Navneet Chaurasia vs Lanco Infratech Ltd. & Ors

NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI Company Appeal (AT) (Insolvency) No. 326 of 2019

IN THE MATTER OF:

Navneet Chaurasia ...Appellant

Versus

M/s. Lanco Infratech Ltd. & Ors. ...Respondents

Present: For Appellant : Mr. Kaustubh Sinha, Advocate Mr. Raj Khurana, A/R for the Appellant

For Respondents : Ms. Misha, Mr. Vaijayant Paliwal and Ms. Charu Bansal, Advocates

ORDER

19.08.2019 The Appellant claims to be the owner (Lessor) of the premises

given on rent to the 'Corporate Debtor' (Lessee). A 'Corporate Insolvency

Resolution Process' was initiated against the 'Corporate Debtor' and during the

said period it is alleged that no rent was paid.

2. However, learned counsel for the 'Resolution Professional' / 'Liquidator'

accepts that the rent amount had not been paid after August, 2016.

Subsequently, due to failure no resolution has taken place and the company was

ordered to be liquidated under Section 33 of the 'Insolvency and Bankruptcy

Code, 2016' (for short, 'the I&B Code') and liquidation proceedings are going on.

In the meantime, the Appellant filed an application before the Adjudicating

Authority (National Company Law Tribunal), Hyderabad Bench Hyderabad to

allow the appellant to take appropriate remedies against the 'Corporate Debtor', 2

which was rejected by the impugned order dated 12th February, 2019 and this

appeal has been preferred.

3. Learned counsel appearing on behalf of the Appellant submitted that

during the resolution process with the 'corporate debtor', there is default in

paying the rent and having failed to pay so, the Appellant has right to file a suit.

4. We have heard the learned counsel appearing on behalf of the Appellant

and the learned counsel appearing on behalf of the 'Liquidator'.

5. During the 'Corporate Insolvency Resolution Process', in view of provisions

of Section 14 of the 'I&B Code', it was not open to the Appellant to prefer a suit

or a 'Corporate Debtor' to vacate from the premises in question, though we accept

that during the 'Corporate Insolvency Resolution Process', the Appellant was also

entitled for the rent. We also accept that if the rent of the earlier period has not

been paid, it is for the Adjudicating Authority to decide at one or other stage.

Learned counsel appearing on behalf of the 'Resolution Professional' /

'Liquidator' has also not disputed that the rent amount is payable to the

Appellant prior to the commencement of the 'Corporate Insolvency Resolution

Process'. However, we are not deciding such issue in this appeal as it is for the

appropriate authority/Court of competent jurisdiction to decide the same. The

fact is that the 'Corporate Debtor' has been ordered to be liquidated and now the

question of payment of any rent as the 'resolution cost' cannot be assessed before

the completion of the liquidation proceedings.

6. In the case of "Y. Shivram Prasad Vs. S. Dhanapal & Ors. - Company

Appeal (AT) (Insolvency) No. 224 of 2018 etc." this Appellate Tribunal

observed and held :

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15. Learned counsel appearing on behalf of the

Appellant (Promoter) submitted that the provisions

under Section 230 may not be completed within 90

days, as observed in "S.C. Sekaran v. Amit

Gupta & Ors." (Supra).

16. It is further submitted that there will be objections

by some of the creditors or members who may not

allow the Tribunal to pass appropriate order under

Section 230 of the Companies Act, 2013.

17. Normally, the total period for liquidation is to be

completed preferably within two years. Therefore,

in "S.C. Sekaran v. Amit Gupta & Ors." (Supra),

this Appellate Tribunal allowed 90 days' time to

take steps under Section 230 of the Companies Act,

2013. In case, for any reason the liquidation

process under Section 230 takes more time, it is

open to the Adjudicating Authority (Tribunal) to

extend the period if there is a chance of approval of

arrangement of the scheme.

18. During proceeding under Section 230, if any,

objection is raised, it is open to the Adjudicating

Authority (National Company Law Tribunal) which

has power to pass order under Section 230 to

overrule the objections, if the arrangement and

Company Appeal (AT) (Insolvency) No. 326 of 2019 4

scheme is beneficial for revival of the 'Corporate

Debtor' (Company). While passing such order, the

Adjudicating Authority is to play dual role, one as

the Adjudicating Authority in the matter of

liquidation and other as a Tribunal for passing

order under Section 230 of the Companies Act,

2013. As the liquidation so taken up under the 'I&B

Code', the arrangement of scheme should be in

consonance with the statement and object of the

'I&B Code'. Meaning thereby, the scheme must

ensure maximisation of the assets of the 'Corporate

Debtor' and balance the stakeholders such as, the

'Financial Creditors', 'Operational Creditors',

'Secured Creditors' and 'Unsecured Creditors'

without any discrimination. Before approval of an

arrangement or Scheme, the Adjudicating Authority

(National Company Law Tribunal) should follow the

same principle and should allow the 'Liquidator' to

constitute a 'Committee of Creditors' for its opinion

to find out whether the arrangement of Scheme is

viable, feasible and having appropriate financial

matrix. It will be open for the Adjudicating Authority

as a Tribunal to approve the arrangement or

Scheme in spite of some irrelevant objections as

may be raised by one or other creditor or member

Company Appeal (AT) (Insolvency) No. 326 of 2019 5

keeping in mind the object of the Insolvency and

Bankruptcy Code, 2016.

19. In view of the observations aforesaid, we hold that

the liquidator is required to act in terms of the

aforesaid directions of the Appellate Tribunal and

take steps under Section 230 of the Companies Act.

If the members or the 'Corporate Debtor' or the

'creditors' or a class of creditors like 'Financial

Creditor' or 'Operational Creditor' approach the

company through the liquidator for compromise or

arrangement by making proposal of payment to all

the creditor(s), the Liquidator on behalf of the

company will move an application under Section

230 of the Companies Act, 2013 before the

Adjudicating Authority i.e. National Company Law

Tribunal, Chennai Bench, in terms of the

observations as made in above. On failure, as

observed above, steps should be taken for outright

sale of the 'Corporate Debtor' so as to enable the

employees to continue.

20. Both the appeals are disposed of with aforesaid

observations and directions. No cost."

7. In view of the decision of this Appellate Tribunal in "Y. Shivram Prasad

Vs. S. Dhanapal & Ors', it is stated that the 'Liquidator' shall take steps to

Company Appeal (AT) (Insolvency) No. 326 of 2019 6

get the matter settled by way of arrangement or scheme in terms of Section 230

of the Companies Act, 2013. During the 'liquidation process' in terms of Section

35 read with Sections 36, 38, 39 and 40 of the I&B Code, the 'Liquidator' is

required to collate and determine the claims. The Appellant at that stage may

file the claim, which may be determined.

The 'Liquidator' is also to make arrangement and from claims in terms of

Section 230 of the Companies Act, 2013 and while doing so, it may take into

consideration the claim of the Appellant along with others. On failure, if the

'Corporate Debtor' is sold with its employees, such person will take care of the

claim of the Appellant otherwise, if finally it is to be liquidated by the assets of

the 'Corporate Debtor', the Appellant will be entitled in terms of Section 53 of the

'I&B Code'.

In the meantime, in view of Section 33(5) of the I&B Code, we cannot allow

the Appellant to file a suit. However, this order will not come in the way of the

Appellant and the 'Liquidator' to make settlement for payment of amount to

post-liquidation as the 'Corporate Debtor' will kept as a going concern.

The appeal stands disposed of with aforesaid observations.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice A.I.S. Cheema ] Member (Judicial)

[ Kanthi Narahari ] Member (Technical) /ns/gc

Company Appeal (AT) (Insolvency) No. 326 of 2019