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2021 (11) TMI 843 - AT - Insolvency and BankruptcyCIRP Proceedings - Resolution plan - seeking directing to form a consolidated Committee of Creditor (CoC) of the Corporate Debtor alongwith parent company and the Corporate Debtor etc. - HELD THAT - It is an admitted fact that debt and default exists. The Corporate Debtor is in a bad financial health and has failed to execute the major project awarded to it by NHAI and there are huge costs overrun - the issue of limitations cannot be acceded too as the Balance Sheet of the corporate debtor as early as in the year 2018 acknowledges debt and Section 18 of Limitation Act, 1963 is applicable to the proceedings under the Code. Hence, the Appellant cannot be given advantage of the limitation also. Even the summary of financial linkage between the parent company and the SPVs cannot be examined on standalone mode. Even value of awards won by SPVs and Financial Debt and other input cannot be examined as these are not the subject matter of the Appeal even remotely. The Code is silent on the issue of Group Insolvency and only when input is available in respect of all subsidiary companies and holding company then only it can be examined and that too only with respect to the material available in the Appeal Paper book and relief sought. This Tribunal is the creature of the statute only and hence, it has to work within the framework of the Code. As far as filing of claim by the Respondent and withdrawing the claim, thereafter, is the prerogative of the Bankers at its own risks and based on its own evaluation. The claim has been withdrawn and permitted by the Adjudicating Authority . Hence, this issue is not of much consideration in the present appeal. Each member of CoCs have an independent mechanism for evaluation considering its own benefits and risks - it is amply clear that the Appellant has to prove the fraudulent or malicious intent and has to file specific application under Section 65 of the Code. The Appellant has not done so. Hence, this Tribunal cannot accede to the request of the Appellant to annule the proceedings. The Adjudicating Authority vide Section 7(5)(a) is fully satisfied from their observations in the impugned order that a Debt beyond the threshold limited of the Code exists and Default has occurred and the Application complied with the relevant applicable regulations and hence, thereafter, admitted the application. Appeal dismissed.
Issues Involved:
1. Financial debt and default of the corporate debtor. 2. Consolidation of Committee of Creditors (CoC) of the corporate debtor with the parent company. 3. Limitation period for filing claims. 4. Withdrawal of claims by financial creditors. 5. Allegations of fraudulent or malicious initiation of proceedings. Detailed Analysis: 1. Financial Debt and Default of the Corporate Debtor: The Adjudicating Authority initiated the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor, Dehradun Highway Projects Limited (DHPL), based on the financial debt and default. The financial creditor, ICICI Bank, had provided substantial loans to the corporate debtor, which defaulted on repayments. The corporate debtor admitted to the debt and default, and the Adjudicating Authority was satisfied that the debt exceeded the threshold limit under the Insolvency and Bankruptcy Code (IBC). 2. Consolidation of Committee of Creditors (CoC): The appellant sought the consolidation of the CoC of the corporate debtor with its parent company, Era Infra Engineering Limited (EIEL). The appellant argued that the business model and financial interdependence between the parent company and its subsidiaries warranted consolidation. However, the Adjudicating Authority noted that the Code is silent on group insolvency and that each case must be examined independently. The financial creditor, ICICI Bank, had withdrawn its claim from the CIRP of the parent company, and the CoC of the corporate debtor had not consented to the consolidation. The pending petitions for consolidation before the Adjudicating Authority were not grounds to set aside the initiation of CIRP against the corporate debtor. 3. Limitation Period for Filing Claims: The appellant contended that the claims were time-barred. However, the Adjudicating Authority found that the balance sheet of the corporate debtor acknowledged the debt, and Section 18 of the Limitation Act, 1963, applied to proceedings under the IBC. Therefore, the claims were within the limitation period. 4. Withdrawal of Claims by Financial Creditors: The appellant argued that the withdrawal of claims by ICICI Bank from the CIRP of the parent company was improper. The Adjudicating Authority held that financial creditors have the prerogative to withdraw claims based on their evaluation and risks. The withdrawal was acknowledged and accepted by the Resolution Professional of the parent company, and this issue was not a significant consideration in the present appeal. 5. Allegations of Fraudulent or Malicious Initiation of Proceedings: The appellant alleged that ICICI Bank fraudulently initiated proceedings under Section 7 of the Code against the corporate debtor. The Adjudicating Authority noted that specific provisions under Section 65(1) of the Code address fraudulent or malicious initiation of proceedings. The appellant had not filed any application under this section to prove fraudulent or malicious intent. Therefore, the Tribunal could not annul the proceedings based on these allegations. Conclusion: The Adjudicating Authority found no infirmity in the impugned order dated 18.09.2020, which initiated the CIRP against the corporate debtor. The appeal was dismissed, and the interim order, if any, stood vacated. Pending applications were disposed of, and no order as to costs was made.
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