2021 (3) TMI 549 - Tri - Insolvency and Bankruptcy

CIRP cost incurred as well as the liquidator's fees and the liquidation expenses had not been paid - Payment to be made to KMEWPL - verification of claim to be payable to the liquidator, in relation to the balance amounts - Fees payable to the liquidator - Agreement for the dredger as entered into between the KMEWPL and liquidator - Condonation of delay in filing the requisite form as prescribed - HELD THAT - In relation to the amount which is being disputed namely the balance amount payable to the KMEWPL, this Tribunal is of the view that the chartered accountant, viz., statutory auditor of the corporate debtor should have afforded an opportunity, in fairness, to the scheme proponents to make objections, if any. In the absence of the same having been afforded by the statutory auditor, we direct the statutory auditor of the corporate debtor to afford an opportunity to the scheme proponents to put forth their objections, if any, in relation to the payments quantified as payable to KMEWPL as well as to the liquidator's claim under cost for claim verification . Thus, affording an opportunity to the scheme proponents and factoring their objections, if any, made by the scheme proponents, let the statutory auditor of the corporate debtor submit a report containing only in relation to the amounts in dispute as between the parties as noted above with proper reconciliation. For the above purpose, documents and records, if any, submitted by the liquidator to sustain the disputed claim the same shall also be made available to the scheme proponents for their perusal and record. Fees payable to the liquidator - HELD THAT - As already dealt with vide order dated May 5, 2020 the fees will become payable only upon the occurrence of the events of respective receipts and disbursal at the specified percentage payable and not otherwise and in the circumstances we direct the liquidator to desist from claiming the amounts towards liquidator fees as immediately payable. Agreement for the dredger as entered into between the KMEWPL and liquidator - HELD THAT - The board of the corporate debtor along with the liquidator who will act as an independent observer is directed to make a decision whether to extend the said agreement or to engage some other parties other than the said KMEWPL as per the terms and conditions as may be agreed between the corporate debtor and such other party. The liquidator, in this connection, will act only as an independent observer and will not have any vote in relation to the decision to be taken by the corporate debtor in this regard. The liquidator is ordered to make arrangements to hand over the reins of the management of the corporate debtor, including the possession of assets of the corporate debtor, if not already done within a period of 10 (ten) days from today. No fees shall be chargeable by the liquidator for the same and if not handed over as above, the risk and responsibility and costs shall be to the personal account of the liquidator without any recourse to the funds or assets available with that of the corporate debtor. Condonation of delay in filing the requisite form as prescribed - HELD THAT - The liquidator is directed to avail the remedy as available to him under section 460 of the Companies Act, 2013 by following the proper procedure. Application disposed off.

Summary

Issues Involved:
1. Compliance with the approved scheme and section 29A of the Insolvency and Bankruptcy Code, 2016.
2. Payment of CIRP cost, liquidator's fees, and liquidation expenses.
3. Handing over of the company's management and assets.
4. Dispute over liquidation costs and fees.
5. Role of the liquidator as an independent observer.
6. Agreement with Knowledge Marine Engineering Works P. Ltd. (KMEWPL).
7. Condonation of delay in filing requisite forms.

Issue-wise Detailed Analysis:

1. Compliance with the Approved Scheme and Section 29A of the Insolvency and Bankruptcy Code, 2016:
The Tribunal approved the scheme proposed by Amma Lines P. Ltd. and Meka Infrastructure P. Ltd. on January 10, 2020, subject to compliance with section 29A of the IBC, 2016. The scheme proponents filed an affidavit confirming compliance, which the liquidator verified and reported back to the Tribunal.

2. Payment of CIRP Cost, Liquidator's Fees, and Liquidation Expenses:
The Tribunal's order on May 5, 2020, directed the scheme proponents to pay the CIRP costs, including the resolution professional fees and liquidation costs, as quantified by the liquidator. The liquidator was to provide supporting vouchers and documents. In case of disputes, the statutory auditor of Meka Dredging Co. P. Ltd. was to verify the claims.

3. Handing Over of the Company's Management and Assets:
Despite the Tribunal's order, the liquidator failed to hand over the company's management and assets, citing unpaid CIRP costs and liquidation fees. The Tribunal found this delay unjustified and reiterated that the liquidator should have handed over the reins by May 5, 2020, if not earlier.

4. Dispute Over Liquidation Costs and Fees:
The scheme proponents disputed certain liquidation costs, including payments to KMEWPL and claim verification costs. The Tribunal directed the statutory auditor to provide an opportunity for the scheme proponents to raise objections and to submit a reconciled report on the disputed amounts.

5. Role of the Liquidator as an Independent Observer:
The Tribunal emphasized that the liquidator should act as an "independent observer" on the board of the corporate debtor, overseeing the implementation of the scheme and reporting any infractions to the Tribunal. The liquidator's fees were to be paid only upon the occurrence of specific events, as per the Tribunal's order.

6. Agreement with Knowledge Marine Engineering Works P. Ltd. (KMEWPL):
The Tribunal addressed the dispute regarding payments to KMEWPL, which were part of the liquidation costs. The liquidator had entered into an agreement with KMEWPL, approved by the Tribunal, to protect the dredging equipment. The Tribunal directed that the board of the corporate debtor, along with the liquidator as an independent observer, decide whether to extend the agreement or engage another party.

7. Condonation of Delay in Filing Requisite Forms:
The Tribunal directed the liquidator to seek remedies under section 460 of the Companies Act, 2013, for the delay in filing the requisite forms, as sought in Application No. I. A. No. 478 of 2020.

Conclusion:
The Tribunal disposed of all applications with specific directions for compliance with the approved scheme, payment of undisputed amounts, and resolution of disputed costs through the statutory auditor. The liquidator was instructed to hand over the company's management and assets within ten days and to act as an independent observer in future proceedings. The Tribunal also provided a mechanism to address the disputed amounts to avoid prolonged litigation.