2020 (12) TMI 873 - AT - Insolvency and Bankruptcy

Liquidation Order - It is stated that the Respondent who has been the Managing Director of the Corporate Debtor had been cooperating with the Appellant but at some point, there was misunderstanding and the Appellant had filed application that Respondent is not co-operating and should not leave Jurisdictional area - HELD THAT - It is stated by the Appellant that Respondent was earlier cooperating with the Liquidator and is even now cooperating with the Liquidator and the Respondent is still standing by the Memo, we do not find that any Orders as such giving directions to the Respondent are necessary. As regards the contention of the learned Counsel for the Appellant for remarks as have been made in Impugned Order against Appellant, the observations of the Adjudicating Authority will not be taken as adverse remarks but observations in the context of examining the dispute raised before the Adjudicating Authority. The Appellant is at liberty to place detailed Report before the Adjudicating Authority so as to clear the impression of the Adjudicating Authority with regard to the progress of the liquidation proceedings. Appeal disposed off.

Summary

Issues:
1. Cooperation between Liquidator and Managing Director of Corporate Debtor.
2. Rejection of applications seeking directions under Section 19 and Section 34(3) of the Insolvency and Bankruptcy Code, 2016.
3. Allegations of non-cooperation against the Managing Director.
4. Infructuous nature of the Appeal due to cooperation claims.
5. Adverse comments against the Liquidator in the Impugned Order.

Analysis:
1. The judgment revolves around the cooperation dynamics between the Liquidator and the Managing Director of the Corporate Debtor. The Liquidator filed applications seeking directions under the Insolvency and Bankruptcy Code, citing non-cooperation by the Managing Director. However, it was later revealed that the Managing Director expressed willingness to cooperate, which was acknowledged by both parties during the proceedings.

2. The applications filed by the Liquidator under Section 19 and Section 34(3) of the Insolvency and Bankruptcy Code were rejected by the Adjudicating Authority. This rejection led to the filing of the Appeal before the National Company Law Appellate Tribunal, seeking a review of the decision.

3. The Managing Director, in response to the allegations of non-cooperation, submitted a Memo denying the accusations and expressing commitment to cooperate with the Liquidator. The Managing Director's consistent stance on cooperation throughout the proceedings raised doubts about the necessity of issuing further directions to ensure cooperation.

4. The Respondent argued that the Appeal had become infructuous due to the Managing Director's continuous cooperation with the Liquidator, as evidenced by previous submissions and the Memo presented before the Adjudicating Authority. The Tribunal considered this argument in light of the ongoing cooperation between the parties.

5. Lastly, the judgment addressed the adverse comments made against the Liquidator in the Impugned Order regarding the progress of the liquidation proceedings. The Tribunal clarified that the observations by the Adjudicating Authority were not adverse remarks but part of the examination process. The Liquidator was given the liberty to provide a detailed report to address any concerns regarding the progress of the liquidation proceedings. Ultimately, the Appeal was disposed of without interference with the Impugned Order, with specific observations provided for clarity.