2022 (1) TMI 719 - AT - Insolvency and Bankruptcy

Appellate Tribunal Upholds Orders, Dismisses Appeal, Civil Suit Pending

SUN PHARMACEUTICAL INDUSTRIES LIMITED, UNIMED TECHNOLOGIES LIMITED Versus SUMIT BINANI, MONITORING COMMITTEE/STAKEHOLDERS

The Appellate Tribunal upheld the orders dated 18.03.2021 and 23.03.2021, finding no interference warranted. The issues related to the terms and ... Liquidation/sale proceedings under process - seeking to allow the Liquidator to keep windmill assets of the Corporate Debtor outside the sale purview of Liquidation Estate - seeking to allow the liquidator to distribute the sale proceeds from the sale of windmill - Liquidator also seeking to get himself impleaded as a party - Whether the title of windmill asset has passed to Appellants is sub-judice before the Calcutta High Court? - HELD THAT:- It is apparent that whether the title of windmill assets has been passed to the Appellants is to be decided in the Civil Suit which is pending before the HC. Thus, we are unable to convince with the argument of Ld. Sr. Counsel that the Adjudicating Authority has wrongly concluded that the Civil Suit is for determining rights of the parties over the windmill assets. Whether the order for keeping the windmill asset out of the liquidation estate is beyond the jurisdiction of Adjudicating Authority? - HELD THAT:- Before initiation of CIRP the creditors of the Corporate Debtor and the Corporate Debtor have decided to sale the windmill assets belonging to the Corporate Debtor as contemplated under the MRA dated 18.09.2014 and the supplemental MRA dated 02.03.2015. The same were executed by the Corporate Debtor and the creditors forming part of JLF of the Corporate Debtor constituted in October, 2013. As agreed between the Corporate Debtor and the JLF lenders an asset sale committee was formed and pursuant to a bid process on a private treaty basis commencing in August, 2016 and considering this fact, the Adjudicating Authority vide order dated 22.08.2017 directed that the windmill assets to keep outside the CIRP. Thus, the case comes within the exclusion clause (a) and (e) of sub-Section (4) of Section 36 of IBC. Whether the Adjudicating Authority has exceeded its jurisdiction in passing an order for allowing the liquidator to implead in Civil Suit No. 39 of 2019 pending before the Calcutta High Court? - HELD THAT:- The Adjudicating Authority has only permitted the Liquidator to file an Application before the Hon’ble Calcutta High court to get impleaded as party. It cannot hold that the Adjudicating Authority has exceeded its jurisdiction and encroached in the jurisdiction of the Hon’ble Calcutta High Court. The Adjudicating Authority has only permitted the Liquidator to file the Appropriate Application. Whether the order of corrigendum dated 23.03.2021 is without jurisdiction? - HELD THAT:- It seems that it is an accidental slip or omission by the Adjudicating Authority and the Adjudicating Authority can rectify such mistakes under Rule 154 of NCLT Rules 2016. Thus, we find no substance in the argument of Ld. Sr. Counsels for the Appellants that the Adjudicating Authority vide order dated 23.03.2021 reviewed its own order and exceeded its jurisdiction. Appeal dismissed. Issues Involved:1. Whether the title of windmill asset has passed to Appellants is sub-judice before the Calcutta High Court.2. Whether the order for keeping the windmill asset out of the liquidation estate is beyond the jurisdiction of Adjudicating Authority.3. Whether the Adjudicating Authority has exceeded its jurisdiction in passing an order for allowing the liquidator to implead in Civil Suit No. 39 of 2019 pending before the Calcutta High Court.4. Whether the order of corrigendum dated 23.03.2021 is without jurisdiction.Issue-wise Detailed Analysis:Issue No. (i): Whether the title of windmill asset has passed to Appellants is sub-judice before the Calcutta High CourtRs.The Civil Suit No. 39 of 2019 pending before the Calcutta High Court involves the Appellants seeking a decree for the refund of the upfront consideration amount and the release of bank guarantees. The Single Bench of the High Court initially granted an interim order in favor of the Appellants, which was later set aside by the Division Bench, allowing the Respondent No. 2/SBI to invoke the bank guarantees. The Appellants amended their plaint to seek the return of the total consideration of Rs. 180 Crores. The High Court needs to determine whether the sale of the windmill assets was concluded as per the LOI and the agreement dated 01.04.2017. The Appellants have admitted in their counter affidavit that the rights over the windmill assets can only be determined upon adjudication of the Civil Suit pending before the High Court. Therefore, the issue of whether the title of the windmill assets has passed to the Appellants is indeed sub-judice before the Calcutta High Court.Issue No. (ii): Whether the order for keeping the windmill asset out of the liquidation estate is beyond the jurisdiction of Adjudicating AuthorityRs.Before the initiation of CIRP, a Master Restructuring Agreement (MRA) was entered into between the Corporate Debtor and the consortium of lenders, granting SBI the right to auction non-core assets, including windmill assets. The Appellants participated in the bid and deposited the required amounts. An agreement for the sale of windmill assets was executed on 01.04.2017. The Adjudicating Authority, in its order dated 22.08.2017, allowed the sale transaction to be completed outside the CIRP. The Corporate Debtor was later ordered into liquidation on 11.01.2018. The Liquidator filed an application to keep the windmill assets outside the liquidation estate, which was partly allowed by the Adjudicating Authority on 18.03.2021. The Appellants did not object to this relief in their counter affidavit. Given the earlier order dated 22.08.2017 and the exclusion clauses in Section 36(4) of IBC, the Adjudicating Authority did not exceed its jurisdiction in allowing the liquidator to keep the windmill assets outside the liquidation estate.Issue No. (iii): Whether the Adjudicating Authority has exceeded its jurisdiction in passing an order for allowing the liquidator to implead in Civil Suit No. 39 of 2019 pending before the Calcutta High CourtRs.The Adjudicating Authority permitted the Liquidator to file an application to get impleaded as a party in the Civil Suit pending before the High Court. This permission was granted in light of the order dated 11.01.2018, which directed that legal proceedings may be instituted by the Liquidator on behalf of the Corporate Debtor with prior approval. The Adjudicating Authority provided reasons for this permission, stating that the Corporate Debtor should have been made a party to the Civil Suit. Therefore, the Adjudicating Authority did not exceed its jurisdiction by allowing the Liquidator to seek impleadment in the Civil Suit.Issue No. (iv): Whether the order of corrigendum dated 23.03.2021 is without jurisdictionRs.The corrigendum dated 23.03.2021 deleted the words 'and therefore, at this stage it is not proper to order distribution of the sale proceeds' from the order dated 18.03.2021. The Appellants argued that this amounted to a review of the order, which is not permissible. However, Rule 154 of NCLT Rules, 2016 allows the Tribunal to correct errors arising from accidental slips or omissions. The correction was made considering the prayers of the Appellants and Respondent No. 2, who opposed the distribution of sale proceeds. The deletion did not amount to a review but was a rectification of an accidental slip. Therefore, the corrigendum order was within jurisdiction.Conclusion:The Appellate Tribunal upheld the orders dated 18.03.2021 and 23.03.2021, finding no interference warranted. The issues related to the terms and conditions of the LOI and the agreement dated 01.04.2017 will be decided in Civil Suit No. 39 of 2019. The appeal was dismissed without any order as to costs.