AI Drafter 
TaxTMI 
TaxTMI 
2024 (11) TMI 482
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....A.1370/2021 filed by the Appellant in C.P. (IB) No. 3622(MB)/2018. By the Impugned Order, Adjudicating Authority has dismissed the I.A.1370/2021, aggrieved by which Order, this Appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: i. The TJSB Sahakari Bank Ltd. filed an Application under Section 7 against Corporate Debtor M/s. Unimetal Castings Limited, (UCL) in C.P. (IB) No.3622/I&B/MB/2018. ii. Vide Order dated 25.01.2019, for debt and default of Rs.6,38,78,417/-, Section 7 Application was admitted and Tejas Jatin Parikh, Respondent No. 1 herein was appointed as Interim Resolution Professional (IRP) who was subsequently confirmed as Resolution Professional (RP). iii. Public announcement was made by the IRP. Committee of Creditors (CoC) was constituted with TJSB Sahakari Bank Ltd., Reliance Asset Reconstruction Company Ltd. and Mahindra & Mahindra Financial Services Ltd. iv. On 15.07.2019, CoC unanimously, voted for Liquidation of the Corporate Debtor. v. Respondent No. 4, the Promoter & Executive Director of the Corporate Debtor, UCL as well as Joshi Deodhar Engineering Company Limite....
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.... filed an Application before the Adjudicating Authority. I.A. No. 1370/2021, praying for refund of amount of Rs.3,25,00,000/-. xvi. On 25.01.2022, Adjudicating Authority directed the RP to proceed for Liquidation of the Corporate Debtor. Adjudicating Authority heard the I.A. No. 1370/2021 which was opposed by the CoC by filing a Reply. Adjudicating Authority heard the I.A. No. 1370/2021 and by Impugned Order dated 26.07.2022, rejected the Application. Adjudicating Authority by rejecting the Application also imposed a cost of Rs.1 Lakh on the Appellant. Adjudicating Authority also returned a finding that I.A. is nothing but a collusive Application filed by the Appellant at the behest of Respondent No. 3 to 6, who were the Promoters of the Corporate Debtor. It was held that withdrawal of CIRP under 12A with regard to JDECL cannot be legally reversed. 3. Learned Counsel for the Appellant challenging the Order submits that first & second MoU, both contemplated closure of the CIRP of JDECL by 12A Application and approval of Resolution Plan in the CIRP of Corporate Debtor by 30.09.2020 which fact having not accomplished, the Appellant was entitled to refund of the amount whic....
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....itled for any refund. It is submitted that Appellant is third party to the CIRP and under the MoU, there was Clause XII, which was regarding the dispute resolution, Appellant could have taken recourse of the Clause XII of the MoU for its claim, if any, and the Application filed before the Adjudicating Authority for refund of the amount was not maintainable. 5. We have considered the submission of Counsel for the Parties and perused the record. 6. We have noted above that CIRP of the Corporate Debtor commenced by Order dated 25.01.2019. The CIRP against the JDECL was also initiated on an Application filed by the TJSB Sahakari Bank Ltd. The MoU dated 07.08.2020 which was termed as a revised MoU between the Financial Creditor of the Corporate Debtor, UCL and Financial Creditors of JDECL and Promoter Directors is filed as an (Annexure A-6) contains the terms and conditions. The MoU itself contains a statement that Promoter/Directors of the UCL and JDECL and the professionals and investors have formed a company, i.e., Globemet Engineering Private Limited for investment in the process of Resolution of debt of UCL and JDECL. The MoU 07.08.2020 refers to earlier MoU dated 16.03.2020 ....
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....ty Five Lakh Only) out of which Rs.25 Lakh shall be paid on execution of this MOU and the balance Rs.9.50 Crore will be paid as under: Sr. No. Due Date Amount of Instalment (Rs. In Lakhs) 1 9 months from effective date of NCLT order approving the Resolution Plan 25 2 Last week of the subsequent quarter after previous instalment 25 3 Last week of the subsequent quarter after previous instalment 50 4 Last week of the subsequent quarter after previous instalment 50 5 Last week of the subsequent quarter after previous instalment 50 6 Last week of the subsequent quarter after previous instalment 75 7 Last week of the subsequent quarter after previous instalment 75 8 Last week of the subsequent quarter after previous instalment 75 9 Last week of the subsequent quarter after previous instalment 75 10 Last week of the subsequent quarter after previous instalment 75 11 Last week of the subsequent quarter after previous instalment 75 12 Last week of the subsequent quarter after previous instalment 100 13 Last week of the subsequent quarter after previous instalment 10....
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.... to the Financial Creditor on execution of the MoU towards the full and final settlement against all dues of JDECL. Para III is as follows: "III. It was agreed that the resolution of debts of Financial Creditors No. 1 and 2 in respect of "JDECL" will be settled by GEPL as follows - a) GEPL will make payment of Rs.3 Crore (Rupees Three Crore Only) to the Financial Creditors No. 1 and 2 on execution of this MOU towards one time full and final settlement against all dues of JDECL. b) The parties noted that UCL is a holding company of JDECL in which UCL holds more than 80% of equity shares and since UCL is undergoing CIRP under the Code, it will not be possible to resolve the debts of JDECL till the resolution plan for UCL is approved by the NCLT. It is, therefore, a pre-requisite for the settlement of the dues of JDECL that the resolution plan for UCL is approved by the NCLT so that the management control of JDECL will vest with the new management. It was, therefore, agreed that the effective date for the settlement of JDECL dues to the Financial Creditors No. 1 and 2 will be the date of approval of resolution plan by the NCLT. c) On payment of Rs.3....
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....Promoter Directors of UCL and JDECL and their Investment Partners through GEPL shall not be required to pay any Earnest Money Deposit or Bank Guarantee, as required under the RFRP issued in case of UCL and the conditions of the RFRP of UCL shall stand modified accordingly." 10. From the facts brought on the record, it is clear that insofar as dues of JDECL is concerned, 12A Application was filed which was allowed by the Adjudicating Authority approving the 12A and the CIRP of JDECL thus came to be closed. Entire debt of the Financial Creditor with JDECL was Rs.3 Crores, which CIRP stood closed and entire debt also discharged. MoU also indicates that Rs.25 Lakhs was to be paid with regard to debt of Corporate Debtor on execution of MoU and rest of the payments were made within 4 years as per the schedule given in revised MoU as noted above. No further payment with regard to dues of Corporate Debtor could be paid since the Resolution Plan could not be approved by the Adjudicating Authority, although CoC has approved the Resolution Plan for the Corporate Debtor. 11. Now we come to the Application which was filed by the Appellant being I.A.1370/2021. Application filed by the Appe....
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....ed or undone by this Tribunal. 3. It is also noticed that the above application was filed on 30.06.2021 belatedly against the Respondents as an afterthought to cover up their own latches. The First communication received from Globomet with regard to return of the Settlement Amount and supposed nonadherence to obligations under the 1st MOU and 2nd MOU was only on 22.12.2020, by which time all processes and proceedings had already culminated and now cannot be reversed. 4. It is very surprising to observe that the applicant while arraying the promoters and directors of both the companies as Respondent Nos. 3 to 6 is praying refund only from COC i.e. Respondent No.2. 5. It is also observed that Respondent Nos. 3 to 6 are the people who are really responsible for failure of CIRP process of M/ s Unimetal Castings Ltd and the same Respondents are also part of the present Applicant M/ s Globomet Engineering Pvt. Ltd. Therefore, it is very clear from the above conduct of the Applicant that the applicant is trying to take advantage of their own wrong and demanding refund only from COC by exonerating its own people from their personal liability. Therefore, the above....
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....re the Adjudicating Authority for approval. The fact remains that Plan submitted by Promoters could not be approved for the Corporate Debtor because it was as per the Respondent No. 1 it was not placed before the Adjudicating Authority on account of non-payment of Performance Security. As noted above, MoU dated 07.08.2020 also contains Clause XII with regard to dispute resolution which is as follows: "XII. GOVERNING LAW AND DISPUTE RESOLUTION This Memorandum of Understanding shall be governed by and construed in accordance with the laws of India. All disputes and differences of opinion arising out of or in connection with this Agreement shall be referred to a sole arbitrator to be appointed by the parties with mutual agreement. The arbitration shall be in accordance with the provisions of the Indian Arbitration & Conciliation Act, 1996 as amended from time to time. The place of arbitration and sitting/ venue shall be in Mumbai. The language of arbitration proceeding shall be in English. This Clause shall survive the termination of this Agreement. The cost of arbitration shall be shared equally by the parties." 16. Any dispute arising out of MoU between the Fina....
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....he MoU with regard to dues of Corporate Debtor. We have already noticed the undertaking contained in Clause VI, which contained the undertaking that with the Resolution Plan of UCL is not approved and withdrawal of CIRP proceeding under 12A is not allowed before 30.09.2020, the amount shall be refunded. Clause B further provided that deposit of the Rs.3,25,00,000/- in no lien account Promoter/Directors of UCL shall not be required to pay any Earnest Money Deposit or Bank Guarantee as required under RFRP issued in case of UCL and the conditions of UCL shall stands modified accordingly. Clause VI (b) of MoU is as follows: "b) The Financial Creditors undertake that the said amount of Rs.325 lakhs shall not be withdrawn or appropriated by them till the resolution plan for UCL and the withdrawal of CIRP proceedings under Section 12 A of the Code in case of JDECL have been approved by NCL T as the said amount is not payable to them without the aforesaid approvals from NCL T. The Financial Creditors shall not exercise lien, attachment etc on the amount deposited in the aforesaid No Lien Account under any circumstances." 22. We find that in the MoU there was no Clause of forfei....