2021 (11) TMI 614 - HC - Insolvency and Bankruptcy

Court orders return of title documents to liquidator, balancing liquidation process and criminal trial needs

The Court set aside the CBI Court's order declining return of original title documents to the liquidator of a Corporate Debtor. The Court directed the CBI ... Declining to return original ‘title’ documents to the petitioner - petitioner is liquidator of Corporate Debtor - HELD THAT:- It may be emphasized that, under the Insolvency and Bankruptcy Board of India (Liquidation Process), Regulation, 2016, the petitioner being ‘liquidator’, is under obligation to liquidate the Corporate Debtor within a period of one year from the liquidation commencement date. Therefore, the petitioner has to complete the liquidation process in a time-bound manner. Obviously, for selling the assets during the liquidation process, the buyers would insist for original title documents either for purpose of availing credit facilities for purchasing the assets or otherwise - It is therefore essential that the original title documents seized by the CBI and presently in the custody of the Special Court are required to be returned to the purchaser. In consideration of the facts of the case, the apprehension expressed by the CBI can be taken care of by directing the CBI to retain on record certified true copies of documents listed in Exhibit-G in return of original documents to the petitioners. The CBI shall certify all the documents listed in Exhibit-G and shall place a set of certified documents on record of the subject case, which will form part of the chargesheet. It is clarified that, certified copies of the documents, shall be treated as “primary evidence” for all purposes in the subject trial. The CBI Court shall handover the documents listed under Exhibit-G to the petitioners - Petition allowed. Issues: Petition challenging the order declining return of original title documents by the CBI Court to the liquidator of a Corporate Debtor.Analysis:1. The petitioner, appointed as the liquidator of the Corporate Debtor, sought the return of original title documents seized by the Economic Offences Wing (EOW) for conducting due diligence and sale of assets in accordance with the Insolvency and Bankruptcy Code, 2016. The Special CBI Court declined to return the documents, leading to the petition under Article 227 challenging this decision.2. The petitioner, as the liquidator, is obligated to liquidate the Corporate Debtor within a year from the commencement of liquidation. Original title documents are crucial for potential buyers during the liquidation process, as they may require them for availing credit facilities or other purposes. Failure to provide these documents could result in bidders withdrawing their offers, causing losses to public-sector banks and hardship for genuine buyers.3. The CBI expressed concerns that returning the original documents may hinder their ability to present primary evidence in the trial. To address this, the Court directed the CBI to retain certified true copies of the documents while handing over the originals to the petitioner. The certified copies would be treated as primary evidence in the trial, ensuring the CBI's evidentiary requirements are met.4. In light of the above considerations, the Court set aside the CBI Court's order and instructed the CBI to provide certified copies of the documents to the liquidator. These certified copies would form part of the chargesheet and be considered primary evidence in the trial. By balancing the needs of the liquidation process and the requirements of the criminal trial, the Court resolved the issue effectively, allowing for the continuation of the liquidation process while safeguarding the CBI's evidentiary interests.