V.K. Abdul Rahim Vs. Jasin Jose, RP/ Liquidator - This Tribunal, is of the considered view that IBC is a time bound process and the Liquidator cannot accept a belated Claim, which would go against the provisions of the IBC, 2016 as well as the scope and objective of the `Code’.

 NCLAT (05.09.2023) In V.K. Abdul Rahim Vs. Jasin Jose, RP/ Liquidator  [Company Appeal (AT) (CH) (INS.) No. 299 of 2023] held that;

• This Tribunal, is of the considered view that IBC is a time bound process and the Liquidator cannot accept a belated Claim, which would go against the provisions of the IBC, 2016 as well as the scope and objective of the `Code’.

Excerpts of the Order;    

Aggrieved by the Impugned Order dated 21.04.2022, passed in MA(IBC)/39/KOB/2021 in TIBA/7/KOB/2019, by the Adjudicating Authority, National Company Law Tribunal, Kochi Bench, Kochi, Mr. V.K. Abdul Rahim / the Suspended Managing Director of the Corporate Debtor Company / M/s. Sargam Builders Pvt. Ltd., has preferred this Appeal, under Section 61 (1) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as `The Code’).

# 2. By the Impugned Order dated 21.04.2022, the Adjudicating Authority, has dismissed the Applications, preferred by the Applicant / Appellant herein, observing as follows:

• 20. “We have heard the learned counsel for the applicant – Shri. Babu Karukapadath and learned counsel for Respondent No.1 Shri. Akhil Suresh and R2 Shri. Mohan Jacob George. We have meticulously perused the case records and various documents annexed with this MA. We have also gone through the extant provisions of the Code and Rules made thereunder. It is seen that the applicant was going on challenging the procedure adopted by the IRP / RP and Liquidator in the Corporate Insolvency Resolution Process. When Respondent Bank initiated proceedings under Section 7 of the I & B Code, 2016, after hearing the contention of the Corporate Debtor in which the applicant herein was the Managing Director, this Tribunal vide order dated 20.9.2019 admitted the application. In the 4th CoC meeting held on 3.9.2020 the CoC with 77.92% voting right resolved not to re-issue the Form G further and not to go for fresh EOI and recommended to file application before this Adjudicating Authority for Liquidation of Company under Section 33(2) of IBC, 2016. Resolution Professional based on the resolution passed in the 4th CoC filed I.A No.129/KOB/2020 on 07.09.2020 before this Tribunal. Vide order dated 16.09.2020 this Tribunal allowed the application and ordered Liquidation of M/s. Sargam Builders Pvt Ltd (Corporate Debtor) and appointed Shri. Jasin Jose as the Liquidator.

• 21. We have gone through the averments made in MA/207/KOB/2020 and found that similar contentions were raised in that MA in which the applicant herein was the applicant. After a detailed hearing and considering all the contentions of both sides, this Tribunal vide order dated 20.09.2021 dismissed that MA with costs of Rs.25,000/- which according to the Liquidator, the applicants therein have not paid. Without complying with the direction in that order, the applicant has again moved this Tribunal taking some other contentions regarding the non-acceptance of his claim and the interest levied by the Federal Bank. The Liquidator has satisfactorily clarified why his claim was not accepted and the interest charged by the Bank is as per the agreement between the Bank and the Corporate Debtor. It appears to us, that the only intention of the applicant is to delay the proceedings in one way or the other approaching various forums including the Hon’ble Supreme Court of India, wherein all his attempts were failed.

• 22. From the verification of the earlier proceedings of this matter, it is seen that the Suspended Directors are not at all co-operating in the CIR Process and they were only on the lookout of creating hurdle to the continuation of CIR Process. Moreover, the applicant herein is a shareholder of the Company and as rightly pointed out by the Respondents that he is not entitled to claim any relief against the CoC or the conduct of the CIRP.

• 23. Without attending the meeting conducted by the IRP / RP, the applicant is making bald allegations against the conduct of the CoC meetings. His challenge to the order of admission of the TIBA/07/K0B/2019 before the Hon’ble NCLAT and the appeal against the order before the Hon’ble Supreme Court was failed. Hence, he cannot challenge the wisdom of the IRP/RP/Liquidator or the CoC at this belated stage and this is a fit case for dismissal.’’

# 3. The Learned Counsel for the Appellant submitted that the Corporate Debtor Company, was admitted into Corporate Insolvency Resolution Process on 20.09.2019, that a Liquidation Order, was passed by the Adjudicating Authority, on 16.09.2020, an Appeal, was preferred against this Liquidation Order, before the Appellate Tribunal, Principal Bench, New Delhi on 09.11.2020 in Comp. App (AT) (INS) No. 1297 / 2019, in which Appeal this Tribunal, vide Order dated 27.01.2020 has dismissed the Appeal.

# 4. It is submitted that the Appellant subsequently filed MA No. 207 / KOB / 2020 on 07.12.2020, seeking a direction to recall the Exparte Order of Liquidation, on various grounds. The Appellate Tribunal, Principal Bench, New Delhi, vide Order dated 16.12.2020, had permitted the Appellant to withdraw the Appeal and to prosecute MA No. 207 / KOB / 2020, which was a more comprehensive Petition. Thereafter, the Adjudicating Authority, dismissed MA No. 207 / KOB / 2020 on 20.09.2021, which was challenged by way of an Appeal, by the Appellant in his capacity as a Shareholder in Comp. App (AT) (INS.) No. 264 of 2021.

# 5. It is submitted by the Learned Counsel for the Appellant that in view of the long pendency of the Proceedings and to avoid any further delay in finalizing the Liquidation Process, in the event of the Appellate Authority under IBC approving the Order of Liquidation, without prejudice to the right of the Appellant, to prosecute the challenge against the Order of Liquidation, the Appellant had submitted his Claim, on 16.11.2021 in Form D, dated 15.11.2021 to the Respondent, claiming an amount of Rs.2,93,17,492.65.

# 6. It is the case of the Appellant that the Respondent had refused to admit the Claim and communicated the same vide email dated 25.11.2021. The Adjudicating Authority, without taking into consideration that the Appellant had not made his Claim in Form D, immediately after the Public Announcement, as the Applicant was in fact, pursuing his remedies, against the very Order of Liquidation, with an expectation that the Order of Liquidation to be set aside in due course, had dismissed his Application. Despite having filed a Form D with all the subsequent documents, the Respondent had insisted for a direction from the Adjudicating Authority, for admitting the genuine Claim of the Appellant.

# 7. The Learned Counsel for the Appellant further submitted that despite the Order of the Hon’ble Apex Court, extending the period of Limitation, on account of the Covid Pandemic from 15.03.2020 to 28.02.2022, the Adjudicating Authority, had erred in not excluding this period for the purpose of calculating the delay.

# 8. The Learned Counsel appearing for the Respondent / Liquidator submitted that the Appellant being the Suspended Managing Director, was aware of the Proceedings and had attended the Committee of Creditors Meetings, and therefore any delay in filing of the Claim, cannot be pardoned.

# 9. It is further submitted that the Appellant had filed MA No.207/KOB/2020, seeking to set aside the Liquidation Order and thereafter an Interlocutory Application for Amendment, was filed in this MA No. 207 / KOB / 2020 and was numbered as IA No. 101 / KOB / 2021.

# 10. The Respondent / Liquidator submits that both the Applications were heard together and dismissed on 17.08.2021, on the ground that the Suspended Directors, are not co-operating in the Corporate Insolvency and Resolution Process and were only looking out to create hurdles in the continuation of the Corporate Insolvency Resolution Process.

# 11. It was further submitted that in the light of the conduct of the Appellant herein, the Adjudicating Authority, had dismissed the said Application with costs of Rs.25,000/-.

Assessment:

# 12. It is seen from the record that the Liquidation date is 16.09.2020, the Public Announcement was made on 24.09.2020, the last date for receipt of Claim was 22.10.2020 and the last date for Verification of the Claim was 22.11.2020.

# 13. It is significant to mention that subsequent to the last date of receipt of Claim i.e. 22.10.2020, the Appellant had filed an Appeal on 10.11.2020, without choosing to prefer any Claim, within the stipulated period.

# 14. Regulation 16 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016, refers to `Submission of Claim’, and reads as hereunder:

• “(1) A person, who claims to be a stakeholder, shall submit its claim, or update its claim submitted during the corporate insolvency resolution process, including interest, if any, on or before the last date mentioned in the public announcement.

• (2) A person shall prove its claim for debt or dues to him, including interest, if any, as on the liquidation commencement date.’’   [Emphasis Supplied]

# 15. The Regulation clearly stipulates that the Claim has to be submitted on or before the last date mentioned in the Public Announcement.

# 16. In the instant case, it is an admitted fact that the Claim was submitted with an inordinate delay of 390 days. The contention of the Learned Counsel for the Appellant that this inordinate delay of 390 days is on account of pursuing the Appeal, challenging the Exparte Liquidation Order, is untenable on the ground that the last date for receipt of Claim was 22.10.2020, the Appeal challenging the Liquidation Order, was on 10.11.2020 and moreover, challenging the Liquidation Order by way of an Appeal, specifically in the absence of any `Stay Order’, does not prevent, viewed from any angle, the Appellant in preferring a Claim, within the stipulated period of time.

# 17. It is seen from the record that the Appellant had registered even the Publication of Form B in the Company’s Website. An email dated 26.04.2021, sent by the Appellant’s requests, the Liquidator, not to Publish Form B in the Website, until the case is disposed of.

# 18. At this juncture, it is relevant to reproduce the email dated 25.11.2021, addressed by the Liquidator to the Appellant herein, which is detailed as hereunder:

# 19. From the aforenoted email dated 25.11.2021, it is clear that the Liquidator had intimated to the Appellant herein, the reason for having rejected the Claim as the last date for Submission of Claim, was 22.10.2020 and 14 months had elapsed, since the Liquidation Order, was passed. Being the Managing Director of the Corporate Debtor Company, the Appellant cannot plead ignorance of the Proceedings and this Tribunal is of the earnest view that preferring an Appeal and challenging the Liquidation Order, cannot be a substantial ground, for not having preferred the Claim on time.

# 20. This Tribunal, is of the considered view that IBC is a time bound process and the Liquidator cannot accept a belated Claim, which would go against the provisions of the IBC, 2016 as well as the scope and objective of the `Code’. It is also seen from the record that the Appellant had made every effort to derail the process and this Tribunal, does not find any substantial grounds to interfere with the well-reasoned order of the Adjudicating Authority.

# 21. For all the foregoing reasons, this Comp. App (AT) (CH) (INS.) No. 299 of 2023 fails and accordingly Dismissed. No Order as to Costs. The connected pending IA No. 916 of 2023 (`For Stay’) is Closed.

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Slipco Construction Pvt. Ltd. Vs. Shri Abhijit Guhathakurta - Hon’ble NCLAT in the case of Canara Bank v. Commercial Tax Department, Madhya Pradesh and Anr.; (2023) ibclaw.in 342 NCLAT held that the delay in filing the Appeal under Section 42 of the Code is clearly condonable while exercising the power under Section 5 of the Limitation Act.

 NCLT Mumbai-II (12.09.2023) In Slipco Construction Pvt. Ltd. Vs. Shri Abhijit Guhathakurta  [Company Appeal No.20/2023 In CP(IB)No.1832/MB/C-II/2017] held that;

• It appears that the requirement to adhere to the forms specified under the Liquidation Regulations is directory in nature for the timely completion of the process and not intended to scuttle the rights of the persons or increase the disputes and consequential appeal under Section 42 of the Code. 

• Considering the above and the fact that the claim of Appellant had already been admitted in CIRP and that fresh claim was filed within the time announced by the Liquidator, rejection of the same merely on a procedure / format prescribed in the Liquidation Regulations may not, in our opinion, help to achieve the ends of justice.

• Hon’ble NCLAT in the case of Canara Bank v. Commercial Tax Department, Madhya Pradesh and Anr.; (2023) ibclaw.in 342 NCLAT held that the delay in filing the Appeal under Section 42 of the Code is clearly condonable while exercising the power under Section 5 of the Limitation Act.

Excerpts of the Order;    

# 1. This is an appeal filed under Section 42 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) to set aside the order dated 13.03.2023 of the Liquidator, wherein the claim of the Appellant has been rejected by the Liquidator and to direct the Liquidator to include the claim of the Appellant as secured creditor on the basis of the arbitration award passed in its favour. 

# 2. The case of the Appellant is that EPC Constructions Ltd (“Corporate Debtor”) issued a work order dated 17.03.2012 in favour of the Appellant for construction of annular colums of air-cooled condenser unit at one of plant area for a contract value of Rs.48717304/- valid from 01.03.2012 to 31.03.2013. Before completion of the above contract, dispute arose between the parties which resulted in termination of the contract on 12.02.2013. This led to a reference for Arbitration u/s.18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 and then to Delhi International Arbitration Centre, Delhi High Court, resulting in passing of an award dated 06.03.2018 by the Sole Arbitrator in favour of the Appellant. The said award was presented before the competent court for execution on 14.08.2018 as per the Arbitration & Conciliation Act, 1996. 

# 3. Meanwhile, on a Company Petition filed by IDBI Bank Ltd under Section 7 of the Code against the Corporate Debtor, the Adjudicating Authority vide its order dated 20.04.2018 admitted the petition, initiated Corporate Insolvency Resolution Process (CIRP) and appointed Mr. Abhijit Guhathakurta as the Interim Resolution Professional (IRP). 

# 4. On 26.04.2018, the IRP issued public announcement inviting claims to be filed against the Corporate Debtor. On 10.05.2018, the Appellant filed its claim against the Corporate Debtor and the same was admitted to the tune of Rs. 1,06,91,881/- (Rs. One Crore Six Lakhs Ninety-One Thousand Eight Hundred Eighty-One). 

# 5. The IRP was confirmed as Resolution Professional (RP) in the Committee of Creditors (CoC) meeting dated 25.05.2018. Since the claim of appellant was admitted as Operational Debt vide RP’s mail dated 17.08.2018, the Appellant raised an objection vide e-mail dated 04.09.2018 stating that the Appellant herein should not have been treated as an Operational Creditor in view of the final award dated 06.03.2018 passed in favor of the Appellant. 

# 6. On 10.01.2019, the CoC approved a Resolution Plan of Royale Partners Investment Fund which was then approved by the Adjudicating Authority vide its order dated 25.11.2019. However, Royale Partners Investment Fund failed to implement the approved Resolution Plan, despite orders passed by Adjudicating Authority as well as Hon’ble National Company Law Appellate Tribunal and the Hon’ble Supreme Court. Resultantly, vide order 07.05.2021 passed by the Adjudicating Authority, the Corporate Debtor was directed to be liquidated w.e.f. 18.05.2021 and the RP was appointed as the Liquidator. 

# 7. On 19.05.2021, the Liquidator made public announcement for submission of claims with 17.06.2021 as the last date for submission of the claim. On 27.05.2021, the Appellant filed a claim for Rs.1,06,00,000/- with the Liquidator. The claim was rejected by the Liquidator and as per the modified list of stakeholders as on 29.11.2021, it was rejected stating that the amount claimed by the OC is in excess of balance as per books of accounts of Corporate Debtor. 

# 8. In response to the above, the Liquidator in his affidavit-in reply stated that the Liquidator vide his e-mail dated 27.05.2023 cautioned the Appellant that claims were to be submitted as per the appropriate format provided under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (“Liquidation Regulations”); in the manner set forth in the public announcement dated 19.05.2021, and claims not made in the appropriate format would be rejected. Subsequently, the Liquidator vide his mail dated 24.07.2021 rejected the claim made by the Appellant on the ground that the claim submitted by the Appellant was not as per the appropriate format provided under the Liquidation Regulations and as per the provisions of Code and the public announcement dated 19.05.2021. 

# 9. The Liquidator further submitted that the Appellant, after 590 days, wrote a mail dated 06.03.2023 requesting to accept its claim and add the Appellant’s name in the list of creditors. The Liquidator vide his mail dated March 13, 2023 reiterated that the claim submitted by Appellant in Form C for Rs.10600000/- cannot be verified by the Liquidator as per the provisions of the Code and the records maintained with the Corporate Debtor. 

# 10. We have heard the counsel for the parties. The learned counsel appearing for the Appellant further submitted that as the claim of the Appellant was accepted by the RP, the Liquidator has no power to reject the claim of the Appellant. In support of the above, the Appellant cited the order of the Hon’ble NCLAT in Vijay Kumar Gupta v Canara Bank; Company Appeal (AT) (Ins.) No. 1015 of 2021 wherein it was held that 

• “….once the claim is admitted and submitted by the Liquidator to the Adjudicating Authority, if he receives any information, then he shall have no jurisdiction to reject or make any modification in the claims which has already been admitted in terms of Section 40 of the Code and has to approach the Adjudicating Authority for the purpose of its modification which precisely has been done in the present case by the Liquidator”. 

# 11. On the other hand, the counsel for the Liquidator has submitted that the Appellant failed to submit the claim in accordance with the forms and the manner specified by Section 38(3) of the Code and Regulation 17 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Further, if the Appellant was dissatisfied with the rejection of its claim by the Liquidator, the Appellant should have filed the appeal within 14 days from the date of such decision as per section 42 of the Code (since the Appellant’s claim was rejected by the Liquidator’s mail dated 24.07.2021, the present appeal should have been filed within 07.08.2021). The present appeal has been filed on 24.03.2023 i.e. after an inordinate delay of 593 days. No justification for the delay had been given and the Appellant had also not sought any condonation of delay. The Corporate Debtor is at its last stage of liquidation where seven auctions were already conducted and the final e-auction for selling the Corporate Debtor as a going concern is pending approval before the Adjudicating Authority. Condoning the inordinate delay at this stage would result in further delay and additional costs in the liquidation process. 

# 12. We have weighed the contention raised by the Counsel for the Appellant and the Respondent- Liquidator. 

# 13. It is apparent from the records that the claim of the Appellant to the extent of Rs.1,06,91,881/- was admitted in the Corporate Insolvency Resolution Process (CIRP) and when the liquidation process commenced, the Appellant filed a claim for lesser amount (Rs.106,00,000/-) on 27.05.2021 i.e. well within the time of 17.06.2021 specified by the Liquidator in the public announcement. The above claim was rejected by the Liquidator on the reason that the Appellant did not file the claim in the appropriate format specified under the Liquidation Regulations. It appears that the requirement to adhere to the forms specified under the Liquidation Regulations is directory in nature for the timely completion of the process and not intended to scuttle the rights of the persons or increase the disputes and consequential appeal under Section 42 of the Code. Considering the above and the fact that the claim of Appellant had already been admitted in CIRP and that fresh claim was filed within the time announced by the Liquidator, rejection of the same merely on a procedure / format prescribed in the Liquidation Regulations may not, in our opinion, help to achieve the ends of justice. 

# 14. As regards the delay of 593 days in preferring the present appeal under Section 42 of the Code, we are of the opinion that the sequence of the events and the facts of the case do justify non-mentioning of condonation of delay. In a similar situation, the Hon’ble NCLAT in the case of Canara Bank v. Commercial Tax Department, Madhya Pradesh and Anr.; (2023) ibclaw.in 342 NCLAT held that the delay in filing the Appeal under Section 42 of the Code is clearly condonable while exercising the power under Section 5 of the Limitation Act. 

# 15. It would be relevant to mention here that the Corporate Debtor is still undergoing liquidation process, and the application for selling the Corporate Debtor as a going concern is still pending for approval before the Adjudicating Authority. Acceptance of claim of the Appellant at this stage would not have a major direct bearing on the present process of liquidation. 

# 16. For all the aforesaid reasons, Company Appeal No. 20/2023 is allowed with a direction to the Liquidator to consider and verity the claim of Appellant on the basis of the award passed by the Arbitrator in accordance with Section 53 of the Code, 2016 and in the appropriate category as the debt of the applicant is admittedly based on work order executed by it would fall in the category of an operational debt. 

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Anil Kumar Arora Vs Leather World India Limited - Application for disclaimer of onerous covenants on a property during Liquidation.

 NCLT Kolkata (14.06.2021) in Anil Kumar Arora Vs Leather World India Limited (in liquidation) [IA (IB) No.1687/KB/2019 in CP (IB) No.432/KB/2018]. Applicant prayed for disclaimer of onerous covenants on the property of the applicant. AA observed that;

• Prayer (a) is for an order of disclaimer of the premises at No.15, Lindsay Street, Police Station-New Market, Kolkata 700 087 in favour of the applicant. This is ostensibly on the ground that onerous covenants supposedly are attached to the property. We are not required to go into the veracity of the commission agreement dated 13.11.2014. However, even from a bare reading of the commission agreement of 13.11.2014, which is the basis of such claim, there is nothing that can be attributed to the property itself, even if the commission agreement is taken at face value. It only casts a burden on the corporate debtor to make payments- that too if the commission agreement is otherwise sustainable in law. Therefore, this prayer of the applicant for disclaimer of onerous covenants is hereby rejected.

 

Excerpts of the order;

2. The applicant’s case

2.1. The applicant is a tenant in respect of a shop room at the ground floor of the premises bearing No.15, Lindsay Street, Police Station New Market, Kolkata 700 087;

2.2. The applicant had entered into a commission agreement with the corporate debtor on 13.11.2014 for a period of nine years, whereby the corporate debtor would utilise the premises for its leather business and shall pay the applicant as the commission agent, commission at 3% of the total sale on a monthly basis, subject to a minimum guaranteed return of ₹2.00 lakh.

2.3. The monthly commission as above was required to be paid within the 10th day of every month, in default of which the corporate debtor was liable to pay interest @12% per annum.

2.4. From April 2016 onwards, the corporate debtor started defaulting in making payments to the applicant. Between April 2016 and February 2017, the corporate debtor made part payments of ₹8,10,000/-, leaving a total of ₹30,19,513/- upto November 2017 inclusive of interest, as unpaid.

2.5. On 13.06.2016, the corporate debtor sought to reduce the monthly guaranteed return of ₹2.00 lakh to ₹1.10 lakh on grounds of losses sustained in its business. The applicant has, therefore, filed a civil suit bearing CS No.12/2018 before the Hon'ble Calcutta High Court for the said sum of ₹30,19,513/- in January 2018. Subsequently, several interlocutory applications bearing GA No.349/2018 and GA No.1604/2018 were also filed before the Hon'ble Calcutta High Court, which are pending adjudication. In GA No.349/2018, the Hon'ble Calcutta High Court passed an order restraining the corporate debtor from creating any third party interest over the subject premises.

2.6. The premises were taken on rent by the applicant’s father, late Hiralal Arora, to run his business in the name and style of M/s H. Lal & Co, a sole proprietorship, in the year 1950 from one Peter Basil, being joint owner with his sister, Pamela Basil. In 1970, Peter Basil left India and settled in Australia. His sister Pamela continued to stay in her half portion of the premises till her death. After Peter Basil shifted to Australia, the applicant has been paying rent to the Rent Controller, Govt of West Bengal. Following the death of Peter Basil, his sister Pamela became the absolute owner of the said premises. However, she never claimed any rent for the said premises, which continued to be in enjoyment and occupation of M/s H Lal & Co as tenant.

2.7. That the applicant is a tenant in the said premises is known to the corporate debtor, and the corporate debtor has accepted the applicant as the tenant in respect of the said premises, by virtue of the commission agreement dated 13.11.2014.

2.8. The applicant has given only right of user in respect of the said premises to the corporate debtor, and the latter is neither the owner nor a tenant in the said premises.

2.9. The applicant has come to know that the corporate debtor has unlawfully transferred the premises to a third party, which is now carrying on business and operations under the name and style of Prince Majestic wherein one Vidhan Fashions is claiming franchise thereof from March 2018, before the order of admission dated 13.06.2018 passed by this Adjudicating Authority.

2.10. The applicant’s information is that the corporate debtor has already transferred the premises to Vidhan Fashion for a sum of ₹20.00 lakh and that the corporate debtor is earning a whopping sum of ₹4.00 lakh per month from the said premises, despite having no right, title or interest in respect thereof.

2.11. The applicant had sent an email dated 26.08.2018 to the Respondent No.2/ Liquidator, asking for refund of the amount collected from third party and also for giving back vacant and peaceful possession of the premises. However, the liquidator has not acted in accordance with the requests.

2.12. The applicant is not only entitled to the premises, but also to the sums collected from the third party. Additionally, it is also entitled to the minimum commission guarantee of ₹2.00 lakh per month in terms of the commission agreement dated 13.11.2014.

2.13. The applicant had filed CA (IB) No.981/KB/2018 in CP (IB) 432/KB/2018, for an order directing the respondents to give back vacant and peaceful possession of the premises to the applicant. The annual accounts of the corporate debtor for the year 2014-15 would reveal that the said premises are not the asset of the corporate debtor. When the said application was taken up on 21.01.2019, the Adjudicating Authority did not consider the submissions made and instead directed the applicant to file its claim with the liquidator, who was to consider the claim on its own merit. The Adjudicating Authority passed the order for liquidation of the corporate debtor on 29.01.2019. Now, therefore, the order dated 21.01.2019 has merged with the order dated 29.01.2019.

2.14. Being aggrieved by both the orders, the applicant preferred Company Appeal (AT) (Insolvency) Nos.295/2019 and 296/2019 before the Hon'ble NCLAT, New Delhi. By an order dated 27.01.2019, the appeals were dismissed. Civil Appeals Nos.6592/2019 & 6593/2019 to the Hon'ble Supreme Court were also dismissed.

2.15. In the meantime, the applicant lodged proof of claim with the liquidator, claiming a sum of ₹67,07,118, which has been duly admitted by the liquidator under communication dated 01.04.2019.

2.16. The said premises is burdened with onerous covenants for the corporate debtor as the corporate debtor has to pay a sum of ₹2.00 lakh on monthly basis to the applicant. Therefore, the premises should be disclaimed in favour of the applicant. The applicant is entitled to a vesting order, especially since there are no other claimants in respect of the said premises.

2.17. The liquidator has filed CA (IB) No.1415/2019, seeking direction upon the respondents therein to provide vacant possession of the shop-room in the said premises. Since the applicant has not been made a party to this application, the applicant asked for a copy of the application from the liquidator vide his email dated 13.11.2019, but the liquidator refused to provide the same vide his reply email dated 13.11.2019.

2.18. The applicant also seeks disbursement of the amount admitted in his favour by the liquidator.

2.19. In these circumstances, the applicant seeks the following prayers: -

• (a) An order of disclaimer of the premises at No.15, Lindsay Street, Police Station-New Market, Kolkata 700 087 in favour of the applicant herein;

• (b) Alternatively, an order declaring that the premises at No.15, Lindsay Street, Police Station-New Market, Kolkata 700 087, is outside the scope of the moratorium of the corporate debtor;

• (c) Direction on the liquidator for disbursement of ₹67,07,118 admitted by the liquidator, in favour of the applicant;

• (d) Order directing the respondents to refund the amount collected from Vidhan Fashions each and every month;

• (e) Order directing the respondents to pay commission fee to the applicant at the rate of 3% of the total sale on a monthly basis, subject to the minimum guarantee of ₹2.00 lakh under the commission agreement dated 13.11.2014, till the actual physical possession of the property is handed back to the applicant;

• (f) An order directing the respondents to give back vacant, peaceful and actual possession of the said premises to the applicant;

• (g) Direction on the liquidator for serving a copy of the application in CA (IB) No.1415/KB/2019 filed by the liquidator, and an opportunity be given for filing a reply thereto.

 

3. The liquidator’s reply

3.1. The liquidator has filed a reply, wherein he has questioned the maintainability of the application, which has been filed under section 333 of the Companies Act, 2013. The liquidator states that the application is filed on a mere apprehension, and that cannot be the basis for maintaining an application. He has also drawn attention to the order dated 27.03.2019 passed by the Hon'ble NCLAT, dismissing the appeals filed by the applicant. The order of dismissal has also been sustained by the Hon'ble Supreme Court.

3.2. The liquidator has also received the claim of the applicant to the tune of ₹67,07,118/-, which has been duly verified and admitted.

3.3. The liquidator has also referred to the fact that the applicant has filed a Title Suit in a city civil court praying for permanent injunction. The suit is still pending for adjudication. The applicant filed for winding up of the corporate debtor before the Hon'ble Calcutta High Court, whose proceedings have been stayed since moratorium has kicked in following the order of admission dated 13.06.2018 passed by this Adjudicating Authority. The applicant has, therefore, approached every forum to take possession of the said property.

3.4. The liquidator has also received a letter dated 14.12.2020 from Lloyd Erectors Pvt Ltd, wherein it was informed for the very first time that Lloyd Erectors Pvt Ltd had purchased the premises No.15, Lindsay Street (previous numbered as 15A, 15B, 15C, 15D, 15E, 15F, 15G, 15H, 15I, 15J, 15K 15L) known as Lindsay Mansion from Peter Alan Basil by way of a registered deed of conveyance dated 30.04.1988, registered as Document No.4708/1988, Book I, Vol.137, pages 52 to 68 before the Registrar of Assurances, Kolkata. It was also mentioned that shop no.15D was tenanted to Hiralal Arora, sole proprietor of M/s H. Lal & Co. The applicant herein is the legal heir to Hiralal Arora who is claiming back the premises even though he has no legal right over the property.

 

4. Analysis of the contentions & orders on each of the prayers

4.1. We have perused the application and the reply of the liquidator, and heard the learned counsel appearing for each of them.

4.2. At the outset, we note that there are discrete causes of action combined in a single application. We can think of no reason other than saving of application fees for such a move. Let us examine the prayers once by one.

 

Prayer (a)

4.3. Prayer (a) is for an order of disclaimer of the premises at No.15, Lindsay Street, Police Station-New Market, Kolkata 700 087 in favour of the applicant.

4.4. This is ostensibly on the ground that onerous covenants supposedly are attached to the property. We are not required to go into the veracity of the commission agreement dated 13.11.2014. However, even from a bare reading of the commission agreement of 13.11.2014, which is the basis of such claim, there is nothing that can be attributed to the property itself, even if the commission agreement is taken at face value. It only casts a burden on the corporate debtor to make payments- that too if the commission agreement is otherwise sustainable in law. Therefore, this prayer of the applicant for disclaimer of onerous covenants is hereby rejected.

 

Prayer (b)

4.5. Prayer (b) is for an order declaring that the premises at No.15, Lindsay Street, Police Station-New Market, Kolkata 700 087, is outside the scope of moratorium of the corporate debtor.

4.6. The CIRP has come to an end with the order dated 29.01.2019 ordering the liquidation of the corporate debtor. With this, the moratorium that kicked in with the order of admission dated 13.06.2018 has also run its course. Since the corporate debtor is in liquidation, the provision that now govern initiation or continuation of legal proceedings is section 33(5), which reads as follows: - “(5) Subject to section 52, when a liquidation order has been passed, no suit or other legal proceeding shall be instituted by or against the corporate debtor: Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority.”

4.7. While section 14 of the Insolvency & Bankruptcy Code, 2016, is a broad-spectrum moratorium prohibiting all kinds of action against the corporate debtor, section 33(5) confines itself only to initiation of legal proceedings by or against the corporate debtor. The proviso to section 33(5) makes it clear that the liquidator may institute a suit or legal proceeding for and on behalf of the corporate debtor, after obtaining the prior approval of the Adjudicating Authority. There is no bar engrafted into section 33(5) which prohibits continuation of any pending suits or legal proceedings.

4.8. In the present case, since the applicant has also instituted civil proceedings for various reliefs both in the Hon'ble Calcutta High Court as well as in the city civil court, there is no need for this Adjudicating Authority for grant of prayer (b), and the same is hereby rejected.

 

Prayer (c)

4.9. Prayer (c) is for disbursement of claim admitted by the liquidator, which is not permissible until the liquidator process itself comes to an end. Therefore, this prayer is rejected.

 

Prayer (d)

4.10. Prayer (d) is for an order directing the respondents to refund the amount collected from Vidhan Fashions on each and every month.

4.11. This prayer cannot be granted without determining the issue of ownership and possession of the property. Since that issue is sub judice before the Hon'ble Calcutta High Court and the city civil court, this prayer is rejected.

 

Prayer (e)

4.12. Prayer (e) is for an order directing the respondents to pay commission fee to the applicant in terms of agreement dated 13.11.2014.

4.13. Since the claim of the applicant has already been adjudicated and admitted in full, all that is required to be done at this stage is to sit back and wait for the liquidation process to be completed, at the end of which disbursement will take place in accordance with law. Therefore, this prayer is rejected as premature at this stage.

 

Prayer (f)

4.14. This is for an order directing the respondents to give back vacant peaceful and actual khas possession of the said premises.

4.15. This Adjudicating Authority had considered application bearing IA No.138/2021, in which an order dated 12.04.2021 was passed. It was directed that in view of contesting claims made regarding ownership and possession, the liquidator shall hand over physical possession of the premises to the person from whom the corporate debtor took possession, since the corporate debtor was not the owner of the premises. Accordingly, the liquidator has since handed over possession to Mr Anil Arora, the applicant herein.

4.16. In view of this, prayer (f) has become infructuous.

 

Prayer (g)

4.17. This is for a direction to the liquidator for service of a copy of the application being CA (IB) No.1415/KB/2019 filed by the liquidator, and for an opportunity to be given to the applicant to file appropriate reply therein.

4.18. The liquidator is the applicant in that application, and therefore, the dominus litus. If at all the applicant feels that he is entitled to be heard, he ought to file an intervention petition in IA No.1415/KB/2019. This prayer in the present application is, therefore, refused.

 

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Insolvency and Bankruptcy Board of India(Liquidation Process) Regulations, 2016.

 

# Regulation 10. Disclaimer of onerous property.

(1) Where any part of the property of a corporate debtor consists of-

• (a) land of any tenure, burdened with onerous covenants;

• (b) shares or stocks in companies;

• (c) any other property which is not saleable or is not readily saleable by reason of the possessor thereof being bound either to the performance of any onerous act or to the payment of any sum of money;

• (d) unprofitable contracts;  the liquidator may, notwithstanding that he has endeavored to sell or has taken possession of the property or exercised any act of ownership in relation thereto or done anything in pursuance of the contract, make an application to the Adjudicating Authority within six months from the liquidation commencement date, or such extended period as may be allowed by the Adjudicating Authority, to disclaim the property or contract.

(2) The liquidator shall not make an application under sub-regulation (1) if a person interested in the property or contract inquired in writing whether he will make an application to have such property disclaimed, and he did not communicate his intention to do so within one month from receipt of such inquiry.

(3) The liquidator shall serve a notice to persons interested in the onerous property or contract at least seven days before making an application for disclaimer to the Adjudicating Authority:

Explanation: A person is interested in the onerous property or contract if he-

• (a) is entitled to the benefit or subject to the burden of the contract; or

• (b) claims an interest in a disclaimed property or is under a liability not discharged in respect of a disclaimed property.

(4) Subject to the order of the Adjudicating Authority approving such disclaimer, the disclaimer shall operate to determine, from the date of disclaimer, the rights, interest and liabilities of the corporate debtor in or in respect of the property or contract disclaimed, but shall not, except so far as is necessary for the purpose of releasing the corporate debtor and the property of the corporate from liability, affect the rights, interest or liabilities of any other person.

(5) A person affected by the disclaimer under this Regulation shall be deemed to be a creditor of the corporate debtor for the amount of the compensation or damages payable in respect of such effect, and may accordingly be payable as a debt in liquidation under section 53(1)(f).

 

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