Proceedings u/s 61 of IBC cannot be Instituted by Official Liquidator to Challenge Directions by IBBI: NCLAT [Read Order]
The tribunal upheld the order of the High court of Delhi stating that at this stage there is no action that the appellant could use to invoke appellate jurisdiction as the investigation is fact-finding and a preliminary inquiry and no final decision has been made yet
NCLAT – IBBI – Section 61 of IBC – RLS Alloys case – NCLAT Chennai – taxscan
NCLAT – IBBI – Section 61 of IBC – RLS Alloys case – NCLAT Chennai – taxscan
The Chennai bench of the National Company Law Appellate Tribunal dismissed an appeal filed by the Liquidator of the Corporate Debtor M/s RLS Alloys Pvt. Ltd stating that the Liquidator cannot institute proceedings under Section 61 proceedings to challenge the directions given to the Insolvency Bankruptcy Board of India ( IBBI ).
CA Ramasamy Shanmuggam, the appellant is the official liquidator of the Corporate Debtor M/s RLS Alloys Pvt. Ltd has partially challenged the Impugned Judgement of the adjudicating authority before the National Company Law Appellate Tribunal (Chennai).
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According to impugned judgement of the adjudicating authority, during the liquidation process an e-auction was held wherein the issue of irregularities was raised. Subsequently it is also seen that the liquidator allowed a lower bid to prevail even though a higher bid was placed. An e-auction was also held without giving any prior notice of the initiation of the auction. The price in the new auction was also set low from the previously valid bid. The liquidator also allowed a suspended bidder to participate in the auction process. As a result, NCLT stated that there was lack of transparency in the liquidation process.
Due to the lack of transparency in the liquidation process and in the conduct of the liquidator, the tribunal ordered IBBI to conduct a inquiry into the acts of the liquidator. The NCLT also clarified that the inquiry is a fact-finding process and is not a punitive action against the liquidator. Aggrieved by the order of the NCLT, the liquidator filed a case appealing the order of NCLT before NCLAT, Chennai.
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The liquidator also filed a parallel proceeding before the High Court of Delhi challenging the order of the NCLT. The High court stated that the liquidator should be provided with a copy of the inspection report and should also be given a chance to file a reply to the show cause notice. The High Court also stated that the IBBI must make decision with the period of 4 weeks after receiving the reply of the liquidator.
The bench comprising of Justice Sharad Kumar Sharma (Member Judicial) and Jatindranath Swain (Member Technical) ruled that the Liquidator cannot institute a Section 61 proceedings to challenge the directions given to the IBBI to conduct an inquiry.
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The tribunal upheld the order of the High court of Delhi stating that at this stage there is no action that the appellant could use to invoke appellate jurisdiction as the investigation is fact-finding and a preliminary inquiry and no final decision has been made yet. The Appeal was dismissed.
To Read the full text of the Order CLICK HERE
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