TaxTMI 
TaxTMI 
2022 (10) TMI 63
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....ef Facts : 2. The Appellant had filed an `Application', before the 'Adjudicating Authority' under Section 60(5) of the I & B Code, 2016 read with Rule 11 of the NCLT Rules, 2016 seeking reliefs including and mainly for issuance of direction to the Respondents, to make payment of a sum of Rs. 62,31,242/- towards the Applicant's Claim from the `Contingency Fund'. 3. It is seen that the 'Resolution Plan' was approved by the 'Adjudicating Authority' on 20.01.2020. From the 'Impugned Order' it is evident that one `Contingency Fund' of Rs. 7 Crore was kept in the 'Resolution Plan' `for a period of 6 months' `from the Date of Approval of the 'Resolution Plan' which expired, on 20.07.2020 and dismissed the `Application', which was filed before the 'Adjudicating Authority', only on 05.08.2020. 4. It is further ascertained from the 'Impugned Order' that the 'Resolution Professional' vide email dated 29.07.2019 had requested the 'Appellant' to submit supporting documents to establish the `Claims' and had also listed out the `Documents' required. However, the 'Appellant' had failed to furnish those documents and therefore the 'Resolution Professional' vide email dated 17.08.2019 stated tha....
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....cy Board of India' (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 mandates preparation of Information Memorandum. Such an Information Memorandum having been preferred, the reasoning of the 'Resolution Professional' that records were not available and access to SAP denied, therefore expressing inability to verify the `Claim' cannot be cited as `valid reasons' for `denying the legitimate dues of the Appellant'. 12. The Learned Counsel for the Appellant has assailed the 'Impugned Order' dated 10.06.2022 stating that when Contingency Fund was available, the 'Adjudicating Authority' ought to have directed the 'Resolution Professional' to accept the `Claims' of the 'Appellant'. 13. Hence, this `Appeal'. Respondent's Submissions: 14. The Learned Counsel for the Respondent No. 2 stated that the 'Resolution Professional' of the 'Corporate Debtor' was appointed vide order dated 13.12.2018. The 'Corporate Insolvency Resolution Process' of the 'Corporate Debtor' had commenced on 01.11.2018 and completed on 20.01.2020 with the 'Resolution Plan', submitted by the 'Respondent No. 3' getting approved by the 'Adjudicating Authority'. The 'Monitoring Committee' was forme....
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....vided by the 'Appellant'. b. The `Claims of the Appellant' included amounts for the period during 'Corporate Insolvency Resolution Process'. Rs.3,78,150/- was paid during 'Corporate Insolvency Resolution Process' on 05.12.2018 however the 'Appellant' did not adjust the `Claims' and the `Inflated Claims' were continued. c. Agreement between the 'Appellant' and the 'Corporate Debtor' relating to the nature of proposed services, payment terms, confirmation of the rate for the proposed services was not provided by the 'Appellant'. d. Proof of the `Goods' transported to the 'Corporate Debtor' like E-way Bills, Lorry Receipts, etc., and its corresponding acknowledgments by the 'Corporate Debtor' in those Receipts were also not provided by the 'Appellant'. e. Invoices raised on the 'Corporate Debtor' by the 'Appellant' with an acknowledgment by the 'Corporate Debtor' or the Authorized Representative or `any acknowledgment' of the `Debt', by the 'Corporate Debtor' or the Authorized Representative were not made available by the 'Appellant'. f. Copy of the Due Certificate or outstanding balance payable statement issued by the 'Corporate Debtor' was not supplied by the 'Appellant'. ....
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.... Respondent pointed out that in terms of the Judgment of Hon'ble Supreme Court passed in Ghanashyam Mishra and Sons vs Edelweiss Asset Reconstruction Company Limited and Ors. in Civil Appeal Nos. 8129 of 2019 dated 13.04.2021, on the date of approval of the 'Resolution Plan' by the 'Adjudicating Authority', all `Claims', which are not a part of the 'Resolution Plan', shall stand extinguished and no person shall be entitled to initiate proceedings in respect of a claim which is not a part of the 'Resolution Plan'. Relevant portion of the Judgment is extracted hereinbelow: "58. Bare reading of Section31 of the I & B Code would also make it abundantly clear, that one the resolution plan is approved by the Adjudicating Authority, after it is satisfied, that the resolution plan as approved by the CoC meets the requirements as referred to in sub-section (2) of Section 30, it shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders. Such a provision is necessitated since one of the dominant purposes of the I & B Code is, revival of the Corporate Debtor and to make it a running concern. 61.......The legislative intent of mak....
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.... 'SNJ Distilleries Pvt Ltd', is in a various Businesses, including the Brewery and Sugar business, as is that of the 'Corporate Debtor'. The Successful Resolution Applicant had taken over the 'Corporate Debtor' by offering a sum of Rs. 475.04 crores as the 'Resolution Plan' amount, which constituted 100% of the monies owed and due by the 'Corporate Debtor', to its Financial Creditors, VAT (Government) Tax Authorities and Operational Creditors, as on the date of submission of its 'Resolution Plan'. All monies payable to all the Creditors were paid and 'no monies due' under the 'Resolution Plan' are pending. In other words, there is no money available or due to be paid by the 'Successful Resolution Applicant', under the 'Resolution Plan', which can be utilised to entertain the belated unverified claims of the 'Appellant'. For this reason alone, the appeal is infructuous, ex facie, and deserves to be dismissed. Also, the 'Appellant' has been very late in filing the claims as well as this `Appeal' is also badly delayed. 27. Learned Counsel for the Respondent No. 3 submitted that the 'Corporate Insolvency Resolution Process' had commenced on 01.11.2018. As per `Regulation 12 of the CIR....
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....tion Professional' was right in rejecting claims of 'Appellants' with reasoning that the documents were not enough to establish their claim? (II) Whether the relief sought by the 'Appellants' for payment of Rs. 62,31,242/- towards claim from contingency fund admissible? Issue No.(I) Whether the 'Resolution Professional' was right in rejecting claims of 'Appellants' with reasoning that the documents were not enough to establish their claim? (a) The 'Appellant', raised an objection regarding the `reasoning' followed by 'Resolution Professional' in rejecting Claims, i.e., the unavailability of proper documents necessary to prove an `Operational Debt', claimed by the 'Appellant', as per Section 9(3) of I & B Code, 2016. Section 9(3) of I & B Code, 2016 reads as under: "9 (3) The operational creditor shall, along with the application furnish- (a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining a....
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....s referred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of approval under sub-section (1), - (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. [(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.]" [emphasis supplied] (d) This Tribuna....
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....ese reasons, NCLAT judgment must also be set aside on this count." 62. This aspect has been aptly explained by this Court in the case of Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra). 94. Therefore, in our considered view, the aforesaid provisions leave no manner of doubt to hold, that the 2019 amendment is declaratory and clarificatory in nature. We also hold, that even if 2019 amendment was not affected, still in light of the view taken by us, the Central Government, any State Government or any local authority 35 2018 SCC On Line Cal. 142 would be bound by the resolution plan, once it is approved by the Adjudicating Authority (i.e. NCLT). 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 subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by ....
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.... delay or to further extend the time. If the delay in the present case is condoned then the same will nullify the amendment made to Regulation 12(2)." (g) In present `Appeal', before this Tribunal, the 'Adjudicating Authority' approved the 'Resolution Plan' on 20.01.2020, and has taken umbrage of the ratio laid down by the Hon'ble Supreme Court of India in "Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited - (2021) 9 SCC 657". The Hon'ble Supreme Court of India had made the observations on the "Clean Slate Theory" and stated that "if additional liabilities are allowed to be imposed on the Successful Resolution Applicant after the approval of the plan, the entire plan would become unworkable". The Hon'ble Supreme Court had mentioned that such surprise `Debts' cannot be put upon the `Resolution Applicant', which were not laid down in its `Resolution Plan'. If that is allowed, the very calculations on which the Resolution Applicants rely to submit their Resolution Plans would go awry. (h) The Hon'ble Supreme Court of India had laid emphasize that the 'Successful Resolution Applicant' should start with a `clean slate', on the basis of its `....
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....counted for, the problem lies when Claims which are either inevitable or contingent ones. (d) Regulation 14 of 'Insolvency and Bankruptcy Board of India' (Insolvency Resolution Process for the 'Corporate Person') Regulations (IBBI) 2016 Chapter-IV- Proof of Claims, provides for determination of claim which are not precise and contingent and it is evident from the language of the code that it mandates the 'Resolution Professional' to make best possible estimate and create a provision for the abovesaid contingency fund in the 'Resolution Plan'. "Regulation 14- Determination of amount of claim. 14. (1) Where the amount claimed by a creditor is not precise due to any contingency or other reason, the interim resolution professional or the resolution professional, as the case may be, shall make the best estimate of the amount of the claim based on the information available with him. (2) The interim resolution professional or the resolution professional, as the case may be, shall revise the amounts of claims admitted, including the estimates of claims made under sub-regulation (1), as soon as may be practicable, when he comes across additional information warranting such revision."....