Erstwhile Liquidator Can't Seek Recall Of An Order In His Personal Capacity After Being Replaced By Another Liquidator: NCLAT Chennai
The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Justice Sharad Kumar Sharma (Judicial Member) and Shri Jatindranath Swain (Technical Member), has held that a Liquidator, after being replaced with another liquidator, cannot seek recall of an order in his personal capacity. If the erstwhile liquidator...
The National Company Law Appellate Tribunal (“NCLAT”), Chennai Bench, comprising of Justice M. Venugopal (Judicial Member) and Justice Sharad Kumar Sharma (Judicial Member) and Shri Jatindranath Swain (Technical Member), has held that a Liquidator, after being replaced with another liquidator, cannot seek recall of an order in his personal capacity. If the erstwhile liquidator is aggrieved by an order passed by NCLAT then the remedy would lie in appeal under Section 62 of IBC.
The erstwhile Liquidator had filed an appeal before the NCLAT. In the meanwhile, the erstwhile Liquidator was replaced with new Liquidator, who withdrew the appeal before the NCLAT. The Erstwhile Liquidator filed a review application before NCLAT seeking recall of the order whereby appeal was withdrawn. The NCLAT dismissed the review application citing that the erstwhile Liquidator has no locus standi to file such application or question the decision taken by New Liquidator in his official capacity.
BACKGROUND FACTS
The Jeypore Sugar Co. Ltd. (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the NCLT. Subsequently, the NCLT ordered liquidation of the Corporate Debtor and appointed Mr. V. Venkata Sivakumar (Appellant/Erstwhile Liquidator) as the Liquidator.
An application was filed by the Secured Creditors of the Corporate Debtor seeking inclusion of Rayagada property of Corporate Debtor in the liquidation estate. On 17.11.2021, the NCLT held that the Rayagada property of the Corporate Debtor would form part of the liquidation estate and directed the Liquidator to conduct fresh valuation of assets.
The Erstwhile Liquidator during his engagement had filed an appeal before NCLAT against the NCLT order dated 17.11.2021 bearing Company Appeal (AT) (CH) (Ins) No.8 /2022.
In the meanwhile, on 01.07.2022 the NCLT replaced the Erstwhile Liquidator with Mr. Hari S. Hari Karthik (“New Liquidator”) as the new Liquidator. The NCLT order dated 01.07.2022 was upheld by the NCLAT.
On 05.01.2024, the New Liquidator withdrew the appeal filed by the Erstwhile Liquidator before NCLAT.
The Erstwhile Liquidator filed a review application before the NCLAT, seeking 'recall' of the order dated 05.01.2024 whereby the NCLAT allowed the plea of withdrawal of appeal made by the New Liquidator. The Erstwhile Liquidator contended that the order for withdrawal could not have been passed without hearing him as he is an aggrieved party.
NCLAT VERDICT
The Bench observed that the Erstwhile Liquidator cannot pray for a Review/Recall of an Order passed by NCLAT in his personal capacity, since the appeal before the NCLAT was filed by the Liquidator of the Corporate Debtor and not in his personal capacity.
“The fact of the matter is that when the 1st Respondent / New Liquidator has stepped into the shoes of the Erstwhile Liquidator / Petitioner (Mr. V. Venkata Sivakumar), then, the Review Petitioner (Mr. V. Venkata Sivakumar), legally has No Vested Right, left with him, in respect of the instant Comp. App (AT) (CH) (INS) No. 08 / 2022, as opined by this Tribunal.”
It was concluded that the review application has been filed by the Erstwhile Liquidator without any legal justification or locus standi. The decision to withdraw the appeal before NCLAT was made by the New Liquidator in his official capacity and he is empowered to take a subjective decision of whether or not to pursue a litigation, which was instituted by an earlier Liquidator.
Further, if the Erstwhile Liquidator is aggrieved by the order dated 05.01.2024 then the remedy would be to file an appeal before the Supreme Court under Section 62 of IBC. Accordingly, the review application has been dismissed.
Case Title: Adv. (CA) V. Venkata Sivakumar v Hari S. Hari Karthik & Ors.
Case No.: Comp. App (AT) (CH) (INS) No. 8 / 2022
Counsel for Applicant: Mr. V. Venkata Sivakumar (In person)
Counsel For Respondents: Mr. J. Manivannan, Advocate For New Liquidator and Mr. Varun Srinivasan, Advocate.