NCLT Hyderabad Bench Orders Immediate Release of Third-Party Equipment, Initiates Contempt Action Against Liquidator
In a significant ruling, the National Company Law Tribunal (NCLT) Hyderabad Bench-II has directed M/s Orissa Thermal Energy Limited (OTEL) to facilitate the immediate dismantling and retrieval of equipment belonging to M/s Teknow Overseas Private Limited. The Tribunal found the liquidator, Mr. Rajendra Prasad Tak, in contempt for failing to comply with judicial directions regarding the exclusion of third-party equipment from the liquidation estate of M/s KVK Nilachal Power Pvt. Ltd.
The Tribunal, comprising Shri Rajeev Bhardwaj and Shri Sanjay Puri, passed the order on December 3, 2025, addressing two interconnected applications: I.A (IBC) No. 933 of 2024 and Contempt Petition (IBC) No. 9 of 2024. M/s Teknow Overseas Private Limited, an SME involved in civil and electrical works, had sought the return of its equipment, which was unlawfully retained at the site of the corporate debtor, KVK Nilachal Power Ltd.
The Tribunal's order underscored that the liquidator had a clear obligation to exclude the applicant's equipment from the liquidation estate, as affirmed in a previous order dated December 3, 2021. The liquidator's failure to ensure the removal of the equipment before proceeding with the e-auction sale of the debtor’s assets was deemed a deliberate and wilful disobedience of the Tribunal's orders.
The case traces back to the applicant's involvement in a power plant construction project halted by a court order in 2012, leaving their equipment stranded on-site. Despite repeated attempts to reclaim the equipment, the applicant faced obstruction due to the liquidator’s non-compliance and the auction purchaser's assertion of ownership over all materials on-site.
The Tribunal rejected the defenses put forth by OTEL, emphasizing that the sale conditions such as "as is where is" do not override judicial orders excluding third-party property from the liquidation estate. The Tribunal clarified that auction purchasers acquire only the assets lawfully owned by the corporate debtor, and not third-party properties.
The order requires OTEL to grant full access and cooperation to M/s Teknow for the dismantling and retrieval of its equipment. Additionally, the liquidator, Mr. Rajendra Prasad Tak, has been summoned to appear before the Tribunal on March 18, 2026, to show cause why action should not be taken against him under the Contempt of Courts Act, 1971.
The ruling serves as a pivotal reminder of the responsibilities of liquidators in insolvency proceedings and the limits of auction terms when judicial determinations are in place.
Bottom Line:
Insolvency and Bankruptcy Code - Liquidator's failure to comply with judicial directions regarding third-party equipment leads to contempt proceedings - Auction purchaser cannot claim ownership over third-party property excluded from the liquidation estate.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 36, Contempt of Courts Act, 1971 Sections 2(b) and 12, Insolvency and Bankruptcy Code, 2016 Section 60(5)
