2021 (8) TMI 412 - Tri - Insolvency and Bankruptcy

Liquidation proceedings - Jurisdiction - seeking direction to deposit the arrears in salaries of the workmen and employees - matter regarding the applicability of the provision of the I B Code to government companies is pending before the Hon'ble Bombay High Court and the Hon'ble Guwahati High Court - HELD THAT - The applicant could not produce any law to show that this Adjudicating Authority is empowered to review its own order and quash the liquidation proceedings. That is the reason in the course of hearing, Ld. Counsel for the applicant submitted that since the violation of the Code to declare the moratorium against the Government Company is under challenge before the Hon'ble Guwahati High Court in HINDUSTAN PAPER CORPORATION LTD., HEMANTA KUMAR KAKATI, KRISHNA KANTA SUTRADHAR VERSUS THE UNION OF INDIA, HINDUSTAN PAPER CORPORATION LTD., INCOME TAX DEPTT. REP. BY THE CHIEF COMMISSIONER OF INCOME TAX, KULDEEP VERMA AND ORS. 2020 (6) TMI 760 - GAUHATI HIGH COURT , the petitioner is not pressing this prayer. Hence, we are not inclined to consider this prayer. Seeking to stay the liquidation proceedings - HELD THAT - It is an admitted fact that the liquidation order was passed by this Adjudicating Authority on 14.05.2019 and liquidator was appointed. Thereafter, in the year 2020, the applicant has filed a writ application HINDUSTAN PAPER CORPORATION LTD., HEMANTA KUMAR KAKATI, KRISHNA KANTA SUTRADHAR VERSUS THE UNION OF INDIA, HINDUSTAN PAPER CORPORATION LTD., INCOME TAX DEPTT. REP. BY THE CHIEF COMMISSIONER OF INCOME TAX, KULDEEP VERMA AND ORS. 2020 (6) TMI 760 - GAUHATI HIGH COURT before the Hon'ble Guwahati High Court and raised all these issues. But the applicant however, failed to produce any document to show that the applicant had prayed for stay of the liquidation proceedings in that writ petition. Under the IBC 2016, there is no provision to stay the liquidation proceedings once the order of liquidation is passed by the Adjudicating Authority. If the applicant is aggrieved by the order of liquidation passed by this Adjudicating Authority, he has a remedy to file an appeal before the Hon'ble NCLAT. Since the liquidation proceedings have already started, the matter regarding the power of the Adjudicating Authority to pass a liquidation order against -a Government Company is sub judice before the Hon'ble High Courts of Guwahati as well as Delhi and the order of Liquidation has already been confirmed by the Hon'ble NCLAT - Application dismissed.

Summary

Issues:
1. Quashing of present liquidation proceedings
2. Stay of present liquidation proceedings
3. Applicability of I & B Code to government companies
4. Violation of Article 21 of the Constitution
5. Challenge before the Hon'ble Guwahati High Court

Quashing of present liquidation proceedings:
The applicant sought to quash the liquidation proceedings, arguing that the Adjudicating Authority lacked jurisdiction. However, the applicant could not provide legal grounds for this claim during the hearing. The applicant also referenced a similar matter before the Hon'ble Guwahati High Court, indicating that the issue was already under consideration by other parties. As a result, the tribunal declined to consider this prayer, noting that the matter was already being addressed by other courts.

Stay of present liquidation proceedings:
The applicant requested a stay on the liquidation proceedings, contending that the Fundamental Rights of the workers and employees would be violated if the proceedings continued. However, the tribunal highlighted that once a liquidation order is passed, there is no provision under the IBC 2016 to stay the proceedings. The tribunal emphasized that the issue of passing a liquidation order against a Government Company was already under judicial review in various High Courts. Since the order of liquidation had been confirmed by the Hon'ble NCLAT, the tribunal rejected the prayer for a stay on the proceedings.

Applicability of I & B Code to government companies:
The applicant argued that the I & B Code should not apply to government companies, citing pending cases before the Hon'ble Bombay High Court and the Hon'ble Guwahati High Court. The applicant contended that a Government Company cannot be taken over by a Resolution Professional/Liquidator under the IBC Code. However, the tribunal did not find merit in this argument and emphasized that the matter was already sub judice before various High Courts.

Violation of Article 21 of the Constitution:
The applicant raised concerns about the violation of Article 21 of the Constitution due to non-payment of salaries leading to severe consequences for employees. The tribunal acknowledged the gravity of the situation but reiterated that the legal proceedings and challenges were already in progress before the appropriate forums. The tribunal did not find grounds to intervene based on this argument alone.

Challenge before the Hon'ble Guwahati High Court:
The applicant highlighted challenges against the violation of the IBC before the Hon'ble Guwahati High Court. The tribunal acknowledged the ongoing legal challenges and emphasized that the matter was being actively considered by the courts. As a result, the tribunal did not grant the requested relief, as the issues were already under judicial scrutiny. Ultimately, the tribunal dismissed the Interlocutory Application, maintaining the status quo of the liquidation proceedings.