TaxTMI 
TaxTMI 
2022 (12) TMI 711
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....Adjudicating Authority"). Company Appeal (AT) Ins. No. 14 of 2022 has been filed against the Order dated 01.11.2021 passed in C.A. No. 1090 (PB)/2020 filed by the Monitoring Professional by which approval given to the Successful Resolution Applicant of the Resolution Plan vide Order dated 04.01.2020 has been cancelled and the amount of Rs. 20 Crore deposited by the Resolution Applicant has been forfeited and the matter was referred to the IBBI for taking appropriate action under Section 74(3) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "The Code"). Company Appeal (AT) Ins. No. 15 of 2022 has been filed against the Order of the same date 01.11.2021 in C.A. No. 719 (PB) 2020 and C.A. No. 1247 (PB)/2019. C.A. No. 719 (PB)/2020 was filed by the Successful Resolution Applicant (Appellant herein) praying certain directions with regard to the Order dated 04th January, 2020 approving the Resolution Plan. C.A. No. 1247 (PB)/2019 was also filed by the Successful Resolution Applicant (Appellant herein) seeking certain directions from the Adjudicating Authority. Both the above Applications have been rejected by the Order dated 01.11.2021. 2. Brief facts giving rise....
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....er on 25th September, 2019 and pronounced the Order on 04th January, 2020 approving the Resolution Plan. The Adjudicating Authority directed that Resolution Plan shall become effective from the date of the passing of the Order. Before inviting 'Expression of Interest', the Resolution Professional has filed an Application bearing C.A. No. 01/2018 under Section 66 of the Code seeking declaration that MoU dated 15.10.2018 be declared as fraudulent and possession of 05th Floor be restored. HBN Group (Respondent No. 3 in C.A. (AT) Ins. No. 15/2022) who is owning fifty percent shareholding of the Corporate Debtor has been claiming ownership of the fifth floor of the Hotel pursuant to MoU dated 15.10.2018. In view of the Resolution Plan, Appellant was required to make entire payment of Rs. 252 Crores within 30 days i.e. by 03rd February, 2020. The Appellant made the upfront payment of Rs. 20 Crores however failed to make payment of Rs. 232 Crores in terms of the approved plan. The Resolution Professional asked the Appellant to confirm payment of balance approved Resolution Plan vide Email dated 04th February, 2020. Appellant vide email dated 04th February, 2020 stated that Appellant is no....
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....(PB)/2020 was filed by the Monitoring Professional- Respondent No. 1 where following prayers have been made: "a. Allow the present application and b. Issue appropriate directions against the Respondent GP Global Energy Pvt. Ltd. for knowingly and willfully contravening the terms of the resolution plan for the corporate debtor as approved by this Hon'ble Adjudicating Authority vide Order dated 04.10.2020 and appropriate order be passed under Section 74(3) read with Section 235 (a) of the Code against the Respondent and c. Extend the period of the Corporate Insolvency Resolution Process by 60 days in terms of second proviso to Section 12(3) so that efforts could be made either for seeking resolution of the Corporate Debtor instead of putting the Corporate Debtor to liquidation and Committee of Creditors be reinstated to make another attempt for a fresh process for Resolution Plan for the Corporate Debtor. d. Pass such other or further order/Order(s) as may be deemed fit and proper in the facts and circumstances of the instance case." 6. The Adjudicating Authority heard the parties and vide Order dated 01.11.2021 allowed C.A. No. 1090(PB)/2020 by following Order: "I. We....
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....ion Applicant. The prayers made in the C.A. No. 719(PB) of 2020 and C.A. No. 1247 (PB) of 2019 were necessary to be granted for implementation of the plan. The amount which was accrued during the running of the hotel was required to be appropriated for the benefit of Successful Resolution Applicant/Monitoring Committee. 11. Learned Sr. Counsel-Mr. Gopal Jain appearing for the Respondent submits that Successful Resolution Applicant-the Appellant herein has submitted the Resolution Plan after fully knowing well the dispute pertaining to 05th Floor which were clearly mentioned in the Information Memorandum also. The Adjudicating Authority while considering the Application filed by the Resolution Professional for approval of the Plan categorically asked the Successful Resolution Applicant to file an Affidavit that the Plan is not subject to any dispute pertaining to 05th Floor which Affidavit was duly filed by the Appellant before the Adjudicating Authority dated 22nd August, 2019. The Resolution Plan submitted by the Appellant cannot be held to be any conditional plan. Successful Resolution Applicant has further filed an Additional Affidavit dated 18th September, 2019 clearly stating....
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....The Adjudicating Authority could not have reviewed or modified the plan hence the Applications filed by the Appellant were rightly rejected. It was in the knowledge of the Appellant that Application filed by the RP with regard to 05th Floor is pending consideration before the Adjudicating Authority. After receipt of the letter from the Axis Bank dated 30th November, 2018, clarification was sought from the Ex-Management by the RP. 14. Learned Counsel appearing for the Respondent No. 3 in Company Appeal (AT) Ins. No. 15 of 2022 has referred to Order passed by SEBI by which it is claimed that properties of the Respondent No. 3-HBN Diaries and Allied Ltd. including the 05th Floor of DMall has been attached. It is submitted that the Adjudicating Authority had directed the SEBI to detach the property by Order dated 30thApril, 2019 against which Order SEBI has filed Civil Appeal No. 5089 of 2019 which is pending consideration. 15. We have considered the submissions of Learned Counsel for the parties and have perused the record. 16. Before we consider the submissions of Learned Counsel for the parties, it is relevant to notice the details which are mentioned in the Information Memorandu....
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.... the parties above and transfer all benefits taken on account of such transfer by them, to corporate debtor." 17. With regard to certain transactions in respect to 2nd Floor which is also sought to be raised before us, certain updates were given in Information Memorandum which are to the following effect: "An update on Poker Lounge & Fun Pub. Poker lounge Some portion near the tea lounge was leased to M/s IQ Sports Management Pvt. Ltd. who are in the business of providing the sports and coaching facilities, on 10th April, 2017, for opening the Poker Lounge, for a period of 2 years at a monthly rental of Rs. 5 Lacs and an interest free deposits of Rs. 20 Lacs. The company paid the lease rental for month of May 2017 along with the security deposit. The Company could not, however, obtain the necessary licenses and approvals and since then their setup & fixtures are lying locked. The company has not been responding to the requests of the corporate debtor. We are in the process of getting the same evacuated though legal means, if not vacated by them at their own. Fun Pub. The corporate debtor had entered into an agreement with one M/s. HMS Relations Management Pvt. Ltd. ....
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....e Successful Resolution Applicant would not be liable for any such costs. However, the fifth floor will become part of hotel and will be under our possession. b. The court does not allow the application of creditors, then fifth floor remains with occupants. In that case the users would have to pay us Common Area Maintenance and other charges leviable as per understanding between us and the occupants. In either case the floor remains a part of the Hotel and will remain in the ownership of successful resolution applicant. That we as the successful applicant are free to approach the NCLT for any such waivers that we find would come as a stumble block in the turning around of this asset into a profitable venture. The outcome of our request will not in any ways effect the execution of Resolution Plan from our end. Thanking you, For GP Global Energy Pvt. Ltd. BarunBhanot Executive Director - Assets" 19. When we look into the details of Section 66 Application as contained in Information Memorandum extracted above as well as the Addendum-1 dated 16th March, 2018, it is clear that Appellant was well aware about the dispute pertaining to 05th Floor which was illegally ....
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....ere can only be two situations upon pronouncement of the Order C.A. 01(PB) of 2018: (a) The avoidance application may be allowed. (b) The avoidance application is dismissed. In both the situations the Successful Resolution Applicant is ready to proceed with the Resolution Plan as approved by the COC. In case the avoidance application is accepted, which is most likely, the Successful Resolution Applicant will get not only the ownership but also the possession of the 5th floor from HBN Diaries & Allied Limited in due course. I state that in case the avoidance application is dismissed the unauthorized occupant would continue to be in possession of 5th Floor. However, the ownership of the same would best in the Successful Resolution Applicant upon the implementation of the Resolution Plan. The Successful Resolution Applicant will be having right to take recourse under the common law to seek eviction and also damages, common area maintenance and other charges, which unauthorized occupant would become liable." 22. Further on 03.09.2019, the Adjudicating passed an order directing the Appellant to file an Affidavit that he shall make the payment of Rs. 232 Crores within 30 days of app....
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....there was no mention of the Sale Deed in the Information Memorandum nor the Appellant was made aware of the Sale Deed. We have looked into the photo copy of the Sale Deed and other materials which have been brought on record by the Appellant as Annexure 30 to the Appeal (C.A. (AT) Ins. No. 14 of 2022). The Resolution Professional after receiving the Letter dated 30th November, 2018, has sent Email on 15th December, 2018 to the Bank. The Resolution Professional has asked for clarification from the promoters and directors of the Corporate Debtor to enable the Resolution Professional to take appropriate steps as per the provision of the Code regarding the lien if any accrued on any assets of the Corporate Debtor. The above correspondence admittedly took place much after the plan was submitted by the Appellant. The Resolution Professional prepared Information Memorandum on the basis of materials available on record of the Corporate Debtor as well as the claims received in pursuance of the publication. There is no material on record to indicate that any claim was filed by the Company- K Sera Sera Digital Cinema Pvt. Ltd. claiming any rights on any part of the property of the Corporate D....
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....also referred to certain dispute pertaining to 2nd floor of the Hotel. We have already noted, details pertaining to Poker Lounge were already mentioned in the Information Memorandum. Lease of some portion of Tea Lounge to M/s. IQ Sports Management Limited was mentioned further reference of agreement with one M/s. HMS Relations Management Pvt. Ltd. for leasing out space to the extent of 8000 sq feet at a monthly rental of Rs. 11 lacs a month was mentioned. Subsequent proceeding in relation to aforesaid space shall have no bearing nor can be ground to refuse to implement the plan. The Adjudicating Authority being conscious of the fact that no Resolution Applicant can submit a conditional plan has directed by filing Affidavit by Resolution Applicant that plan is not conditional and further as noted above 1st Addendum dated 16th March, 2018 to the Resolution Plan clearly mentioned that the plan is not a conditional plan. 27. Hon'ble Supreme Court in [(2022) 2 SCC 401] "Ebix Singapore (P) Ltd. Vs. Educomp Solutions Ltd. (CoC)" laid down that Resolution Plan which has been approved, cannot be withdrawn by the Successful Resolution Applicant nor the plan can be modified. In paragraph 159....
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.... completeness of the information in this RFRP and obtain independent advice from appropriate sources, prior to making an assessment of the Company." 29. It was further laid down by the Hon'ble Supreme Court that Resolution Applicant is deemed to be aware of the code and its mechanism before he submits a Resolution Plan and consent to be bound by its underlying objective. In this context, reference to paragraph 156.5 of the above judgement is extracted as below: " 156. 5. This Court, in Maharashtra Seamless had denied relief to a resolution applicant who had sought to invoke Section 12-A to resile from its resolution plan. The nature of the statute indicates the clarity of its purpose -primacy of the interests of the creditors who are seeking to cut their losses through a CIRP. Traditional models sand understandings of equity or fairness that seek reliefs which are misaligned with the goals of the statute and upset the economic coordination envisaged between the parties, cannot be read into the statute through judicial interpretation. While parties have the freedom to negotiate certain commercial terms of the resolution plan to gain wide support, their ability to negotiate is ci....
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....t all in existence on the spot or is not identifiable / can be located on the spot, then neither sale deed can be executed of the non existing property nor purchaser can be handed over possession thereof. Not only this, Bank itself has made several requests to the Collector to demarcate the property auctioned, therefore, Bank ought to have persuaded the Collector to undertake the demarcation proceedings at the earliest. Petitioner should not be allowed to suffer adversely for the lapses on the part of the Revenue Authorities or the Bank. On the other hand, Bank should also not loose interest on the outstanding amount to be paid by the petitioner." 33. In the above case, what the High Court has observed that condition as is where basis does not mean that property may not be in existence at all. Present is not a case where property is not in existence at all. The above judgement in no manner helps the Appellant. 34. Another Judgement relied by Learned Counsel for the Appellant is "Llovegeet Dhuria Vs. State Bank of India and Ors." [2022 SCC OnLine P&H 2363] where the question which arose for consideration was as to whether secured creditor like SBI can suppress from persons intend....
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....tter dated April 30, 1998, a copy of which is at Annexure P6, and nothing to the contrary having been produced on the file, we find that the action of the respondent/Corporation in forfeiting the amount deposited by the petitioner was wholly arbitrary and unfair." 22. We see no reason to take any different view. We are also of the opinion that the Division Bench was justified in further concluding that in law the appellants/Corporation undoubtedly has the power to forfeit the earnest money provided there was a failure on the part of the respondent to make the deposit. The Division Bench, however, observed that the respondent was dealing with an instrumentality of state. He was entitled to legitimately proceed on the assumption that the appellants, a Statutory Corporation, an instrumentality of the State, shall act fairly. The respondent could not have suspected that he would be called upon to pay the amount of Rs.50 lakhs without being given even a proper passage to the Unit that he was buying. We are of considered opinion that the respondent had deposited the sum of Rs.2.5 lakhs on the clear understanding that there would be an independent approach road to the Unit. This is und....
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....he Corporate Debtor in which proceeding Information Memorandum was issued, publication inviting Expression of Interest where details of the property were all mentioned with all details as required by the Code and the Regulation framed thereunder. The Resolution Professional has brought on record the entire information memorandum running into 111 pages which contains all details regarding the assets, financial information, details of liabilities, details of certain litigation and ongoing investigations or proceedings were also mentioned in the Information Memorandum including provisional attachment order passed in the Enforcement Directorate. Information Memorandum is a comprehensive document containing all details and in view of the detailed information memorandum which is part of the record, it is not open for the Appellant to contend that certain information was not shared with the Appellant by the Resolution Professional which furnishes the basis for the Appellant not to implement the Resolution Plan. 40. Learned Counsel for Respondent in his submissions has time and again contended that there is no statement on behalf of the Appellant even as on date that Appellant is ready to....
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....ion all relevant facts, has rightly recorded a finding that Appellant is not interested in implementing the plan hence no error has been committed by the Adjudicating Authority in cancelling the approval of the Resolution Plan dated 04.01.2020. We thus do not find any error in the Order dated 01st November, 2021 allowing the C.A. No. 1090(PB)/2020 filed by the Monitoring Professional. After Order dated 01.11.2021, fresh Expression of Interest was issued in response to which the Resolution Plans were submitted. CoC noticed vide its meeting dated 04.01.2022 that highest offer now has come is of Rs. 142 Crores and major players in hotel industry are reluctant to submit Resolution Plan in view of the fact the dispute pertaining to fifth floor is sub-judice before the Adjudicating Authority. The CoC in its 19th CoC Meeting held on 04th January, 2022 noted the value which is offered by three Resolution Applicants consequent to fresh invitation for expression of interest. In the minutes, under the heading of "matters of discussion" following was noticed: "A. Matters of Discussion: 1) Noting of the minutes of 18th meeting of Committee of Creditors held on 30.12.2021. The Resolution....
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....even quashing of attachment notification issued by MPID by Hon'ble NCLT. Further the pandemic situation due to which the industry has been affected upon badly and again there is a grim situation worst than earlier waves. It was also stated that as per PRAs any property with a 3rd party occupant, fetches a diminished value due to the prospective litigations on the title or possession. The RP also explained the present market conditions and operational efficiencies during management of RP in pre-covid times wherein Highest Gross Operating Profit achieved during IRP period in 2019-20 @30.8% resulting in a cash surplus of around Rs. 20 Crs approx. from the revenues generated out of the operations of the CD in initial 1-2 years of his management in pre pandemic and during the pandemic situation whereupon the RP has managed to restrict the deficit to a great extent by various cost cutting measures. Post various discussions, the CoC members advised RP to again approach the major players of industry such Taj/Eros/Hyatt Group for seeking their inputs/offer/interest in submitting their resolution plan, in case the ongoing litigations of the CD are decided by the judiciary. Further the CoC....
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.... noticed that C.A. No. 01 of 2018 was listed for 04.02.2022. Learned Counsel for the Appellant has submitted that C.A. No. 01 of 2018 has not yet been decided as noted above due to non-decision of C.A. No. 01 of 2018, no major players are offering satisfactory valuation for the Corporate Debtor for resolving it. We are of the view that decision of C.A. No. 01 of 2018 is must before Corporate Debtor is finally resolved. We thus are of the view that National Company Law Tribunal, Principal Bench, New Delhi be requested to decide C.A. No. 01 of 2018 preferably within three months from the date copy of this judgement is produced, since non-decision of C.A. No. 01 of 2018 is creating hurdle in resolution of the Corporate Debtor. The object of IBC is to maximize the value of the Corporate Debtor but hurdle is being created in such objective due to non-decision of C.A. No. 01 of 2018. 46. One of the directions issued by the Adjudicating Authority in the Impugned Order dated 01.11.2021 allowing C.A. No. 1090(PB)/2020, was direction No. III which is to the following effect: " III. This matter is hereby referred to the IBBI for taking appropriate action in accordance with Section 74(3) of....