The National Company Law Tribunal (NCLT), Chennai, has allowed a plea by IDBI Bank Ltd. to replace the liquidator of the Jeypore Sugar Company Ltd. The tribunal said it had powers to remove the liquidator.
The insolvency petition filed by the bank against the company was admitted in 2019 and in 2020 the tribunal had ordered liquidation and V. Venkata Sivakumar was appointed liquidator.
In its plea, IDBI Bank said liquidator did not possess a valid authorisation for assignment as required by regulation 7A of the Insolvency and Bankruptcy Board of India (Resolution Professionals) Regulations, 2016 and sought for his removal.
As per the regulation, an insolvency professional shall not accept or undertake an assignment after December 2019, unless he holds a valid authorisation for assignment.
In his response, Mr. Sivakumar sought dismissal of the application and one of the arguments put forth by him was that once liquidator is appointed, he cannot be removed unless there is a serious allegation of corruption.
The NCLT said by virtue of Section 16 of the General Clauses Act, 1897, it had powers to dismiss the liquidator since it was vested with the powers under Section 33 and 34 of Insolvency and Bankruptcy Code (IBC), 2016, to appoint a liquidator.
IBC does not explicitly state the grounds on which the liquidator can be removed. In the absence of specific provisions, we may resort to Section 276 of the Companies Act, 2013, which provides for removal and replacement of liquidators on various grounds, it said.
The tribunal said the liquidator in the present case had shared the valuation report of Jeypore with prospective scheme proponents leading to them quoting value on par with valuation report. It amounts to failure to exercise due care and diligence. Besides, the liquidator did not hold a valid authorisation for assignment and named S. Hari Karthik as replacement. It ordered the current liquidator to hand over charges to Mr. Karthik within seven days from its order of July 1.
