Agrawal Structure Mills Private Limited vs Rajesh Chillale

KANTHI NARAHARI, MEMBER (TECHNICAL)

The Present Contempt Application is filed by the Appellant stating that the Respondent had wilfully violated the Order passed by this Tribunal dated 20.07.2021, thereby, the Respondent committed contempt of this Tribunal.

The Learned Counsel appeared for the Applicant submitted that the Appellant preferred the Appeal before this Hon’ble Tribunal bearing No. CA (AT) (CH) (Ins.) No. 155 of 2021 against the Order dated 30^th June, 2021 passed by the NCLT, Hyderabad Bench, in I.A. 233 and 234 of 2021 in C.P 277/9/HDB/2019.

This Hon’ble Tribunal after hearing the Counsel for the Appellant passed an order of ‘status quo’ till the next date hearing i.e. 18.08.2021. The ‘status quo’ order continued from time to time till date.

The grievance of the Applicant that this Hon’ble Tribunal pleased to direct maintaining of ‘status quo’ in relation to the liquidation process of the Corporate Debtor upon being satisfied that an options of an Interim Protection the Application of the Appellant for confirmation of its bid for Corporate Debtor as a going concern is likely to be rendered infructuous.

It is further submitted that the Liquidator had confirmed the sale of the plant and machinery in favour of M/s Umang Enterprises and has already commenced dismantling of the machinery and lifting of the same by the aforementioned bidder i.e. M/s Umang Enterprises on an itemized sale basis. It is submitted that such lifting would also render the likelihood of revival of the Corporate Debtor as a going concern impossible. In order to prevent pursuant to the dismantling of the said plant and machinery and lifting of the same, this Hon’ble Tribunal was pleased to pass the above order of ‘status quo’.

It is submitted that the order of this Hon’ble Tribunal was served on the Liquidator through its advocate by an electronic mail dated 20.07.2021 and requested him to maintain the ‘status quo’ by not allowing further dismantling and lifting of the plant and machinery from the premises of the Corporate Debtor.

It is submitted that the Applicant was informed that the Liquidator has refused to halt the dismantling and lifting of the plant and machinery from the premises of the Corporate Debtor on the flimsy and frivolous ground that the liquidator has already proceeded to confirm the sale and has issued sale certificate and as such lost possession and control over the said plant and machinery of the Corporate Debtor.

The Applicant also sent a mail dated 23.07.2021 seeking a compliance of the Order dated 20.07.2021 passed by this Tribunal. However, the Liquidator refused to halt any works in premises of the CD on the pretext that the Order does not operate on the auction purchaser from lifting and dismantling the plant and machinery and the Liquidator has no control or possession of the said plant and machinery.

It is submitted that the Liquidator is acting contemptuously with the entire object of rendering the order passed by this Tribunal as infructuous. In view of the reasons, the Learned Counsel prayed this Bench to direct the Liquidator to immediately comply with the directions passed by this Tribunal.

The Learned Senior Counsel appeared for the Respondent submitted that the present Application is filed by the Applicant against this Respondent alleging that the Respondent had violated the ‘status quo’ Order passed by this Hon’ble Tribunal on 20.07.2021. The Learned Counsel submitted that this Respondent has highest regard and respect to the Orders and directions of this Hon’ble Tribunal. It is submitted that the Respondent has not committed any disobedience nor violated the order of this Hon’ble Tribunal.

It is submitted that the filing of Contempt Application against this Respondent alleging that this Respondent allowed dismantling of machinery belonging to the Corporate Debtor which was auctioned and alleged that this Respondent committed contempt of this Hon’ble Tribunal or totally false and unfounded and they are made against this Respondent to intimidate him and also to generate pressure for deriving unlawful gain in the form of getting the assets of the Corporate Debtor at lower price to the detriment of all stake-holders.

It is submitted that the true facts are that the CD was ordered for liquidation by the Hon’ble NCLT Hyderabad Bench and the Respondent herein has been appointed as its Liquidator vide its Order dated 25.11.2020. The Respondent initially called for an e-auction for sale of the assets of the CD as a going concern vide an e-auction notice dated 25.01.2021 at a reserve price of Rs. 9,27,00,000/-. However, the e-auction failed for want of bidders. The Liquidator thereafter called for Second e-auction vide Notice dated 08.04.2021 for sale of assets of the CD and the e-auction was held on 08.05.2021. The Applicant/ Appellant participated in the Second e-auction and could not get the assets as the Liquidator with a view to maximise the value of the assets decided to sell them in piece-meal in accordance with the terms of the auction notice. While so, the sale of only the plant and machinery it fetched Rs. 3,56,00,000/- as against the offer of the Applicant/ Appellant of Rs. 3,79,25,000/- for the total assets of the CD. Apart from plant and machinery still there are two more items classified as “land and building” and “Other assets” at a reserve price of Rs. 2,86,00,000/- and Rs. 2,63,00,000/-respectively, as per the said e-auction notice dated 08.04.2021 and the expected return from them is much higher than the actual amount offered by the Applicant herein.

It is submitted that the Liquidator herein could fetched Rs. 6,00,00,000/- from sale of plant and machinery and land and building respectively thereby maximising the value of the Corporate Debtor. The e-auction conducting on 08.05.2021, M/s Umang Enterprises was declared as a successful bidder for the plant and machinery with a bid of Rs. 3,56,00,000/- and the said auction purchaser paid the entire bid amount as per terms and the Sale certificate was issued on 03.06.2021. The physical possession of the said plant and machinery was handed over to the auction purchaser on 03.06.2021. The applicable GST of Rs. 64,08,000/- was also paid on 19.07.2021. Thus, the auction purchaser became owner of the property with the conclusion of the sale process. The Respondent without having possession could not exercise any right or control in respect of the property and he could not issue any direction or restrain the purchaser from exercising his rights in respect of his own property.

It is submitted that this Respondent came to know about the status quo order passed by this Tribunal on 20.07.2021 and this Respondent stopped all further proceedings in the liquidation process in total compliance with the said orders. Thus, this Respondent has not committed any violation or breach of the orders of this Tribunal as alleged by the Applicant.

It is submitted that this Respondent received an e-mail dated 23.07.2021 from the Applicant and this Respondent upon receipt of the said e-mail clarified to the Applicant vide his e-mail dated 24.07.2021 that the said plant and machinery had been sold and transferred to the auction purchaser on 03.06.2021 and that the Respondent has neither has possession nor control over the plant and machinery. It is also stated that all further proceedings in the liquidation process were stopped in compliance of the Order of this Hon’ble Tribunal.

In view of the reasons as stated above, this Respondent has not violated the orders of this Hon’ble Tribunal and humbly prays this Bench to dismiss the Contempt Application with exemplary costs.

Heard the Learned Counsel for the parties, perused the pleadings documents and citations relied upon by the respective parties. After hearing the Learned Counsel, the point felt for consideration is whether the Respondent violated Order of this Bench dated 20.07.2021 as alleged by the Applicant?

The Applicant filed the Appeal before this Tribunal bearing CA (AT) (INS.) No. 155 of 2021 challenging the Order dated 30.06.2021 passed by the National Company Law Tribunal, Hyderabad Bench, (NCLT) in I.A. 233 & 234 of 2021 in C.P. 277 of 2019. The Applicant in the Appeal sought to set aside the said Impugned Order dated 30^th June, 2021 and sought a restraint Order to the Respondent (Liquidator) from proceeding in the Liquidation Process till disposal of I.A 233 of 2021. The said Appeal has been filed before this Tribunal on 14.07.2021 and this Tribunal after hearing the Parties passed an Order of ‘status quo’ on 20^th July, 2021 till the next date of hearing on 18.08.2021. The said Order of status quo continued from time to time.

While so, the Applicant filed the Instant Contempt Application bearing No. 1 of 2021 on 02.08.2021 stating that the Respondent had violated the Order of this Tribunal dated 20^th July, 2021 and sought directions from this Tribunal.

After filing the Contempt Application dated 02.08.2021 this Tribunal had afforded opportunity to the Respondent to file their Response to the Contempt Application and the Contempt Application has been heard both sides and reserve for Orders. This Tribunal extended the Interim Order dated 20^th July, 2021 till 05.07.2022.

The Respondent filed Counter Affidavit and denied all the allegations made by the Applicant in this Contempt Application. From the records it is evident that Second e-auction sale notice was issued on 08.04.2021 for sale of assets of CD as a going concern as well as on piecemeal basis under different options and the said second e-auction was held on 08.05.2021. After the process M/s Umang Enterprises was declared as a successful bidder for the plant and machinery with a bid amount of Rs. 3,56,00,000/- and the entire bid amount has been paid as per terms and conditions of the process document and the sale certificate was issued on 03.06.2021. It is also borne out from the records that the physical possession of the said plant and machinery was handed over to the auction purchaser (M/s Umang Enterprises) on 03.06.2021. Once the Sale Certificate has been issued the auction purchaser becomes the owner of the property. After taking over the possession by the auction purchaser pursuant to Sale Certificate, the auction purchaser started dismantling and started lifting the remains of plant and machinery from the premises.

As stated Supra the Appeal filed by the Applicant on 14.07.2021 and this Tribunal passed Status Quo Order on 20^th July, 2021 much later to handing over the possession of property and issuance of sale certificate to the auction purchaser on 03.06.2021. Moreover, the Applicant has not made the auction purchaser a party to the proceedings before this Tribunal. This Tribunal passed the status quo order on 20^th July, 2021 and the Respondent/ Liquidator stated that he has implemented the Order of this Tribunal dated 20^th July, 2021 with respect to Liquidation Process from the date of passing of status quo order. The Applicant on 23^rd July, 2021 sent a mail to the Respondent/ Liquidator, whereby, it is requested that the Respondent/Liquidator refrain from the activities of dismantling and lifting of plant and machinery from the subject premises. The Respondent replied to the e-mail of the Applicant on 24.07.2021, wherein, it has been clearly stated that the plant and machinery of the Corporate Debtor was auctioned on 08.05.2021 and the same was sold and the possession of the same was also handed over to the successful bidder along with the sale certificate on 03.06.2021. Further, it is sated that the Respondent/ Liquidator does not have possession or control over the disposed asset of the Corporate Debtor.

As observed Supra, the Appeal has been filed much later to the sale certificate issued to the auction purchaser and the Applicant has not impleaded the auction purchaser as a party to the proceedings and the status quo order will not be applicable to the auction purchaser and this Tribunal cannot desist the auction purchaser from proceeding with the property which he is in possession in accordance with law, therefore, this Tribunal is of the view that the Respondent has not violated the order of this Tribunal dated 20^th July, 2021 nor committed any contempt of this Tribunal. Further, this Tribunal is of the firm opinion that there is no disobedience of the Order of this Tribunal by the Respondent/ Liquidator. It is apt to note that the Court must not only be satisfied about the disobedience of any judgement, decree, direction, writ or other process but should also be satisfied that such disobedience was wilful and intentional.

In this context the Hon’ble Supreme Court in the matter of Rama Narang vs. Ramesh Narang & Ors (2021 SCC Online SC 29 Para 79 held as under :-

As held Supra, this Tribunal comes with a resultant and irrefutable conclusion that there is no disobedience of the Order of this Tribunal and the Contempt Application filed by the Applicant is frivolous and wasting the precious time of this Tribunal.

Accordingly, the Contempt Application No. 01 of 2021 is dismissed with a cost of Rs. 50,000/- to be paid to the Hon’ble Prime Minister’s Relief Fund within a period of one month from the date of receipt of copy this Order, and report compliance of the same by filing proof thereof before the Deputy Registrar NCLAT, Chennai Bench, Chennai.