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2025 Supreme(Online)(NCLT) 3273
NATIONAL COMPANY LAW TRIBUNAL
SHRI JYOTI KUMAR TRIPATHI, SHRI RAVICHANDRAN RAMASAMY, JJ
S. Hari Karthick – Appellant
Versus
Laxmi Organic Industries Limited – Respondent
IA (IBC) /1496 (CHE) /2023 | CP (IB) /1307 /2018
For the Appellants/Petitioners: Mr. J. Manivannan
For the Respondents: Mr. Menon, Mr. Karthick
The tribunal ruled that a memorandum of settlement made outside the IBC framework is void if it contravenes liquidation processes, confirming all creditor claims must comply with statutory regulations.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 60(5), 33, 53, and 36 - Liquidation process - The tribunal declared the Memorandum of Settlement dated 16.10.2020 illegal for contravening statutory provisions regarding creditor claims in liquidation - Payment of Rs. 1,15,00,000/- by the erstwhile liquidator during the liquidation process was unlawful as the respondent failed to submit a valid claim within the stipulated period and did not comply with required procedures - The tribunal ruled that decree holders do not have preferential rights unless specified, reaffirming adherence to the regulated framework of the IBC. (Paras 55, 85)
Facts of the case:
The application was filed by the liquidator, seeking to declare a settlement between the erstwhile liquidator and a respondent company as illegal. The respondent had received Rs. 1,15,00,000/- amid insolvency proceedings without filing a claim in a timely manner.
Findings of Court:
The tribunal found the repayment to the respondent was unlawful and consequently directed the return of the amount along with interest, and allowed for a new claim submission by the respondent.
Issues: The tribunal addressed the status of the respondent as a decree holder and the enforceability of the settlement made outside the provisions of the IBC.
Ratio Decidendi: The tribunal emphasized the principle that all claims and payments during liquidation must comply with the IBC and associated regulations, declaring the settlement and payment to be beyond lawful reach and thus void.
Result: Application allowed and disposed of with directions.
| Table of Content |
|---|
| 1. factual background of the insolvency case. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. claims and actions taken by the liquidator. (Para 7 , 8 , 9 , 10 , 11 , 12 , 14 , 15 , 16 , 17) |
| 3. respondent's claims and defenses in the proceedings. (Para 18 , 19 , 20 , 21 , 22 , 23) |
| 4. counterarguments from the respondent. (Para 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42) |
| 5. legal assertions by the applicant. (Para 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52) |
| 6. legal findings on the nature of claims and rights. (Para 55 , 56 , 58 , 60 , 62 , 67 , 72) |
| 7. final ruling and order of the tribunal. (Para 85 , 86 , 87 , 88) |
ORDER
(Heard through Hybrid Mode)
Brief Facts
1. The present Application preferred under Sec 60(5) of the IBC, 2016 seeks the following as below, ”
a. To declare the Memorandum of Settlement dated 16.10.2020 entered between the Erstwhile Liquidator of the Corporate Debtor and the Respondent for settling the amount to the tune of Rs. 1,15,00,000/- Rupees One Crore and Fifteen Lakh only) as illegal and void as contrary to the provisions of Section 53 of IBC, 2016.
b. To direct the Respondent to refund an amount of Rs. 1,15,00,000/- (Rupees One Crore Fifteen lakh only) received by them as contrary to the provisions of Section 53 of IBC, 2016 along with the reasonable interest to the Liquidation Account of Corporate Debtor maintained by the Applicant-Liquidator in time bound manner.
c. Pass any other order(s) as this Hon’ble Tribunal may deem fit in the facts and circumstances of the present case.”
2. The Corporate Debtor (hereinafter referred as CD) namely "The Jeypore Sugar Company Limited" was admitted into CIRP vide order dated 25.02.2019 in CP/1307/IB/2018 under Section 7 of the IBC, 2016 by this Tribunal and Mr. V. Venkata Sivakumar was appointed as Interim Resolution Professional (IRP).
3. Subsequently, Committee of Creditors (CoC) confirmed IRP as the Resolution Professional (RP) in their 1st CoC meeting and CIRP was continued. After completion of 330 days from initiation of CIRP, as there was no Resolution Plan, the Liquidation of the CD was ordered on 29.05.2020 by this Tribunal. The than existing RP was appointed as the Liquidator to carry out the process.
4. The Liquidator Mr. V. Venkata Sivakumar (erstwhile Liquidator), who was appointed has been removed and replaced by Mr. S. Hari Karthik vide order of this Tribunal dated 01.07.2022 in IA/815/IB/2020 moved by the IDBI Bank.
5. At present, Mr. S. Hari Karthik continues as Liquidator of the Corporate and manages the affairs of the CD.
6. The Respondent Laxmi Organic Industries Limited is a Public Limited Company bearing CIN: L24200MH1989PLC051736, registered under Companies Act, 1956.
Applicant Submissions
7. Applicant states that, after his appointment as New Liquidator, verified certain records namely the Liquidation Account and corresponding Bank statements of the CD and found Respondent Company has received a sum of Rs.1,15,00,000/- on 04.11.2020 during the existence of Insolvency (Liquidation) process.
8. The Public announcement in respect of the Commencement of Liquidation Process was carried out on 03.06.2020 in accordance with Reg. 12 of IBBI, (Liquidation Process) Regulations, 2016.
9. Applicant avers that, Reg.12 of Liquidation Process, provides for 30 day time period for receipt and collation of the claims of creditors by the Liquidator and in present case the last date was calculated as 28.06.2020.
10. From the records of the CD, liquidator states that, Respondent is a decree holder, who would fall under the category of Other Creditor in the event of filing a claim.
11. It is stated that, the Respondent did not file any claims and failed to disclose the legal proceedings pending in respect of its claims against the CD.
12. The CD was holding Equity Investments in certain companies, which was attached by the Respondent in its favour in the process of Execution of a Decree. The stand of the Liquidator is that, attac
