Ashish Arjunkumar Rathi

The present Appeal is filed aggrieved by the Order of the ‘Adjudicating Authority’ dated 22^nd April 2021 passed in IA No. 28 of 2021 in CP (IB) No. 150/9/HDB/2017 whereby the ‘Adjudicating Authority’ dismissed the IA, hence this Appeal.

Shri. Abhijeet Sinha, Learned Counsel appearing for the Appellant submitted that the present Appeal is filed aggrieved by the arbitrary rejection and disposal of the IA No. 28 of 2021 by the Ld. ‘Adjudicating Authority’. He submitted that the Appellant filed the above IA before the ‘Adjudicating Authority’ under Section 35(1)(n) and Section 60(5) of the Insolvency and Bankruptcy Code, 2016, Read with Rule 11 of the NCLT Rules, 2016 seeking directions for exclusion of the period of Operation of Stay in Liquidation Proceedings, in terms of Regulations 44(1) of the Liquidation Regulations 2016.

The Learned Counsel submitted that the Appellant was appointed as Liquidator of the Corporate Debtor by the NCLT Hyderabad Bench vide its Order dated 22.04.2019. After being appointed as the Liquidator, the Applicant made a public announcement in accordance with the Regulations of the I & B (Liquidation Process Regulations), 2016. The Appellant duly compiled all the formalities with regard to the process of Liquidation of the Corporate Debtor. While so, the Ld. NCLT, Hyderabad Bench on 15.11.2019 stayed the Liquidation Process.

In view of the stay operating on the Liquidation Process of the Corporate Debtor since 15.11.2019, the Appellant could not take any further steps towards the completion of Liquidation Process of the Corporate Debtor. In view of the stay, the Appellant has not taken steps for concluding the sale to Nu-Tech and realization of the Liquidation Estate of the Corporate Debtor. In view of the stay, the Appellant would not be able to proceed with a realization and distribution of Liquidation Estate and the period of stay ought to be excluded from the calculation of time period under Regulation 4(3) of the IBBI (Liquidation Process Regulations), 2016.

Further, the Learned Counsel submitted that the Appellant specifically in its Application bearing No. 28 of 2021 prayed the Hon’ble NCLT to exclude the period for calculation of the time taken for realization of the assets of the Corporate Debtor.

However, the Ld. ‘Adjudicating Authority’ instead of exclusion of time as sought by the Appellant, the ‘Adjudicating Authority’ extended the period of Liquidation by one year from the date of the Impugned Order i.e., 22.04.2021. The Learned Counsel submitted that the reliefs sought by the Appellant is specific to the effect that the Appellant sought exclusion of the period during Operation of the Stay. However, the Ld. ‘Adjudicating Authority’ extended the period of Liquidation by one year which the Appellant did not sought. In view of the reasons, the Learned Counsel prayed this Bench to set aside the Impugned Order of the ‘Adjudicating Authority’ dated 22.04.2021 by allowing exclusion of period of stay on the Liquidation Process of the Corporate Debtor, operative since 15.11.2019 passed by the NCLT in IA No. 1012 of 2019 in CP (IB) No. 150/9/HDB/2017.

Heard the Learned Counsel appeared for the Appellant and perused the pleadings and documents filed in support of the Appeal. This Tribunal perused the Application in IA No. 28 of 2021 filed by the Appellant and the Appellant prayed a specific relief that the period of stay of Liquidation Process of the Corporate Debtor operative since 15.11.2019 passed by the Hon’ble Tribunal in Interim Application No. 1012 of 2019 shall be excluded for calculation of the time taken for realization of the assets of the Corporate Debtor in terms of Regulation 44 (Read with Regulation 4(3) of the Liquidation Regulations, 2016 and other such applicable Regulations). The grievance of the Appellant is that the NCLT granted the stay in IA No. 1012 of 2019 and the Appellant could not proceed further with respect to sale of assets of the Corporate Debtor and could not realize the Liquidation Estate of the Corporate Debtor.

The ‘Adjudicating Authority’ instead of granting exclusion of time ordered/extended the Liquidation period under Regulation 44(2) of the Liquidation Regulations. The Ld. ‘Adjudicating Authority’ ought to have considered that the stay has been granted by the ‘Adjudicating Authority’ on 15.11.2019 and in view of Operation of Stay, the Liquidator was not able to proceed further in the process of Liquidation as per law. The main contention of the Appellant is that Regulation 44(1) of the IBBI (Liquidation Process Regulations), 2016. The Liquidator shall liquidate the Corporate Debtor within a period of one year from the Liquidation commencement date. However, in view of the stay, the Appellant could not complete the Liquidation Process within a period of one year from the Liquidation Order. Had there been no stay, the Appellant would have completed the Liquidation Process within one year from the Order of Liquidation and would have been entitled to fee under a different bracket as per Regulation 4 of the Liquidation Regulations. The contention of the Appellant is that the Appellant be placed in the same position as he would have been if the Liquidation Process was not stayed by the ‘Adjudicating Authority’. However, the contention of the Appellant is that the said fact was not taken into account by the ‘Adjudicating Authority’ while passing the Impugned Order which of course prejudiced the Appellant for no fault.

Regulation 4 of IBBI (Liquidation Process Regulations), 2016 deal with Liquidator’s Fee. In Sub Clause (b) of Sub Section 2 of Section 4, the percentage of Fee on the amount realized and distributed is given. The ‘Adjudicating Authority’ failed to take into consideration the contents and the relief as sought in IA No. 28 of 2021 and passed the Impugned Order without appreciating the fact and law. This Tribunal is of the view that having not considered the Appellant’s Application, the Appellant prejudiced gravely, since he could not claim the fee as per along Regulations and in accordance with Law. In view of the reasons, this Tribunal comes to a conclusion that the ‘Adjudicating Authority’ erred in passing the Impugned Order and this Tribunal is of the view that the Appellant has made out a prima facie case to grant relief as prayed for.

Further, this Tribunal is of the view that the ‘Adjudicating Authority’ failed to take into consideration the relief of exclusion prayed for in IA No. 28 of 2021 is illegal. Further, the maxim of actus curiae neminemgravabit i.e., the act of the Court shall harm no person. The said maxim is recognized in the Indian jurisprudence and also followed in Essar Steel India Limited Vs. Satish Kumar Gupta in Civil Appeal No. 8766-67 of 2019. The Hon’ble Supreme Court held that “It is well settled that no man should suffer because of the fault of the court or delay in the procedure”.

In view of the reasons as stated above, the “Appeal is Allowed” and the Impugned Order is hereby set aside. The Appellant is entitled to be allowed exclusion of period of the Stay on the Liquidation Process of the Corporate Debtor operative since the Order dated 15.11.2019 passed by the NCLT, Hyderabad Bench in IA No. 1012 of 2019 in CP (IB) No. 150/9/HDB/2017 from calculation of the time taken for realization and distribution of the assets of the Corporate Debtor in terms of Regulation 44, Read with Regulation 4(3) of the IBBI (Liquidation Process Regulations), 2016. No Orders as to costs.

[Justice M. Venugopal]

The Acting Chairperson

[Kanthi Narahari]

Member (Technical)

Chennai 30.09.2021 GS