2020 (12) TMI 246 - Tri - Insolvency and Bankruptcy

Legal battle over share sales and contract breaches in insolvency case leads to Tribunal's interim stay order

The Tribunal addressed issues stemming from a failed resolution plan, disputes over share sales by the Liquidator, and alleged contract violations. An ... Liquidation of Corporate Debtor - in the 6th CoC meeting the resolution plan for revival of the Corporate Debtor had failed to get the approval of the CoC - HELD THAT:- This matter needs a further hearing but prima facie the liquidation process cannot be halted for indefinite period. As a part of the liquidator process shares have to be sold after making offer to the other parties i.e., the applicant and WBIDC - We, therefore, grant ad interim stay only by restraining the Liquidator from selling the shares of the Corporate Debtor to outsiders for a period of two weeks only when the issue would possibly be heard and decided finally. Matter stands adjourned to 22/09/2020 for further consideration. Issues:1. Failure of the resolution plan in the CoC meeting and subsequent liquidation order.2. Dispute regarding the sale of shares of the Corporate Debtor in NPRL by the Liquidator.3. Allegations of violation of Joint Sector Agreement terms by the Liquidator.Analysis:1. The application was filed under sections of the Insolvency and Bankruptcy Code, 2016, regarding the failure of the resolution plan in the CoC meeting, leading to the liquidation of the Corporate Debtor. The Liquidator was appointed, and subsequent events, including challenges to orders, were detailed.2. The applicant contested the sale of 25% shares of the Corporate Debtor in NPRL by the Liquidator, alleging non-compliance with the Joint Sector Agreement. The applicant argued that the Liquidator failed to offer the shares as required by the agreement, impacting the fair valuation process. The applicant sought to declare the EoI invitation as null and void.3. The Liquidator defended the sale by citing clauses of the Joint Sector Agreement, emphasizing the need for efficacious disposal of shares. The Liquidator proposed selling shares on the stock exchange and highlighted delays caused by the applicant. The Tribunal granted an ad interim stay on selling shares to outsiders for two weeks, pending further hearings.4. The Tribunal directed both parties to file affidavits and responses within specified timelines, indicating a need for further consideration. The matter was adjourned for a later date, and the Registry was instructed to circulate the order to all concerned parties promptly.This judgment addresses the complexities arising from the failure of a resolution plan, disputes over the sale of shares by the Liquidator, and alleged violations of contractual agreements. The Tribunal's interim decision aims to balance the interests of all parties involved while ensuring a fair and transparent liquidation process.