TaxTMI 
TaxTMI 
2024 (8) TMI 1600
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....mali, Advocates for R1, Mr. Tushar Mehta, Sr. Adv., Mr. Satish Parasaran, Sr. Adv., for Mr. Krishnava Dutt, Advocate, Ms. Aditi Chaudhury, Advocate, Ms. Bhavya Mohan, Advocate, Mr. Ann Finiya Pereira, Advocate, Ms. Mili Baxi, Advocate, Mr. Tanmay Mehta, Advocate, Mr. Kanu Agarwal, Advocate, Mr. Ashwini Vaidlialingam, Advocate, Mr. Gowri MS Advocate for R2 (BCCI), Mr. Mukul Rohatgi, Sr. Advocate, Mr. Krishnendu Datta, Sr. Advocate, Mr. P.H. Arvindh Pandian, Sr. Advocate, For Mr. Avinash Balakrishna, Advocate, Mr. Prateek Kumar, Advocate, Mr. Ashwin Bishwi, Advocate, Mr. Nikhilesh Rao, Advocate, Mr. Thriyambak Kannan, Advocate, Mr. Raveena Rai, Advocate, Mr. Gautam Mudgal, Advocate, Mr. Kevin Joseph, Advocate, Ms. Tejas Shetty, Advocate, Ms. Smrithi Nair, Advocate, Mr. Abhishek, Advocate for Intervenor, For Applicant in I.A.7 27/2024, ORDER (HYBRID MODE) PER: JUSTICE RAKESH KUMAR JAIN (ORAL) The Board of Control for Cricket in India (in short 'BCCI") filed a Company Petition (IB) No. 149/BB/2023 on 23.09.20223 under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') against Think and Learn Pvt. Ltd. (Corporate Debtor) before the Adjudicating Auth....
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....CIRP) has been initiated in respect of the Corporate Debtor therein by appointing the IRP, the instant C.P is disposed of by granting liberty to the Petitioner herein to put-forth their claim before the IRP appointed in C.P (IB) No. 149/BB/2023 in accordance with the provisions of the IBC 2016 and the Regulation made thereunder. 4. However, at the request of the Learned Senior Counsel for the Petitioner, we hereby grant liberty to the Petitioner to seek restoration/revival of the said petition bearing C.P (IB) No. 55/BB/2024 depending on the subsequent developments in the matter at the Appellate level; if any. 5. Accordingly, C.P (IB) No. 55/BB/2024 is disposed of and all the pending IAs in the present case stands closed." 6. As per the above order, the Applicant has been given liberty to put forth their claim before the IRP, appointed in the present case, in terms of the provisions of the Code and has also been given liberty to seek restoration/revival of the petition bearing CP (IB) No. 55/BB/2024 depending upon the subsequent developments in the matter at the Appellate level. 7. The Applicant has also challenged the order dated 16.07.2....
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.... an aggregate of USD 1,182,000,000/- were disbursed on 24.11.2021 after deduction of the agreed original issue discount of USD 18,000,000. 16. As per the credit agreement, the Corporate Debtor issued a guarantee deed dated 24.11.2021 (the Onshore Guarantee) in favour of the Applicant for the benefit of the secured parties pursuant to its approval by the Reserve Bank of India on 29.03.2022. 17. The parties also executed forbearance agreement on 06.01.2023 whereby the Corporate Debtor acknowledged and agreed that the amount due under the term loan constitutes a financial debt and the Applicant is a Financial Creditor for the purposes of the Code. This Forbearance agreement came into effect from 13.01.2023 as stated. 18. The borrower of the Applicant made default in payment and after the expiration of the forbearance period, the Applicant issued a notice of default and acceleration, inter alia, to the Borrower and the Corporate Debtor on 03.03.2023. The issuance of the default and acceleration notice also constituted a Trigger event which entitled the Applicant immediately to enforce the security provided by parties under the loan documents after which the Applicant removed a....
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.... copy of this Order to Byju Raveendran and Divya Gokulnath, and the treasury department of Think＆ Learn Private Limited: (ii) by 5:00 P.M.E.T. on March 21, 2024, take all necessary steps to determine the location, amount, and composition of the Alpha Funds, including but not limited to(a) the identity, address and domicile of the entity that is the beneficial owner of the Alpha Funds(whether a "non-US based 100% subsidiary of BYJU"S" or otherwise). (b) the identity, address, and domicile of each bank, institution or other entity in which the Alpha Funds are deposited held or otherwise located and (c) a line-item breakdown of the assets (whether cash or cash equivalents, securities, loans, derivatives, or otherwise) composing the Alpha Funds; and (iii) by 5:00 P.M. E.T. on March 21.2024. disclose the information required by Section 2(ii) of this Order to the Debtor and GLAS Trust Company LLC ("GLAS"). 3. By 5:00 P.M. E.T. on March 21,2024 counsel for Defendant Ravindran shall file in the Adversary Proceeding a certification of counsel attesting to the compliance of Ravindran with Sections 1 and 2 of this Order, and enclosing (under seal as appropriate) the informatio....
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....ran, suspended director/ promoter of Respondent No. 1, aged about 43 years, S/o Ravindran Kunnaruvath, presently at London, United Kingdom, do hereby undertake to this Hon'ble Tribunal as under: 1. I say that on 31 July 2024, I tendered before the Hon'ble National Company Law Appellate Tribunal, Chennai an undertaking (the "Undertaking"） stating a settlement has been arrived at with the Board of Cricket Control of India (the "BCCI"） and that I would discharge the entire amount of INR 158 crores (the "Settlement Amount"） claimed by BCCI. The Undertaking reads as follows: "I shall in discharge of the entire amount in the sum of Rs. 158,00,00,000/-[Rupees One Hundred and Fifty Eight Crore Only], due and payable by Respondent No. 1 to Respondent No. 2 i.e. The Board of Control for Cricket in India ("BCCI"), in terms of the settlement arrived at, pay to BCCI the same in the following manner- (a) Rs. 50,00,00,000/- [Rupees Fifty Crore Only] paid on 30.06.2024 by way of RTGS bearing the UTR No. ICICR52024073000412272; (b) Rs. 25,00,00,000/- [Rupees Twenty-Five Crore Only] to be paid on 02.0....
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....ectly, indirectly or in any form or manner received any sum of money from disbursements made under the Credit Agreement. In fact, the only foreign remittance received by me since execution of the Credit Agreement is from two secondary sales of my shareholding in TLPL in January and November 2022 totalling approximately USD 109 million, as demonstrated by the SH-4 annexed hereto at pages and respectively. 7. I further confirm that Byju Raveendran has not transferred any money or extended any security of his assets towards raising the sums for payment of the Settlement Amount to the BCCI. 8. I further state and confirm that the Settlement Amount comprises funds raised by me personally: a. from the sale and the gains/income on such sale of shares held personally by me in TLPL between May 2015 and January 2022. By way of these sales, I had accumulated approximately INR 3600 crores. The forms SH-4 evidencing these sales are hereto annexed and marked Exhibit A. Out of the aforementioned amount, approximately INR 1050 crores was paid as income tax. The IT returns filed by me over the relevant period and which would reflect these amounts are hereto annexed and ma....
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.... 2. In order to secure the balance payment of Rs. 83,00,00,000/-[Rupees Eighty Three Crore Only. Riju shall handover a postdated cheque bearing No. 234496 drawn on ICICI Bank, HSR Layout Branch for the sum of Rs. 83,00.00,000/-/Rupees Eighty-Three Crore Only in favour of the BCCI. 3. Riju shall be bound by the undertakings given herein and in the event of any default, the order of admission dated 16.07.202f passed by the Hon'ble National Company Law Tribunal, Bengaluru in Company Petition (IB) No. 149/BB/2023 shall stand restored with immediate effect and without any further recourse." Riju states that the BCCI has agreed to and accepted the Undertaking. Riju states and confirm that no part of the Settlement Amount is being paid in violation of any order passed by any court or tribunal, including orders passed by the Delaware Bankruptcy Court. Riju states that he has not received any portion of the USD 533 million that are the subject matter of the proceedings before the Delaware Bankruptcy Court and, accordingly, no part of those funds have been, or will be, used to pay the BCCI. In fact, the funds forming part of the Settleme....
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....TLPL due to its operational needs and o ensure that TLPL continues to carry on business as a going concern, including paying salaries to its 27000 employees and sustaining the platform which has over 150 million students worldwide (which is a matter of record). The amounts that remained with Riju were used to pay the first tranche of the Settlement Amount (in the amount of INR 50 crores) to BCCI on 30 June 2024; and b. from liquidation of Riju's personal assets in India, which will be used to pay the balance amount of the Settlement Amount. 9. The content of the present Affidavit-cum-Undertaking is true and correct. Place: Chennai Date: 1 August 2024 25. Mr. Tushar Mehta, Ld. Sr. Counsel appearing on behalf of Respondent No. 2 has submitted that Respondent No. 2 would not accept any tainted money for settlement but since the money being offered by Riju Raveendran, former Promoter Director, is generated in India on which income tax has duly been paid and is coming through banking channel, therefore, the same shall be accepted. Mr. Arun Kathpalia, Sr. Counsel appearing on behalf of the Appellant also submitted that the issue of rou....
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....ry that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. A question arises as to what is to happen before a committee of creditors is constituted (as per the timelines that are specified, a committee of creditors can be appointed at any time within 30 days from the date of appointment of the interim resolution professional). We make it clear that at any stage where the committee of creditors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case." 30. As a matter of fact, it is sought to be argued that the Appellant should have approached the NCLT instead of invoking the inherent powers of the Appellate Tribunal under Rule 11 of the Rules. 31. Mr. Krishnendu Datta, Ld. Sr. Counsel also appearing on behalf of the Applicant too has referred to Para 27 and 28 of the same judgment i.e. Swiss Ribbons (Supr....
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....bifurcated and separated from that of its promoters / those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor's assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends." 32. It is argued by him that the interest of all stakeholders should be looked into and since the Applicant has a substantial interest in so far as the CD is concerned, who stood as parent guarantor, invocation of Rule 11 should be avoided. 33. He has referred to certain news items appended with the application to contend that the senior functionaries of the CD have either left or been removed, offices have been vacated, auditor resigne....
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....hat he has not violated the order dated 18.03.2024 and has not transferred any money from the account of the Borrower for raising money for payment of settlement amount to Respondent No. 2. He further submitted that the money which is being offered by the ex-promoter and largest shareholder of the CD is not coming either from the US creditors or from the CD, therefore, no creditors could have any grievance and thus, this application filed by the Applicant is misplaced and deserves to be dismissed. He has further submitted that Rule 11 of the Rules is akin to Section 151 of the CPC which gives power to the Court to make such orders as may be necessary for meeting the ends of justice or to prevent the abuse of the process. He has further submitted that the judgment relied upon by Mr. Krishnendu Datta, Ld. Sr. Counsel for the Applicant, in the case of Bhaskar Biswas (Supra) is of the year 2019 whereas there is a change in law of settlement which has been gradually evolved by the Courts. It is submitted that initially there was no provision for settlement in the Code but Section 12A of the Code was inserted by Act No. 26 of 2018 w.e.f. 06.06.2018 and Regulation 30A of the Reg....
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....Singh (supra), relying upon paragraph 82 of the report in the case of Swiss Ribbons (supra), the Supreme Court, which was dealing with a similar situation where the settlement had been arrived before constitution of CoC allowed the proceedings to be withdrawn and held that the applications filed under Rule 11 of the NCLT Rules would be maintainable and the OCs therein was justified in moving such application. 37. In the case of Ashok G. Rajani (supra), the settlement had been arrived at between the parties on 08.08.2021, after the NCLT had admitted the application under section 7 of IBC vide order dated 03.08.2021. On appeal, the NCLAT vide order dated 18.08.2021 stayed the formation of CoC but declined to exercise its powers under Rule 11 of the NCLAT Rules. The said order was challenged before this Court. This Court in its order in paragraphs 29 and 30 gave reasons as to why the applications for withdrawal cannot be stifled before the constitution of CoC by third parties. The said paragraphs are reproduced below: "29. Considering the investments made by the Corporate Debtor and considering the number of people dependant on the Corporate Debtor for their survival....
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....een observed: "37. In Kamal K. Singh (supra), relying upon paragraph 82 of the report in the case of Swiss Ribbons (supra), the Supreme Court, which was dealing with a similar situation where the settlement had been arrived before constitution of CoC allowed the proceedings to be withdrawn and held that the applications filed under Rule 11 of the NCLT Rules would be maintainable and the OCs therein was justified in moving such application. 38. In the case of Ashok G. Rajani (supra), the settlement had been arrived at between the parties on 08.08.2021, after the NCLT had admitted the application under section 7 of IBC vide order dated 03.08.2021. On appeal, the NCLAT vide order dated 18.08.2021 stayed the formation of CoC but declined to exercise its powers under Rule 11 of the NCLAT Rules. The said order was challenged before this Court. This Court in its order in paragraphs 29 and 30 gave reasons as to why the applications for withdrawal cannot be stifled before the constitution of CoC by third parties. The said paragraphs are reproduced below: "29. Considering the investments made by the Corporate Debtor and considering the number of people dependant on....
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....is judgment will not, in any manner, affect the claim of other creditors of whatever category and they would be 34 free to raise their own independent claims in appropriate proceedings which would be dealt with in accordance with law." 21. The above judgement of the Hon'ble Supreme Court in Ashok G Rajani and Abhishek Singh (supra) where the cases were Application for withdrawal was filed before the Committee of Creditors was constituted. Present is also a case where Settlement has been entered between the parties and prayer is being made to withdraw the CIRP in exercise of jurisdiction under Rule 11 of NCLAT Rule, 2016. The Financial Creditor having settled the matter with the Corporate Debtor and Settlement letter dated 08th May, 2023 having been brought on record, we find it a fit case to exercise jurisdiction under Rule 11 of NCLAT Rules, 2016 to close the CIRP. We are of the view that on account of objection raised by the intervener of his filing claim before the IRP, the CIRP cannot be allowed to proceed since the debt for which CIRP has been initiated, has been settled with the Financial Creditor. The Intervener is free to take such legal proceedings as may be advis....
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....t Section 9 application was not maintainable because there was a preexisting dispute. But the said appeal was withdrawn with liberty to apply for revival of the appeal in case the settlement fails. 20. The application under Section 12A was dismissed by the Tribunal on 13.04.2021, appeal preferred against it was dismissed by this court. The Tribunal recorded the following findings. i. The facts relating to the settlement and the fulfilment of the terms of the settlement are not disputed; ii. The suspended directors of the CD despite the moratorium having commenced with effect from 01.03.2021 have not only made transactions of deposit but also withdrawal from the account of the CD. They have thus violated the directions contained in the admission order dated 01.03.2021; iii. Although the IRP had made submissions that the suspended director having transferred huge amount from the account of the company to his personal account and from there having made the payment to the OC under the settlement but the same was not conclusively proved; iv. The suspended director and their counsel made frivolous arguments before the NCLT which were contrary to record in order to obtain favoura....
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....CoC in such manner as may be specified. The role of CoC and 90 percent of its voting share approving the said withdrawal would come into play only when CoC has been constituted. Section 12A did not specifically mention withdrawal of such applications where CoC had not been constituted but at the same time it does not debar entertaining applications for withdrawal even before constitution of CoC. Therefore, the application Under Section 12A for withdrawal cannot be said to be kept pending for constitution of CoC, even where such application was filed before constitution of CoC. The IBBI which had the power to frame Regulations wherever required and in particular Section 240 of IBC for the subjects covered therein had accordingly substituted Regulation 30A dealing with the procedure for disposal of application for withdrawal filed Under Section 12A of IBC. The substituted Regulation 30A of IBC as it stands today clearly provided for withdrawal applications being entertained before constitution of CoC. It does not in any way conflicts or is in violation of Section 124 of IBC. There is no inconsistency in the two provisions. It only furthers the cause introduced vide Section 12A of IBC....
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....tors of whatever category and they would be free to raise their own independent claims in appropriate proceedings which would be dealt with in accordance with law". 24. The facts of this case are almost akin to the facts of the case of Abhishek Singh (Supra) because in both the cases the CoC was not constituted and settlement was arrived at but the only distinguishing feature is that in the case of Abhishek Singh (Supra) the proceedings of settlement were taken up immediately whereas in the present case it took some time and the moratorium remained operative to the benefit of the CD. However, in our considered opinion the facts of the present case are squarely covered by the decision of the case of the Abhishek Singh (supra). 25. Consequently, in view of the settlement arrived at and the money having been paid, duly received by the creditor (Omkara asset Reconstruction Company Pvt. Ltd.), order of admission passed against the CD in CP (IB) No. 1089 of 2022 does not survive and hence CA (AT) (Ins) No. 711 of 2023 is hereby allowed. CP (IB) No. 439 of 2022 has been disposed of as infructuous because of the admission of CP (IB) No. 1089 of 2022, c....
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....t clear that at any stage where the Committee of Creditors is not yet constituted, a party can approach NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the parties concerned and considering all relevant factors on the facts of each case." (emphasis supplied) (4) In the instant case, as noticed earlier, the applicant-respondent no. 1 had made an application before the NCLT, Mumbai Bench, under Rule 11 of the NCLT Rules for withdrawal of company petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) on the ground that the matter has been settled between the Corporate debtor and the applicant-respondent no. 1. (5) Having heard learned counsel for the parties and having regard to the facts and circumstances of the case, we are of the view that the applicant-respondent no. 1 was justified in filing the application under Rule 11 of the NCLT Rules for withdrawal of the company petition on the ground that the matter has been settled between the parties. (6) The appeal is accordingl....
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....is not in India. We have perused the affidavit and undertaking and found that the money has been generated by Riju Raveendran from his own sources by sale of his shares held in the CD and income tax has been paid on such sale of such shares. In the undertaking, he has categorically stated that he is not violating the order dated 18.03.2024 passed by the Delaware Court and confirmed that he has not directly, indirectly or in any form or manner received any sum of money from disbursements made under the Credit agreement. Although, the Applicant is not satisfied about the undertaking but the Applicant has also not brought on record any evidence to the contrary that the money which is being offered has actually been brought by Riju Raveendran from the money disbursed to the borrower in terms of credit agreement or has been taken out of the coffers of the CD. 45. Mr. Tushar Mehta, Ld. Sr. Counsel appearing on behalf of Respondent No. 2 today as well has categorically argued that Respondent No. 2 would be the last authority to receive any tainted money but now this money offered by Riju Raveendran is being accepted by Respondent No. 2 because it is generated in India, c....