TaxTMI 
TaxTMI 
2022 (5) TMI 21
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.... Appellant's case is that after order for liquidation of the Corporate Debtor dated 26.9.2019, the erstwhile resolution professional Sudeep Bhattacharya was appointed as liquidator. During the liquidation process, the liquidator vide e-mail dated 2.10.2019 intimated the Appellant/Hero Fincorp Limited (in short 'Hero Fincorp') which had charge of vessel Tag 22, that two vessels, namely Tag 6 and Tag 22, which are assets in the liquidation estate, have come close to each other and may make contact which might result in potential damage to the vessels. This email was also sent to United Bank of India, which had the charge of vessel Tag 6. The liquidator also mentioned in the email that he has reached out to a salvage company, namely K.E. Salvage for securing the two vessels for their protection and preservation and asked it to provide an estimate for the proposed job. The Appellant has further submitted that vide e-mail dated 3.10.2019 it communicated to the liquidator its willingness to contribute funds for securing the vessel Tag 22 and also requested for starting the job of securing the vessels. After completion of the securing operation, K.E. Salvage submitted tax invoice dated 9.....
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....the expenses incurred should be part of the overall liquidation process costs. He has further argued that the liquidator had issued an email dated 2.10.2019 for securing the two vessels Tag 6 and Tag 22 to the Appellant and United Bank of India and the Appellant had requested the liquidator to undertake the securing operation since it had no technical expertise or knowledge of shipping activities and also agreed to contribute its share in the expenses so incurred. He has further argued that the Appellant indicated its intention to exit from the liquidation process vide notice dated 9.10. 2019 in view of the fact that it had obtained statutory remedy for enforcement of the mortgage for the vessel under its charge by invoking the Admiralty Jurisdiction of the Hon'ble Bombay High Court and the Hon'ble Andhra Pradesh High Court but the said notice did not elicit any response from the liquidator. 6. The Learned Counsel for Appellant has further contended that it was therefore constrained to prefer MA No. 3656 of 2019 seeking directions of the Adjudicating Authority for permission to exit from the liquidation process and keep vessel Tag 22 out of the liquidation estate, and also for i....
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....gagee under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 prior to commencement of CIRP of the corporate debtor, wherein vessel Tag 22 which is under its charge was 'arrested' on the order dated 18.3.2019 of the Hon'ble Bombay High Court and its auction/sale was also ordered on 23.4.2019 and, therefore, the expenses incurred for securing the specific charge Tag 22 of the Appellant have to be borne by the Appellant. The Learned Counsel for Appellant has adverted to para 8 of the Impugned Order to claim that the Appellant had, through e-mail dated 4.10.2019, agreed to reimburse 50% of the total expenses and this fact is not disputed by the Appellant and, therefore, such expenses should not form part of CIRP or liquidation process expenses. 9. The Learned Counsel for Respondent/Liquidator has urged that, in accordance with the order given by the Adjudicating Authority in MA No. 3656 of 2019, the Appellant should not be allowed to exit from the liquidation process until it clears its proportionate CIRP costs and also pays the expenses incurred by the liquidator in securing its charge vessel Tag 22. 10. The provisions in the Liquidation Process Regulatio....
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....ass of recipients that rank equally, each of the debts will either be paid in full, or will be paid in equal proportion within the same class of recipients, if the proceeds are insufficient to meet the debts in full; and (ii) (ii) the term "workmen's dues" shall have the same meaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). 12. It is noted that the liquidator, who is responsible for preservation and protection of the assets in the liquidation estate, exchanged email communications starting with an e-mail dated 2.10.2019 (emails attached at pp.45-48 of the appeal paperbook) to both Appellant/Hero Fincorp and United Bank of India, under whose charges the vessels Tag 22 and Tag 6 were held respectively, that the two vessels have come close to each other and may come into contact leading to potential damage, whereupon vide e-mail dated 3.10.2019 (attached at pg. 45 of the appeal paperbook) the Appellant communicated its unreserved willingness to contribute funding needed for securing Tag 22 and also requested the liquidator to undertake the securing operation. Again, vide e-mail dated 4.10.2019, the Appellant expressed its willingness to con....
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....ty Jurisdiction of the Hon'ble Bombay High Court for securing and realizing its charge in the vessel Tag 22. 15. It is also noted by us that the actions relating to protection and preservation of two vessels Tag 22 and Tag 6 were taken by the liquidator during the period 3rd to 5th October, 2019, as is clear from the e-mails exchanged between the charge holders of two vessels, namely United Bank of India and Hero Fincorp and the liquidator (emails attached at pp. 45-48 of appeal paperbook) and also from the tax invoice submitted by K.E. Salvage (attached at pg. 49 of the appeal paperbook). Therefore, the action relating to securing the two vessels was taken much after the Appellant had obtained order from the Bombay High Court under its Admiralty Jurisdiction on 18.3.2019 and 23.4.2019 and therefore the vessel Tag 22 had become the 'asset' of the Appellant. Thus, it is clear the any action taken thereafter for securing the vessel Tag 22 was undertaken by the liquidator with the explicit consent of the Appellant/Hero Fincorp in pursuance of Hero Fincorp's interest in protecting and preserving its asset Tag 22, and the action being taken for liquidation of the Corporate Debtor is ....