2021 (5) TMI 576 - Tri - Insolvency and Bankruptcy

Seeking withdrawal of the application, which was filed by him seeking clarification of the order dated 14.01.2020 passed by this Bench - whether once elected to approach the Hon'ble NCLAT, the Liquidator ought not to have filed another application for seeking clarification of the order? - HELD THAT - It is true that having once approached the Hon'ble NCLAT in appeal against the order dated 26.06.2020, the applicant/liquidator ought to have desisted from filing another application bearing IA No. 1165/KB/2020 before this Adjudicating Authority seeking clarifications. The applicant is a seasoned professional and would have been well advised not to venture into such a misadventure. Be that as it may, in these circumstances, not granting leave to withdraw will amount to holding the appeal before the Hon'ble NCLAT hostage, which we are loathe to do. The ends of justice will be met if we allow the applicant/liquidator leave to withdraw application, but at a cost of ₹ 50,000/- to be paid to the Prime Minister's Citizen Assistance and Relief in Emergency Situations (PM-CARES) Fund, within a period of two weeks from today - application disposed off.

Summary

Issues:
1. Withdrawal of application seeking clarification of previous orders.

Analysis:
The judgment revolves around an application filed by the liquidator of a corporate debtor seeking to withdraw a previous application for clarification of orders issued by the Tribunal. The liquidator had distributed funds among stakeholders as per the Tribunal's direction, but a subsequent order required the stakeholders to keep the funds in an interest-bearing account. The liquidator appealed this order before the NCLAT, leading to a request for clarification. The respondent opposed the withdrawal, alleging forum shopping by the liquidator. The Tribunal acknowledged the liquidator's misstep in filing a new application after appealing to the NCLAT but granted leave to withdraw the application with a penalty of ?50,000 to be paid to the PM-CARES Fund within two weeks. The Tribunal emphasized that not allowing withdrawal would hold the NCLAT appeal hostage, hence the decision to permit withdrawal while imposing a cost.

The Tribunal found that the liquidator's decision to file a new application seeking clarification after already appealing to the NCLAT was inappropriate. The respondent accused the liquidator of malice and forum shopping, arguing against the withdrawal of the application. Despite acknowledging the misstep by the liquidator, the Tribunal decided to grant leave to withdraw the application to prevent the NCLAT appeal from being affected. The Tribunal imposed a penalty of ?50,000 to be paid to the PM-CARES Fund within two weeks as a consequence of the withdrawal.

In conclusion, the Tribunal allowed the liquidator to withdraw the application seeking clarification of previous orders but imposed a penalty of ?50,000 to be paid to the PM-CARES Fund within two weeks. The decision aimed to prevent the NCLAT appeal from being impacted while addressing the liquidator's procedural error in filing a new application after initiating the appeal process. The Tribunal's ruling balanced the need for justice with the consequence of the liquidator's actions, ensuring fairness and adherence to legal procedures.