Powers and duties of Liquidator [ Section 35 ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Powers and duties of Liquidator [ Section 35(1) ] (1) Subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties, namely:- (a) to verify claims of all the creditors; (b) to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor; (c) to evaluate the assets and property of the corporate debtor in the manner as may be specified by the Board and prepare a report; (d) to take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary; (e) t o carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary; (f) subject to section 52 , to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels in such manner as may be specified: Provided that the liquidator shall not sell the immovable and movable property or actionable claims of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicant. (g) to draw, accept, make and endorse any negotiable instruments including bill of exchange, hundi or promissory note in the name and on behalf of the corporate debtor, with the same effect with respect to the liability as if such instruments were drawn, accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary course of its business; (h) to take out, in his official name, letter of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due and payable from a contributory or his estate which cannot be ordinarily done in the name of the corporate debtor, and in all such cases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or recover the money, be deemed to be due to the liquidator himself; (i) to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities; (j) to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code; (k) to institute or defend any suit, prosecution or other legal proceedings , civil or criminal, in the name of on behalf of the corporate debtor; (l) to investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions; (m) to take all such actions, steps, or to sign, execute and verify any paper, deed, receipt document, application, petition, affidavit, bond or instrument and for such purpose to use the common seal, if any, as may be necessary for liquidation, distribution of assets and in discharge of his duties and obligations and functions as liquidator; (n) to apply to the Adjudicating Authority for such orders or directions as may be necessary for the liquidation of the corporate debtor and to report the progress of the liquidation process in a manner as may be specified by the Board; and (o) to perform such other functions as may be specified by the Board. Reporting Regulation 5 of the IBBI (Liquidation Process) Regulations, 2016 provides that The liquidator shall prepare and submit to the Adjudicating Authority in the manner specified under these Regulations. [ Sub - regulation (1) ] (a) a preliminary report; (b) an asset memorandum; (c) progress report(s); (d) sale report(s); (e) minutes of consultation with stakeholders; and (f) the final report prior to dissolution Preservation of Report [ Sub - regulation (2) ] The liquidator shall preserve a physical as well as an electronic copy of the reports and minutes referred to in sub-regulation (1) for eight years after the dissolution of the corporate debtor. Report make available to Stakeholder [ Sub - regulation (3) ] Subject to other provisions of these Regulations, the liquidator shall make the reports and minutes referred to sub-regulation (1) available to a stakeholder in either electronic or physical form, on receipt of (a) an application in writing; (b) costs of making such reports and minutes available to it; and (c) an undertaking from the stakeholder that it shall maintain confidentiality of such reports and minutes and shall not use these to cause an undue gain or undue loss to itself or any other person. Power to Consult Stakeholder [ Section 35(2) ] The liquidator shall have the power to consult any of the stakeholders entitled to a distribution of proceeds under section 53 : Provided that any such consultation shall not be binding on the liquidator: Provided further that the records of any such consultation shall be made available to all other stakeholders not so consulted, in a manner specified by the Board. R e g ul a t i o n 8(1) of the IBBI (Liquidation Process) Regulations, 2016 states that the stakeholders consulted under section 35(2) shall extend all assistance and cooperation to the liquidator to complete the liquidation of the corporate debtor. Relevant Case Law Reliance India Power Fund Vs. Raj Kumar Ralhan [CA (AT) (Ins.) No. 318 of 2020] NCLAT order dt. 24.02.2020 Liquidator has a duty under section 35(1)(k) of the Code but the FC has no right to force the liquidator to take part in the arbitration proceedings. The duty of the liquidator would include a conscious decision not to take part in the proceedings. Rasiklal S. Mardia Vs. Amar Dye Chem Ltd. Ors. - NCLAT Dated 08.04.2019 Liquidator is only an additional person and not exclusive person who can move an application under section 391 of the Companies Act, 1956 , when the company is in liquidation. B.R. Traders Vs. Venkataramanarao Nagarajan Ors. - NCLAT order dt. 13.11.2019 The liquidator is duty bound to make every endeavour to protect and preserve the value of the property of the CD and manage the operations as a going concern.