Hyderabad: The National Company Law Appellate Tribunal (NCLAT) at New Delhi on Wednesday directed the Official Liquidator of the Nizam Sugars to not alienate properties of the corporate debtor and not to create any encumbrances on properties.
The NCLAT was dealing with the appeal petition by the Telangana state government and Director of Sugar and Cane Commissioner against the National Company Law Tribunal (NCLT) at Hyderabad, order dated 03 June 2019, which allowed the liquidation against the Corporate Debtor under section 33 of the Insolvency and Bankruptcy Code 2016.
The NCLT had passed an order by approving the petition moved by debtors of the sugar factory for liquidation of ailing Nizam Deccan Sugar Factory Ltd, after efforts to find a suitor for revival under the Insolvency and Banking Code (IBC) failed.
Mr.Avinash Desai, the counsel representing the appellants submitted before the NCLAT, that the Resolution Professional conducted the Insolvency resolution process in contravention to the provisions of the Code and applications for liquidation.
Avinash submitted that there was fraud played in the whole issue and told that the RP was in concert with the private management and tried to scuttle the revival of the corporate debtor at every stage.
Considering the arguments of the Counsel , the Appellate Tribunal has restrained the liquidator to not alienate the properties until further orders.
The factory was established at Bodhan in Telangana in 1938 during the Nizam era, the sugar factory is one of the biggest factories with units at Bodhan, Metpally and Mambojipally.
While the Telangana government holds 49 per cent equity stake, the erstwhile unified Andhra Pradesh State had divested 51 per cent stake to a private company as a part of the restructuring process of State-owned enterprises.
The Telangana Rastra Samiti leadership headed by Chief Minister K. Chandrasekhar Rao, during 2014 election campaign, had assured to take over the ailing Nizam Sugars and after the government formation it had issued an order to continue the factory under the cooperative sector.
With the sugar units getting closed, the private management knocked at the doors of NCLT for liquidation of the company.
Thereafter in 2017, the Corporate Insolvency Resolution Process was initiated, inviting creditors to submit their claims.
The Committee of Creditors (Andhra Bank, Syndicate Bank and Indian Overseas Bank), held 11 meetings, which included seeking Expression of Interest as per the provisions of the IBC.