TaxTMI 
TaxTMI 
2021 (3) TMI 1413
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....h Mr Vikram Mehta, Mr Debolina Roy, Advocates for R-4 Mr Dinkar Singh, Advocate for ARCL Mr Mahendra Ralhan, Advocate. Mr Utsav Mukherjee and Mr Jaivir Sidhant, Advocates for CoC JUDGMENT [Per; V. P. Singh, Member (T)] These eight Appeals emanate from the common Order dated September 4, 2019, passed by the Adjudicating Authority/National Company Law Tribunal, in Company Petition (I.B.) No.349/K.B./2017, Kolkata Bench, Kolkata, whereby the Adjudicating Authority has approved the Resolution Plan submitted by S S Natural Resources Private Limited (in short 'SSN') under Section 31of the Insolvency and Bankruptcy Code, 2016 (in short 'I&B Code'). Their original status in Company Petition represents the Parties in all these appeals for the sake of convenience. Civil Appeal (AT) (Ins.) No. 995 of 2019 2. The brief facts of the case are as follows: The Appellant in this Appeal is the Successful Resolution Applicant whose Plan is approved by the Adjudicating Authority by the Impugned Order. Appellant has challenged the impugned Order only to the extent of not allowing the terms contemplated in Clause 15.15.5 of the Resolution Plan, thus making the entire Plan un....
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....clearly states that if the Plan is approved with variation, the 'SSN' shall be bound by the Plan only if the variation is acceptable in the Plan. 6. The Appellant further contended that the 'CoC' in the commercial wisdom approved the Resolution Plan. However, while approving the Resolution Plan, the Adjudicating Authority modified the core commercial terms of the Resolution Plan, making the same commercially unviable and unworkable for the Appellant. It is submitted that the modifications made are contrary to express assumptions made by the Appellant in the Resolution Plan and against the CoC's commercial decision. It is further contended that the Hon'ble Supreme Court in case of K. Sashidhar v Indian Overseas Bank (2019) 12 SCC 150 has settled the law that the Adjudicating Authority's discretion is limited to the extent of satisfaction that the Resolution Plan meets the requirements specified in Section 30(2) of the I&B Code. Such commercial considerations are outside the scope of judicial review. If there is a contravention of the provision of Section 30(2) of I&B Code, including a decision on the Resolution Applicant's eligibility under Section 2....
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.... the Adjudicating Authority in its Resolution Plan has not been granted. The 'SSN' had sought transfer of the lease of the land of about 315 acres lying in Kharagpur to 'Ramsarup Industries Ltd'. The 'SSN' has contended that the Adjudicating Authority has not sanctioned the waiver on transfer about payment of any fee, consideration, premium, arrears of lease rent or penalty or interest; therefore, the Resolution Plan has purportedly become unviable and unfeasible. 11. As per Clause 15.3, Clause 15.12 and Clause 15.14 (vi) (g) of the Resolution Plan, if the waiver sought are not granted or the assumptions made are not true, it will not have a bearing on the successful implementation of the Resolution Plan. The 'CoC' has approved the Resolution Plan, fully aware of these clauses in the Resolution Plan. The Adjudicating Authority has not in any manner mandated or directed 'SSN' to make payments of the transfer fee, consideration, premium, arrears of lease rent, penalties, interest, or any other payment to 'WBIDC'. 12. The Adjudicating Authority as noted in its Order that "any exemption for payment would be dealt with by the respective ....
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....ly held responsible or liable about it. 17. It is further contended that it is neither established nor borne out from the records that 'SSN' is required to pay an amount higher than Rs. 400 crores. The alleged assumption of an amount higher than Rs. 400 crores is based on presumptions only. Therefore, after the Resolution Plan's approval, the alleged payment is not required to be made as claimed of 'SSN. 18. The Resolution Professional further contends the transfer of Kharagpur land to the Corporate Debtor under Clause 15.15 of the Resolution Plan is not a mandatory condition of the Resolution Plan and are covered under the approvals, extinguishment and waiver sought under Annexure 3 of the Resolution Plan. The following items of Annexure 3 cover the extinguishments sought by Appellant in Clause 15.15; Item 11- "waiver of any dues of what so ever nature towards the Railways, water authorities or any such infrastructure provider and waiver of all statutory liabilities as the liquidation value is nil." Item 17-"specific waiver of transaction costs related to implementation of the resolution plan including but not limited to any incidence of a stamp duty, ROC fee....
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....jections raised by the Appellants are untenable. The Lease Deed entered into between the 'WBIDC' and the Corporate Debtor's unit does not contemplate any transfer fees. 'WBIDC', being a member of the Committee of Creditors, was aware of all terms and conditions in the Plan and had therefore voted in favour of the Plan. Accordingly, it is now estopped from claiming what it has already waived in the Plan, which has even received the Adjudicating Authority's approval. 23. The Learned Counsel for the Committee of Creditor's contended that the claim of 'WBIDC' has only been raised pursuant to the filing of the captioned Appeal and includes the following components; * Transfer fee payable at the rate of 10% of the subleased market value, which it estimates to be around Rs. 9.23 crore. * Rs. 22.07 Lac, payable towards the outstanding arrears of subleased rent in respect of the subleased property. * Rs. 33.37 lakhs payable towards interest at the rate of 12% per annum on the outstanding arrears of subleased rent. * Rs. 4.85 crores payable on account of land revenue and cess in respect of the said property to the District Land and Land Reforms Of....
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....2020 wherein it is observed that the Successful Resolution Applicant is not to be burdened with undecided claims at the stage of implementation of the Resolution Plan. Further, it is observed that; "A successful Resolution Applicant is to be provided by the company free from past liabilities. It has been rightly understood that a successful Resolution Applicant cannot be saddled with past liabilities indefinitely. Such an Act will make it impossible for the successful Resolution Applicant to run the business of the Corporate Debtor effectively. In fact, saddling a Resolution Applicant with past claims will defeat the entire purpose and mechanism set out under the Code." 26. Thus in view of the above, the Appellant or 'WBIDC' cannot be permitted to disturb the Resolution Process on the basis of mere apprehensions of the additional cost of erroneous and subsequent claims, which are an afterthought as the same could be against the object of the I&B Code, 2016. Therefore, the principle laid down in the above-mentioned case, which has been relied upon by the Appellant and 'WBIDC', does not find a place in the premise discussed above and is thus not applicable to the f....
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....nd unfeasible for 'SSN'. 30. As per Clause 15.3, Clause 15.12 and Clause 15.14 (iv) (g) of the Resolution Plan, if the waivers sought are not granted, or the assumptions made are not true, it will not have a bearing on the successful implementation of the Resolution Plan. The 'CoC' has approved the Resolution Plan, fully aware of these Clauses in the Resolution Plan. Further, the Adjudicating Authority has not in any manner mandated or directed 'SSN' to make payment of transfer fee, consideration, premium, arrears of lease rent, penalties, interest or any other payment to 'WBIDC'. 31. It is pertinent to mention that the Adjudicating Authority in its Order has specified that "any exemption for payment could be dealt with by the respective authorities if applied for. With the above observations, we are not inclined to approve the waiver as prayed for in the Plan. It is left open for the determination by the appropriate authorities if applied for the waiver/exemption as prayed for in the Plan." 32. The Adjudicating Authority has based its Order on Clause 15.3 of the Resolution Plan. Adjudicating Authority has merely directed 'SSN' to seek wai....
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....ease, which was executed on 13 September 2009, after the merger. Therefore, when providing the lease, the Corporate Debtor was the legal entity, and Ramsarup Loh Udyog was merely its unit. The Successful Resolution Applicant 'SSN's allegations that it has to pay an amount higher than Rs.400 crores is neither established nor borne out from the records. No calculations or facts have been provided to establish that amount higher than Rs.400 crores are required to implement the Resolution Plan. 37. It is also important to mention that the Order dated 25 September 2019, passed by this Tribunal, has stayed the impugned Order's operation so far relating to the payment of the amount excess of Rs. 400 crores. Therefore, the Resolution Plan itself leaves a buffer for certain payments. The Appellant has prematurely and erroneously acted, based on presumptions and made arbitrary calculations in the captioned Appeal with the sole aim of evading its obligations under the approved Resolution Plan and has not paid a single penny on the pretext of the Order dated 25 September 2019 without there being any stay on the payments up to Rs. 400 crores. 38. Appellant further contended that due to Co....
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....ved despite the fact that there is no maximisation of the assets of the corporate debtor to satisfy the debts of the all the stakeholders concerned. 43. The Appellant contends that the Adjudicating Authority has failed to appreciate that the Resolution Plan is conditional and contingent in as much as the Applicant has sought for a direction to the effect that upon the Resolution Plan getting sanctioned, the land in Durgapur and Kalyani would be transferred in the name of Resolution Applicant which cannot be allowed. 44. It is further contended that the Adjudicating Authority has failed to consider that there cannot be any discrimination between the same groups such as Financial Creditors or Operational Creditors and Operational Creditors must get the same treatment as Financial Creditors otherwise; such Resolution Plan ought to be rejected so that the Operational Creditors rights are safeguarded. 45. The Appellant contended that the Adjudicating Authority has failed to appreciate that the Resolution Applicant had sought a waiver of penalty and arrears of lease rent and interest on arrears and a waiver on payment of transfer fee and all such amounts from the West Bengal Industria....
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.... (Insolvency) No. 1 to 8 of 2019. 51. However the aforesaid judgement has been overruled by the Hon'ble Supreme Court in case of Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467 : 2020 SCC OnLine SC 67 at page 487 wherein it is held that; "28. No provision in the Code or Regulations has been brought to our notice under which the bid of any resolution applicant has to match liquidation value arrived at in the manner provided in Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This point has been dealt with in Essar Steel [Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531]. We have quoted above the relevant passages from this judgment. 29. It appears to us that the object behind prescribing such valuation process is to assist the CoC to take decision on a resolution plan properly. Once, a resolution plan is approved by the CoC, the statutory mandate on the adjudicating authority under Section 31(1) of the Code is to ascertain that a resolution plan meets the requirement of sub-sections (2) and (4) of Section 30 thereof. We, per se, d....
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....ch a decision is non-justiciable. 54. Hon'ble Supreme Court in case of K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222: 2019 SCC OnLine SC 257 at page 183 has held that; "52. As aforesaid, upon receipt of a "rejected" resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I&B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could inde....
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.... 59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors. The fact that substantial or majority per cent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 6-6-2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter III of the I&B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October 2017; and now after the amendment w.e.f. 6-6-2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial....
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....belong to the same class are not similarly situated are treated differently. Judicial precedents make it clear that the Resolution Plan must not discriminate among creditors who are similarly situated and that the creditors must be given roughly the same treatment. 59. Hon'ble Supreme Court in case of Essar Steel India Ltd. Committee of Creditors vs. Satish Kumar Gupta, (2020) 8 SCC 531 : 2019 SCC OnLine SC 1478 at page 606 held that; "88. By reading para 77 (of Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17]) dehors the earlier paragraphs, the Appellate Tribunal has fallen into grave error. Para 76 clearly refers to the UNCITRAL Legislative Guide which makes it clear beyond any doubt that equitable treatment is only of similarly situated creditors. This being so, the observation in para 77 cannot be read to mean that financial and operational creditors must be paid the same amounts in any resolution plan before it can pass muster. On the contrary, para 77 itself makes it clear that there is a difference in payment of the debts of financial and operational creditors, operational creditors having to receive a minimum payment, being not less than liquidat....
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....ss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17]. Indeed, Regulation 13(1) of the 2016 Regulations mandates that when the resolution professional verifies claims, the security interest of secured creditors is also looked at and gets taken care of. Similarly, Regulation 36(2)(d) when it provides for a list of creditors and the amounts claimed by them in the information memorandum (which is to be submitted to prospective resolution applicants), also provides for the amount of claims admitted and security interest in respect of such claims." 60. It is also important to mention that distinction between creditors on the basis of security interest is permitted under Section 30 (4) of the Insolvency and Bankruptcy Code, 2016, which reads as under; "the Committee of Creditors may approve a resolution plan by a vote of not less than 66%, of voting share of the financial creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements....
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....62. The Resolution Plan proposes that the Financial Creditors get 5.8% of the admitted claim amounting to Rs. 5853 crores; the said Plan also contemplates the payment of Rs. 10.5 crores to the Operational Creditor, which amounts to 4.68% of the admitted claim amount of Rs. 224.05 crores. The workman's payment is 90% of the admitted claim, and the statutory authorities have been offered Rs. 3 crores. Thus the total claim of the Operational Creditor inclusive of statutory authorities would come to 5.82%. 63. In the light of the aforesaid, it is clear that the Resolution Plan give similar treatment to the operational creditor even when the liquidation amount to the Operational Creditors has been calculated to nil. 64. The Appellant has contended that the Resolution Plan is conditional. Respondent No. 2 will have to expend money towards the transfer charges and arrears of lease rent, penalty, and interest to West Bengal Industrial Development Corporation. Respondent No. 2 is statutorily bound to do so. The aforesaid contention of the Appellant shows that it is only interested in the Corporate Debtor and not in its revival under the Corporate Insolvency Resolution Process, which i....
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....n plan has been approved by the Committee of Creditors, and has passed muster before the adjudicating authority, this determination can be challenged before the appellate authority under Section 61, and may further be challenged before the Supreme Court under Section 62, if there is a question of law arising out of such Order, within the time specified in Section 62. Section 64 also makes it clear that the timelines that are to be adhered to by the NCLT and NCLAT are of great importance, and that reasons must be recorded by either the NCLT or NCLAT if the matter is not disposed of within the time-limit specified. Section 60(5), when it speaks of the NCLT having jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person, does not invest the NCLT with the jurisdiction to interfere at an applicant's behest at a stage before the quasi-judicial determination made by the adjudicating authority. The non obstante clause in Section 60(5) is designed for a different purpose: to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, mak....
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....Director of Shayam Metallics and Energy India Ltd under a letter of appointment dated February 18, 2019, for a tenure of 5 years. Mr Anoop Krishna continued in the said Shayam Sel and Energy Ltd office from April 18, 2019, till September 5, 2019. It is contended that 'CIRP' was manifestly illegal and void ab initio, and the entire process of selecting the Successful Resolution Applicant was vitiated by fraud. Since fraud vitiates all transactions, the entire process has to be set aside, and fresh Resolution Plans should be called for. It is alleged that the Successful Resolution Applicant was favoured and there was a bias towards the Successful Resolution Applicant for which a Resolution Plan with such a low bid amount has been accepted and approved by the 'CoC' and the Resolution Professional. 72. In reply to the above objection, Learned Counsel for the Committee of Creditors submits that there is no conflict of interest just because Mr Anoop Krishna is a consultant of Grant Thornton India. It is pertinent to note that this issue was not brought up by the Appellants before the Adjudicating Authority. But it was raised by Srei Multiple Asset Investment Trust Vision India Fund. 73....
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....ng multiple applications cannot be considered as with genuine object to get the relief as prayed for, with object to protract the matter..... If this kind of approach is not prevented, it would air a wrong message to the similarly situated directors of the corporate debtor company". 76. Therefore, in view of the, it appears that instant appeal is a mala fide attempt on the part of the Appellant to disturb the Resolution Process, and the same cannot be sustained. In the circumstances as stated above, we believe that the Appeal sans merit and deserves to be dismissed. Civil Appeal (AT) (Ins.) No.1242 of 2019 77. The Appellant, being aggrieved by the Resolution Plan's approval, has filed this appeal on the ground that the Adjudicating Authority has erred in holding that the Respondent No.1 Corporate Debtor is the owner of the Wind Mill Project at Dhule, Maharashtra. 78. The Appellant contends that the above finding is beyond the Adjudicating Authority's jurisdiction under the Insolvency & Bankruptcy Code, 2016. The Appellant is seeking deletion of Wind Mill Project's name from the Resolution Plan as an asset of the Corporate Debtor. The ownership of the same is the sub....
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....ons of Clause VII of the approved Resolution Plan ought to have been deleted by the Adjudicating Authority as the Appellant stand to lose its legitimate and admitted claim and its right to recover the same under the law, leaving the Appellant effectively remediless. 83. The Appellant contends that the Adjudicating Authority erred in dismissing the Application filed under Section 60(5) of the I&B Code. The Adjudicating Authority has failed to take note of the fact that the 'Wind Mill Project' at Dhule, Maharashtra was hypothecated by Respondent No.1/Corporate Debtor, against the grant of the loan of Rs. 12.48 crores in favour of the Appellant, by executing the Deed of Hypothecation dated July 20, 2005. The charge was duly registered with the Registrar of Companies on August 5, 2005. The Respondent Corporate Debtor having defaulted in repayment of the loan amounts thus constrained the Appellant to proceed in terms of Section 13(4) of the SARFAESI Act, 2002, resulting in the sale of the secured asset, i.e. the Wind Mill at Dhule, Maharashtra on March 24, 2017, to one Suzlon Global Services Ltd for a sum of Rs. 5.15 crores and the said certificate was accordingly issued on April 7, 20....
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.... 88. In the circumstances as discussed above, we find no merit in the Appeal; hence deserves to be dismissed. Civil Appeal (AT) (Ins.) No.1159 of 2019 89. The present Appeal is filed against the Resolution Plan's approval because of the Appellant's Application CA (I.B.) No.497/K.B./2019 under Section 29A read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016 challenging the eligibility of 'S.S. Natural Resources Private Limited' a Successful Resolution Applicant (from now on referred to as the H-1 Bidder) to submit a Resolution Plan regarding Ramsarup Industries Ltd (from now on referred to as the Corporate Debtor) was rejected. 90. The Appellant (Orissa Metallics Private Limited) was the H-2 bidder and submitted a bid for a total sum of Rs. 1014.99 crores with an upfront payment of Rs. 281.90 Capex and working capital of Rs. 733.09 crores. Despite being much above the Corporate Debtor's liquidation value, such Plan of the Appellant, i.e. Rs. 610.29 crores, was not accepted. The CoC accepted the Resolution Plan of the H-1 bidder for a total bid amount of Rs. 670.50 crores solely on the ground that H-1's upfront payment of Rs. 351 crore is hig....
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....ther contends that during the hearing before the Adjudicating Authority, the Learned Counsel appearing on behalf of the H-1 bidder submitted that the H-1 is unwilling to vary and modify its Plan. Further, if the waiver is not granted, the actual bidder may withdraw from implementing the said Plan. Such submission was recorded in the Impugned Order. Given the undertaking recorded in Clause 15.3 of the said Plan, the Learned Adjudicating Authority has rejected such an offer. The Appellant has prayed that the H-1 bidder should be declared as ineligible to submit its Resolution Plan in respect of the Corporate Debtor. 94. The Learned Counsel for the Appellant further placed reliance on the Hon'ble Supreme Court's judgment in Embassy Property Developer's Private Limited v State of Karnataka and others, reported in 2019 SCC online SC 1542, wherein it is held that whenever the Corporate Debtor has to exercise a right that falls outside the purview of the I&B Code, especially in the realm of public law, they cannot, through the Resolution Professional, take a bypass and go there before NCLT for the enforcement of such a right. 95. The Appellant has filed additional written submission....
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....y 'BRG Iron and Steel Co Private Limited', and therefore SSN is ineligible. It is also pleaded that some of 'SSN' shareholders are also shareholders in an entity, namely Shyam Emco Infrastructure Ltd and Emco Power Ltd (a subsidiary of an NPA company, namely Emco Ltd), and therefore 'SSN' is ineligible. 99. The Resolution Professional submits that Shyam Ferro Alloys is not an NPA and does not have an investment in a company that is an NPA. Neither Shyam Emco Infrastructure Ltd nor Emco Power Ltd is NPA, and they do not have an Investment in a Company that is NPA. By merely having a group Company (which is not an NPA entity), which has shareholders that are also shareholders in an NPA entity, does not in any way disqualify Resolution Applicant 'SSN'. Further by merely having shareholders in a non-NPA company, along with a shareholder that is not an NPA entity but a subsidiary of an NPA entity, does not in any way disqualify 'SSN'. 100. We have considered the argument advanced by both parties. We find that a Shyam Ferro is not an NPA and does not have an investment in a company that is an NPA. Neither Shyam Emco Infrastructure Ltd nor Emco Power Ltd is NPA. They do not have....
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....d all the parties appearing before it. The directions were passed by the Hon'ble Supreme Court post-approval of Resolution Plan by the Committee of Creditors, and the Hon'ble Supreme Court was informed about these developments. This explains why the Hon'ble Supreme Court order dated May 6, 2019, was passed in peculiar circumstances and with all the parties' consent. 107. The Hon'ble Supreme Court direction of participation would be rendered utterly meaningless if the Appellant were not permitted to submit its claim before the Resolution Professional. As a Financial Creditor, there was nothing else, that the Appellant could achieve by participating in the proceedings before the NCLT, except for a consideration of its claim. 108. In reply to the above Learned Counsel representing 'CoC' submits that the Appellant never filed its claim with the Resolution Professional from the admission order till date. The present appeal filed by the Appellant forms a part of the second round of litigation between the same parties before this Tribunal on the same set of facts, which has been dealt with vide judgement dated December 14, 2018, of this Tribunal, which went up to the....
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....me Court in Suman Devi v Manisha Devi (2018) 9 SCC 808 laid down the law that "the grant of liberty" to pursue an alternative remedy "cannot obviate the bar of limitation", especially when the remedy is governed by a "complete code" was under the Insolvency and Bankruptcy Code, 2016. Further, the Appellant's SLP before the Hon'ble Supreme Court was filed on 25 October 2090, i.e. beyond the maximum period of 45 days prescribed for filing an Appeal before this Appellate Tribunal. The Appellant had preferred to file an SLP before the Hon'ble Supreme Court only after the limitation period under Section 61 of the I&B Code had already expired. 114. The Appellant is claiming to be a Financial Creditor of the Corporate Debtor for a claim amount of Rs. 76,327,919. However, the Appellant had not filed its claim in the 'CIRP' of the Corporate Debtor extracting the grounds of the pending challenge to the admission of the Section 10 petition before the NCLAT and the Hon'ble Supreme Court. However, even after the adverse order passed by the Adjudicating Authority and the NCLAT, the Appellant did not submit its claim before the Resolution Professional. Moreover, there was no reason for the Appel....
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....019, the Hon'ble Supreme Court had been informed that the 'CIRP' had already expired. The Resolution Plan had been approved by the 'CoC', and accordingly, the Civil Appeal had become infructuous. Given the same, the Hon'ble Supreme Court granted the Appellant the liberty to participate in the Resolution Process before the Adjudicating Authority and disposed of the Civil Appeal. 118. It is pertinent to mention that the Hon'ble Supreme Court in case of Committee of Creditors of Essar Steel India Ltd vs Satish Kumar Gupta 2019 SCC online SC 1478 has held that all claims must be submitted to and decided by the Resolution Professional so that a Prospective Resolution Applicant knows exactly what is to be paid so that it may then take over and run the business of the Corporate Debtor. 119. In the light of the above judgement, the Appellant's claim could not have been admitted as the Resolution Plan had already been approved by the 'CoC'. In the present case, the 'CIRP' already expired before any claim being submitted by the Appellant. Even assuming the Appellant's claim has been accepted by the Adjudicating Authority, the whole 'CIRP' period of approximately 15 to 16 months, an....
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....btor's final Resolution Plan. The Appellant is now seeking to turn back the clock in the garb of the Hon'ble Supreme Court's order by misinterpreting it, which is not sustainable. The appellant wants to cover up its shortcomings. There is a hiatus on the Appellant part for not filing its claim with the Resolution Professional within the prescribed timelines. Appellant is now seeking to turn back the clock of the entire resolution process spanning a period of approximately 15 to 16 months, jeopardising the successful Resolution Plan involving a debt of about Rs. 6,000 crores, which has been approved of 74.41% of the voting share. It will further jeopardise the claims of the various Financial Creditors and Operational Creditors of Respondent No. 1 Corporate Debtor. 124. In the circumstances stated above, we find that the Appeal sans merit and deserve to be dismissed. Civil Appeal (AT) (Ins.) No. 1124 of 2019 125. The Appellant being aggrieved by the Impugned Order dated September 4, 2019, in Company Application No. 1039/K.B./2019 under Section 60(5) of the I&B Code, 2016, in CP (IB) No.349/KB/2017 has filed this Appeal. 126. By Order dated September 4, 2019, the Adjudicating ....
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....here in this case in hand. There are various correspondence by way e-mail referred to us on the side of the Applicants. None of the e-mails referred to us enabled us to hold that the Applicants have meted out the requirement in order to see that the claim of the Applicants has been substantiated as alleged on the side of the Applicants. ....... That being so, non-admission of the claim of the Applicants found not in violation of any of the provisions of the Code and Regulation and therefore, none of the Applications deserves consideration. Accordingly, the Applications are liable to be dismissed." (Verbatim Copy) 129. We have heard the arguments of the Learned Counsel for the parties and perused the records. 130. The Learned Counsel for the Appellant argued that the Appellant had granted unsecured loans / financial assistants to the tune of Rs.29,56,01,279/- to the Corporate Debtor. This fact has been consistently acknowledged in the annual report of the Corporate Debtor. It appears from e-mails dated February 04, 2019, and February 15, 2019, that Banks Statements and Annual Reports of the Corporate Debtor were duly received and accepted by the Resolution Professional. The Appel....
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....Agro Marine Exports Pvt. Ltd.' (subject matter of Company Appeal (AT) (Insolvency) No. 291/18). A 'resolution plan' has already been approved and placed before the Adjudicating Authority (Chennai) on 4th October, 2018. However, till date no order under Section 31 has been passed. We find that 270 days have passed." 133. In the case mentioned above, this Appellate Tribunal has clarified that this Tribunal has not expressed any opinion with regard to the claim made by 'Srei Infrastructure Finance Limited' or the decision taken by the Resolution Professional. 134. Relevant Regulation in this regard is given as under for ready reference; "Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016. Regulation "8. Claims by financial creditors.- (1) A person claiming to be a 8[financial creditor, other than a financial creditor belonging to a class of creditors, shall submit claim with proof] to the interim resolution professional in electronic form in Form C of the Schedule: Provided that such person may submit supplementary documents or clarifications in support of the claim before the constitution of the committee. (....
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....encement date, within seven days from the last date of the receipt of the claims, and thereupon maintain a list of creditors containing names of creditors along with the amount claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims, and update it. 14. Determination of amount of claim.- (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." 138. Based on the above CIRP Regulations, it is clear that the IRP/Resolution Professional is empowered to make the best estimate of the claim based on the information available with him. IRP/RP is further authorised to revise the amounts of the claim ad....
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....the Adjudicating Authority has failed to appreciate the provision of Section 18 of the Code read with the Regulation 37(a) of the Insolvency Resolution Process for Corporate Person's Regulation, 2016, which bars the transfer of title of the third party such as the Appellant herein in favour of the Resolution Applicant. Further, the Adjudicating Authority has erred in essentially giving effect to the provisions of the SARFAESI Act, 2002 by allowing the Resolution Plan of the Resolution Applicant, which could not be permitted in law. 145. The Appellant further contends that the Adjudicating Authority has failed to appreciate that the Resolution Plan is conditional and contingent in as much as the Resolution Applicant had sought a direction to the effect that upon the Resolution Plan being sanctioned, the land in the Durgapur would be transferred in the name of the Resolution Applicant which cannot be allowed. Further, the land in the Durgapur not being a property of the Corporate Debtor and property belonged to a third party cannot be transferred by way of a Resolution Plan. As such, the Adjudicating Authority approval is conditional under which the property not belonging to the....
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....tors regarding the Durgapur land. The Appellant has also challenged the notice under Section 13(2) of the SARFAESI Act, 2002 and proceedings under Section 17 of the SARFAESI Act, 2002, pending before DRT, Kolkata. If during the pendency of the proceedings under Section 17 of the SARFAESI Act, 2002 the said premises is transferred by way of Resolution Plan, the entire proceedings before the DRT would be rendered infructuous, especially when the creation of a mortgage and enforcement procedure thereof is under challenge, is under the exclusive jurisdiction of the DRT. 149. The Appellant further contends that the Adjudicating Authority has failed to consider that no transfer or conveyance of the said premises can be permitted without first obtaining the landowner's express consent, i.e. the Appellant herein. The Process Memorandum also states that the Resolution Plan cannot be conditional. Still, the Resolution Applicant has submitted the Resolution Plan, which dehors the Process Memorandum; thus, Resolution Plan is liable to be rejected. 150. In reply to the above, the Learned Counsel representing the Committee of Creditors submitted that Mr Ashish Jhunjhunwala, the Corporate D....
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....s by way of creating an equitable mortgage of the property owned by it, more particularly the land, building and structure along with the immovable property situated at Durgapur. 155. The Guarantee described above gave all rights in respect of the mortgaged properties to the Financial Creditors. Clause 10 of the deed, as mentioned earlier, dated July 27 2009, is as under; "In case the bank sells the hypothecated, pledged or mortgaged security/ies held in the account, the guarantors agree (s) that the bank may sell securities without giving any notice of such sale to the guarantors. The guarantors agrees that he will not question the sale or sale price in any manner or on any ground whatsoever." 156. Learned Counsel representing the 'CoC' argued that the Financial Creditors such as Punjab National Bank and Axis Bank had provided their respective loans to the Corporate Debtor on the basis that the repayment by the Corporate Debtor was secured by way of a mortgage over the land (provided by the Appellant) and by way of Corporate Guarantees provided by the Appellant itself. 157. By creating a mortgage over the land, Appellant created a security interest over the land in favour of ....
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....e sale of all or part of the assets whether subject to any security interest or not." 160. As per Section 31 of the Insolvency and Bankruptcy Code, 2016, the approved Resolution Plan binds all the stakeholders, including the Corporate Debtor's Guarantors. Thus Vanguard, being corporate Guarantor of the Corporate Debtor, is bound by the approved Resolution Plan. In light of the above discussion, we believe that the objections raised by "Vanguard/Appellant" are not sustainable. 161. The Learned Counsel for Appellant emphasised the judgment of Hon'ble Supreme Court in case of Embassy Property Developments (P) Ltd. v. State of Karnataka, (2020) 13 SCC 308 : 2019 SCC OnLine SC 1542 at page 332;wherein Hon'ble Supreme Court has held: "38. It was argued by all the learned Senior Counsel on the side of the appellants that an Interim Resolution Professional is duty-bound under Section 20(1) to preserve the value of the property of the corporate debtor and that the word "property" is interpreted in Section 3(27) to include even actionable claims as well as every description of interest, present or future or vested or contingent interest arising out of or incidental to property and th....
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.... the interim resolution professional and Section 25 speaks about the duties of resolution professional. These two provisions use the word "assets", while Section 20(1) uses the word "property" together with the word "value". Sections 18 and 25 do not use the expression "property". Another important aspect is that under Section 25(2)(b) of the IBC, 2016, the resolution professional is obliged to represent and act on behalf of the corporate debtor with third parties and exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial and arbitration proceedings. Sections 25(1) and 25(2)(b) reads as follows: "25. Duties of resolution professional.-(1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions: (a) *** (b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial and arbitration proceedings;" (emphasis supplied) T....
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....tor, for the right to mine, excavate and recover red oxide for a specified period of time. The deed of lease contains a schedule divided into several parts. The restrictions and conditions subject to which the grant can be enjoyed are found in part 3rd of the Schedule. Therefore, NCLT did not have jurisdiction to entertain an Application against the government of Karnataka for a direction to exclude Supplemental Lease Deeds for the extension of the mining lease. Since a NCLT choose to exercise of jurisdiction not vested in it in law, the High Court of Karnataka was justified in entertaining the Writ Petition on the basis that NCLT was quorum non-judice. 165. The Learned Counsel for the Appellant, the Corporate Guarantor of the Corporate Debtor, further emphasised the law laid down by Hon'ble Supreme Court in the case of Jaypee Infratech Ltd. Interim Resolution Professional v. Axis Bank Ltd., (2020) 8 SCC 401; it is contended that in the instant case JP Infratech Limited was undergoing 'CIRP'. Jayprakash Associates Ltd was the holding company. The Corporate Guarantors of JP Infratech Limited mortgaged its property to secure the loan of JP associates Ltd. Before the Hon'ble ....
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....ive loans to the Corporate Debtor on the basis that the repayment by the Corporate Debtor was secured by way of a mortgage over the land (provided by the Appellant) and by way of Corporate Guarantees provided by the Appellant itself. By creating the mortgage over the land, the Appellant has created a security interest over the land in favour of Punjab National Bank (subsequently transferred to Respondent No. 3/ARCIL) and Axis Bank. It is thus evident that the land has been committed by the Appellant to be utilised for the repayment of the debts of Punjab National Bank and Axis Bank. The Punjab National Bank has already taken possession of the land in exercise of its powers under Section 13 (4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 from August 1, 2013, and has the right to enforce the mortgage created in its favour. The copy of the letters confirming the deposit of the title deeds to create a mortgage for the Durgapur property indicates the above position. 170. It is important to point out that the date of creation of mortgage and extension of guarantees in favour of the Financial Creditors, there were two Direct....
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....tions. Therefore, with the only aim of spoiling the resolution process, such objections were raised at such a belated stage which is only an afterthought. For the 1st time on 20th February 2019, the Appellant wrote to the Resolution Professional stating that the land does not belong to the Corporate Debtor and to exclude from the Resolution Process. The same is also indicative that the Appellant is not a separate legal entity but is only acting on the whims and fancies of Mr Ashish Jhunjhunwala. Therefore, the Corporate veil should be pierced, and the real Promoter/Management's acts and intention cannot be ignored. 173. In light of the discussion above, we find no merit in this appeal, and the appeal deserves to be dismissed. Company Appeal (AT) (Ins.) No. 988 of 2019 174. The Appellant Pegasus Assets Reconstruction Pvt Ltd has challenged the impugned order on the ground that the Adjudicating Authority has arbitrarily dealt with the Appellant's Application in para No. 18 to 23 of the Impugned Order and while dismissing the same without looking into the documents on record has erroneously held that the Appellant has failed in proving that it has an exclusive charge over the Air S....
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....aripassu charge along with the State Bank of India. 179. It is submitted by the plant that the Adjudicating Authority has made a gross error in law by arbitrarily dismissing the Application of the Appellant without considering the correct factual position and not considering the error made by the Resolution Professional while calculating the distribution as per Section 30 and 53 of the Code. Appellant has prayed that the Appellant's charge position be corrected to prevent the monetary loss, which the Appellant may suffer. 180. In reply to the above the Respondent No. 3 ARCIL submits that the main objection of the Appellant before the Adjudicating Authority as well as in this Appeal is that the RP failed to consider that the Appellant has an exclusive charge over two plants-Air Separation Plan and Sinter Plant of the Corporate Debtor ,consequently RP and the Process Advisers committed an error in the methodology of distribution of the proceeds in respect of these two plants and wrongly allocated the proceeds also to IDBI/ARCIL. 181. The Adjudicating Authority observed that the 'IDBI' had also granted a loan to the Corporate Debtor and had charge over the Kharagpur unit of the....
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....n No. (IB)/424/KB/2019 in CP (IB)/349/KB/2017. The main objection of the Appellant is that RP failed to consider that the Appellant has an exclusive charge over two plants-Air Separation Plant and Sinter Plant of the Corporate Debtor. The RP and the process advisers committed an error in the methodology of distribution of the proceeds in respect of these 2 plants and wrongly allocated the proceeds also to IDBI/ARCIL. 185. The Adjudicating Authority considered the objections of the Appellant and gave a finding that 'IDBI' had also granted loan to the Corporate Debtor and had charge over the Kharagpur unit of the Corporate Debtor. The 'IDBI' vide registered deed of assignment of that duly executed with Asset Reconstruction Company (India) Ltd assigned the secure debts of the Corporate Debtor in favour of the Asset Reconstruction Company (India) Ltd. The Corporate Debtor approached the 'IDBI' for financial exposure to the extent of the Rs.124 crores for capital expenditure on its Kharagpur unit. IDBI Bank accepted the request of the Corporate Debtor and made financial exposure for Rs.124crores in Corporate Debtor for capital expenditure on its Kharagpur unit. The Corporate Debtor, co....
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....ed in the Application to pass necessary direction to the Resolution Professional to modify the Resolution Plan to the extent of "Facility wise distribution methodology based on security structure". 188. The Adjudicating Authority has observed that the Pegasus Asset Reconstruction Private Limited has failed in proving that it has an exclusive charge over Air Separation Plant and Sinter Plant. Admittedly, 'IDBI' had also issued loans to the Corporate Applicant, which was subsequently assigned in favour of the ARCIL and ARCIL, inter alia, had charge over the Kharagpur unit. The Resolution Professional had seen and examined the Mortgage Deed executed by 'IDBI'. The Mortgage Deed indicates that IDBI had a charge of the Corporate Applicant's property at Kharagpur. 189. It is pertinent to mention that both the objectors were members of the Committee of Creditors. It is also understood that the security interests recorded for each creditor have been made available to all the members of the 'CoC' before finalisation of the approval of the Resolution Plan. Therefore, the challenges raised by the above said Financial Creditors claiming exclusive charge over the above said plants are fou....
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....s of 'CoC' vide various emails. The 'CoC' in its 24th meeting held on 6 March 2019 discussed the methodology of distribution and was put to vote. The members of the 'CoC' were specifically asked to review the final distribution methodology that was prepared. The Pegasus sent an email to the RP on 19 March 2019, i.e. after the voting on the Resolution Plan had concluded, and the Resolution Plan along with the distribution methodology as per the security interest was approved by a vote share of 74.41%. 192. Based on the above discussion, we consider that the Appeal sans merit and deserves to be dismissed. CONCLUSION COMMON ORDER 193. Company Appeals (AT) (Insolvency) Nos.995, 988, 1039, 1124, 1125, 1159, 1242 of 2019 & 468 of 2020 are being dismissed. 194. While deciding Company Appeal No.995 of 2019, we have observed that the Successful Resolution Applicant/Appellant S.S. Natural Resources Pvt. Ltd. Has not implemented the Resolution Plan despite its approval by the Adjudicating Authority on 04th September 2019. Pandemic Covide-19's effect in India started from 15th March 2020 onwards. But the Successful Resolution Applicants has filed an application informing about the invokin....
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....eration of the impugned order, in so far it relates to the payment of amount in excess of Rs.400 crores shall remain stayed." 197. Based on the above order, it is clear that there was no stay for implementation of the Resolution Plan, but after about 1½ year period after the date of approval of the Resolution Plan, Appellant has not taken any stay towards the implementation of the Plan. The approved Resolution Plan contemplates Financial Creditors to get only 5.8% of the admitted claim amounting to Rs.5,853 crores and Operation Creditors to get Rs.10.5 Crores out of the admitted claim amount of Rs.224.05 crores. 198. It is further to observe that the Adjudicating Authority has also observed that the Applicant's overall conduct in filing multiple applications cannot be considered with the genuine object to get the relief as prayed for, with the object to protract the matter...... If this kind of approach is not prevented, it will air a wrong message to the similarly situated Directors of the Corporate Debtor Company. It is essential to point out that the Adjudicating Authority, while dismissing the CA (IB) No.461 & 462 of 2019, imposed a cost of Rs.25 lakhs payable by t....