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Judgment
O R D E R
27.01.2022: Heard Shri Tushar Mehta, learned senior counsel for the Appellant and Shri Pulkit Sharma, learned counsel for the Liquidator. This Appeal has been filed against the order dated 10.11.2021 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench by which I.A. No. 977 of 2021 filed by the Appellant has been disposed of. The Appellant has filed an application before the Adjudicating Authority praying the Tribunal to please to direct the Respondent-Liquidator to permit the Financial Creditors of the Corporate Debtor to distribute an amount of INR 223 crore from the cash balance available with the Corporate Debtor in the proportion of their respective voting share in the erstwhile CoC.
When this Appeal was taken for hearing this Court passed following order on 20.12.2021:
“ORDER
20.12.2021: Issue Notice. Learned Counsel Shri Mr. Abhishek Swaroop appears for the Liquidator and accepts Notice. No Notice needs to be issued. Shri Tushar Mehta, learned Senior Advocate for the Appellant contends that the cash reserve which is laying with the liquidator, was requested to be disbursed as per Section 53 of Insolvency and Bankruptcy Code, 2016. It is submitted that the said Application has been rejected by the Adjudicating Authority only observing that the distribution of the cash will derogate the value of the Company, which observations are not in accordance in law.
Respondent may file their Reply within two weeks. Rejoinder, if any, may be filed within two weeks thereafter.
List for Admission on 20th January, 2022.
Looking to the nature of dispute in this Appeal, it is made clear that the Appeal itself may be disposed off on the next date, if possible.”
In pursuance of our order dated 20.12.2021, the Liquidator has filed Counter Affidavit. In the Counter Affidavit in Para 5 sub-clause (c) following has been stated:
“c)In view of the foregoing, the Liquidator verily, and in all bonafide, believes that even after distribution of INR 223 crores, as sought in the captioned Appeal, the Corporate Debtor shall have sufficient liquidity of approximately INR 80 (eighty) crores to enable the Liquidator / Respondent to run the liquidation process smoothly in accordance with law.”
Learned counsel for the Liquidator submits that as stated by the Liquidator in his reply/counter affidavit, the Liquidator has no objection in distribution of INR 223 crores as per waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code, 2016 (for short ‘Code’) subject to undertaking that in event any of the member of the CoC receives any amount surplus to which it was entitled would undertake to return the same.
After hearing counsel for the parties and having gone through the record and counter affidavit Para 5(c) as extracted above, we are of the view that this appeal can be disposed of directing for distribution of INR 223 crores as submitted by the Liquidator. We set aside the order dated 10.11.2021 with direction to the Liquidator to distribute Rs. 223 crores out of the available cash balance as prayed in the application subject to undertaking by the members of the CoC to return the amount in the event they are paid any amount in excess to their entitlement as per waterfall mechanism under Section 53 of the Code. Such undertaking shall be submitted before the Liquidator by the members of CoC within two weeks. With these directions the Appeal is disposed of.