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2022 (8) TMI 232 - AT - Insolvency and BankruptcyRevocation of liquidation process enabling the Corporate Debtor to revive and reconstruct by implementing the scheme sanctioned - qualification of the Respondents to be scheme proponents under Sections 230 to 232 is in contravention to Section 29A read with Section 35(1)(f) and the IBBI Regulations - payment of fee to the Appellant stating that the Adjudicating Authority erroneously interpreted the impugned order - liquidator s fee will be payable only as per the occurrence of the event reflected in the table - HELD THAT - In view of the directions passed by the Adjudicating Authority, the Appellant obtained an affidavit from the Respondents dated 17.01.2020, whereby the Respondents have clearly stated that they were eligible to submit the scheme under Sections 230-232 of the Companies Act, 2013 and did not suffer from any disqualification under Section 29A of the Code - The order of the Adjudicating Authority dated 10.01.2020 has not been appealed by the Appellant and the said order has attained finality. Further, the Appellant filed its report before the Adjudicating Authority after receipt of affidavit from the Respondents. This Tribunal is also of view that the Appellant filed the present Appeal on 05.10.2020 whereas the limitation period expires on 09.02.2020 and the Appellant has not filed any application seeking condonation of delay. Even otherwise, this Tribunal cannot condone the delay beyond the period as prescribed under Section 61(2) of the I B Code, 2016. On this ground itself the Appeal is liable to be dismissed to the extent challenging the order dated 10.01.2020. However, this Tribunal has dealt with the issue even on merits to give a quietus to the litigation initiated by the Appellant. From the sequence of events, the Respondent have submitted scheme as directed by this Tribunal. The consequences thereof follow namely convening meeting of creditors and shareholders and filing an application before the Adjudicating Authority seeking approval of the scheme as per the directions of this Tribunal - The Appellant is a party even to the Appeal filed by the promoters before this Tribunal in appeal and subsequent to all other proceedings. Being a party to the proceedings the Appellant is bound by the decisions of the Adjudicating Authority and this Tribunal and the precedents of the Hon ble Supreme Court. The order of the Adjudicating Authority dated 10.01.2020 to which the Appellant is a party has not challenged the said order dated 10.01.2020 and the same has attained finality. Therefore, the Appellant is estopped from challenging the said order in this Appeal. The filing of the present Appeal is an abuse of process of law and wasting the precious time of this Tribunal - this Tribunal comes to an irresistible and inescapable conclusion that the Appeal is frivolous and vexatious and the same is liable to be dismissed.
Issues Involved:
1. Eligibility of Respondents as scheme proponents under Section 29A of the IBC. 2. Payment of liquidator's fee and its interpretation by the Adjudicating Authority. Detailed Analysis: 1. Eligibility of Respondents as Scheme Proponents: The Appellant contested the eligibility of the Respondents to act as scheme proponents under Section 29A of the Insolvency and Bankruptcy Code (IBC), 2016. The Adjudicating Authority's order dated 05.05.2020 allowed the promoters to take back the Corporate Debtor under a scheme for compromise and arrangement, which the Appellant argued was in contravention to Section 29A read with Section 35(1)(f) of the IBC and Regulation 2B(1) of the IBBI (Liquidation Process) Regulations, 2016. The Respondents submitted that the scheme was unanimously approved by the shareholders and creditors of the Corporate Debtor. The Adjudicating Authority had directed the Appellant to file a report certifying that the Respondents did not suffer from any disqualification under Section 29A. The Appellant filed this report on 24.01.2020. The Adjudicating Authority, in its order dated 10.01.2020, considered the Supreme Court's judgment in M/s Meghal Homes Pvt. Ltd. and the NCLAT's judgment in Jindal Steel and Power Limited vs. Arun Kumar Jagatramka, which clarified that a promoter ineligible under Section 29A cannot submit a scheme for compromise and arrangement. However, it was noted that the Respondents had settled the debts owed to the secured financial creditors in full, which was a significant factor in determining their eligibility. The Appellant did not contest the issue of ineligibility before the Adjudicating Authority and even submitted the scheme for approval. The Adjudicating Authority concluded that the Respondents were not disqualified under Section 29A as they had settled the debts of the Corporate Debtor. 2. Payment of Liquidator's Fee: The Appellant also raised issues regarding the payment of the liquidator's fee. The Adjudicating Authority's order dated 05.05.2020 determined that the liquidator's fee would be payable only upon the occurrence of specific events as detailed in the order. The Appellant argued that this interpretation was erroneous and contrary to Section 53 of the IBC and the IBBI (Liquidation Process) Regulations, 2016. The Respondents contended that the Appellant had delayed handing over the Corporate Debtor, causing additional expenses. They also argued that the Appellant, as an officer of the court, had no vested right or locus standi to challenge the scheme that he himself had submitted for approval. The Adjudicating Authority noted that the Appellant's repeated attempts to challenge the scheme were an abuse of process and aimed at personal gain. The Tribunal emphasized that the Appellant had not challenged the order dated 10.01.2020 within the limitation period and that the order had attained finality. Conclusion: The Tribunal dismissed the appeal, finding it frivolous and vexatious. It concluded that the Appellant was estopped from challenging the order dated 10.01.2020, which had attained finality. The appeal was seen as an abuse of process and a waste of the Tribunal's time. No costs were awarded, and any pending applications were closed.
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