2021 (5) TMI 137 - Tri - Insolvency and Bankruptcy

Maintainability of application - RP failed to perform its functions properly - HELD THAT - Based on the inspection dated 10.01.2020, the applicant has taken possession of the machineries in question and to that effect applicant never protested/raised objection - In that event, admittedly, in view of filing additional affidavit, no prayer of the instant application is required to be redressed. However, during the course of argument, on a number of occasions, the applicant had argued that some parts of the machineries were missing, However, neither the applicant nor the respondent could produce any supporting documents, i.e., list of inspection and/or list of inventory, etc., made during the time of taking possession. Further, it is also a matter of record that on a number of occasions, this Adjudicating Authority made observations/directions of the parties to produce inventories, if any prepared, but both sides have failed to produce. This Adjudicating Authority is not in a position to draw any conclusion. More so, when the applicant, by way of additional affidavit, submitted that except prayer at para E , as said above, other prayers need not be redressed. Hence, nothing remains in the instant application - Application not maintainable and is rejected.

Summary

Issues:
1. Application filed under Section 424 (3) of the Companies Act 2013 and Section 60(5) of Insolvency and Bankruptcy Code, 2016 for possession of machineries.
2. Dispute regarding possession of machineries purchased through auction from a company under insolvency resolution.
3. Allegations of missing parts of machineries and request for direction to resolve the issue.
4. Lack of inventory or inspection memo during the transfer of possession leading to dispute.

Analysis:
1. The application was filed seeking direction to release control and custody of machineries purchased by the applicant, which were lying with a company under insolvency resolution. The applicant approached the Adjudicating Authority for relief, which was granted on 19.12.2019, allowing possession of the machineries. An appeal against this order was withdrawn, making the order final and conclusive.

2. Subsequently, the applicant found missing parts of the machineries and filed a new application requesting various reliefs, including dismantling and taking possession of the machineries. The Resolution Professional (RP) handed over possession on "as is where is basis," and the applicant accepted it without objection. However, during inspection, no inventory or inspection memo was prepared by either party, leading to a lack of clarity on missing parts.

3. The applicant alleged missing parts but failed to provide evidence such as an inspection memo or inventory list to substantiate the claim. Despite additional affidavits filed, no concrete evidence was presented to support the allegation of missing parts. The Adjudicating Authority emphasized the importance of proper documentation during possession transfer to avoid disputes and noted the lack of evidence to draw any conclusion on the missing parts.

4. The Adjudicating Authority concluded that the application was not maintainable due to the absence of concrete evidence and the applicant's acknowledgment of possession based on the inspection. The RP was advised to perform duties diligently to prevent future disputes. The application was deemed misconceived and an abuse of the legal process, leading to its rejection without costs.

This detailed analysis of the judgment highlights the legal proceedings, the issues raised, the evidence presented, and the final decision of the Adjudicating Authority in resolving the dispute over possession of machineries purchased during insolvency proceedings.