TaxTMI 
TaxTMI 
2024 (2) TMI 1219
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....n and Mr. Harsh Sharma, Advocates for Applicant in I.A. 3218/2023. Mr. Amit K. Mishra, Mr. Akshat Hansaria, Advocates for Homebuyers/Intervenors. Mr. Vierat K. Anand, Ms. Srishty Kaul, Mr. Harish Nadda, Advocates For the Appellant : Mr. Krishnan Venugopal, Sr. Advocate with Mr. Anupam Chaudhary, Mr. Sarvesh Mehra, Mr. Krishnan Aggarwal, Mr. Avinash Mathews, Advocates For the Respondents : Mr. Sumant Batra, Mr. Sanjay Bhatt, Mr. Sarthak Bhandari, Ms. Mehreen Garg, Advocates for IMC of JIL/R-1. Mr. Krishnendu Datta, Sr. Advocate with Mr. Mahesh Agarwal, Ms. Geetika Sharma, Ms. Eshna Kumar, Mr. Sagar Bansal, Ms. Varsha Himatsingka, Mr. Rajat Sinha, Advocates for SRA, R- 3 & 4. Mr. Varinder Kumar Sharma, Ms. Parul Sharma, Advocates in I.A. No. 3701, 3702 of 2023. Mr. Vierat K. Anand, Ms. Srishty Kaul, Mr. Harish Nadda, Mr. Vikalp Singh, Mr. Kumar Shashank, Mr. Rishabh Singh, Ms. Deepannita Chakraborty, Mr. Arun Yadav, Mr. Anant Singh, Mr. Abhishek Sharma, Advocates JUDGMENT Ashok Bhushan, J. These two Appeals have been filed against the same order dated 07.03.2023 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Special Bench approving the....
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....in which Writ Petition several orders were passed by the Hon'ble Supreme Court permitting IRP to take over the management of JIL. Orders were also passed against JAL. Hon'ble Supreme Court passed final judgment in Writ Petition of Chitra Sharma on 09.08.2018 (Judgment Reported in (2018) 18 SCC 575). The Hon'ble Supreme Court held that the promoters of JAL/JIL cannot participate in the Resolution Process of the Corporate Debtor in view of Section 29A. CIRP period having come to an end, Hon'ble Supreme Court took the view that the CIRP should be revived and CoC be re-constituted as per the amended provision to include the homebuyers. The Hon'ble Supreme Court in exercising jurisdiction under Article 142 of the Constitution revived the CIRP process. After the order of the Hon'ble Supreme Court dated 09.08.2018, the IDBI Bank filed an application before the Adjudicating Authority for excluding certain period. In the Appeal filed by IDBI Bank, NCLAT granted the exclusion of time which order was challenged by Jaiprakash Associates Limited and Ors. in the Hon'ble Supreme Court by Civil Appeal No.8437 of 2019 which Appeal was finally disposed of by the Hon'ble Supreme Court by judgment and....
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....uyers were decided by the same order. IA No.2836 of 2021 filed by the IRP was allowed and other applications were dismissed. Challenging the order dated 07.03.2023, Company Appeal (AT) (Insolvency) No.548 of 2023 has been filed by Jaiprakash Associates Limited and Company Appeal (AT) (Insolvency) No.559 of 2023 has been filed by Manoj Gaur, promoter/director. 2.3. It is also relevant to notice that the order dated 07.03.2023 has also been challenged by other several entities who were aggrieved by the order dated 07.03.2023. 2.4. The Income Tax Department has filed a Company Appeal (AT) (Insolvency) No.549 of 2023- "Deputy Commissioner of Income Tax vs. Anuj Jain, IRP of M/s. Jaypee Infratech Limited" which has been decided by judgment of this Tribunal dated 26.09.2023. 2.5. YEIDA also filed a Company Appeal being Company Appeal (AT) (Insolvency) No.493 of 2023 challenging the order dated 07.03.2023 which is still pending. 3. We have heard Shri Krishnan Venugopal, Learned Senior Counsel on behalf of the Appellant, Shri Sumant Batra, Learned Counsel appearing for Monitoring Committee and Learned Senior Counsel Shri Krishnendu Datta for the SRA. We have also heard several ....
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.... dues of Income Tax Department. It is submitted that the revenue subsidy on account of the land for development given by YEIDA to JIL could not be written off in the Resolution Plan as these were future liabilities in respect of which no demand had yet been raised. 4.3. The Resolution Plan extinguishes an amount of Rs.3334 Crores for assessment years 2010-11 and 2012-13 in respect of which IT Department had filed its claim in Form B on 28.09.2017. However, the Resolution Plan also sought to extinguish the future liability of Rs.33,000 Crores. The Adjudicating Authority by approving the Resolution Plan has wiped out the entire liability owing to the IT Department including the amounts in respect of which the IT Department did not raise any demands. The IT Department had not filed any objections before the Adjudicating Authority but they have preferred Company Appeal (AT) (Insolvency) No.549 of 2023 against the impugned order which has been decided by this Tribunal vide order dated 26.09.2023. Against the judgment of this Tribunal dated 26.09.2023, Suraksha Realty has filed Civil Appeal No.7412 of 2023. 4.4. It is submitted that the treatment of the dues to the IT Department no....
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....he liability of surety also gets extinguished. Suraksha Realty is being unjustly enriched by taking over an asset rich company at a hefty haircut while depriving JAL and Shri Manoj Gaur of their statutory rights of discharge under Section 135 of the Contract Act, right to get possession of the securities under Section 141, and their right to become creditors of JIL as the principal debtor under Section 140 of the Contract Act. Thus, the Resolution Plan being contrary to the provisions of the law for the time being in force in terms of Section 30(2)(e) of the IBC. 4.6. Coming to the reliefs and concessions, Counsel for the Appellant submits that out of 38 reliefs and concessions sought by Suraksha Realty, Adjudicating Authority has granted only 8 reliefs and concessions. Rejection by the Adjudicating Authority of certain clauses i.e. by denying the reliefs and concessions, it is clear that the Resolution Plan does not confirm to the parameters laid down in Section 31(1) and are inconsistent with Section 30(2). Adjudicating Authority having denied several reliefs and concessions, the Resolution Plan ought not to have been approved and the plan ought to have been sent back to the C....
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....al dated 26.09.2023 has not been set aside. It is not open to the Appellant to re-open the issue of liability of the Income Tax Department. Appellant by making submission is seeking review of the order dated 26.09.2023 which is not permissible. 5.2. Coming to the submission advanced by Counsel for the Appellant with regard to the claim of Yamuna Expressway, it is submitted that the Yamuna Expressway has already filed its appeal being Company Appeal (AT) (Insolvency) No.493 of 2023 and they have raised issues in support of their appeal. YEIDA being affected by order dated 07.03.2023, it has raised ground to challenge which is to be considered in the said appeal. Counsel for the Respondent has also referred to the order dared 05.12.2023 passed by this Tribunal in Company Appeal (AT) (Insolvency) No.493 of 2023 where this Tribunal has noted that a proposal has been submitted by Suraksha Realty for settlement which has been forwarded to the State Government which is under active consideration. It is submitted that the claim of YEIDA will be considered and decided in Company Appeal (AT) (Insolvency) No.493 of 2023 and Appellant cannot be allowed to raise the issue nor the said issue ....
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....ance and cannot be allowed to question by the Appellant in this Appeal. It is submitted that the Adjudicating Authority cannot enter into any quantitative analysis to adjudge whether the prescription of the resolution plan results in maximisation of the value of assets of not. 6. Learned Counsel for the SRA has also advanced submission on the same line as was advanced on behalf of Monitoring and Implementation Committee of the Corporate Debtor. It is submitted that the Adjudicating Authority has rightly treated the debt of the Income Tax Department as operational debt and further the appeal being Company Appeal (AT) (Insolvency) No.549 of 2023 filed by the Income Tax has already been dismissed which is under challenge by the SRA in the Hon'ble Supreme Court. It is not open for the Appellant to raise any issue on behalf of the Income Tax Department. SRA has filed limited appeal in the Hon'ble Supreme Court for quashing the observations made in paragraphs 24 and 25 of the judgment of this Tribunal dated 26.09.2023 is binding on all parties and Appellant cannot be raised any amount pertaining to Income Tax dues. 6.1. With regard to claim of YEIDA, it is submitted that the amicab....
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.... the plan that the Resolution Applicant undertake that they will implement this plan whether or not the reliefs and concessions are granted. Reliefs do not have any bearing on the implementation of the plan. It is submitted that no grounds have been made out on behalf of the Appellant to interfere with the order of the Adjudicating Authority approving the Resolution Plan. Adjudicating Authority has considered all objections raised by the Appellant and there is no error in the order to approve the Resolution Plan. 7. In Company Appeal (AT) (Insolvency) No. 548 of 2023, several IAs have been filed praying to intervene in the appeal. We need to notice the different IAs and prayers made therein. 7.1. IA No.2643 of 2023 has been filed by one Ayush Agarrwal, allottee of unit in Kosmos. Applicant claims to have been issued allotment letter dated 11.12.2009 and submit that he has deposited certain amount till June 2022. Applicant submits that the Applicant who is not a resident of Delhi NCR never came to know about the insolvency proceeding of the Corporate Debtor. Being unaware of the aforesaid proceeding, he could not file his claim in the CIRP. In the application, following prayer....
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....of the YEIDA being treated as Operational Creditor and having offered only Rs. 10 lacs towards satisfaction of their dues violates provision of subsection (2) of Section 30 of the Code and the Resolution Plan deserves to be set aside on this ground alone? (iv) Whether YEIDA is a Secured Creditor of the Corporate Debtor? (v) Whether the Resolution Plan violates provision of Section 30(2)(e) of the Code in removing the right of subrogation to the guarantors whereas under Indian Contract Act a surety or guarantor has right to subrogation and further upon discharge of principal debtor to repay the debt the liability of surety also gets extinguished? (vi) Whether the Adjudicating Authority having denied several reliefs and concessions which clearly means that those provisions of Resolution Plan have been disapproved, the Adjudicating Authority ought not to have been approved the Resolution Plan and only course available for the Adjudicating Authority was to send the plan back to the CoC for reconsideration? (vii) Whether the Adjudicating Authority in granting various reliefs and concessions has exceeded the jurisdiction vested in the Adjudicating Auth....
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...., a person who has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the adjudicating authority under the IBC is prohibited from participating. The Court must bear in mind that Section 29- A has been enacted in the larger public interest and to facilitate effective corporate governance. Parliament rectified a loophole in the Act which allowed a backdoor entry to erstwhile managements in the CIRP. Section 30 IBC, as amended, also clarifies that a resolution plan of a person who is ineligible under Section 29-A will not be considered by the CoC:" 13. Further in paragraph 42, it was further held: "42. The bar under Section 29-A would preclude JAL/JIL from being allowed to participate in the resolution process. Moreover, the facts which have been drawn to the attention of the Court leave no manner of doubt that JAL/JIL lack the financial capacity and resources to complete the unfinished projects. To allow them to participate in the process of resolution will render the pr....
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....nd order dated 06.11.2019. Hon'ble Supreme Court exercised its jurisdiction under Article 142 of the Constitution of India directing that 90 days extended period be reckoned from the date of the Judgment. In paragraph 19 and 20, following was held: 19. Indeed, the third proviso to Section 12(3) predicates time-limit for completion of insolvency resolution process, which has come into effect from 16-8-2019. The same reads thus: 'Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.' Taking an overall view of the matter, we deem it just, proper and expedient to issue directions under Article 142 of the Constitution of India to all concerned to reckon 90 days' extended period from the date of this order instead of the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. That means, in terms of this order, the CIRP concerning JIL shall be completed within a ....
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....preme Court in above case was that 758 acres land became encumbrance free land which came to be vested in the corporate debtor. 19. In consequence to the order passed by the Hon'ble Supreme Court in Jayprakash Associates Limited Vs. IDBI Bank Limited dated 06.11.2019 as noted above, the revised resolution plans in the CIRP of the Corporate Debtor were submitted by Suraksha Realty and NBCC. The Resolution Plan came to be approved by the Committee of Creditors, application was filed by the IRP for approval of the plan before the Adjudicating Authority, the Adjudicating Authority vide order dated 03rd March, 2020 approved the Resolution Plan submitted by NBCC India Limited with 97.36% voting share. NBCC aggrieved by certain part of the order filed an appeal before the NCLAT being Company Appeal (AT) Ins. No. 475 of 2022 which was transferred by the Hon'ble Supreme Court. Jaypee Kensington Boulevard Apartments Welfare Association and Ors. have also filed appeal questioning the order dated 22nd April, 2020 passed by NCLAT. Hon'ble Supreme Court decided the civil appeal filed by the Jaypee Kensington along with Appeal filed by the NBCC which was transferred. Hon'ble Supreme Court deli....
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....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 indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corp....
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....nt provisions concerning corporate insolvency resolution process; and, as noticed above, explained the assignments of different role players in this process. In that context, this Court again explained the primacy endowed on the commercial wisdom of the Committee of Creditors and reasons therefor, with a further detailed reference to the aforesaid report of the Bankruptcy Law Reforms Committee of November 2015. Apart from the passage from the said report that was noticed in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] (reproduced hereinabove), the Court noticed various other passages from this report in Essar Steel [Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] ; and one part thereof, which further underscores the rationale for only financial creditors handling the process of resolution, could be usefully reproduced as under (part of para 56 at pp. 578-79 of SCC): "56. ... 5.3.1. Steps at the start of the IRP *** 4. Creation of the creditors committee The creditors committee will have the power to decide the final solution by majority vote in the n....
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.... of at least 66% of the votes of the Committee of Creditors. ... 60. Thus, it is clear that since corporate resolution is ultimately in the hands of the majority vote of the Committee of Creditors, nothing can be done qua the management of the corporate debtor by the resolution professional which impacts major decisions to be made in the interregnum between the taking over of management of the corporate debtor and corporate resolution by the acceptance of a resolution plan by the requisite majority of the Committee of Creditors. Most importantly, under Section 30(4), the Committee of Creditors may approve a resolution plan by a vote of not less than 66% of the voting share of the financial creditors, after considering its feasibility and viability, and various other requirements as may be prescribed by the Regulations. *** 64. Thus, what is left to the majority decision of the Committee of Creditors is the "feasibility and viability" of a resolution plan, which obviously takes into account all aspects of the plan, including the manner of distribution of funds among the various classes of creditors. As an example, take the case of a resolution plan which d....
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....nquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the prop....
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....e Board. Significantly, the matters or grounds-be it under Section 30(2) or under Section 61(3) of the I&B Code-are regarding testing the validity of the "approved" resolution plan by CoC; and not for approving the resolution plan which has been disapproved or deemed to have been rejected by CoC in exercise of its business decision. 58. Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with Section 31(1) of the I&B Code. No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (Nclat) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters "other than" enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/Nclat) have been endowed with limited jurisdiction as specified in the I&B Code and not to act as a court of equity or exercise plenary powers." 23. Hon'ble Supreme Court ....
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....CA, even though not a statutory one, is nevertheless a contract entered into between the concessionaire and statutory authority, that is, Yeida. It is needless to observe that even if in the scheme of IBC, a resolution plan could modify the terms of a contract, any tinkering with the contract in question, that is, the concession agreement, could not have been carried out without the approval and consent of the authority concerned, that is, Yeida. Any doubt in that regard stands quelled with reference to Regulation 37 of the CIRP Regulations that requires a resolution plan to provide for various measures including "necessary approvals from the Central and State Governments and other authorities". The authority concerned in the present case, Yeida, is the one established by the State Government under the U.P. Act of 1976 and its approval remains sine qua non for validity of the resolution plan in question, particularly qua the terms related with Yeida. The stipulations/assumptions in the resolution plan, that approval by the adjudicating authority shall dispense with all the requirements of seeking consent from Yeida for any business transfer are too far beyond the entitlement of the....
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....k to the Committee of Creditors for reconsideration." 27. Under 'Point N' "summation of findings; final order and conclusion" Hon'ble Supreme Court held that the Adjudicating Authority has limited jurisdiction in the matter of approval of the Resolution Plan which is well defined and circumscribed by Section 30(2) and 31 of the Code. In paragraph 273. 1 and 273.3, following observations were made: "273.1. The adjudicating authority has limited jurisdiction in the matter of approval of a resolution plan, which is welldefined and circumscribed by Sections 30(2) and 31 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the Committee of Creditors. If, within its limited jurisdiction, the adjudicating authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Code and exposited by this....
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.... were permitted to submit the revised plans in the judgment dated 6-11-2019 [Jaiprakash Associates Ltd. v. IDBI Bank Ltd., (2020) 3 SCC 328 : (2020) 2 SCC (Civ) 113]] respectively, giving them time to submit the same within 2 weeks from the date of this judgment. 282.3. It is made clear that the IRP shall not entertain any expression of interest by any other person nor shall be required to issue any new information memorandum. The said resolution applicants shall be expected to proceed on the basis of the information memorandum already issued by IRP and shall also take into account the facts noticed and findings recorded in this judgment. 282.4. After receiving the resolution plans as aforementioned, the IRP shall take all further steps in the manner that the processes of voting by the Committee of Creditors and his submission of report to the adjudicating authority (NCLT) are accomplished in all respects within the extended period of 45 days from the date of this judgment. The adjudicating authority shall take final decision in terms of Section 31 of the Code expeditiously upon submission of report by the IRP. 282.5. These directions, particularly for enlargement....
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....nd it is not open to Respondent to contend that Appellant has no locus to object approval of the Resolution Plan. Learned Counsel for the Appellant has relied on judgment of the Vijay Kumar Jain Vs. Standard Chartered Bank & Anr. (2019) 20 SCC 455. The Appeal before the Hon'ble Supreme Court was filed by Vijay Kr. Jain, member of suspended board of directors of the Corporate Debtor challenging the Appellate Tribunal's Judgment rejecting appellant's prayer for direction to the Resolution Professional to provide all relevant documents including the insolvency resolution plan in question to members of the Suspended Board of Directors. The facts were noticed in paragraph 1 of the Judgment which is as follows: "R.F. Nariman, J.- The present appeal arises out of an Appellate Tribunal's judgment [Vijay Kumar Jain v. Standard Chartered Bank Ltd., 2018 SCC OnLine NCLAT 855] rejecting the appellant's prayer for directions to the resolution professional to provide all relevant documents including the insolvency resolution plans in question to members of the suspended Board of Directors of the corporate debtor in each case so that they may meaningfully participate in meetings ....
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....rd of Directors. 19.5. Further, under Regulation 37(1)(f), a resolution plan may provide for reduction in the amount payable to the creditors, which again vitally impacts the rights of a guarantor. Last but not the least, a resolution plan which has been approved or rejected by an order of the adjudicating authority, has to be sent to "participants" which would include members of the erstwhile Board of Directors - vide Regulation 39(5) of the CIRP Regulations. Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan, and may, as persons aggrieved, file an appeal from the adjudicating authority's order to the Appellate Tribunal under Section 61 of the Code. Quite apart from this, Section 60(5)(c) is also very wide, and a member of the erstwhile Board of Directors also has an independent right to approach the adjudicating authority, which must then hear such person before it is satisfied that such resolution plan can pass muster under Section 31 of the Code." 35. Ultimately Hon'ble Supreme Court directed that Appellant will be given copies of all resolution plan submitted to the CoC within period ....
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....ssion made by the Appellant/Respondent. 37. Learned Counsel for the Respondent has also relied on judgment of this Tribunal in Jaidep Ghosh and Anr. Vs Niraj Agarwal and Ors. C.A.(AT) Ins. No. 839 of 2022, (2023) SCC OnLine NCLAT 396. A perusal of the above judgment indicates that this Tribunal has not noticed the judgment of the Hon'ble Supreme court in Vijay Kumar Jain. Further judgments which have been relied on by this tribunal from the observation that law is settled on the point that suspended board of directors has no locus to file an appeal against the approval of the plan where the judgment laying down that unsuccessful resolution applicant has no right to challenge the approval of the Resolution Plan. Furthermore, the main reasons for dismissing the appeal has been contained in paragraph 48. The main reason, where the court has observed that one who does not come to a court with clean hand may not get any relief. It was held that conduct of the Appellant in both the appeals is not transparent. In the present case, there are several other facts which need to be noticed. For example, the Appellants were permitted to file objections before the Adjudicating Authority again....
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.... the amount to be paid in the event of liquidation as per Section 53. It is specifically submitted on behalf of Respondent No. 2 and 3 that liquidation value of the Appellant being NIL, the Appellant was not entitled to receive any amount as per Section 30(2)(b). We, thus, are of the view that no effective relief can be granted to the Appellant in the present Appeal. The treatment of the claim of the Appellant in the Resolution Plan cannot be said to be in violation of Section 30(2)(e)." 41. Income Tax Department itself having filed an appeal challenging the part of the Order dated 07th March, 2023 which has approved the resolution plan qua the treatment of income tax dues which appeal has already been disposed of by this tribunal observing the order of the Adjudicating Authority in so far as treatment of the claim of the plan is not vitiated, it is not open for the Appellant to raise any further submissions with regard to dues of income tax. Learned Counsel for the Appellant has also contended that against the order of this tribunal dated 26.09.2023 passed in C.A.(AT) Ins No.549 of 2023, Suraksha Realty has also filed an appeal where it was contended on behalf of Suraksha Realt....
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....on with regard to claim of YEIDA is a binding precedent which cannot be allowed to be violated by Suraksha Realty in its plan. It is submitted that additional farmers compensation Rs.1,698 Crore has not been paid which was required to be paid asper concession agreement. A Government Agency like YEIDA cannot be made to withdraw pending litigation whereas Clause 34.28 seeks to render infructuous litigation about Additional AFC. Liability of additional farmers' compensation for land under express way is of the concessioner. Learned counsel for the Appellant has also referred to judgment of Hon'ble Supreme Court in "Yamuna Expressway Industrial Development Authority vs. M/s Shakuntala Education and Welfare Society and Ors., 2022 SCC On Line SC 655". Learned counsel for the Appellant further submits that YEIDA is a Secured Creditor as per judgment of the Hon'ble Supreme Court in State Tax Officer vs. Rainbow Papers Limited, 2022 SCC OnLine SC1162. Learned counsel for the Appellant has also referred to Section 13 of the Uttar Pradesh Industrial Area Development Act, 1976. YEIDA being a Secured Creditor, Resolution Plan could not have treated as mere Operational Creditor and allocate only....
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....er dated 07.03.2023 in so far as it treats the claim of YEIDA. Challenge to the treatment of claim of YEIDA has been raised on various grounds in Company Appeal (AT) (Ins.) No.493 of 2023. It is relevant to notice that in Company Appeal (AT) (Ins.) No.493 of 2023 this Tribunal has passed following orders on 2.04.2023, 25.08.2023 and 05.12.2023: "20.07.2023: Mr. Ramji Srinivasan, Learned Senior Counsel for the SRA submits that they have given a proposal to the appellant which as per Learned Senior Counsel for the Appellant has been received. Learned Counsel for the parties prays that appeal be adjourned for four weeks. As prayed, list this appeal on 25th August, 2023 at 2.00 P.M." "25.08.2023: Mr. Gopal Jain, Learned Senior Counsel appearing for the appellant submitted that the proposal received by SRA is to be considered in the Board Meeting and it is likely to be held in the next month. List this appeal on 09.10.2023 at 2.00 P.M." "05.12.2023: Learned Counsel appearing for the appellant submits that the proposal has already been submitted before the State Government which is under active consideration and some more time may be required to take a....
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....ve consideration. In any view of the matter, the issues pertaining to YEIDA cannot be decided in this appeal, where YEIDA is not a party. Appellant has filed this appeal as Suspended Promoter and Director of the Corporate Debtor and the issues pertaining to claim of YEIDA need to be considered in Company Appeal (AT) (Ins.) No.493 of 2023 filed by YEIDA challenging the impugned order. In so far as submission of learned counsel for the Appellant that YEIDA is a Secured Creditor which has wrongly been treated as Operational Creditor, such issue is also needed to be considered in Company Appeal (AT) (Ins.) No.493 of 2023 filed by YEIDA. We, thus, are of the view that issues pertaining to the claim of YEIDA and their ground to challenge the impugned order approving Resolution Plan are best suited to be examined and decided in the appeal filed by YEIDA where impugned order is under challenge and grounds have been raised. We, thus, are of the view that the issues raised by the Appellant, as noted above, need to be examined and considered in the appeal filed by YEIDA i.e. Company Appeal (AT) (Ins.) No.493 of 2023 and there is no necessity to consider those issues in this appeal which is fi....
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.... of exercise of rights by Institutional Financial Creditors shall stand extinguished."" 51. Learned counsel for the Appellant relies on Section 135, 140 and 141 of the Contract Act. Section 135, 140 and 141 of the Indian Contract Act are as follows: "135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor.-A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract. 140. Rights of surety on payment or performance.-Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. 141. Surety's right to benefit of creditor's securities.-A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the....
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.... Kumar Jain vs. Union of India, (2021) 9 SCC 321". Submission was advanced before the Hon'ble Supreme Court that once a resolution plan is accepted, the corporate debtor is discharged of liability. As a consequence, the guarantor whose liability is co-extensive with the principal debtor i.e. the corporate debtor, too is discharged of all liabilities. Above submission is noted in Para 115 of the judgment, which is as follows: "115. The other question which parties had urged before this Court was that the impugned notification, by applying the Code to personal guarantors only, takes away the protection afforded by law; reference was made to Sections 128, 133 and 140 of the Contract Act, 1872; the petitioners submitted that once a resolution plan is accepted, the corporate debtor is discharged of liability. As a consequence, the guarantor whose liability is co-extensive with the principal debtor i.e. the corporate debtor, too is discharged of all liabilities. It was urged therefore, that the impugned notification which has the effect of allowing proceedings before NCLT by applying provisions of Part III of the Code, deprives the guarantors of their valuable substantive rights....
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....ontract. A surety is no doubt discharged under Section 134 of the Contract Act, 1872 by any contract between the creditor and the principal debtor by which the principal debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. But a discharge which the principal debtor may secure by operation of law in bankruptcy (or in liquidation proceedings in the case of a company) does not absolve the surety of his liability."" "125. In view of the above discussion, it is held that approval of a resolution plan does not ipso facto discharge a personal guarantor (of a corporate debtor) of her or his liabilities under the contract of guarantee. As held by this Court, the release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract." 56. The Resolution Plan after approval is binding on the Corporate Debtor, its employees, members, creditors including its Directors and Guarantors.....
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....thout any reasons for the same. 101. Shri Prashant Ruia a promoter/director of the corporate debtor in his personal guarantee dated 28-9- 2013, specifically stated as follows: "7. The obligations of the Guarantor under this Guarantee shall not be affected by any act, omission, matter or thing that, but for this Guarantee, would reduce, release or prejudice any of its obligations under this Guarantee (without limitation and whether or not known to it or any Secured Party) including: *** (g) any insolvency or similar proceedings." 102. Also, under the caption "terms of settlement", the final resolution plan dated 2-4-2018, as approved on 23-10-2018, specifically provided: "Financial Creditors: Pursuant to the approval of this resolution plan by the Adjudicating Authority, each of the financial creditors shall be deemed to have agreed and acknowledged the following terms: (i) The payment to the financial creditors in accordance with this resolution plan shall be treated as full and final payment of all outstanding dues of the corporate debtor to each of the financial creditors as of the effective date, and all agreements a....
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....iled by the corporate debtor, which have been invoked prior to the effective date, claims of the guarantor on account of subrogation, if any, under any such guarantee shall be deemed to have been abated, released, discharged and extinguished. It is hereby clarified that, the aforementioned clause shall not apply in any manner which may extinguish/affect the rights of the financial creditors to enforce the corporate guarantees and personal guarantees issued for and on behalf of the corporate debtor by existing promoter group or their respective affiliates, which guarantees shall continue to be retained by the financial creditors and shall continue to be enforceable by them." 104. We were also informed by the learned Senior Counsel that the personal guarantees of the promoter group have been invoked and legal proceedings in respect thereof are pending. It has been pointed out to us that Shri Prashant Ruia and other members of the promoter group, who are guarantors, are not parties to the resolution plan submitted by ArcelorMittal and hence, the resolution plan cannot bind them to take away rights of subrogation, which they may have if they are ordered to pay amounts....
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....his Court's judgment in V. Ramakrishnan case [SBI v. V. Ramakrishnan, (2018) 17 SCC 394 : (2019) 2 SCC (Civ) 458] , is set aside. 107. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. 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 would 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 applican....
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....f the law that Resolution Plan shall contain provision for effective implementation of the Resolution Plan. 61. We may first notice the relief and concession which have been granted by the Adjudicating Authority in the impugned order which are sought to be questioned by the Appellant. Learned counsel for the Appellant has challenged the reliefs and concessions granted in Para 157, 158, 160, 161 and 164. We first proceed to notice above reliefs and concessions granted by the Adjudicating Authority and as to whether the said grant was impermissible and violative of Section 30(2)(e). Para 157 of the impugned order is as follows: "157. The next relief and concession sought by the SRA is at Serial No.26 of Annexure II, which reads as under: "26. Issuance of necessary directions to SEBI, relevant stock exchanges and MCA for expediting the delisting of shares and to take necessary actions in a time bound manner as applicable under the prevailing laws in order to implement the Resolution Plan." As the relief sought is to facilitate implementation of the Resolution Plan, the same is granted." 62. From the above direction issued by the Adjudicating Authority ....
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....ection cannot be read as violating any law of the land. 67. In Para 161 following has been directed: "161. The next relief and concession sought is at Serial No. 30 of the Annexure II, which reads as under: "30. To direct the concerned Registrar of Companies to expeditiously associate, as per Applicable Laws, the Directors Identification Numbers (DIN) of the Directors who would be taking charge collectively as Board of Directors of the Corporate Debtor, pursuant to the approval of the Resolution Plan." The aforesaid relief is granted." 68. In the above relief, the applicant is asking for issuing direction "as per applicable laws", which cannot be said to violate any statutory provision. 69. Lastly, the Appellant has questioned the relief granted by Para 164. In Para 164, the Adjudicating Authority has directed following: "164. The next relief and concession sought at Serial No. 33 of Annexure II reads as under: "33. Issuance of suitable directions to the Ministry of Corporate Affairs, to waive the requirements under Section 140 of the Companies Act, 2013 in respect of the removal of the existing auditors of the Corporate Debtor.....
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....It is clear that any reliefs and concessions not been granted thus cannot have any adverse effect nor by non-grant of any relief and concession, for the reasons which are given by the Adjudicating Authority in the impugned order, there can be said to be any violation of law. There is no challenge to the reliefs and concessions not granted by the Adjudicating Authority by the Successful Resolution Applicant. The submission of the Appellant that as several reliefs and concession have not been granted which were part of the Resolution Plan, the Resolution Plan cannot be approved and should be sent back to the CoC also does not commend us. As noted above, the Successful Resolution Applicant has clearly contemplated that the Successful Resolution Applicant will implement the plan whether or not reliefs and concessions are granted. We, thus, do not find any infirmity in the reliefs and concessions granted by the Adjudicating Authority. As noted above, the fact that certain reliefs and concessions have not been granted could have not adverse effect on validity of the Resolution Plan or it can be said that any illegality has been crept in the Resolution Plan on the above ground. We thus an....
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....s it abundantly clear that the land offered by Suraksha to the stakeholders under the Resolution Plan takes into account the additional Land of 758 acres released from any encumbrances under the provisions of avoidance transactions. 75. In reply Para u, a table has been given where details of the land have been mentioned and land which was mortgaged to JAL Lenders, except that 100 acres rest has been taken into consideration in the Resolution Plan. The aforesaid reply clearly pleads that plan of Suraksha includes the entire 758 acres of land which was released from mortgage. We have already noticed that the IRP has filed an application before the Adjudicating Authority for avoidance of 7 transactions by which land of Corporate Debtor were mortgaged for securing the loan granted to JAL by the Lenders. The Adjudicating Authority has declared 6 transactions as preferential by order dated 16.05.2018 which order was set aside by the Appellate Tribunal but reversed by the Hon'ble Supreme Court in "Anuj Jain Vs Axis Bank Ltd., (2020) 8 SCC 401". It is relevant to notice that although in the reply filed by Respondent No.1 details of 858 acres which has been taken in the Resolution Plan ....
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....s filed by the Appellants are nothing but another attempt to create obstruction in implementation of the Resolution Plan. It is submitted that implementation of the Resolution Plan is in the benefit of all homebuyers. 79. It is well settled that interveners by the I.A. cannot claim any relief for themselves. Interveners are either to support the order which is subject matter of challenge or support the Appellant in their challenge. The Applicants who have filed their claims before the IRP and whose claims are reflected are fully entitled to approach the SRA/Monitoring and Implementation Committee for their entitlement, for which they are entitled as per the Resolution Plan. 80. In I.A. No.3218 of 2023, the Applicant has prayed for a direction to the Respondent No.1 to disclose as to when they will initiate refund of the money of the Applicant who cancelled the allotment of the unit prior to initiation of CIRP. I.A. No. 3218 of 2023 is disposed of with liberty to the Applicant to approach Respondent No.1. 81. I.A. No.2643 of 2023 is an I.A. filed by one Ayush Agarrwal who has claimed in the application that he had no knowledge of the insolvency resolution process and he had....