Abuse of Dominant Position: NCLT Imposes Rs 1 Lakh Costs On Insolvency Resolution Professional For Stalling Claim
Censuring an Insolvency Resolution Professional for not taking a decision with respect to the claim of the Applicant against a Corporate Debtor, the Mumbai Bench of the National Company Law Tribunal imposed on him costs of Rs. 1,00,000/- for "abuse of dominant position".
The bench comprising Judicial Member Bhaskara Pantula Mohan and Technical Member Shyam Babu Gautam said,
"the Resolution Professional seems to have been sitting over the claim of the Applicant for a long time and this cannot be allowed since the same would cause heavy prejudice to the Applicant and defeat the purpose of the Code.
the actions or rather inaction on the part of the Resolution Professional in not taking a decision with respect to the claim of the Applicant is an abuse of the powers given to him under the code and contrary to justice and public policy. His actions are nothing more but an abuse of his dominant position."
The order was passed in an application filed by Amar Universal Pvt. Ltd., in the Company Petition pending against SK Wheels Pvt. Ltd. (Corporate Debtor), whereby the Resolution Professional had been appointed.
It was the Applicant's case that the Resolution Professional did not accept its claim against the Corporate Debtor and did not even cite any reasons for the same. Briefly, the facts of the case were that the Corporate Debtor was allegedly liable to pay on or before 7th of each Calendar Month, a License Fee against the Applicant's premises. However, in view of the debtor's default in payment and failure to vacate the premises in pursuance of termination notice issued by the Applicant, a Civil Suit against the Corporate Debtor for possession and recovery of arrears was pending.
Subsequently however, moratorium was declared against the debtor under section 14 of the Code, and the said suit had come on a stand-still. Accordingly, the Applicant filed his claims before the Resolution Professional, in Form-B under Regulation 7 of Insolvency and Bankruptcy Board of India, Regulations, 2016.
The Resolution Professional challenged the maintainability of the application, stating that the said claim was under consideration as it was pending for clarification. It was also submitted that the Applicant had not approached the Tribunal with clean hands inasmuch as there were material discrepancies with regards to the claim submitted by it.
Taking note of the fact that the claim of the Applicant was filed more than 4 months ago and that the premises undisputedly belonged to the Applicant, the bench held,
"Applicants has complete right over the possession of his land and his dues.
Keeping in mind that the Applicant is being deprived from his right of using the land that owns is patently illegal and wrong, therefore cannot be allowed."
The bench noted that it was a very peculiar case where the Resolution Professional "maliciously" stalled the Applicant's claim since he wanted to hand over the said premises to the successful Resolution Applicant as a going concern.
In this regard, the bench said that it enjoyed vast powers under Section 60(5) of the Code to act upon the Resolution Professional's "inaction". Accordingly, it said,
"It is trite law that this tribunal has been provided with vast powers under section 60 (5) of the Code. Therefore, based on the above this bench is of the view that the actions or rather inaction on the part of the Resolution Professional in not taking a decision with respect to the claim of the Applicant is an abuse of the powers given to him under the code and contrary to justice and public policy.
this Application is allowed with cost of Rs. 1,00,000/- to be paid by the Resolution Professional to the Applicant within a week from the date of this order."
The Applicant, Amar Universal Pvt. Ltd., was represented by Advocate Manan Sanghai, i/b Advocate Sudarshan Bhosale for Ajit Talwar & Co. and the Resolution Professional for Corporate Debtor SK Wheels Pvt. Ltd., by Advocate Anirudh Purshottam.