TaxTMI 
TaxTMI 
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2025 (9) TMI 71
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....Court No.II, Kolkata in IA (IB) No.1332/KB/2024 filed by the Appellant. By the impugned order, IA (IB) No.1332/KB/2024 has been dismissed by the Adjudicating Authority. Aggrieved by which order, this Appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) The Appellant - Chintan Jhunjhunwala is Suspended Director of Energy Properties Private Limited (hereinafter referred to as the "Energy") and a shareholder of Corporate Debtor ("CD") - Avani Towers Private Limited (hereinafter referred to as the "Avani"). (ii) Energy entered into a Memorandum of Understanding ("MoU") with Avani for acquisition of subject land comprising 10.19 acres situated at Ramrajatalla, Near Ramrajatalla Station Road, District - Howrah from UCO Bank in a sale under Section 13, sub-section (4) of the SARFAESI Act, 2002. Under the MoU, the Avani was to give accommodation amount of Rs. 2.7 crores to the Energy for buying the land from UCO Bank for acquiring the property. On 24.01.2008, A Shareholders' Agreement was executed between Energy and Avani, where 40% shareholding of Energy was transferred to Avani - CD. On 29.01.2008, Sale Certificat....
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....ore the Adjudicating Authority for approval of the Resolution Plan being IA No.1892/KB/2023. The Appellant filed an application - IA No.200 of 2024 seeking dismissal of IA No.1892 of 2023 filed by the RP for approval of Resolution Plan. (viii) CIRP against Energy commenced by an order dated 20.03.2024 on an Application filed by Avani, through RP, claiming to be a Financial Creditor, in which proceedings, Respondent No.4 - Mahesh Chand Gupta was appointed as the RP of Energy. (ix) The RP of Energy on the basis of Minutes of the CoC, decided to withdraw IA No.200 of 2024, which was filed by Energy, objecting to the Resolution Plan. On 25.06.2024, the RP of Energy withdrew IA No.200 of 2024. (x) The Appellant on 27.06.2024 filed an IA No.1332 of 2024 objection to the Resolution Plan as Member of Suspended Board of Energy and shareholder of the Avani. The Adjudicating Authority heard IA No.1332 of 2024 filed by the Appellant along with other applications, including IA No.1892 of 2023 filed by the RP for approval of the Resolution Plan. The Adjudicating Authority by the impugned order dated 03.01.2025, rejected IA No.1332 of 2024 filed by the Appellant. The Ad....
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...., the ownership rights of Energy, who is owner of the land are being taken away. The Resolution Plan by its various Clauses, specially Clause 5(c), 5(h), 5(j) and 5(l), takes away valuable right of the Energy, the owner of land as protected in the MoU dated 24.01.2008 as well as JDA dated 16.06.2008. It is submitted that the impugned Clause 5(c) seeks to alter the order of repayment provided in Part II of the Third Schedule of the JDA, instead of rendering the security deposit repayable upon various milestones up to and including completion of the Project, the said clause seeks to appropriate the same upon approval of the Resolution Plan by acquiring the owner's allocation of the constructed area @ of Rs. 1400 per sq. ft. Such Clause renders the entire security deposit to be due and payable immediately upon approval of the Resolution Plan, which is in complete departure of Part II of the Third Schedule of the JDA. Similarly, under Clause 5(h) the SRA with the approval of Resolution Plan is entitled without any involvement of the landowner to raise finance by encumbering the land, which is clear departure from the obligation of the parties under Clause 20.8 of the JDA. Similarly, it....
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....nterest of Energy, who is the owner of land. 5. Learned Counsel for the RP refuting the submission of learned Counsel for the Appellant submits that the Appellant has not challenged the order allowing IA No.1892 of 2023 approving the Resolution Plan. It is submitted that although the Adjudicating Authority has taken the view that Appellant has no locus to file the application, being IA No.1332 of 2024, but the RP proceeds to counter the submissions raised by the Appellant on merits, accepting, for arguments sake, that Appellant has locus to file the application. The submission of the Appellant that Resolution Plan seeks to completely depart from the terms and conditions of JDA, is incorrect. The submission is also incorrect that Resolution Plan is attempting to dilute the rights of Energy contained in the JDA. The submission of the Appellant that Resolution Plan is contrary to Section 30(2)(e), is not correct. It is submitted that some of the Clauses in the Resolution Plan specially Clause 5(c), (h), (i), (g) and (l) as relied by learned Counsel for the Appellant in no manner alter the Clauses of JDA. Referring to Clause 5(c), it is submitted that repayment of Rs. 12 crores as e....
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....mmenced, the RP of Energy convened the 4th CoC Meeting and RP has independently looked into the Resolution Plan and found that Resolution Plan in no manner harm the interest of Energy. Hence, a decision was taken to withdraw IA No.200 of 2024 in the interest of Energy and said was bonafide decision taken by the RP of Energy. Respondent No.4 has acted in the interest of Energy. 8. Learned Counsel for the parties have placed reliance on judgment of the Hon'ble Supreme Court and this Tribunal, which we shall refer to while considering submissions in detail. 9. From the submissions of learned Counsel for the parties, following are the questions, which arose for consideration in this Appeal: (I) Whether Resolution Plan submitted by Respondent No.3, specially Clauses 5(c), (h), (i), (j) and (l), take away ownership rights of the Energy and the aforesaid Clauses contravene the provisions of MoU dated 24.01.2008 and JDA dated 16.06.2008? (II) Whether ownership rights of the Energy in the land of 10.19 acres are being taken away by the Resolution Applicant, under the approved Resolution Plan? (III) Whether Resolution Plan submitted by SRA is contingent and c....
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....in respect of the premises by deposit of the original title deeds for the purpose of obtaining construction loan. Clause 15.3 is as follows: "15.3 It is hereby expressly agreed and declared that Avani shall be entitled to create a charge and/or mortgage over and in respect of the said Premises and/or. Avani's Area by deposit of the original title deeds for the purpose of obtaining construction loan for undertaking development of the said Premises after sanction of the Plan for which Energy with join as co applicant/co-borrower." 14. The MoU further provides that for protecting the interest of Avani including repayment of Rs. 12 crores, it was agreed that Jhunjhunwala Group Shareholders shall transfer 40% of the shares in favour of the Avani. Clause 16.2 provides as follows: "16.2 For the purpose of protecting the interest of Avani including repayment of the said sum of Rs. 12,00,00,000/- (Rupees twelve crores only) it has been agreed that the Jhunjhunwala Group Shareholders out of the shares presently held by them will transfer 40% of the shares at face value unto and in favour of Avani of Avani or affiliated and/or nominees." 15. Clause 18 of the MoU pr....
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....crore) (hereinafter referred to as the Security Deposit) which will not carry interest and will be payable & refundable in the manner as would appear from the Fart-1 of the Third Schedule hereunder written. The 'Developer as on date has already paid Rs. 7,86,83,108/- (Rupees seven crores eighty six lác eighty three thousand one hundred eight). The said sum of Rs. 12,00,00,000/-1 (Rupees twelve crore) agreed to be paid by the Developer will be treated as the Security Deposit. However any further sum, subject: to a maximum of Rs. 3,00,00,000/- (Rupees three crore), if advanced by. Developer to Owner, shall form part of Security Deposit and shall carry interest at agreed rate of 18% per annum compounded and payable quarterly. 8.2 Refund of Refundable Deposit: The Security. Deposit shall be refunded by the Owner to the Developer in the manner provided in the Part-II of the Third Schedule, The Owner agrees to ensure timely repayment of the said Refundable Deposit in the manner as herein before stated and in the event of failure to refund an interest 18%ipa. compounded quarterly shall become payable calculated from the due date of refund. 8.3 Recovery of Secu....
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....hall complete. the construction of the Housing Complex within the Stipulated Period mentioned in Clause 11:5 above." 23. Third Schedule of the Part-II deal with 'Manner of Refund of Deposit'. Third Schedule Part-II is as follows: "Part-II (Manner of Refund of Deposit) 1. The said Refundable Deposit shall become refundable in the following manner: a) Rs. 3,00,00,000/- (Rupees three crore) simultaneously upon completion of foundation of the blocks and certified so by the Architect. b) Rs. 3,00,00,000/- (Rupees three crore) simultaneously upon completion of 50% of the super structure and certified so by the Architect c) Rs. 3,00,00,000/- (Rupees three crore), simultaneously upon completion of the total super structure and brickwork as certified by the Architect. d) Balance sum of Rs. 3,00,00,000/- (Rupees three crore) upon completion of the project and certified so by the Architect." 24. The MoU dated 24.01.2008 and JDA dated 16.06.2008 created development rights in favour of the Avani - the CD in the present proceedings. After initiation of CIRP against the Avani by order dated 15.10.2019, the RP had filed an application for ta....
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....et" within the meaning of Section 18(f) and Section 25(2)(a) of IBC" 25. In IA No.1332 of 2024, which was filed by the Appellant before the Adjudicating Authority, following prayers were made: "a. Direction to be passed for dismissal of the lA (IBC) 1892 of 2023 filed by the RP before this Hon'ble Tribunal for approval of the Resolution Plan of the SRA. b. Direction to be passed for rejection of the Resolution Plan of the SRA which was approved on October 31, 2023 at the 29th meeting of the CoC by the CoC, since the CIRP of the CD culminating into the approval of the Resolution Plan is vitiated with fraud and non- joinder of the EPPL being the necessary party; c. Direction to be passed declaring the approval of the Resolution Plan of the SRA by the CoC as bad in law; d. Such further or other order or orders as to this Hon'ble Tribunal may deem fit and proper; e. Interim order in terms of prayer (a) and (b); f. Ad interim orders in terms of prayer (a) and (b); g. Receiver. h. Costs." Question Nos.(I) and (II) Both the above questions being inter-related are being taken together. 26. We have already n....
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....he Resolution Plan by acquiring the owner's allocation of the constructed area @ Rs. 1400 per sq. ft. Learned Counsel for the RP has submitted that submission of the Appellant questioning Clause 5(c), is not correct. Clause 5(c) captures the terms of JDA and repayment as provided in Part-II of Third Schedule. The said appropriation is on failure of payment within the due dates. Learned Counsel for the RP submitted that the said Clause 5(c) does not contemplate that Plan does not deviate from the JDA nor does it state that the adjustment would be made immediately after approval of the Plan. The amount to be refunded in the manner as contemplated in Part-II of Third Schedule is without any deviation. Learned Counsel for the RP has relied on Clause 5(m), which clearly provides that the Resolution Plan envisages to carry out all the terms of the MoU, Shareholding Agreement and JDA on approval of Resolution Plan by the Adjudicating Authority subject to fulfillment of the pre- condition in terms of Fourt Schedule of the JDA. Clause 5(m) of the Plan is as follows: "5(m) Resolution Applicant envisages to carry out all the terms of the Memorandum of Understanding, Shareholding Agre....
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....hold rights. This Tribunal found the Resolution Plan does not confine to the development rights which were granted by the land owing company but also contemplates transfer of title of land in favour of the Successful Resolution Applicant. Following was observed in paragraph 51 of the judgment:- "51. The Resolution Plan does not confine itself to the development rights, which were granted by the land owning company in favour of the Corporate Debtor on an unregistered Agreement, but also contemplates transfer of title of land in favour of Successful Resolution Applicant/ Special Purpose Company as contemplated in the Resolution Plan, which is an impermissible. The Development Agreement, which was unregistered document, could not have dealt with any right in the Project land and the lease hold right as per Development Agreement continued with the Lessee. Hence, the Resolution Plan could not have provided for transfer of the lease land in favour of Successful Resolution Applicant/ Special Purpose Company. Admittedly, the Appellant was not party to the Development Agreement, which was executed between land holding Company of the Corporate Debtor. The Appellant not being the cre....
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....As per the information made available, the owner has executed two (2) power of attorney in the name of directors of the suspended board, dated 16.06.2008 & 23.06.2008 towards development including sale, sanction and all such action that may be required in completion of the project. It is envisaged that on approval of the resolution plan, the name of such power of attorney holder would deemed to be substituted with the new directors of the resolution applicant, for which no further registration or agreement would be required. In terms of the said Power of Attorney, executed pursuant to the Joint Development Agreement (JDA) and as contained in clause 12.3 of the said JDA, the developer shall have all the exclusive rights to receive advances including for the purpose of raising finance, sale, transfer or execute all deeds & agreements in terms of the JDA and that the owner shall have no rights to claim in the proceeds or advance money, except for in the manner as contained in the resolution plan and/or JDA." 35. The above Clause itself indicates that owner had executed two Power of Attorney in the name of Directors of the Suspended Board towards development including sale,....
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....med by the Appellant in the process. Appellant who was contemplated to extend its co-operation as nominee of the corporate debtor in developing the property is now taken a stand to create obstacles in revival of the corporate debtor to carry out function by the SRA who now takes over the corporate debtor after approval of the Resolution Plan. 20. When PoA which was given for a particular purpose to the Appellant as nominee of the corporate debtor and Resolution Plan is approved by the CoC of the corporate debtor, the approval of the Resolution Plan is in commercial wisdom of the CoC and in event, the Resolution Plan declare the PoA which was given in favour of the Appellant as nominee of the corporate debtor as cancelled, the said clause of the Resolution Plan cannot be allowed to be challenged by the Appellant nor Appellant was given any rights in the subject property so as to assert any right. The endeavour of the Appellant is nothing but creating obstacles in revival of the corporate debtor in which he was suspended director. We also affirm the findings and imposition of cost of Rs. 1 lakh that application was filed by the Appellant is nothing but a vexatious and dishon....
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....monitor the implementation of the Resolution Plan. After the approval of the Resolution Plan, the said terms and conditions would continue to be governed strictly as per the executed documents between the Corporate Debtor and Energy Properties Pvt. Ltd or any other party. Upon approval of the Resolution Plan the said parties are required to comply with the said terms: For any breach on the part of any party, the Resolution Applicant shall have the right to seek for additional compensation, damages, loss for delay in the project, etc." 39. The MoU dated 24.01.2008 as well as Share Purchase Agreement dated 24.01.2008 had clearly provided for transfer of 40% of shares to Avani and 20% shares to Mr. R.L. Gaggar. Under the Share Purchase Agreement, the Avani was entitled to nominate Director in the Energy and nominating RP of the Avani as Independent Director was only for the implementation of the Resolution Plan. Hence, we do not find Clause 5(j), to be violative of any provision of the JDG. 40. Last Clause, which has been questioned is Clause 5(l), which is as follows: "5(l) On approval of the Resolution Plan, the Corporate Debtor shall have the sole & exclusiv....
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....an be found with the Resolution Plan. Question No.(III) is answered accordingly. Question No.(IV) 44. With regard to eligibility of SRA, learned Counsel for the Appellant has submitted that SRA did not fulfill the criteria of net worth, which was necessary pre-condition to be fulfilled by a Resolution Applicant. It is submitted that Financial Statements of the SRA for the Financial Year ended on 31.03.2023, the funds deployed by the Company was meagre Rs. 25,38,800/-. Neither, does the SRA had available cash and cash equivalent nor it has Rs. 5 crores, on its book available for deployment for investment. Both RP and SRA have refuted the above submission and contend that SRA fulfills the eligibility. It is submitted by Respondent No.3 that in the Appeal, the relevant Financial Statements are there, which were filed along with the affidavit of RP, where the RP has referred to the eligibility criteria. It is useful to notice paragraphs 4, 5 and 6 of the affidavit, which are as follows: "4. I state that as per the Invitation for Expression of Interest a 'corporate applicant' having a Net Worth of Rs. 3 crores (Rupees Three Crores Only) or above can participate in....