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2021 (12) TMI 1430 - AT - Insolvency and BankruptcyLiquidation of Corporate Debtor - seeking directions in the Liquidation Process and Sale of the assets of the Corporate Debtor - Section 33 read with Regulation 32(b) (e) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016 - HELD THAT - There are no deficiency in the performance of functions of the Liquidator who has acted in accordance with the directions given by this Tribunal and as per the relevant regulations - A key benefit of selling the Corporate Debtor as a going concern in Liquidation as against other manners of sale is it can preserve employment while maximising the result of stakeholders. There are merit in admitting sale of the Corporate Debtor as a going concern in this Liquidation Process. The timelines under Regulation 47 for Liquidation Process are directory. Procedural law should not be construed as an obstruction but as an aid to Justice. Extension of time under Liquidation may be allowed only on the satisfaction that there exists exceptional circumstances - The Hon ble Supreme Court in RANI KUSUM VERSUS KANCHAN DEVI ORS. 2005 (8) TMI 709 - SUPREME COURT concurring with the ratio laid down in KAILASH VERSUS NANHKU ORS. 2005 (4) TMI 542 - SUPREME COURT it was held that A procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed. Section 32(A)(4) should be read together with Section 35(1)(e) and Regulation 47. What is mandated in the Code in Section 35(1)(e) is to carry on business for its beneficial Liquidation. The Regulation therefore cannot override the objective of beneficial liquidation provided for in Section 35(1)(e) of the Code - thus to achieve Beneficial Liquidation provided for under Section 35(1)(e) and maximisation of the value of assets under Section 53 and having regard to all reasons given below it is found just expedient to exercise the inherent powers under Rule 11 of the NCLAT Rules 2016 to extend the period by six weeks to enable the Liquidator to attempt the Sale as a Going Concern at an appreciable value. The Liquidator has adhered to the directions of the Tribunal and has acted as per the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016. This extension of six weeks is being granted to achieve the objective of Beneficial Liquidation and attempt to keep the business of the Company as a Going Concern - Appeal disposed off.
Issues Involved:
1. Approval of Liquidation Process and Sale of Assets. 2. Compliance with Directions for Sale as a Going Concern. 3. Adequacy of Publicity and International Advertisement. 4. Consideration of Proposals and Earnest Money Deposit (EMD). 5. Role and Actions of the Liquidator. 6. Procedural Timelines and Extensions. Issue-wise Detailed Analysis: 1. Approval of Liquidation Process and Sale of Assets: The appeals challenge the common impugned order dated 18.12.2020 passed by the Adjudicating Authority (NCLT, Mumbai Bench) under Section 61(1) of the Insolvency and Bankruptcy Code, 2016. The order allowed the liquidation process and sale of assets of the ‘Corporate Debtor’ due to the deteriorating financial condition and the inability to maintain the shipyards and vessels. The order directed the Liquidator to proceed with the sale of assets collectively, in parcels, or individually as per the provisions of the Code and complete the process at the earliest. 2. Compliance with Directions for Sale as a Going Concern: The Tribunal directed the Liquidator to ensure that the company remains a ‘going concern’ and to follow the directions in ‘Y Shivram’ Vs. ‘S. Dhanpal & Ors.’ The Liquidator issued multiple public announcements and extended deadlines for submission of Expressions of Interest (EOI) to sell the ‘Corporate Debtor’ as a ‘going concern’. Despite these efforts, no compliant scheme was received within the stipulated time frame, leading to the decision to proceed with the liquidation and sale of assets. 3. Adequacy of Publicity and International Advertisement: The appellants contended that the Liquidator did not publish international advertisements calling for EOI, thus marring prospective buyers from participating. However, the Tribunal found that the Liquidator had issued public announcements in multiple newspapers and on the official website of the ‘Corporate Debtor’, providing sufficient publicity. The Tribunal concluded that the Liquidator had followed all requisite steps in accordance with the Tribunal’s directions. 4. Consideration of Proposals and Earnest Money Deposit (EMD): The appellants argued that the Liquidator ignored significant proposals, such as the one from Playglobal International, which committed approximately 800 million dollars. However, the Tribunal noted that no compliant scheme along with the EMD was submitted by any prospective applicants within the given timelines. The Tribunal emphasized that the Liquidator had provided ample opportunities and extensions for the submission of EMD and compliant schemes. 5. Role and Actions of the Liquidator: The Tribunal found no deficiency in the performance of the Liquidator, who acted in accordance with the Tribunal’s directions and relevant regulations. The Liquidator’s actions, including issuing public announcements and extending deadlines, were deemed appropriate and in compliance with the objective of achieving beneficial liquidation and maximizing the value of assets. 6. Procedural Timelines and Extensions: The Tribunal acknowledged that procedural timelines under Regulation 47 for the liquidation process are directory and not mandatory. Given the exceptional circumstances, including the pandemic, the Tribunal exercised its inherent powers to extend the period by six weeks to enable the Liquidator to attempt the sale as a ‘going concern’ at an appreciable value. The Tribunal emphasized that this extension aims to achieve the objective of beneficial liquidation and preserve the business as a going concern. Conclusion: The appeals and interlocutory applications were disposed of with directions to the Liquidator to continue efforts to sell the company as a ‘going concern’ within the extended period. The Tribunal reiterated that the Liquidator had adhered to the directions and regulations, and the extension was granted to ensure beneficial liquidation and maximize asset value. The judgment directed the Registry to upload the judgment on the Tribunal’s website and send a copy to the Adjudicating Authority (NCLT, Mumbai Bench).
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