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TMI Blog2022 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant : Mr Mohit Choudhury , Mr Prakhar Mithal and Ms Sanyuikta Gupta , Advocates For the Respondent : Ms Swati Dalmia , Mr Saurabh Bindal , Mr Palzer and Mr Siddharth Baskar , Advocates for R1. Mr. Bishwajit Dubey and Ms Aishwarya Gupta , Advocates for R2 / SBI . Mr Shivam Saini and Mr Arun Aggarwal , Advocates for R10 / Bank of Baroda JUDGEMENT JUSTICE RAKESH KUMAR , MEMBER ( JUDICIAL ) Since in both the appeals order challenged was common i.e. order dated 26.07.2021 passed by the Adjudicating Authority, National Company Law Tribunal, Allahabad Bench, Allahabad (hereinafter referred to as 'Adjudicating Authority') in IA No.19/2021 filed in CP No.(IB) 223/ALD/2019, both the appeals were tagged and heard together. Accordingly, by a common judgement both the appeals are being disposed of. 2. Mr. Mohit Chaudhury, learned counsel for the appellant in Company Appeal (AT)(Insolvency) No.594/2021 has argued as lead appeal and as such the brief facts stated in Company Appeal (AT)(Insolvency) No.594/2021 can be taken into account for disposal of both the Appeals. In both the Appeals the Appellants have prayed for setting aside an order dated 26.07.2021 whereby the Adjudicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived on 02.02.2019 the notified date for submission of Resolution Plans was extended at various occasions. Even after best efforts made by the RP, Resolution Plan was not approved by the CoC. 5. Finally on an application for liquidation under Section 33(1) of IBC on 19.08.2020 the order was passed by Adjudicating Authority regarding liquidation of the Corporate Debtor. During the liquidation proceeding, meeting of the Stakeholders Consultation Committee was held on 21.10.2020 wherein the members of the Stakeholders' Consultation Committee comprising of the representatives of the State Bank of India and other Banks considered that when the amount was lying in the Bank account of the corporate debtor approximately Rs.99.35 crores, those amount may be distributed amongst the shareholders. In the said Meeting it was intimated by the Liquidator that such distribution would only commence after filing of the assets memorandum with the Adjudicating Authority and after expiry of period of 90 days stipulated for receipt of the proposals for scheme of compromise for arrangements. No scheme of compromise or arrangement was receipt by the applicant from any eligible person. Thereafter, seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the distribution once the list of stakeholders and asset memorandum have been filed with the Tribunal. The Adjudicating Authority allowed distribution of amount of Rs.61 crores less any applicable withholding tax out of accumulated cash profit lying with the Bank in the account of corporate debtor to the stakeholders in accordance with waterfall mechanism as specified under Section 53 of the IBC. 8. Before further proceeding, it is necessary to indicate that after an application filed under Section 33 of IBC by the liquidator/Respondent No.1, the learned Adjudicating Authority by its order dated 19.08.2020 allowed the same. The liquidation order dated 19.8.2020 was assailed by both the appellants herein alongwith some other. The Appellant in Company Appeal (AT)(Ins) No.594/2021 filed an appeal under Section 61 of IBC vide Company Appeal (AT)(I) No. 832/2020 whereas appellant in Company Appeal (AT)(I) No.565/2021 filed an another appeal i.e. Company Appeal (AT)(Ins) No.846/2020. The Appellant i.e. Yogesh Singh was Appellant No.2 in Company Appeal (AT) (Ins) No.846/2020. The said appeals were finally disposed off by judgement dated 18.01.2022 passed by the Division Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeals insisted for hearing in the appeals and prayed for deciding the issue. 11. Mr. Mohit Chaudhury, learned counsel for the Appeal in Company Appeal (AT)(Ins) No.594/2021 has emphatically argued that the impugned order is liable to be set aside on the ground that the same is in conflict with the Regulation 32 and 42 of the IBBI (Liquidation Process) Regulations, 2016 (hereinafter referred to as Regulation, 2016). He further submits that the impugned order is itself against the provisions contained in Section 53 of the IBC. He has argued that without following procedure as prescribed in Chapter VI and VII of the Regulation, 2016 neither the liquidator was entitled to file an application for distribution of surplus income lying in the bank account of corporate debtor nor the Adjudicating Authority was competent to permit the liquidator for distribution of the said funds amongst the stakeholders. 12. Shri Chaudhury, learned counsel has further made allegations against the liquidator for suppression of fact. He submits that once appeal i.e. Company Appeal (AT)(Ins) No.832/2020 and 846/2020 filed against the liquidation order were pending before the Appellate Tribunal it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such distribution will not hamper the liquidation process of the corporate debtor." "Order dated 20.11.2020 passed in Comp.App(AT) No.832 and 846 of 2020. "20.11.2020: Let a formal notice be issued to Respondents. Notice on behalf of Respondent No.1 is accepted by Mr. Ramji Srinivasan, Senior Advocate along with Ms. Swati Dalmia, Advocate. Notice on behalf of Respondent No.2 (Committee of Creditors/ Members of the Committee of Creditors) is accepted by Mr. Ritin Rai, Senior Advocate along with Mr. Madhav Kanoria. No further notice need be issued to them. Reply affidavit may be filed by the Respondents within two weeks. Rejoinder, if any, be filed within two weeks thereof. Short written submissions, not exceeding three pages, may also be filed along with the pleadings. List the appeals on 13th January, 2021 at 2.00 P.M. Meanwhile, the Liquidator shall ensure that if the Corporate Debtor (Company) is a going concern, it shall continue to operate as a going concern." 14. According to Mr. Gautam Singh, learned Counsel for the appellant in Company Appeal (AT)(Ins) No.565/2021, the Adjudicating Authority has not taken any steps to ensure the corporate debtor to continue as going co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor and Ramesh Chandra Garg, ex-CFRO of the corporate debtor and others (Employees) respectively against the order of liquidation passed by this Hon'ble Tribunal dated 19th August, 2020. The Hon'ble NCLAT has observed in course of hearings that any sale of assets an/or distribution of proceeds would render the appeals infructuous. The appeals are in the final stage of hearing and next fixed in April, 2021 for hearing. The Applicant craves leave to submit copies of the said appeals and orders passed thereon at the time of hearing of this application, if any." 17. Learned counsel for the Respondent No.1 has further drawn our attention to IA filed in Company Application No.19/2021 which was filed on behalf of the liquidator to urgency application, filed by the applicant under Section 60(5)(c) of IBC read with Rule 111 of NCLT Rules. She has drawn our attention to para 8 of the petition which is at running page 267 to 268 in Volume 2 of reply affidavit filed on behalf of Respondent No.1. The same is quoted herein below:- "8. Paragraph 5(vi) and (vii)-With reference to paragraphs 5(vi) and (vii), save what are matter of records, all allegations made therein are denied an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor being an officer of the Tribunal considered that the appeals had reached an advanced stage of hearing and pursuant to concerns raised by the Hon'ble Bench-IV, NCLAT and the advice of his learned senior counsel cancelled the e-auction process scheduled on 4th March, 2021 and 5th March, 2021. The said appeals were thereafter heard by the Hon'ble Bench -IV, NCLAT on 4th March, 2021 when counsel appearing on behalf of the appellants concluded their arguments. On the said date the Counsel on behalf of the Liquidator informed the Hon'ble Bench-IV, NCLAT were informed about the cancellation of the e-auction. The Applicant and its officers despite appearing as Respondent No.2 in the said appeals and being represented by its Senior counsel who have had no objection whatsoever to the deferment/cancellation of e-auction in course of hearing of the appeals on the assurance of the Senior Counsel of the Liquidator is now taking advantage of the situation and instigating and misrepresenting to other stakeholders/lenders that the Liquidator has unilaterally cancelled the e-auction without any direction being passed of stay of liquidation process/e-auction by the Hon'ble NCLAT. The Applicant he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June, 2021 when counsel on behalf of the appellants therein, Liquidator and the Applicant herein were present and made submissions. The Hon'ble NCLAT concluded hearing of the applications of the said date and disposed of the same by an order dated 10th June, 2021 wherein the Liquidator was allowed to sell the inventory of 600 tonnes (approx.) of expired Olein and 100 tonnes (approx.) of expired stock of refined palm oil by way of e-auction in a transparent manner to the highest bidder. The sale proceeds have been directed to be kept in a interest baering bank account. The senior counsel appearing on behalf of the Applicant herein in the said appeals was present during hearing and did not have any submissions and/or objections. It is, therefore, clear that the NCLAT has not permitted the Liquidator to sell the assets of the Corporate Debtor pending adjudication of the appeals filed by the Promoter Director and Employees of the Corporate Debtor. The NCLAT has also not passed any direction for distribution of funds to the stakeholders from proceeds realized from sale of inventor. The Liquidator humbly states and submits that there is no scope for passing any order of distribution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders i.e. Respondent No.9 Rathod Jitender Kumar was already arrayed in the application filed before the Adjudicating Authority under Section 60(5) of the IBC, Satya Narayan Jhunjhunwala, the appellant in Company Appeal (AT)(Ins) No.594/2021 was having no locus to file the present appeal. 20. Ms Swati Dalmia, learned counsel for Respondent No.1 has argued that it is true that mechanism has been provided under Section 53 of the IBC as well as Chapter VI and Chapter VII of the Regulation, 2016 regarding sale of assets etc and its liabilities but fact remain that once accumulated profits of the corporate debtor was already lying in the bank account, distribution of such accumulated profit may not invite any question since it was not the proceed of the sale of assets. The accumulated profit was already lying in the bank and there was huge corporate debt against the corporate debtor. In any event such amount would not have been withheld for long period by the liquidator and as such it was necessary to distribute the accumulated profit amounts in terms of Section 53 of the Code. She has also drawn our attention to distribution of accumulated profit by way of referring to chart showi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Rs.61,00,000,00. On aforesaid fact and circumstances the learned counsel for Respondent No.1 has further argued that filing of the present appeal and that too pressing the same even after liquidation order was already approved by this Appellate Tribunal amounts to abuse of process of Court and wasting precious time of the Tribunal. 21. Mr. Biswajit Dubey, learned Counsel appearing on behalf of State Bank of India in both the appeals has raised question of maintainability of the present appeal by way of referring to Section 61 of the IBC. He submits that only an aggrieved person can file an appeal under Section 61 of the IBC whereas appellants in both the appeals are strangers. One of the appellant has claimed to be ex director of the corporate debtor i.e. Company Appeal (AT)(Ins) No.594/2021 whereas in Company Appeal (AT)(Ins) No.565/2021 the appellant claims to be an employee/engineer of the corporate debtor. He further submits that though learned counsel for the appellant in both the appeals have highlighted the provisions regarding distribution of sale proceeds they have not shown any provision which restrict distribution of accumulated profit lying in the account of corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo days. If the Appellant provides the email address to the Respondents. Let notice be also issued through email. Let the matter be fixed 'For Admission (After Notice)' on 03th September, 2021." Once the order impugned had already taken its finality there was no reason to advance further arguments. Even though learned counsel for the appellants were conveyed regarding the present situation, learned counsel for the appellants insisted to pursue the Court. We have noticed that without any plausible reason during arguments false allegations were made against Respondent No.1/liquidator on the point of facts relating to pendency of two appeals before this Appellate Tribunal. We have already hereinabove that the fact regarding pendency of the appeal before this Appellate Tribunal was brought on record by the liquidator by way of filing rejoinder/reply affidavit before the Adjudicating Authority as it is apparent from Volume I and Volume II. The reply filed by the Respondent No.1 was already served on the appellants even then learned counsel for the appellants have ventured to make allegations against Respondent No.1 regarding suppression of fact of pendency of appeal before this Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Satya Narayan Jhunjhunwala in Company Appeal (AT)(Ins) No.594/2021 and Mr. Yogesh Singh appellant in Company Appeal (AT)(Ins) No.565/2021 had earlier approached this Tribunal assailing the order of liquidation passed by the Adjudicating Authority. The liquidation order was approved by this Tribunal. It is also noticed that the corporate debtor was not going concern. Even though learned counsel for the appellant by way of referring to an order dated 20.10.2020 passed by this Tribunal, which has been quoted hereinabove, has argued that the Tribunal had observed that it was a going concern. On bare perusal of the said order it is clear that it was observed in order dated 20.11.2020 that liquidator shall ensure that if the corporate debtor was (company) going concern, it shall continue to operate as going concern. Accordingly the allegation of Learned Counsel for the Appellant that the Adjudicating Authority has incorrectly referred in its order that the corporate debtor was not going concern appears to be baseless. 26. In view of the facts and circumstances as discussed hereinabove we are of the opinion that both the appeals are devoid of merits and require to be rejected with impos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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