TaxTMI 
TaxTMI 
2023 (11) TMI 567
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....substituting the name of Respondent No. 1 in place of Applicant (Resolution Professional) in I.A. No. 1090 of 2018 has been allowed. The Appellant aggrieved by the said order, has come up in this Appeal. 2. Before we proceed to notice the respective contentions of the parties, it is necessary to notice background facts and sequence of the events leading to passing of the Order dated 01st May, 2023. 3. The Corporate Debtor-Su-Kam Power Systems Ltd. was admitted to Insolvency Resolution Process by Order dated 05th April, 2018 passed on Section 7 Application filed by the State Bank of India. Resolution Professional invited Expression of Interest. The Appellant as suspended director of the Corporate Debtor also submitted a Resolution Plan. Resolution Professional informed the Appellant that Appellant is ineligible under Section 29A (h) of the Code to submit a Resolution Plan. The Appellant filed an Application being C.A. No. 58(PB)2019 challenging the decision of the Resolution Professional to declare him ineligible which application came to be rejected by the Adjudicating Authority vide Order dated 02nd April 2019. Order of the Adjudicating Authority was challenged by the Appell....
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.... challenging the Order impugned contends that Successful Auction Purchaser cannot be allowed to pursue the avoidance application which is not in accordance with the scheme of IBC and the Regulation framed thereunder. It is further submitted that IBC as well as Regulations provide only the Resolution Professional and Liquidator to prosecute the avoidance application, avoidance application cannot be allowed to be prosecuted by Successful Auction Purchaser, permitting to pursue the application by a Successful Auction Purchaser is unjust enrichment which is not permissible, the benefit arising out of avoidance application cannot be available to Successful Auction Purchaser. It is submitted that the order passed by the Adjudicating Authority is unreasoned order and deserves to be set aside on this ground alone. It is further submitted that issue which is involved in the present case is pending before the Hon'ble Supreme Court in C.A. No. 1632-1634 of 2022, "Piramal Capital and Housing Finance Limited Vs. 63 Moons Technologies Limited". 8. Learned Sr. Counsel for the Respondents refuting the submissions of Learned Sr. Counsel for the Appellant submits that Appellant as Suspended Direc....
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..... In the Liquidation Proceedings also, the EoI submitted at the instance of the promoter was not accepted and further the highest bid submitted by Respondent No. 2 to 5 was accepted. In the Application filed by the Liquidator to approve the e-auction in favour of Respondent No 2 to 5, Appellant also filed an application praying for rejection of the Application. In the said proceedings, the Adjudicating Authority had made following observations: "In any event, we find that the ex-promoter has no locus standi to participate or agitate in this proceeding or submit a settlement proposal at this stage, in view of the finding of this Adjudicating Authority, Hon'ble NCLAT and Hon'ble Supreme Court, wherein it was held that, the ex-promoter has become ineligible in terms of Section 29A(h) of the Code as well as proviso to sub section (f) of Section 35 of the Code." 11. In the Appeal itself, the Appellant has come up with the case that in the acquisition plan, it was successful auction purchaser who was to get the benefit of avoidance application. In the Appeal in paragraph 9.8, following grounds have been urged by the Appellant: "9.8 BECAUSE in the Acquisition Plan, wh....
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....s shall form the liquidation estate. There can be no dispute to this legal position that proceeds of the avoidance application are part of the liquidation estate. 15. The question which has been raised by the Appellant in the present case is as to whether the Successful Auction Purchaser can prosecute the avoidance application after approval of the acquisition plan. There is no issue that proceeds out of avoidance application are not part of Liquidation Estate. 16. Learned Counsel for the Appellant has also relied on regulation 44A of IBBI (Liquidation Process) Regulation, 2016. Regulation 44A has been inserted by notification dated 16th September, 2022. Regulation 44A is as follows: "44A Treatment of avoidance of transaction. The liquidator shall, on the advice of the consultation committee, provide in the application along with the final report filed under regulation 45 for the manner in which proceedings in respect of avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, will be pursued after the dissolution or closure of liquidation process and the manner in which the proceeds, if any, from su....
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.... permit a creditor or the creditor committee to require the insolvency representative to initiate an avoidance proceeding where it appears to be beneficial to the estate to do so or also permit a creditor itself or the creditor committee to commence proceedings to avoid these transactions, where other creditors agree." (Emphasis Supplied) 2.3. In light of the above, the Committee discussed that it may be beneficial to allow creditors (individual or in groups) and the CoC to file applications in case the insolvency professional fails to do so. In this regard, creditors should first approach the resolution professional or the liquidator to file an application. After this, if the resolution professional or liquidator then fails to file an application, then the creditor or the CoC may file the application itself. 2.4. The Committee also considered if the successful resolution applicant should be permitted to file such applications. However, it was agreed that this would possibly result in the resolution applicant being entitled to a return that was not factored in at the time of submitting their bid. Therefore, the Committee decided that the resolution applic....
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....tion Applicant. The Successful Resolution Applicant is not exercising any delegated powers of RP, hence, the argument that RP being persona designate, has no relevance in the present case. The Adjudicating Authority in the present case has substituted the Piramal - Successful Resolution Applicant relying on provisions of the Resolution Plan. The Adjudicating Authority while approving the Resolution Plan vide its order dated 07.06.2021 has noted the provisions of the Plan, which empowers the Resolution Applicant to pursue the avoidance application. In order passed by the Adjudicating Authority dated 07.06.2021, following has been stated: "i. Under Section 2.13.2 of Part A of the Resolution Plan, the Successful Resolution Applicant has provided that it intends to pursue, on a best efforts basis, the application(s) filed by the Administrator before this Hon'ble Tribunal in respect of these Avoidance Transactions (as defined in the Resolution Plan). Any positive monetary recovery received by the Corporate Debtor as a result of orders passed in relation to the Avoidance Transactions hall be distributed, net of costs and expenses (including taxes), to the Financial Creditor ....
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....f this tribunal dated 15th May, 2023, Civil Appeal has been filed being Civil Appeal vide diary no. 25822 of 2023 where Hon'ble Supreme Court on 06.09.2023 passed following order: "Delay in re-filing is condoned. Our attention is drawn to the orders dated 07.07.2023 and 14.08.2023 passed in SLP (C) Nos. 10331-10332/2023 titled "Tata Steel Ltd. v. Venus Recruiter Private Limited & Ors." and in SLP (C) D. No. 15256/2023 titled "Venus Recruiter Private Limited v. Tata Steel BSL Limited & Ors.", respectively. Issue notice and tag with SLP (C) Nos. 10331- 10332/2023 and SLP (C) D. No. 15256/2023. Ms. Chitra Rentala, learned counsel, who is present in Court on advance notice/caveat, waives service and accepts notice on behalf of the respondent No.1 - Piramal Capital and Housing Finance Limited. Notice will be served by all modes, including dasti, to all unrepresented respondents on steps being taken within a period of ten days from today. Notwithstanding pendency of the present appeal, proceedings under Sections 43 to 66 of the Insolvency and Bankruptcy Code, 2016 can continue." 23. The Judgment of this Tribunal dated 15th May, 2023 thus ha....
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.... of S.N. Mukherjee v. Union of India [JT 1990 (3) SC 630: 1990 (4) SCC 594], while referring to the practice adopted and insistence placed by the Courts in United States, emphasized the importance of recording of reasons for decisions by the administrative authorities and tribunals. It said 'administrative process will best be vindicated by clarity in its exercise'. To enable the Courts to exercise the power of review in consonance with settled principles, the authorities are advised of the considerations underlining the action under review. This Court with approval stated: "11......the orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained." 12. In exercise of the power of judicial review, the concept of reasoned orders/actions has been enforced equally by the foreign courts as by the courts in India. The administrative authority and tribunals are obliged to give reasons, absence whereof could render the order liable to judicial chastise. Thus, it will not be far from absolute principle of law that the Courts should record reasons for its conclusions to enable....