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One Page #2 – In matter of Gujarat NRE Coke Limited (In Liquidation)

One Page #2 – In matter of Gujarat NRE Coke Limited (In Liquidation)
Decisions taken by Liquidator in the best interests of the Company must be kept at that Courts: NCLT-Kolkata (IA 865/2020 in 180/KB/2017 Dt 03.05.2021)

1. Section 10 application got admitted and in the due course went into liquidation. Application is filed by the workers of the Corporate Debtor against the Liquidator of the Company seeking following reliefs:

S N Prayer NCLT Judgment
1 Liquidator be directed to pay the dues of the workers and employees Court is satisfied that liquidator made payments to all workmen in full till Aug 2020. Liquidator cannot be expected to foot the bill from his own pocket in the absence of adequate cash flows to the corporate debtor. In the absence of inflows prayer 1 cannot be granted.
2 To restrain Liquidator; by an order of injunction; from taking coercive steps for closing the operations of CD Hard decisions have to be taken and unviable units have to be closed down. Unviable units cannot be kept afloat in the disguise of going concern, defeating the key objective of the code. Prayer 2 cannot be granted & the liquidator is directed to proceed with sale of the assets of the company as per section 33 of the code in light of the final decision of Hon’ble SC in Arun Kumar Jagatramka v Jindal Steel & Power Ltd.
3 To restrain Liquidator; by an order of injunction; from terminating the agreement between CD and Jeju metals A contractual agreement between two corporates cannot be considered to be skewed in favor of any one party. It is necessarily to be treated as a contract between equals, unless the contrary is proved. Liquidator is responsible for the affairs of the company in liquidation and if any decision is taken by him in the best interests of the company it must be left at that.  Workers cannot be used as excuse by Jeju Metals for its own cause.
4 To appoint a competent and independent agency to investigate the manner in which the liquidator is conducting the affairs. In the absence of any allegation of fraud or bias in the decision of Liquidator, AA cannot order a roving enquiry just on the basis of perceived loss of employment of the workers on account of a business decision taken by the Liquidator.

MS Mano Ranjani

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