How Did A Liquidator Shake A Tribunal?
A Liquidator who shook a Tribunal is replaced in the matter of IDNI Bank Limited v The Jepore Sugar Company Limited as ordered by Judges in the National Company Law Tribunal, Division Bench – II, Chennai.
It appears that at the date of the appointment the Liquidator did not have the relevant authorisation.
The Liquidator’s appointment was around a couple of months after 31 December 2019 which the judgment says was the date after which the Liquidator required authorisation.
It was the Liquidator’s case that in absence of serious allegations of corruption there was no provision for a change of Liquidator.
However, the Tribunal did not appear so readily persuaded:
If we go by the contention that the Liquidator is infallible and this Adjudicating Authority has to simply close its eyes and let the Liquidator do whatever he wants.
Serious allegations had been made about the Liquidator sharing a valuation report with the prospective Scheme proponents. This was not denied by the Liquidator who said there was no bar to the same but:
Such a statement made by the Liquidator shook the conscious of this Court.
In sharing the valuation report the proponents quoted a value on par with the valuation report and the Court considered this a serious act of failing to act with due care and diligence.
Although the holding of valid authority might not render the Liquidation invalid the Tribunal could reconsider the appointment of the Liquidator.
In view of the suggestion of failing to act with due care, the Tribunal replaced the Liquidator.
Oliver Elliot Observation Of Liquidator Who Shook A Tribunal
The position is one seen time and again. The Courts will not hesitate to change a Liquidator if ethical considerations appear to be in question. It will not do so without good reason because a Liquidator is seen in the UK to be the Court’s Officer.
A Liquidator has a duty as a fiduciary not to act with total perfection but certainly not to act unreasonably. He or she has to act selflessly in the interests of creditors in an insolvent Liquidation and the members in a solvent Liquidation.
Time and again on this site we have referred to the case of Sisu Capital Fund Ltd and others v Tucker [2005] All ER (D) 200 (Oct) which so notably and so clearly promulgated those famous Liquidator warning words that are appropriate to reiterate here:
… the court expects any liquidator to be efficient, vigorous and unbiased in his conduct of the liquidation and should have no hesitation in removing him if satisfied that he has failed to live up to those standards unless it can reasonably confidently be said that he will live up to those requirements in the future
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