An application was moved by the workers of the Dharwad Unit of Gujarat NRE Coke Limited before the National Company Law Tribunal, Kolkata. The application sought the tribunal to direct the Liquidator to pay and clear the dues of the company's workers and employees in Dharwad, Karnataka on time. It sought an injunction order to restrain the company from stopping the plant's operations through coercion. It also sought another injunction order to restrict the Liquidator from terminating the agreement between the company and Jeju Metals Pvt Ltd. The application further sought that a competent and independent agency be appointed to investigate and submit a report on how the Liquidator has been carrying out the duties of Liquidator.
Mr Banerjee, appearing on the behalf of workers submitted the following prayers:
[a] The liquidator to pay the dues of the workers and employees.
[b] For restricting the Liquidator from taking any coercive decisions for shutting down the plant.
[c] It is like an indulgence, he conceded that it is for the court to examine.
The NCLT denied to approve prayer [a] and stated that in the absence of cash flows to the corporate debtor, it couldn't be expected from the liquidator to add any amount from his pocket to balance the bill. After acknowledging that no transactions have been made after the termination of the contract, the tribunal concluded that without the presence of inflow statements, this prayer couldn't be granted.
While addressing the prayer [b] the tribunal observed that it couldn't be granted because only the liquidator could decide whether to shut down the company or to run operations. The tribunal also stated that the tough decisions could be taken for the sake of the company and all unfeasible units would have been shut down. The tribunal further directed the liquidator to carry on with the sale of assets as per section 33 of the Insolvency and Bankruptcy Code.
The NCLT refused to grant prayer [c] and ruled that the responsibility falls on the liquidator for the company's affairs involved in liquidation and if any decision of the liquidator based on good faith for the best interest of the company then the matter should be left at that. The tribunal stated that the contract made between Corporate Debtor and JMPL could not be said to be biased for one party, it should be treated as a contract between equals. In cases where parties enter into a contract without undue influence, coercion or fraud the parties to the contract should normally be held to their bargain.
On the last prayer mentioned in the application, the tribunal stated that the counsel for the applicant failed to argue seriously and in absenteeism of any accusation of bias or fraud in the liquidator's decision, the tribunal found no reason to appoint an independent agency to investigate the liquidator.