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2024 (9) TMI 1092 - AT - IBCRejection of claims of the Operational Creditor on the basis that he did not get sufficient documentation - HELD THAT - The Hon ble Supreme Court of India in the matter of Regen Powertech (P) Ltd. 2023 (9) TMI 1406 - SUPREME COURT has given ratio decidendi that Resolution Professional has to be neutral party and not expected to take a stand, which is contrary in present appeal where the Appellant filed appeal on merits of the Impugned Order and that too in his personal capacity as Resolution Professional of Corporate Debtor. It is further interesting to note that one Unsecured Financial Creditor, namely, Paton Construction Private Limited who is supposed to have given a loan of paltry sum of Rs. 1 Lakh knowing well that CIRP is being initiated against the Corporate Debtor, then original IRP is removed and the present Appellant is appointed as Resolution Professional, who in turn rejected the claims of Operational Creditor and accepted the claims of the Unsecured Financial Creditor and claims of promoter. This made the way for making Unsecured Financial Creditor of Rs. 1,05,877/- as a Sole Member of the CoC and ousting the Malharshanti Enterprises Limited the Operational Creditor out of CoC having claim of Rs. 1,94, 62, 148/-. Although the Adjudicating Authority in Impugned Order dated 16.02.2023 in Para 22 has recorded that the conduct of the Resolution Professional also need to be thoroughly investigated . However, the Adjudicating Authority did not give directions for the further course of action for the same or direction to the IBBI. Hence, this Appellate Tribunal is required to take this to logical conclusion as we are upholding the Impugned Order in toto. In this background, the IBBI is directed to look into the role of the Appellant in accordance with the law regarding conduct/ misconduct of the Appellant as the Resolution Professional and take further necessary action as deemed fit and warranted on the facts of the case and as per law. Cost of Rs. 10 Lakhs on the Appellant to be paid in Prime Minister s National Relief Fund within four weeks of pronouncement of this order. The compliance for the same will be reported to the Adjudicating Authority by the Appellant. Initiation of CIRP - It is claim of the Appellant that he did not know about the on going proceedings by the Respondent against the Corporate Debtor and only on publication of public announcement by the IRP inviting claims from the Creditors on 28.01.2020, the Appellant came to know about these developments and filed the claim of Rs. 1,05,877/- before the IRP/ RP - HELD THAT - There are no fault in the finding of the Adjudicating Authority contained in Impugned Order includings as contained in para 20 against which the Appellant has filed this. The Impugned Order merely recorded that an application filed under Section 12 A on the ground of purported settlement entered between the CoC and the sole Appellant herein who is Unsecured Financial Creditor who took a loan just before passing CIRP order is indigenous idea of Corporate Debtor and the Promoters of Corporate Debtor to bring out the Corporate Debtor from the clutches of CIRP which attained the finality through back door entry. The order admitting CIRP against the Corporate Debtor was passed on 27.01.2020. This was for the first and the last time that the Appellant paid money to the Corporate Debtor - there are noting which prevented the Appellant to disburse further amount under the agreement and it is only after the claims of the operational creditor got rejected the Appellant expressed its intention to continue the business relations with the Corporate Debtor. Incidentally it has been brought to our notice by the Respondent No. 1 that the alleged loan agreement was backdated and unstamped documents. There are no error in the Impugned Order and the Appeal devoid of any merits is dismissed. Challenge to claims submitted by the Operational Creditor - fraudulent claims - HELD THAT - Once the claims of the Operational Creditor have been crystalized and admitted by the Adjudicating Authority while admitting Section 9 application of Respondent No. 1 and initiating CIRP against the Corporate Debtor. We also find that IRP was duly appointed by the Adjudicating Authority who collated the claims and admitted the claims of the Respondent No. 1 basis on the documentation submitted by the Respondent No. 1. It is surprising as how the claims of the Operational Creditor have been rejected later by the Resolution Professional - appeal dismissed.
Issues Involved:
1. Challenge to the Impugned Order dated 16.02.2023. 2. Rejection of claims by the Resolution Professional. 3. Constitution of the Committee of Creditors (CoC). 4. Allegations of pre-existing disputes and fraud. 5. Role and conduct of the Resolution Professional. 6. Application under Section 12A of the Insolvency and Bankruptcy Code (IBC). Detailed Analysis: 1. Challenge to the Impugned Order dated 16.02.2023: The appeals were filed against the common Impugned Order dated 16.02.2023 passed by the National Company Law Tribunal, Mumbai Bench, Court-III. The order was challenged by the Resolution Professional, the Suspended Directors of the Corporate Debtor, and an Unsecured Financial Creditor. All three appeals sought to set aside the order and requested costs and other reliefs as deemed fit by the Tribunal. 2. Rejection of Claims by the Resolution Professional: The Resolution Professional, Mr. Manish Jaju, rejected the claims of the Operational Creditor, Malharshanti Enterprises Limited, in totality and admitted the claims of Paton Construction Pvt. Ltd., an Unsecured Financial Creditor, for Rs. 1,05,877/-. The Adjudicating Authority noted that the Resolution Professional's action in rejecting the Operational Creditor's claims was illegal and arbitrary, emphasizing that the claims had already been adjudicated and attained finality through judicial processes. 3. Constitution of the Committee of Creditors (CoC): The constitution of the CoC was challenged, particularly the inclusion of Paton Construction Pvt. Ltd. as the sole CoC member. The Operational Creditor argued that the loan of Rs. 1 lakh from Paton Construction Pvt. Ltd. was an ingenious idea to manipulate the CIRP process. The Tribunal observed that the inclusion of Paton Construction Pvt. Ltd. was aimed at derailing the CIRP and denying the claims of the Operational Creditor. 4. Allegations of Pre-Existing Disputes and Fraud: The issue of pre-existing disputes was raised by the Appellants, arguing that disputes existed before the demand notice was issued. However, the Tribunal noted that this issue had already been examined and rejected by both the Adjudicating Authority and this Appellate Tribunal in earlier judgments. The Tribunal found no merit in the allegations of fraud and emphasized that the claims had been properly adjudicated and attained finality. 5. Role and Conduct of the Resolution Professional: The Tribunal castigated the Resolution Professional for exceeding his powers and acting in a non-transparent manner. The Resolution Professional was found to have rejected the claims of the Operational Creditor without proper justification and accepted the claims of the Unsecured Financial Creditor and the Suspended Director. The Tribunal directed the Insolvency and Bankruptcy Board of India (IBBI) to investigate the conduct of the Resolution Professional and take necessary action. 6. Application under Section 12A of the IBC: The Tribunal noted that the Resolution Professional filed an application under Section 12A of the IBC for withdrawal of the CIRP on the ground of a purported settlement with the sole CoC member, Paton Construction Pvt. Ltd. The Tribunal found this action to be an attempt to bring the Corporate Debtor out of the CIRP through a back-door entry, which was deemed illegal and arbitrary. Conclusion: The Tribunal dismissed all three appeals, upholding the Impugned Order dated 16.02.2023. The Tribunal imposed a cost of Rs. 10 lakhs on the Resolution Professional for filing a frivolous appeal and directed the IBBI to investigate the conduct of the Resolution Professional. The Tribunal emphasized the need for transparency and adherence to legal procedures in the CIRP process and condemned the actions aimed at derailing the process and denying legitimate claims.
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