The National Company Law Appellate Tribunal (NCLAT) has stayed eviction of Sterling Biotech from its premises as the debt-ridden company was going under the insolvency resolution process and was under the moratorium period.
A two-member bench headed by NCLAT Chairman Justice S J Mukhopadhaya upheld the order passed by the Mumbai Bench of the National Company Law Tribunal (NCLT), which had asked Srei Infrastructure FinanceNSE -2.13 %, a financial creditor, to hand over the possession of the A and B wing premises of Laxmi Towers.
The appellate tribunal observed that although Sterling Biotech, which is presently going through liquidation, is not the owner of the premises it cannot be ejected or disturbed during the moratorium period as the company has to remain as a going concern.
“We hold that the Adjudicating Authority (NCLT) has rightly directed the Appellant to hand over the possession of ‘B’ Wing premises of Lakshmi Towers and rightly prohibited the Appellant from evicting the ‘Corporate Debtor (Sterling Biotech) from ‘A’ Wing premises of Lakshmi Towers,” said NCLAT.
However, it also said that “So far as the question as to who is the owner of ‘A’ and ‘B’ Wings premises of Lakshmi Towers and whether the Appellant has any right over the said property, such questions are not required to be determined in the proceeding under the ‘I&B Code’.”
NCLAT also said if Sterling Biotech is saved during the liquidation proceeding or if it is sold to a third party along with the employees then, in such case, one may move before the Competent Court of law for appropriate decision.
Besides, the appellate tribunal also said that “the Liquidator cannot sell the assets of the premises in question.”
Resolution Professional of Sterling Biotech had moved NCLT against the financial creditor to return the possession of B Wing premises of Lakshmi Towers and restrain Srei Infrastructure Finance from taking any action in relation to A Wing premises, which had allowed it.
Following which, Srei Infrastructure Finance moved NCLAT.
It had contended that the property in question does not belong to Sterling Biotech and being a third party property, the order of ‘Moratorium’ passed under Section 14 of the ‘I&B Code’ will not be applicable.
Opposing it, the RP had submitted that it amounts to obstruction in the matter of keeping Sterling Biotech as a going concern.
Sterling Biotech, whose promoters Nitin Jayantilal Sandesara and Chetankumar Jayantilal Sandesara are absconding, has a total debt of over Rs 9,000 crore.
Source: Economic Times