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2022 (1) TMI 719
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....e Liquidator "Mr. Sumit Binani" against that order the Appeal is filed. 2. The Application filed by the Liquidator of Gujarat NRE Coke Ltd (Corporate Debtor) seeking following directions:- (i) Allowed the Liquidator to keep windmill assets of the Corporate Debtor outside the sale purview of Liquidation Estate. (ii) Allowed the liquidator to distribute the sale proceeds from the sale of windmill, where Rs. 180 Crore is laying in a lien account of SBI in view of the fact that the sale was approved by this Tribunal by order dated 22.08.2017. (iii) Allowed the Liquidator to get himself impleaded as a party in the Civil Suit No. 39 of 2019 titled as Sun Pharmaceutical Industries & Anr. Vs. State Bank of India & Ors., pending before the Hon'ble High Court. 3 Ld. Adjudicating Authority by the impugned order dated 18.03.2021 partly allowed the Application which is as under:- "The following orders are, therefore, passed:- (a) The Application is allowed and the Liquidator is permitted to keep the windmill assets that are the subject matter ofthe Civil Suit No. 39 of 2019 before the Hon'ble Calcutta High Court, outside the sale purview of the....
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....ellant No. 1 and 2, the aforementioned bank guarantee were to be invoked by the SBI in the event the buyer failed to comply with the agreement. The said LOI had been acknowledged by both the Appellants and pursuant thereto the agreement for sale was entered into between the Corporate Debtor and the Appellants on 01.04.2017. 8. The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) by the Adjudicating Authority vide order dated 07.04.2017 in CP (IB) No. 182/KB/2017 by allowing the Application under Section 10 of IBC filed by the Corporate Debtor. 9. An Application bearing CA (IB) No. 326/KB/2017 was made before the Adjudicating Authority by the SBI on behalf of CoC of the Corporate Debtor. Ld. Adjudicating Authority vide order dated 22.08.2017 approved the sale of the windmill assets of the Corporate Debtor to the Appellants. However, Ld. Adjudicating Authority did not accord its approval to distribute the sale proceeds at the relevant point of time since the Corporate Debtor was undergoing CIRP. 10. According to the liquidator, on being informed of the approval of sale of the windmill assets by the Adjudicating Authority, the Appellants backe....
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.... order of this Appellate Tribunal, the Hon'ble Supreme Court vide order dated 24.02.2020 directed that the liquidation proceedings may proceed and sales, if any, shall not be confirmed. 15. The Liquidator has taken steps according to the direction of Y. Shivram Prasad (Supra). The steps taken for revival by way of a scheme of arrangement have failed. The Liquidator therefore, has to sale the entire business as a going concern in its totality with the employees under the directions of orders in Y. Shivram Prasad (Supra). However, the Liquidator is faced with several impediments, inter alia, the fact that all the business units of the Corporate Debtor are not functioning due to several reasons, the Liquidator is facing non-cooperation from the members of suspended board of directors, etc. 16. The stakeholders were of the opinion that the Liquidator should consider selling the running business of the Corporate Debtor as a going concern since the Corporate Debtor, as a whole, is not operating as a going concern. They were also of the opinion that in case the Liquidator decides to sell the Corporate Debtor as a going concern, he may do so without considering the windmill assets. ....
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....n 13.09.2021 in Civil Appeal No. 3224 of 2020 in this case Hon'ble Supreme Court upheld the order of this Appellate Tribunal holding that withdrawal of the resolution plan by the Resolution Applicant after its approval by the CoC cannot be permitted, inter alia, because there is no specific provisions in the IBC for allowing withdrawal. 21. Ld. Sr. Counsel for the Appellants further submitted that it is an undisputed fact on record that by an email dated 18.08.2017 the Appellant withdrew the proposal to purchase the windmill asset from the Corporate Debtor and demanded refund of the advance deposit with interest the factum of withdrawal of the proposal as aforesaid has not been considered in the impugned order or earlier orders as a matter of fact, such a vital fact has been suppressed by the SBI and also the Liquidator. The impugned order as well as submissions of the Liquidator and the beneficiary (SBI) proceeds on fallacious assumption that there is concluded sale in regard to windmill asset of the Corporate Debtor, this assumption is absolutely baseless and is indeed gross misrepresentation of the facts. 22. It is also submitted that the order of the Adjudicating Authorit....
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....iction, Ld. Adjudicating Authority is a Tribunal of limited jurisdiction and derives its power under the IBC. It does not have any plenary and inherent power to pass orders. No power of review has been conferred upon the Adjudicating Authority. The impugned corrigendum order has been passed behind the back of the Appellant and there was no occasion to pass the said corrigendum order. A perusal of the direction would show that the said direction follows a judicial determination. No Application for review was filed by any party and it is surprising that the Ld. Adjudicating Authority deleted the direction by which it had not allowed distribution of the sale proceeds. The said corrigendum order was passed modifying the earlier order dated 18.03.2021 in complete violation of principle of natural justice and fair play. The corrigendum order was passed without notice to the Appellant. The argument of the Respondent No. 1 that it was passed upon oral mentioning by him and the name of the matter was published in the cause list which amounts to due notice is preposterous. Even the cause list which is being relied upon by the Respondent does not have the name of the Appellants. Rule 11 and R....
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..... However, the Appellants refused to take over control and possession of the windmill assets and also refused to take steps for execution of conveyance deed despite the entire consideration having been obtained by Respondent No. 2. 28. Ld. Counsel for the Respondent No. 1 further submitted that the Division Bench of Hon'ble High Court of Calcutta vide its order dated 04.09.2019 observed that time was not the essence of the contract as the Appellants were put to notice on 14.06.2017 and informed about the initiation of CIRP, the Appellants without any compulsion extended the period for performance and completion of sale of windmill assets. In so far as the enforceability of the sale transaction of the windmill assets are concerned, the same is pending adjudication before the Hon'ble High Court of Calcutta in Civil Suit No. 39 of 2019. The Appellants cannot seek adjudication of the contractual dispute, inter se Appellants and Respondent No. 2 which is prior to initiation of CIRP of the Corporate Debtor. 29. Ld. Counsel for the Respondent No. 1 lastly submitted that the order dated 23.03.2021, only proceeds to delete the embargo created in respect of distribution of sale proceed....
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....btor as the sale of windmill assets was never concluded and this Hon'ble Tribunal may pass such orders on the liquidator's Application as it deem fit but should not permit the liquidator to distribute the amount of Rs. 180 Crores". Accordingly, the Ld. Adjudicating Authority while allowing the prayer order to keep the windmill assets outside the liquidation estate, the second prayer for distribution thereof was rejected as prayed by the Appellants and the Respondent No. 2 (SBI). Thus, the Appellants cannot be aggrieved person and maintain the Appeal under Section 61(1) of IBC. 33. Ld. Sr. Counsel for the Respondent No. 2 submitted that the provisions in relation to formation /creation of liquidation estate are dealt with in Section 36 of IBC. Sub-clauses (a) and (e) of Section 36 (4) of IBC are attracted in the present case which provides that the assets owned by a third party which are in possession of the Corporate Debtor shall not be used for recovery in liquidation and also clause (e) provides that any other assets as may be specified by the board, including assets which could be subject to set-off on account of mutual dealings between the Corporate Debtor and any creditor s....
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.... inasmuch as the matter was listed in the cause list and the cause list is sufficient notice as held by the Hon'ble Supreme Court in the case of Bar Association and Ors. Vs. B. D. Kaushik (2011) 13 SCC 774. The corrigendum has to be appreciated on a complete reading of the impugned order dated 18.03.2021 passed by the Ld. Adjudicating Authority both the Appellants and SBI had supported the first prayer but the second prayer was opposed by the parties which was ultimately not granted by the Adjudicating Authority. The error due to accidental slip was manifest and no Court would ever permit it to remain cited the Judgment of this Appellate Tribunal in the case of Santosh Wasantrao Walokar Vs. Vijay Kumar V. Iyer and another 2020 SCC Online NCLAT 128. 38. It is further submitted that when the Adjudicating Authority has allowed the prayer of keeping the windmill assets outside the liquidation process it was obvious that the sale proceeds of such assets would also be outside the liquidation process and would be dealt with as per direction in Civil Suit No 39 of 2019 alone. When such is the position, the lines "and therefore, at this stage, it is not possible to order distribution of ....
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....voke the bank guarantees. The bank guarantees have been encashed by the Respondent No. 2 on 06.09.2019. Thereafter, the Appellants have amended their plaint and sought the relief for return of total consideration Rs. 180 Crores i.e. the amount of bank guarantees as well as up front amount (25% of the sale consideration). 43. Whether the Appellants are entitled for refund of the consideration Rs. 180 Crores. To answer this issue HC has to examine whether in terms of the LOI and the agreement dated 01.04.2017 the sale of the windmill assets has been concluded as alleged by the Respondent No. 2 SBI. On behalf of the Appellants, counter affidavit was filed before the Adjudicating Authority in reply to the Application I.A. (IB) No. 1001/KB/2020. This affidavit is sworn by Rakesh Chandra Sinha who is the Associate vice president of the Appellant No. 1 and authorised signatory of the Respondent No. 2, we would like to refer the Para 6 of the affidavit which as under:- "6. With reference to ............................................................... I say that the rights of the respective parties over the windmill asset can only be determined upon adjudicating of C....
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....ime was essence of the contract (b) and that no objection certificate had been received (c) or that the sale could not be completed with the extended period (d) or that the contract stood frustrated in view of the proceedings before the NCLT (e) or that windmills could or could not be transferred have to be ultimately decided in the suit" 47. At this stage, we would like to refer the arguments of Ld. Counsels of Appellants advanced before the Adjudicating Authority. "5.1. Mr. Malay Kumar Ghosh, Ld. Sr. counsel appearing for Respondents No. 1 and 2 submitted that the sale of the windmill asset was never concluded and that the Respondent No. 3 SBI illegally invoked the bank guarantee. The rights of the respective parties over the windmill asset can only be determined upon adjudication of the Civil Suit No. 39 of 2019 by the Hon'ble Calcutta High court, since that court is in seisin of the same. 48. With the aforesaid 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 Authori....
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....tor as well as Corporate Creditors. Denial of approval may cause economic loss and in connection to the Creditors, Corporate Debtor as well as to the prospective buyers. Therefore, I am inclined to permit RP to complete the proposed sale transaction initiated by him. The Applicant prays for distribution of the proceeds of the sale amongst JLF, considering total claims admitted by the RP. Considering that Corporate Insolvency Resolution Process is in progress and not yet finalised it is not fair and just to allow the said prayer of the Applicant at this stage. It is to be decided upon finalization of the process by the RP. If it is allowed at present, it would cause great injustice to the Corporate Debtor as well as to the unsecured creditors. In view of the above said discussion, the prayer for appropriation and distribution of proceeds of sale is hereby rejected. In the result, the Application is allowed in part permitting the RP to complete the proposed sale transactions by executing the conveyance under the law in favour of the buyers." 52. According to the Appellants before passing of the aforesaid order they have informed SBI vide email dated 18.08.2017 that the co....
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....ed by the SBI. The Respondent Nos. 1 and 2 are entitled to refund the entire sum of Rs. 180 Crores alongwith interest thereon" 56. With the aforesaid assertion it is clear that in regard to the Application the Appellants have only objection that the amount of Rs. 180 Crores laying in the lien account of SBI may not be disbursed. Therefore, the Adjudicating Authority has not allowed the prayer for distribution of sale proceeds of the windmill assets and refused to grant the prayer (b) of the Application. 57. Now, we have considered the legal aspect of the matter. As per the Ld. Sr. Counsel for the Appellants in view of Section 36(4) of IBC. The Adjudicating Authority cannot direct exclusion of windmill assets from the liquidation estate. Section 36(4) provides that:- "The following shall not be included in the liquidation estate assets and shall not be used for recovery in the liquidation:- (a) assets owned by a third party which are in possession of the corporate debtor. 58. In this matter, the question is yet to be decided by the Hon'ble High Court of Calcutta whether the title of windmill asset has been passed to the Appellants. At this juncture, it is ....
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....ded and therefore belonged to the Corporate Debtor, as Mr. Malay Kumar Ghosh, Ld. Sr. Counsel appearing for them, had vehemently argued, then the claim would primarily have arisen against the Corporate Debtor, now represented by the Liquidator. Therefore, the Corporate Debtor ought to have been made a party to the Civil Suit. Such is not the case here." 62. It means 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. Issue No. (iv) Whether the order of corrigendum dated 23.03.2021 is without jurisdiction? 63. The controversy arises when the Ld. Adjudicating Authority passed the order on 18.03.2021 and partly allowed the Application filed by the Liquidator. After passing of the order, Ld. Adjudicating Authority on 23.03.2021 deleted the words from the clause (b) of the aforesaid order "and therefore, at this stage it is not proper to....