The National Company Law Tribunal ("NCLT"), Chennai Bench, comprising of Justice S. Ramathilagam (Judicial Member) and Shri Anil Kumar B (Technical Member), while adjudicating an application filed in IDBI Bank v Jeypore Sugar Company Ltd., has restrained the liquidator from dealing with the assets of Jeypore Sugar Company Ltd. ("Corporate Debtor") till the pendency of the application filed by promoters of the Corporate Debtor. The order was passed on 03.06.2022.
Jeypore Sugar Company Ltd. was admitted into Corporate Insolvency Resolution Process by the NCLT, Chennai Bench ("Adjudicating Authority") on an application made by IDBI Bank Ltd. and subsequently liquidation was ordered.
A scheme for compromise under Section 230 of the Companies Act, 2013, was submitted by the Kineta Global Ltd. before the NCLT which was pending adjudication. In the meanwhile, the NCLT Bench vide an order dated 17.11.2021 had directed fresh valuation of the assets of the Corporate Debtor in order to invite schemes under Section 230 of the Companies Act, 2013. Kineta Global filed an appeal before the NCLAT against the order dated 17.11.2021 and a stay was imposed on the order on 03.12.2021.
Thereafter, the Promoters of the Corporate Debtor had filed an application in 2022 in the proceedings pending before the NCLAT, seeking permission to pay off the debts of the Corporate Debtor, the application is pending adjudication.
The Promoters of the Corporate Debtor further filed an application bearing I.A. (IBC) 579/CHE/2022 before the NCLT, alleging that the Liquidator was selling the plant and machinery of the Corporate Debtor for a scrap value and is ensuring that Corporate Debtor is sold out for an under value so as to favour Kineta Global Ltd. Further, the Liquidator was handling the litigations against the Corporate Debtor in a manner prejudicial to the latter. In view of these allegations the Promoters had prayed for the following reliefs:
- To restrain the liquidator from dealing with Rayagada lands and conducting sale of the assets of the Corporate Debtor;
- To direct the liquidator to not dispense functions of a liquidator except maintaining security at Corporate Debtor's premises;
- To permit applicant to appoint one person at each premises of Corporate Debtor alongwith the security maintained by the liquidator, to prevent removal of valuables from the premises;
- To order inquiry to find out the properties sold by the liquidator;
- To constitute Joint Inspection Committee;
- To direct the scrap purchaser (Respondent No. 12) to not lift any machinery or scrap until further directions.
Observations Of The NCLT
While adjudicating the I.A. (IBC) 579/CHE/2022, the NCLT Bench observed that the NCLAT had imposed a stay on the order dated 17.11.2021 which was in operation till date and hence the Liquidator cannot be permitted to sell the plant and machinery of the Corporate Debtor. Accordingly, it was held that:
"The Liquidator shall not deal with any of the assets of the Corporate Debtor till the disposal of the present application. Further, Respondent No. 12 is also restrained from lifting any kind of machinery or scrap until the disposal of the present application."
The next date of hearing is 30.06.2022.
Case Title: IDBI Bank v Jeypore Sugar Company Ltd., CP/1307/IB/2018
Counsel for Applicant: Sr. Adv. P. Nagesh