2021 (4) TMI 993 - Tri - Insolvency and Bankruptcy

Assets forming part of Block No. 2 of the Schedule of Assets of the Corporate Debtor - Inclusion of moveable assets and/or aluminium scrap materials lying in the factory premises - moveable assets and/or scrap materials including the aluminium scrap materials lying in the factory premises of the Corporate Debtor (in liquidation) forming part of Block No. 1 of the Schedule of Assets of the Corporate Debtor (in liquidation) - HELD THAT - From the materials available on record, the ownership of the aluminium scrap in question cannot be conclusively established one way or the other. Therefore, neither the successful auction purchaser nor the Rishabraj Logistics Limited can actually be said to be entitled to take away the aluminium scrap in question - In the absence of any documents to conclusively establish the ownership of the aluminium scrap, the Liquidator is entitled to presume that the same belongs to the corporate debtor until proved otherwise, if nothing else merely on the basis that the scrap in question was found on the premises of the Corporate Debtor and there is no dispute to this. The documents in the form of the alleged rental agreement and the subsequent addendum do not really establish anything. No rentals are envisaged to be paid under these documents. What is actually envisaged is payment of miscellaneous expenditure in regard to this scrap. From this it cannot be established that the goods in question belongs to Rishabraj Logistics Limited. Therefore, at this point of time we refrain from commenting on the ownership aspect. The successful auction purchaser i.e. Rekha Halder, Proprietor of Sayan Enterprises does not really have the right to take away the aluminium scrap lying inside the various shops, which did not ever form part of the auction process - Application dismissed.

Issues Involved:
1. Ownership and inclusion of aluminium scrap materials in the liquidation estate.
2. Rights of the successful auction purchaser to remove the aluminium scrap.
3. Liquidator's authority and actions regarding the aluminium scrap.
4. Claims and rights of Rishabraj Logistics Limited over the aluminium scrap.
5. Validity and implications of the rental agreements and addendums.

Issue-wise Detailed Analysis:

1. Ownership and Inclusion of Aluminium Scrap Materials in the Liquidation Estate:
The primary issue revolves around whether the aluminium scrap materials lying in the factory premises of the Corporate Debtor were part of Block No. 2 of the Schedule of Assets. The applicant, Ms. Rekha Halder, sought a declaration that these materials were included in the assets she purchased in the e-auction. The Tribunal examined the auction notice and tender documents, which described the goods as including miscellaneous scrap materials lying in the yard outside different shops. The Tribunal concluded that the ownership of the aluminium scrap could not be conclusively established based on the available records, and thus, the scrap would be presumed to belong to the Corporate Debtor until proven otherwise.

2. Rights of the Successful Auction Purchaser to Remove the Aluminium Scrap:
Ms. Rekha Halder, the successful auction purchaser, claimed the right to remove all assets forming part of Block No. 2, including the aluminium scrap. However, the Tribunal found that the scrap inside the various shops did not form part of the auction process. Consequently, the Tribunal held that Ms. Halder did not have the right to take away the aluminium scrap lying inside the shops, leading to the dismissal of her application (I.A. No. 1081/KB/2020) as without merit.

3. Liquidator's Authority and Actions Regarding the Aluminium Scrap:
The Liquidator, in I.A. No. 1060/KB/2020, sought directions for the removal of the scrap and assistance from the respondents. The Tribunal noted that the Liquidator had clarified that certain aluminium scrap lying in the yard outside different shops was not part of the liquidation estate. The Tribunal directed the Liquidator to conduct further due diligence to establish the ownership of the aluminium scrap before filing any further applications. Consequently, the Liquidator's application was also dismissed.

4. Claims and Rights of Rishabraj Logistics Limited Over the Aluminium Scrap:
Rishabraj Logistics Limited claimed ownership of the aluminium scrap based on documents from 2015 and a rental agreement addendum dated 07.08.2019. The Tribunal found these documents insufficient to establish ownership, noting the absence of distinctive identification marks on the scrap and the lack of rent receipts or trade licenses. The Tribunal held that Rishabraj Logistics Limited failed to prove ownership of the aluminium scrap, and thus, the scrap would remain part of the liquidation estate until ownership was conclusively established.

5. Validity and Implications of the Rental Agreements and Addendums:
The Tribunal scrutinized the rental agreements and addendums presented by Rishabraj Logistics Limited, noting that these documents did not envisage the payment of rent but rather miscellaneous expenses. The Tribunal found these documents inadequate to establish ownership of the aluminium scrap. The addendum dated 07.08.2019 was deemed redundant as the liquidation order was already in force. The Tribunal refrained from commenting on the ownership aspect at this stage due to the lack of conclusive evidence.

Conclusion:
The Tribunal dismissed both applications (I.A. No. 1081/KB/2020 and I.A. No. 1060/KB/2020) due to the inconclusive establishment of ownership over the aluminium scrap. The Liquidator was directed to perform further due diligence regarding the scrap's ownership. The aluminium scrap would remain part of the liquidation estate until ownership was conclusively proven. The matter was scheduled for further progress reporting on 24.06.2021.

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