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2023 (3) TMI 72
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....been filed by the Housing Development Finance Corporation Ltd. Both having been heard together are being decided by this common judgment. We need to notice the facts and sequence of events giving rise to I.A. No. 2966 of 2020 as well as Company Appeal (AT) No. 177 of 2022: (i) Housing Development Finance Corporation Ltd. (hereinafter referred to as 'HDFC Ltd.') made an offer to sanction a loan of Rs.400 crores to IL&FS as a lease rental discounting transaction. The repayment of the said facility was to be from the cash flows generated from the use of the TIFC property being let out by the Respondent No.1 which cash flows were to be and are assigned in favour of the Appellant. (ii) In pursuance of the said offer, Master Facility Agreement was executed on 25.06.2018 extending facility of Rs.400 crores to the IL&FS by the Appellant. Assignment and Administration Agreement dated 25.06.2018, Escrow Account Agreement dated 25.06.2018 and Power of Attorney dated 25.06.2018 were executed. (iii) This Tribunal in Company Appeal (AT) No. 346 of 2018 passed an order on 15.10.2018 staying the institution or continuation of suits or any other proceedings by any party o....
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.... (ii) This Hon'ble Tribunal be pleased to direct Infrastructure Leasing and Financial Services Limited to make necessary disclosures to the intending purchasers of the property, being The IL&FS Financial Center, situated at Plot No 22, G Block, Bandra Kurla Complex, Bandra East, Mumbai - 400 051, in respect of the rights, title and interest of the Applicant over the aforesaid property; (iii) Pending the hearing of the present Application including Interlocutory Application Nos. 2262 of 2020 and 2264 of 2020, by way of interim and / or ad - interim relief, this Hon'ble Tribunal be pleased to stay the operation and implementation of the advertisement, notice inviting expression of interest along with the expression of interest issued by Infrastructure Leasing and Financial Services Limited in so far as it seeks to sell the right, title and interest of the Applicant in the property being The IL&FS Financial Center, situated at Plot No 22, G Block, Bandra Kurla Complex, Bandra East, Mumbai - 400 051 and annexed as Annexure-O- Colly hereto; (iv) This Hon'ble Tribunal be pleased to grant exparte interim and/or ad-interim relief in terms of Prayer (iii); ....
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....me shall be reversed to borrower which exercise shall be completed within the period of one month from today with due intimation in writing to the IL&FS. (iii) All Applications being I.A No. 2196 of 2020; 1.A No. 2262- 2263, 2264-2266 of 2020 and I.A No. 2330-2331, 2332-2333 of 2020 are disposed of accordingly. (xvii) In pursuance of the order dated 08.03.2022 of Hon'ble Justice (Retd.) D. K. Jain, the application was filed before the Adjudicating Authority being CA No. 248/MB/C-I/2022 seeking approval of the asset sale of TIFC property as approved by Hon'ble Justice (Retd.) D. K. Jain on 08.03.2022. (xviii) The order passed by this Tribunal dated 23.09.2022 in the application, as noticed above, was challenged by IL&FS in Civil Appeal No. 4708/2022, in which appeal the Hon'ble Supreme Court passed an order on 29.07.2022 staying the judgment and order of this Tribunal dated 13.05.2022. (xix) An application CA No. 248/MB/C-1/2022 filed for the approval of the Tribunal as per Revised Resolution Framework approved by this Tribunal by judgment dated 12.03.2020 came to be heard by the Adjudicating Authority and on 25.08.2022, order was reserved. The HD....
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....earing for the Appellant challenging the order of the Adjudicating Authority dated 23.09.2022 submits that the Adjudicating Authority has passed the order dated 23.09.2022 in violation of principles of natural justice. The Appellant to whom the IL&FS has already assigned the future rent receivables from the asset in question to secure the facility of Rs.400 Crores could not have sold the asset without impleading the Appellant, who was a necessary party. It was duty of the IL&FS to ensure that the HDFC is impleaded in the application. The order passed in the application without hearing the necessary party is liable to be set aside. Application was filed by the IL&FS seeking the approval of sale of TIFC property before the NCLT, in which rights of HDFC were duly recognized by NCLAT's order dated 13.05.2022. It is further submitted that mere stay of order dated 13.05.2022 passed by this Tribunal by the Hon'ble Supreme Court on 29.07.2022 does not wipe out the order of this Tribunal and the interim order only makes the order inoperative. The NCLT ought to have considered the effect of order dated 29.07.2022 as well as order dated 13.05.2022 by this Tribunal while adjudicating the CA. I....
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....966/2020 pending before this Tribunal during the pendency of CA No. 248/MB/C-1/2022 before the Adjudicating Authority. The order of the Adjudicating Authority dated 23.09.2022 is in line with the direction of this Tribunal to complete the resolution process expeditiously. The IL&FS initiated the process of sale of the TIFC property in October, 2020, in terms of the Resolution Framework approved by this Tribunal for resolution of debt of the IL&FS group vide order dated 12.03.2020. This Tribunal having not granted any interim order in I.A. No. 2966 of 2020, the process was continued and received approval of Hon'ble Justice (Retd.) D. K. Jain on 08.03.2022 and also been subsequently approved by the Adjudicating Authority on 23.09.2022. The Appellant has already filed its claim before the Claims Management Consultant for a sum of Rs.393,65,98,221/- which shall be dealt with as per the Revised Resolution Framework approved by this Tribunal. Both the Appeal and I.A. No. 2966 of 2020 deserve to be dismissed. 4. We have heard learned counsels for the parties and perused the record. 5. From the facts noticed above, it is clear that IL&FS has assigned receivables form TIFC property (p....
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....ties whose rights are directly affected are the necessary parties to a writ petition to quash the order of a tribunal. As we have seen, a tribunal or authority performs a judicial or quasi- judicial act after hearing parties. Its order affects the right or rights of one or the other of the parties before- it. In a writ of certiorari the defeated party seeks for the quashing of the order issued by the tribunal in favour of the successful party. How can the High Court vacate the said order without the successful party being before it. Without the presence of the successful party the High Court cannot issue a substantial order affecting his right. Any order that may be issued behind the back of such a party can be ignored by the said party, with the result that the tribunal's order would be quashed but the right vested in that party by the wrong order of the tribunal would continue to be effective. Such a party, therefore, is a necessary party and a petition filed for the issue of a writ of certiorari without making him a party or without impleading him subsequently, if allowed by the court, would certainly be incompetent. A party whose interests are directly affected is, therefor....
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....or orders before a Division Bench as to issue of notice to the respondents. The Court may either direct notice to issue and pass such interim order as it may deem necessary or reject the application. Rule 5. The notice of the application shall be served on all persons directly affected and on such other persons as the Court may direct. Both the English rules and the rules framed by the Patna High Court lay down that persons who are directly affected or against whom relief is sought should be named in the petition, that is all necessary parties should be impleaded in the petition and notice served on them. In "The law of Extraordinary Legal Remedies" by Ferris, the procedure in the matter of impleading parties is clearly described at p.201 thus: "Those parties whose action is to be reviewed and who are interested therein and affected thereby, and in whose possession the record of Such action remains, are not only proper, but necessary parties. It is to such parties that notice to show cause against the issuance of the writ must be given, and they are the only parties who may make return, or who may demur. The omission to make parties those officers whose p....
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.... case where the Hon'ble Supreme Court was considering the question of necessary and proper party in a Writ Petition under Article 226. The present is a case where the question to be considered is as to whether for obtaining the approval of the Adjudicating Authority for sale of asset as per the Revised Resolution Framework, whether the Appellant ought to have been impleaded as necessary party to the application CA No. 248/MB/C-1/2022. 9. Present is a case where in the Creditors Committee, the Appellant is already a member with voting share of 1.89%. After inviting application for Expression for Interest, when bids were received meeting of the Creditors Committee took place on 17.12.2021. Minutes of the 5th meeting of the Creditors Committee of IL&FS has been brought on record as Annexure 4 to the Reply filed by Respondent No.1 in I.A. No. 2966 of 2020. Para 27 of the minutes clearly notices the objection of the representative of the Appellant. Para 2 of the minutes is as follows: "2. At this juncture, the representative of HDFC Limited ("HDFC Representative") mentioned that HDFC Limited has sent a letter to IL&FS and the COC Members, requesting them to postpone the disc....
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....r of the said building) which shall be paid in the manner stipulated in the agreed form of the Letter of Intent (a copy of each of which has been shared with the members of the Committee of Creditors of IL&FS) be approved by the Committee of Creditors of IL&FS, in accordance with the provisions of the Third Progress Report dated December 17, 2018, the Addendum to the Third Progress Report dated January 15, 2019 and the Second Addendum to the Third Progress Report dated December 5, 2019" 11. The above resolution was put to e-voting and by the e-voting as commenced on 28.01.2022, the resolution was passed with 73.57% votes. And only 4.24% voted rejecting the resolution. After Resolution was approved by the Creditors Committee, meeting of Board of Directors of IL&FS also passed the resolution on 29.01.2022, which is to the following effect: "TIFC "RESOLVED THAT in accordance with resolution framework for IL&FS Group as approved by Honourable National Company Law Appellate Tribunal ("NCLAT") in its order dated March 12, 2020 (Resolution Framework") and pursuant to the recommendations of the Asset Sale Committee of the Board ("ASC"), approvals of the Board of Direct....
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....r the aforesaid, an application was filed by the IL&FS before the Committee appointed by this Tribunal of Hon'ble Justice (Retd.) D. K. Jain for approval. Hon'ble Justice (Retd.) D. K. Jain on 08.03.2022 approved the proposal for the sale/assignment of commercial premises situated at Plot No. C-22, in the "G" Block of Bandra Kurla Complex, Mumbai. In the order dated 08.03.2022 all details pertaining to the entire process including the meeting of the Creditors Committee dated 17.12.2021 and approval of resolution with 73.57% was noticed. It was also noticed that the voting share of the Appellant was 1.89% only. It is useful to extract Paras 16 to 20 of the letter dated 08.03.2022, which is to the following effect: "16. Referring to the Orders passed by the Hon'ble NCLAT from time to time, ultimately culminating in the final Order dated 12 March 2020, delineating the powers and remit of the CoC, it is pointed out that the role of the IL&FS CoC (of which, HDFC is a Member with a voting percentage of 1.89%) is restricted/limited to only consider and vote on the highest bid and not to determine the distribution of the bid amount. These limitations/restrictions, in effect, e....
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....e Proposal is approved, subject to its approval by the Hon'ble NCLT." 13. The Appellant being member of the Creditors Committee and having participated in the meeting held on 17.02.2021, it cannot be said that in passing resolution for approving the highest bid any principles of natural justice have been violated. The Appellant is a dissenting Financial Creditor who has only 1.89% vote share. When resolution is passed by the Creditors Committee and approval is sought from the Adjudicating Authority, as per the Revised Resolution Framework approved by this Tribunal on 12.03.2020, it is not necessary that all dissenting Financial Creditors should be impleaded to the application. Present is not a case where it can be said that any principles of natural justice have been violated since the Appellant has raised its objection in the meeting of the Creditors Committee and also voted against the resolution. The filing of the application for approval before the Adjudicating Authority was as per the steps provided in the Revised Resolution Framework. We, thus, are of the view that the order of the Adjudicating Authority dated 23.09.2022 cannot be set aside on the ground of violation o....
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.... after adjusting any shortfall in the amount payable need to be reversed to the borrower. (ii) The Escrow Bank shall re-visit all its debits after 15.10.2018 to find out as to whether any amount in excess to the amount payable to cover principal and interest subject to adjustment any shortfall in earlier payment have been debited; and in event, any excess amount has been debited, the same shall be reversed to borrower which exercise shall be completed within the period of one month from today with due intimation in writing to the IL&FS. (iii) All Applications being I.A No. 2196 of 2020; I.A No. 2262- 2263, 2264-2266 of 2020 and I.A No. 2330-2331, 2332-2333 of 2020 are disposed of accordingly." 18. Against judgment dated 13.05.2022 passed by this Tribunal, Civil Appeal No. 4708/2022 was filed before Hon'ble Supreme Court in which appeal following order was passed on 29.07.2022: "ORDER Issue notice. Mr. Pranaya Goyal and Mr. Ashok Mathur, learned Advocates-on-Record, who have entered caveat on behalf of some of the respondents, accept notice. List the matter for disposal on 02.09.2022. In the meantime, the respondents ....