2023 (3) TMI 70 - AT - Insolvency and Bankruptcy

Tribunal Allows Appellant to Pursue Arbitration, Emphasizes Contingent Provision

Shapporji Pallonji and Co. Pvt. Ltd. Versus Kobra West Power Company Limited, Mr. Abhijit Guhathakurta, Adani Power Limited, Committee of Creditors

The Tribunal upheld the approval of the Resolution Plan but allowed the appellant to pursue pending arbitration proceedings. Emphasizing the need for a ... CIRP - Approval of the Resolution Plan - whether the Appellant/Operational Creditor can be allowed to pursue the Arbitration Proceedings in the light of the ratio laid down by the Hon’ble Apex Court in FOURTH DIMENSION SOLUTIONS LTD. VERSUS RICOH INDIA LTD. & ORS. [2022 (1) TMI 1352 - SUPREME COURT]? - Contingent Liability HELD THAT:- any ‘Claims’ which are not part of the Resolution Plan shall stand extinguished and no person would be entitled to continue any Proceedings in respect of a ‘Claim’, which is not part of Resolution Plan. The Hon’ble Apex Court had disposed of the Appeal with a liberty to the parties to pursue all contentions available to them in the Proceedings at the relevant period of time. Contingent Liability - HELD THAT:- The ratio of this Judgement is applicable to the facts of this case, keeping in view that the CIRP Proceedings were invoked under Section 10 of the Code, that the name of the Appellant was mentioned in the list of Operational Creditors, that the RP had posted on the website that the Claims of the Operational Creditors are under verification, and that admittedly Pre-Arbitration Proceedings were pending prior to the invocation of the Section 10 Proceedings, and there was no Contingent Liability or any other provision made in the Resolution Plan, subject of course, to the result of the Arbitration Proceedings. There is no illegality in the Order of the Approval of the Resolution Plan by the Adjudicating Authority and there are no reason to set aside the Resolution Plan per se except for observing that the RP ought not to have made a ‘Contingent Provision’ with respect to the Appellant herein having regard to the specific facts of this case, which would be subject to the result of the Arbitration Proceedings. Having observed so, liberty is being given to the Appellant herein to pursue all contentions available to them in the pending Arbitration Proceedings and the same be decided in the said proceedings on its own merits in accordance with law. Appeal disposed off. Issues Involved:1. Challenge to the Impugned Order approving the Resolution Plan.2. Rejection of the Appellant's claims by the Resolution Professional (RP).3. Entitlement of the Appellant to pursue pending Arbitration Proceedings.4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC) and related regulations.5. Interpretation of relevant judgments and precedents.Issue-Wise Detailed Analysis:1. Challenge to the Impugned Order Approving the Resolution Plan:The appeal challenges the Impugned Order dated 24.06.2019, passed by the National Company Law Tribunal (NCLT), Ahmedabad Bench, which approved the Resolution Plan for the Corporate Debtor. The appellant argued that the Resolution Professional (RP) unfairly rejected their claims and did not communicate the rejection in writing. The RP uploaded the status of claims on the Corporate Debtor's website, which the appellant contended was insufficient notification.2. Rejection of the Appellant's Claims by the Resolution Professional (RP):The appellant submitted claims amounting to Rs.45,22,52,428/- related to ongoing arbitration proceedings. The RP rejected these claims, stating that they were 'not verifiable' due to pending arbitration. The appellant argued that the RP lacked adjudicatory powers to reject claims and that the rejection was communicated only orally. The RP contended that the claims were uploaded on the website as required by Regulation 13(2)(c) of the CIRP Regulations, which does not mandate individual notice to creditors regarding claim admission or rejection.3. Entitlement of the Appellant to Pursue Pending Arbitration Proceedings:The appellant relied on the judgment of the Hon'ble Supreme Court in 'Fourth Dimension Solutions' Vs. 'Ricoh India Limited & Ors.' to argue that operational creditors can pursue arbitration proceedings even after the approval of the Resolution Plan. The RP and the Successful Resolution Applicant (SRA) argued that once the Resolution Plan is approved, all claims not part of the plan are extinguished, as established in precedents like 'Ghanshyam Mishra & Sons Private Limited' Vs. 'Edelweiss Asset Reconstruction Company Ltd.' The Tribunal acknowledged the appellant's right to pursue arbitration, referencing the Supreme Court's judgment in 'Fourth Dimension Solutions' and emphasizing that the RP should have made a contingent provision for the appellant's claims subject to arbitration outcomes.4. Compliance with Procedural Requirements under the Insolvency and Bankruptcy Code (IBC) and Related Regulations:The RP argued that the appellant was aware of the claim status as it was uploaded on the website, and there was no requirement for individual written communication. The appellant contended that they were unaware of the claim rejection until after the Resolution Plan's approval. The Tribunal noted that the RP followed Regulation 13(2)(c) of the CIRP Regulations, which does not require individual notice. The Tribunal also considered the appellant's delay in filing the appeal, noting that it was filed 152 days after the claim rejection was uploaded.5. Interpretation of Relevant Judgments and Precedents:The Tribunal referenced several judgments, including 'Committee of Creditors of Essar Steel India Ltd.' Vs. 'Satish Kumar Gupta & Ors.' and 'Ghanshyam Mishra & Sons Private Limited' Vs. 'Edelweiss Asset Reconstruction Company Ltd.' These judgments establish that once a Resolution Plan is approved, all claims not included in the plan are extinguished. However, the Tribunal also considered the judgment in 'Fourth Dimension Solutions,' which allows operational creditors to pursue arbitration proceedings pending at the time of CIRP initiation. The Tribunal concluded that the appellant could pursue arbitration proceedings and that the RP should have made a contingent provision for the appellant's claims.Conclusion:The Tribunal upheld the approval of the Resolution Plan but allowed the appellant to pursue pending arbitration proceedings. The Tribunal emphasized that the RP should have made a contingent provision for the appellant's claims, subject to the arbitration outcome. The appeal was disposed of with these observations, and no order as to costs was made.