Ethenic Agencies Private Limited vs Mr. K.G. Somani Erstwhile Liquidator – ...

Ethenic Agencies Pvt. Ltd. ....Appellant Vs. Mr. K.G. Somani, ...Respondents Erstwhile Liquidator - Delicious Coco Water Pvt. Ltd. & Anr. For Appellant Mr. Sudhir Makkar, Sr. Advocate with Ms. Anushka Sarkar, Ms. Veera Mathai, Advocates. For Respondents

ORDER

04.10.2023: Heard Shri Sudhir Makkar, Learned Senior Counsel for the

Appellant.

2. This Appeal has been filed against the order dated 30.08.2023 passed

by the Adjudicating Authority (National Company Law Tribunal), New Delhi,

Special Bench (Court-II) by which IA No.4174 of 2023 filed by the Appellant

has been rejected.

3. Learned Senior Counsel for the Appellant submits that the Appellant's

name was included in the balance sheet of the Corporate Debtor. However,

after publication was made by the Liquidator and claim was filed by the

Appellant which stood rejected, an Appeal under Section 42 of the IBC also

was subsequently rejected on the ground of limitation. Under the order of this

Tribunal, a scheme was submitted under Regulation 2B of the IBBI 2

(Liquidation Process) Regulations, 2016 which scheme was approved by SIDBI

the 100% Financial Creditor and in the scheme, no payment was proposed to

the Appellant, hence, he filed an application before the Adjudicating Authority

challenging the scheme on the ground that the Appellant was also a Financial

Creditor whose consent was required for approval of the scheme. Adjudicating

Authority has rejected the said application. Aggrieved by the said order, this

Appeal has been filed.

4. Learned Senior Counsel for the Appellant submits that in the scheme,

Appellant's amount was noticed. However, the payment proposed as NIL. It is

submitted that even though the claim of the Appellant was rejected in the

liquidation proceeding but since it was reflected in the balance sheet,

Appellant is a Financial Creditor. He further submits that the claim of

Appellant was reflected in the balance sheet which was even signed by the

Liquidator.

5. We have considered the submissions of the Appellant and perused the

record.

6. The claims of all creditors are to be considered in the liquidation

proceedings and examined by the Liquidator and in event of any dispute,

matter is required to be adjudicated by the Adjudicating Authority. There is

no dispute to the fact that the claim was filed by the Appellant as Financial

Creditor which stood rejected by the Liquidator as well as the Adjudicating

Authority. The rejection of the claim of the Appellant clearly lead to the

Company Appeal (AT) (Insolvency) No. 1305 of 2023 3

conclusion that the claim cannot be accepted in the liquidation proceedings

nor Appellant is entitled for any claim in the water fall mechanism.

7. Present is a case where a scheme was submitted in the liquidation

proceeding in which scheme also the payment to the Appellant has been

shown as a 'nil' and the scheme was approved by SIDBI who according to the

Liquidator was a 100% Financial Creditor. When the Appellant's claim was

rejected, he cannot claim that he is a Financial Creditor whose consent was

required for approval of the scheme. The Application filed by the Appellant for

the purpose that a scheme be rejected since consent of the Appellant was not

obtained. He also prays for modification of the scheme. The Adjudicating

Authority has rejected the application relying on the fact that the claim of the

Appellant was rejected by the liquidator and when the scheme was brought it

had approval of 100% Financial Creditor i.e. SIDBI. Much emphasis has been

made by the Counsel for the Appellant on the fact that Appellant's claim was

reflected in the balance sheet. It is after the reflection in the balance sheet that

in the liquidation proceeding, the claim was filed by the Appellant and

adjudicated rejecting the claim of the Appellant. The proceeding which

undertook in the liquidation proceedings cannot be ignored nor can be washed

out only on the ground that in the balance sheet of the Corporate Debtor the

name of the Appellant was reflected. Proceeding in the adjudication which

culminated in the rejection of the claim has to be given effect to in the

liquidation proceeding. The scheme was also a part of the liquidation

proceeding, hence, we are of the view that no error has been committed by the

Adjudicating Authority rejecting the application of the Appellant.

Company Appeal (AT) (Insolvency) No. 1305 of 2023 4

8. There is no merit in the Appeal. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) Anjali/nn

Company Appeal (AT) (Insolvency) No. 1305 of 2023