While hearing an appeal filed in CA V. Venkata Sivakumar v IDBI Bank Limited & Ors., the National Company Law Appellate Tribunal ("NCLAT"), Chennai Bench, comprised of Justice M. Venugopal (Judicial Member) and Mr. Barun Mitra (Technical Member), held that the Adjudicating Authority has the power to remove the Liquidator. 

The main question raised by the appellate tribunal is whether the Adjudicating Authority has the authority to remove the Liquidator.

The Bench noted that Mr. Sivakumar admitted that the AFA application was filed on December 31, 2019 and was rejected on January 14, 2020. It cannot be claimed that there was no need for a new AFA for his assignment as Liquidator. Mr. Sivakumar's appointment as Liquidator was confirmed on 29.05.2020, which is after the prescribed deadline of 31.12.2019. As a result, the IBC's regulatory provisions were not followed. 

The NCLAT decision in Subrata Maity v Amit C Poddar, Company Appeal (AT) (Ins.) No. 1234 of 2022, which held that: “The Liquidator does not have any personal right to continue in the Liquidation Process and the reasons which have been noted in the order are sufficient to exercise even the inherent power by NCLT to replace the Liquidator. It is not a fit case to interfere in exercise of our Appellate Jurisdiction.”

The Bench ruled that no Liquidator has any personal rights to continue in Liquidation, and that the Adjudicating Authority can order the Liquidator's replacement after recording sufficient reasons under the law.

“Further, since the ‘Adjudicating Authority’, is vested with the power, to `appoint a Liquidator’, under Section 33 and 34 of the I & B Code, 2016. It is by virtue of the Section 16 of the General Clauses Act, 1897, that an ‘Adjudicating Authority’, who also, has the power, to remove the `Liquidator’.”

The combined reading of Case Laws, as well as Sections 33 and 34 of the IBC, revealed that the Adjudicating Authority has the authority to remove the Liquidator for any reason it deems fit, just, valid, and proper. The Adjudicating Authority's order was upheld by the Bench, and the appeal was dismissed.

Case Title: CA V. Venkata Sivakumar v IDBI Bank Limited & Ors.
Case No.: Company Appeal (AT) (CH) (Ins.) No. 269/2022

Link: https://nclat.nic.in/display-board/view_order