NCLT Chandigarh Allows Liquidator To Initiate Execution Proceedings For Enhanced Land Acquisition Compensation

The National Company Law Tribunal (NCLT) at Chandigarh has allowed the liquidator of a rice mill to initiate execution proceedings for recovery of enhanced compensation awarded for land acquired by the Punjab government.

A bench of Judicial Member Khetrabasi Biswal and Technical Member Shishir Agarwal observed that the compensation awarded under the land acquisition proceedings formed part of the company's liquidation estate and could be recovered by the liquidator.

“The enhanced compensation together with statutory benefits arising out of the aforesaid Award constitutes an actionable claim and forms part of the liquidation estate of the Corporate Debtor. The Liquidator, being entrusted with the duty of maximisation and realisation of assets of the Corporate Debtor, cannot be restrained from taking necessary legal steps for enforcement and recovery of the said amount," the tribunal observed.

Julka Rice and Oil Mills Limited was admitted into the corporate insolvency resolution process in April 2018. The company was later ordered into liquidation after no viable resolution plan was received. Rajesh Kumar Loomba was appointed as the liquidator.

During the liquidation process, Loomba learned that the company was entitled to enhanced compensation for industrial land measuring about 22 kanals and 8 marlas at Qadian in Punjab. The land had been acquired by the state government for setting up a new grain market.

The liquidator subsequently obtained a copy of an award passed by the Additional District Judge, Gurdaspur. The award enhanced the compensation payable for the acquired land and granted statutory benefits and interest. It also directed payment within four months.

According to the liquidator, the amount remained unpaid even after the expiry of that period. He therefore sought the Tribunal's approval to initiate execution proceedings for recovery of the amount.

The tribunal noted that a liquidator is required to obtain prior approval before instituting proceedings on behalf of a company in liquidation. It also referred to a National Company Law Appellate Tribunal ruling which held that such approval is mandatory.

“We further find substance in the submission advanced on behalf of the Applicant that delay in initiation of execution proceedings may adversely affect realization of the awarded amount and consequently diminish the value available for distribution amongst the stakeholders of the Corporate Debtor,” the tribunal observed.

Finding merit in the liquidator's submissions, the tribunal held that delay in initiating recovery proceedings could affect realisation of the awarded amount. It accordingly allowed the application and granted approval to initiate execution proceedings.