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2022 (9) TMI 439 - AT - Insolvency and BankruptcySeeking disbursement of payment of dues of workers and employees of the Company working at Dharwad Plant of the company in Karnataka in a regular and timely manner - restraint on respondent/Liquidator by an order of injunction from taking any coercive steps for closing the operations of the company's plant at Dharwad, Karnataka - restraint by an order of injunction from terminating, or taking any decision to terminate, the agreement between the company and Jeju Metals Private Limited - appointment of competent and independent agency to investigate the manner in which the respondent/Liquidator has been conducting his affairs as such Liquidator, and a report be called for from such agency. HELD THAT - The conduct of the Appellants are noted, who have not come with clean hands in filing this Appeal. Out of 42 Appellants, 20 have been paid in full and final settlement and so far as the remaining Appellants are concerned, they have not been handed over charge and have obstructed in taking of the possession of Dharwad unit. The reasons recorded by the Adjudicating Authority for dismissing the application are within the framework of law and require no interference. The impugned order dated 03.05.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) is hereby affirmed. There is no merit in the Appeal. Appeal dismissed.
Issues Involved:
1. Payment of dues to workers and employees. 2. Injunction against closing the Dharwad plant. 3. Injunction against terminating the agreement with Jeju Metals Private Limited (JMPL). 4. Appointment of an independent agency to investigate the Liquidator's conduct. Issue-wise Detailed Analysis: 1. Payment of dues to workers and employees: The appellants, employees and workers of Gujarat NRE Coke Limited, sought regular and timely disbursement of their dues from the Liquidator. They argued that despite the plant's operational status and the Liquidator receiving payments from JMPL, their salaries and wages were delayed or unpaid. The Liquidator contended that payments were made to some appellants, while others had not received their dues due to non-cooperation in handing over assets and records. The Tribunal noted that the Liquidator had made payments until September 2020 and could not be expected to cover expenses from personal funds due to limited cash flow. Thus, the Tribunal found no grounds to grant this prayer. 2. Injunction against closing the Dharwad plant: The appellants sought to restrain the Liquidator from closing the Dharwad plant. The Tribunal observed that the Liquidator had made efforts to keep the plant operational despite financial constraints. The Liquidator's decision to terminate the contract with JMPL was based on commercial considerations, as JMPL was unable to make timely payments. The Tribunal emphasized that unviable units should not be kept afloat against the objectives of the Insolvency and Bankruptcy Code (IBC). Consequently, the Tribunal upheld the Liquidator's discretion to close the plant if necessary. 3. Injunction against terminating the agreement with JMPL: The appellants requested an injunction to prevent the termination of the agreement with JMPL. The Tribunal found that the Liquidator's decision to terminate the contract was justified due to JMPL's delayed payments and inability to commence operations. The Tribunal concluded that the Liquidator's actions were commercially sound and did not warrant interference. 4. Appointment of an independent agency to investigate the Liquidator's conduct: The appellants sought an investigation into the Liquidator's conduct. The Tribunal noted that there were no allegations of fraud or bias against the Liquidator. It held that ordering an investigation based on perceived loss of employment would set a harmful precedent, undermining the independence of insolvency professionals. The Tribunal dismissed the prayer for an investigation, emphasizing the protection provided to actions taken in good faith under Section 233 of the IBC. Conclusion: The Tribunal dismissed the appeal, affirming the Adjudicating Authority's order. It found that the Liquidator had acted within the framework of the law and had made reasonable decisions based on the financial condition of the company. The Tribunal emphasized the need for hard decisions in insolvency proceedings and upheld the Liquidator's discretion in managing the company's affairs. The appeal was dismissed with no order as to costs.
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