TaxTMI 
TaxTMI 
2024 (2) TMI 261
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....mbai Bench. 2. Earlier, the Adjudicating Authority/NCLT, Mumbai Bench, while passing the impugned order dated 06.07.2023 in IA No.1020/2023 in CP (IB) No.1137/2017 (filed under Section 60(5) and (7) of I&B Code, 2016) had observed the following:- "Though the Ld. Counsel for the Applicant is present has not mentioned the Appearance in the Attendance Sheet. Ms Kriti Kalyani, Ld. Counsel for the Respondent is present. The present Interlocutory Application has been filed by the Applicant, Africa Power Company CC, seeking direction against the Respondent to pay the Applicant an aggregate amount of ZAR 1,17,81,893.174 (South African Rands One Crore Seventeen Lakhs Eighty One thousand Eight Hundred and Ninety Three and Seventeen Cents) or the equivalent amount in Indian National Rupees, alongwith the applicable interest therein for the dues pending from the Respondent in respect of the equivalent leased by the Applicant top the Respondent, after the admission of the Respondent in Corporate Insolvency Resolution Process (CIRP) and the equipment not returned by the Respondent to the Applicant. The Resolution Plan for the corporate Debtor was approved on 27.03.2019. Hence the pre....
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....ined without proper 'Reasons'. 7. Advancing his argument, the Learned counsel for the Appellant proceeds to point out that 'Right to reason', is an 'indispensable' part of a sound 'judicial system', 'reasons' at least are sufficient to indicate an 'application of mind', to the matter before Court and to fortify his plea, relies upon the judgement of the Hon'ble Supreme Court in the matter of UPSRTC Vs Jagdish Prasad Gupta reported in (2009)12 SCC 609(vide paragraph 8 and 9). 8. According to the Appellant, the Appellant, is not enforcing a 'Foreign Judgement' dated 06.10.2020, passed by the Hon'ble High Court of South Africa Gauteng Local Division Johannesburg, through this Tribunal. 9. Added further, it is the stand of the Appellant that the object of annexing the South Africa Hon'ble High Court Judgement was to disclose in 'Good Faith', the action taken by the 'Appellant', before approaching the 'Adjudicating Authority'/'Tribunal', Mumbai, through an 'Interlocutory Application'. 10. It is represented on behalf of the Appellant that the I&B Code, 2016 does not impose 'any bar' upon this 'Tribunal', to take cognizance of a 'Foreign Judgement'. In this connection the Lear....
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....ress, mentioned in the Rental Agreement. In addition, the purchase order issued by the 1st Respondent on its letterhead, do contain the same address, as that of the rental agreement and the 'CIPC Report'. 16. The Learned Counsel for the Appellant, points out that the 2nd Respondent in paragraph 9 of the 'Affidavit' in Reply dated 23.10.2023, had mentioned that she has not authorised Mr. Sudip Sharma viz. the person who executed the 'Rental Agreement', on behalf of the 1st Respondent to enter into the 'Rental Agreement', and she has not authorised any payments to be made, to the Appellant/Petitioner and this argument raises a serious question, on the management of the internal affairs of the 1st Respondent, during the 'Corporate Insolvency Resolution Process'. 17. It is the version of the Appellant that on appointment, the management of the 1st Respondent was wholly under the aegis of the 2nd Respondent, meaning that the powers of the Board of Directors/1st Respondent were transferred to the 2nd Respondent. Also that Section 18 of the I&B Code, 2016 delineates the 2nd Respondent duties. 18. The Learned counsel for the Appellant/Petitioner adverts to Section 18 of the I&B Co....
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....outh Africa. 23. While summing up, the Learned counsel for the Appellant prays for the allowing of the instant Appeal, by setting aside the 'impugned order', passed by the 'Adjudicating Authority/Tribunal', Mumbai Bench, in IA No.1020/2023 in CP (IB) 1137 of 2017, in the interest of justice. 1st Respondent's Plea. 24. According to the 1st Respondent, the Adjudicating Authority/Appellate Tribunal lacks the necessary jurisdiction to execute a 'Foreign Judgement, under the I&B Code, 2016. Also that the 'Claimed Amount', was never accounted into/or recognised as 'CIRP Cost/Costs' incurred during the period when the 1st Respondent, was managed by the 'Erstwhile Resolution Professional' coupled with the Monitoring Committee. 25. According to the 1st Respondent the 'Adjudicating Authority/Tribunal', through an order dated 04.04.2017, had directed the initiation of 'CIRP', against the 1st Respondent and Ms Vandana Garg was appointed as an 'Interim Resolution Professional', and later, confirmed as 'Resolution Professional' of the 1st Respondent. 26. It is represented on behalf of the 1st Respondent that the 'Erstwhile Resolution Professional', was Incharge of managing the aff....
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....le us to provide some insight to the incoming management about the impugned matter'. 32. The Learned Counsel for the 1st Respondent, points out that all the 'costs' incurred by the 1st Respondent, during the 'CIRP' and accounted for as 'CIRP' costs, by the 'Erstwhile Resolution Professional', as per Section 5(13) of the I&B Code, 2016, and informed to the new management of the 1st Respondent that it was paid already and further when the 'Resolution Plan', stood 'implemented' the 'claim' of the Appellant, in this Appeal, is a 'baseless' and a 'frivolous one', besides the same is not to be entertained against the new management of the 1st Respondent. 33. The Learned counsel of the 1st Respondent, points out that in regard to the 'part of the claimed amount' that was allegedly fell due, during the 'MC Period' and not recognised by the 'Erstwhile Resolution Professional', the same, cannot be saddled on the new management, especially after four years of the 'Plan approval order'. 34. The Learned counsel for the Appellant refers to Section VII(K) and (L) of the Resolution Plan which reads as under:- "K. The Company, the Proposed Investors, the Founder Promoters, existin....
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....graph 67 it is observed as under:- "67. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to BE paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove." 36. The Learned counsel for the 1st Respondent cites the Judgement dated 13.04.2021 of the Hon'ble Supreme Court of India in the matter of Ghanashyam Mishra and sons Private Ltd Vs Edelweiss Asset Reconstruction Company Ltd, (Civil Appeal No.8129/2019) wherein at para 95 "95. (i) On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person....
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.... firms and individuals in a time bound manner for maximisation of value of assets of such persons to promote entrepreneurship, availability of credit, balance the interests of all stakeholders. The recent Ordinance explicitly aims to promote resolution over liquidation. 2. The objective of the 'I&B Code' is Resolution. The Purpose of Resolution is for maximisation of value of assets of the 'Corporate Debtor' and thereby for all creditors. It is not maximisation of value for a 'stakeholder' or 'a set of stakeholders' such as Creditors and to promote entrepreneurship, availability of credit and balance the interests. The first order objective is "resolution". The second order objective is "maximisation of value of assets of the 'Corporate Debtor'' and the third order objective is "promoting entrepreneurship, availability of credit and balancing the interests". This order of objective is sacrosanct. In the matter of "Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta and Ors.", the Hon'ble Supreme Court observed that "the 'Corporate Debtor' consists of several employees and workmen whose daily bread is dependent on the outcome of the CIRP. If there is a resolution ....
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....olvency resolution of corporate persons, ....for maximisation of value of assets of such persons to.... balance interests of all stakeholders. It is possible to balance interests of all stakeholders if the resolution maximises the value of assets of the 'Corporate Debtor'. One cannot balance interest of all stakeholders, if resolution maximises the value for a or a set of stakeholder such as 'Financial Creditors'. One or a set of stakeholders cannot benefit unduly stakeholder at the cost of another. d. The 'I&B Code' prohibits any action to foreclose, recover or enforce any security interest during resolution period and thereby prevents a creditor from maximising his interests. e. It follows from the above: i. The liabilities of all creditors who are not part of 'Committee of Creditors' must also be met in the resolution. ii. The 'Financial Creditors can modify the terms of existing liabilities, while other creditors cannot take risk of postponing payment for better future prospectus. That is, 'Financial Creditors' can take haircut and can take their dues in future, while 'Operational Creditors' need to be paid immediately. iii. A creditor cannot....
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....ure or leverage; infusion of additional resources in cash or kind over time; etc. Each plan has a different likelihood of turnaround depending on credibility and track record of 'Resolution Applicant' and feasibility and viability of a 'Resolution Plan' are not amenable to bidding or auction. It requires application of mind by the 'Financial Creditors' who understand the business well. It is not recovery: Recovery is an individual effort by a creditor to recover its dues through a process that has debtor and creditor on opposite sides. When creditors recover their dues - one after another or simultaneously- from the available assets of the firm, nothing may be left in due course. Thus, while recovery bleeds the 'Corporate Debtor' to death, resolution endeavors to keep the 'Corporate Debtor' alive. In fact, the 'I&B Code' prohibits and discourages recovery in several ways. It is not liquidation: Liquidation brings the life of a corporate to an end. It destroys organisational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only if there is any surplus after satisfy....
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.... settled and extinguished. Moreover, the Appellant was informed by the 2^nd Respondent, that it has 'no power' and authority to alter the admitted liabilities of the Corporate Debtor (in the case Jyoti Structures Ltd) which had already formed part of the Approved Resolution Plan. 45. The Learned counsel for the 2nd Respondent, points out that the 2nd Respondent through a letter dated 01.09.2021, had informed the Appellant, that the impending documentation, for the implementation of the 'Approved Resolution Plan', had commenced and the 'take over process', was expected to be completed soon. 46. It is the version of the 2nd Respondent that the CIRP Process was started on 04.07.2017 and the 'Moratorium', imposed by the 'Adjudicating Authority/Tribunal', was in operation, on the day on which the purported contracts were said to have been executed. In reality, the 2nd Respondent, was in control of its management, pursuant to Section 23(1) of the I&B Code, 2016. Also that the 2nd Respondent, had neither executed the alleged contract nor authorised any personnel of the 1st Respondent to enter into the same. 47. According to the 2nd Respondent, the two alleged contracts dated 06.1....
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....6 which in any case, does not vest the Adjudicating Authority/Tribunal, as a judicial forum to recognise and enforce a 'Foreign Judgement'. 53. The Learned counsel for the 2nd Respondent refers to the Judgement of this Tribunal in Usha Holdings LLC and Ant V. Francorp Pvt Ltd (vide Comp App (At)(Ins) No. 44/2018 dated 30.11.2018) wherein in paragraph 14 observed as under:- "14. In the circumstances, we answer the first question in favour of the Appellant and hold that the Adjudicating Authority has no jurisdiction to decide the question of legality and propriety of a foreign judgment and decree in an application under Section 7 or 9 or 10 of the I&B Code. The second question relating to maintainability is answered against the Appellants, they being not the 'Operational Creditors'' 54. The Learned Counsel for the 2nd Respondent, contends that the purported contract two of which are oral Contracts, cannot be relied upon, having been allegedly entered into during the 'CIRP', without the requisite 'Authorisation' of the 2nd Respondent. Section 44A of Civil Procedure Code, 1908 55. The twin requirements mentioned in Section 44A of the Civil Procedure Code are (i) th....
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....fice it for this 'Tribunal' to point out that the Approved Resolution Plan stood implemented as on date. 61. Proceeding further, this 'Appellate Tribunal' is not the proper and correct Forum to execute the 'Foreign Judgement' and in this regard the Appellant/Petitioner is not to be allowed to circumvent the 'Law', in the considered opinion of this Tribunal. 62. One has to keep in mind of a relevant fact that the 'Adjudicating Authority/Tribunal' not being a 'Court' and the 'Insolvency Resolution Process' not being a litigation, the Appellant/Petitioner, cannot invoke, Section 60(5) of the I&B Code, 2016 to project the IA No.1020/2023 in CP (IB) No.1137/2017 before the 'Adjudicating Authority/Tribunal' seeking the reliefs in respect of(i) issuance of direction to the 1st Respondent, to pay the Appellant/Petitioner an amount of ZAR 90,53,355.58 alongwith interest @ 2% per month, compounded monthly from 15.06.2020 till the date of payment or the equivalent amount in Indian National Rupees; (ii) in directing the 1st Respondent to pay the Applicant an amount of ZAR 40,66,000 (South African Rands) alongwith interest at 10% per annum from 14.07.2020 till day of payment or the equiva....