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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 ..... s insisted to pursue the Court. It is 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. 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 Appellate Tribunal. Section 61 of IBC in a specific term contemplates filing of appeal by an aggrieved person. It was not a stage of corporate insolvency proceeding. After CIRP since it failed, liquidation order was passed by the Adjudicating Authority on an application filed by the Liquidator under Section 33(1) of the IBC. Once corporate debtor went into liquidation and the petition for distribution of accumulated profit was filed wherein representatives of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Adjudicating Authority on an application filed by the Liquidator i.e. Respondent No.1 under Section 35(1)(n) of IBC read with Section 60(5) IBC allowed the said application. By the said order the Adjudicating Authority opined that as the amount to be distributed is in excess of the liquidation cost as estimated by the liquidator and is to be distributed to them who are entitled to the benefit of the distribution of liquidation proceedings, therefore, the Adjudicating Authority allowed the applicant/liquidator to distribute the amount of Rs.61 crore, less any applicable withholding tax, out of the accumulated cash profits lying the bank ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered 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, second meeting of Stakeholders Consultation Committee (hereinafter referred to as SCC) of the Corporate Debtor was held on 10.12.2020 and in the said Meeting the representatives of SBI insisted that the accumulated profit aggregating to Rs.96.21 crore lying in the bank account of the corporate debtor be distributed to the stakeholders in accordance with waterfall mechanism as per Section 53 of IBC. The said stand was also supported by representatives of Standard Chartered Bank. It is reflected from the impugned order that Legal Advisor on behalf of Liquidator present in the said Meeting informed the Members of the SCC that su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed 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 this Tribunal. This Tribunal did not interfere with the liquidation order rather approved the same with certain observations. 9. While Company Appeal (AT)(Ins) No. 565/2021 was taken up for the first time before Division Bench of this Tribunal, a prayer was made by the Appellant for staying of operation of the impugned order. However, considering the fact that the impugned order had already been carried out, this Tribunal refused to pass an order staying the impugned order. We feel appropriate to reproduce the order dated 5.8.2021 passed in Company Appeal (AT) (Ins) No. 565/2021 as follows:- 05.08.2021: Heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 duty on the part of the liquidator to inform the Adjudicating Authority, but this fact was suppressed. Same stand has been taken by Mr. Gautam Singh, learned counsel who has appeared on behalf of the Appellant in Company Appeal (AT)(Ins) No.565/2021. Both the counsel besides raising allegations against the liquidator have also argued that this Tribunal may issue some guidelines to prevent re-occurrence of such event by either liquidator or the Adjudicating Authority. According to the learned counsel for the appellant the liquidator in connivance with State Bank of India persuaded the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 concern. He also reiterates that liquidator/Respondent No.1 has suppressed the facts before the Adjudicating Authority regarding pendency of two appeals i.e Company Appeal (AT)(Ins) No.832 and 846 of 2020 and he levelled serious allegations against the liquidator for suppression of facts. 15. Ms Swati Dalmia, learned counsel has appeared on behalf of Liquidator/Respondent No.1. She has taken the allegations made by both the appellants very seriously and refuting the same she has argued that without pleading such allegation has been levelled which is highly deplorable. 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 and disputed. It is denied and disputed that the Liquidator has stalled the liquidation process and the only sale notice dated 19th January, 2021 issued for sale of Block/(s) of assets of the Corporate Debtor has been withdrawn on 3rd March, 2021 without specifying any reason and without discussion with the Stakeholders. The Liquidator states that two appeals bearing Company Appeal (AT)(Insolvency) No.832 of 2020 and Company Appeal (AT)(Insolvency) No.846 of 2020 have been filed before the Hon ble NCLAT by the suspended Promoter Director and employees of the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 herein has in fact in a meeting of the 4th Stakeholders Consultation Committee held on 24th May, 2021 repeatedly raised alleged and insisted that the Liquidator has brought in a self inflicted stay on the e-auction/liquidation process while deliberately suppressing to other stakeholders that the Applicant has not also raised any objection to the submissions made by Senior Counsel of the Liquidator before the Hon ble Bench-IV, NCLAT regarding deferment/cancellation of e-auction till the appeals are disposed of. The stakeholders attending the said meeting categoric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. 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 funds to the stakeholders at this stage in view of the order passed by the Hon ble NCLAT as aforesaid. Copies of the order dated 2nd June, 2021 and order dated 10th June, 2021 are annexed hereto and marked as Annexure D. It is denied and disputed that the Liquidator has not been convening the meetings of stakeholders even when request for such meeting is made by more than 60% of the stakeholders. It is further denied and disputed that the Liquidator had previously, by intentionally misinterpreting the provisions of law as to stakeholders rejected the request of al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain 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 showing distribution of accumulated cash profit available with the corporate debtor as in the month of December, 2020. She has taken this Tribunal to running page No.355 of Volume 2 of reply affidavit filed by Respondent No.1. We feel it necessary to reproduce the same as follows:- Particulars Amount distributed Remarks 1 Insolvency Resolution process costs (Section 53(1)(a) 62,93,488 Provisioning for payment of enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank (UK) 1,44,79,249.19 Standard Chartered Bank (India) 2,01,20,895.75 Total amount distributed to the secured financial creditors 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 fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Ld. Counsel for the Respondent No. 1 (Liquidator) may file Reply Affidavit within two weeks. Rejoinder, if any, may be filed within one week thereafter. Issue notice to the other Respondents by speed post. Requisites alongwith process fee be filed if not filed within two 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h law. Even huge cash i.e. Rs.1,27,58,850/- was distributed under the head of workmen dues representing gratuity. We do not find any justification to interfere with the impugned order. 25. Before parting with the judgment it is also required to notice that the same appellants i.e. Appellant 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 Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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