2023 (11) TMI 106 - AT - Insolvency and Bankruptcy

Wilful Obedience - Application filed under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 by the Liquidator praying for directions to be issued to the Respondent to hand over the vacant possession of the immovable property - HELD THAT - This Tribunal on 21.04.2023 in allowing the Respondent to settle the dues of the statutory creditors had done so by holding that the liquidator should assume a more positive approach and not shun the bonafide efforts made by the present Respondent to clear the debt of the Corporate Debtor. It had therefore decided to give an opportunity to the present Respondent to settle with the fourth statutory creditor rather than straight away allow auction of the subject property with the caveat that this settlement was to be completed within a limited and stringent timeframe. This was allowed so as to balance the interests of all stakeholders while being fully conscious of the objectives of timeliness in the completion of proceedings under IBC. Despite allowing two extensions of time to the Respondent, he failed to submit a responsive proposal and instead chose to file an appeal before the CESTAT. The object behind filing the appeal was to reach an end which was clearly different from the purpose for which time was allowed by this Tribunal towards full and final settlement. Instead of clearing the claims of the majority stakeholder, endeavours have only been made to dispute and stagger the claims by filing an appeal - In the process, the objectives of the IBC have been upset and defeated. Speed is the essence of IBC and the process of liquidation is time-bound to be completed within one year. Keeping in mind that the liquidation process in the instant case is already much delayed we do not find strong and cogent reasons to allow more time. Application disposed off.

Summary

Issues Involved:
1. Compliance with Tribunal's Order and Undertaking.
2. Settlement Proposal Submission and Acceptance.
3. Liquidation Process and Delay.
4. Validity of GST Department's Claim.

Summary:

1. Compliance with Tribunal's Order and Undertaking:
The application was filed under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, by the Liquidator seeking directions for the Respondent to hand over the vacant possession of the immovable property (subject property) due to willful disobedience of the Tribunal's order dated 21.04.2023 and breach of undertaking dated 20.05.2023.

2. Settlement Proposal Submission and Acceptance:
The Tribunal had allowed the Respondent to submit a full and final settlement proposal within a stringent timeframe, initially set for two weeks. The Respondent failed to meet this deadline and requested extensions, which were granted with clear stipulations that no further extensions would be entertained. Despite submitting a settlement proposal, the GST Department did not accept it, leading to the Liquidator's request for the Respondent to vacate the subject property.

3. Liquidation Process and Delay:
The Liquidator contended that the Respondent was willfully disobeying orders and delaying the liquidation process, which is detrimental to the interests of the Corporate Debtor and statutory creditors. The Tribunal emphasized that proceedings under IBC are strictly time-bound, and the Respondent's conduct was seen as an attempt to derail the liquidation process by filing an appeal instead of settling the claims.

4. Validity of GST Department's Claim:
The Respondent argued that the GST Department's claim should be considered invalid due to a pending appeal before the CESTAT and the mandatory pre-deposit of 7.5% of the principal amount. The Tribunal found this contention mis-conceived, stating that pre-deposit for filing an appeal is not payment of duty, and the claim of the GST Department cannot be viewed as extinguished.

Conclusion:
The Tribunal reiterated that the Liquidator should proceed with the liquidation process as the GST Department did not accept the settlement proposal. The Respondent was directed to vacate the subject property within seven days from the date of the order. The Liquidator was also instructed to claim fees and expenses and make provisions for the pre-deposit amount in respect of the CESTAT appeal. The I.A. was disposed of with these observations.