TaxTMI 
TaxTMI 
2025 (8) TMI 260
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....lvency & Bankruptcy<br>[ Justice Ashok Bhushan ] Chairperson And [ Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Abhinav Vashisht, Sr. Advocate with Mr. Manmeet Singh, Ms. Bhavika, Deora, Ms. Saru Sharma, Advocates for Axis Bank . Ms. Payal Kabra, Mr. Pranav, Veerashwar Singh Jadaun, Advocates for Intervenor . Mr. Anand Varma & Apoorva Pandey, Advocates for IA 8388 . For the Respondents : Mr. Ritin Rai, Sr. Advocate with Mr. Aman Gandhi, Mr. Vardaan Bajaj, Mr. Ojasvi Sharma, Advocates for ZEEL, IA 8455 . Mr. Nalin Kohli, Sr. Advocate with Ms. Pooja Mahajan, Mr. Karan Vir Khosla, Mr. Anshul Malik, Ms. Nimisha Menon, Mr. Ayushman Arora, Advocates for RP . Mr. Krishnendu Dutta, Sr. Advocate with Mr. Aman Varma, Advocates for R10 . Mr. Dhruv Mehta, Sr. Advocate with Mr. Kaustubh Prakash, Ms. Hita Sharma, Ms. Tanya Singh, Mr. Rishabh Chandra, Advocates for R1 . Mr. Kunal Tandon, Sr. Advocate with Ms. Aanchal Tandon, Ms. Niti Jain, Mahima Arora, Advocates for Intervenor- Jio Star India . JUDGMENT Ashok Bhushan, J. All these Appeals have been filed against the same order dated 01.10.2024 passed by the Adjudicating Authority (National Company L....
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....e representatives of the Corporate Debtor participated. In the Joint Lenders' Meeting, company presented the financial summary for the Financial Year 2023. It was stated by the Company in the Joint Lenders' Meeting that on 30.03.2023, Axis Bank has appropriated a sum of Rs.20 Crores towards its own dues which was not approved by the Company or KPMG (ASM Agent). All lenders except Axis Bank took an objection towards the same. 2.3. Again Joint Lenders' Meeting was held on 04.05.2023 in which lenders objected unilateral withdraw of amount by Axis Bank. One of the lenders also suggested to file an IA before the Adjudicating Authority or before the Appellate Tribunal for maintaining the status quo to safeguard the business of the Corporate Debtor. It was placed before the Joint Lenders' Meeting that no lender should unilaterally appropriate the funds. On 15.05.2023, Axis Bank again withdrew Rs.23 Crores. On 22.05.2023, ARCIL issued a letter to the Axis Bank to refund the appropriated amounts back to the current account of the Corporate Debtor. Axis Bank continued to withdraw the amount till 05.06.2023. Total amount withdrawn by Axis Bank was more than Rs.143 Crores during the aforesa....
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....e Supreme Court noticing the fact that application for refund of the payments withdrawn by the Axis Bank is listed before the NCLAT on 10.08.2023, hence, Appeal was not entertained and dismissed. 2.4. Company Appeal (AT) (Insolvency) No.274 of 2023 came to be heard before this Tribunal on 10.08.2023. This Tribunal heard the Company Appeal and by judgment and order dated 10.08.2023 dismissed the Appeal upholding the admission order passed by the Adjudicating Authority dated 22.02.2023. While dismissing the Appeal, all pending applications were also closed. After order dated 10.08.2023, Committee of Creditors (CoC) was constituted and first meeting was held on 01.09.2023. On 11.10.2023, IRP filed an IA No.4844 of 2023 seeking certain directions and clarifications. Challenging the order dated 10.08.2023, Shilpi Asthana, Suspended Director filed Civil Appeal No.5340 of 2023 in which an IA No.170166 of 2023 was also filed by Shilpi Asthana. An Intervention Petition No.57 of 2023 was also filed before the Adjudicating Authority by a Suspended Director Kavita Anand Kapahi. The Asset Reconstruction Company (India) Ltd. (ARCIL) filed an IA No.126 of 2024 on 16.12.2023 seeking direction a....
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....t- RBL Bank Ltd. and Shri Nikhil Nayyar, Learned Senior Counsel for the Appellant- ARCIL. We have also heard Shri Nalin Kohli, Learned Senior Counsel with Ms. Pooja Mahajan, Learned Counsel for the Appellant in Company Appeal (AT) (Insolvency) No.1978 & 1979 of 2024. We have heard Shri Dhruv Mehta, Learned Senior Counsel appearing for Respondent- ARCIL in the Appeals, Shri Krishnendu Datta, Learned Senior Counsel for the Promoter, Shri Ritin Rai, Learned Senior Counsel for intervenor- ZEEL. Shri Kunal Tandon, Learned Senior Counsel for Intervenor- Jio Star India. Shri Anand Verma, Learned Counsel for the Intervenor in IA No.8388 of 2024. We have also heard other Learned Counsel appearing for the Intervenors. 4. Submissions which have been advanced by the Axis Bank and other lenders of the Corporate Debtor except ARCIL are common submissions challenging the order dated 01.10.2024 allowing IA No.126 of 2024 filed by ARCIL. The submissions on behalf of the lenders have been led by Counsel for the Axis Bank. Submissions of Counsel for the Axis Bank and all other lenders except ARCIL being common, we shall refer those submissions as submissions of the Appellants. Submissions on behal....
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....n some interim order only publication of Form G is stayed, however, in the interim order dated 07.03.2023, the entire admission order was stayed. It is submitted that the judgment of this Tribunal in "Ashok Kumar Tyagi v. Uco Bank & Anr.- CA(AT)(Ins) No. 1323 of 2022" relied by the Adjudicating Authority does not hold that Moratorium under Section 14 of the IBC continues to operate during the period when a CIRP admission order is stayed. Reliance on judgment of the Hon'ble Supreme Court in "Shree Chamundi Mopeds Ltd. vs. Church of South India Trust Association, CSI Cinod Secretariat, Madras [1992 3 SCC 1]" is misplaced. Relying on the judgment of the Hon'ble Supreme Court in "BPL Limited vs. R. Sudhakar [(2004) 7 SCC 2019]", it is submitted that the Hon'ble Supreme Court in the said order held that when the reference order was stayed, all consequential actions, including employee termination, were also stayed. It is submitted that after passing of the interim order dated 07.03.2023, the management of the Corporate Debtor started functioning, acting and performing all duties of management including participation in Joint Lenders' Meeting and other fora as well as notification to sto....
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....assed in the Appeal. ARCIL's appeal challenging the non-grant of interest also deserves to be dismissed. Adjudicating Authority has rightly rejected prayer (g) made in the application filed by ARCIL. Accounts were withdrawn from Corporate Debtor's current account where no interest accrues, therefore, there is no question of payment of any interest. 8. Shri Dhruv Mehta, Learned Senior Counsel refuting the submissions made on behalf of the Appellant- ARCIL who has been arrayed as Respondent in all the Appeals filed by lenders submitted that judgment of this Tribunal in "Ashok Kumar Tyagi" (supra) which was delivered on 21.11.2022 was the law prevailing at the relevant time which held that stay of the admission order under Section 7 cannot lead to installation of the management. Judgment of "Ashok Kumar Tyagi" (supra) was passed prior to initiation of CIRP of the Corporate Debtor, hence, all parties including Axis Bank and other lenders had the benefit of the settled legal position prior to the appropriation. It is submitted that the Adjudicating Authority has rightly relied on the judgment of the Hon'ble Supreme Court in "Shree Chamundi Mopeds Ltd." (supra) where the Hon'ble Supre....
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....jected. The principle of res judicata shall be applicable and ARCIL cannot be allowed to re-agitate the issue which was rejected both by this Tribunal as well as the Hon'ble Supreme Court. It is submitted by Shri Mehta that the res judicata applies when an issue directly and substantially in issue, is necessarily decided by a Court. The issue of appropriation was never decided by this Tribunal or the Hon'ble Supreme Court. This Tribunal only dismissed the Appeal upholding the admission order. Thus, the issue which is decided was only challenge to admission order. There is no applicability of principle of res judicata in the present case. It is submitted that the submission advanced by the Appellant on the ground of "issue estoppel" is also without any basis. No representation was made by ARCIL or any one to the lenders that they can withdraw the amount from the account of the Corporate Debtor. Principle of estoppel is applicable when on the representation one party alters its position to its detriment. In the present case, no representation was made to the Axis Bank and other lenders rather to the contrary objection was raised by ARCIL in the Joint Lenders' Meeting held on 26.04.20....
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..... Resolution Professional abdicated his duties and did nothing and has tried to cover up withdrawal by Axis Bank by praying that Insolvency Commencement Date be changed from 22.02.2023 to 10.08.2023 which is impermissible. 9. Counsel for the Resolution Professional submits that no application was filed either by suspended management or the ARCIL before this Tribunal seeking a direction to handover back the management of the Corporate Debtor to the IRP. Interim order dated 07.03.2023 clearly prohibited the IRP to take any steps in the CIRP which is the law laid down by this Tribunal in "Ashok Kumar Tyagi" (supra). IRP cannot be said to have failed in discharge of duties, by virtue of interim order dated 07.03.2023 he was incapable of performing any function. It is submitted that in pursuance of the order dated 22.02.2023, Resolution Professional has made publication inviting claim on 25.02.2023 and immediately after interim order dated 07.03.2023, Shilpi Asthana has informed about the interim order on 09.03.2023 by e-mail. On 10.03.2023, the management has made public disclosure informing the stock exchange that this Tribunal has granted interim order. On behalf of the management....
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....eed no consideration in these Appeals who are to take their remedies in accordance with the IBC before the appropriate forum. We, thus, are of the views that various submissions advanced by Counsel for the Intervenors need no consideration. 12. Before proceeding further, we need to notice prayers made in IA No.126 of 2024 and IA No.4844 of 2023 and the directions issued by the Adjudicating Authority in the order dated 01.10.2024. As noted above, IA No.4844 of 2023 was filed by the IRP on 11.10.2023. In IA No.4844 of 2023, the Resolution Professional has prayed for following reliefs:- "a. Allow the present Application; b. Clarify that/ direct that the Unpaid OC Liabilities/ Unpaid Interest Claim (as defined in the Application)/ Unpaid Other Liabilities (as defined in the Application) is to considered for admission/ verification as part of the claims of the respective creditors against the Corporate Debtor (which will then be dealt with under the resolution plan or liquidation, as the case may be, in accordance with the Code); Clarify that/ direct that for the purpose of conducting various CIRP c. related activities under the Code read with the CIRP Regu....
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....reditors from the resolution plan or liquidation proceeds, as the case may be, in the right proportion/quantum/manner. (f) Direct Respondent Nos. 2 to 6 as well as other third party entity/entities (if any /if at all) to refund/remit back the monies to the CIRP Bank account of the Corporate Debtor to the extent in the proportion as received by each of the aforesaid Respondent; (g) Pass an order directing the Respondents No. 2 to 6 to pay interest at an appropriate rate/percentage as deemed appropriate by this Hon'ble Tribunal on the respective principal amounts withdrawn/received by them in contravention of moratorium; (h) Pass an interim order that the percent voting share qua various financial creditors shall get crystallized subject to outcome of the present Application for the purpose of distributions to be made to various Financial Creditors pursuant to resolution plan(s) submitted by Resolution Applicant(s) in the Corporate Insolvency Resolution Process of the Corporate Debtor, (i) Pass an interim order that till the disposal of this application, this Hon'ble Tribunal will not pronounce its order reserved in the I.A. No. 4844 of 2023 and /or....
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....held that merely closing a proceeding in a case cannot be construed as a final decision on merits to attract the principle of res judicata under section 11 of CPC. Following the above judgment, we hold that the issues raised in the present applications are not covered by the principle of Res Judicata under section 11 of CPC. Having said this, we are inclined to decide the remaining issues." 17. On the Issue No.II i.e. "On subsistence of moratorium during the Stay Period", Adjudicating Authority came to the conclusion, after referring to the judgments relied by the parties that this Appellate Tribunal while granting interim order dated 07.03.2023 did not intend to suspend Moratorium imposed under Section 14. In paragraph 77.22, following conclusion is recorded:- "77.22 Thus, based on the above discussions, we are satisfied that Hon'ble Appellate Tribunal, even in the absence of any specific directions/ observations while granting the interim stay on 07.03.2023, did not intend to suspend the moratorium imposed under section 14 or the appointment of RP but merely impelled to stay the operation of the CIRP order dated 23.02.2023. This means that the RP was only prevented fr....
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....ion/ liquidation of a company, no creditor shall be paid in priority otherwise than as prescribed under the I&B Code. 79.4 In view of the various judgments of Hon'ble Supreme Court and Appellate Tribunal discussed above, the scheme and intent of IBC and the effect of Stay order is clearly laid down and we have no hesitation in holding all transactions undertaken during the period 07.03.2023 to 10.08.2023 were subject to the final outcome of the appeal. As the appeal stood dismissed, the moratorium stands applicable from the date of ICD i.e. 23.02.2023. 79.5 Since we had held that moratorium is applicable from 23.02.2023, all transaction during the period from 23.02.2023 to 10.08.2023 are subject to the moratorium under section 14 of IBC. The expenses incurred in the ordinary course of business to protect the Corporate Debtor and to keep it as a going concern would be safeguarded. All other transactions and appropriations would consequently be returned to the corporate debtor for the benefit of all the creditors in accordance with the provisions and intent of the IBC. 79.6 In view of our decision that moratorium is applicable from the ICD i.e. 23.02.2023, ....
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....III) What is the effect on the Moratorium which commenced on 22.02.2023 by admitting Section 7 application, on passing of an interim order dated 07.03.2023? (IV) Whether application IA No.126 of 2024 filed by ARCIL praying for reversal of the amount withdrawn by Axis Bank and other lenders during the stay period was barred by principle of res judicata, issue estoppel and merger? (V) Whether on principle of restitution, the lenders who have withdrawn the money from the account of the Corporate Debtor during period of interim stay which came to end on 10.08.2023 when Appeal was dismissed, were obliged to reverse the amount in the account of Corporate Debtor? (VI) Whether findings and observations made by the Adjudicating Authority in paragraph 78 against the Resolution Professional deserves to be set aside? (VII) Whether order of the Adjudicating Authority dated 01.10.2024 rejecting prayer (g) in IA No.126 of 2024 filed by ARCIL deserves to be dismissed and Axis Bank and other lenders who have withdrawn the amount from the account of the Corporate Debtor were liable to refund the amount with interest? Question Nos.(I), (II) & (III) 23. The qu....
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....ncy resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto." 26. Chapter II of the IBC, deal with 'Corporate Insolvency Resolution Process'. Section 13 of the IBC provides that the Adjudicating Authority, after admission of the application under Section 7 or Section 9 or Section 10, shall, by an order - (a) declare a moratorium for the purposes referred to in Section 14; (b) cause a public announcement of the initiation of CIRP and call for the submission of claims under section 15; and (c) appoint an interim resolution professional in the manner as laid down in section 16. In the present case, after initiation of CIRP against the CD on 22.02.2023, the public announcement was made by the IRP on 25.02.2023. The moratorium was also declared by the same order dated 22.02.2023, prohibiting acts as contem....
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....nted from taking advantage of undue delays and preventing an inevitable insolvency. In other words, as noted by this Court in Arun Kumar Jagatramka [Arun Kumar Jagatramka v. Jindal Steel & Power Ltd., (2021) 7 SCC 474 : (2021) 14 Comp Cas-OL 231], the economic value of corporate structures is broader than the partisan interests of their management." 28. Under the heading "Nature of proceedings after admission of the application", in paragraph 42, it was held that admission of an application is a significant event that alters the nature of the proceedings, once the petition is admitted and CIRP is initiated, the proceedings become in rem. Paragraph-42 of the judgment is as follows: "42. From this scheme of Chapter II IBC, it appears that the admission of an application is a significant event that alters the nature of the proceedings, and the stakeholders involved. Initially, when the petition is filed by the financial creditor, operational creditor or corporate applicant, as the case may be, the proceedings are in personam and the only relevant stakeholders are the applicant creditor and the corporate debtor. However, once the petition is admitted and CIRP is initiated, ....
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....hority proceeds to admit the application, the corporate insolvency resolution process commences as provided under sub-section (6) and is required to be processed further. In such event, it becomes a proceeding in rem on the date of admission and from that point onwards the matter would not be arbitrable. The only course to be followed thereafter is the resolution process under IB Code. Therefore, the trigger point is not the filing of the application under Section 7 IBC but admission of the same on determining default. 26. ... On admission, third-party right is created in all the creditors of the corporate debtors and will have erga omnes effect. The mere filing of the petition and its pendency before admission, therefore, cannot be construed as the triggering of a proceeding in rem. Hence, the admission of the petition for consideration of the corporate insolvency resolution process is the relevant stage which would decide the status and the nature of the pendency of the proceedings and the mere filing cannot be taken as the triggering of the insolvency process." 30. The Hon'ble Supreme Court noticed two significant principles under the scheme of the IBC under Chapter ....
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.... What is the consequence of stay order passed on 07.03.2023, both the parties have advanced their diametrically opposite submission. The Appellants contended that after passing of the stay order on 07.03.2023, the admission order appointing IRP and starting moratorium, all were stayed and no moratorium shall be operative after 07.03.2023, so as to prohibit Axis Bank and other lenders to withdraw the amount from the account of the CD. On the contrary, the submission made by ARCIL is that by stay of the order of admission on 07.03.2023, the freeze, which was imposed on 26.02.2023 is not withdrawn and the Axis Bank and other lenders could not have withdrawn the amount of more than Rs.143 crores from the accounts of the CD, period during which interim order was operative. 34. Learned Counsel for both the parties have relied on various judgments of the Hon'ble Supreme Court and this Tribunal, which we need to notice for answering the question. 35. The most celebrated judgment of the Hon'ble Supreme Court referred and relied by learned Counsel for the ARCIL and other parties, i.e., Shree Chamundi Mopeds Ltd. vs. Church of South India Trust Association, CSI Cinod Secretariat, Madras....
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....No.2553 of 1991 was filed by the Appellant Company against the order of the Karnataka High Court. Two questions that arose for consideration before the Hon'ble Supreme Court have been noticed in paragraph 6 of the judgment, which are to the following effect: "(1) What is the effect of the order passed by Delhi High Court dated February 21, 1991 staying the operation of the order dated January 7, 1991 passed by the Appellate Authority? Does it mean that after the passing of the said order by the High Court, the proceedings under the Act should be treated as pending and, if so, before which authority? (2) Are the proceedings instituted by a landlord for eviction of a tenant who is a sick company from the premises let out to it, required to be suspended under Section 22(1) of the Act?" 36. Section 22 under which suspension of legal proceedings was claimed has been noticed in paragraph 8 of the judgment. In paragraph 8 of the judgment, following has been observed: "8. Sub-section (1) of Section 22 which alone has relevance to these questions provides as under: "22. Suspension of legal proceedings, contracts, etc.-(1) Where in respect of an industr....
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....Section 25 of the Act against said order of the Board was dismissed by the Appellate Authority by order dated January 7, 1991. As a result of these orders, no proceedings under the Act were pending either before the Board or before the Appellate Authority on February 21, 1991 when the Delhi High Court passed the interim order staying the operation of the order of the Appellate Authority dated January 7, 1991. The said stay order of the High Court cannot have the effect of reviving the proceedings which had been disposed of by the Appellate Authority by its order dated January 7, 1991. While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence. T....
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....by the operating agency to attempt to revive the Company, all such efforts failed, and ultimately, on 30-4-2001, BIFR, on the basis of the recommendation of the operating agency, formed a prima facie opinion that Appellant 1 Company should be wound up under Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. On 27-7-2001, BIFR confirmed its prima facie opinion after noting that Appellant 1 Company had been enjoying protection under the Sick Industrial Companies (Special Provisions) Act, 1985 for the last 12 years. There being no acceptable viable rehabilitation proposal after the failure of two schemes, Appellant 1 Company was not likely to make its net worth exceed its accumulated losses, and therefore, BIFR recommended to the High Court of Bombay that the said Company be wound up. On 4-2-2002, Appellant 1's challenge to the BIFR order was dismissed by AAIFR." 39. After the aforesaid order of the BIFR and AAIFR, ICICI Bank issued a notice under Section 13(2) of the SARFAESI Act, 2002 to the Company. Writ Petition was filed challenging the order of AAIFR dated 04.02.2002 before the Delhi High Court. The Delhi High Court by its interim order on 07.0....
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....atter is remanded, the result would be that the appeal which had been disposed of by the said order of the appellate authority would be restored and it can be said to be pending before the appellate authority after the quashing of the order of the appellate authority. The same cannot be said with regard to an order staying the operation of the order of the appellate authority because in spite of the said order, the order of the appellate authority continues to exist in law and so long as it exists, it cannot be said that the appeal which has been disposed of by the said order has not been disposed of and is still pending. We are, therefore, of the opinion that the passing of the interim order dated 21-2-1991 by the Delhi High Court staying the operation of the order of the appellate authority dated 7-1-1991 does not have the effect of reviving the appeal which had been dismissed by the appellate authority by its order dated 7-1-1991 and it cannot be said that after 21-2-1991, the said appeal stood revived and was pending before the appellate authority. In that view of the matter, it cannot be said that any proceedings under the Act were pending before the Board or the appellate aut....
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....n 6-1-1991 when the Division Bench passed the order dismissing OSA No. 16 of 1991 filed by the Company and, therefore, there was no impediment in the High Court dealing with the winding-up petition filed by the respondents." 43. In paragraph 13, the Hon'ble Supreme Court took the view that in the case on hand the situation is entirely different. The Tribunal gets jurisdiction only on reference made by the Government and when the operation of the very order of reference was stayed, the question of dispute pending before the Tribunal did not arise. In paragraph 13, following was held: "13. In the case on hand the situation is entirely different. The Tribunal gets jurisdiction only on reference made by the Government. When the operation of the very order of reference was stayed, the question of dispute pending before the Tribunal did not arise inasmuch as the reference order itself stood suspended. So long as stay order was operating, it could not be said that the dispute was pending before the Tribunal. Admittedly, when workmen were dismissed from service stay order was operating. Learned Single Judge as well as the Division Bench of the High Court have proceeded on a wro....
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.... are covered directly by the judgment of the Hon'ble Supreme Court in Shree Chamundi Mopeds. Paragraph 48 of the Madras Petrochem Ltd. is as follows: "48. However, Shri Sreekumar referred to three judgments in support of the proposition that interim orders preserve the status quo and that, therefore, the interim order of stay has to be obeyed during the pendency of the writ petition. For this purpose, he cited Kihoto Hollohan v. Zachillhu [Kihoto Hollohan v. Zachillhu, 1992 Supp (2) SCC 651], Ravi S. Naik v. Union of India [Ravi S. Naik v. Union of India, 1994 Supp (2) SCC 641] and BPL Ltd. v. R. Sudhakar [BPL Ltd. v. R. Sudhakar, (2004) 7 SCC 219] . Each of these judgments was delivered in different contexts. The first judgment of Kihoto Hollohan [Kihoto Hollohan v. Zachillhu, 1992 Supp (2) SCC 651] was delivered in the context of landslide changes that would have taken place had a stay order not been passed in the context of the Tenth Schedule to the Constitution of India, which was enacted to remedy the evil of defection. The second judgment, namely, Ravi S. Naik [Ravi S. Naik v. Union of India, 1994 Supp (2) SCC 641] was also delivered in the same context and the third....
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....een disposed of by the Appellate Authority by its order dated January 7, 1991. While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order Quashing of an order result in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence. This means that if an order passed by the Appellate Authority is quashed and the matter is remanded, the result would be that the appeal which had been disposed of by the said order of the Appellate Authority would be restored and it can be said to be pending before the Appellate Authority after the quashing of the order of the Appellate Authority. The same cannot be said with regard to an order staying the operation of the order of the Appellate Authority because in spite of the said order, the order ....
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....padhyay and Anr. (2023) SCC OnLine NCLAT 2359. In the above case two sets of Company Appeals were filed. One by the RP and another by Suspended Director of the CD. The Appeals were filed challenging the order dated 30.05.2023 passed by Adjudicating Authority, by which the Adjudicating Authority issued various directions. The Adjudicating Authority referring to the interim order dated 25.02.2022 passed by Hon'ble Supreme Court, where CIRP has been stayed by the Hon'ble Supreme Court, held that RP could not have taken any action. The RP was directed to hand over the management of the CD to the Promoters, which order was under challenge in the Appeal. The RP in the Appeal relied on judgment of this Tribunal in Ashok Kumar Tyagi vs. UCO Bank and contended that in view of the said judgment, the Adjudicating Authority could not have directed the management to be reinstated. This Tribunal referring to its earlier judgment in Ashok Kumar Tyagi held that Ashok Kumar Tyagi's case did not lay down any proposition that if an order initiating CIRP has been stayed, the result would be to hand over the CD to the ex-management of the CD. In paragraphs 12 and 13 of the judgment, following were laid....
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....y affect the creditors of the Corporate Debtor. In view of the stay of the CIRP, it is true that the Resolution Professional cannot take any further steps in the CIRP of the Corporate Debtor and has to stay his hand from proceeding any further in the CIRP and await the order of the Appellate Court. The direction to the Resolution Professional in the impugned order to handover the Corporate Debtor to the ex-management is wholly unjustified and has to be set aside." 50. From the above, it is clear that judgment of this Tribunal in Mukesh Kumar Jain again reiterated the proposition laid down in Ashok Kumar Tyagi's case. 51. Learned Counsel appearing for the Appellant submitted that the judgment in Ashok Kumar Tyagi had clearly laid down that after staying of the admission order, the IRP cannot function. There cannot be any dispute to the proposition laid down by this Tribunal in Ashok Kumar Tyagi, that after stay of the admission order, IRP cannot discharge any function. Learned Counsel for the Appellant relied on order of the Hon'ble Supreme Court dated 03.09.2024 passed in Civil Appeal No.2661 of 2022 - Shobori Ganguli vs. Amit Goel & Ors. According to the Appellant in the abo....
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....2022 passed by it, the affairs of the company would be run by the Appellant and Respondent No.3 and further directed the RP not to interfere in the functioning of the company. The submission of learned Counsel for the Appellant is that Hon'ble Supreme Court has interpreted the interim order passed on 25.02.2023 that affairs of the Company will be managed by the Suspended Director, hence, it cannot be said that after order of admission of Section 7 application, which order is stayed, the management cannot come back in operation. The interim order passed by the Hon'ble Supreme Court on 25.02.2024 is as follows: "Issue notice. There shall be stay of the following in the meanwhile: 1. Corporate Insolvency Resolution Process of the Respondent No.2; and 2. Judgment and final order dated 16.12.2021 passed by the NCLAT in company Appeal (AT) (insolvency) No. 128/2021." 53. The interim order passed by the Hon'ble Supreme Court was in a particular facts and situation, where the Hon'ble Supreme Court clearly directed stay of the CIRP of the CD and has clarified the interim order dated 25.02.2022 by a subsequent order dated 03.09.2024, that RP would not i....
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.... In the meantime, another financial creditor of the appellant in the main Civil Appeal has come up with the application for intervention, with a very peculiar grievance. The grievance of the intervenor is that the corporate debtor defaulted in payment of certain amount, forcing him to independently file an application under Section 7 IBC, in CP(IB) No.300/2020. The said application was dismissed by the NCLT, but the said order reversed by the NCLAT. As against the said order, the very same Corporate Debtor came up with a Civil Appeal No.4823/2022. But the said appeal was dismissed as withdrawn on 01.08.2022. In other words, the order passed by NCLAT on the application of the proposed intervenor under Section 7 IBC attained finality. But in the meantime, the other proceedings initiated by the respondent in the above Civil Appeal reached this Court and an interim stay was granted. On account of the stay so granted, the NCLT has now passed an order dated 12.01.2023 in the intervenor's own application under Section 7 IBC. It is better to reproduced the order passed by the NCLT. It reads as follows: "Hence, we are of the considered view that the present appl....
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....stay of the order of admission, enforcement actions can be taken by the Financial Creditors against the CD. 56. Learned Counsel for the Appellant has also relied on the order of the Hon'ble Supreme Court in Chitra Sharma and Ors. Vs. Union of India and Ors., Writ Petition (Civil) No.744 of 2017 dated 11.09.2017. It is submitted that initially the Hon'ble Supreme Court had stayed the order passed by NCLT, admitting Section 7 application, but in an application for vacating/ modification, the Hon'ble Supreme Court issued further directions on 11.09.2017. Directions of the Hon'ble Supreme Court issued on 11.09.2017 are as follows: "The present interlocutory application has been filed by the IDBI Bank Limited in the special leave petitions which have been registered as SLP(C)Nos.24001 & 24002/2017. This is an application for vacating/modification of the order dated 04.09.2017. On that day, this Court while issuing notice, had passed the following order: "In the meantime the impugned order(s) passed by the National Company Law Tribunal, Allahabad shall remain stayed until further orders. A copy of the special leave petition be served on the office o....
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....of the home buyers; b) Mr.Shekhar Naphade, learned senior counsel along with Ms.Shubhangi Tuli, Advocate-on-Record, shall participate in the meetings of the Committee of Creditors under Section 21 of the Insolvency and Bankruptcy Code, 2016 to espouse the cause of the home buyers and protect their interests; c) The Managing Director and the Directors of JIL and JAL shall not leave India without the prior permission of this Court; d) JAL which is not a party to the insolvency proceedings, shall deposit a sum of Rs.2,000 crores(Rupees two thousand crores) before this Court on or before 27.10.2017. For the said purpose, if any assets or property of JAL have to be sold, that should be done after obtaining prior approval of this Court. Any person who was a Director or Managing Director of JIL or JAL on the date of the institution of the insolvency proceedings against JIL as well as the present Directors/Managing Director shall also not leave the country without prior permission of this Court. The foregoing restraint shall not apply to nominee Directors of lending institutions (IDBI/ICICI/SBI); e) All suits and proceeding instituted against JIL shall i....
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....n could not proceed. Reliance was placed on the interim order. In the above reference, the Hon'ble Supreme Court held that as the order of the CAT was not operative, the order of compulsory retirement remains in force and therefore, no sanction was required. In paragraphs 7 and 8 following was held: "7. Before us, it has been urged that in the absence of sanction under Section 19 of the Prevention of Corruption Act, 1988, the prosecution could not proceed. It is submitted that on the day prosecution was launched, the order of compulsory retirement had been set aside by CAT. It is submitted that even though this Court had granted an interim stay, the order of CAT had not been quashed. It is submitted that the effect was that the appellant continued to be in service. In support of this submission, reliance is placed upon the case of Shree Chamundi Mopeds Ltd. v. Church of South India Trust Assn. [(1992) 3 SCC 1] wherein it has been held that the effect of an interim stay is that the original order does not get quashed but that order would not be operative and may get restored. 8. We are unable to accept this submission. As has been held in Chamundi Mopeds case [Unio....
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....s Notes on Clauses of IBC. In Clause 14 of the Notes on Clauses, which is now Section 14 of the IBC, following was stated: "Clause 14 describes the effect of the moratorium. The purposes of the moratorium include keeping the corporate debtor's assets together during the insolvency resolution process and facilitating orderly completion of the processes envisaged during the insolvency resolution process and ensuring that the company may continue as a going concern while the creditors take a view on resolution of default. This also ensures that multiple proceedings are not taking place simultaneously and helps obviate the possibility of potentially conflicting outcomes of related proceedings. This also ensures that the resolution process is a collective one. The order under this Clause 14 inter alia, prohibits the institution or continuation of suits or any legal proceedings against the corporate debtor, the disposal of any assets of the corporate debtor and debt enforcement actions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The moratorium on initiation and continuation of legal proceedings, inc....
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....P. There should be no additional stress on the business after the public announcement of the IRP. The order for the moratorium during the IRP imposes a stay not just on debt recovery actions, but also any claims or expected claims from old lawsuits, or on new lawsuits, for any manner of recovery from the entity. The moratorium will be active for the period over which the IRP is active." 64. Learned Counsel for Respondent No.1 has also referred to the judgment of the Hon'ble Supreme Court in Rajendra K. Bhutta vs. Maharashtra Housing and Area Development Authority & Anr. - (2020) 13 SCC 208, in which judgment the Hon'ble Supreme Court referring to Section 14 of the IBC has held that Section 14 plays a statutory freeze. In paragraph 25 of the judgment, following was held : "25. There is no doubt whatsoever that important functions relating to repairs and reconstruction of dilapidated buildings are given to Mhada. Equally, there is no doubt that in a given set of circumstances, the Board may, on such terms and conditions as may be agreed upon, and with the previous approval of the Authority, hand over execution of any housing scheme under its own supervision. However, when....
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....int was only against the Department not to recover the license fee. There was no prohibition for the respondent to deposit the balance of license fee. It is to be stated here that the High Court has not quashed the demand of license fee made by the appellants. There is a difference between stay of operation of an order and quashing of an order which has been explained by this Court in Shree Chamundi Mopeds Ltd. V. Church of South India Trust Association CSI CINOD Secretariat, Madras as under: "While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence." (19) Following the said decision, this Court in Kanoria Chemicals and Indus....
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....n of the very notification revising/enhancing the tariff rates was stayed. Mercifully, no such argument was urged by the appellants. It is ununderstandable how the enhanced rates can be said to be payable but not the late payment surcharge thereon, when both the enhancement and the late payment surcharge are provided by the same notification - the operation of which was stayed."" 66. The Hon'ble Supreme Court held that the order, which has been stayed would not be operative from the date of passing of the stay order. However, it does not mean that the stayed order is wiped out from the existence, unless it is quashed. In paragraph 24, following was laid down: "(24) From the above discussion, it is clear that imposition of a stay on the operation of an order means that the order which has been stayed would not be operative from the date of passing of the stay order. However, it does not mean that the stayed order is wiped out from the existence, unless it is quashed. Once the proceedings, wherein a stay was granted, are dismissed, any interim order granted earlier merges with the final order. In other words, the interim order comes to an end with the dismissal of the pro....
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....though admission order dated 22.02.2023 was stayed by this Tribunal on 07.03.2023. (ii) On passing of interim order dated 07.03.2023, the admission order appointing IRP and order declaring moratorium were kept in abeyance but shall not be treated to have been quashed by passing interim order on 07.03.2023. (iii) The effect of interim order dated 07.03.2023 is not to revive the state of affairs, which were prevailing before the date 22.02.2023, when order of admission was passed by Adjudicating Authority under Section 7. 70. In view of the foregoing discussions and conclusions, we answer Question Nos.(I), (II) and (III) in following manner: Answer to Question No.(I) : The effect and consequences of the interim order dated 07.03.2023 passed by this Tribunal, staying the operation of the admission order dated 22.02.2023 shall be that the order dated 22.02.2023 shall be treated to have been kept in abeyance, but shall not be treated to have been quashed. Answer to Question No.(II) : On passing of the interim order dated 07.03.2023, staying the admission order dated 22.02.2023, the status quo prevailing prior to passing of the order dated 22.02.202....
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....ded that ARCIL was also precluded to file I.A.126/2024 on the principle of "Issue Estoppel". The ARCIL having already raised similar plea before this Tribunal in reply dated 09.06.2023 to the Interim Application No.2558/2023 filed in Company Appeal (AT) (Ins.) No. 274/2023 where ARCIL sought refund of the amount read with Intervention Application No.2321/2023 filed by the ARCIL, this Tribunal vide order dated 10.08.2023 dismissed the appeal filed by Suspended Director and close all the applications, thus ARCIL by order dated 10.08.2023 is now estopped from preferring any further application before the adjudicating authority. The proceedings before this Tribunal for refund of the amount having attained finality the ARCIL on principle of 'Issue Estoppel' is precluded from re-agitating the said issue by filing I.A. No.126/2024. 74. Learned counsel for the appellant had also relied on Principle of Merger. It is submitted that Hon'ble Supreme Court having exercised its appellate jurisdiction deciding the appeal on merit, the Doctrine of Merger and finality applies, issue of appropriation of fund stands conclusively adjudicated. Reliance has been placed by the appellant on the judgmen....
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.... default within the ambit of Section 10A of the Code fails and as a result thereof, all the contentions of the Appellant are hereby rejected. 30. No other point has been raised." 78. In paragraph 30 Court has observed that "no other point has been raised". Operative order is contained in paragraph 31. Paragraph 31 of the judgment is as follows: "31. In view of the aforesaid facts and circumstances, the present appeal is found to be without any merit and the same is hereby dismissed, though, without any order as to costs." 79. In the above paragraph 31, where this Tribunal held that appeal is found to be without any merit and dismissed. Last line observed: "With the dismissal of the appeal, all the pending applications in this appeal are hereby closed". 80. Thus, the closure of all applications including the applications filed by promoters seeking a direction for reversal of the amount withdrawn by Axis Bank and other lenders as well as applications for intervention filed by ARCIL and reply filed by ARCIL to the application as noted above and all other pending applications was closed by last sentence as noted above. The above judgment of this Trib....
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....lt of this is that the original court as well as any higher court must in any future litigation proceed on the basis that the previous decision was correct." From the above extract, it is clear that while res judicata may have been codified in Section 11, that does not bar its application to other judicial proceedings, such as the one in the present case. 181. In a judgment of this Court in Sheodan Singh v. Daryao Kunwar [Sheodan Singh v. Daryao Kunwar, (1966) 3 SCR 300 : AIR 1966 SC 1332], a four-Judge Bench of this Court elaborated on the various conditions which must be satisfied before the doctrine of res judicata can apply in a given case. K.N. Wanchoo, J. speaking for the Court, held : (AIR p. 1334, para 9) "9. A plain reading of Section 11 shows that to constitute a matter res judicata, the following conditions must be satisfied, namely- (i) The matter directly and substantially in issue in the subsequent suit or issue must be the same matter which was directly and substantially in issue in the former suit; (ii) The former suit must have been a suit between the same parties or between parties under whom they or any of them claim; ....
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.... the aforesaid writ petition and, therefore, to take a view that the decision in earlier proceeding operated as res judicata was absolutely erroneous, not to speak of its being uncharitable." ( emphasis supplied ) 185. Another two-Judge Bench of this Court, in its judgment in Erach Boman Khavar v. Tukaram Shridhar Bhat [Erach Boman Khavar v. Tukaram Shridhar Bhat, (2013) 15 SCC 655 : (2014) 5 SCC (Civ) 387], has held that the doctrine of res judicata can only apply when there has been a conscious adjudication of the issue on merits. Dipak Misra, J. speaking for the Court, held : (SCC p. 673, para 39) "39. From the aforesaid authorities it is clear as crystal that to attract the doctrine of res judicata it must be manifest that there has been a conscious adjudication of an issue. A plea of res judicata cannot be taken aid of unless there is an expression of an opinion on the merits. It is well settled in law that principle of res judicata is applicable between the two stages of the same litigation but the question or issue involved must have been decided at earlier stage of the same litigation." (emphasis supplied) 186. Res judicata canno....
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....v. Musa Dadabhai Ummer, (2000) 3 SCC 350] . During the course of the judgment, the Court analysed the expression "directly and substantially in issue" in Section 11 and laid down the twin test of essentiality and necessity : (SCC pp. 357 & 359-60, paras 12 & 18-19) "12. It will be noticed that the words used in Section 11CPC are "directly and substantially in issue". If the matter was in issue directly and substantially in a prior litigation and decided against a party then the decision would be res judicata in a subsequent proceeding. Judicial decisions have however held that if a matter was only "collaterally or incidentally" in issue and decided in an earlier proceeding, the finding therein would not ordinarily be res judicata in a latter proceeding where the matter is directly and substantially in issue. *** 18. In India, Mulla has referred to similar tests (Mulla, 15th Edn., p. 104). The learned author says : a matter in respect of which relief is claimed in an earlier suit can be said to be generally a matter "directly and substantially" in issue but it does not mean that if the matter is one in respect of which no relief is sought it is not directl....
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....ssed. Hon'ble Supreme Court in its order dated 01.09.2023 did not decide any issue pertaining to reversal of withdrawal of the amount noticing that the applications are pending before the NCLAT, hence nothing can be read in the order dated 01.09.2023 which may attract the principle of res judicata. Insofar as the appeal filed by the Suspended Director in Civil Appeal No.5340/2023 challenging the order dated 10.08.2023 of this Tribunal even though on the grounds of the appeal various issues were raised. In Civil Appeal No.5340/2023, Hon'ble Supreme Court dismissed the same by order dated 01.09.2023 which order is as follows: "We do not find any good ground and reason to interfere with the impugned judgment and hence, the present appeal is dismissed. Pending application(s), if any, shall stand disposed of." 88. The above judgment of the Hon'ble Supreme Court indicate that order dated 10.08.2023 passed by this Tribunal dismissing the Comp. App. (AT) (Ins.) No.274/2023 by Shilpi Asthana was affirmed. What Hon'ble Supreme Court said that no grounds have been made out to interfere in the impugned order. No other issue was considered or decided by the Hon'ble Supre....
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....e submission was also sought to be raised by the appellant that had ARCIL be given also the amount due to ARCIL by the Axis Bank, ARCIL could not have filed any application for reversal of the amount and ARCIL filed the application only because although Axis Bank and other lenders appropriated the amount from the account of the corporate debtor but ARCIL was not given his due shares. Appellant submitted that this is another reason due to which ARCIL's application need no consideration. 92. While noticing the facts of the case, we have noted that after the interim order was passed on 07.03.2023 first Joint Lenders Meeting was held on 25.04.2023 where ARCIL, Axis Bank, other lenders and representatives of corporate debtor participated. When financial summary of the company was presented before the JLM and company updated that on 30.03.2023 Axis Bank had appropriated the sum of Rs.30 crore towards its own dues. All lenders raised objection towards the same. It is useful to notice the following part of JLM meeting: "...During presenting the financial summary for FY 2023, Company updated that on March 30, 2023, Axis bank had appropriated a sum of INR 20 crs towards its own d....
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....ce again informed that it is not holding account on behalf of other lenders have all the right to set off the funds against its dues as per their loan documentation. 7. All other lenders (except Axis Bank) have a view that noted in previous JLM minutes and agreed by Axis Bank, it holds account on behalf of all lenders. Accordingly company started touting all transaction through Axis Bank. Post failure of implementation of restructuring scheme all lenders were free to take legal actions against the company wrt to legal remedies available with them and not appropriation of funds from current account maintained with Axis Bank on behalf of lenders. 8. Axis bank did not agree to it and said it will not comment/ assure on not appropriating funds. As he has no permission as of now from its management on this. He will abide to its management decision and what is allowed in its loan documentation. 9. All lenders (except Axis Bank) took strong objection to this. The amount lying in FDs and current account is charged to all the lenders and is not exclusively charged to Axis and cannot be appropriated. Lenders stated that in case Axis Bank any further appropriates un....
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.... IDBI Bank 6.36 crores 4 01.06.2023 IDBI Bank 16.91 crores 5 01.06.2023 IndusInd Bank 4.64 crores 6 01.06.2023 IndusInd Bank 12.45 crores 7 01.06.2023 RBL Bank 12.45 crores 8 01.06.2023 Axis Bank 27.63 crores 9 02.06.2023 RBL Bank 4.69 crores 10 05.06.2023 Aditya Birla Finance Ltd. 15 crores Total 143.15 95. Learned counsel for the ARCIL has also relied on the judgment of the Hon'ble Supreme Court in the matter of 'Tata Iron & Steel Co. Ltd.' Vs. 'Union of India' reported in [(2001) 2 SCC 41], where Hon'ble Supreme Court had occasion to consider the concept of estoppel by conduct. Hon'ble Supreme Court held that plea of estoppel by conduct can only be said to be available in the event of there being precise and unambiguous representation and on that score there is alteration of position or status. In paragraph 22, following was laid down : "22. A bare perusal of the same would go to show that the issue of an estoppel by conduct can only be said to be available in the event of there being a precise and unambiguous representation and on that score a further ....
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.... dismissing the appeal and further order passed by the Hon'ble Supreme Court dated 01.09.2023 dismissing the appeal filed by Suspended Director challenging the order dated 10.08.2023 Principle of Merger is applicable. 99. The judgment of the Hon'ble Supreme Court in the matter of 'Kunhayammed & Ors.' Vs. 'State of Kerala & Anr.' reported in [(2000) 6 SCC 359], has been referred to, where Hon'ble Supreme Court had occasion to consider the Doctrine of Merger. In the above case, Hon'ble Supreme Court had occasion to consider the cases where Principle of Merger will be applicable with respect to Article 136 i.e., effect from grant/dismissal of SLP. 100. In the present case, the statutory appeal was filed under Section 62 of the IBC against the order dated 10.08.2023 which has been dismissed by the Hon'ble Supreme Court on 01.09.2023. There can be no denial that order of this Tribunal stand merged with the order of the Hon'ble Supreme Court. But merger is only of the judgment of this Tribunal where appeal filed by Suspended Director challenging the admission of Section 7 was rejected. We fail to see that how the case of appellant can be benefitted by the Doctrine of Merger in ....
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....omething which has been taken and at times referring to compensation for injury done : "Often, the result under either meaning of the term would be the same. ... Unjust impoverishment as well as unjust enrichment is a ground for restitution. If the defendant is guilty of a non-tortious misrepresentation, the measure of recovery is not rigid but, as in other cases of restitution, such factors as relative fault, the agreed-upon risks, and the fairness of alternative risk allocations not agreed upon and not attributable to the fault of either party need to be weighed." The principle of restitution has been statutorily recognized in Section 144 of the Code of Civil Procedure, 1908. Section 144 CPC speaks not only of a decree being varied, reversed, set aside or modified but also includes an order on a par with a decree. The scope of the provision is wide enough so as to include therein almost all the kinds of variation, reversal, setting aside or modification of a decree or order. The interim order passed by the court merges into a final decision. The validity of an interim order, passed in favour of a party, stands reversed in the event of a final decision going agai....
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.... has been filed frivolously or without any basis, iniquitously in order to delay and by that it is delayed, there is no equity in favour of such a person. Such cases are required to be decided on merits. In Mrutunjay Pani v. Narmada Bala Sasmal [Mrutunjay Pani v. Narmada Bala Sasmal, AIR 1961 SC 1353], this Court observed that : (AIR p. 1355, para 5) "5. ... The same principle is comprised in the Latin maxim commodum ex injuria sua nemo habere debet, that is, convenience cannot accrue to a party from his own wrong. To put it in other words, no one can be allowed to benefit from his own wrongful act." 323. In GTC Industries Ltd. v. Union of India [GTC Industries Ltd. v. Union of India, (1998) 3 SCC 376], it was observed that while vacating stay, it is the court's duty to account for the period of delay and to settle equities. It is not the gain which can be conferred. In Jaipur Municipal Corpn. v. C.L. Mishra [Jaipur Municipal Corpn. v. C.L. Mishra, (2005) 8 SCC 423], it has been observed that interim order merges in the final order, and it cannot have an independent existence, cannot survive beyond final decision. In Ram Krishna Verma v. State of U.P. [Ram Kri....
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....itigation cannot be reduced to gaming where there is an element of chance in every case. If the concept of restitution is excluded from application to interim orders, then the litigant would stand to gain by swallowing the benefits yielding out of the interim order. This Court observed in South Eastern Coalfields [South Eastern Coalfields Ltd. v. State of M.P., (2003) 8 SCC 648] thus : (SCC pp. 662-64, paras 26-28) " 26. In our opinion, the principle of restitution takes care of this submission. The word "restitution" in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order, what has been lost to him in execution of decree or order of the court or in direct consequence of a decree or order (see Zafar Khan v. Board of Revenue, U.P. [Zafar Khan v. Board of Revenue, U.P., 1984 Supp SCC 505] ). In law, the term "restitution" is used in three senses : (i) return or restoration of some specific thing to its rightful owner or status; (ii) compensation for benefits derived from a wrong done to another; and (iii) compensation or reparation for the loss caused to another. (See Black's Law Dictionary, 7th Edn., p. 1315).....
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....t at the end. This cannot be countenanced. We are, therefore, of the opinion that the successful party finally held entitled to a relief assessable in terms of money at the end of the litigation, is entitled to be compensated by award of interest at a suitable reasonable rate for the period for which the interim order of the court withholding the release of money had remained in operation." ( emphasis supplied ) " 106. We have noticed the judgment of the Hon'ble Supreme Court in the 'State of Uttar Pradesh' Vs. 'Prem Chopra', reported in [2022 SCC OnLine SC 1770] in which judgment on account of interim order passed in the writ petition, which writ petition ultimately got dismissed contention was sought to be raised that no liability to pay interest shall accrue during the period interim order was being operated. The said argument was rejected in paragraphs 20 to 22, following was held: "20. In Rajasthan Housing Board v. Krishna Kumari,3 this Court observed that Order 39 of the Civil Procedure Code, 1908 provides for grant of temporary injunction at the risk and responsibility of the person who obtains it and, if ultimately case is decided against such per....
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.... not or ought not to have passed. There is nothing wrong in an effort being made to restore the parties to the same position in which they would have been if the interim order would not have existed." 22. In Nava Bharat Ferro Alloys Limited v. Transmission Corporation of Andhra Pradesh Limited, 5 the appellant therein had challenged the revised tariff rates imposed by the respondent therein and obtained an interim order of stay against collection of the disputed amounts. The High Court subsequently upheld upward revision of tariff. Thereafter, the respondent therein raised a demand for additional charges/interest on outstanding amounts from the date of tariff revision and the High Court upheld such demand holding that there was no subsisting relief once the demand was upheld. This Court further held that the principle of restitution entitles the successful party to be restored back to the position it would hold had there been no order/judgment adverse to it. The appellant therein had obtained only an ad-interim order of stay against enforcement of tariffs. A party who fails in the main proceedings cannot take benefit from the interim order issued during the pendency of suc....
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....ve been issued to restore the benefits taken under the interim order. Thus, the submission on behalf of the lenders that doctrine applies only inter-parties does not help them in the present case. 109. We thus are satisfied that the benefit which was taken by the lenders relying on the interim order 07.03.2023 for withdrawing amount of more than Rs.143 crore from the account of the corporate debtor is required to be made good by the lenders. Adjudicating authority thus has not committed any error in issuing the direction to the lenders to reverse the amount withdrawn from the account of the corporate debtor. 110. We thus answer Question No. V in following manner: On Principle of Restitution, the lenders who have withdrawn the money from the account of the corporate debtor during period of interim stay which came to be end on 10.08.2023, are obliged to reverse the amount in the account of the corporate debtor. Question No. (VI) 111. Learned counsel appearing for the RP in support of Comp. App. (AT) (Ins.) Nos.1978-1979/2024 has challenged the findings and observations returned by the adjudicating authority in paragraph 78 of the order of the adjudicating authority. It....
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.... the adjudicating authority or this Appellate Tribunal for the steps which had to be taken by the IRP. IRP had happily handed over the management to the Ex-Directors and did not raise a single finger till the appeal was dismissed on 10.08.2023. The prayer made in the application I.A.4844/2023 where the RP sought a direction in prayer (c) is follows: "a. Allow the present Application; b. Clarify that/direct that the Unpaid OC Liabilities/ Unpaid Interest Claim (as defined in the Application)/ Unpaid Other Liabilities (as defined in the Application) is to considered for admission/ verification as part of the claims of the respective creditors against the Corporate Debtor (which will then be dealt with under the resolution plan or liquidation, as the case may be, in accordance with the Code); c. Clarify that/ direct that for the purpose of conducting various CIRP related activities under the Code read with the CIRP Regulations, including valuation, conducting transactional audit for avoidance transactions, preparation of Information Memorandum and provisional balance sheet, up-dation of claims etc. the relevant date should be 10 August 2023 (being the date o....
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....atorium'. 117. Learned counsel for the appellant submits that when the amount was withdrawn by Axis Bank and other lenders from the account of the corporate debtor and appropriated, the lenders are liable to reverse the amount along with the interest. Interest is part of compensation, to which corporate debtor is entitled due to illegal withdrawal by Axis Bank. It is submitted that adjudicating authority has erroneously rejected the Prayer (g) in the application filed by ARCIL. 118. Learned counsel for ARCIL relied on Doctrine of Restitution and unjust enrichment, illegal appropriation and detention of money warrants for restitution of money interest. The lenders have refuted the submissions, on behalf of the appellant it is contended that account of the corporate debtor was a current account in which no interest is payable. It is submitted that allegation of any unjust enrichment by lender is unfounded. Amount which was withdrawn by Axis Bank and distributed to the other lenders was in accordance with the contract with the corporate debtor and lenders were only exercising their contractual rights. In paragraph 82, adjudicating authority gave following reasons for not allowin....