2022 (5) TMI 19 - AT - Insolvency and Bankruptcy

Seeking to implead the Applicant as Respondent No. 4 in main Company Appeal - HELD THAT - This Tribunal taking note of the surrounding facts and circumstances in a conspectus fashion and keeping in mind that the Applicant/Bank has not filed appropriate Application to get itself impleaded either before the Hon ble High Court or before the Hon ble Supreme Court of India, comes to a consequent conclusion that in a subject matter pending before the Hon ble Supreme Court of India in SLP(C) No.9252 of 2020, the Applicant/Bank is to wait for the final determination of the Hon ble Supreme Court of India, or to take necessary steps to implead itself before the Competent Forum, if it so desires / advised. Viewed in this perspective, this Tribunal without any haziness, holds that the Applicant/Bank is not entitled to file I.A.No.450 of 2021 in Comp. App (AT) (CH) (INS) No. 215 of 2021 (Impleading Application) and accordingly the I.A.No.450 of 2021 fails. Application dismissed.

Issues Involved:
1. Whether the Applicant/Bank should be impleaded as Respondent No.4 in the main Company Appeal.
2. The status and impact of the securities created by the 3rd Respondent on a pari-passu basis.
3. The implications of the 3rd Respondent's irregular payments and NPA status.
4. The effect of the attachment order obtained by the 2nd Respondent in execution proceedings.
5. The necessity and propriety of the Applicant/Bank's involvement in the proceedings.

Detailed Analysis:

1. Impleading the Applicant/Bank as Respondent No.4:
The Applicant/Bank filed an interlocutory application seeking to be impleaded as Respondent No.4 in the main Company Appeal. The Applicant argued that it is a necessary party due to its status as a secured lender with a charge on the amounts attached by the 2nd Respondent. The Applicant emphasized that no prejudice would be caused to any party if the application was allowed. However, the 1st Respondent contended that the Applicant/Bank is not a proper or necessary party as it had not approached the Adjudicating Authority to have its claims verified, which is contrary to the I&B Code, 2016. The Tribunal concluded that the Applicant/Bank must wait for the final determination by the Hon'ble Supreme Court or take steps to implead itself before the competent forum, thus dismissing the application.

2. Securities Created by the 3rd Respondent:
The 3rd Respondent had created securities on a pari-passu basis among various lenders, including the Applicant/Bank. The securities included a first pari-passu charge on fixed and current assets, and a pledge of promoter’s shares. The Applicant/Bank argued that these securities were significant and that the amounts lying in the bank accounts were charged for dues payable to all lenders. The 1st Respondent countered that the floating charge on the current assets allowed the 3rd Respondent to utilize revenues to operate its business, and there was no proof that this charge had crystallized into a fixed charge.

3. Irregular Payments and NPA Status:
The 3rd Respondent was irregular in payments to the lenders from 28.04.2018 and was reported as a Non-Performing Asset (NPA) with ICICI Bank on 18.07.2018. The 3rd Respondent had filed a writ petition against the lenders' decision to initiate legal action, which was dismissed by the Hon'ble High Court of Telangana. The 3rd Respondent then appealed, and a stay was granted, directing the bank not to take coercive action against it.

4. Attachment Order by the 2nd Respondent:
The 1st Respondent, as an operational creditor, had filed a petition for initiation of CIRP proceedings against the 3rd Respondent due to its failure to pay nearly ?14.00 Crores in an international arbitration initiated by the 2nd Respondent. The 2nd Respondent had secured an order of attachment in execution proceedings, virtually securing the entire award amount with interest. The Applicant/Bank argued that the plea that the sum payable to the 2nd Respondent was fully secured by the attachment order was incorrect, as the amounts in the bank accounts were charged for dues payable to all lenders.

5. Necessity and Propriety of Applicant/Bank's Involvement:
The 1st Respondent argued that the Applicant/Bank had not filed necessary applications to implead itself in proceedings before the Hon'ble High Court or the Hon'ble Supreme Court. The I&B Code, 2016, prevents parties from approaching the Adjudicating Authority if disputes relating to claims are pending. The Tribunal noted that the Applicant/Bank had not filed appropriate applications to be impleaded either before the Hon'ble High Court or the Hon'ble Supreme Court. Therefore, the Applicant/Bank must wait for the final determination by the Hon'ble Supreme Court or take steps to implead itself before the competent forum.

Conclusion:
The Tribunal concluded that the Applicant/Bank is not entitled to file the impleading application and dismissed I.A.No.450 of 2021 in Comp. App (AT) (CH) (INS) No. 215 of 2021. No costs were awarded.

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