TaxTMI 
TaxTMI 
2022 (1) TMI 1430
X X X X Extracts X X X X
X X X X Extracts X X X X
.....1. The Appellant has created fixed deposits with the Corporate Debtor to manage their funds. 2.2. On November 29, 2019, the Corporate Insolvency Resolution Process was initiated against the Corporate Debtor by RBI under Rule 5 of Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 ("FSP Rules") through Company Petition No. 4258 of 2019. 2.3. The Adjudicating Authority vide its Order Dt. December 3, 2019, admitted the said petition against the Corporate Debtor. Accordingly, Respondent No. 1, Mr. R. Submramaniakumar, was confirmed as the Administrator and was further directed to perform all functions of Resolution Professional and complete the Corporate Insolvency Resolution Process of the Corporate Debtor according to IBC. 2.4. In the resolution process, a Resolution Plan was submitted by Respondent No. 3, Piramal Capital & Housing Finance Limited and was subsequently approved by Respondent No. 2 (CoC). Accordingly, Respondent No. 1 filed an Interlocutory Application No. 449 of 2021, among other things, under Section 30(6) and Section 31 of IBC for approval of the Resolution Plan.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Housing Bank Act, 1987, as it fails to make full Payment of the admitted claim of the Appellant. 3. Grounds of Appeal The Appellant filed the present Appeal before the Appellate Tribunal against the impugned Order passed by the Adjudicating Authority and the subsequent conduct of Respondent No. 2, failing to secure the interest of the Appellant as a deposit holder and secured financial creditor of the Corporate Debtor. The grounds of challenge are as follows: a) That the Resolution Plan is in contravention of the NHB Act as it fails to make full Payment of the admitted claim of the Appellant. b) The Adjudicating Authority ought to have rejected the Resolution Plan as it contravenes Section 29A (4) (a) of the NHB Act. c) That Adjudicating Authority ought to have rejected the Resolution Plan as it a contravention of Section 36(A) of the NHB Act. d) That Adjudicating Authority ought to have rejected the Resolution Plan as it a contravention of Section 12 (vi) and Section 18 of NHB Directions 2010. e) That Adjudicating Authority did not consider Section 36 of the NHB Act, which provided that Chapter V of the NHB Act will override other inconsistent laws or any instrument af....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the flying branch at the time of commission is 21 years. Officers undergo rigorous training and sacrifice the comforts of civilian life due to their postings far from home, away from the comforts and conveniences of city life, whilst exposing themselves to high risk at a young age. Every Air Warrior, irrespective of his rank, is ready to make the ultimate sacrifice for the defence of the Indian skies. This sacrifice alone ensures that the Indian Air Force lives up to its motto, 'Nabha Sparsham Deeptham'; in Sanskrit, it means 'Touch the Sky with Glory.' n) The Adjudicating Authority did not consider that in the case of loss of life of the Air Force Warriors, it is of utmost importance that the financial support is provided to the deceased's family. Payment of death claims must therefore be made quickly without delay. Consequently, it is imperative that deposits placed by the Appellant with the Corporate Debtor be repaid promptly on the death of air force personnel and maturity of deposits. As a result, the families of deceased air force personnel will face financial ruin, apart from a complete demoralisation of the armed forces. o) The amount deposited by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w that where two legislations contain non-obstante clauses. Still, they operate in different fields. Therefore, earlier legislation yielded to the latter one. (b) The Resolution Plan, as well as the distribution mechanism, are discriminatory and arbitrary. i) Under Clause 2.5.5 of the resolution plan, the Resolution Applicant had provided an additional amount to be paid to the Fixed Deposit holders, over and above the amount allocated to them by the CoC. However, this clause was rendered otiose by the CoC in as much as; the COC has arbitrarily and whimsically withdrawn the alleged benefit to the Appellants as is evident from a perusal of the minutes of 18th CoC, wherein it has been recorded that this additional amount shall not be over and above the resolution plan amount. ii) Further, the CoC has created an artificial and arbitrary distinction between similarly placed fixed deposit holders by categorising them into different groups and allocating discriminatory payments amongst these fixed deposit holders. A perusal of pages 183 and 184 of the Appeal clarifies the position. There cannot be discrimination between similarly placed creditors. iii) Vide the Impugned Order, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom the Insolvency of a regular Corporate Debtor. The Report of the subcommittee on the Insolvency of FSPs provides that the rationale for excluding FSPs from the purview of IBC is that the financial firms differ from other firms, inter -alia, for the reason that they handle large amounts of consumers money. Therefore, they are considered systemically important as their failure might disrupt the financial system. The sub-committee also noted that the Housing Finance Companies must comply with the directions and instructions issued by the National Housing Bank. (Report of the Sub-Committee of the Insolvency Law Committee for Notification of Financial Service Providers under Section 227 of the IBC, 2016.) ii) Therefore, because the Corporate Debtor is an FSP, the Insolvency of which poses systemic risks to the market, the scrutiny entailed in appreciation of the Resolution Plan must be stricter. The commercial wisdom of the CoC cannot stretch to cover regulatory aspects expressly provided for under the NHB Act read with the Directions. 5. Respondent No. 1's submission 5.1. Respondent submits that the Appellant does not have any locus to challenge the impugned Order. However, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and the NHB Directions will have to yield to the distribution mechanism for Payment to creditors under the Code due to the overriding effect of section 238 of the Code. 5.5. The respondent further submits that the resolution plan is under the Code and the Allied regulations. Therefore, the Appellant cannot bypass the distribution mechanism under the Code and see preferential treatment. In any event, the primary grievance of the Appellant is not against the resolution plan but again, the distribution mechanism 6. Written submissions on behalf of Respondent No. 2 The Appellants have filed the present Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 ("Code/IBC") aggrieved by the impugned Order dated June 07, 2021 ("Impugned Order") passed by the Learned AA/NCLT in IA. No. 449 of 2021 in Company Petition (IB) No. 4258 of 2019 approving the Resolution Plan submitted by 'Piramal Capital and Housing Finance Limited' ("Successful Resolution Applicant") for 'Dewan Housing Finance Corporation Limited' ("DHFL"). The Appellants' main grievance is that the approved resolution plan ("Resolution Plan") has equated the Appellants who are fixed deposit hold....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led by FD Holders. (ii) The RBI Act and NHB Act merely provide that the license of an HFC or NBFC may be cancelled if the deposit holders are not paid, or the company court may be approached. However, even in such cases, decisions are taken only after giving the HFC or NBFC a chance of being heard. (iii) Further, even the 'Banning of Unregulated Deposit Schemes Act', 2019 ("BUDSA") enacted on July 19, 2019, inter-alia to protect the interest of depositors under Chapter V dealing with "Restitution of Depositors" provides as under: "12. Save as otherwise provided in the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or the Insolvency and Bankruptcy Code, 2016, any amount due to depositors from a deposit taker shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the appropriate Government or the local Authority...." The legislation, which has been made to protect the rights of the FD Holders, in unambiguous terms makes it clear that the rights of FD Holders will have priority, save and otherwise, as provided under the Code. Primacy has been given to the Code despi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ositors would be classified as financial creditors and be treated accordingly." (iv) It is evident from the legislative intent that the Appellants as FD Holders are to be treated as Financial Creditors and, therefore, cannot claim any preferential treatment under the Code or any other legislation. E. There is no provision under the Code providing any preferential treatment to the Appellants. (v) The Appellants are Financial Creditors of DHFL; any right to recovery from DHFL must be as per the framework and mechanism provided under the Code. Once the Resolution Plan has been approved, Payment to the Appellants who are FD Holders will be made per the approved Resolution Plan. (vi) The AR being aware of the same addressed a letter dated January 17, 2020, to IBBI and RBI requesting that the relevant regulations be suitably amended so that FD Holders can be paid and urged that a compassionate view be taken concerning their payments. [Refer: Page 133 of the CoC's Reply] (vii) In the Second CoC meeting, the Administrator maintained that claims of the FD Holders could only be under the provisions of law and in the Third CoC Meeting, the AR requested that the payments to the F....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovides them with the liquidation value. Accordingly, the Resolution Plan is fully compliant with the Code, and hence the Impugned Order deserves no interference. (iv) It is also well established that the commercial wisdom of the CoC is not amenable to judicial review on any ground. [Refer; K. Shashidhar v. Indian Overseas Bank [(2019) 12 SCC 150] Paragraph 52), Kalparaj Dharamshi & Anr v. Kotak Investment Advisors Ltd. [Civil Appeal No. 2943-2944 of 2020] (paragraphs 154, 155); Jaypee Kensington Boulevard Apartments Welfare Association & Ore. vs NBCC (India) Ltd. & Ors. [Civil Appeal No. 3395 of 2020] order dated March 24, 2021] (v) In the present CIRP, the CoC has approved the Resolution Plan with a 93.65% majority. Accordingly, the distribution mechanism by 86.95% majority and the FD Holders charge has been taken into account for the purpose of calculating their liquidation value. Therefore, while other dissenting financial creditors recover 1.25%, the FD Holders are recovering 23.08% of their admitted claim. G. The Appellants' case is based purely on equity; (i) The Appellants have not pointed out any legal provisions to establish their right to get priority payment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and the Appellate Tribunal have been endowed with limited jurisdiction as specified in the Code and not to act as a court of equity or exercise plenary powers and that there is no residual equity-based jurisdiction with the Adjudicating Authority or this Appellate Tribunal. The Code itself circumscribes the jurisdiction of this Appellate Tribunal to review the resolution plan. (iv) In the present case, the Learned Adjudicating Authority has already found that the Resolution Plan is compliant with the Code. The Appellant has made no case that the Resolution Plan is not compliant with the Code. That being the case, there is no ground that the Appellant has demonstrated which would merit interference with the Impugned Order by this Hon'ble Appellate Tribunal. COMPANY APPEAL (AT) (INSOLVENCY) NO. 552 OF 2021 8. Anup Kumar Shrivastava and Vibha Shrivastava have preferred the present Appeal ('FD Holders') against the common impugned Order dated June 7, 2021, passed by the National Company Law Tribunal, Mumbai Bench ('Adjudicating Authority), whereby the Adjudicating Authority approved the Resolution Plan in IA. No. 449/2021 in CP (IB) No. 4258/MB/C-II/2019 and dispose....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on mechanism envisaged, the FD Holders are given the biggest haircut. Out of the admitted claims amount of Rs. Five thousand three hundred seventy-five crores, only Rs. 1243 Crores (i.e. 23.08%) has been directed to be paid to the fixed deposit holders. This is against the 40% (minimum) of the admitted claims agreed to be paid to the secured financial creditors with a tremendously huge risk appetite. 11. Submission on behalf of the Appellants:- 11.1. Appellants contended that Resolution Plan does not pass muster under Section 30(2)(e) being in contravention of the provisions of the NHB Act, read with the NHB directions. The entire scheme of the NHB Act is aimed at securing the interest of depositors, as evidenced by a perusal of the provisions of Section 29B, 29C, 30A, 31, and 33A of the Act. 11.2. The Appellants further contended that the Resolution Plan and the distribution mechanism are discriminatory and arbitrary. The CoC has created an artificial and arbitrary distinction between similarly placed fixed deposit holders by categorising them into different groups and allocated discriminatory payments. The Treatment of the Appellants under the Resolution Plan runs afoul of exp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 238 of the Code. It is also well settled that when two special statutes contain non-obstante clauses, the later statute will prevail over the earlier one. 12.4. Respondent No. 2 also contended that the FD Holders, including the Appellants in the present Appeal, are Financial Creditors of DHFL and have been treated accordingly under the provisions of the Code. The Appellants are Financial Creditors of DHFL, and therefore, any right to recovery from DHFL must be as per the framework and mechanism provided under I&B Code. Once the Resolution Plan has been approved, Payment to the Appellants who are FD Holders will be made per the approved Resolution plan. Therefore, the Appellants cannot be treated as a sub-class of creditors, and the Appellants case is based purely on equity. 13. Submission on behalf of Respondent no. 3 (Piramal):- 13.1. Respondent No. 3 submitted that the Appellants participated in the Corporate Insolvency Resolution Process in the capacity of Financial Creditors and were treated as such. Accordingly, the Appellants' claims are governed by the I&B Code alone. While the I&B Code is a self-contained Code exclusively dealing with Insolvency, the NHB Act and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vided to the deceased family. 14.4. Learned Counsel for the Appellant submits that Rule 5(d) of Financial Service Providers Rules, 2019 mandates that the Resolution Plan include a statement explaining how the Resolution Plan satisfies or intends to satisfy the requirements of engaging in the business of the FSP. Resolution Plan fails to include a message explaining how it plans to meet the needs of engaging in the business of an FSP, especially concerning the repayment of deposits. Further, the plan should comply with existing laws governing the entity's actions -further, the interest as per the terms of the deposit made by the FD holders. 14.5. Further, the Resolution Plan must contain provisions for complete repayment to poor and helpless depositors; otherwise, it would be held for any oblique purpose, which cannot be countenanced in law. The Hon'ble Supreme Court has held that the provisions of the RBI Act requiring payments to be made to depositors in total are a mandatory provision of law, which cannot be contracted out. The Ld. Counsel refers to the case of Integrated Finance Co. Ltd. v. RBI, (2015) 13 SCC 772 wherein at para 52 and 56 Hon'ble Supreme Court has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e non-obstante clause in Section 45Q of the RBI Act. 14.7. The overriding effect extends to any other law for the time being in force and to any instrument having effect by such law. The reasons for giving such categorical overriding effect are evident from the objects and reasons given in the amendment Act viz. the magnitude of the exploitations of the poor sections of the society, leading to utter destruction of innumerable families was the underlying impetus to bring NBFC under strict control of Companies Act, 1956. Accordingly, Hon'ble Supreme Court has held that Chapter III-B of the RBI Act is a self-contained Code. 14.8. Hon'ble Supreme Court has further held that submissions of the Appellant that Section 45QA of the RBI Act is in pari materia if not identical with Section 58A of the Companies Act cannot be accepted. Further, suppose a scheme of arrangement is not prohibited under the latter Section in that case; it cannot be prohibited under the former, i.e. Section 45QA of the RBI Act cannot be accepted. 14.9. The allocation of the Resolution Amount is contrary to law, and the Resolution Plan/resolutions passed by the CoC to the extent that the FD Holders are not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....non-banking financial Company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the Order: Provided that the Company Law Board may, before making any order under this sub-section, give a reasonable opportunity of being heard to the non-banking financial Company and the other persons interested in the matter. [45-MB. Power of Bank to prohibit acceptance of deposit and alienation of assets.-(1) If any non-banking financial company violates the provisions of any section or fails to comply with any direction or Order given by the Bank under any of the provisions of this Chapter, the Bank may prohibit the non-banking financial Company from accepting any deposit. (2) Notwithstanding anything to the contrary contained in any agreement or instrument or any law for the time being in force, the Bank, on being satisfied that it is necessary so to do in the public interest or in the interest of the depositors, may direct, the non-banking financial Company against which an order prohibiting from accepting deposit has been issued, not to sell, transfer, create charge or mortgage or deal in any manner with i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wer of Bank to file winding-up petition.-(1) The Bank, on being satisfied that a non-banking financial company- (a) is unable to pay its debt; or (b) has by virtue of the provisions of Section 45-IA become disqualified to carry on the business of a non-banking financial institution; or (c) has been prohibited by the Bank from receiving deposit by an order and such Order has been in force for a period of not less than three months; or (d) the continuance of the non-banking financial Company is detrimental to the public interest or to the interest of depositors of the Company, may file an application for winding up of such non-banking financial Company under the Companies Act, 1956 (1 of 1956). (2) A non-banking financial company shall be deemed to be unable to pay its debt if it has refused or has failed to meet within five working days any lawful demand made at any of its offices or branches and the Bank certifies in writing that such Company is unable to pay its debt. (3) A copy of every application made by the Bank under sub-section (1) shall be sent to the Registrar of Companies. (4) All the provisions of the Companies Act, 1956 (1 of 1956) relating to winding-up o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntil maturity. Therefore, it is not a loan in the strict sense of the term. (Deepak Insulated Cable v. UOI, (at p. 1288, para 9 at p. 1289 of compilation); Vijay Mills Co v. State of Gujarat. 14.16. In response to the argument of the Appellant, the Learned Senior Counsel for Respondent CoC submits that there is no provision in the RBI Act, the NHB Act, or any other law that mandates that depositors have to be paid in full. 14.17. A plain reading of Sections 29 A(6), Section 29 A(4)a), 36 and 36A of the National Housing Bank Act, 1987 ("NHB Act"), read with para 39 of the Housing Finance Companies (NHB) Directions, 2010 ("NHB Directions"), as well as sections 45Q and 45QA of the RBI Act read with para 39 of RBI Master Direction on Non- Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 ("RBI Directions") makes it amply clear that none of the enactments guarantees full payment to the FD. Holders. 14.18. RBI also acknowledged the same in its replies to the Writ Petitions filed by FD. Holders before the Hon'ble Delhi High Court and the Hon'ble Bombay High Court. 14.19. The RBI Act and the NHB Act merely provide that the license of an H....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... DHFL and have been treated accordingly. Thus, the bald, unsupported and misleading contention of the Appellants that the amount payable to FD Holders are held in trust by DHFL is entirely fictional and ought not to be entertained. 14.26. It is pertinent to mention that there is no provision in either the RBI Act, the NHB Act, or any other law that mandates that depositors have to be paid in full. Sections 29 A(6), 29 A(4)(a), 36 and 36A of National Housing Bank Act, 1987 is given below for ready reference: "[29-A. Requirement of registration and net owned fund.- [(1) Notwithstanding anything contained in this Chapter or in any other law for the time being in force, no housing finance institution which is a company shall commence housing finance as its principal business or carry on the business of housing finance as its principal business without- (a) obtaining a certificate of registration issued under this Chapter; and (b) having the net owned fund of ten crore rupees or such other higher amount, as the Reserve Bank may, by notification, specify. (2) Every housing finance institution which is a company shall make an application for registration to the Reserve Bank in su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e prejudicial to the public interest or in the interests of the depositors: [Provided that the Reserve Bank may, wherever it considers necessary so to do, require the National Housing Bank to inspect the books of such housing finance institution and submit a report to the Reserve Bank for the purpose of considering the application.] (5) The [Reserve Bank] may, after being satisfied that the conditions specified in sub-section (4) are fulfilled, grant a certificate of registration subject to such conditions which it may consider fit to impose. (6) The [Reserve Bank] may cancel a certificate of registration granted to a housing finance institution under this Section if such institution- (i) ceases to carry on the business of a housing finance institution in India; or (ii) has failed to comply with any condition subject to which the certificate of registration had been issued to it; or (iii) at any time fails to fulfil any of the conditions referred to in clauses (a) to (g) of sub-section (4); or (iv)... (a) fails to comply with any direction issued by the [Reserve Bank or the National Housing Bank] under the provisions of this Chapter; or (b) to maintain accounts in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) other intangible assets; and (b) further reduced by the amounts representing- (1) investments of such institution in shares of- (i) its subsidiaries; (ii) companies in the same group; [(iii) all other housing finance companies; and] (2) the book value of debentures, bonds, outstanding loans and advances (including hire-purchase and lease finance) made to, and deposits with,- (i) subsidiaries of such Company; and (ii) companies in the same group, to the extent such amount exceeds ten per cent of (a) above; [(II) the expressions "subsidiaries" and "companies in the same group" shall have the meanings respectively assigned to them in the Companies Act, 2013 (18 of 2013): Provided that the National Housing Bank shall, in consultation with the Reserve Bank, specify the companies to be deemed to be in the same group.] 29(4) The [Reserve Bank], for the purpose of considering the application for registration, may require to be satisfied by an inspection of the books of such housing finance institution or otherwise that the following conditions are fulfilled:- (a) that housing finance institution is or shall be in a position to pay its present or future depositors ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re assets of third parties are held in trust by the Corporate Debtor. 14.29. FD Holders have not filed any documents to show that amount deposited by the FD Holder was assets held in trust. Therefore, there is no legal justification whatsoever given by the Appellant/F.D. Holder to show that the money deposited by them was held in trust by DHFL and the amount held by DHFL were not assets of DHFL. Thus, Rule 10 of FSP Rules is inapplicable about the amount deposited by FD Holders. 14.30. The Learned Senior Counsel representing CoC submits that no full payment right exists under the NHB Act, the RBI Act, or any other subordinate legislation. Moreover, even if it exists, any such request would be wholly repugnant to provisions of the Code, which provide for a specific manner and priority of Payment; hence will not be applicable in terms of S. 238 of the Code. The minimum amount a creditor is mandatorily required to be paid in a Resolution Plan, i.e. liquidation value. 14.31. Further, it is well-established law that when two special statutes contain a non-obstante clause, the latter will prevail over the earlier statute. In case of any inconsistency between the provision of the Code ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d arrangements under the Companies Act, 2013; hence not applicable to the present case. 14.35. Appellants case that the amount of fixed deposit held by the Bank as a trustee is the property of the customer held by the Bank as a trustee is negated by the recent observation in para 44 of the Judgment of the Hon'ble Supreme Court in the case of N. Raghavender v state of Andhra Pradesh, CBI. 14.36. In this case, Hon'ble Supreme Court has observed that; "As already clarified by us, to prove the charge under Section 409 IPC, the prosecution need not prove the exact manner of misappropriation. Once the 'entrustment' is admitted or proved, as has been done in the present case, the onus lies on the Accused to prove that the entrusted property was dealt by him in an acceptable manner. Thus, misappropriation with this dishonest intention is one of the most important ingredients of proof of 'criminal breach of trust'. The offence under Section 409 IPC can be committed in varied manners, and as we are concerned with its applicability in the case of a bank officer, it is fruitful to point out that the banker is one who receives money to be drawn out again when the own....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the owner/settler being the owner of the property, he is entitled to take it back in the event it is not utilised for the purpose the owner intended to. But that is not the case when money from the debtor or on behalf of the debtor has gone out towards discharge of an obligation. In the case of trust, ownership of that property or money remains with the owner as long as it is not utilised for the purpose intended to. That owner has no obligation to part with his property/money. 59. In case of homebuyers' issue, once homebuyers entered into an agreement with a developer and when their relations entered into turbulence and not in a position to become normal, the relation in between them will become creditor and debtor and the person under obligation shall refund the money of the homebuyers. In the given case, JAL deposited money on behalf of JIL for utilisation of the same to the homebuyers of the Corporate Debtor. Therefore, it is evident that this deposit is made towards an obligation. When any money is received towards an obligation, it can neither be construed as trust money nor construed as governed by constructive trust, therefore we have not found any merit to say that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....compliance with the provisions of the IBC. In the light of the Hon'ble Supreme Court decision in Essar Steel (supra), it is unequivocally clear that the CoC members have the critical task of not only running the resolution process but also working towards maximisation of value of the Corporate Debtor for all the stakeholders, not fixed deposit holders alone, and providing for the manner of distribution of funds as obtained by way of a resolution plan. By seeking Payment outside the resolution process, the appellants who are also CoC members (other CoC members being banks, etc. are acting in a silo for obtaining funds at the outset, which is not only against the interest of all the stakeholders but also against a holistic resolution for maximisation of value & distribution of funds between different classes of creditors. 14.42. As per the decision of the Hon'ble Supreme Court in Rajendra K Bhutta v Maharashtra Housing and Area Development Authority and others (para 26), it is settled that provisions of section 14 of the IBC must be strictly observed. Section 14 of IBC inter alia prohibits alienation, transfer, disposal of any asset of the Corporate Debtor. Since IBC is a ti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o put in a nutshell, the Adjudicating Authority has limited jurisdiction in the matter of approval of a resolution plan, which is well-defined and circumscribed by Sections 30(2) and 31 of the Code read with the parameters delineated by this Court in the decisions above-referred. The jurisdiction of the Appellate Authority is also circumscribed by the limited grounds of Appeal provided in Section 61 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 CoC. Within its limited jurisdiction, if the Adjudicating Authority or the Appellate Authority, as the case may be, would find 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 Code and exposited by this Court. 14.46. Further, in the case of Ebix Singapore (P) Ltd. v. Committee of Creditors of Educomp Hon'ble Supreme Court has observed that; 115. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....11 of the NCLT Rules 2016 or even the powers of this Court under Article 142 of the Constitution must be closely scrutinised for broader compliance with the insolvency framework and its underlying objective. The adjudicating mechanisms which have been specifically created by the statute, have a narrowly defined role in the process and must be circumspect in granting reliefs that may run counter to the timeliness and predictability that is central to the IBC. Any judicial creation of a procedural or substantive remedy that is not envisaged by the statute would not only violate the principle of separation of powers, but also run the risk of altering the delicate coordination that is designed by the IBC framework and have grave implications on the outcome of the CIRP, the economy of the country and the lives of the workers and other allied parties who are statutorily bound by the impact of a resolution or liquidation of a Corporate Debtor. 14.47. Hon'ble Supreme Court has observed that while exercising the interpretative task by the Adjudicating Authority and the Appellate Authority, the powers are limited, to the extent that infrastructure under the Code is sufficiently develope....
X X X X Extracts X X X X
X X X X Extracts X X X X
....posit holders are not paid. Such a decision can be taken only after allowing the concerned Housing Finance Company or NBFC to present its case. None of the legislation provides that FD holders are required to be paid in full. Therefore, it is not the case of the Appellant's that RBI is not empowered to act under the RBI Act or the FSP Rules. 14.52. Further, in the case of Pratap Technocrats Private Limited Hon'ble Supreme Court has held; "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 i....