| Subject | Insolvency and Bankruptcy Code, 2016 |
| Case | Sri Supriyo Kumar Chaudhuri (Liquidator of JVL Agro Indstries Ltd) vs. State Bank of India, SARG & Others |
| Corporate Debtor | JVL Agro Indstries Ltd |
| Tribunal | NCLT, Allahabad Bench |
Summary of the Case
The Application was filed under Section 35(1)(n) of IBC, 2016 read with Section 60(5) of IBC, 2016 to distribute the cash profit lying in the bank account of the Corporate Debtor’s bank account. The Adjudicating Authority allowed the application stating that the Code does not bar such distribution and the same will not hamper the liquidation process of the Corporate Debtor.
Facts of the case
1. The present application has been filed under Section 35(1)(n) of IBC, 2016 read with Section 60(5) of IBC, 2016 and the applicable provisions on behalf of the liquidator with the prayer to grant leave / sanction to the applicant to distribute an amount of Rs. 61 crores, less any applicable withholding tax, out of the accumulated cash profits lying in the bank accounts of the corporate debtor, to the stakeholders in accordance with Section 53 of IBC, 2016.
2. Applicant filed the present application seeking clarification whether the accumulated cash profit presently lying in the bank account of the Corporate Debtor which are in excess of liquidation cost can be distributed by the liquidator to the stakeholders u/s 53 of the IBC,2016 subject to deduction of withholding tax as may be applicable. There are pending sale of assets forming part of liquidation estates and realisation of proceeds thereof.
3. Further, an Intervention application has also been filed as IVN.P.02/ALD/2021 on behalf of another Financial Creditor of Corporate Debtor and a member of CoC, whose Security interest stands relinquished as part of liquidation estate and has a substantial and vital interest in the relief relating to distribution of accumulated cash balances in the bank account of the Corporate Debtor.
NCLT’s Decision :
The Tribunal observed that Regulation 42 of the IBBI (Liquidation Process) Regulation, 2016 provides that the Liquidator can commence with the distribution once the list of stakeholders and asset memorandum have been filed with the Tribunal and in the present case, it is a matter of record that it has already been done and filed before this Tribunal.
Further, since the Corporate Debtor in liquidation is not a going concern and assets which are to be distributed are in the form of liquid assets and are non-saleable, thus the Adjudicating Authority was of the opinion that the Code does not bar such distribution, and the same will not hamper the liquidation process of the Corporate Debtor.
The Tribunal was of the opinion that as the amount to be distributed is in excess of the liquidation cost as estimated by the liquidator and is to be distributed to them who are entitled to the benefit of the distribution of liquidation proceedings, therefore the Adjudicating Authority allowed the Applicant to distribute an amount of Rs. 61 crores, less any applicable withholding tax, out of the accumulated cash profits lying in the bank accounts of the Corporate Debtor, to the stakeholders in accordance with the waterfall mechanism as specified under Section 53 of the Insolvency and Bankruptcy Code, 2016.
IA No. 19/2021 was allowed and stands disposed of.
Article Assistant
Karthick . M