Tribunal dismisses applications for restitution and compensation over auctioned machinery, citing negligence by Ahluwalia Contracts in asserting ownership.
The National Company Law Tribunal (NCLT), Mumbai Bench-I, has dismissed the interlocutory applications filed by Ahluwalia Contracts (India) Limited against Maharashtra Housing and Area Development Authority (MHADA) and the liquidator, Mr. Rajendra K. Bhuta, in the liquidation proceedings of Guruashish Construction Private Limited. Ahluwalia Contracts sought compensation and restitution for machinery allegedly wrongfully auctioned by the liquidator.
The tribunal ruled that Ahluwalia Contracts failed to assert ownership or file claims regarding its machinery during the Corporate Insolvency Resolution Process (CIRP) or liquidation process. The applicant had initially deployed heavy machinery for construction projects under work orders from the corporate debtor, Guruashish Construction, as part of a joint development agreement with MHADA. However, following the termination of the agreement and subsequent liquidation proceedings, the machinery was auctioned based on available records.
Ahluwalia Contracts claimed compensation of Rs. 7.64 crore for the replacement cost of auctioned machinery and Rs. 12.74 crore for losses due to unavailability of machinery. The tribunal found the applicant negligent for not pursuing its claims effectively, noting that Ahluwalia Contracts did not provide adequate documentation or evidence of ownership during the liquidation process.
The tribunal highlighted discrepancies in the lists provided by the applicant, the liquidator, and another contractor, PECL, whose machinery was also present at the site. It emphasized the applicant's failure to follow up with MHADA or the liquidator after retrieving some machinery in 2022.
Referencing the case of Reliance Realty Ltd. v. Anup Kumar (Liquidator), the tribunal reiterated that liquidation processes should not be disrupted by belated claims unsupported by evidence. It held that restitution could not be granted as the applicant failed to prove ownership and was negligent in pursuing its claims.
Ultimately, the tribunal concluded that the claims against MHADA could not be granted under Section 60(5) of the Insolvency and Bankruptcy Code, as they did not directly stem from the insolvency of the corporate debtor. The applications were dismissed without any order as to costs.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Liquidator cannot be held liable for auctioning third-party machinery when there is negligence by the claimant in asserting ownership and filing claims during CIRP or liquidation process.
Statutory provision(s): Section 36(3), Section 36(4), Section 60(5) of the Insolvency and Bankruptcy Code, 2016; National Company Law Tribunal Rules, 2016; Liquidation Regulations.
