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2021 (7) TMI 1130 - AT - Insolvency and BankruptcyValidity of approved Resolution Plan - submission of Resolution Plan beyond the date prescribed in Form-G - decision of CoC to approve the plan - no objection shown before RP and CoC to dispute the claims placed - Whether there has been material irregularity in exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution Period? - HELD THAT - The RP has published the list of creditors on 24.08.2018, 29.11.2018, 10.12.2018 and finally on 24.01.2019 and in these lists the claims of the Appellant were shown as disputed claims. These lists were displayed on website, however, the Appellant has not raised any objection before the RP and CoC that the estimate of the amount of claims has not been shown in the lists - In this Application in Paras 16, 17, 21 to 30 there are specific allegations that the Appellant s claims fall within the scope of fraudulent trading and wrongful trading transactions under Section 66 of the IBC. However, the Appellant has not contested these applications before the Adjudicating Authority. The Appellant in rejoinder did not dispute the aforesaid facts, however, stated that the Application has no relevance to the determination of the issues involved in the present Appeal. The Appellant has not challenged the findings of the A M report dated 15.01.2019 and SEBI interim order dated 16.08.2018 - the Appellant has failed to convince that the RP has committed any material irregularity in exercise of powers during the CIRP. Whether the debts owed to the Operational Creditor (Appellant) of the Corporate Debtor have not been provided for in the Resolution Plan in the manner specified by the Board? - HELD THAT - Appellant heavily placed reliance on the Judgment of Hon ble Supreme Court in the case of NTPC Ltd (Simhadri Project) 2020 (11) TMI 973 - SUPREME COURT - According to the Appellant, the claims of the Appellant was pending adjudication before the Arbitrator, therefore, according to the Appellant, the claim amount should have been reflected under the heading Claims of Operational Creditors . The Hon ble Supreme Court do not agree with this submission and held that the Appellant s claims has rightly been described in the memorandum as other creditors claims (Claims under Adjudication). The Appellant has raised this objection before the approval of Resolution Plan. In the present Appeal, the facts are quite different the Appellant s claims are not only disputed claims but are the fraudulent extortionate credit transactions. Thus, this Judgment is not helpful to the Appellant. The Appellant has failed to make out a case for interference in the impugned order - Appeal dismissed.
Issues Involved:
1. Material irregularity in the exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution Process (CIRP). 2. Non-provision of debts owed to the Operational Creditor (Appellant) in the Resolution Plan as specified by the Board. 3. Jurisdiction of the Appellate Tribunal to grant the relief sought in the Appeal. Issue-wise Detailed Analysis: Issue No. (i): Material Irregularity in Exercise of Powers by the Resolution Professional During the CIRP The Appellant, Fourth Dimension Solutions Ltd. (FDSL), argued that the Resolution Professional (RP) failed to discharge his mandatory duties by not adjudicating the legitimate claim of the Appellant, which was substantiated by supporting documents. The RP deferred the claim based on ongoing arbitration proceedings without admitting or rejecting it, which the Appellant claimed was a violation of the Insolvency and Bankruptcy Code (IBC) and related regulations. The RP, Mr. Krishna Chamadia, was appointed on 14.05.2018. He issued a public announcement inviting claims and subsequently published lists of creditors, where the Appellant's claims were marked as disputed and pending arbitration. The Appellant did not challenge these lists or the RP's determination at the time. The RP, upon examining the Corporate Debtor's books, suspected fraudulent transactions between the Corporate Debtor and the Appellant, leading to the appointment of forensic auditors Alvarez and Marsal India Pvt. Ltd. (A&M). The findings of A&M and an interim order by SEBI indicated large-scale irregularities and fraud involving the Appellant. Consequently, the RP filed an application under Sections 50, 51, and 66 of the IBC for avoidance of these transactions. The Tribunal found that the RP acted in accordance with the IBC and regulations, and there was no material irregularity in his conduct during the CIRP. The Appellant failed to substantiate allegations of misconduct or collusion against the RP. Issue No. (ii): Non-Provision of Debts Owed to the Operational Creditor (Appellant) in the Resolution Plan The Appellant contended that the Resolution Plan did not provide for its claims, despite being the highest Operational Creditor. The Resolution Plan, however, included a statement as required by Regulation 38(1A) of the CIRP Regulations, dealing with the interests of all stakeholders, including Operational Creditors. The Resolution Plan categorized claims into related and non-related party Operational Creditors, proposing full payment to non-related party Operational Creditors but nil payment to the Appellant, whose claims were deemed fraudulent and extortionate based on the forensic audit and SEBI's findings. The Tribunal found that the Resolution Plan complied with regulatory requirements and appropriately addressed the interests of Operational Creditors, excluding the Appellant's disputed claims. Issue No. (iii): Jurisdiction of the Appellate Tribunal to Grant the Relief Sought in the Appeal The Appellant sought to set aside the Adjudicating Authority's order approving the Resolution Plan. However, the Supreme Court had already upheld this order. The Tribunal noted that once a Resolution Plan is approved by the Adjudicating Authority and upheld by the Supreme Court, all claims not included in the Resolution Plan are extinguished, and no further proceedings can be initiated regarding those claims. The Tribunal emphasized that the Successful Resolution Applicant should not face undecided claims post-approval, as this would create uncertainty in the amounts payable. The Appellant's claims, being part of fraudulent transactions, were not included in the Resolution Plan, and the Appellant did not challenge this determination at the appropriate time. Given that the Resolution Plan had been implemented and the RP discharged, the Tribunal found no grounds to interfere with the impugned order, which had already been upheld by the Supreme Court. Consequently, the Appeal was dismissed. Conclusion: The Tribunal dismissed the Appeal, finding no material irregularity in the RP's conduct, proper provision for Operational Creditors in the Resolution Plan, and no jurisdiction to grant the relief sought due to the Supreme Court's prior validation of the Resolution Plan.
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