Asl Enterprises Ltd. Vs. Mr. Daulat Ram Jain, Liquidator - Any decision post the date of such transfer regarding the management of such assets, including that of the subsequent transfer of the said assets to another company, lies with the company. The same is not covered within the jurisdiction of the Adjudicating Authority under the IBC and as such, the prayers sought in the instant application cannot be granted.

 NCLT Kolkata (18.10.2023) in Asl Enterprises Ltd. Vs. Mr. Daulat Ram Jain, Liquidator [I.A. (I.B.C.) 703/KB/2023 in CP(IB) No. 1172/KB/2019] held that;

• Any decision post the date of such transfer regarding the management of such assets, including that of the subsequent transfer of the said assets to another company, lies with the company. The same is not covered within the jurisdiction of the Adjudicating Authority under the IBC and as such, the prayers sought in the instant application cannot be granted.

Excerpts of the Order;    

1. This Court convened through hybrid mode. 

2. The interlocutory application being I.A. No. 703/KB/2023 has been filed by the Applicant herein being the guarantors of the Corporate Debtor under section 60(5) of the Insolvency And Bankruptcy Code, 2016 (“IBC”) seeking the following reliefs: (a) An order and/or direction upon the liquidator to ef ect registration of the land and other assets of the Corporate Debtor sold in liquidation in favour of the applicant to be done in the name of the respondent no. 2 herein; (b) Direction upon the Liquidator to issue, execute and register the Sale Certificate The name of the respondent no. 2 herein; (c) Stay on dissolution of the Corporate Debtor till disposal of the present application;(d) Ad-interim orders in terms of Prayers above. (e) Such further and/or other directions be passed as this Adjudicating Authority May Deem fit and proper. 

3. Submissions of the Applicant: 

3.1 Adi Ispat Private Limited (the Corporate Debtor) was admitted into CorporateInsolvency Resolution Process (CIRP) vide this Adjudicating Authority’s order dated 22.11.2019.1 Thereafter, this Adjudicating Authority passed an order allowing the liquidation of the Corporate Debtor vide order dated 27.09.2022.2 The respondent herein was appointed as Liquidator of the Corporate Debtor. 

3.2 By virtue of Section 35 of the Code, the Liquidator is empowered to sell the moveable and immoveable properties and assets of the Corporate Debtor Undergoing liquidation by public auction or by private contract or to sell the same in parcel in such a manner as may be specified. 

3.3 In accordance with the provisions of the Code and the Regulations framedthereunder, the Liquidator caused valuation of the moveable and immoveable properties of the Corporate Debtor (in liquidation) and thereafter, the Liquidatormade public announcement3 on September 29, 2022 in newspapers for sale of assets 4 of the Corporate Debtor (in liquidation) on AS IS WHERE IS BASISandAS IS WHAT IS BASIS and WHATEVER THERE IS BASIS and NO RECOURSE BASIS for auction, which was to be held on November 28, 2022. 

3.4 It is stated that the applicant participated in the said public auction heldonNovember 28, 2022 and was declared as the successful H1 bidder with abid amount of Rs.15 crore. After conclusion of the public auction on November 28, 2022, the Liquidator issued a Letter of Intent5 to the successful auction purchaser on November 29, 2022. The said Letter of Intent was duly accepted by the applicant on November 30, 2022 by endorsing on the copy of the Letter of Intent dated November 29, 2022. 

3.5 The entire sale consideration amount of Rs.15 crore has been deposited/paid by the applicant successful auction purchaser. In terms of the Expression of Interest, the applicant had already submitted Rs.1.5 crore as Earnest Money Deposit (for short, "EMD") prior to auction on November 28, 2022. Thereafter, in terms of the Letter of Intent it had deposited Rs.10 crore on December 21, 2022, Rs.3 crore on December 28, 2022 and the balance sum of Rs.50 lakh on December 31, 2022. As the 30 days' period to make payment of the total consideration amount expiredonDecember 29, 2022, the applicant made further payment of Rs.3,333/- towards interest on the amount paid after 30 days. The Liquidator by a letter 6 datedDecember 31, 2022 has acknowledged and confirmed receipt of the full consideration amount. 

3.6 It has been submitted that the Liquidator/the vendor has already delivered actual physical possession 7 of the assets of the Corporate Debtor to the applicant onASISWHERE IS BASIS & WHAT IS BASIS and WHATEVER THERE IS BASISandNO RECOURSE BASIS without any warranty and/or indemnity on February 4, 2023. Further the Liquidator has also executed a Sale Agreement8 on March 20, 2023 in favour of the applicant being the successful auction purchaser. 

3.7 In order to revive the Unit and setting up a rolling mill, the Applicant has incorporated the Respondent no. 2 herein, which is the 100%subsidiary company of the Applicant. On March 15, 2023, the Respondent no. 2 was incorporated under the Companies Act, 2013, having his Corporate IdentityNo. U29301WB2023PTC260399. The respondent no. 2 has been incorporated tocarryon the business of manufacturers of, dealers in, exports and importers of all varieties of iron, steel and TMT bar, which is in the identical line of business as that of the Corporate Debtor. 

3.8 The Applicant and the Respondent no. 2 are in the same "ASLE Group" having the same Registered Office, same e-mail address and common directors on the board. The applicant intends to do the business of rolling mill through the new100%subsidiary company, which is the respondent no. 2 herein, for better efficiency and management of the new business. As such, the applicant has filed the instant application, praying for registration of the Sale Agreement in the name of the6 Annexure “F” 7 Annexure “G” 8 Annexure “H” respondent no. 2 so that the land and assets can be transferred and registered in the name of the respondent no. 2. 

3.9 The Respondent no. 2 is neither a related party of the Corporate Debtor nor of theLiquidator or any other professional appointed by the Liquidator. The respondent no. 2 is not ineligible under Section 29A of the said Code to run the CorporateDebtor. In this regard, a copy of the Certificate and/or Declaration made by way of an affidavit by the respondent no. 2 that it is not ineligible to revive the Unit and operate a rolling mill with the assets and properties of the Corporate Debtor sold in liquidation, has been provided by the Applicant 9 . 

3.10 In order to operate a rolling mill, various statutory clearances from the Government Authorities like Ministry of Environment, Forest and Climate Change, StatePollution Control Board and other Licensing Authorities are required and it will be convenient if new business is being run by way of a separate entity. Further, since the parent company i.e. the Applicant herein, is the successful auction purchaser of the assets and properties of the Corporate Debtor, it is just, fit and expedient to pass an order and/or direction for registration of the land and other assets of the Corporate Debtor in the name of the Respondent no. 2 herein whichis the 100% subsidiary of the applicant. 

4. Analysis and Findings: 

4.1 Heard the Ld. Counsel on behalf of the Applicant and the Ld. Counsel on behalf of the respondents and perused the records. 

4.2 The instant matter came up for hearing on 26.05.2023 wherein it was noted that theLiquidator had no objections to the prayers of the instant application. On perusal of the records it can be seen that a sale agreement for the assets of the CorporateDebtor was executed between the Applicant herein and the Liquidator of theCorporate Debtor on 20.03.2023. Further, the assets are in possession of theApplicant herein as is clear from the possession letter dated 04.02.2023. As such, there is no doubt that the assets have been transferred to the Applicant. 9 Annexure “K” 

4.3 Further, the Applicant, under section 179 of the Companies Act, 2013, has filed an extract of the its board resolution dated 27.03.2023 wherein it had resolved to file the instant application seeking the registration of transfer of the sale agreement dated 20.03.2023 and transfer of the land in the name of ASLE Rolling Mills PrivateLimited. 

4.4 Be that as it may, since the assets in question have been transferred vide sale agreement dated 20.03.2023 to the Applicant, i.e. a private company, any decision post the date of such transfer regarding the management of such assets, including that of the subsequent transfer of the said assets to another company, lies with the company. The same is not covered within the jurisdiction of the AdjudicatingAuthority under the IBC and as such, the prayers sought in the instant application cannot be granted.

4.5 Accordingly, I.A. (I.B.C.) 703/KB/2023 is dismissed. Needless to mention, theApplicants are at liberty to take other steps in accordance with law in order to pursue any other remedy available to them. 

4.6 CP (IB) No. 1172/KB/2019 shall be listed for further consideration on 24.11.2023. 

4.7 The Registry is directed to send e-mail copies of the order forthwith to all the parties for information and for taking necessary steps. 

4.8 Certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities

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