2021 (11) TMI 1095 - Tri - Insolvency and Bankruptcy

Sale of the MV. VM Hopper Barge - violative of the moratorium imposed under section 14 of the Insolvency and Bankruptcy Code, 2016 or not - Preferential, Undervalued Fraudulent Transaction or not - reversal of the sale of the MV. VM Hopper Barge - seeking restraint on Respondents, their officers, servants, agents, assignees, and successors in office from in any way alienating or creating any further third-party rights in respect of MV.VM Hopper Barge. HELD THAT - It is borne out from record that the Vessel HV. VM Hopper Barge H-107 against which the Respondent No.2 is having primary charge has been disposed of by Respondent No. 2 under SARFAESI proceedings to the Respondent No.3 out of liquidation process and the Respondent No.3 has already taken physical possession by paying the entire sale consideration and also obtained sale certificate in their favour from Respondent No.2 - It is also an admitted fact that the present Applicant had filed Securitization Application before the Debt Recovery Tribunal-II, Mumbai challenging the possession notice issued under the SARFAESI Act by Respondent No.2 and the matter is subjudice before the competent DRT and the DRT has refused to grant any stay to the applicant. As rightly contended by the Respondent No.2, the Applicant has already approached the Competent DRT challenging the SARFAESI measure initiated by Respondent No.2 and the proceedings are pending. The issue as to whether the sale conducted by the Respondent No.2 in respect of Vessel is hit under Section 31 (d) of the SARFEASI Act or not can be decided by DRT. The Applicant cannot continue simultaneous proceedings both in NCLT and DRT Especially without any locus. Since the above application is not filed by the IRP or RP and since this Bench is inclined to dismiss the above application on the locus of the applicant, this Bench is not giving any findings on the other issues raised by the petitioner. Application dismissed.

Summary

Issues involved:
1. Application challenging sale of a vessel under Insolvency and Bankruptcy Code.
2. Locus standi of the applicant to file the application.

Analysis:

Issue 1: Application challenging sale of a vessel under Insolvency and Bankruptcy Code

The applicant, the Managing Director of the Suspended Board of the Corporate Debtor, filed an application seeking various reliefs related to the sale of a vessel, MV. VM Hopper Barge H-107, from Respondent No. 2 to Respondent No. 3. The applicant alleged that the sale violated the moratorium imposed under section 14 of the Insolvency and Bankruptcy Code, 2016, and was a preferential, undervalued, and fraudulent transaction. The Respondent No. 2, a bank, opposed the application, stating that the sale was conducted under the SARFEASI Act and was confirmed before the commencement of the Corporate Insolvency Resolution Process (CIRP). The Respondent argued that the sale was valid, and the applicant, as a suspended director, lacked the authority to file such an application. The Respondent also highlighted that the applicant had challenged the possession notice in the Debt Recovery Tribunal-II, Mumbai, and no stay was granted. The Tribunal noted the non-cooperation among financial creditors affecting the CIRP process and dismissed the application, emphasizing that the applicant lacked the locus standi to file the application.

Issue 2: Locus standi of the applicant to file the application

The Tribunal deliberated on whether the applicant, as the Ex-Managing Director of the Suspended Board of the Corporate Debtor, had the standing to file the application challenging the sale of the vessel. It was emphasized that the Insolvency and Bankruptcy Code does not provide for applications by members of the suspended board, as the affairs of the company are managed by the Insolvency Resolution Professional (IRP) post-admission of the Company Petition. The Tribunal acknowledged that the applicant had already approached the Debt Recovery Tribunal challenging the SARFAESI measures initiated by the Respondent No. 2, indicating that the issue of the sale's legality could be addressed by the DRT. As the application was not filed by the IRP or Resolution Professional, the Tribunal dismissed it based on the lack of locus standi of the applicant, refraining from addressing other issues raised. The Tribunal highlighted that decisions regarding the sale proceeds returning to the liquidation estate rest with the Committee of Creditors (COC) based on commercial considerations.

This comprehensive analysis of the legal judgment highlights the key issues, arguments presented, and the Tribunal's decision, ensuring a detailed understanding of the case.