TaxTMI 
TaxTMI 
2020 (8) TMI 384
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....No. II, Mumbai) in MA No. 515/2020 in C.P. (IB)- 1832(MB)/2017, the Appellant/'Monitoring Agency' of the 'Corporate Debtor' has focused the instant Appeal before this Tribunal. 2. The Learned Counsel for the Appellant contends that the Adjudicating Authority ('NCLT') Bench No. II, Mumbai while passing the impugned order in M.A. No. 515/2020 dated 12.02.2020 had acted arbitrarily and exceeded its jurisdiction in staying the proceeding in M.A. No. 249 of 2020 which was heard at length and reserved for 'Orders' by an Erstwhile Bench / Co-ordinate Bench of 'NCLT', Mumbai. 3. The Learned Counsel for the Appellant submits that the Respondent herein was provided with an adequate opportunity to file a 'Reply' to the said miscellaneous Application No. 249/2020 and a reply was filed prior to the hearing of the said miscellaneous application by the Adjudicating Authority. 4. The Learned Counsel for the Appellant submits that the 'Successful Resolution Applicant' raised numerous Defenses in reply to MA No. 249/2020 which were raised again in MA No. 515/2020 by it and that too when orders were reserved in MA No. 249/2020. Further, it is the contention of the Appellant, when the erstwhi....
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.... Court. That which could not be done directly could also not be done indirectly. Otherwise, a party aggrieved by an order passed by one Bench of the High Court would be tempted to attend to get the matter reopened before another Bench and there would not be any end to such attempts. Besides, it was not consistent with the judicial discipline which must be maintained by Courts both in the administration of justice by assuring the binding nature of an order which becomes final and the faith of the people in the judiciary. The impugned order dated 16-7-91 is, therefore, set aside and the order dated 6-7-90 granting bail to the Appellant is restored". 6. The Learned Counsel for the Appellant cites the decision of Hon'ble Supreme Court 'Sant Lal Gupta and Ors. Vs. Modern Co-operative Group Housing Society Ltd. and Ors.' reported in MANU/SC/0859/2010 wherein at paragraph 18 it is observed as follows: - "18. A coordinate bench cannot comment upon the discretion exercised or judgment rendered by another coordinate bench of the same court. The rule of precedent is binding for the reason that there is a desire to secure uniformity and certainty in law. Thus, in judicial administr....
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....0 filed by the Respondent (Royale Partners Investment Fund Limited / 'Successful Resolution Applicant') the re-constituted 'NCLT' Mumbai Bench, Court no. II on 12.2.2020 at paragraph 4 had observed the following: - "4. Learned Senior Counsel for the Applicant pressed for Interim Relief mentioned at Clause (h) on page-24 of the MA. Learned Counsel appearing on behalf of the Monitoring Agency sought some time to file reply in the matter. Considering the submissions made and the nature of the prayers, this Bench deems it necessary that the prayer in Clause(h) on page-24 of MA-515/2020 should be granted at this pint of time. We therefore stay all proceedings in MA 249/2020 until the next date of hearing in the present MA." and the matter was directed to be listed on 28.2.2020. 11. On behalf of the Appellant, it is brought to the fore that on 27.1.2020, the erstwhile 'NCLT' Mumbai Bench in MA No. 249/2020 had interalia directed the Respondent to file its reply in next two days' time i.e. by 29.1.2020, (since it was mentioned from the Respondent side that MA No. 249/2020 was received about five days back and time was sought to file a reply) and it was specifically made men....
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....20 before this Tribunal. 16. The Learned Counsel for the Intervenor prays for annulling the 'Impugned Order' to promote substantial cost of justice. Respondent's Contentions 17. Conversely, it is the submission of Learned Counsel for the Respondent that in MA No. 249/2020 a reply was filed by the Respondent and the matter was heard extensively (after completion of pleadings) on 30.01.2020 before the Bench II of the 'NCLT', Mumbai and thereafter reserved for orders, which was pronounced on 18.02.2020. 18. Advancing his arguments, the Learned Counsel for the Respondent brings to the notice of this Tribunal that pursuant to the reconstitution of the Benches, the Respondent / Appellant in Company Appeal (AT)(Ins.) 327/2020 sought to mention the said M.A. No. 249/2020 before the reconstituted Bench No. II of 'NCLT' on 04.02.2020 and that the Appellant's / Respondent's (in Company Appeal (AT)(Ins.)No. 287/2020) Advocates were present in court for a different matter were able to oppose the same as a malafide one and as a result thereof, the re-constituted Bench No. II of 'NCLT' Mumbai had not permitted the 'mentioning'. 19. The Learned Counsel for the Respondent submits tha....
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....cted to file 'Reply' in next two days' time i.e. by 29.1.2020 and it was categorically stated that 'the matter would be heard on 30.01.2020. However, MA No. 515/2020 was filed by the 'Successful Resolution Applicant' / Royale Partners Investment Fund Ltd. (Appellant in Company Appeal (AT)(Ins.) No. 327/2020) seeking reliefs (a to j) mentioned therein. More specifically, in MA No. 515/2020 before the newly reconstituted Bench of 'NCLT' Mumbai, Court No. II, the 'Successful Resolution Applicant' in serial No. (h) of the relief portion had sought the following: - "That pending the hearing and final determination of the present application, this Tribunal may be pleased to stay all proceedings in MA No. 249/2020." 25. As a matter of fact, the 'Adjudicating Authority' (erstwhile Mumbai Bench of 'NCLT') when it reserved orders in MA No. 249/2020 on 30.01.2020 comprised of different Members (both Judicial and Technical) than that of the newly reconstituted Bench of 'NCLT' Mumbai Bench, Court No. II which passed the orders on 12.2.2020. In the newly reconstituted Bench in Court No. II of 'NCLT', Mumbai, the Members (both Judicial and Technical) were different, than the former Be....
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.... (a) in any case involving persons with whom the President or the Member has or had personnel, familial or professional relationship; 33(b) in any cases concerning which the President or the Member has previously been called upon in another capacity including as advisor, representative, experts or witness; or (c) if there exist other circumstances such as to make the President or the Member's participation seem inappropriate. (2) The President or any Member recuse himself may record reasons for recusal; Provided that no party to the proceedings or any other person shall have right to know the reasons for recusal by the President or the Member in the case." 30. It comes to be known that the Hon'ble President of 'NCLT', New Delhi, (in exercise of the powers conferred u/s 419 of the Companies Act, 2013) on 29.1.2020 had re-constituted the Benches at 'NCLT' Mumbai for the purpose of exercising and discharging the functions assigned by the statute which was in partial modification of the order dated 25.07.2020. The Benches comprised of the following Members and the order of reconstituted Benches at 'NCLT' Mumbai dated 29.1.2020 was to come into effect fr....
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....s page 273 at special page 274 it is held that 'judicial discipline and propriety demands that a Bench of two learned judges should follow a decision of a Bench of three Judges. But if a judge of two Learned judges concludes that an earlier judgement of three Learned Judges is so very incorrect that in no circumstances can it be followed, the proper course for it to adopt is, to refer the matter before it to a Bench of three Learned judges setting out the reasons why it could not agree with a earlier judgement and then if the Bench of three learned judges also comes to the conclusion that the earlier judgement of a Bench of three learned judges is incorrect, then a reference could be made to a Bench of five learned judges etc." 34. It is to be remembered the principle of "qundo aliquid prohibetur, prohibetur et omne per quod devenitur ad illud" is that an 'Authority is not to be permitted to evade a Law by shift or contrivance'. 35. In a recent judgement of Hon'ble Supreme Court in Criminal Appeal No. 452 of 2020(arising out of SLP(CRL) No. 2433/2020 S.Kasi V. State Through the Inspector Police, Samayanallur Police Station, Madurai dated 19.06.2020 it is held at paragraph 31 ....
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.... to. No doubt in our jurisprudence 'precedents' do play a primary role in patronising the 'Rule of Law'. At this juncture, it is worth to point out that in MA No.515/2020 pending hearing and final determination of the said application a relief was sought from the Tribunal to stay all proceedings in MA No. 249/2020. 38. To put it precisely, it is neither palatable / desirable nor permissible by the 'Co-ordinate Bench' of a Tribunal to fetter the hands of erstwhile Bench in passing necessary orders in MA 249/2020 which was admittedly heard and reserved for orders on 30.01.2020. In the case on hand, an order passed by a co-ordinate Bench of the same Tribunal in reserving the matter in MA No. 249/2020, on 30.01.2020 must be reverred and the 'judicial precedent' requires that as a 'rule of practice', the same cannot be interfered with by the re-constituted Bench on any score. Only if the Members of the Adjudicating Authority('NCLT') do not brush aside the orders passed by a 'Coordinate Bench' of the same Tribunal, Certainty and uniformity in 'Law' can be achieved and preserved in our administration of justice. 39. In as much as the impugned order dated 12.2.2020 in MA No. 515/2020....
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....ant. 42. The Learned Counsel for the Appellant contends that since the erstwhile 'Resolution Professional' of the 'Corporate Debtor' was managing the operations of the 'Corporate Debtor', the Steering Committee appointed the erstwhile 'Resolution Professional' as the 'Monitoring Agency', albeit, in a different capacity and not to continue as a 'Resolution Professional'. 43. In this connection, the stand of the Appellant is that as per Section 23 of the 'I&B' Code, the powers of 'Resolution Professional' ceases the moment a 'Resolution Plan' is approved by the Adjudicating Authority and accordingly the former 'Resolution Professional' was deemed to have handed over the charge upon approval of the 'Resolution Plan' by the 'NCLT', Mumbai Bench and now entrusted with the role and responsibility of the 'Monitoring Agency'. 44. The Learned Counsel for the Appellant proceeds to point out that in MA No. 249/2020 (MA1), the 'Monitoring Agency' had claimed that it is seeking implementation of the approved 'Resolution Plan' but neither MA No. 249/2020 (MA 1) deals with all the concerns for implementation of the 'Resolution Plan' nor that filing such an application was within the ambi....
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....proval of 'Resolution Plan' will be subject to the decision of the Appeal, filed by 'ARCELOR Mittal India Pvt. Ltd.' challenging the decision of the 'Committee of Creditors' approving the Respondent's 'Resolution Plan'. Accordingly, the approval order attained finality on 16.12.2019, when the said appeal was dismissed by this Tribunal. 49. The Learned Counsel for the Appellant contends that the period of 30 Business Days should have commenced from 16.12.2019 and accordingly after the 'Resolution Professional' had handed over the charge to the Appellant. However, the erstwhile 'Resolution Professional' had not till date been able to comply with the approval order. This apart, the 'Monitoring Agency' without any powers / responsibilities is claiming the payment of total consideration from 10.01.2020 and without any approval filed MA No.249/20 (MA No.1) on 15.01.2020. Indeed, the 'Monitoring Agency' at paragraph 7 of MA 249/20 had submitted that the total consideration viz. upfront consideration and deferred consideration aggregating to a sum of INR 480 crores paid by way of 'Non- Convertible Debentures' (Deferred Consideration) was required to have been paid on or before 10.01.202....
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....d the ongoing projects (if any), assets converted to cash / receivables realized, receivables lost for non-completion of projects and other damages and recoveries by various 'Debtors'. 53. The Learned Counsel for the Appellant brings it to the notice of this Tribunal that in terms of the 'Approval Order' the erstwhile 'Resolution Professional' was categorically directed by the Tribunal to 'hand over all records, premises/factories/documents' to the 'Resolution Applicant' to finalize the further line of action required for starting of the operation etc. but the erstwhile 'Resolution Professional' pursuant to approval order or even after its appointment as 'Monitoring Agency' has high handedly been awarding sharing such data / information with the Appellant and only sought recovery of upfront consideration. 54. The Learned Counsel for the Appellant contends that the receivable and assets shown in 'information memorandum' have de-pleaded considerably as (i) the office of the 'Corporate Debtor' has been shut for a long time i.e. at least 6 months; and (ii) there was 25 ongoing projects of the 'Corporate Debtor' at the time of commencement of CIRP but as of February, 2020 there we....
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.... Indian SPV: a. Upfront Consideration equivalent to INR 420 Crores (Indian Rupees Four Hundred Twenty Crores) less payment towards (i) Balance CIRP Costs; and (ii) Potential Workmen's Dues, if any within 30 Business Days; and b. Deferred Consideration equivalent to INR 480 Crore (Indian Rupees Four Hundred Eighty Crores) in the form of unlisted NCDs." 56. The Learned Counsel for the Appellant contends that clause 3.2(vi)(B) of the 'Resolution Plan' sets out that the total consideration is full and final settlement dues of the 'Financial Creditors' and that they have waived off the balance sum of their dues and the same is as follows:- "It is hereby clarified that (ii) notwithstanding anything contained in this 'Resolution Plan', the aggregate of upfront consideration and deferred consideration (total consideration') shall be there full and final discharge provided to the claims of the 'Financial Creditors' upon receipt of which all claims of 'Financial Creditors' in relation to the admitted debt shall stand extinguished." 57. The Learned Counsel for the Appellant contends that if upon payment of INR 900/- Crores all claims and admitted debt of 'Fina....
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....flict to each other and both the clauses cannot be given effect to, then the earlier clause will prevail over the later clause. In this connection, the learned counsel for the Appellant relies on the Hon'ble Supreme Court decision in Radha Sundar Datta Vs. Mohd. Jahadur and Rahim and Others Reported in 1959 SCR at page 1309 wherein it is observed as under:- "11. Now it is a settled rule of interpretation that if there be two admissible constructions of a document, one of which will given effect to all the clauses therein while the other will render one or more of them nugatory, it should be the former that should be adopted on the principle expressed in the maxim "ut res magis valeat quam pereat" ..... "13.............. In fact, there is a conflict between the earlier clause and the later clauses and it is not possible to give effect to all of them, then the rule of construction is well established that it is the earlier clause that must override the later clauses and not vice versa." 62. The Learned Counsel for the Appellant submits that the approved 'Resolution Plan' does not entitle the 'Financial Creditors' any sum over and above the total consider....
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....solution Plan' etc. After hearing the parties at length, on 30.1.20 the orders were reserved in MA No. 249/20 and before that, by virtue of an order dated 29.1.20 the Benches of the 'NCLT' Mumbai were re-constituted, which was to come into effect only from 03.02.2020. 66. The Learned Counsel for the Respondent brings it to the notice of this Tribunal that the 'Successful Resolution Applicant'/the Appellant in the present Appeal, on 06.02.2020 filed MA No. 515/2020 before the re-constituted 'NCLT' Bench No. II illegally seeking among other things a direction from reconstituted Bench No. II to stay the proceedings in MA No. 249/2020 (which was heard at length and reserved orders by the earlier bench of 'NCLT' Mumbai Bench No. II on 30.01.2020). 67. The Learned Counsel for the Respondent submits that by means of the impugned order dated 18.02.2020 in MA No.249/2020, the 'Successful Resolution Applicant'/ the present Appellant was directed to implement the 'Resolution Plan' within seven days from the date of the order and as against the said order dated 18.02.2020 the present Appellant filed Company Appeal (AT)(Ins.)No. 327/20 before this Tribunal on 25.02.2020 and a stay in resp....
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....olation of the 'Resolution Plan' the Monitoring Agency / Respondent was forced to file MA No. 249/2020 before the Adjudicating Authority. 71. The Learned Counsel for the Respondent contends that the order in MA No. 249/2020 to implement the 'Resolution Plan' within 07 days was passed on 18.02.2020 and that the order dated 29.08.2019 passed in Company Appeal (AT)(Ins.)No. 524/2019 passed by this Tribunal, relied on by the Appellant in no manner can be relied upon by the 'Successful Resolution Applicant' /Appellant for not implementing its 'Resolution Plan' in terms thereof. 72. The Learned Counsel for the Respondent submits that the Adjudicating Authority at paragraph 5.2 of the impugned order in MA No. 249/2020 had dealt with the aspect of 'Locus-Standi' of the 'Monitoring Agency' and further it is clearly held by the Adjudicating Authority that the 'Monitoring Agency' as well as the 'Resolution Professional' who are part of the said agency are duty bound to do all that is required to see the successful implementation of the 'Resolution Plan' and can file any application before the Adjudicating Authority for ensuring the successful implementation of the 'Plan'. 73. The Lea....
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....ail dated 15.12.2019 from the 'Successful Resolution Applicant' had specified to it, that it had already shared the entire back-up of documents made available on the virtual data room as part of the 'Resolution Plan Process' through a flash drive on 29.11.2019 and the remaining information was shared on 24.12.2019, 26.12.2019 and in the 'Steering Committee' that took place on 07.01.2020. Besides this, the 'Monitoring Agency' together with the 'Corporate Debtor's team also made presentation to the 'Successful Resolution Applicant' on 24.12.2019 to provide an update on the status of completed and ongoing EPC projects. 79. The Learned Counsel for the Respondent submits that the 'Monitoring Agency' in good faith, without prejudice to the fact that supplying of information is not a condition to the implementation of Plan, again furnished all the information to the 'Successful Resolution Applicant' that were sought vide e-mail dated 16.03.2020. Inspite of all the information being furnished to the 'Successful Resolution Applicant', it has not taken any steps to implement the 'Resolution Plan' and according to the Respondent the 'Successful Resolution Applicant' is deliberately delayin....
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....spondent contends that the contents of the approved 'Resolution Plan', as modified by the 'Letter of Intent' was unconditionally accepted by the Appellant / 'Successful Resolution Applicant' and no other interpretation would come to the rescue of the Appellant because of the reason that the approved 'Resolution Plan' is a clear and un-ambiguous one. 85. The Learned Counsel for the Respondent refers to the judgment of this Tribunal 'JSW Steel Ltd.' Vs. 'Mahender Kumar Khandelwal & Ors.' (Company Appeal (AT)(Ins.) No. 957/2019') wherein after relying upon the judgement of the Hon'ble Supreme Court in 'Committee of Creditors' of 'Essar Steel India Ltd.' Vs. 'Satish Kumar Gupta & Ors.' reported in 2019 SCC online SC 4178 held that : "126. The aforesaid decision having been reversed by the Hon'ble Supreme Court we hold that the distribution on the profit made during the 'Corporate Insolvency Resolution Process' should be made in terms of addendum to the RFP as held by the 'Hon'ble Supreme Court." 86. The Learned Counsel for the Respondent contends that in the present case on hand, not only the 'Process Documents' as well as the 'Resolution Plan' and the 'LOI' specifically mentione....
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....9 without prejudice to the right of 'Committee of Creditors' to invoke and forfeit the 'Performance Guarantee'. The Appellant / 'Successful Resolution Applicant' (as Respondent) filed a preliminary reply before the Adjudicating Authority contending that (i) MA No. 249/2020 was not filed with the approval of the 'Steering Committee' and that the powers and functions of the 'Monitoring Agency' is limited to the conduct of day-today affairs of the 'Corporate Debtor' etc. 92. The Appellant /'Successful Resolution Applicant' had averred in its reply in MA No.249/2020 before the Adjudicating Authority that it is committed to implement the approved 'Resolution Plan' in its entirety but the 'Secured Financial Creditors' as well as the 'Monitoring Agency' (Applicant) and the 'Steering Committee' had failed to adhere to its binding terms. Also, that the Appellant/ 'Successful Resolution Applicant' before the Adjudicating Authority in MA No. 249/2020 had taken a stand that the payment of cash balances proposed to be made to 'Financial Creditors' forms a part of the aggregate payment obligation and not in addition to the aggregate payment obligation. 93. A perusal of the 'Preliminary Rep....
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....e Appellate Tribunal to modify a 'Resolution Plan' approved by the 'Committee of Creditors'. 96. To put it succinctly, Section 31 of the Code enjoins that once the 'Resolution Plan' is approved by an 'Adjudicating Authority' it binding on all interested parties. Of course, a threadbare scrutiny of a 'Resolution Plan' with great care, caution and utmost circumspection is very much required before recording a satisfaction in writing by an 'Adjudicating Authority'. 'Satisfaction' is a condition precedent for approval of a 'Resolution Plan'. Undoubtedly, the 'Resolution Plan' must resolve 'Insolvency'. It cannot be forgotten that 'I&B' Code permits liquidation only on failure of 'Corporate Insolvency Resolution Process'. 97. If all the requirements as mentioned in Section 30(2) are satisfied an 'Adjudicating Authority' has to pass an order of approval of 'Resolution Plan'. After the 'Resolution Plan' is approved by an Adjudicating Authority, an application may be made to the said Authority by a person in-charge of the Management or control of the business and operations of the 'Corporate Debtor' for an order praying of an assistance from the Local District Administration in imple....
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....ring Agency' has no 'Locus-Standi' to file MA No. 249/2020 before the Adjudicating Authority, and further it can file the same only there being specific authorization from the 'Steering Committee', this Tribunal opines that the approval order of the Adjudicating Authority dated 25.11.2019 pin pointedly granted liberty if deem fit and legally permissible to move miscellaneous application if required in connection with the implementation of this 'Resolution Plan' and as such the counter plea taken on behalf of the Appellant is negatived by this Tribunal especially considering the fact that for ensuring successful implementation of 'Resolution Plan' the 'Monitoring Agency' and the 'Resolution Professional' are to take a lead role in this regard. 101. As regards the plea that MA No. 249/2020 was filed by the Respondent before the Adjudicating Authority in a premature fashion and that the 'Monitoring Agency' without any powers / responsibility is claiming payment of total consideration from 10.01.2020 and without any approval filed MA No. 249/20, this Tribunal points out that as against the dismissal order in MA No. 344/2019 passed by the Adjudicating Authority, 'ARCELOR Mittal India....
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....ny cash which accrues to the 'Corporate Debtor's Company will only be paid to the 'Financial Creditors' (less any balance CIRP costs) and not to the Appellant. Hence, the contra plea of the Appellant is legally untenable. 105. It is candidly clear from the 'Letter of Intent', (signed by the Appellant on 20.01.2019) that there was no condition imposed to implement the 'Resolution Plan' other than the approval to be obtained from the 'Adjudicating Authority' and the 'CCI', which were secured. 106. Moreover, the 'Resolution Plan' is free from any doubt and quite clear on treatment of the cash balances, especially in the teeth of 'process document' dated 4.10.2018 which clearly mentioned that the 'Resolution Plan' was required to provide 'that the available cash balances in the books of the 'Corporate Debtor' upto the implementation of 'Resolution Plan' shall accrue to the 'Financial Creditors' and will not form part of the offering by 'Resolution Applicants'. 107. 'Speed' is the gist for an effective and efficacious functioning of 'I&B' Code. The longer the delay, it may induce 'Liquidation' and 'Value, Deterioration/Destruction'. 108. In the instant case, it cannot be bru....