TaxTMI 
TaxTMI 
2018 (11) TMI 250
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....ution Professional, Ms. Misha and Mr. Shantanu Chaturvedi, Advocates for Committee of Creditors, Mr. Nitish Massey and Mr. Abhishek, Advocates for Orissa Metaliks Pvt. Ltd JUDGMENT BANSI LAL BHAT, J.- The Appellant - 'SREI Infrastructure Finance Limited', one of the 'Financial Creditors' of Respondent No. 1 - 'M/s Aadhunik Alloys and Power Ltd.' (hereinafter referred to as 'Corporate Debtor') is aggrieved of order dated 26th April, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata, whereby and where under the Adjudicating Authority declined to pass an order of restraint upon the Respondents from continuing with the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, negotiating with any other bidder and/or approving any Resolution Plan till the pendency of application being CA(IB) No. 377/KB/2018 arising out of CP(IB)No.387/KB/2017. The impugned order has been assailed on the grounds set out in the memorandum of appeal. 2. For better understanding of the controversy, it would be appropriate to trace the genesis thereof by wading through the factual matrix, which is reprod....
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....Appellant submitted a detailed representation to prove its eligibility. Resolution Professional obtained legal opinion and having regard for the order dated 16.11.2017 passed by the Adjudicating Authority (National Company Law Tribunal) Hyderabad Bench in 'SREI Infrastructure Finance Ltd. Vs. Canara Bank & Ors.' held the Appellant ineligible. Resolution Professional placed the matter before the CoC, which took a decision to negotiate with the H2 bidder only. Negotiations with the H2 bidder were underway when the Appellant questioned the decision of Resolution Professional and CoC in rejecting the Appellant as a Resolution Applicant by filing CA(IB) No. 377/KB/2018. The Adjudicating Authority passed an order dated 07.05.2017 directing the CoC to consider the question of eligibility of the Appellant under Section 29A independently. In pursuance thereto CoC looked into the aspect of eligibility of the Appellant and was of the view that the Appellant was at that moment ineligible. Meanwhile the Appellant filed an appeal before this Appellate Tribunal wherein, in terms of interim order dated 09.05.2018 this Appellate Tribunal directed the CoC to decide as to which resolution pla....
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.... for the Appellant would submit that the question involved in Company Appeal (AT) (Insolvency) Nos.316 & 317 of 2017 was whether the Appellant was a 'related party' of DCHL by virtue of holding 24.6% shareholding in DCHL and the question has been answered in negative by this Appellate Tribunal. It was immaterial that Respondent No. 9 was not a party in Company Appeal (AT) (Insolvency) Nos.316 & 317 of 2017 and the finding recorded by this Appellate Tribunal that the Appellant was not a 'related party' of DCHL would be binding. He would further submit that the Respondent No. 9 is estopped from contending that the decision of 20th July, 2018 is not relevant as it has accepted in its affidavit that such decision is relevant and would determine the instant appeal. It is further submitted that the membership is determined on the basis of entry in the register of members and the mere fact that the Appellant had asserted itself as a shareholder of the DCHL will make no difference as there is no estoppel against statute. 5. The Resolution Professional, in its additional affidavit dated 01.08.2018, has taken the stand that in view of order of this Appellate Tribunal dated....
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....ment in personam and not judgment in rem. Further that DCHL is not a party in the present appeal and status of Appellant SREI was not the question involved in DCHL matter. It is contended that the Appellant does not qualify as an eligible Resolution Applicant as it holds approximately 24% equity shares in Deccan which makes SREI a 'connected person' of Deccan and at the time of submission of resolution plan account of Deccan had been classified as NPA since more than one year before. It is lastly contended that Respondent No. 9 is the Successful Resolution Applicant with its resolution plan having been approved by CoC with 100% vote and its bid is Rs. 326 Crores as compared to Appellants bid of Rs. 300 Crore and the negotiation has already been closed. 8. Heard learned counsel for the parties and perused the record. Section 29A of the I&B Code, introduced by Act 8 of 2018 with retrospective effect from 23.11.2017 deals with persons not eligible to be Resolution Applicant. It reads as under: "29A. A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person - (a) is an undis....
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....te company or related party of a person referred to in clauses (i) and (ii): Provided that nothing in clause (iii) of this Explanation shall apply to - (A) a scheduled bank; or (B) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; or (C) an Alternate Investment Fund registered with the Securities and Exchange Board of India." 9. This Appellate Tribunal had an occasion to consider the ambit and scope of Section 29A of the I&B Code in 'Numetal Ltd. v. Satish Kumar Gupta & Ors.' Company Appeal (AT) (Insolvency) No. 169 of 2018 decided on 7th September, 2018. It observed as follows: "41. The substantive provision of Section 29A of the 'I&B Code' suggests that not only a person is ineligible to submit a 'Resolution Plan', but also a person with any other person acting jointly or in concert with such person, if attracts any one or other ineligibility clause mentioned in clauses (a) to (i) is also ineligible. In terms of clause (j) of Section 29A, if the 'connected pe....
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.... any connected person is ineligible under clauses (a) to (i), the person who intend to submit, is not eligible to file 'Resolution Plan'. **** **** **** 117. Admittedly, 'AM Netherlands' is related party of 'AM India Ltd.'. 'AM Netherlands' was the promoter of 'Uttam Galva' on the date when the 'Uttam Galva' classified as NPA in accordance with the guidelines of Reserve Bank of India and a period of one year has elapsed from the date of such classification, at the time of commencement of 'Corporate Insolvency Resolution Process' of the 'Corporate Debtor'. 118. Once the stigma of "classification of the account as NPA" has been labelled on the promoter of the 'Uttam Galva', even after sale of shares by 'AM Netherlands' it ceased to be a member or promoter of the 'Uttam Galva', but stigma as was a....
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....ate Tribunal assailing the order rendered by the Adjudicating Authority in DCHL Case. This Appellate Tribunal passed interim direction on 9th May, 2018 directing the CoC to take a call in regard to the acceptability of the Resolution Plans and keep the same in a sealed cover. It further emerges from record that in pursuance of directions of this Appellate Tribunal the CoC voted upon the BPSL resolution plan and the same was approved by 100% voting. Resolution Professional placed the BPSL resolution plan as approved by CoC before the Adjudicating Authority. Same was done in pursuance of interim directions passed by this Appellate Tribunal. The Adjudicating Authority was permitted to consider the same for approval subject to the outcome of the appeal. The Resolution Professional appears to have approached the Adjudicating Authority for approval of the BPSL Resolution Plan. The matter is said to be pending consideration before the Adjudicating Authority. 11. Whether the judgment rendered by this Appellate Tribunal on 20.07.2018 in the matter of 'SREI Infrastructure Finance Ltd. v. Canara Bank & Ors.', Company Appeal (AT) (Insolvency) No. 316 & 317 of 2018 overturning the fi....
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.... it would have been disqualified under Section 29A(c). Admittedly, DCHL, declared as NPA and suffering the ignominy of being a defaulter at the relevant time has not jumped in the fray to submit a Resolution Plan for the Corporate Debtor. However, the Appellant, which initially emerged as H1 relegating BPSL to second slot was stripped of H1 status at the instance of BPSL, which alleged ineligibility of Appellant on the ground of the Appellant holding more than 24% of shares in DCHL which had been declared NPA thereby bringing the Appellant within the ambit of a 'related party' of DCHL. It appears that the allegation of ineligibility of the Appellant relating to its capacity as a 'related party' of DCHL emanated from BPSL on the strength of order dated 16th November, 2017 passed by Adjudicating Authority, Hyderabad Bench in the matter of 'SREI Infrastructure Finance Ltd. Vs. Canara Bank and Ors.', which turned tables on the Appellant forcing its ouster from the Resolution Process of the Corporate Debtor. Admittedly, the aforesaid order passed by Adjudicating Authority, Hyderabad Bench has been set aside in appeal by this Appellate Tribunal. It is therefore a ....
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....previous judgment will not operate as res judicata in the subsequent proceeding for different property though between the same parties. 15. Admittedly, R-9 was not a party to the decision rendered by this Appellate Tribunal on 20.07.2018 in the matter of 'SREI Infrastructure Finance Ltd. v. Canara Bank and Ors.' in which it was held that the Appellant could not be treated to be a 'related party' in relation to DCHL. However, the fact remains that the issue of Appellant being in control of DCHL by virtue of holding more than 20 per cent shares and thereby attracting ineligibility as a 'related party' was involved in DCHL matter. Determination of the question as to whether the Appellant held 24.6% shareholding in DCHL at the relevant time thereby attracting ineligibility in terms of provisions of Section 29A of I&B Code is relevant notwithstanding the fact that R-9 was not a party to the DCHL matter. The finding recorded in DCHL matter in regard to status of Appellant as a 'related party' qua DCHL stands dislodged in appeal. The edifice upon which rested the plea of R-9 in regard to alleged ineligibility of Appellant stands demolished. It is not in ....