Jain Irrigation Systems Limited vs Hemant Sharma (Liquidator)

Heard Dr. K.S. Ravichandran, Practicing Company Secretary, appearing for the ‘Applicant’/`Appellant’ in IA/255/2022 in Comp App (AT) (CH) (INS) No. 111 of 2022, seeking to condone the delay of 13 days in preferring the instant Company Appeal. This ‘Tribunal’ on being satisfied with the reasons ascribed in IA/255/2022, condones the delay of 13 days (from 09.03.2022 to 22.03.2022) in preferring the `Appeal’, to secure ‘ends of justice’. IA/255/2022 is allowed. No costs.

Heard Dr. K.S. Ravichandran, Practicing Company Secretary, appearing for the ‘Appellant’. At the ‘Admission’ stage itself, this ‘Tribunal’ is disposing of the ‘instant Company Appeal (AT)(CH) (INS) No. 111 of 2022.

According to the ‘Appellant’, it is an ‘Operational Creditor’ and has a total claim of Rs.4,85,62,104.49 against the ‘Corporate Debtor’. In terms of the Appellant’s Statement of Accounts, an `Operational Debt’ of a sum of Rs,4,85,62,104.49 is due from the `Corporate Debtor’ and the `Corporate Debtor’ is in default.

On the side of the `Appellant’, it is submitted that the impugned order dated 05.01.2022 in IA No. 741/2021 in CP(IB)/329/7/HDB/2018 passed by the `Adjudicating Authority’ (`National Company Law Tribunal’, Hyderabad Bench, Hyderabad) in dismissing the `Interlocutory Application’ is an incorrect and unsustainable one.

It is the case of the `Appellant’ that the following `Table’ will be useful for ease of convenience and reference which proceeds as under:

It is projected on the side of the `Appellant’ that the `Adjudicating Authority’ failed to appreciate that the delay of 245 days (after excluding 426 days of the Covid-19 period) in preferring the `Claim’ with the `Liquidator’ was because of the reason that the `Appellant’, inadvertently failed to notice the `Liquidation Order’ passed against the `Corporate Debtor’ which was neither `wilful’ nor `wanton’. Further, the 426 days delay was caused due to Covid-19 and the reason for the delay is a `Bonafide’ and `Genuine’ one.

It is represented on behalf of the ‘Appellant’ that the rejection of the claim of the ‘Appellant’ by the ‘Liquidator’ is unsustainable in law and that the ‘Liquidation Process’ is enshrined in the I&B Code, 2016, is not only to maximize the `Value of the Asset’, but also to ensure a `fair’ and `equitable distribution’ of the sums realised to all the `Stake Holders’ (including ‘Shareholders’) if there remains anything after payment to the ‘Creditors’ as per the ingredients of Section 53 of the I & B Code, 2016.

The other argument advanced on behalf of the ‘Appellant’ is that the `structure’ of the I&B Code, 2016 is not intended to shut the doors on the `Claimants’ and benefit `Junior Stake Holders’.

On the side of the Appellant, it is pointed out that the ‘Adjudicating Authority’ while passing the ‘impugned order’ appears to have been guided by the assumption that even after the `claim’ is admitted, the `claim’ cannot be receiving any `paise’ as `share’ and that the ‘Adjudicating Authority’ also had failed to direct the `Liquidator’ to `Admit` or atleast consider the `Claim’.

Besides the above, the `Adjudicating Authority’ had failed to require the `Liquidator’ to explain what action he took in regard to the difference between the amount of debts, as per the most recent Financial Statement reckoned from the `Insolvency Commencement Date’ and the amount of `Claims’ received.

It is not out of place for this ‘Tribunal to make a pertinent mention that the ‘Applicant’/‘Appellant’/‘Operational Creditor’ in IA/741/2021 in CP(IB)329/7/HDB/2018 (filed under Section 60(5) of the I & B Code, 2016) had sought a relief of declaration that the decision of the ‘Resolution Professional’ in rejecting the `claim’ of the ‘Applicant’ is an `arbitrary’ and `unlawful’ one. Also, the relief of setting aside the decision of the `Resolution Professional’ in rejecting the claim of the Applicant in the `updated List of Claims’ was also prayed for. Further, the ‘Appellant’/’Applicant’ had also in IA/741/2021 in CP(IB)329/7/HDB/2018 had sought a direction to the ‘Resolution Professional’ in admitting its `Claims’ of the Applicant filed in Form-C dated 15.05.2021 due of an amount of Rs.4,85,62,104.49.

It is not in dispute that the ‘Applicant’/‘Appellant’ had filed its claim only on 19.05.2021 i.e., after 670 days beyond the last date for submission of claims and also after the ‘Adjudicating Authority’ permitting the sale of ‘Corporate Debtor’ (As Going Concern).

It must be borne in mind that as per Section 42 of the I & B Code, 2016, that an ‘Appeal’ against the decision of `Liquidator’ can be preferred by a `Creditor’ before the ‘Adjudicating Authority’ either (accepting or rejecting the claims, within 14 days of the receipt of such decision). However, in the instant case this ‘Tribunal’ is of the considered view that IA No. 741/2021 in CP(IB)329/7/HDB/2018 cannot be entertained by the ‘Adjudicating Authority’ because of the fact that the `Corporate Debtor’/‘Company’ was permitted to be sold as a `Going Concern’, as per Order dated 18.01.2021 passed by the `Adjudicating Authority’.

Be it noted, that the ‘Speed’ is the gist of I & B Code, 2016. The ‘CIRP’ process is a `Time Bound’ one. Viewed in that perspective, and also this ‘Tribunal’ bearing in mind the contentions advanced on behalf of the `Appellant’ and also on going through the ‘Impugned Order’ dated 05.01.2022 in IA No. 741/2021 in main Company Petition (IB)329/7/HDB/2018, passed by the ‘Adjudicating Authority’ (`National Company Law Tribunal’, Hyderabad Bench, Hyderabad) to the effect that the `Corporate Debtor’ was admitted into CIRP on 31.08.2018 and the `Applicant’ remained negligent and seemed to be oblivious to the `chronology’ that followed thereafter etc., is of the considered view, that they do not suffer from any `material irregularity’ or `patent illegality’, in law. Consequently, the ‘Appeal’ fails.

In fine, the instant Company Appeal (AT) (CH) (INS) No.111 of 2022 is dismissed. No costs.