NCLAT Delhi: Liquidator Can Pursue Writ Petition On Behalf Of Corporate Debtor When NCLT Has Allowed Liquidator To Prosecute As Per Sec. 33(5) Of IBC
The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member) held that the Liquidator can pursue a Writ Petition on behalf of the Corporate Debtor when the Adjudicating Authority has allowed the Liquidator to prosecute on behalf of the Corporate Debtor as...
The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Mr. Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member) held that the Liquidator can pursue a Writ Petition on behalf of the Corporate Debtor when the Adjudicating Authority has allowed the Liquidator to prosecute on behalf of the Corporate Debtor as per Section 33(5) of Insolvency and Bankruptcy Code, 2016 ('IBC').
Background Facts:
The Appellant, CA Rajeev Bansal (Liquidator) for Isolux Corsan India Engineering & Construction Pvt. Ltd. (Corporate Debtor), filed an interlocutory application to obtain permission to defend legal proceedings on behalf of the corporate debtor, both pre and post-liquidation. The NCLT Chandigarh Bench granted this permission on 28.04.2022.
Later, the Liquidator learned about Re-Assessment Proceedings initiated by the Commercial Tax Department. To safeguard the Corporate Debtor's interests, the Liquidator filed a Writ Petition seeking to quash the Re-assessment order and the associated demand.
During the Writ Petition hearing, the Respondent objected, asserting that the Liquidator did not obtain prior approval from NCLT Chandigarh before filing the Writ Petition. Consequently, the Appellant applied to NCLT Chandigarh, which was dismissed in the order dated 29.11.2023.
NCLAT Verdict:
The NCLAT Delhi allowed the application and held that the Liquidator can pursue a Writ Petition on behalf of the Corporate Debtor when the Adjudicating Authority has allowed the Liquidator to prosecute on behalf of the Corporate Debtor as per Sec. 33(5) of IBC.
The Appellate Tribunal observed that exceptions cannot be made to the requirement of law as contained in Section 33(5) of the IBC i.e. legal proceedings may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority.
It noted that the intent of the Liquidator while filing the application was to obtain prior approval of NCLT Chandigarh to institute legal proceedings on behalf of the Corporate Debtor and the same was allowed by it by the order passed on 28.04.2022. The later application became necessary due to the objection raised in regard to the maintainability of the Writ Petition since there is no prior approval for the filing of the Writ petition.
NCLAT clarified that though there was no specific approval for filing Writ Petition, however, NCLT Chandigarh's approval to the Liquidator to prosecute on behalf of the Corporate Debtor, the Adjudicating Authority ought to clarify that the Liquidator was fully entitled to peruse the Writ Petition on behalf of the Corporate Debtor.
In conclusion, NCLAT set aside the Order dated 29.11.2023 and allowed the application holding that the proceedings initiated by the Liquidator by filing Writ Petition were fully covered by the approval of NCLT Chandigarh.
Case Title: CA Rajeev Bansal Liquidator of Isolux Corsan India Engineering & Construction Pvt. Ltd.
Case No.: Company Appeal (AT) (Insolvency) No. 1653 of 2023
Counsel for Appellants: Mr. Abhinav Mishra, Ms. Nivedita Chauhan, Ms. Jagriti Dosi, and Ms. Komal Singh, Advocates.