book debts could not be traced.

The Tribunal observed that continuing the liquidation proceedings would serve no useful purpose because the company had no traceable assets and its directors were absconding. It noted that Sheth had completed the statutory compliances and filed Form H under the Liquidation Regulations.

Rejecting the Income Tax Department's objection, the Bench held that the small outstanding tax demands did not justify prolonging the liquidation process. It also accepted the bank's clarification regarding the untraceable secured assets and the absence of recoverable stock and book debts.

Accordingly, the NCLT ordered the dissolution of Captivate Foods Private Limited under Section 54 of the IBC and discharged the Liquidator from his duties, subject to applicable statutory requirements. It clarified that creditors could pursue independent proceedings against the suspended management before competent courts to recover mortgaged or charged assets.