TaxTMI 
TaxTMI 
2021 (7) TMI 1130
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....proved the Resolution Plan submitted by Kalpraj Dharamshi and Ms Rekha Jhunjhunwala (the Respondent No. 2 & 3). 2. Brief facts of this case are that since the year 2013 there is business relationship between the Appellant and the Corporate Debtor (Respondent No. 1). The Appellant entered into more than 90 different contracts for various projects with the Corporate Debtor (Respondent No. 1). The total value of all different contracts is more than 2400 Crores. The dispute arose between the Appellant and Corporate Debtor (Respondent No. 1) in respect of six different contracts for different projects. Therefore, the Appellant invoked the arbitration agreement and the arbitration proceedings were commenced before the Sole Arbitrators. On 29.01.2018 the Corporate Debtor filed an Application CP No. IBC/156/MB/MAH/2017 under Section 10 of the IBC before the Adjudicating Authority for initiation of Corporate Insolvency Resolution Process (CIRP). Ld. Adjudicating Authority vide order dated 14.05.2018 admitted the Application and directed the moratorium to commence as prescribed under Section 14 of the IBC and Mr. Krishana Chamadia was appointed as Interim Resolution Professional (IRP). Th....
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....n Plan beyond the prescribed time limit. During the CoC meeting held on 30.01.2019 the Resolution Plan of Kalpraj Dharamshi was placed before the CoC and the CoC resolved to direct all the Applicants to submit the revised plan. Accordingly, all the Applicants submitted the revised Resolution Plan. In the CoC meeting held on 13/14.02.2019 the plan of Kalpraj Dharamshi came to be approved by a majority. 5. After CoC had approved the plan of Mr. Kalpraj Dharamshi, RP applied for approval of plan before the Adjudicating Authority on 18.02.2019 vide M.A. No. 691 of 2019 in CP No. 156/MB/2018. After coming to know about the RP applying for approval of plan of Kalpraj Dharamshi, KIAL filed an Application on 14.03.2019 being M.A. No. 1039 of 2019 objecting the plan of Kalpraj Dharamshi. The objection was on the ground that the RP was not justified in permitting Kalpraj Dharamshi to submit the Plan beyond the date prescribed in Form-G and the decision of CoC to approve the plan submitted by Kalpraj Dharamshi was not in accordance with the IBC. Vide impugned order dated 28.11.2019 the Ld. Adjudicating Authority allowed M.A No. 691 of 2019 and approved the Resolution Plan of Kalpraj Dharam....
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....s Appeal she has been discharged. 10. The Adjudicating Authority vide order dated 28.11.2019 approved the Resolution Plan for Corporate Debtor which was submitted jointly by Kalpraj Dharamshi and Ms. Rekha Jhunjhunwala (Successful Resolution Applicants) and in terms of the approved Resolution Plan a monitoring committee comprising three Members - one nominated by the Successful Resolution Applicants, one nominated by CoC and the erstwhile Resolution Professional has been appointed to supervise the implementation of the Resolution plan and to conduct the day to day functioning of the Corporate Debtor. Further as per the terms of the approved Resolution Plan Mr. Krishna Chamadia (erstwhile RP) has been appointed as the monitoring agent, acting on the sole instructions of the monitoring committee. Thus, after approval of the Resolution Plan, the Corporate Debtor (R-1) is represented by the monitoring committee. 11. Ld. Sr. Counsel for the Appellant submitted that as per Section 18 (1) (b) and (g) r/w Section 25 (2) (e) of the IBC, the IRP/RP shall receive and collate all the claims submitted by the Creditors and shall maintain an updated list of claims. The RP clearly failed to ....
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....g the highest Operational Creditor. 14. It is submitted that as per Section 24(3) (c) of the IBC the Appellant was entitled to participate in the CoC meeting, being the highest Operational Creditor having aggregate dues of not less than 10%. That non-inclusion of the Appellant in the CoC by the RP malafidely, rendered the constitution of CoC illegal and all the proceedings undertaken by such incomplete CoC are not tenable in the eye of law and have caused grave injustice to the highest Operational Creditor like the Appellant. 15. Ld. Sr. Counsel for the Appellant submitted that the RP had erred in not taking into consideration the claim of the Appellant on the basis of Arbitration proceedings being pending in respect of the dispute claim. The RP had again failed to validate his stand by not admitting the claims of the Appellant despite the fact with the moratorium being declared and the continuation of the Arbitration proceedings comes to stand still as per the expressed provision of Section 14(1) (a) of the IBC. 16. Ld. Sr. Counsel for the Appellant submitted that the RP has committed gross misconduct and fraud during the course of entire CIRP which is evident from the fo....
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....pellant and the Corporate Debtor are pending Adjudication before the Arbitrators. The RP in the updated list of the Creditors as on 24.01.2019 specifically mentioned that the claims of the Appellant have been disputed and are in the proceedings before the Arbitrators and the liability is subjected to outcome of these proceedings. He submitted that Ld. Adjudicating Authority failed to appreciate as on date a sum of Rs. 511,58,39,247/- is due and payable by the Corporate Debtor to the Appellant towards hardware and services delivered and provided by the Appellant to the Corporate Debtor (Respondent No. 1). 18. It is submitted that Ld. Adjudicating Authority erred in approving the Resolution Plan of the Respondent No. 2 & 3 for waiver of claims against the Respondent No. 1 on the date of approval of the Resolution Plan. Ld. Adjudicating Authority erred to hold that the Resolution Applicant will not be held responsible for any outstanding claims for the period before the commencement of CIRP. He submitted that Ld. Adjudicating Authority failed to appreciate that the CoC being a custodian of public interest is under statutory duty to exercise its power under Section 30(4) of the IBC ....
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....aims. He submitted that Ld. Adjudicating Authority failed to appreciate that where the claim of Operational Creditor involves a disputed question of fact as it cannot be decided by the RP or Ld. Adjudicating Authority, such Operational Creditor can raise such issue and claim at an appropriate stage i.e. after moratorium is over. For this proposition, placed reliance on the Judgment of this Appellate Tribunal in the case of M/s Roma Enterprises Vs. Martin S. K. Golla RP (CA (AT) (Ins) No. 232 of 2018). 22. It is submitted that the Resolution Plan was erroneously approved by the Adjudicating Authority without application of mind and without being satisfied regarding the compliance of the requirements referred in Section 30 (2) of the IBC. Section 31 (1) of the IBC requires the Adjudicating Authority to record its satisfaction regarding compliances of the Section 30(2) of the IBC. As per the intent of the IBC such satisfaction should not be mere subjective satisfaction of the Adjudicating Authority rather objective satisfaction regarding fulfilment of the requirements under Section 30(2) of the IBC. Ld. Adjudicating Authority failed to appreciate that due to collusive conduct of th....
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....798 of 2020) 26. Per Contra Ld. Sr. Counsel for monitoring committee representing Respondent No. 1 submitted that in terms of Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations 2016 (Regulations, 2016) a public announcement in Form-A was issued on 28.05.2018 in various newspapers. Pursuant to the public announcement claims of various Financial Creditors, Operational Creditors and other Creditors and the Corporate Debtor were received which were collated and verified by the IRP/RP. Further as per Regulation 13 of the Regulations 2016 a list of Creditors of the Corporate Debtor was prepared and filed with the Adjudicating Authority and the same list was also displayed on the website and was updated periodically. During the CIRP a total claim of INR 511,58,39,247 was received from the Appellant claiming to be an Operational Creditor of the Corporate Debtor. It is further submitted that the Appellant's claim was examined by the RP and took to verification against the books and records of the Corporate Debtor, whereupon it claimed that the said claim was disputed by the Corporate Debtor in various Arbitrations....
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....ent practices and manipulations in the books of accounts of Ricoh. 30. Ld. Sr. Counsel for the Respondent No. 1 submitted that on 24.08.2018 the RP published the updated list of the Creditors along with admitted claims and verification of the claims done till date. It is submitted that on 29.11.2018 the RP published an updated list of the Creditors for the Corporate Debtor wherein the admitted claims of the Appellant in annexure B was indicated as 'Nil' with an appended note 2 wherein it is stated that the claims of the Appellant were disputed and pending adjudication in the Arbitration Proceedings. 31. It is also submitted that the RP had filed before the Adjudicating Authority an Application (M.A 262 of 2019) under Section 50, 51 and 66 of the IBC for avoidance of certain extortionate, fraudulent and wrongful trading practices by the Corporate Debtor in connivance with various persons/entities including the Appellant. The Appellant was also a party in the said Application. However, despite presence of its counsel on various dates before the Adjudicating Authority the Appellant did not raise any objection before the Adjudicating Authority. This being so the Appellant has no ....
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....dingly, the present Appeal is rendered non-maintainable, infructuous, and non-est, and thereby ought to be dismissed. 36. Ld. Sr. Counsel for the Respondent Nos. 2 & 3 submitted that the claims of the Appellant were not admitted and the same reflected in the list of Creditors published by the RP on three occasions i.e. 29.11.2018, 10.12.2018 and 24.01.2019. However, the Appellant failed to challenge the non-admission of its claim by the RP in the first instance before the Adjudicating Authority and thereby acquiesced to this determination. The Appellant is estopped from challenging the non-admission of its claims at a belated stage in the present Appeal. In fact, it may be noted that on 31.01.2021, the Respondent Nos. 2 & 3 had successfully and irreversibly implemented the Resolution Plan, thereby completing the takeover of the control, operations, and management of the Corporate Debtor. These facts have been duly considered by the Hon'ble Supreme Court and upheld the impugned order. 37. Ld. Counsel for the Respondent Nos. 2 & 3 submitted that the Appellant has approached this Appellate Tribunal seeking reliefs under Section 61 of the IBC with the impugned order be set aside ....
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....ng the determination of RP before the Adjudicating Authority. Admittedly, the claims of the Appellant has not been admitted by the RP and determined to be fraudulent and extortionate credit transactions and in view of this no payment was provided under the Resolution Plan to the Appellant. 40. It is submitted that there is no substance or merit to the allegations of the Appellant on the grounds of discrimination in the treatment provided under the Resolution Plan, alleged fraud illegality or any contravention of law by or attributable to the Respondent Nos. 2 & 3 and such allegations in the Appeal ought to be summarily rejected by this Hon'ble Appellate Tribunal. 41. It is submitted that the Resolution Plan by the Prospective Resolution Applicants prepared on the basis of information memorandum and evaluation matrix. The Respondent Nos. 2 & 3 were duly provided with a copy of information memorandum and evaluation matrix and the Appellant's claim was not admitted therein and that fact was duly taken into consideration by the Respondent Nos. 2 & 3 when the Resolution Plan was submitted before the CoC on 12.02.2019 and subsequently, approved on 14.02.2019 by a thumping majority ....
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....4. Ld. Sr. Counsel in support of aforesaid arguments placed reliance on the Judgment of Hon'ble Supreme Court in the case of Maharashtra Seamless Ltd. Vs. Padmanabhan Venketesh & Ors. (2020) 11 SCC 467 and Jaypee Kensington Boulevard Apartments Wellfare Association & Ors. Vs. NBCC (India) Ltd. & Ors. Civil Appeal No. 3395 of 2020 decided on 24.03.2021 and B.L. Sreedhar and Ors. Vs. K.M. Munireddy (2003) 2 SCC 355,and also place reliance on the Judgement of this Appellate Tribunal in the case of Santosh Wasantrao Walokar Vs. Vijay Kr. V. Iyer & Anr. 2020SCC Online NCLAT 128. 45. Ld. Sr. Counsel for the Respondent Nos. 2 & 3 submitted that the Appellant has failed to establish any of the grounds for interference with the impugned order passed by Adjudicating Authority. Thus, the Appeal must be dismissed. 46. After hearing Ld. Sr. Counsels for the parties we have gone through voluminous record. 47. Admittedly, the Appeal has been filed against the impugned order approving a Resolution Plan under Section 31 of the IBC. Against an order approving a Resolution Plan under Section 61 (3) Appeal may be filed on the grounds specified in (i) to (v). From the grounds projected in memo....
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....15 r/w Regulation 13(2) (c) of Regulations 2016. The RP upon examination of the books and accounts of Corporate Debtor during the CIRP, determined that the transactions entered into by the Corporate Debtor with the Appellant prior to initiation of CIRP required detailed investigation. Pursuant to this determination, the RP exercised his powers under Section 25(2) (d) read in conjunction with Sections 43, 45, 49, 50 and 66 of the IBC and appointed, Alvarez and Marsal India Ltd. 'A & M' on 13.07.2018 to assist him in investigating and examining potential fraudulent, extortionate credit and undervalued transactions which took place between Corporate Debtor and third parties, including the Appellant. 51. On 16.08.2018 in respect ongoing investigation into transactions between Appellant (FDSL) and the Corporate Debtor, SEBI passed an interim order under Sections 11(1), 11 (4) and 11B of the SEBI Act and Regulation 11 of the PFUTP Regulations holding inter alia that there is large-scale irregularity in the business transactions between the erstwhile management of Corporate Debtor and the Appellant (FDSL), including the manipulation in its books and accounts, which amounted to fraud. S....
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....gures in respect of the alleged fraud pertaining to the suspect transactions and manipulated books and accounts of Ricoh. Thus, in the larger interest of investors in the securities market, I do not deem fit to grant any interim relief, as requested by Shri Amalendu Mukherjee and FDSL." 52. As per the mandate dated 13.07.2018 of the RP stated above A & M completed forensic auditor investigation into transactions of the Corporate Debtor of three preceding years to the commencement of the CIRP and submitted the final report dated 15.01.2019 containing the findings of fraudulent and collusive transactions between the ex-management of FDSL and the Corporate Debtor, which was intended to defraud the Corporate Debtor. It is the matter of record that receivable of huge amounts accruing to the Corporate Debtor under these transactions where written off illegally by the Appellant and its ex-management. The RP on verification of the Appellant's claims came to the reasoned determination that all the transactions between the Appellant and the Corporate Debtor were vitiated by fraud and illegality as confirmed by the findings of the 'A & M' report dated 15.01.2019 and the findings of the SEB....
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....oreover, instead of putting the dispute amount and claim in the contingency provisions the RP has mechanically deferred the entire claim of the Appellant. As per the Regulation 14 where the amount claimed by the Creditors is not précised due to any contingency or other reasons, the IRP or RP shall make the best estimate of amount of the claim based on the information available with him. 56. In the present case Mr. Krishna Chamadia on the basis of documents found that the claims of the appellant are disputed and are pending adjudication before the Arbitrators but when he received the report of forensic auditor, 'A&M' and also received the interim order of SEBI that the transactions are not only disputed but are fraudulent and extortionate. Therefore, as per the Regulation 14 it was not required to put estimate value of amount of the claim. On the other hand, Mr. Krishna Chamadia found that receivable of huge amounts accruing to the Corporate Debtor under these transactions were written off illegally by the Appellant, therefore, Krishan Chamadia has filed the Application M.A No. 262 of 2019. With the aforesaid, we are of the view that Mr. Krishna Chamadia has done his duty ....
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.... the findings of the A & M report dated 15.01.2019 and SEBI interim order dated 16.08.2018. 59. With the aforesaid we are of the view that the Appellant has failed to convince that the RP has committed any material irregularity in exercise of powers during the CIRP. Issue No. (ii) Whether the debts owed to the Operational Creditor (Appellant) of the Corporate Debtor have not been provided for in the Resolution Plan in the manner specified by the Board? 60. We have to see that as per Regulation 38 (1A) the Resolution Plan has dealt with the interest of Operational Creditor. Regulation 38 (1A) reads as under: - "38(1A) The Resolution Plan shall include a statement as to how it dealt with the interests of all stakeholders including Financial Creditors and the Operational Creditors, of the Corporate Debtor" 61. Such Amendment was inserted w.e.f. 05.10.2017. In the light of the Regulation 38 (1A), we have examined the Resolution Plan. The Resolution Plan Para 3.3 treatment of Operational Creditors (Other than workman/employees) reads as under: - "(3.3) As per the list of Creditors, the total amount of claims of Operational Creditors admitted by the RP is....
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.... 38(1A) for the debts owed to the Operational Creditors of the Corporate Debtor. So far as the claims of the Appellant are concerned these are not only disputed claims but are the fraudulent and extortionate credit transactions as per the forensic auditor report 'A&M' and SEBI interim order dated 16.08.2018. Therefore, the Appellant's claims not included in the Resolution Plan. 64. Ld. Sr. Counsel for the Appellant heavily placed reliance on the Judgment of Hon'ble Supreme Court in the case of NTPC Ltd (Simhadri Project) (Supra). In this Appeal, the limited issue placed before Hon'ble Supreme Court is about the claims of the Appellant not been reflected under the heading 'claims of Operational Creditors' in the information memorandum. According to the Appellant, the claims of the Appellant was pending adjudication before the Arbitrator, therefore, according to the Appellant, the claim amount should have been reflected under the heading 'Claims of Operational Creditors'. The Hon'ble Supreme Court do not agree with this submission and held that the Appellant's claims has rightly been described in the memorandum as other creditors' claims (Claims under Adjudication). The Appellant ....
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....ellant" (c) Whether the order impugned might operate as constructive res-judicata as against the Appeal preferred by the Appellant and thus, renders the pending Appeal of the Appellant technically infractuous? 68. Thus, Ld. Sr. Counsel for the Appellant is unable to convince us that when the impugned order has been upheld by the Hon'ble Supreme Court then how the impugned order can be set aside in this Appeal. 69. Hon'ble Supreme Court in the case of Ghansyam Mishra and Sons (Supra) examining the issue as to whether after approval of Resolution Plan by the Adjudicating Authority, a creditor including the Central Government, State Government or any local Authority is entitled to initiate any proceedings for recovery of any of the dues from the Corporate Debtor, which are not part of the Resolution Plan approved by the Adjudicating Authority. Hon'ble supreme court in Para 95 of the Judgment held as under: - "CONCLUSION 95. In the result, we answer the questions framed by us as under: (i) That once a resolution plan is duly approved by the Adjudicating Authority under sub- section (1) of Section 31, the claims as provided in the resolution pla....
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....ellant has not pursued such claims, when the Resolution Plan was pending for approval before the Adjudicating Authority. 71. Now, we have considered the another aspects of the matter, the plan has already been implemented by the Successful Resolution Applicants and RP has already been discharged. Therefore, the monitoring committee of Ricoh India Ltd. (Corporate Debtor) has filed the Reply on behalf of the Respondent No. 1.They submitted that now the Appellant cannot pursue its claim against the Corporate Debtor after implementation of the plan and the Appellant's claim deserves out right dismissal. In the light of the ruling of Hon'ble Supreme Court in the case of CoC of Essar Steel India Ltd. Vs. Satish Kr. Gupta 2019 SCC Online SC 1478, wherein Hon'ble Supreme court has inter alia held as under: - 67. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6)of the Code, also militates against the rationale of Section 31of the Code. A successful resolution applica....