National Company Law Appellate Tribunal sets aside an improper judgment by NCLT

National Company Law Appellate Tribunal (NCLAT): Set-aside improper judgment by NCLT: In the matter of Company Appeal (AT) (CH) (Ins.) No. 139 of 2021, order dated 30. Sep. 2021

Brief Introduction of the Appeal:

This appeal is made by the insolvency professional (IP), Mr. Ashish Arjunkumar Rathi, the appellant herein, represented by his Counsel Mr. Abhijeet Sinha against the impugned order of National Company Law Tribunal (NCLT), Hyderabad Bench, issued in C.P.(IB) No. 150/9/HDB/2017, I.A. No. 28 of 2021 dated 22. Apr. 2021. The IP was appointed as the liquidator for Ind-Barath Power (Madras) Ltd.

Contention of the Appellant:

The appellant had filed the appeal as the I.A No. 28 of 2021 was rejected and disposed of by the NCLT, Hyderabad Bench. The appellant claimed that the application was filed before NCLT for appropriate orders to be sought for the liquidation of Ind-Barath Power (Madras) Ltd as per Section 35(1)(n) and also Section 60(5) of the IBC, where a question of law/priorities/facts is involved in the process of liquidating a company and necessary clarifications are sought to proceed with the liquidation process. Further as per the Liquidation Proceedings 2016, Regulation 44(1), the IP sought to complete the liquidation process within one year, notwithstanding pendency of any application for avoidance of transaction under Part II of the Code, read with Rule 11 of NCLT rules, requesting for exclusion of period of Operation of Stay in Liquidation Proceedings.

The Appellant was appointed as liquidator of Corporate Debtor by the NCLT, Hyderabad Bench as on 22.Apr.2019. A public announcement was issued by the appellant as per liquidation procedures under IBC but the liquidation process was stayed by the NCLT, Hyderabad Bench as on 15.Nov.2019. Due to the stay order, the Appellant could not complete the sale of Nu-Tech and process the proceeds of sale toward the liquidation process. The contention of the appellant is to exclude the period of stay while computing the time period for completion of liquidation process under Regulation 4(3) of the IBBI Liquidation Process Regulations, 2016.
In addition to the above, a representation was made to the NCLT to exclude the time taken for realization of the assets of Ind-Barath Power (Madras) Ltd i.e the Corporate Debtor.

On the I.A submitted by the Appellant, the NCLT, Hyderabad Bench instead of excluding the period of stay on the liquidation process and excluding the time taken for realization of assets of Corporate Debtor, extended the time of the liquidation process by one more year. The present appeal is to set aside the impugned order passed by NCLT, dated 22.Apr.2021 and exclude the stay time as required by the appellant. The period of stay was operative since 15.Nov.2019.

Analysis and the final judgment:

The NCLAT took note of the impugned order passed by NCLT under Interim application number 1012 of 2019 for excluding the time taken for realization of Corporate Debtors assets. Since the NCLT stayed the application, the Appellant could not proceed further with the sale and realize the proceeds toward the estate of the Corporate Debtor. This lead to the non-completion of the liquidation process by the Appellant within a period of one year and the further additional fee was also attracted under Regulation 4 of Liquidation Regulation with respect to the sale of the assets of Corporate Debtor. Hence the Appellant required that he be treated as though the impugned order was not passed and the stay period be excluded under the liquidation process and the fee also revised accordingly. The NCLAT opined that the relief sought for by the appellant be granted and the Appellant has rightly pointed out the error made in the impugned order of NCLT, Hyderabad bench.

The NCLAT bench further reiterated the legal maxim actus curiae neminemgravabit i.e the actions of any Court shall not harm any person and no one should suffer due to procedural and faulty decisions of the Court.

For reasons stated above, the appeal with the NCLAT was allowed and the impugned order passed by the NCLT, Hyderabad Bench was set aside. Further, no orders as to costs were passed.