The Federal Bank Ltd. Vs. Ruben George Joseph, Liquidator, M/s. Platino Classic Motors (India) Pvt. Ltd. - Regulation 21A (3) provides the consequences of non-compliance of direction provided in Regulation 21A(2)(b), accordingly on the expiry of 180 days if the secured creditor failed to realize the amount and paid to the liquidator the secured asset automatically shall vests with the liquidator as part of liquidation estate.

NCLT Kochi (23.06.2023) In The Federal Bank Ltd. Vs. Ruben George Joseph, Liquidator, M/s. Platino Classic Motors (India) Pvt. Ltd. [IA(IBC)/139/KOB/2023 in IA(IBA)/176/KOB/2022 in IBA/25/KOB/2020] held that;

• Whether any provision where the time limit prescribed is mandatory or directory the Madras High court in Shahji Purushottam vs Union of India, observed that when there is no consequential result is prescribed it will consider as only a directory, and when there is consequential result is prescribed then the provision is mandatory.

• Regulation 21A (3) provides the consequences of non-compliance of direction provided in Regulation 21A(2)(b), accordingly on the expiry of 180 days if the secured creditor failed to realize the amount and paid to the liquidator the secured asset automatically shall vests with the liquidator as part of liquidation estate.

• The period mentioned in Regulation 21A(2)(b) is mandatory, hence the period of 180 days prescribed under Regulation 21A(2)(b) of IBBI (Liquidation Process)2016 cannot be extended.

Excerpts of the Order;

# 1. The present application has been filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016, by the Applicant who is the Secured Creditor of Corporate Debtor M/s. Platino Classic Motors (India) Pvt Ltd. seeking the time extension of 180 days from 29.03.2023 for effecting the sale of secured asset under the SARFAESI Act, and remit the excess amount, over it’s admitted claim etc; 

# 2. The facts as narrated in the application and explained by the Applicant are summarized hereunder: 

• i. The Applicant being a secured creditor opted to realize its security as provided in Section 52(l)(b) of the Insolvency and Bankruptcy Code (for short code) and informed the Liquidator of its security interest and identified the asset subject to such security interest to be realised. The Applicant has submitted Form- D as provided under Regulation 2lA (l) of the IBBI (Liquidation Process) Regulations 2016 on 28.10.2022. The Liquidator has verified the security interest and permitted the Applicant to realize its security interest which has been proved before him. The Applicant has paid the amount payable under Section 53(1)(a) & 53(1)(b)(i) to the Liquidator as it would have shared in case it had relinquished the security interest within the time allotted. 

• ii. Thereafter on 15.11.2022 the Liquidator directed the Applicant to inform him of the Value of its Secured asset. Accordingly, the Applicant informed on 29.11.2022 the Value of its Secured asset as Rs, 15,00,00,000/-. The Liquidator on 23.12.2022, informed the Applicant that he could not find a buyer for a better price and permitted the Bank to proceed under the SARFAESI Act and the Possession of the secured Asset was surrendered to the Applicant on 27.12.2022. 

• iii. It is stated that the fixed Reserve Price of the Secured asset being Rs 19,00,00,000/-, they issued a sale notice dated 07.01.2023 as provided under the SARFAESI Act and Enforcement of Security Interest Rules 2002 fixing the sale on 08.02.2023. There were several inquiries from various quarters and the same was known to the erstwhile Directors of the Corporate Debtor as well. One of the erstwhile Directors of the Corporate Debtor approached the Honourable High Court of Kerala challenging interalia the sale notice issued by the Applicant by filing WP(C)No. 3780/2023, contending that a Financial Creditor who has initiated CIRP under Section 7 of the code cannot opt to realise its security interest as provided under Section 52(1)(b) of the Code. The Honourable High Court admitted the Writ Petition without staying the sale to be held on 08.02.2023. However, the sale proposed to be held on 08.02.2023 could not be undertaken for want of bidders. In this circumstance, the Applicant has again notified the sale on 01.03.2023 by issuing a sale notice dated 10.02.2023 fixing the reserve Price at Rs. 17,00,00,000/-. Based on that the Writ Petition was amended by incorporating certain additional allegations to the effect that the bank has not submitted Form-D within the time allowed and hence it is not entitled to realize its security independently and moved again on 28.02.2023 and pressed for an interim order. But the Hon’ble High Court declined the Interim Order sought for as per Order dated 28.02.2023. It is further stated that the Petitioner in WP(C)No. 3780/2023 challenged Annexure A1 before the Division Bench by filing Writ Appeal No. 485/2023. The Petitioner in WP(C)No. 3870/2023 has made wide publicity regarding the pendency of the Writ Petition and that of the Writ Appeal among the prospective buyers and ultimately the sale proposed to be held on 01.03.2023 also could not be successful for want of bidders. In the circumstances, the Applicant again brought notified a sale to 17.03.2023 by issuing the sale notice dated 01.03.2023 fixing the Reserve Price at Rs.15,00,00,000/-. When the Writ Appeal came up for hearing the fact that the sale notified on 01.03.2023 could not be successful and that a new sale notification has been issued for sale on 17.03.2023 has been brought to the notice of the Hon’ble Court on 06.03.2023. The Appellant withdrew the Writ Appeal leaving open the legal and factual contentions raised by them in the Writ Appeal and without prejudice to their right to challenge the fresh sale notice at appropriate proceedings. 

• iv. It is stated that by amending the WP(C) No. 3780/2023 the Petitioner pressed for an interim relief to stay the sale to be held on 17.03.2023. Even though the Hon’ble High Court did not stay the sale proceedings, passed an order that if any sale is held the same shall be subject to the result of the Writ Petition. However, the sale slated on 17.03.2023 also could not be held due to the availability of bidders. 

• v. It is further stated that the time limit provided under Regulation 21A(2)(b) of IBC, 2016 to remit the excess if any of the realized value of the asset over the admitted claim of the Applicant is to expire on 29.03.2023. The reason is not attributable to the Applicant as it has made all earnest efforts to realize its security interest for the maximum price to the benefit of the entire creditors. However, this is due to the tactics of the erstwhile Directors of the Corporate Debtor. Ultimately it is the time for making the remittance as provided under Regulation 2lA(2)(b) extended by this Adjudicating Authority, the asset which is subject to the security interest of the Applicant shall become part of the liquidation estate which would cause irreparable injury and prejudice to the Applicant. 

# 3. On 26.04.2023, the Respondent/Liquidator filed his reply statement and stated that the prayer is beyond the scope of the statute and hence cannot be granted, as there is no provision for an exclusion of time under the statute. Therefore, he has stated that the application is not maintainable. The Point for consideration is: 1. Whether the period of 180 days prescribed under Regulation 21A (2) (b) of IBBI (Liquidation Process) 2016 can be extended? 

# 4. The corporate debtor was ordered to liquidation by this Adjudicating Authority on 30.09. 2022.The applicant being a secured creditor opted to realize its security interest by filing form ‘D’ of Schedule II of IBBI (Liquidation Process) Regulations 2016 and obtained the possession of immovable secured asset from the respondent liquidator on 27.12.2022. The applicant could not realize the amount as expected on or before 29.03.2023 i.e., within 180 days from the date of commencement of liquidation. Even though the applicant narrated about the pending of writ petitions filed by the erstwhile director of corporate debtor, admittedly there was no stay and applicant also thrice issued notification to auction the property but sale could not be succeeded because of want of bidders. Now the applicant filed this application for extension of time. 

# 5. The Regulations 21A (2) (b) and 21(A) 3 of IBBI (Liquidation Process) 2016 are reads as follows: 

• b) the excess of the realized value of the asset, which is subject to security interest, over the amount of his claims admitted, to the liquidator within one hundred and eighty days from the liquidation commencement date: 

• Provided that where the amount payable under this subregulation is not certain by the date the amount is payable under this sub-regulation, the secured creditor shall pay the amount, as estimated by the liquidator: 

• Provided further that any difference between the amount payable under this sub regulation and the amount paid under the first proviso shall be made good by the secured creditor or the liquidator, as the case may be, as soon as the amount payable under this sub-regulation is certain and so informed by the liquidator. 

• (3) Where a secured creditor fails to comply with subregulation (2), the asset, which is subject to security interest, shall become part of the liquidation estate. 

# 6. The point is whether the time limit of 180 days prescribed in Regulation 21 A (2) (b) is mandatory or directory in nature. To decide whether any provision where the time limit prescribed is mandatory or directory the Madras High court in Shahji Purushottam vs Union of India, observed that when there is no consequential result is prescribed it will consider as only a directory, and when there is consequential result is prescribed then the provision is mandatory. 

# 7. In our case the word “shall” has been used in Regulation 21A (2), apart from this Regulation 21A (3) provides the consequences of non-compliance of direction provided in Regulation 21A(2)(b), accordingly on the expiry of 180 days if the secured creditor failed to realize the amount and paid to the liquidator the secured asset automatically shall vests with the liquidator as part of liquidation estate. Here also the word “shall” have been used. In the scenario it is evident that the period mentioned in Regulation 21A(2)(b) is mandatory, hence the period of 180 days prescribed under Regulation 21A(2)(b) of IBBI (Liquidation Process)2016 cannot be extended. Thus, this point is answered. In the result the application is DISMISSED. 

# 8.The Registry is directed to communicate this order to the respective parties through email. 

# 9. Certified copy of the order be issued on request of the parties as per the procedure. 

# 10. File be consigned to records. 

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Pankaj Srivastava Vs. Narappa Manohar Reddy. - Provisions of Section 19 shall apply in relation to voluntary liquidation process as they apply in relation to liquidation process with the substitution of references to the liquidator for references to the interim resolution professional.

 NCLT Bengaluru (23.06.2023) In Pankaj Srivastava Vs. Narappa Manohar Reddy. [IA No. 361 of 2021 & I.A No. 568 of 2022 In CP (IB) No. 243/BB/2018] held that;

• Provisions of Section 19 shall apply in relation to voluntary liquidation process as they apply in relation to liquidation process with the substitution of references to the liquidator for references to the interim resolution professional.

Excerpts of the order;  

IA NO 361 OF 2021

# 1. The instant application has been filed by Resolution Professional (herein after ‘applicant’) under Section 19 (2) r/w 60 (5) of the I & B Code, 2016 interalia seeking directions to provide all the original documents in the possession of the respondents in support of acquisition of lands as appearing in the Audited Financial Statements namely, Land parcels for Rs.5.19 Cr, Land parcels forming part of sale agreement dated 11.10.2018 admeasuring about 21.39 acres and amounting to Rs.12.40 Cr, allow the resolution professional to take possession of all the records related to financial statements as well as land documents and issue appropriate directions to Ex-Directors/Management for extending full cooperation and to provide necessary information to the resolution professional for completing the required compliances to various statutes and a successful completion of CIRP. On 4.11.2022, this Tribunal approved the Liquidation of M/s Sagar Power (Neerukatte) Private Limited, the Corporate Debtor and appointed the Applicant/Resolution Professional as the Liquidator.

# 2. Brief facts of the case, as mentioned in the application which are relevant to the issue in question, are as follows: 

• I. In the meeting of CoC held on 28.12.2020, the requests were made by the CoC to the respondents to provide numerous information with regard to the land parcels of the Corporate Debtor, its other liabilities, books of accounts, etc. to properly assess the financial position of the Corporate Debtor .the applicant has not been provided the necessary information and assistance since Jan 2021.

• II. In spite of the Covid 19 lock down restrictions by the Central Government and respective State Governments, the respondents have continued to not co operate and comply with the directions and requests of the applicant. The Auditors of the Company appointed by the Erstwhile Directors have in their letter dated 15.02.2021 expressed their inability to sign the audited financial statement for the period 1st April 2019 to 31st March 2020 which includes audit of books of accounts up to Insolvency commencement date as on 27.09.2019, due to refusal of Erstwhile Directors to sign the Audited Statements.

• III. The respondents have time to time failed to provide information with respect to an amount of Rs.5.19 Crores is capitalized as Landin the books of the Corporate Debtor and appears in the Audited Balance sheet as at 31.03.2019, documents in support of transfer of land admeasuring 21.39 acres in the name of the Corporate Debtor by way of sale agreement dated 11.10.2018 for which corporate debtor has compensated the seller being the ex directors to the tune of Rs.12.40 Crores. The respondents have failed to register the said property by way of entering into a sale deed with the Corporate Debtor, original documents of the various land parcels as listed in the sale agreement have not been handed over to the resolution professional. The accounts upto 31.03.2020, as respondents as Directors holding office as on the date and fully in control of the business upto 27th Sep 2019 being the date of order of admission of the Corporate Debtor under Corporate Insolvency Resolution Process, have refused to sign the financial statements resulting in failure of completing annual compliances with various regulatory authorities. 

• IV. The registered office of the Corporate Debtor has not been operational since the commencement of the Corporate Insolvency Resolution Process. The makeshift office of the Corporate Debtor where the erstwhile promoter’s conduct their other business and which was visited by the applicant does not contain most of the relevant documents and the officers stationed at the makeshift office are not aware of the whereabouts of the documentations and records of the Corporate Debtor.

• V. The applicant had issued a Legal Notice dated 09.09.2021, the respondent neither came forward to provide the information neither sought nor provided any reply to the said Legal notice.

• 
  

# 3. The Respondent No 1 has filed the reply for the application vide Diary No. 5184 dated 1.12.2022 inter alia contending as follows:

• a) The Respondent No 1 has furnished all the necessary information and has been providing the necessary assistance as and when required by the Resolution Professional in managing the affairs of the Corporate Debtor. The Board of Directors of the Corporate Debtor were suspended and the Resolution Professional has not convened any meeting of the Board to discuss the Accounts or Affairs of the Company nor convened any discussions to consider, draft and finalize the returns for the said period.

• b) It is submitted that the details of amount of Rs.5.19 Crores capitalised as land enclosed by the applicants as Annexure G along with the application is ledger extract and not the Audited Balance Sheet. The Balance Sheet for the period 2018-19 was neither signed by the auditor nor it was filed by the Resolution Professional.

• c) It is submitted that the Corporate Debtor was in requirement of the land for the purpose of storing water and the respondent no 1 being the promoter of the company had tried to mobilize land for the same and the agricultural land was mobilized to the extent of 100 Acres and some portion of land was registered and some portion of land is still in agreement stage and not executed as an absolute sale deed in the name of the Company. Out of the acquired land,21.39 Acres(which is in agreement stage) was not entered as absolute sale deed and was in the possession of the respondent no.1 and the consideration for the same has been paid.The banks were aware of the facts pertaining to the process and efforts and chronology with respect to Acquisition/mobilization of land.The Banks has insisted the Respondent No 1 to give the documents pertaining to land acquisition as security accordingly the same was given to the bank (all absolute sale deeds not sale agreements which banks desisted).Further clarification with respect to the land measuring 21,39 acres was provided by the respondent no 1 in his email date 27.07.2020.

• d) The fixed asset register is not required to claim the insurance. Further the applicant has not taken care of the insurance renewals because of which, the insurance amount could not be claimed.

# 4. The Respondent No 2 has filed the reply for the application vide Diary No. 857 dated 14.02.2023 inter alia contending as follows: 

• I. The respondent no 2 has commenced her tenure as the director of the corporate debtor from 11.04.2008 and thereafter, resigned from the post on 1.04.2019, she ceased to be part of the day today affairs of the company. Hence the documents sought by the resolution professional in the application are neither in the possession of the respondent no 2 nor in her control as an Ex-director.

• II. The management of the company is to be handled by the Board of directors but the provisions of sec 19 cannot be read to mean that whatsoever was the director of the company including the director who has resigned should be made responsible for extending co operation to the resolution professional.

# 5. The applicant has filed the rejoinder for the application vide Diary No. 5293 dated 08.12.2022, is inter alia contended as under: 

• a) The CoC meeting held on 28.12.2020, wherein the respondents were requested to furnish the information with respect to the land parcels and related assets, books of accounts etc for the proper assessment of the financial position of the Corporate Debtor. But the respondents gave a vague reply and did not furnish the information. The same was reflected in the minutes of the CoC meeting dated 29.12.2020.Further, the applicant sends various e-mails to the Respondents with respect to the land parcel, but no information was furnished to the applicant. The emails dated 20.10.2020 is attached as Annexure E to the application. Moreover, the Respondents have not signed the Audited Financial Statements for the FY 2019-2020 of the Corporate Debtor, which itself made the applicant to assess the true value of assets of the Corporate Debtor. 

• b) It is submitted that, after the audit undertaken by the applicant, it was clear that four land parcels were associated with the project of the Corporate Debtor of which specific details were mentioned along with survey nos and amounts. The Land Parcel no.4 was included in Fixed Asset Schedule of the Corporate Debtor Balance Sheet as on 31.03.2019 and as on 31.03.2018 and earlier years. 

• c) Therefore, the respondents failed to provide any information with respect to the land parcels and refused to cooperate with the Applicant, for the reasons best known to him.

# 6. Heard the Learned Counsel for the applicant. We have carefully perused the pleadings of the parties and extant provisions of the Code, and the Regulations made there under.

# 7. The relevant extract of the Section 19 IBC is as under:

• (1) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor shall extend all assistance and cooperation to the interim resolution professional as may be required by him in managing the affairs of the corporate debtor.’

• (2) Where any personnel of the corporate debtor, its promoter or any other person required to assist or cooperate with the interim resolution professional does not assist or cooperate, the interim resolution professional may make an application to the Adjudicating Authority for necessary directions. 

• (3) The Adjudicating Authority, on receiving an application under sub-section (2), shall by an order, direct such personnel or other person to comply with the instructions of the resolution professional and to co operate with him in collection of information and management of the corporate debtor.

# 8. In respect of Liquidation, it is necessary to reproduce Sec 34(3) of IBC which is as under:

• (3) The personnel of the corporate debtor shall extend all assistance and corporation to the liquidator as may be required by him in managing the affairs of the corporate debtor and provisions of Section 19 shall apply in relation to voluntary liquidation process as they apply in relation to liquidation process with the substitution of references to the liquidator for references to the interim resolution professional.”

# 9. It is desirable that, the respondents extend co operation to ensure that the Liquidator functions and conducts liquidation in terms of the provisions of Insolvency and Bankruptcy Code, 2016. Accordingly, as per Section 19 and section 34 of IBC, this Adjudicating Authority directs the respondent no 1 to provide all the original documents in the possession in support of acquisition of lands as appearing in the Audited Financial Statements.

# 10. Moreover, this Adjudicating Authority is of the view that the ex director/management collectively and independently, must furnish information and documents and extend full co operation to the liquidator for  completing the required compliances to various statutes for a successful completion of the liquidation of the Corporate Debtor. The respondents should co operate with the Liquidator in respect of supply of the documents as mentioned in prayers in the IA; and they cannot escape their obligation. Therefore this Adjudicating Authority in order to implement the intention of the Code directs the ex director/management to extent full co operation and simultaneously furnish all the requisite documents related to Corporate Debtor as desired in the prayers.

# 11. In the result the application is allowed with above directions. Accordingly IA NO 361 OF 2021 is disposed of.

IA NO 568 OF 2022

# 1. The instant application has been filed by Liquidator (herein after ‘applicant’) under Section 60 (5) of the I & B Code, r/w Rule 11 of the NCLT Rules, 2016 inter alia seeking to pass an interim order restraining the respondents from trespassing or dealing with the Schedule Property as well as other Properties or assets owned by the Corporate Debtor till the final disposal of CP (IB) No.243/BB/2018,pass an interim order to maintain the status –quo of the Corporate Debtor till the final disposal of CP (IB) No. 243 of 2018.

# 2. Brief facts of the case, as mentioned in the application which are relevant to the issue in question, are as follows:

• I. The applicant is seeking issuance of appropriate directions to the respondents to restrain them from illegally entering the property owned by the Corporate Debtor situated at Survey 463/2, Bajattur Village, Near Uppinangadi, Puttur Taluk,Dakshina Kannada District-574241 (hereinafter referred as the “Schedule Property”) as well as other Properties or assets owned by the Corporate Debtor in the surrounding areas of the Schedule Property measuring over 100 acres.

• II. On 17.10.2022, the Liquidator was informed that certain people had trespassed upon the Schedule Property owned by the Corporate Debtor.

• III. It is stated that with respect to the trespassing of the property of the corporate debtor by any persons including the respondent’s amounts to an illegal activity which is legally untenable as the corporate debtor is under liquidation and the matter is sub-judice.

# 3. Heard the Learned Counsel for the applicant. We have carefully perused the pleadings of the parties and extant provisions of the Code, and the Regulations made there under.

# 4. On 9.1.2023, when the matter was listed, this Tribunal issued notice. The proof of service filed by the applicant vide diary no 650 dated 02.02.2023, with tracking report with an endorsement showing ‘item delivery confirmed’, the respondents did not appear, therefore the respondents are proceeded against on an exparte basis.

# 5. We have observed that, trespassing of the Property of the corporate debtor by any persons including the respondents causes hindrance in the process of liquidation. Therefore respondents are restrained from trespassing or dealing with the Schedule Properties or assets owned by the corporate debtor and corporate debtor /liquidator is directed to maintain the status quo with regard to the Schedule Property till the disposal of CP (IB) NO 243/BB/2018.

# 6. Accordingly, IA No 568 of 2022 stands disposed of

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RPG Industrial Product Pvt. Ltd. Vs. Sh. Harvinder Kumar Jatana - The Adjudicating Authority, which had the powers, to appoint the Liquidator, will also have the powers, to remove the Liquidator for reasons, the Adjudicating Authority, may find fit, just, valid and proper.

 NCLT Chandigarh (30.05.2023) In RPG Industrial Product Pvt. Ltd.  Vs. Sh. Harvinder Kumar Jatana  [IA No. 843/2020 In CP (IB) No.121/Chd/Pb/2018] held that;

• No Liquidator, has any personal rights, to continue in Liquidation and the Adjudicating Authority, can order for replacement of the Liquidator, recording sufficient reasons, as per law.

• Since the Adjudicating Authority, is vested with the power, to appoint a Liquidator, under Section 33 and 34 of the Code, 2016. It is by the virtue of the Section 16 of the General Clauses Act, 1897, that an Adjudicating Authority, who also, has the power, to remove the Liquidator.

• The Adjudicating Authority, which had the powers, to appoint the Liquidator, will also have the powers, to remove the Liquidator for reasons, the Adjudicating Authority, may find fit, just, valid and proper.

Blogger’s Comments; Regulation 31A (11) OF Liquidation Regulations reads as under;

# Regulation 31A(11) The consultation committee, after recording the reasons, may by a majority vote of not less sixty-six per cent., propose to replace the liquidator and shall file an application, after obtaining the written consent of the proposed liquidator in Form AA of the Schedule II, before the Adjudicating Authority for replacement of the liquidator :

Provided that where a liquidator is proposed to be replaced, he shall-

• (a) continue to work till his replacement; and

• (b) be suitably remunerated for work performed till his replacement.

Excerpts of the order; 

This application has been filed by the applicant under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, with a prayer to replace Sh. Harvinder Kumar Jatana-Liquidator appointed in Sahil International Pvt. Ltd. with Sh. Arvind Mital as New Liquidator. 

# 2) It is stated in the application that the CIRP was initiated by order of this Tribunal dated 21.09.2019, and the IRP was appointed and was substituted on the request of the petitioner-operational creditor by this Tribunal by its order dated 29.03.2019. Subsequently, the liquidation order was passed by this Bench on 18.11.2019 on an application by the Resolution Professional. As the outgoing RP did not give his consent to act as a liquidator, the present applicant Sh. Harvinder Kumar Jatana was appointed as liquidator. The RP informed the petitioner-operational creditor by his email dated 06.12.2019 and has invited the claim by 18.12.2019, the requisite claim submitted by the liquidator in time. The liquidator informed the petitioner by email dated 08.01.2020 about the estimated amount of liquidation expenses for a period of 12 months, the said email is attached as Annexure C to the application. Furthermore, by his email dated 28.01.2020, the liquidator intimated the operational creditor to constitute towards the liquidation costs was as to enable him to proceed with the liquidation process. It is also stated that the RP could not find any asset or any liquidity in the account of the respondent. It is stated by the applicant that in the 6th CoC, meeting held on 15.10.2019 under Item 11 to discuss and approve the fee of the liquidator and as per Regulation 39 (d) of the CIRP Regulations, the following decision was taken: 

• “The RP further explained the relevant provisions of the IBC, 2016 and the regulations to the members of the CoC. The CoC after discussions decided not to fix any fees payable to the liquidator.” 

# 3) It is further stated that the demand of the liquidator is illegal and arbitrary, and the liquidator is not pursuing the applications filed under Sections 43 & 66 of the Code, and there has been no progress in the liquidation process. 

# 4) In view of this, the applicant has prayed to appoint Mr. Arvind Mittal as the new liquidator by replacing Sh. Harvinder Kumar Jatana/liquidator. 

# 5) In his reply filed by Diary No. 02050/01 dated 08.04.2022, it is stated that the respondent has taken all necessary steps to discharge his duties as provided under the IBC as well as the IBBI (Liquidation Process) Regulations 2016, including submitting quarterly progress reports. It is stated that the liquidator has not demanded any fee from the applicant and, on request of the applicant, only provided the estimated liquidation cost through his email dated 08.01.2020. 

# 6) We have heard the learned counsel for the parties and have carefully perused the available records. 

# 7) In the course of the present proceedings, it has been stated by the learned counsel for the liquidator that he has no objection to his replacement subject to the payment of his fees. 

# 8) From a perusal of the minutes of the Stakeholders Consultation Committee, it is seen that the liquidator’s request for his fees have not been seriously considered by the operational creditor. In the present case, no decision has been taken by the CoC under Regulation 39 (d) of the IBC, 2016, and therefore, the case squarely falls under Regulation 4 (2) of the Liquidation Regulations. We also note the fact that the corporate debtor has no tangible assets. Be that as it may, under the provisions of the Code, a decision with regard to the fees to be paid in terms of Regulation 4 (2) of the Liquidation Regulations needs to be determined. 

# 9) As regards to the appointment of Sh. Arvind Mittal as the liquidator in place of Sh. Harvinder Kumar Jatana, we are of the view that the Code, 2016 does not explicitly state the grounds for removing the liquidator. In this context, a reference is made to the decision of Hon’ble NCLAT Chennai Bench in case of CA V. Venkata Sivakumar Vs. IDBI Bank Ltd. Company Appeal (AT) (CH) (Ins.) No. 269/2022 & I.A. Nos. 571, 572 & 623/2022 dated 20.12.22 wherein it is held that 

• “I. The Code, 2016 does not explicitly state the grounds for removing the liquidator. In the absence of specific provisions, we may resort to Section 33 & 34 of the Code, 2016 and Section 276 of the Companies Act, 2013, which provides for the removal and replacement of liquidators on various grounds. 

• II. NCLAT also notes the recent judgement passed by Principal Bench, NCLAT vide order dated 13.10.2022 reported at (2022) ibclaw.in 839 NCLAT. This clearly establishes that, no Liquidator, has any personal rights, to continue in Liquidation and the Adjudicating Authority, can order for replacement of the Liquidator, recording sufficient reasons, as per law. 

• III. Further, since the Adjudicating Authority, is vested with the power, to appoint a Liquidator, under Section 33 and 34 of the Code, 2016. It is by the virtue of the Section 16 of the General Clauses Act, 1897, that an Adjudicating Authority, who also, has the power, to remove the Liquidator. 

• IV. Combined reading of above Case Laws and provisions along with Section 33 and Section 34 of the Code, 2016, would make it clear that the Adjudicating Authority, which had the powers, to appoint the Liquidator, will also have the powers, to remove the Liquidator for reasons, the Adjudicating Authority, may find fit, just, valid and proper.” 

# 10) In the present case, the applicant is the sole member of the SCC constituted by the liquidator. Hence, it’s recommendation to appoint Mr. Arvind Mittal in place of Mr. Harvinder Kumar Jatana is accepted. The Law Research Associate of this Tribunal has checked the credentials of Mr. Arvind Mittal, and there is nothing adverse against him. In view of the above, we appoint Mr. Arvind Mittal, Registration No. IBBI/IPA-001/IP-P01358/2018-19/12081, E-mail:arvindmittal81@yahoo.in, Mobile No. 9958061149. The outgoing liquidator is directed to hand over the charges and records to the newly appointed liquidator within the period of seven days from the date of this order. 

# 11) As regards to the payment to the outgoing Liquidator, we have already observed in para 7 & 8 above the legitimate claims regarding Fees etc, of the liquidator have not been seriously considered by the CoC. In view of such facts, we direct the new liquidator to convene the meeting of the stakeholders within 15 days of this order, and the Stakeholders Committee is to decide on the fees of the outgoing liquidator in the said meeting. The necessary payments with regard to the fees to be paid within 30 days of the SCC meeting. 

# 12) In the result, IA No. 843/2020 is allowed and disposed of accordingly. The registry is directed to send a copy of this order to IBBI for its information and records.

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Subrata Maity Vs. Mr. Amit C. Poddar & Ors - The Liquidator does not have any personal right to continue in the Liquidation Process and the reasons which have been noted in the order are sufficient to exercise even the inherent power by NCLT to replace the Liquidator.

NCLAT (13.10.2022) In Subrata Maity  Vs. Mr. Amit C. Poddar & Ors [Comp. App. (AT) (Ins.) No. 1234 of 2022 ] held that;

• The Liquidator does not have any personal right to continue in the Liquidation Process and the reasons which have been noted in the order are sufficient to exercise even the inherent power by NCLT to replace the Liquidator.

Excerpts of the order; 

13.10.2022: Heard Learned Counsel for the Appellant and Learned Counsel appearing for the Respondents. 

2. This Appeal has been filed against the order dated 22.09.2022 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court-II, by which order in place of the Appellant who was erstwhile Liquidator of ‘Seam Industries Ltd.’, one Mr. Amit C. Poddar has been appointed as a Liquidator. 

3. Learned Counsel for the Appellant challenging the order contends that the Appellant has not been issued any notice and he was not served the copy of the Application filed by the Stakeholders Consultation Committee seeking appointment of Mr. Amit C. Poddar. 

4. We have perused the order passed by the Adjudicating Authority. The Adjudicating Authority has noted in the order that the Appellant was arrested by the CBI and due to which 116 days was lost due to incapability of the Appellant to act as a Liquidator. Learned Counsel for the Appellant contends that the Appellant was granted bail immediately. 

5. Be that as it may, the fact that the criminal prosecution is going on against the Appellant and he was arrested by the CBI, there is no error committed by the Adjudicating Authority in passing the impugned order by replacing the Appellant with another Liquidator. The Liquidator does not have any personal right to continue in the Liquidation Process and the reasons which have been noted in the order are sufficient to exercise even the inherent power by NCLT to replace the Liquidator. It is not a fit case to interfere in exercise of our Appellate Jurisdiction. 

6. Learned Counsel for the Appellant also contended that there is no provision in law for replacement of Liquidator by the Adjudicating Authority. The present is a case where inherent power can be exercised by the Adjudicating Authority to do substantial justice. 7. The Appeal is dismissed with the above observations.

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