2019 (12) TMI 1322 - AT - Insolvency and Bankruptcy

Possession of machinery - whether plant is in possession of the Janata Sahkari Bank Limited and they have put it up for auction and that respondent No. 2 has submitted bid in that process? - HELD THAT - As per explanation below Section 18 of Insolvency and Bankruptcy Code 2016 the plant is owned by appellant and thus does not belong to the Corporate Debtor and is thus owned by third party i.e. The Appellant - the possession of the plant machinery shall be restored to the appellant through Janata Sahkari Bank Limited Pune. Appeal disposed off.

Summary

Issues involved:
- Distinct issue in the appeal arising out of the Corporate Insolvency Resolution Process (CIRP)

Analysis:
1. The appeal before the National Company Law Appellate Tribunal involved a distinct issue arising from the Corporate Insolvency Resolution Process (CIRP). The advocates representing both parties agreed that this appeal could be heard and decided separately from another related appeal.

2. The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, and during this process, the appellant claimed to be a Financial Creditor for rent related to machinery installed in the premises. The Resolution Professional informed the appellant to file a claim for operational debt, but the appellant did not do so. The resolution plan approved did not provide for rent payment during the CIRP period due to the Corporate Debtor not being functional. The appellant, being a related party to the Corporate Debtor, did not pursue the rent claim but sought restoration of the machinery instead.

3. The Successful Resolution Applicant stated that no provision was made for rental income as the ethanol plant was operational for only 5 months. The plant and machinery were owned by the appellant and were in the possession of a bank. The machinery, although owned by the appellant, was legally possessed by the bank invoking the relevant Act. It was clarified that the plant did not belong to the Corporate Debtor but to the appellant, a third party.

4. Considering the ownership of the plant machinery by the appellant, the National Company Law Appellate Tribunal directed the restoration of possession to the appellant through the bank. The appeal was disposed of with the directive for the respondents to act accordingly. The legal possession claim by the bank was left open for them to take appropriate action under the law.