TaxTMI 
TaxTMI 
2025 (1) TMI 81
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....en dismissed. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are:- 2.1. The CIRP against the Corporate Debtor- M/s. Amtek Auto Limited commenced by order dated 24.07.2017 passed on an application by Corporation Bank (now Union Bank of India). In the CIRP, public announcement was made on 27.07.2017 in pursuance of which Appellant filed claim for an aggregate amount of Rs.876,42,09,926/-. The claim included an amount of Rs.39,61,54,488/- under Non Fund Based (Letter of Credit/ Bank Guarantee Facility). The Resolution Professional on verification did not admit the claim of Rs.39,61,54,488/- which had not crystalised as on Insolvency Commencement Date. The CoC was constituted in which the Appellant had vote share of 6.64%. The Resolution Professional after commencement of CIRP wrote to the Appellant to continue the Non Fund Based facility on account of business requirement of the corporate debtor to run it as a going concern. The Corporation Bank extended the Non Fund Based Facility to the corporate debtor starting from 24.07.2017 till 24.10.2018. Letter of Credit/ Bank Guarantee issued by Appellant during CIRP period were debited from the account of t....
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....ibunal by order dated 04.10.2023 allowed the IA No.3961 of 2022 filed by the CoC recalling the judgment and order dated 27.01.2022. The CoC was impleaded as party Respondent to the Appeal. Reply has been filed by the Respondent No.4 (CoC). Resolution Professional had already filed a reply to the appeal. Appeal was heard by this Tribunal and judgment was reserved on 09.12.2024. 3. We have heard Shri Abhijeet Sinha, Learned Senior Counsel along with Shri Alok Kumar, Learned Counsel for the Appellant, Shri N. Venkatraman, Learned ASG has appeared for the CoC and Shri Sumant Batra, Learned Counsel for the Resolution Professional. 4. Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant submits that the letter of credit which was issued by the Bank were honoured during CIRP period due to the fact that the Resolution Professional had requested the Union Bank of India to continue its Non Fund Based facility to keep the corporate debtor as a going concern. Letter of credits issued by the bank were required to be honoured by the Bank and Appellant has not unduly enriched itself. The Resolution Professional having been regularly giving instructions with respect to debiting of c....
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....tly been decided by the CoC to deduct from the pay out of the Appellant. It is submitted that in the meetings of the CoC held on 05.02.2020 and 07.02.2020, two options were placed. Firstly, to treat the aforesaid amount as interim finance as suggested by the Appellant or to deduct the said amount from the payouts of the Appellant. CoC after due deliberation by majority vote has approved the second option i.e. deduction of the amount from payouts of the Appellant. The Appellant being financial creditor having 6.64% voting share had no right or jurisdiction to challenge the decision of the CoC taken in exercise of commercial wisdom. Dissenting Financial Creditor and all other stakeholders are fully bound by the decision taken by the CoC. During CIRP period, the LCs issued were of Rs.1,49,66,13,386/- and payment debited by Appellant during the CIRP period was Rs.1,83,00,47,429/-. Thus, excess amount of Rs.33,34,34,043/- was deducted by the Appellant which has rightly been directed to be deducted from the payouts of the Appellant since Appellant was not entitled to make that recovery. It is submitted that when only an amount of LCs of Rs.1,49,66,13,386/- has been issued during the CIRP....
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....to deduct the amount of Rs.34 Crore from the final payment to be made to Applicant as per the scheme of distribution of amount under Resolution Plan; and 3. Direct the Respondent Resolution Professional to further include amounts of Rs.6,22,58,072.64/- towards LC payments and Rs.61,39,000/- towards Bank Guarantee (BG) payments in the total admitted claim of Applicant; or 4. To pass such other order or relief be granted as this Hon'ble Tribunal deems fit and proper having regard to the facts and circumstances mentioned in the present Application." 9. Reply was filed by the Resolution Professional to the IA No.222 of 2020 which reply has been brought on the record by the Resolution Professional as Annexure R1 in the reply filed in this appeal. It is useful to notice the pleadings of the Resolution Professional which was made in the reply filed in IA No.222 of 2020. Details of the claim submitted by the Appellant and claim which was verified by the Resolution Professional has been mentioned in paragraph 6 of the reply which is as follows:- "6. It is submitted that pursuant to the Public Announcement made by the Answering Respondent as IRP, the Applica....
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.... reply refers to Annexure R2 which is detailed table of LCs opened from 24th July 2017 to 24th October 2018 and further payments debited by Corporation Bank. Annexure R2 to the reply is as follows : - S. No. Particulars INR 1 NET LCs issued during CIRP period # [A] 1,49,66,13,386 2 Payments made/ debited by Corporation Bank on account of LCs expiring during CIRP [B] 1,83,00,47,429 3 Excess amounts debited by Corporation Bank [A-B] -33,34,34,043 #Represents the total amounts payable to Corporation Bank on account of LCs opened by Corporation Bank during CIRP starting from 24-Jul-17 S. No. Month LCs issued (INR) LCs Cancelled* (INR) NET LCs issued during CIRP period (INR) 1 Jul-17 3,47,82,522 32,25,200 3,15,57,322 2 Aug-17 18,88,67,838 1,70,12,232 17,18,55,606 3 Sep-17 12,46,75,988 42,68,670 12,04,07,319 4 Oct-17 7,95,16,397 12,39,020 7,82,77,377 5 Nov-17 13,82,13,132 69,77,961 13,12,35,171 6 Dec-17 13,34,90,426 24,63,162 13,10,27,264 7 Jan-18 6,49,64,611 62,27,878 5,87,36,733 8 Feb-18 7,61,18,847 1,35,36,488 ....
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....onal comfort in the resolution plan submitted by LHG, where an additional clause was added, requiring the successful applicant to post closing/implementation of the plan, provide necessary collateral or undertake to make full payments for the expiring LCs on respective expiry dates and the same was inserted. k) Post the delay of implementation of LHG Resolution Plan the prior agreement to use the LCS continued, however the RP received a letter from the Bank stating continuation of Non Fund Based limits subject to resolution for NFB limits as proposed by accepted subject ("Continuation of Limits") to covering the limit by the Bank from a Scheduled commercial bank. (24 Oct 2018) l) Owing to concerns about the going concern of the CD, a reply to the Bank was sent by RP stating the delay in implementation of the Resolution Plan and requesting the bank not to withdraw the NFB limits during this period to support the going concern of the CD. (30 Oct 2018) m) Around Nov'18 this time the Bank despite the above understanding and communication stopped further LC issuance and started to recover the dues on account of the afore-mentioned LCs despite a contrary co....
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....inance status to the Rs. 34 Cr LC adjusted by them to accord priority to this and thus regularizing the same and Existing Non-fund-based limit can be made available to the Corporate Debtor/RA on the same terms and conditions as applicable to the facility utilized by the Corporate Debtor during CIRP. n) A representative from Corporation Bank urged to the members of the CoC that since there is no precedent to the manner in which such situations should be dealt with, the LCs so recovered should be accorded the status of interim finance and not reduce if from the share of upfront proceeds due to the them. o) The RP proposed that the said matter can be put to vote along with resolution plan to chose from the below two alternatives; * Option 1: Accord interim Finance status to the Rs. 34 Cr LC adjusted by Corporation Bank to accord priority to this and thus the LC limits gets regularized and Existing Non fund-based limit be dame available to the Corporate Debtor/Resolution Applicant on the same terms and conditions as applicable to the facility utilized by the Corporate Debtor during CIRP. The facility to be utilized for purchase of steel and Scrap * O....
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....ve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section]: [Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 shall apply to the resolution applicant who has not submitted resolution plan as on the date of ....
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....ution Plan. Resolution Plan approved by the CoC is not under challenge which has become final. Counsel for the Respondent No.4 has also pleaded that the Resolution Plan approved by the CoC was fully implemented on 08.12.2021. It is useful to extract paragraphs 21 and 22 of the reply of Respondent No.4 which is as follows:- "21. It is relevant to mention here that the Appellant filed present appeal under Section 61 of the Code assailing the impugned order passed by the Ld. NCLT and no interim orders were passed by this Hon'ble Tribunal in the present appeal. Thereafter, on 18.11.2021, this Hon'ble Appellate Tribunal reserved its orders. In the meanwhile, the Hon'ble Supreme Court vide its' judgment and order dated 01.12.2021 in Committee of Creditors of Amtek Auto Limited through Corporation Bank Vs. Dinkar T. Venkatasubramanian [Civil Appeal No. 6707/2019], directed as follows: "...Therefore, we direct all the concerned parties to the approved resolution plan and/or connected with implementation of the approved resolution plan including IMC to complete the implementation of the approved resolution plan, within a period of four weeks from today, wit....