TaxTMI 
TaxTMI 
2023 (11) TMI 1134
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.... Ms. Charu Bansal, Ms. Mohana & Mr. Vasu Manchanda, Adv. for RP Mr. Pinaki Misra, Sr. Adv. with Mr. Tarun Sharma, Mr. Sabyaschi Banerjee, Advocates in I.A. No. 2718 of 2023 JUDGMENT Per : Justice Rakesh Kumar Jain : This order shall dispose of three appeals arising out of the order dated 28.04.2023, passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court No. II), bearing CA (AT) (Ins) No. 572 of 2023 titled as 'Koinonia Coffee Pvt. Ltd.' Vs. Vijay Kumar V Iyer, RP of Future Retail Limited & Ors.' (First Appeal), CA (AT) (Ins) No. 660 of 2023 titled as 'TNSI Retail Pvt. Ltd. Vs. Koinonia Coffee Pvt. Ltd. & Anr.' (Second Appeal), CA (AT) (Ins) No. 674 of 2023 titled as 'Vijay Kumar V. Iyer Vs. Koinonia Coffee Pvt. Ltd. & Ors.' (Third Appeal), one Intervention Application i.e. I.A. No. 2718 of 2023 and a Contempt Petition (AT) No. 27 of 2023 in CA (AT) (Ins) No. 572 of 2023 filed for the alleged violation of the order dated 31.05.2023 passed by this Tribunal in CA (AT) (Ins) No. 572 of 2023. 2. Bank of India filed an application i.e. C.P. (IB) No. 572/(MB)/2022 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short 'Co....
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....o secure that portion of the revenue generated by the Foodhall business that is owed to the Applicant in a separate escrow account until the completion of the Transaction Review Audit and the submission of its final Report to the RP. In case the RP finds any transaction falling under the ambit of preferential, undervalued, extortionate, fraudulent or wrongful trading after perusal of the final Transaction Audit Report, the RP is duty bound to file an appropriate application before this Tribunal under relevant provisions of the Code. 11. With the above observations, I.A. No. 3439 of 2022 is disposed of in the above terms." 5. Aggrieved against the impugned order dated 28.04.2023, the first appeal has been filed in which the Appellant (KCPL) filed an I.A. No. 2284 of 2023 for an interim order which was allowed by this Tribunal vide order dated 31.05.2023 in which the facts of this case have been given in detail, therefore, the said order is reproduced as under:- "1. This Appeal is directed against the order dated 28.04.2023 passed by the 'National Company Law Tribunal, Mumbai Bench' (hereinafter referred as to 'The Adjudicating Authority') by which an application....
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.... the share of the Appellant and 26.5% was to be shared by the FRL. The Appellant was granted space of shop in five Foodhall, three located in Mumbai and two in the NCR. The details of said five foodhall stores are as under: Sl. No. City Address 1. Mumbai 1.Foodhall@linking Road- Plot No. 106, Linking road, Santacruz West, Mumbai - 400054; 2.Foodhall@vama-VAMA Department Store, Pedder Road, Cumballa Hill, Mumbai - 400026; and 3.Foodhall@Palladium- Level 3, Palladium Mall, High Street Phoenix, S B Marg, Lower Parel (W) Mumbai - 400 013 2. New Delhi 1.Foodhall@MKT- Lower Ground Floor, The Chanakya Intersection of Satya Marg & African Avenue, Chankyapuri, New Delhi - 110021 2.Foodhall@Two Horizon - 1C & 1D Ground Floor, Two Horizon Center, Sector 43, Gold Course Road, DLF Phase 5, Gurugram Haryana 122 002 5. During the concurrency of the First Agreement, the Appellant entered into an another Agreement on 19.03.2022 (for short 'The Second Agreement') with FRL in which it was stipulated that the agreement would be effective from the date of execution and shall continue for a period of 55 months unless terminated earlier under the agreement. It was also....
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....ion of TNSI is contrary to the Second Agreement and also questioned the conduct of TNSI accepting the invoices raised by the Appellant in terms of the second agreement. 8. It is the case of the Appellant that it sent an email to the RP asking to clear an outstanding amount of Rs. 48,67,897/- to which there was no response by him, thereafter, the Appellant sent a reminder also but ultimately when he did not receive any reply from the RP, filed an application bearing IA No. 3439 of 2022 for the prayers which have already been mentioned in the beginning of this order. 9. While the said application was pending, the Appellant filed a Commercial Suit bearing Commercial Suit (L) No. 33922 of 2022 and also filed an application bearing Interim Application (L) No. 33926 of 2022 dated 21.10.2022 before the Hon'ble High Court of Bombay against TNSI for injunction to restrain it from interfering in its possession as well as in operation of the business. In the said case, the Hon'ble Bombay High Court, after taking the replies and hearing the parties, passed a detailed order on 07.12.2022. The operative part of the said order read as under : "12. I have heard Mr. Kamat....
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....Defendant, who is only an operator of the FOODHALL Malls, can get no higher right. 13. I am not impressed with the argument canvassed by Mr. Sharma, the learned Advocate appearing on behalf of the Defendant, that the Defendant could terminate the SIS Agreement because the Plaintiff is only a contractor. Even if I was to assume that the Plaintiff is only a contractor, the same would make little difference. Admittedly there is an Agreement between FRL and the Plaintiff which cannot be terminated by FRL for the first 3 years (the Lock-in Period). Once this is the contractual arrangement arrived at between the parties, it makes little difference to the status to the Plaintiff. 14. The argument of Mr. Sharma that the Defendant is not answerable to the Plaintiff because the Plaintiff has not migrated as mentioned above, also holds no substance. Prima facie, the Defendant cannot claim any higher rights than those of FRL under the SIS Agreement. This is more so when takes into consideration that admittedly the Defendant is a 100% subsidiary of FRL. Even the contention of the Defendant that it is a direct lessee/licensee of the premises [in which the FOODHALLs are situated....
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....id application was again heard and reserved for orders. The Appellant received another letter of termination in regard to the Foodhall store at Palladium Mall on 13.04.2023. 11. Since on the one hand, the Appellant was being threatened for its dispossession from the Foodhall store and on the other hand the Application filed by it was not being decided in one way or the other by of the Adjudicating Authority, therefore, the Appellant filed an appeal bearing CA(AT) (Ins) No. 495 of 2023 before this Tribunal for a direction to the Adjudicating Authority to at least pronounce the order. The said appeal was dismissed on 21.04.2023. However, direction was issued to the Adjudicating Authority to pronounce the order at an early date. It is needless to mention that in the said appeal, there was also a prayer for grant of stay till order is pronounced by the Adjudicating Authority but the said prayer was not acceded to. 12. Be that as it may, after the order was passed on 21.04.2023, the Adjudicating Authority decided the application and passed the impugned order on 28.04.2023 which led to the filing of the present Appeal and while the present appeal was pending and ordered....
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....icense Agreement because it has given the authority only to operate the Foodhall. 17. Counsel for Respondent No.2 has submitted that the Appellant is one of the 20 Vendors in the Foodhall and generating a miniscule revenue of an amount of Rs. 169.21 lakh as against the total revenue generated of Rs. 8797.75 lakh. It is also submitted that after the BSA was executed on 14.04.2022, the CEO of the Corporate Debtor addressed an email to the Appellant dated 26.04.2022 conveying that the Vendor Codes would be migrated. 18. It is further submitted that the CEO of the Corporate Debtor addressed another email dated 04.07.2022 to the Appellant revising the revenue model of the Appellant up to 90%. It is further argued by Counsel for Respondent No.2 that the Appellant had the knowledge of BSA and was not taken by surprise because he was asked that there would be an exchange of draft of the proposed Agreement with the Appellant. It is submitted that the contention of the Appellant that the BSA is only an eyewash and has been created between the FRL and its 100% subsidiary is not correct. He has then submitted that the Appellant had earlier tried to obtain injunction from the ....
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....scretion of the court is exercised to grant a temporary injunction only when the following requirements are made out by the plaintiff : (i) existence of a prima facie case as pleaded, necessitating protection of plaintiff's rights by issue of a temporary injunction; (ii) when the need for protection of plaintiff's rights is compared with or weighed against the need for protection of defendant's rights or likely infringement of defendant's rights, the balance of convenience tilting in favour of plaintiff; and (iii) clear possibility of irreparable injury being caused to plaintiff if the temporary injunction is not granted. In addition, temporary injunction being an equitable relief, the discretion to grant such relief will be exercised only when the plaintiff's conduct is free from blame and he approaches the court with clean hands." 20. Counsel for Respondent No.2 has then argued that if the main contract breaks down due to any reasons then the secondary contract would follow. This argument has been raised on the ground that once the Lessor has terminated the lease, there is no question of Appellant being retained as a Vendor in the Foodhall. In this re....
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.... 16.05.2023 but the other application i.e. IA No. 420 of 2023 is filed with regard to the information to be adduced from the Auditor and Chartered Accountant of the Corporate Debtor is pending. It is further submitted that he has already received the first report of the transaction audit report on 21.03.2023 and on the basis thereof, eight Applications have been filed regarding preferential transaction and one application has been filed in regard to undervalued transaction. The said applications are pending before the Adjudicating Authority. 22. It is further submitted that he has also received second report from the Financial Auditor on 22.05.2023 and after the queries raised by him, the transaction auditor has submitted the revised report on 29.05.2023 which includes the report regarding the genuineness of BSA as well. He has submitted that at present the RP is examining the said report because as per the provisions of the Code, RP has to first form an opinion himself to find out as to whether there exist material for avoidance transaction etc., and once he forms an opinion then he would bring it to the notice of the Adjudicating Authority by way of an appropriate applic....
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....the operation of the Appellant in the Mall situated in NCR, namely, (i) Foodhall@MKT (ii) Foodhall@Two Horizon be protected till the next date of hearing. 27. Consequently, the prayer made by the Appellant for an ad interim order in this regard, is hereby allowed. It is ordered that till the next of hearing, the Respondent No.2 shall maintain status quo with regard to the operation in respect of the area on which the vendor is in operation in (i) Foodhall@MKT (ii) Foodhall@Two Horizon. 28. With these observations and directions, the present application is hereby disposed of. No order as to costs." 6. The aforesaid order dated 31.05.2023 was challenged in appeal before the Hon'ble Apex Court by TNSI Retail Pvt. Ltd. (Appellant in second appeal). Civil Appeal No. 4874 of 2023 was dismissed by the Hon'ble Supreme Court vide its order dated 11.08.2023 and the said order read as under:- "Learned Senior Advocate appearing on behalf of the appellant - TNSI Retail Private Limited seeks permission to withdraw the present appeal and states that the appellant - TNSI Retail Private Limited will raise all pleas and contentions as available in law before the Nationa....
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.... contentious nature of the BSA and other transactions related to it and has already initiated the Transaction Review Audit of various transactions to ascertain whether any transactions fall under the ambit of preferential, undervalued, extortionate, fraudulent or wrongful trading under the provisions of the Code. We recognise the fact that though the Applicant has filed this Application at a premature stage i.e. prior to the completion of the Transaction Audit" and has further observed that "In case the RP finds any transaction falling under the ambit of preferential, undervalued, extortionate, fraudulent or wrongful trading after perusal of the final Transaction Audit Report, the RP is duty bound to file an appropriate application before this Tribunal under relevant provisions of the Code." After obtaining the transaction audit report, the RP has filed I.A. No. 3457 of 2023 under Section 45 of the Code for avoidance of undervalued transaction in which notice has been issued and date has been fixed and also an application under Section 66 of the Code on 14.08.2023 for fraudulent or wrongful trading which has not been assigned any application number so far and notice has also not be....
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....prior to the completion of the transaction audit and further a direction has been given to the RP that after the receipt of transaction review audit, in case, the RP finds that any transaction fall within the ambit of preferential, undervalued, extortionate, fraudulent or wrongful trading then it will be brought to the notice of the Adjudicating Authority by way of an application which exactly has been done by the RP by filing of two applications under Section 45 and 66 of the Code, therefore, nothing survives in this appeal. 16. We have heard Counsel for the parties in respect of the first appeal and take into consideration the entire facts and circumstances prevailing at the time when the application was filed and at the time the order was passed that when the application was filed a serious question was raised about the legality and validity of BSA and the Adjudicating Authority was of the view that RP has already initiated transaction review audit of various transactions, therefore, the application was premature at that stage but the apprehension of the applicant therein was found legitimate and necessary directions were given to the RP in Para 10 of the impugned order. 1....
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....in under consideration by the Adjudicating Authority by virtue of applications filed under Section 45 and 66 of the Code by the RP, we do not find any substance in the present petition as well and the same is hereby dismissed. 24. In so far as I.A. No. 2718 of 2023 is concerned, the Applicant has submitted that the Appellant is only having a space admeasuring 350 sq. ft. out of the area admeasuring 14140 sq. ft. being shop no. LG-01, situated in the basement-01 of the Chanakya, Yashwant Place Community Centre, Chanakyapuri, New Delhi. The Appellant executed the agreement with Future Retial Ltd. The Applicant is the developer of the entire multiplex under the concession agreement executed with New Delhi Municipal Council (NDMC) and for the purpose of its operation and management. The Applicant had to pay a huge monthly concession fee of Rs. 1,46,06,748/- to the NDMC. This concession agreement of the Applicant with the NDMC is on PPP basis, the essence thereof is that the Applicant will pay the said concession fee upon earning/operating from the said multiplex. It is further submitted that though the Respondent No. 2/other vendors, who were operating from the said shop no. LG-01, ....
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....11 May 2022 for Chanakya Store of Foodhall, which was extended from time. The said Agreement is valid only till 31 May 2023. The Representative of TNSI have therefore been requesting the Lessor to extend the term of the Lease Deed however, the request has been turned down and TNSI has been asked to vacate the premises on or before 31" May, 2023. 4. Further, please note that another leave and license agreement executed by and between Sidhant Real Estate Developers and Services Private Limited (Licensor), TNSI (Licensee) and DLF Limited (Developer) on 1st May 2022 for Two Horizon store of Foodhall situated at Gurgaon, which was extended from time to time. The term of the said agreement is expiring on 31 May 2023. After receiving notice that the lease agreement would expire. TNSI's management met with DLF to request an extension. However, their request was TNSI RETAIL PRIVATE LIMITED [Foodhall-Division of TNSI Retail Pvt. Ltd.] CIN:U93000DL2010PTC203545 Then liny Registered office: Room No-107, 1st Floor, Pratap Bhawan, 5 Bahadur Shah Zafar Marg New Delhi 110002 IN Corporate Office: 4th Floor, Spring House, IMD Regent Arcade Mall, A Bloc....