2020 (1) TMI 1211 - Tri - Insolvency and Bankruptcy

Maintainability of suit - Liquidation of Corporate Debtor - Section 33 (5) of I B Code - HELD THAT - Any disturbance to the possession of the Liquidator or any obstruction if at all is caused by the said plaintiff who is Respondent in the present application shall be viewed very seriously by this Bench and liquidator is at liberty to approach the Police station of the concerned jurisdiction to file appropriate complaint as the very same would amount to trespass under Criminal law. The Superintendent of Police, District Palghar, directed to forth with look into the matter and provide the necessary security to the liquidator and also take stringent, penal action against the plaintiff Mr. E.C. John by arresting him and secure the life of the Liquidator who is an officer of the court - application allowed.

Summary

Issues:
- Application to quash a civil suit filed by the Liquidator of a company against Mr. E.C. John.
- Compliance with the Insolvency and Bankruptcy Code, 2016 (IBC) regarding disposal of company assets.
- Allegations of wrongful approach by Mr. E.C. John seeking injunction against the Liquidator.
- Legal implications of the suit under Section 33(5) of the IBC.
- Threats and obstruction faced by the Liquidator from Mr. E.C. John.

Analysis:
The judgment deals with an application by the Liquidator of a company to quash a civil suit filed by Mr. E.C. John, who was also the occupant of the Corporate Debtor. The Liquidator sought to dispose of the company's assets in compliance with the IBC, 2016. Despite Mr. John's initial lack of compliance with IBC requirements, he later expressed interest in purchasing a property of the Corporate Debtor, but his offer was below market value. The Liquidator subsequently sold the property to third parties at a better price, following due process under the IBC.

During the court proceedings, Mr. John attempted to claim rights over the property by mentioning a wall he had constructed around it. However, the court found his actions inappropriate and refused his request to withdraw the suit. Citing Section 33(5) of the IBC, the court ruled that any suit seeking to disrupt the Liquidator's proceedings or the IBC provisions is prohibited by law. Therefore, the civil suit filed by Mr. John was quashed.

Furthermore, the judgment highlighted the seriousness of any potential obstruction caused by Mr. John to the Liquidator's possession, warning that such actions could lead to criminal consequences. The Liquidator reported threats and obstruction by Mr. John, prompting the court to direct the Superintendent of Police to provide necessary security to the Liquidator and take penal action against Mr. John, including his arrest, to ensure the Liquidator's safety. The application to quash the civil suit was allowed, with other matters listed for a future date.