TaxTMI 
TaxTMI 
2022 (5) TMI 715
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....lvency) No. 954 of 2021 has been filed against the order by which C.A. No. 2357/2019 and C.A. No. 1170/2019 filed by the Appellant have been disposed of. Company Appeal (AT) (Insolvency) No. 1011 of 2021 has been filed against the order by which C.A. No. 1246/2019 filed by the Monitoring Professional - Respondent No. 1 has been disposed of. The Appellant aggrieved by the aforesaid orders have come up in these Appeals. 2. We need to notice the facts and sequence of events giving rise to the impugned orders for deciding these two Appeals. M/s Allied Strips Ltd., the Corporate Debtor took to insolvency resolution process on an application filed by the Financial Creditor M/s Oriental Bank of Commerce under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'IBC). In the Corporate Insolvency Resolution Process (CIRP), the Appellant submitted a Resolution Plan on 19.10.2018. The Resolution Plan of the Appellant offering total financial plan of INR 233.71 Crores was approved by the Committee of Creditors (CoC) on 27.12.2018. By order dated 30.05.2019, application filed under Section 31 of the IBC by the Resolution Professionals for approving Resolution....
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.... banks for processing the sanctioning of the fund to the SRA. On 07.09.2019, the Appellant further paid an amount of INR 23.00 Crores. In the meeting dated 07.10.2019 of the Monitoring Committee, where several issues of concerns raised by the SRA were considered. Demarcation of land owned by the Corporate Debtor, inventorisation of legal documents pertaining to such land was noticed and it was recorded that Monitoring Committee will extend its full cooperation in this regard. It was further discussed and agreed that considering various processes and compliances to be made, the Monitoring Professional may consider to move an application before the Adjudicating Authority for seeking additional time for implementation of Resolution Plan. However, the Monitoring Professional - Respondent No.1 did not file application before the Adjudicating Authority seeking extension of time. On 29.10.2019, the Appellant filed C.A. 2357/2019 praying for extension of time period for implementation of the Resolution Plan. On 08.11.2019, the Appellant further paid an amount of INR 8.25 Crores to prove its bonafide. Total payment by the Appellant as on 08.11.2019 was INR 70.25 Crores. On 03.12.2019, the A....
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....order was passed: "ORDER (Through Virtual Mode) 07.12.2021: Learned Counsel for the Appellant submits that the Appellant is still desirous of implementing the 'Plan' and to deposit the balance amount of Rs. 165.31 crores in 14 working days. He submits that the Appellant should also be permitted to have a visit of the land in question to find out as to whether the encroachment has been removed as has been submitted by the 'Resolution Professional' in his affidavit dated 04.12.2021 before this Court. We permit the Appellant to have visit of the land in question after intimation of the date of the visit to the 'Resolution Professional' as well as to the Sub-Divisional Officers of the area concern. The visit shall be made within 14 (fourteen) working days after due intimation. We are of the view that Sub-Divisional Officer concerned be also present on the date as intimated by the Appellant to assist the Appellant to see the status of the encroachment, if any and to do the needful. Learned Counsel for Respondent No. 2 Shri Dinkar Singh submits that the interest be also allowed, which submission we are not considering as on date. Learned Counsel for the A....
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.... counsel for the Appellant submitted that the said Report dated 10.04.2022 was obtained by Respondent No. 1 without informing or notice to the Appellant. 7. We have heard Shri Virender Ganda, learned senior counsel appearing for the Appellant, Shri Arun Kathpalia, learned senior counsel with Shri Abhishek Anand appearing for Monitoring Professional (Respondent No.1) and Shri Dinkar Singh, learned counsel appearing for Committee of Creditors (Respondent No.2). 8. Learned counsel for the Appellant submits that present is a case where Appellant has been ready and willing to implement the plan and Appellant till 08.11.2019 had already made payment of INR 70.25 Crores to the Corporate Debtor and was always ready and willing to make balance payment. The Respondent No. 1 did not cooperate with the Appellant in removing the difficulties in implementation of the plan. Visit to the factory premises was denied to the Appellant on 06.06.2019 i.e. within six days from approval of the Resolution Plan and Appellant had to file I.A. 1170/PB/2019 seeking direction to allow the Successful Resolution Applicant to have physical inspection of the plant and machinery of the Corporate Debtor, which....
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....nt made by the Appellant i.e. INR 70.25 Crores in the year 2019 itself. C.A. 2357/2019 has been disposed of without considering any of the grievances of the Appellant and the order is completely a non-speaking order with no judicious consideration at all. The Adjudicating Authority also committed error in observing that the Tribunal has no jurisdiction to amend the approved Resolution Plan. The Appellant was only asking for extension of time for payment, there was no prayer for amending Resolution Plan. It is submitted that the Adjudicating Authority itself has not considered its order dated 03.09.2019 where revised payment timeline was agreed by the Adjudicating Authority which was also substantially complied by the Appellant. 9. Shri Virender Ganda, learned senior counsel challenging the order passed by the Adjudicating Authority in C.A. 1246/2019 submits that no reasons have been given in the order of the Adjudicating Authority as to why directions for initiation of prosecution has been issued. Neither there is any consideration in the order nor is any finding that present a case for initiation of any prosecution. In view of the order dated 03.09.2019 passed by the Adjudicati....
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....ppellant having failed to deposit the amount within 30 days from the date of approval of the plan is not entitled for possession of the assets of the Corporate Debtor. 12. Shri Virender Ganda, in his rejoinder, submits that Application 2357/2019 was filed by the Appellant on 29.10.2019 where issue of encroachment was raised and no reply was filed by Respondent No. 1 to the application. The letter written by Monitoring Professional on 30.12.2019 itself indicate that there was encroachment and Sub-Divisional Magistrate was requested to carry on demarcation. The Inspection Report of Sub-Divisional Officer (Civil) and Tehsildar dated 10.04.2020 obtained by the Respondent No. 1 was surreptitiously placed on record without filing any affidavit and without serving copy of the said report. The submission raised by the Appellant that immovable property is occupied came to be proved by Sub-Divisional Officer Report dated 21.12.2021, which was submitted to this Tribunal in pursuance to order dated 07.12.2021. The claim of the Respondent No.1 as made on 04.12.2021 that there is no encroachment has been proved to be false. Respondent No. 1 never filed any reply to C.A. No. 2357/2019 before t....
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....sit. 15. The Application C.A. 1170/2019 was filed by the Appellant in the above background. The prayer made in C.A. 1170/2019 are to the following effect: "a) To allow the Successful Resolution Applicant to have physical inspection of the plant and machinery of the Corporate Debtor. b) To supply audited balance sheets and statutory filings of the Corporate Debtor uptill May 30, 2019. c) To obtain no due certificate from statutory authorities and other operational creditors after distribution of their dues arising/ arisen against the Corporate Debtor uptill May 30, 2019 and to satisfy all such demand and notices received by the Respondent No. 1/ the Corporate Debtor. d) To restore the essential supplies such as electricity/ power to the plant of Corporate Debtor after distributing the dues of Power Utility." 16. It is also relevant to notice that the Appellant made request to the Monitoring Committee to permit the Appellant to make payment in a revised time schedule. The Monitoring Committee held its meeting on 29.08.2019, in which revised schedule for payment of the amount was decided and the lenders recorded their no objection. The Adjudic....
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....no dues certificate after receipt of balance payment along with interest due. 4. Visits to plant may be allowed to the officials and authorized representatives of the lending bank for processing the sanction to fund SRA. Such visit may be made at the premises/factory of the corporate debtor for the purpose of valuation of the assets of the CD or anything connected to sanctioning of funds. 5. All the cost being incurred, or which may be claimed in future, including but not limited to, salary of the employees, fee of Monitoring Professional etc. Pertaining to be period after the date of approval of resolution plan by the AA vide its order dated 30.05.2019 would be borne by SRA. The same was confirmed by the representative of SRA present at the meeting. 6. The amount paid by the SRA against the revised payment plan i.e. Rs.28.50 crores and post dated cheques be refundable in case the payment plan be not allowed/ approved by the Hon'ble NCLT. 7. In case of any default on the part of SRA in remitting the amount payable as approved by the Hon'ble NCLT through this revised payment plan, the amount deposited till the date of default shall stand forfeited....
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....eir e-mail dated 05.10.2019 The Chairman apprised the members of the Committee that MP has received an e-mail dated 5th October, 2019 from SRA regarding following points of concerns of SRA which requires consideration and deliberation by the members of the committee. 1. Process of handing over and inventorisation (itemized) of the Fixed assets, other than Immoveable Property, owned and possessed by Allied Strips Limited; On the request of MP, the representative of SRA gave a brief on the requirement and requested the Committee that process of handing over the CD be discussed or clarified to them being the way forward. In response, the MP gave an overview on the status of assets of CD. Adding to it he stated that a car of CD is in possession of Petrol Pump owner, Vishal Filing Station, which had been handed over to him by exmanagement of CD against their dues and after following up & explaining the present status of resolution to Petrol Pump owner, the said person expressed their intention to meet the SRA. The SRA agreed to meet and requested to share the contact details of him. Thereafter, various discussions were held and it was decided that MP and SRA m....
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.... noted above. We need to notice payers in C.A. No. 2357 of 2019. In C.A. No. 2357/2019, the Appellant pleaded that they came to know that there were certain issues with regard to title of some piece of land and possession of another piece of land. Several other issues were also mentioned and pleaded. Following prayers have been made in the C.A. 2357/2019: "i) To extend the time period for Implementation of the Resolution Plan Thirty days beyond the date when the Respondents are able to satisfy the Lending Bank; ii) Pass any such other order(s) as may be deemed fit and proper by this Hon'ble Tribunal in the facts and circumstances of the case." 21. Now, we come to the impugned order dated 01.11.2021 passed by the Adjudicating Authority in C.A. No. 2357/2019 and 1170/2019. The discussion pertaining to C.A. 2357/2019 is from Para 1 to Para 6. In those paragraphs only the contents of the application and contents of an additional affidavit filed by the Appellant has been noticed. Under heading C.A. 1170/2019 para 1 to 7 are the pleadings of the applicant. Para 8 deals with reply of the Respondent. In Para 9 of the judgment, the Adjudicating Authority has referred to....
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.... only noticed that Appellant has deposited an amount of INR 10.55 Crore. All subsequent events including deposit of amount INR 70.25 Crore by the Appellant which were brought before the Adjudicating Authority by filing additional affidavits were not even noticed by the Adjudicating Authority. In this context the affidavit filed by the SRA dated 02.08.2021 which was filed in C.A. 2357/2019 is referred to, where details of payment of INR 70.25 Crores as well as possession of 7.34 Acres of land has been specifically mentioned in para 3 and 4, which is to the following effect:- "3. I state that the Successful Resolution Applicant is only suffering party due to the delay in implementation, as the Successful Resolution Applicant has already infused funds of Rs. 70.25 Crores and the process of implementation is not completed for no fault, whatsoever, on account of the Successful Resolution Applicant. That, the summary of the payments made by the Successful Resolution Applicant for successful implementation of the Resolution Plan is as under: S.N Date of the Payment Amount 1. June 10, 2019 10.50 Crores 2. August 29, 2019 28.50 Crores 3. September 7....
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.... a recent judgment of this Appellate Tribunal dated 20.01.2022 in Company Appeal (AT) (Ins.) No. 1038 of 2021, 'Tricounty Premier Hearing Service Inc vs. State Bank of India & others', which was filed against the order in which the application of the Successful Resolution Applicant for extension of time for making deposit was rejected by the Adjudicating Authority which came to be questioned before this Appellate Tribunal. One of the arguments raised before this Tribunal was that in view of the judgment of Hon'ble Supreme Court in 'Ebix Singapore Private Limited vs. CoC Educomp', the Adjudicating Authority cannot even extend the time for making payment. This Tribunal in Para 22, 23 and 24 laid down following: "22. We may also refer to the judgment of the Hon'ble Supreme Court in Ebix Singapore Private Limited (supra) relied by learned Senior Counsel for the State Bank of India in support of his submission. In Ebix Singapore Private Limited (supra), following conclusion has been recorded by the Hon'ble Supreme Court in paragraphs 202, 203 and 204: "202 The residual powers of the Adjudicating Authority under the IBC cannot be exercised to create procedural remedies ....
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....ive policy. 204 In the present framework, even if an impermissible understanding of equity is imported through the route of residual powers or the terms of the Resolution Plan are interpreted in a manner that enables the appellants' desired course of action, it is wholly unclear on whether a withdrawal of a CoC-approved Resolution Plan at a later stage of the process would result in the Adjudicating Authority directing mandatory liquidation of the Corporate Debtor. Pertinently, this direction has been otherwise provided in Section 33(1)(b) of the IBC when an Adjudicating Authority rejects a Resolution Plan under Section 31. In this context, we hold that the existing Company Appeal (AT) (Insolvency) No. 1038 of 2021 29 insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC approved Resolution Plans, at the behest of the successful Resolution Applicant, once the plan has been submitted to the Adjudicating Authority. A Resolution Applicant, after obtaining the financial information of the Corporate Debtor through the informational utilities and perusing the IM, is assumed to have analyzed the risks in the business of the Corporate Deb....
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....Counsel for the State Bank of India that Adjudicating Authority has no jurisdiction to extend the time for complying the financial obligations in the Resolution Plan." 26. This Tribunal rejected the submission that the Adjudicating Authority has no jurisdiction to extend the time for complying the financial obligations in the Resolution Plan. This Tribunal ultimately after considering all facts and circumstances allowed the Appeal and granted 30 days' time to the Appellant to make the payment of the balance amount. 27. The observations in Para 13 about behaviour as demonstrated by SRA so far that of non-seriousness towards the laws and that it defaulted on its obligations is also made without considering all facts and circumstances. The Adjudicating Authority not even was aware of the payments of INR 70.25 crores which have been made till 08.11.2019, when the application was rejected on 01.11.2021, where under the orders of the Adjudicating Authority itself the payments were made by the Appellant. 28. We, thus, are of the opinion that the Adjudicating Authority has rejected both the C.A. Nos. 2357/2019 and 1170/2019 without considering any of the grievances and issues rais....
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....ubstance having been found in the issues raised, the Monitoring Committee decided that Respondent No. 1 - Monitoring Professional may consider to file an application for extension of time before the Adjudicating Authority but Respondent No. 1 did not file any application and application for extension of time was filed by the Appellant on 29.10.2021. The Application, C.A. No. 2357/2019 in which the Appellant has prayed for extension of time remained pending from 29.10.2019 to till passing of order dated 01.11.2021. The fact that application could not be decided by the Adjudicating Authority for a long period of two years, the Appellant cannot be saddled with interest liability of the aforesaid period. We, thus are of the view that the Appellant shall be liable to pay interest @11% p.a. on the balance amount from 30.05.2019 i.e. the date on which plan was approved by the Adjudicating Authority till 28.10.2019 and thereafter w.e.f. 02.11.2021 till the payment is made by the Appellant. The Appellant themselves shall calculate the interest liability @11% simple interest for the aforesaid two periods and deposit the amount in the account of the Corporate Debtor as hereinafter we shall di....
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.... approved resolution plan is binding under section 31, knowingly and wilfully contravenes any of the terms of such resolution plan or abets such contravention, such corporate debtor, officer, creditor or person shall be punishable with imprisonment of not less than one year, but may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both." 33. For offence under Section 74(3), there is to be pleading that SRA or any person knowingly or willfully contravened any of the terms of the Resolution Plan. In entire application neither any pleadings nor averments have been made that SRA has willfully and knowingly contravened the terms of Resolution Plan. 34. The Adjudicating Authority in its order dated 01.11.2019 has not even recorded a prima-facie satisfaction that there is any material to prove any willful contravention of the plan by the Successful Resolution Applicant. The Applicant's averment in application in Para 21 is that even after lapse of 30 days from the date of approval of the plan Appellant has filed to adhere to the terms of the Resolution Plan. Para 21 and 22 of the Application are as follows: ....