2022 (1) TMI 215 - AT - Insolvency and Bankruptcy

Liquidation proceedings - possession of vehicles - It is the Appellant s case that since he had settled the loans in respect of two vehicles and the ownership was transferred in his name, he is not liable to hand over the vehicles to the Resolution Professional as they were no longer assets of the Corporate Debtor - HELD THAT - The Appellant has tried to explain the delay in filing the appeal by claiming that he first filed an application before the Adjudicating Authority for review of the order dated 26.9.2019. This review application was disposed off vide order dated 4.11.2020, inter alia, holding that the review application was misconceived since there was no provision in IBC for review of an order of Adjudicating Authority - the order dated 4.11.2020 is not a substantive order, but only an order seeking help of police authorities for locating the vehicles. The substantive order dated 26.9.2019 has assumed finality, as has been noted by us earlier. The contention of the Appellant that he filed a review application under rule 11 read with Section 154 of NCLAT Rules and hence he waited for an order on this application before filing the appeal is not tenable. It is amply clear that there is no provision of review under the IBC and hence a misconceived review application cannot provide relaxation in limitation to the Appellant. It is clear that the Appellant Niraj Jha had knowledge of the order dated 26.09.2019. His claim that he could appeal against the said order only after receipt of its copy on 12.02.2021 does not appear convincing - This appeal was actually filed on 01.02.2021 which is much after the expiry of the extended period of limitation. Moreover, the Appellant has not explained in any cogent manner the delay of over 40 days in filing this appeal. Hence, even after adopting liberal approach in calculating limitation, we do not find the appeal to be filed within limitation period. Since the appeal is found to be barred by limitation, it is not considered necessary to go into other issues raised by the Appellant relating to transfer of ownership of the said vehicles - appeal dismissed.

Summary

Issues:
1. Appeal against two orders dated 4.11.2020 and 26.9.2019.
2. Compliance with order to hand over vehicle custody to Resolution Professional.
3. Delay in filing appeal challenging the orders.
4. Ownership transfer of vehicles during insolvency resolution process.
5. Review application under NCLT Rules and its impact on limitation period.

Analysis:

1. The Appellant filed two appeals challenging orders dated 4.11.2020 and 26.9.2019, passed in CA-1326(PB)/2019 in CP (IB) 1493(PB)/2018. The order dated 26.9.2019 directed the Appellant to hand over custody of vehicles to the Resolution Professional. The subsequent order dated 4.11.2020 addressed the non-compliance of the earlier order by the Appellant.

2. The Appellant, a Director of the Corporate Debtor, claimed ownership of two vehicles provided by the Corporate Debtor, which were later sold to a third party during the insolvency resolution process. The Liquidator sought custody of these vehicles as they were considered assets of the Corporate Debtor. The Adjudicating Authority's order required the Appellant to hand over the vehicles to the Resolution Professional.

3. The Respondent argued that the appeal against the orders was time-barred as the Appellant did not challenge the initial order within the limitation period. The Appellant's attempt to explain the delay by citing a review application was dismissed, as there is no provision for review under the IBC, and the subsequent order seeking police assistance did not alter the finality of the original order.

4. The ownership transfer of vehicles during the insolvency resolution process was contested by the Liquidator, emphasizing the violation of the moratorium on asset transfers. The Appellant's sale of the vehicles was deemed non-compliant with the insolvency regulations, leading to the Resolution Professional's request for custody.

5. The Appellant's review application under NCLT Rules did not extend the limitation period for filing the appeal. Despite claims of waiting for the review application's outcome, the Appellant failed to meet the extended limitation period for filing the appeal, rendering it time-barred. The dismissal of the appeals due to being barred by limitation necessitated the Appellant's compliance with the original order to facilitate the Corporate Debtor's insolvency resolution/liquidation process.

Overall, the dismissal of the appeals highlighted the importance of adhering to limitation periods in challenging legal orders, especially in insolvency cases, to ensure timely resolution and compliance with regulatory requirements.