Reliance Infra Power Fund vs Raj Kumar Ralhan

[Arising out of Order dated 11.02.2020 passed by National Company Law Tribunal, Principal Bench, New Delhi in CP (IB)-540 (PB)/2017]

IN THE MATTER OF: Before NCLT Before NCLAT

Reliance India Power .... Appellant Fund, Reliance Capital Trustee Company Limited, Kamala City Compound, Trade World, B Wing, 7th Floor, S.B. Marg, Lower Parel (West), Mumbai 400013

Versus

Mr. Raj Kumar Ralhan Liquidator Respondent Liquidator of Su Kam Power Systems Limited, Pricewaterhouse Coopers Professional Services LLP, Building No.10, Tower-C, 17th Floor, DLF Cyber City, Gurgaon, Haryana - 122002

Also at: Plot No.54, Sector 37, Phase VI, Udyog Vihar, Gurugram, Haryana 122001

For Appellant: Shri Sanjay Sharma and Ms. Anisha Mahajan, Advocates

For Respondent: Ms. Misha and Shri Siddhant Kant, Advocates -2-

ORDER

24.02.2020 Heard Counsel for Appellant. This Appeal has been filed

against Impugned Order dated 11th February, 2020 passed in CA

No.1096(PB)/2020 in CP (IB)-540 (PB)/2017. It is stated that the Corporate

Debtor - Su Kam Power Systems Ltd. is undergoing liquidation proceedings.

Counsel states that before the CIRP had started, the Appellant had initiated

arbitration proceedings against the Corporate Debtor, which was hit by

moratorium when CIRP started. The Counsel states that after the liquidation

Order had been passed, the Appellant wanted to proceed with the arbitration

proceedings but the Liquidator only caused appearance once and informed

the Arbitrators regarding the liquidation proceedings but thereafter, has not

participated and the arbitration proceedings are struck.

2. The learned Counsel refers to Section 35(k) of the Insolvency and

Bankruptcy Code, 2016 (IBC - in short) to submit that it is the duty of the

Liquidator to defend any Suit, prosecution or other legal proceedings and it is

stated that the Appellant would not have claimed anything if it was a private

individual but according to the Counsel, under law, the Liquidator is bound

to defend the proceeding. The learned Counsel referred also to the liquidation

Order dated 3rd April, 2019 (Annexure A-9) to state that when liquidation

Order was passed, the Adjudicating Authority (National Company Law

Tribunal, Principal Bench, New Delhi) had directed the Liquidator in direction

'g' that the Liquidator shall follow up and investigate the financial affairs of

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the Corporate Debtor in accordance with provisions of Section 35(1) of the

Code. The argument is that the Liquidator is thus bound to come and defend

the arbitration proceedings.

3. The learned Counsel for the Respondent - Liquidator is submitting that

the arbitration proceeding relates to inter-shareholders dispute of the

Corporate Debtor which was started before CIRP proceedings were initiated.

The learned Counsel states that the Corporate Debtor - the Company as such

has nothing to do with such inter se dispute. The learned Counsel states that

because of this, the Liquidator has taken a decision that he need not contest

the said arbitration proceedings.

4. The learned Counsel for the Appellant in Rejoinder states that the

concerned Agreement (Annexure A-3) shows that the said Agreement was

between the Corporate Debtor and the Appellant.

5. We find that the duty cast on the Liquidator is to institute or defend

any Suit, prosecution or other legal proceedings. The same would include

conscious decision which a Liquidator may take whether or not in the given

set of facts, he needs to defend the proceeding. If the Liquidator has taken the

decision, for reasons stated, we do not think that the Appellant has any right

to force the Liquidator to come and defend and surrender to the action which

the Appellant claims to have initiated.

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6. We do not find any reason to interfere with the Impugned Order. The

Appeal has no substance. The Appeal is dismissed at the stage of admission.

No costs.

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

(Justice A.B. Singh) Member (Judicial)

[Kanthi Narahari] Member (Technical)

/rs/md

Company Appeal (AT) (Ins) No.318 of 2020