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Judgment
O R D E R
16.09.2022: Heard Counsel for the Appellant. This appeal has been filed against the order dated 26.11.2021 passed by National Company Law Tribunal, Mumbai Bench, Court-III in I.A. No. 1047 of 2020.
The Appellant Managing Director of the Suspended Board of Corporate Debtor M/s Virgo Marine Shipyards filed an I.A. 1047/2020 where several reliefs were claimed as has been noted in the order of the Adjudicating Authority itself.
The CIRP against the Corporate Debtor commended on 21.01.2020. It appears that prior to the commencement of CIRP the Respondent Bank had initiated proceedings under SARFAESI Act for auction of the barge which was hypothecated with the bank.
The Appellant filed the application where sale of the barge was asked to be kept on hold and also prayed for setting aside of the sale of barge in SARFAESI proceedings.
The application was objected by the Nagpur Nagrik Sahkari Bank Ltd. who had taken steps for sale of the barge.
Adjudicating Authority heard the parties, however, took the view that the court does not provide filing of an application by the Member of the Suspended Board and the application has not been filed by the Interim Resolution Professional in paragraph 11 of the judgment following has been observed:
“As stated above the application is filed by the Ex-Managing Director of the Suspended Board of the Corporate Debtor. As rightly contended by Respondent No. 2, the code does not provide for filing any application by the Member of the Suspended Board since the affairs of the Corporate Debtor company were controlled and managed by the IRP after admission of the Company Petition.”
Challenging the order passed by the Adjudicating Authority this appeal has been filed by the Suspended Director of the Corporate Debtor where it is contended that Suspended Managing Director of the Corporate Debtor had every jurisdiction to challenge the proceedings initiated under SARFAESI Act by the bank for sale of the barge which belongs to the Corporate Debtor.
The Learned Counsel for the Bank also submitted that Adjudicating Authority has not considered the merits of the application and has only rejected the application on the ground of locus of the appellant.
Learned Counsel for the Appellant in support of her submission that the Managing Director has locus to file the appeal has relied on judgment of this Tribunal in Indian Overseas Bank Vs. RCM Infrastructure Ltd. & Anr. in Company Appeal (AT) (Ins.) No. 736 of 2020 and further the judgment of the Hon’ble Supreme Court in Indian Overseas Bank Vs. RCM Infrastructure Ltd. & Anr ., 2022 [SCC Online SC 634].
We have perused the judgment which has been relied by Counsel for the Appellant.
Hon’ble Supreme Court in paragraph 32,34,35 laid down following:
“32.It is further to be noted that the present case arises out of a statutory sale. The sale would be governed by Rules 8 and 9 of the said Rules. The sale would be complete only when the auction purchaser makes the entire payment and the authorised officer, exercising the power of sale, shall issue a certificate of sale of the property in favour of the purchaser in the form given in Appendix V to the said Rules.
34.Undisputedly, in the present case, the balance amount has been accepted by the appellant Bank on 8 March 2019. The sale under the statutory scheme as contemplated under Rules 8 and 9 of the said Rules would stand completed only on 8 March, 2019. Admittedly, this date falls much after 3 January 2019, i.e., on which date CIRP commenced and moratorium was ordered. As such, we are unable to accept the argument on behalf of the appellant Bank that the sale was complete upon receipt of the part payment.
35.In view of the provisions of Section 14 (1) (c) of the IBC, which have overriding effect over any other law, any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the SARFAESI Act is prohibited. We are of the view that the appellant Bank could not have continued the proceedings under the SARFAESI Act ones the CIRP was initiated an the moratorium was ordered.”
The judgment of Hon’ble Supreme Court in the above case clearly support the submission of the counsel for the appellant that appellant was entitled to file an application under Section 60 (5) before the Adjudicating Authority.
We are of the view that Adjudicating Authority committed error in rejecting the application only on the ground that appellant has no locus.
In view of the aforesaid the order impugned is set aside and the application filed by the appellant is revived before the Adjudicating Authority which may be considered and decided in accordance with law.
The counsel for the appellant submits that during pendency of the application before the Adjudicating Authority an interim order dated 19.08.2020 was passed which was also continued by this Tribunal vide its order dated 27.01.2022.
In view of the aforesaid, we by allowing this appeal also continue the interim order 19.08.2020 for a period of four weeks from today.
Both the counsel for the parties may place the copy of this order before the Adjudicating Authority who may proceed to consider the I.A. No. 1047 of 2020 in accordance with law.