TaxTMI 
TaxTMI 
2023 (1) TMI 110
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....vocates for IRP. Mr. Nakul Dewan, Sr. Advocate with Mr. Ativ Patel, Mr. Anirban Bhattacharya, Mr. Sathvik Chandrasekharan, Mr. Rohan Naik, Mr. Harshad Vyas and Mr. Krishna S., Advocates for Applicant in I.A. No. 2623 of 2021. JUDGMENT ASHOK BHUSHAN , J. 1. Both Company Appeal (AT) Ins. No. 880 of 2021 as well as I.A. No. 2623 of 2021 has been heard together and are being decided by this common Judgment. 2. We need to first notice the facts giving rise to Company Appeal (AT) Ins. No. 880 of 2021 before we notice the details of I.A. No. 2623 of 2021 filed by SREI Equipment Finance Ltd. i. This Appeal has been filed by Indiabulls Housing Finance Limited challenging the Order dated 08.10.2021 passed by the National Company Law Tribunal, Mumbai Bench, Court No. I (the Adjudicating Authority) in I.A. No. 1921 of 2021. I.A. No. 1921 of 2021 was filed by Kalpataru Properties Pvt. Ltd. who has been arrayed as Respondent No. 1 in this Appeal. ii. On 28th June, 2004, a Memorandum of Understanding was executed between the Corporate Debtor, Shree Ram Urban Infrastructure Ltd. Vijay Infrastructure Technology Pvt. Ltd. ("VIT" in short) a sister concern of the Corp....
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.... v. A Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC in short) was filed by the Corporate Debtor-SREI Equipment Finance Ltd. before the NCLT Mumbai. On 06.11.2019, Section 7 Petition was admitted and Respondent No. 2 was appointed as Interim Resolution Professional. vi. On 08.10.2020, Hon'ble Supreme Court granted leave to the Respondent No. 2-IRP to bring on record in place of Provisional Liquidator in SLP No. 12495 of 2020. On 16.10.2020, the Hon'ble Supreme Court dismissed the said SLP filed by IRP on behalf of the Corporate Debtor-VIT and erstwhile director of the corporate debtor. vii. The Respondent No. 1 wrote to Respondent No. 2 -IRP about the right of the Respondent No. 1 in subject property requesting the Respondent No. 2 to perform its obligation. Respondent No. 2-RP addressed an email informing that subject property does not form part of the CIRP and it further acknowledged that amount of Rs. 75,30,00,000/- is entitlement of the Corporate Debtor. viii. I.A. No. 1921 of 2021 was filed by Kalpataru Properties Pvt. Ltd.- Respondent No. 1 before the adjudicating authority seeking a direction to Respondent No.....
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....h other amounts as are payable to Respondent No. 2 directly against reimbursement of expenses from the common pool as per the Orders dated 28 November 2019, 23 January 2020 and 28 July 2021 and (ii) the balance sum to Respondent No 1; ......Prayer "c" This Tribunal hereby direct and authorize Respondent No. 1 jointly with the Applicant to apply to the Hon'ble Bombay High Court for orders and directions in the said I.A. No. 243 of 2021 or by fresh application, including to direct Respondent No. 2 to comply with the orders of the Hon'ble Bombay High Court by removal of construction materials, equipment, sheds, porta cabins etc. lying on the Decreed Property and directions to remove the obstruction on the Applicant's sight of way on one of the three 12 metre-wide accesses to the Decreed Property; Hence, this Order with the aforesaid directions. Accordingly, I.A.-1921/2021 is hereby disposed of" x. Aggrieved by the Order dated 08.10.2021, Company Appeal (AT) Ins. No. 880 of 2021 has been filed by the Indiabulls Housing Finance Ltd. praying to set aside the Order dated 08.10.2021. 3. This Tribunal passed an Interim Order in Company Appeal (AT) Ins.....
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....length. What emerges is that in the proceedings before the NCLAT in Company Appeal (AT)(Insolvency) No.880/2021 an order was passed on 26.09.2022. The matter was being adjourned apparently repeatedly and that is what persuaded the appellant in the Civil Appeal before us to approach this Court. The counsel stated that the appellant before us being the appellant before the NCLAT seeks to withdraw the appeal on the deposit of certain amounts by respondent No.1. It is this what persuaded us to accept the request and dispose of even the Company Appeal pending before the NCLAT as nothing would survive in view of the withdrawal by the appellant itself. The present appellant before us is actually an intervener before the NCLAT. He seeks to make a grievance that the order passed by the NCLT which was in appeal before the NCLAT, he also had some grievances. On our query, he concedes that he did not file an appeal against the order of the NCLT. That being the position, his status as claimed before the NCLAT was of an intervener. Learned senior counsel submits that at least he should have been given liberty to be heard even as the status as an intervener before the N....
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....y of the intervention application within one week. In consequent to which, I.A. No. 2623 of 2021 was filed on 17.11.2021. 10. We have further noticed that SREI Equipment Finance Ltd. has filed MA No. 2064 of 2022 in C.A. No. 7050 of 2022 where order was passed on 09.12.2022 as quoted above. 11. Learned Sr. Counsel for the Appellant-Mr. Vikram Nankani has made a statement that Appellant may be permitted to withdraw the Appeal (C.A. (AT) Ins. No. 880 of 2021) which statement was also made before the Hon'ble Supreme Court as noted in its Order dated 14.11.2022. The prayer of the Appellant is opposed by Mr. Nakul Dewan, Sr. Advocate appearing for Applicant-SREI Equipment Finance Ltd. We thus need to notice the submission made by Learned Sr. Counsel for the Applicant in I.A. No. 2623 of 2021 as well as Learned Sr. Counsel appearing for the Appellant and Learned Counsel appearing for Respondent No. 1 on I.A. No. 2623 of 2021. 12. Learned Sr. Counsel appearing for the Intervener/Applicant submits that the SREI Equipment Finance Ltd. is a non-banking financial institution. The CIRP has already been initiated against the SREI Equipment Finance Ltd. pursuant to order dated 08.10.202....
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.... of the Madras High Court as well as Kolkata High Court and two Judgments of the Hon'ble Supreme Court which we shall consider hereinafter. 13. Mr. Vikram Nankani, Learned Sr. Counsel appearing for the Appellant refuting the submissions of Learned Counsel for the Applicant contends that Applicant has no right to oppose the withdrawal of Appeal filed by the Appellant. It is submitted that Applicant has not filed any Appeal challenging the Order dated 08.10.2021 hence no relief can be granted to the applicant in this Appeal. Applicant's status and right is only of intervener who cannot claim any relief for himself in the present proceedings. The arbitral award passed in favour of the Respondent No. 1 had become final upto the Hon'ble Supreme Court and Special Leave Petition in which the Resolution Professional of the Corporate Debtor was also brought on record, has been dismissed by Hon'ble Supreme Court. The Order passed by the Hon'ble Supreme Court dismissing the Appeal by Resolution Professional makes the arbitral award final between the parties and need to be implemented which cannot be objected by the Applicant. 14. Mr. Arun Kathpalia, Learned Sr. Counsel appearing for the....
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....d. The details of the award dated 29th August, 2016 and challenges made to the award before the Bombay High Court as well as Supreme Court, execution Application No. 134 of 2017 has already been filed by the Kalpataru Properties Pvt. Ltd. before the Bombay High Court for execution and assignment of the documents on behalf of the Corporate Debtor by officer appointed by the Bombay High Court against the balance sale consideration of Rs. 75.30 crores. In the Application prayer 'b' and 'c' was allowed by the Adjudicating Authority which has already been extracted in foregoing paragraphs of this judgment. The Order dated 08.10.2021 has been challenged by the Indiabulls Housing Finance Ltd. by filing an Appeal on 25.10.2021 that is within limitation prescribed under Section 61 of the Code. The limitation for filing an Appeal under Section 61 is 30 days. Admittedly the Applicant-SREI Equipment Finance Ltd. has not filed any appeal. It has filed only an Intervention Application No. 2623 of 2021 as noticed above. 18. Following are the two questions for consideration in this Appeal: i. Whether Applicant who has not filed any Appeal against the Order dated 08.10.2021, can claim f....
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....ted 08.10.2021 or to oppose the said order. But when the Company Appeal (AT) Ins. No. 880 of 2021 which has been filed challenging the Order dated 08.10.2021 is sought to be withdrawn, there is no proceeding in which intervener can be heard in opposition of the Order dated 08.10.2021. Proceedings under the IBC are proceedings in a special statute with timeline where limitation prescribed under the Act is for a purpose. The timeline which are prescribed in the IBC has to be given weight which principle has been reiterated by the Hon'ble Supreme Court in [2022 2 SCC 244] "V. Nagarajan Vs. SKS Ispat and Power Limited & Ors". Paragraph 28 of the Judgment, Hon'ble Supreme Court has laid down following: "In this background, when timelines are placed even on legal proceedings, reading in the requirement of an "order being made available" under a general enactment (Companies Act) would do violence to the special provisions enacted under IBC where timing is critical for the workability of the mechanism, health of the economy, recovery rate of lenders and valuation of the corporate debtor. IBC, as a prescriptive mechanism, affecting rights of stakeholders who are not necessarily par....
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....it by the plaintiff cannot end in the mere dismissal of the suit. Similarly in suits for specific performance and administration suits, withdrawal by the plaintiff should not necessarily lead to the dismissal of the suit, because some appropriate reliefs have to be given even in favour of the defendants. In a representative suit the Court need not dismiss the suit in spite of the withdrawal by the plaintiff, but it may add another person as a party in substitution of the plaintiff or transpose a defendant as plaintiff and direct the continuance of the suit. The case reported in 34 L.W. 548 is one of such cases. Such substitution was made in appeal. In a suit where a compromise was set up by which certain rights were alleged to have been acquired by the defendants with the consent of the plaintiff and the defendants produced the agreement in Court and applied for a decree in terms of the compromise, the Court declined to dismiss the suit by reason of the subsequent withdrawal of the suit by the plaintiff vide Tukaram Mahadu V. Ramchandra Madahu (1). The terms of O. 23 R. 3, Civil Procedure Code, are equally imperative. The Court if satisfied that the suit has been compromised, is bo....
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.... 08.10.2021 without filing an appeal and whether he could successfully oppose the Appellant from withdrawing his Appeal. The Judgment of Madras High Court (supra) thus is clearly distinguishable. 25. Now we come to another judgment of Calcutta High Court relied by the Applicant in the matter of "Lakhinder Samaddar & Ors. Vs. State of West Bengal & Ors." [2009 SCC OnLine Cal 2016]. In the above case, the Division Bench of the High Court was hearing an Appeal against the Order of Learned Single Judge. The appellant who had filed the Appeal before the Division Bench had filed an Application for impleadment in the writ petition which was dismissed. High Court considered the provisions of Order 23 of the CPC and made following observations in the Judgment: "It is also evident that the right of withdrawal is not a matter of course and it is absolutely Court's discretion and this can only be exercised when the Court records its satisfaction on two eventualities viz the suit (here writ petition) must fail by reason of some formal defect or that there are sufficient grounds for allowing the plaintiff to institute the fresh suit for the subject matter of the suit or part of the c....
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....aintain the Company Petition filed under Section 397, 398 and 399 of Companies Act, 1956. The facts of the case have been noted in paragraph 1-4 which are to the following effect: "1. These appeals have been preferred against the judgment and final order dated 24.11.2003 passed by High Court of Calcutta in Bhagwati Developers (P) Ltd. v. Peerless General Finance & Investment Co. Ltd. by way of which the High Court rejected the claim of the appellant to maintain the company petition filed under Sections 397 and 398 of the Companies Act, 1956 (hereinafter referred to as "the 1956 Act"). 2. The facts and circumstances giving rise to these appeals are that: Shri S.K. Roy (Respondent 2) issued and allotted 30,000 shares of Respondent 1 Company to himself and his relatives, and being the majority shareholder therein, hence acquired control over the respondent company. 3. Shri Ajit Kumar Cahtterjee (3.66% shares) and Shri Arghya Kusum Chatterjee (1.01% shares) filed Company Petition No. 222 of 1991 under Sections 37 and 398 of the 1956 Act, before the High Court of Calcutta with the consent of M/s. Bhagwati Developers Pvt. Ltd. (4.78% shares) (hereinafter referr....
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....sible and available to it in law. This Court disposed of the said appeals without expressing any opinion on merit." 29. The Appeal which was filed with the leave of the Hon'ble Supreme Court dated 26.04.1996 came to be dismissed by the Judgment of the Calcutta High Court dated 24.11.2003 which was assailed before the Supreme Court in the above case. In the above background of the facts, Hon'ble Supreme Court laid down following in paragraph 27 of the Judgment: "27. In our humble opinion, the Division Bench has gravely erred in taking the aforesaid view, as the same renders the order of this Court dated 26.04.1996 a nullity. This Court had passed the order after hearing the present respondents on the basis of suggestions made and concessions offered by them. It was in fact suggested by the Learned Counsel appearing on behalf of the respondents, that if the appellant prefers such appeals in the High Court even now, the respondents shall not raise any objection on the ground of limitation, and that they would not also object on the ground of the locus standi of the consenting shareholders. Thus, the same makes it clear the right of maintenance of an appeal against the judg....
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.... (2.3) During pendency of this suit, the original plaintiff A.C. Nataraja Mudaliar expired on 19.05.1988 leaving behind 3 sons and 4 daughters as his legal representatives, who were impleaded as plaintiff Nos. 2 to 8 in the suit. One of the sons of the original plaintiff namely, A. N. Umakanth (plaintiff No. 5- respondent No. 1 herein) was extended power of attorney by his siblings. (2.4) The suit was decreed ex parte in the year 1995 but later on, the ex parte decree was set aside and the suit was restored to the original number. However, in the interregnum, the respondent No. 1 A. N. Umakanth, the power of attorney holder of all the legal representatives of the original plaintiff, sold the suit property to three persons, namely Ramasamy, Dhanam Ramasamy and Venkatasubramanian (respondent Nos. 2 to 4 herein) through a registered sale deed dated 04.07.1995. In view of this transaction, upon restoration of the suit, the said purchasers moved an application (IA No. 135 of 2002) for being impleaded as plaintiffs. This application was allowed on 21.06.2002 and thereby, the said purchasers were allowed to join the suit as plaintiffs Nos. 9 to 11. (2.5) However....
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....xamined the record with reference to the law applicable, we are clearly of the view that on the facts and in the circumstances of this case, upon the existing plaintiffs seeking permission to withdraw under Order XXIII Rule 1 CPC, the defendant Nos. 3 to 6 have rightly been allowed to be transposed as plaintiffs under Order XXIII Rule 1-A read with Order I Rule 10 CPC and to continue with the suit, as originally filed against the defendant Nos. 1 and 2. 8. The law of procedure relating to the parties to a civil suit is essentially contained in Order I of the Code of Civil Procedure, dealing with various aspects concerning joinder, non-joinder and mis-joinder of parties. Rule 10 of Order I specifically provides for addition, deletion and substitution of parties; and the proposition for transposition of a party from one status to another, by its very nature, inheres in subrule (2) of Rule 10 of Order I CPC that reads as under:- "10(2) Court may strike out or add parties. - The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appeared to the Court to be just, order that the name of any party i....
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....nst the said codefendant in the given suit itself. The very nature of the provisions contained in Rule 1-A ibid. leaves nothing to doubt that the powers of the Court to grant such a prayer for transposition are very wide and could be exercised for effectual and comprehensive adjudication of all the matters in controversy in the suit. The basic requirement for exercise of powers under Rule 1-A ibid. would be to examine if the plaintiff is seeking to withdraw or to abandon his claim under Rule 1 of Order XXIII and the defendant seeking transposition is having an interest in the subject-matter of the suit and thereby, a substantial question to be adjudicated against the other defendant. In such a situation, the pro forma defendant is to be allowed to continue with the same suit as plaintiff, thereby averting the likelihood of his right being defeated and also obviating the unnecessary multiplicity of proceedings." 33. The above case does not help the applicant in the facts of the present case. In the above case also Defendant No. 3 to 6 were transposed as plaintiff as per provision of order 23 rule 1-A of the CPC. 34. The conditions for transposition being satisfied, the Hon'ble....
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....thdraw them, is possible only in two circumstances namely (a) when there are cross objection, which can independently proceed in terms of order XLI Rule 22(4) CPC; or (b) when a transposition takes place in terms of Order XXIII Rule 1A CPC. In this case, there were no cross objections and hence Order XLI Rule 22(4) has no application. There was also no transposition and hence 3rd parties cannot seek to continue the appeals; (iii) Proceedings for the framing of a Scheme for the administration of a Trust are no doubt proceedings in rem. Therefore, up to the stage of passing of the final decree approving a Scheme, even 3rd Parties are entitled to intervene and object to the whole or part of the Scheme. But once the final decree approving the Scheme is passed, any person objecting to the final decree should independently file an appeal and cannot ride piggyback on the appellants' shoulders. If they choose to do so they have to fall once the appellants withdraw the appeals; (iv). In any case it was the appellants before the High Court who have given an undertaking to this Court at the time of hearing of SLP(c) No. 27929 of 2012 that they shall not move the Charity Comm....