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2022 (5) TMI 21 - AT - Insolvency and BankruptcyLiquidation process costs - expenses for preventing any damage due to possible collision between the vessels - responsibility was upon the liquidator - expenses incurred should be part of the overall liquidation process costs or not - HELD THAT - It is noted that the liquidator, who is responsible for preservation and protection of the assets in the liquidation estate, exchanged email communications starting with an e-mail dated 2.10.2019 (emails attached at pp.45-48 of the appeal paperbook) to both Appellant/Hero Fincorp and United Bank of India, under whose charges the vessels Tag 22 and Tag 6 were held respectively, that the two vessels have come close to each other and may come into contact leading to potential damage, whereupon vide e-mail dated 3.10.2019 (attached at pg. 45 of the appeal paperbook) the Appellant communicated its unreserved willingness to contribute funding needed for securing Tag 22 and also requested the liquidator to undertake the securing operation - it is clear that proportionate CIRP cost and payment of expenses incurred by the liquidator in securing m.v. Tag-22 has been ordered by the Adjudicating Authority which has to be paid by the Appellant. The actions relating to protection and preservation of two vessels Tag 22 and Tag 6 were taken by the liquidator during the period 3rd to 5th October, 2019, as is clear from the e-mails exchanged between the charge holders of two vessels, namely United Bank of India and Hero Fincorp and the liquidator (emails attached at pp. 45-48 of appeal paperbook) and also from the tax invoice submitted by K.E. Salvage (attached at pg. 49 of the appeal paperbook). Therefore, the action relating to securing the two vessels was taken much after the Appellant had obtained order from the Bombay High Court under its Admiralty Jurisdiction on 18.3.2019 and 23.4.2019 and therefore the vessel Tag 22 had become the asset of the Appellant. Thus, it is clear the any action taken thereafter for securing the vessel Tag 22 was undertaken by the liquidator with the explicit consent of the Appellant/Hero Fincorp in pursuance of Hero Fincorp s interest in protecting and preserving its asset Tag 22, and the action being taken for liquidation of the Corporate Debtor is under the provisions of the IBC - Regulations 16 and 18 of the Liquidation Process Regulations enjoin upon the creditors to file their claim before the liquidator in a prescribed time period. In the present case, the financial creditor Hero Fincorp Limited did not file its claim before the liquidator ostensibly because it wanted to realise its security interest in the vessel Tag 22. The liquidator took action after receiving consent from the Appellant for preservation and protection of vessel Tag 22 during 3rd 5th October, 2019 much after the Appellant had invoked Admiralty Jurisdiction of Hon ble Bombay High Court to realise its security charge in vessel Tag 22. Subsequently, when invoice received from K.E. Salvage Company was sent for payment to the Appellant by the liquidator, the Appellant went for litigation against making payment of said invoice. The Appellant shall pay a cost of Rs. One Lakh as litigation expenses to the liquidator, which shall go into the liquidation estate. Both, the proportional share of the Appellant in securing the two vessels Tag 22 and Tag 6 and the litigation cost shall be paid by the Appellant within 15 days of this judgment - appeal dismissed.
Issues Involved:
1. Responsibility for securing the vessel Tag 22. 2. Inclusion of expenses incurred for securing vessels as part of the CIRP and liquidation expenses. 3. Right of the Appellant to exit the liquidation process and keep the vessel Tag 22 out of the liquidation estate. 4. Payment of expenses incurred by the liquidator in securing the vessel Tag 22. 5. Delay in filing the appeal by the Appellant. Issue-wise Detailed Analysis: 1. Responsibility for securing the vessel Tag 22: The Appellant argued that the responsibility for securing the vessel Tag 22, part of the liquidation estate, lay with the liquidator. The liquidator had informed the Appellant and United Bank of India about the potential damage due to the proximity of vessels Tag 6 and Tag 22 and sought their cooperation for securing the vessels. The Appellant expressed willingness to contribute funds for securing Tag 22. The Tribunal noted that the liquidator, responsible for the preservation and protection of assets, acted with the explicit consent of the Appellant to secure Tag 22, thus making the Appellant responsible for the incurred expenses. 2. Inclusion of expenses incurred for securing vessels as part of the CIRP and liquidation expenses: The Appellant contended that the expenses for securing the vessels should be included in the liquidation process expenses. The Tribunal observed that the expenses were incurred after the liquidation commencement date, and since the Appellant had agreed to contribute to these expenses, it should bear them. The Tribunal upheld the Adjudicating Authority's decision that the Appellant should bear the expenses incurred by the liquidator in protecting its charge. 3. Right of the Appellant to exit the liquidation process and keep the vessel Tag 22 out of the liquidation estate: The Appellant sought permission to exit the liquidation process and keep the vessel Tag 22 out of the liquidation estate, invoking the Admiralty Jurisdiction of the Bombay High Court before the initiation of CIRP. The Tribunal noted that the Appellant had already taken statutory remedies to realize its security interest in the vessel Tag 22. The Adjudicating Authority allowed the Appellant to opt out of the liquidation estate under section 52 of the IBC, subject to the clearance of proportionate CIRP costs and payment of expenses incurred by the liquidator. 4. Payment of expenses incurred by the liquidator in securing the vessel Tag 22: The Tribunal emphasized that the Appellant had consented to the securing operation and should bear the expenses incurred. The Tribunal found no error in the order that the Appellant should pay its proportionate share in the expenses for securing vessels Tag 22 and Tag 6. Additionally, the Appellant was ordered to pay Rs. One Lakh as litigation expenses to the liquidator, which would go into the liquidation estate. 5. Delay in filing the appeal by the Appellant: The Tribunal noted that the Appellant waited almost seven months before filing the appeal. Despite receiving the Impugned Order on 6.2.2020, the Appellant took action to opt out of the liquidation process and keep vessel Tag 22 out of the liquidation assets. The Tribunal found the appeal devoid of merit and dismissed it with directions for the Appellant to pay the proportional share of securing expenses and litigation costs within 15 days.
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