TaxTMI 
TaxTMI 
2022 (9) TMI 567
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....raying for issuance of directions by this `Tribunal', to the `Resolution Professional', to communicate the revised `Settlement Proposal' to the `Committee of Creditors'. Appellant's Submissions: 2. According to the Applicant/Appellant, she is in discussion with the `Home Buyers' and the `Committee of Creditors' for ensuring that, there exist a `Settlement', in order to ensure that the `Home Buyers' are not affected and further that, after taking inputs from the `Home Buyers', the `Settlement Proposal' was prepared, which was a `Revised' one. 3. It is represented by the Learned Senior Counsel for the Applicant/Appellant that the revised `Settlement Plan' will be crucial for the `Home Buyers' and the `Applicant', since it will end all the `Litigations' and even ensure that `Home Buyers' would get their apartments. In this background, according to the `Applicant/Appellant', the `Settlement Plan' is to be approved by the `Committee of Creditors', which will enable the `Applicant/Appellant' to resume the construction. 4. On behalf of the Applicant/Appellant, it is projected before this `Tribunal', that the `Applicant/Appellant', firstly, had communicated the `Settlement Prop....
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....r the Applicant/Appellant is that, the `Promoters' made all endeavours to ensure that a `Meeting' is organised between the `Resolution Professional' and the `Investor', on multiple occasions, which was not permitted by the Rs. 2nd Respondent/Resolution Professional'. But, the `Promoters', have made all attempts to ensure that update of due diligence process being carried on by the `Investor' was given to the Respondents time to time and also convene a Meeting with the Rs. 1st Respondent/Home Buyers Association'. 10. It is represented on behalf of the Applicant/Appellant that the `Promoters' had made several offers to establish their `Bonafides', including the aspect of paying the cost of `Committee of Creditors'. In reality, according to the Applicant/Appellant, the proposal of paying the cost of `Committee of Creditors' arose at Item No.5 in the 18th `Committee of Creditors' from the `Resolution Professional' which was accepted by the `Promoters'. The Rs. 2nd Respondent/Resolution Professional', after the `Promoters' gave confirmation for paying the `Corporate Insolvency Resolution Process cost', denied to accept and stated that the same may be collected by anyone `Committee of....
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....olution Professional' or the `Home Buyers'. If the I.A. No. 558 of 2022 is placed before the `Committee of Creditors', a `One Time Resolution' will be arrived at, as the `due diligence' is completed, the execution of `Documentation' with the `Proposed Investor' is the one that remains pending. 17. At this juncture, it is the submission of the Learned Counsel for the Applicant/Appellant that there exists a Rs.10 Crore Credit line, which has been provided by the `Promoter' and in addition, the `Undisputed Receivables' of Rs.145 Crore from the `Home Buyers' with Seven Lakhs sq. ft. of `Inventory', valued at Rs.525 Crore, will enable the completion of the `Project', and the `Promoters' will be able to interact with the `Committee of Creditors Members' and clarify all questions in the subject matter. 18. The Learned Counsel for the Applicant/Appellant refers to the Judgment of the Hon'ble Supreme Court of India in Civil Appeal Nos. 1811-1812 of 2022 between Vallal RCK v. M/s. Siva Industries and Holdings Limited and Ors., dated 03.06.2022, wherein at paragraph 21, it is observed as under: 21. "This Court has consistently held that the commercial wisdom of the CoC has been....
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.... of the CoC in its commercial wisdom. Nor is there a residual equity based jurisdiction in the Adjudicating Authority or the Appellate Authority to interfere in this decision, so long as it is otherwise in conformity with the provisions of the IBC and the Regulations under the enactment. 41. An effort was made by Mr Dushyant Dave, learned Senior Counsel, to persuade this Court to read the guarantees of fair procedure and non-arbitrariness as emanating from the decision of this Court in Maneka Gandhi vs Union of India (1978) 1 SCC 248 into the provisions of the IBC. The IBC, in our view, is a complete code in itself. It defines what is fair and equitable treatment by constituting a comprehensive framework within which the actors partake in the insolvency process. The process envisaged by the IBC is a direct representation of certain economic goals of the Indian economy. It is enacted after due deliberation in Parliament and accords rights and obligations that are strictly regulated and coordinated by the statute and its regulations. To argue that a residuary jurisdiction must be exercised to alter the delicate economic coordination that is envisaged by the statute would do ....
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....at what is enclosed along with the `Application' filed by the `Applicant'/`Appellant' is only a `Draft Settlement Agreement' with the `Home Buyers', which has not received the `Approval'/`Consent' of the `Home Buyers' and in particular, those forming part of the Rs. 1st Respondent/Association', who hold approximately 56% of voting share in the `Committee of Creditors'. 24. The Learned Counsel for the Rs. 1st Respondent/Association' refers to the Judgment of the Hon'ble Supreme Court of India dated 03.06.2022 in Vallal RCK v. M/s. Siva Industries and Holdings Limited and Ors. (vide Civil Appeal Nos. 1811-1812 of 2022, wherein at paragraphs 16 to 18, it is observed as under: 16. "It could thus be seen that Section 12A of the IBC was brought in the statute book on the basis of the said Committee's Report. It could be noticed that though by the Amendment Act No. 26 of 2018, the voting share of 75% of CoC for approval of the Resolution Plan was brought down to 66%, Section 12A of the IBC which was brought in the statute book by the same amendment, requires the voting share of 90% of CoC for approval of withdrawal of CIRP. It could thus clearly be seen that a more stringent p....
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.... (6) The Adjudicating Authority may, by order, approve the application submitted under sub− regulation (3) or (5). (7) Where the application is approved under sub−regulation (6), the applicant shall deposit an amount, towards the actual expenses incurred for the purposes referred to in clause (a) or clause (b) of sub−regulation (2) till the date of approval by the Adjudicating Authority, as determined by the interim resolution professional or resolution professional, as the case may be, within three days of such approval, in the bank account of the corporate debtor, failing which the bank guarantee received under sub−regulation (2) shall be invoked, without prejudice to any other action permissible against the applicant under the Code." 18. A perusal of the said Regulation would reveal that where an application for withdrawal under Section 12A of the IBC is made after the constitution of the Committee, the same has to be made through the interim resolution professional or the resolution professional, as the case may be. The application has to be made in Form−FA. It further provides that when an application is made after the issue of inv....
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.... on in respect of `Skylark Mansions Private Limited' (`SMPL'), the `ex-promoters' of `Skylark Mansions Private Limited' are not permitted to act on behalf of `SMPL', as it is only the `Resolution Professional' who can represent the `Skylark Mansions Private Limited'. Therefore, a plea is taken on behalf of the Rs. 1st Respondent' that in effect, `no binding' or `enforceable obligations' are undertaken by the `Skylark Mansions Private Limited' / `Promoters' under the `Draft Settlement Agreement'. 28. The other contention on behalf of the 1st Respondent is that, as per Clause 2.3 (b) of the `Draft Settlement Agreement', the completion of the `Project' under the `Proposed Settlement Plan' is premised upon the `Developer' ensuring mobilisation of a fund of Rs.50 Crore, from an `Investor' defined under Clause 1.1.4. as one `FOSUN' (vide Page 13 of IA 558 of 2022 in Comp. App (AT) (INS) No. 647 of 2020 (TA No.102/2021), but there is no timeline provided within which such `Investment' is to be mobilised. 29. Likewise, the Learned Counsel for the 1st Respondent by referring to Clause 7 of the `Draft Agreement' (Page 23 of I.A. No. 558 of 2022), points out that the said Clause purport....
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....eb of 2022. 34. The Learned Counsel for the Rs. 2nd Respondent/Resolution Professional' forcefully raises an argument that as `Fosun Property Holding Limited' and / or its `Group Entities' are Hong Kong based Entities, `Foreign Direct Investment' (`FDI') Approval is a necessary precondition and the said `Term Sheet' was subject to the `Foreign Direct Investment' (`FDI') Approval'. Besides this, ever since the signing of the `Non-binding Term Sheet' as on 29.12.2021, there is no communication of approval of `Foreign Direct Investment's Approval', on which, the entire transaction is rested. 35. The Learned Counsel for the 2nd Respondent/Resolution Professional contends that as on 01.09.2022, there was no call or a mail from `Fosun' assuring that the `Fosun' is a firm on the `deal' and there was no assurance given by `Fosun', in regard to the deposit of any `Bank Guarantee'. Moreover, no `Definitive Agreement' is signed between the `Applicant/Appellant' and `Fosun'. Although, more than eight months elapsed, after signing of the `Non-binding Term Sheet'. 36. Continuing further, it is represented on behalf of the 2nd Respondent/Resolution Professional, till date, the date of fi....
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....1 of the NCLAT Rules, 2016), the `Applicant/Appellant' has failed even to plead, leave alone to demonstrate any provision of the I & B Code, 2016 or Regulations made thereunder, in and by which, a prayer sought for, can be entertained by this `Tribunal'. 42. It is represented on behalf of the 1st Respondent/Association that the Section 7 Application in CP(IB) No.389/BB/2019 was filed by the Rs. 1st Respondent / M/s. Skylark Ithaca Buyers Welfare Association, Bengaluru (under Section 7 of the I & B Code r/w. Rule 4 of I & B (AAA) Rules, 2016), before the `Adjudicating Authority', (National Company Law Tribunal, Bengaluru Bench) as `Petitioners'/`Financial Creditors' against M/s. Skylark Mansions Private Limited (Holding company of ITHACA Estates Private Limited), Ulsoor, Bengaluru-42, and the same came to be admitted on 07.02.2020, by initiating `CIRP' against the `Corporate Debtor', an `Interim Resolution Professional' was appointed and `Moratorium' was declared, etc. 43. The `Applicant'/`Corporate Debtor' (`M/s. Skylark Mansions Private Limited'), Bengaluru-42, preferred a Review Application No. 02 of 2020 in CP(IB) No. 389/BB/2019, before the `Adjudicating Authority', and t....
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....nd Respondent/Resolution Professional is that, till the date of filing of I.A. No. 558 of 2022, there is no direct correspondence by `Fosun' to reach out the Rs. 2nd Respondent/Resolution Professional'. In fact, the `Fosun Property Holding Limited' and / or its `Group Entities' or `Hong Kong based Entities', `Foreign Direct Investment (`FDI') Approval', is a pre-requisite condition and ever since the signing of `Non-binding Term Sheet', as on 29.12.2021, there is no communication of the `Approval of Foreign Direct Investment Approval', on which, the entire transaction is rested. 50. Proceeding further, there is no word in the `Term Sheet' or any later correspondence to exhibit the relationship between `Ahuja Hive Private Limited' and `Fosun Property Holding Limited'. One Mr. Wei Jia in the capacity of `Chairman' of `Ahuja Hive Private Limited' for `Fosun Property Holding Limited' had signed the `Term Sheet' dated 29.12.2021. Even after more than 240 days from the date of execution of the `Term Sheet', according to the Rs. 2nd Respondent/Resolution Professional', there is no information about the status of the due diligence based on which, the whole `Investment Proposal' of `Fosu....
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....litate the `value of realisation' of `Potential Creditors', in the considered opinion of this `Tribunal'. No wonder, `Time' is the essence of the I & B Code, 2016. Without any simmering doubt, `Speed' is the `gist' of the Code. A timely `Liquidation' is preferred over endless `Resolution Proceedings', as opined by this `Tribunal'. Hon'ble Supreme Court's Judgments: 56. It is pointed out that in the Judgment dated 25.01.2019 (vide Writ Petition (Civil) No. 99 of 2018) of the Hon'ble Supreme Court of India in Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors., at paragraphs 52 & 53, wherein it is observed as under: 52. "It is clear that once the Code gets triggered by admission of a creditors petition under Sections 7 to 9, the proceeding that is before the Adjudicating Authority, being a collective proceeding, is a proceeding in rem. Being a proceeding in rem, it is necessary that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. A question arises as to what is to happen before a committee of creditors is constituted (as per the timelines that are specified, a committee of ....
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.... sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from the NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC." 58. It cannot be gainsaid in the Judgment of the Hon'ble Supreme Court of India dated 14.12.2021 (vide Civil Appeal No. 3325 of 2020) in E S Krishnamoorthy & Ors. Vs Bharat Hi Tech Builders Private Limited, wherein at paragraph 29, it is observed as under: 29. " The IBC is a complete code in itself. The Adjudicating Authority and the Appellate Authority are creatures of the statute. Their jurisdiction is statutorily conferred. The statute which confers jurisdiction also structures, channelizes and circumscribes the ambit of such jurisdiction. Thus, while the Adjudicating Authority and Appellate Authority can encourage settlements, they cannot direct them by acting as courts of equity." 59. Be that as it may, on a careful consideration of the divergent contentions advanced on the resp....