TaxTMI 
TaxTMI 
2022 (12) TMI 711
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.... Delhi (hereinafter referred to as "The 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....
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.... completion of the hearing, reserved the Order 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 04t....
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....t and proper by this Hon'ble Tribunal in the facts and circumstances of the case. 5. C.A. No. 1090 (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 Adju....
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....never mentioned about the transaction regarding the second floor in Information Memorandum, no breach of the Resolution Plan can be imputed to the Resolution 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 can....
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....plan and when plan was not complied, on 05th February, 2020, Resolution Professional filed C.A. No. 1090(PB)/2020. Appellant had delayed and derailed the CIRP. 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 recor....
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....Group to make good the revenue loss which has been quantified at Rs. 188.42 Cr along with interest. d) Pass an order to repudiate any third party rights in above part of the property, created by 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. W....
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.... would be asked by the court to vacate and all breakages and maintenance of this floor would be billed by Successful Resolution Applicant to the illegal occupants. The court may ask the illegal occupants to pay old compensation for loss of revenue to the creditors-in such case the monies would be handed over to the creditors and we as the 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. Than....
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.... 5th Floor of the Corporate Debtor the Resolution Professional has already moved an application bearing C.A.01(PB) of 2018 seeking declaration of the Memorandum of Understanding dated Octover 15, 2008 ("MoU") as fraudulent truncation in terms of Section 66(1) of the Code. I state that in the said Application the Order has been reserved by this Hon'ble Tribunal on December 13, 2018. I state that there 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 Re....
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.... Counsel-Mr. Virender Ganda for the Appellant has also raised the issue of sale deed executed by the Corporate Debtor in the year 2016 in favour of the Company-K Sera Sera Digital Cinema Pvt. Ltd. Learned Counsel has also referred to Letter of Axis Bank dated 30th November, 2018 which was sent to Resolution Professional for extension of lien on units in the 5th floor of building. Learned Counsel for the Appellant submitted that 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 m....
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....eating third party rights on the assets of the corporate debtor. We thus are of the view that on the basis of above submissions of Learned Counsel for the Appellant that sale deed executed in the year 2016 which was forwarded by Axis Bank on 30th November, 2018 to Resolution Professional, cannot furnish any ground to the Successful Resolution Applicant/Appellant to refuse to implement the plan approved on 04.01.2020. 26. Learned Counsel for the Appellant has 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 b....
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....rough the Resolution Professional and coordinated by PwC in order to conduct a due diligence of the business and operations of the Company" Similarly, Clause 1.13.6 also requires prospective Resolution Applicants to conduct independent investigations : "1.13.6 This RFRP does not purport to contain all the information required by the Resolution Applicant. The Resolution Applicant should conduct independent investigations and analysis and should check the accuracy, reliability and 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 pu....
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....placed reliance on the judgement of the Utrakhand High Court in Writ Petition No. 1651 of 2008 "M/s. Gurpreet Singh Ahluwalia Vs. District Magistrate" [2015 SCC OnLine Utt 37: (2015) 2 BC 675] where Hon'ble High Court has made following observation: "In my considered opinion, the condition "as is whereas basis" does not mean that property may not be in existence at all. It only means whatever the condition of the property on the spot is same shall be sold in the same condition. However, if property is not at 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 cas....
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....Petition was allowed by the High Court against which Haryana Financial Corporation filed the Appeal. Hon'ble Supreme Court in paragraph 21 and 22 laid down following: "21. Taking into consideration the aforesaid facts the Division Bench concluded as follows: "Taking the totality of circumstances into consideration, we are satisfied that the petitioner was not at fault. He was entitled to withhold the money as the respondents had failed to provide a proper passage. Still further, the factual position having been admitted in the letter 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 d....
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....d of defect in title or description of the property. The case of the Official Liquidator selling the property of a company in liquidation under the orders of the Court is altogether different from the case of an individual selling immovable property belonging to himself. There is, therefore, no merit in the application made on behalf of Triputi that there should be a diminution in price or that it should not be made liable to pay interest on the sum of Rs. 1 Crore 98 Lakhs." 39. Present case is also a case where proceeding for insolvency has commenced against the 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 Enfor....
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....redictability in the insolvency resolution process." 41. In the present case, the CIRP initiated on July 3, 2017, the Resolution Plan was approved by the CoC on 27th March, 2018 which plan was approved by the Adjudicating Authority on 04th January, 2020. Under the Resolution Plan, the amount was to be paid by the Appellant/SRA within 30 days from approval of the Order. The total plan valued was Rs. 252 Crores out of which only Rs. 20 crores as upfront payment was made by the Appellant and amount of Rs. 232 Crores have not been paid so far. The Adjudicating Authority after taking into consideration 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....
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....tiations to be undertaken with all the three RAs and they may consider for change of RP looking to the present status of the resolution process of CD. Thereafter, detailed discussions were held, whereupon the undersigned apprised the CoC that post discussions with PRAs, it was observed that PRAs were apprehensive of the overall present status affected by the pending litigations of CD such as 5th Floor matter, for which order was reserved by the Hon'ble NCLT but wasnot pronounced for long, which is out of the control of RP. RP had done sincere efforts which resulted in landmark judgment for removal of attachments by ATPMLA and 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 achieve....
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....1.2022 makes it clear that CoC itself was not satisfied with the value now offered by three prospective Resolution Applicants which was said to be unacceptable. CoC categorically noticed that due to non-disposal of C.A. No. 01 of 2018, no major player is showing interest. 45. We may at this stage notice few facts pertaining to C.A. No. 01 of 2018. We have already noticed the prayers made in C.A. No. 01 of 2018. C.A. No. 01 of 2018 was twice reserved for Orders on 13.12.2018 and 25.11.2019 but orders were not delivered. Again on 09.01.2020, NCLT listed the C.A. No. 01 of 2018 for rehearing. Subsequently, Interim Order was passed in Company Appeal (AT) Ins. No. 14 of 2022. We have 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 ....