2023 (3) TMI 805 - AT - Insolvency and Bankruptcy

Appeal Dismissed for Lack of Stakeholder Interest in Liquidation Process

The Tribunal dismissed the Petitioner/Appellant's application seeking leave to file an appeal against the Impugned Order, stating it was intended to ... Seeking leave for filing an appeal - locus standi - concept of Sufficient Cause, is alien to the maintaining of an Appeal, under Section 61 (1) of the I & B Code, 2016 or not - the plea of the Petitioner / Appellant is that, there is no need to prove any Sufficient Cause, to prefer an Appeal - Validity of Process of Sale and Realisation - Sale of the Corporate Debtor, as a Going Concern, by means of a Private Sale. HELD THAT:- In the instant case, consequent to the Order dated 19.01.2023, passed by the Adjudicating Authority, the Sale as a Going Concern for the Corporate Debtor, was allowed by the Adjudicating Authority, a Sale Agreement, was executed by the 2nd Respondent with the Corporate Debtor and the 2nd Respondent, took over the Whole Management and the Sale Proceeds, were distributed to the Stakeholders, as per Section 53 of the I & B Code, 2016. In the light of foregoings and this Tribunal, bearing in mind a prime fact that the Petitioner / Appellant, is not a Stakeholder in the Liquidation Process, and in any event, has no vested interest, in the Corporate Debtor, comes to a resultant conclusion that the appeal, filed by the Petitioner / Appellant, is an Otiose one, and the same is filed, only to disrupt, the Liquidation Process of the Corporate Debtor, because of the fact that the entire Sale Proceeds, were distributed to the Stakeholders, as per ‘Section 53 of the I & B Code, 2016. Looking at from any angle, the Leave, prayed for by the Petitioner / Appellant, to file the instant Comp. App, is not assented to, by this Tribunal, cementing upon the facts and circumstances of the instant case. Appeal dismissed. Issues Involved:1. Whether the Petitioner/Appellant has the right to seek leave to file an appeal against the Impugned Order.2. Whether the Petitioner/Appellant is a 'Person Aggrieved' under Section 61 of the I&B Code, 2016.3. Validity of the Liquidation Process and Sale as a Going Concern.Summary:Issue 1: Right to Seek Leave to File an AppealThe Petitioner/Appellant, a member of the Stakeholders Consultation Committee of the Corporate Debtor, sought leave to file an appeal against the Impugned Order dated 19.01.2023 by the Adjudicating Authority (NCLT, Division Bench-II, Chennai). The Petitioner argued that no prejudice would be caused if the Interlocutory Application is allowed. The Petitioner contended that the concept of 'Sufficient Cause' is alien to maintaining an appeal under Section 61(1) of the I&B Code, 2016, and that any person aggrieved by a legal grievance involving the violation of procedural or substantive rights can maintain an appeal.Issue 2: 'Person Aggrieved' under Section 61 of the I&B Code, 2016The Petitioner argued that as a stakeholder entitled to receive monies under the waterfall mechanism, they are entitled to seek leave for filing an appeal. The Petitioner cited the Hon'ble Supreme Court's decision in Samir Agrawal v. Competition Commission of India, which emphasized a broad interpretation of 'Person Aggrieved.' However, the 1st Respondent/Liquidator contended that the Petitioner was not a party to the original proceedings and had not raised any objections during the liquidation process. The 2nd Respondent supported this by stating that the Petitioner is advancing the agenda of the erstwhile promoters to derail the liquidation process.Issue 3: Validity of the Liquidation Process and Sale as a Going ConcernThe 1st Respondent/Liquidator highlighted that the Petitioner had full knowledge of the ongoing proceedings but did not participate in the Swiss Challenge Auction or raise objections during the liquidation process. The 2nd Respondent emphasized that the sale as a going concern was conducted properly, with the sale proceeds distributed as per Section 53 of the I&B Code, 2016. The Tribunal noted that the Petitioner was not a stakeholder in the liquidation process and had no vested interest in the Corporate Debtor.Disposition:The Tribunal concluded that the Petitioner/Appellant's application was otiose and intended to disrupt the liquidation process. Consequently, IA No. 128 of 2023 in Comp. App (AT) (CH) (INS.) No. 35 of 2023 was dismissed. Consequently, the main Comp. App (AT) (CH) (INS.) No. 35 of 2023 was also rejected, and the connected pending IA Nos. 129 and 130 of 2023 were closed.