2020 (1) TMI 1506 - AT - Insolvency and Bankruptcy

Scope of Liquidation estate - Section 36 (4) (d) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The claim sought to be enforced by the Corporate Debtor has been rightly declined by the Adjudicating Authority (National Company Law Tribunal) Division Bench, Chennai as in terms of provisions of Section 36 (4) (d) of the Insolvency and Bankruptcy Code, 2016 assets of its subsidiary did not fall within the ambit of liquidation Estate of Corporate Debtor . However, the provision itself has been subjected to the exclusion clause engrafted in sub-Section 4 and assets of subsidiary of the Corporate Debtor are not included in the liquidation Estate. Appeal dismissed.

Summary

Issues: Appeal against the decision of the Adjudicating Authority regarding the enforcement of a claim by the Corporate Debtor.

Analysis:

The judgment by the National Company Law Appellate Tribunal, New Delhi, involved a case where an appeal was made against the decision of the Adjudicating Authority regarding the enforcement of a claim by the Corporate Debtor. The Tribunal first addressed a procedural matter by condoning a delay of 2 days in filing the appeal, beyond the prescribed period of 30 days. The Interlocutory Application was disposed of in this regard.

Moving on to the substantive issue, the Tribunal examined the claim sought to be enforced by the Corporate Debtor. It was noted that the Adjudicating Authority, the National Company Law Tribunal Division Bench in Chennai, had rightly declined the claim. This decision was based on the provisions of Section 36(4)(d) of the Insolvency and Bankruptcy Code, 2016. The Tribunal highlighted that assets of the subsidiary of the Corporate Debtor did not fall within the ambit of the liquidation estate as defined by the Code.

The Tribunal considered the arguments presented by the Appellant's counsel, who emphasized the ownership rights of the Corporate Debtor over certain assets, as evidenced in the balance sheet or an information utility. However, it was pointed out that these assets were subject to an exclusion clause under sub-Section 4 of Section 36. This exclusion specifically addressed the assets of the subsidiary of the Corporate Debtor, stating that they are not included in the liquidation estate of the Corporate Debtor.

Consequently, after a thorough examination of the provisions of the Insolvency and Bankruptcy Code, 2016, and the arguments put forth by the Appellant's counsel, the Tribunal found no merit in the appeal. Therefore, the appeal was dismissed by the Tribunal.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the legal provisions considered, and the reasoning behind the Tribunal's decision to dismiss the appeal.