2019 (11) TMI 1475 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor had committed default in making the payment of rent - Non-admission of claim of the Applicant vide the updated List of the Petitioner's Creditors - Operational Creditor or not - HELD THAT - There is no requirement to discuss all those legal points at length. In the opinion of this Bench the Resolution Professional was duty bound to ascertain the correct facts, that too, after due diligence and investigation, hence in his wisdom rightly appointed A M. As per Section 25 of Insolvency Code duties of Resolution Professional has been assigned, hence in compliance an investigation was carried out by appointing an Agency so as to ascertain whether the transaction as claimed by the Applicant CRPL was genuine and correct. On investigation it was reported that the transaction was extortionate, preferential in nature, incorrect and fraudulent, hence, the claim allegedly made as Operational debt was rejected - Application dismissed. Refund of amount attached/recovered from the State Bank Account by Commercial Tax Department - HELD THAT - The admitted factual position is that the 'Moratorium' had commenced by admitting the Petition filed by RICOH India Limited U/s 10 of the (I B) Code vide Order dated 14.05.2018, therefore, Section 14 of I B Code shall apply which prohibits recovery or alienation or disposing of any of the property of the Corporate debtor. Due to the declaration of Moratorium the action of recovery from the State Bank account of the Corporate Debtor is barred by Law. As a consequence, the concerned authorities are hereby directed to reverse the recovery entries by refunding back the amount recovered. The amount so refunded shall be kept in a No Lien Account or an Escrow Account of the Corporate Debtor to be controlled and operated by Resolution Professional under the instructions of NCLT Bench - Application allowed. Directions to the Resolution Professional to accept the claim of the Applicant - rejection because of belated submission - HELD THAT - This Bench is of the view that considering few judgments of NCLAT a lodgment of claim can be entertained by the Resolution Professional if it is within a reasonable time and going to effect substantially a Resolution Plan already under consideration before Committee of Creditors - Resultantly this Bench is of the view that under the circumstances when a Resolution Plan is already under consideration which ought to have been based upon the information memorandum prepared and published by Resolution Professional having details of Tax liability, therefore, the right of claim of the Tax Department would have already been taken into account under the provisions of Insolvency Code. However, in a situation when a Tax demand is finalized or matured after the said advertisement of information memorandum, the same is always subject to the proposal incorporated in a Resolution Plan. The present position in this case is that a Resolution Plan is already in hand, hence at this stage when the Committee of Creditors had already forwarded for approval of this Bench, it is not practically possible to entertain any fresh claim. At the most this Bench shall consider the provision made by the Resolution Applicant in the Resolution Plan sub judice for decision - Application disposed off as redundant. Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - HELD THAT - As prescribed under the Code and the Regulations the Committee of Creditors as well as the Resolution Professional have followed the procedure which is evident from the list of events placed for due consideration of this Bench. It is a case where due opportunity was granted to all the Resolution Applicants, moreover, the most attractive plan was sanctioned for approval by the Adjudicating Authority. This is not a case where the Committee of Creditors has not applied commercial wisdom judicially. Rather the basis on which the Committee of Creditors had approved the Resolution Plan shall again be scrutinized at the time of considering the Resolution Plan placed before this Bench for due approval as per law - this Bench is of the conscientious view that no interference is required in the majority decision of the Members of Committee of Creditors - Application rejected.

Summary

Issues Involved:
1. Claim of Operational Debt by Connect Residuary Private Limited (CRPL)
2. Refund of amounts attached/recovered by Commercial Tax Departments during the Moratorium
3. Acceptance of belated claim by Commercial Tax Department, Government of Rajasthan
4. Allegations of irregularities in the Corporate Insolvency Resolution Process by Kotak Investments Advisors Limited

Issue-wise Detailed Analysis:

1. Claim of Operational Debt by Connect Residuary Private Limited (CRPL):
The Miscellaneous Application MA-01 of 2019 was submitted by CRPL for the claim of an 'Operational Debt'. CRPL sought to set aside the action of the Resolution Professional (RP) in not admitting their claim and to declare CRPL as an Operational Creditor to the extent of ?25,52,08,897/-. The claim was based on a 'Master Rental Agreement' dated 06.12.2013 between CRPL and the Corporate Debtor (RICOH). CRPL alleged that RICOH defaulted on rent payments for the period from 15.12.2017 to 16.02.2018. Despite lodging a claim as an Operational Creditor, CRPL's claim was under verification and subsequently not admitted in the updated list of creditors. The RP, after investigation by Alvarez & Marsal India Private Limited (A&M), concluded that the transaction was extortionate, preferential, incorrect, and fraudulent, and thus rejected the claim. The Tribunal found no fallacy in the RP's rejection of the claim and dismissed the application.

2. Refund of amounts attached/recovered by Commercial Tax Departments during the Moratorium:
The Miscellaneous Application MA-1535 of 2018 was moved by the RP seeking direction for the refund of ?43,37,643/- and ?16,00,000/- attached/recovered by the Commercial Tax Departments of Uttar Pradesh and Rajasthan, respectively, during the Moratorium. The RP argued that during the Corporate Insolvency Resolution Process (CIRP), the Moratorium prohibits any recovery or alienation of the Corporate Debtor's property. The Tribunal directed the concerned authorities to reverse the recovery entries and refund the amounts to be kept in a "No Lien Account" or an "Escrow Account" controlled by the RP.

3. Acceptance of belated claim by Commercial Tax Department, Government of Rajasthan:
The Miscellaneous Application MA-1040 of 2019 was filed by the Commercial Tax Department, Government of Rajasthan, seeking directions to the RP to accept their claim, which was denied due to belated submission. The Tax Department cited various tax dues under the RVAT Act, 2003, and CST Act, 1956. The Tribunal noted that the Insolvency and Bankruptcy Code (IBC) has an overriding effect on other laws and that claims can be entertained if submitted within a reasonable time. However, since the Resolution Plan was already under consideration, the Tribunal found it impractical to entertain any fresh claim at this stage and disposed of the application as redundant.

4. Allegations of irregularities in the Corporate Insolvency Resolution Process by Kotak Investments Advisors Limited:
The Miscellaneous Application MA-1039 of 2019 was submitted by Kotak Investments Advisors Limited, an unsuccessful Resolution Applicant, alleging irregularities in the CIRP. Kotak claimed that the process of inviting expression of interest and acceptance of the Resolution Plan was not in accordance with the provisions of the Code. They sought to reject the RP's application for sanction of the Resolution Plan submitted by the consortium of Kalpraj Dharamshi & Rekha Jhunjhunwala and to consider Kotak's Resolution Plan instead. The Tribunal found that the RP and Committee of Creditors (CoC) followed the prescribed procedures and that the commercial decision of the CoC should be sanctioned. The Tribunal rejected Kotak's application, finding no legal force in their allegations.

Conclusion:
The Tribunal addressed each issue comprehensively, upholding the RP's decisions and actions, and ensuring adherence to the provisions of the Insolvency and Bankruptcy Code. The applications by CRPL and Kotak Investments Advisors Limited were rejected, while the application for refund of amounts during the Moratorium was allowed, and the belated claim by the Commercial Tax Department was disposed of as redundant.