Liquidator is Accountable to Explain Delay in Liquidation Process: NCLT

The Chennai bench of the National Company Law Tribunal (NCLT) has held that the liquidator is accountable for explaining the delay in the liquidation process. It was observed that the Liquidation is a time-bound process and the Liquidator being made accountable is required to explain if there is any delay caused in the liquidation process. An application was filed by the Applicant under Section 42 read with Section 60(5) of IBC, 2016 seeking modification of the claim. S. Rajendran,the Liquidator of M/s. Daehsan Trading India Private Limited. The Tribunal vide its order dated 27.03.2018 had ordered for Liquidation of the Corporate Debtor and appointed the 1st Respondent herein as the Liquidator. The Liquidator caused the public announcement on 09.04.2018. The last date for submission of claims was fixed as 26.04.2018. The Applicant herein has not filed its claim before the Liquidator. However, on 20.03.2019, the Liquidator sent a communication to the Applicant stating that as per the Assessment order, a payment of Rs.1,74,245/- has been released to the Applicant under Section 53(1)(e) of IBC, 2016. Only thereafter, the Applicant preferred the claim before the Liquidator in Form C for a sum of Rs.33.49 Crores. The Applicant filed its claim before the Liquidator, and the distribution to the stakeholders as per Section 53 of IBC, 2016 has commenced. The distribution as per Section 53 of IBC, 2016 done by the Liquidator is extracted hereunder; It was stated that after distributing the entire amount to the stakeholders as per Section 53 of IBC, 2016, the Liquidator has filed an Application seeking dissolution of the Corporate Debtor and the same is pending adjudication before the Tribunal. The Applicant in his Application has nowhere mentioned the reasons for the delay in filing the claim before the Liquidator. Further, there are no averments made in the Application as to the delay in preferring the claim before the Liquidator. Further, it is noted that the Applicant had filed its claim before the IRP during the CIRP of the Corporate Debtor. So it cannot feign ignorance for not filing the claim before the Liquidator. However, for the reasons best known to them, the Applicant did not file the claim before the Liquidator within the stipulated period. Further, as per the waterfall mechanism stipulated under Section 53 of IBC, 2016, the Liquidator has distributed the amount to the stakeholders and filed an Application seeking dissolution of the Corporate Debtor. The Tribunal is also persuaded by the decision of the NCLAT in the matter of The Deputy Commissioner Commercial Taxes (Audit), Raichur –Vs- Surana Industries Ltd. dismissed the application filed by the Applicant about the Appeal against the order of the liquidator and also held that liquidation process is a time bound process and the Liquidator has to conclude the proceedings within one year. Under Regulation 44(1) of the IBBI (Liquidation Process) Regulations, 2016, the Liquidator has been directed to liquidate the Corporate Debtor within one year from the date of commencement of the liquidation proceedings. Regulation 44(2) stipulates that, after the expiry of one year, the liquidator shall apply to the Authority to continue the liquidation period along with a report and explain why the liquidation has not been completed. Thus, it can be seen that the Liquidation is a time-bound process and the Liquidator being made accountable is required to explain if there is any delay caused in the liquidation process. A two-member bench comprising Sanjiv Jain, Member (Judicial) and Venkataraman Subramaniam, Member (Technical) observed that the Supreme Court in Gaurav Hargovindbhai Dave – Vs- Asset Reconstruction Company (I) Ltd. & Another about the aspect of limitation has restated the well-established and well-settled principle that “there is no equity about limitation”. The Tribunal dismissed the appeal. B. Dinesh appeared for the appellant and Elamathi appeared for the respondent. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Liquidator is Accountable to Explain Delay in Liquidation Process: NCLT

Your free access to Taxscan has Expired

To read the article, get a premium account.

Taxscan Premium

Topics