2023 (1) TMI 110 - AT - Insolvency and Bankruptcy

Seeking Withdrawal of company appeal - Whether Applicant who has not filed any Appeal, can claim for setting aside the Order on the basis of Intervention Application? - HELD THAT - The Order dated 08.10.2021 which has been challenged in the Company Appeal (AT) Ins. No. 880 of 2021 has been passed by the Adjudicating Authority on an Application filed under Section 60(5) of the Code. IBC provides for filing an Appeal against the Order passed by the Adjudicating Authority by virtue of Section 61(1) - Admittedly, no Appeal has been filed by the Applicant and filing of any Appeal by the Applicant at this stage shall stand barred by time. Hon ble Supreme Court in SARASWATI INDUSTRIAL SYNDICATE LTD. VERSUS COMMISSIONER OF INCOME-TAX 1999 (3) TMI 3 - SUPREME COURT has categorically held that only purpose for granting an Intervention Application is entitled to intervene in support of one or other side. The intervener is well within its rights either to support the order dated 08.10.2021 or to oppose the said order. But when the Company Appeal (AT) Ins. No. 880 of 2021 which has been filed challenging the Order dated 08.10.2021 is sought to be withdrawn, there is no proceeding in which intervener can be heard in opposition of the Order dated 08.10.2021. Proceedings under the IBC are proceedings in a special statute with timeline where limitation prescribed under the Act is for a purpose - Order 23 which came for consideration before the High Court pertains to withdrawal of suit or amending part of claim, the restriction contained in Order 23 for withdrawal were for purpose of object and in the context of Order 23 of the CPC observations as noted above were made by the High Court. It was held that withdrawal cannot be as a matter of course and its Court s discretion. In the present case, Order dated 08.10.2021 has not been challenged by the SREI Equipment Finance Ltd. who has sought intervention. The judgment of the Hon ble Supreme Court relied on by the Appellant do support the contention of the Appellant. Hon ble Supreme Court has held that 3rd parties including interveners have their own remedies in law and they cannot insist upon their grievance being addressed in the appeals filed by the Appellants herein. We are of the considered opinion that at the instance of intervener, the order passed by the Adjudicating Authority dated 08.10.2021 cannot be set aside. We although have permitted the applicant to intervene in the Appeal but are unable to grant any relief to intervention as prayed in the Application. We are thus of the view that prayer of the appellant Indiabulls Housing Finance Ltd. to withdraw the Appeal is to be allowed and the Appeal is to be dismissed as withdrawn. Appeal dismissed as withdrawn.

Summary

Issues Involved:
1. Validity of the arbitral award and its enforcement.
2. Role and rights of the Interim Resolution Professional (IRP) during the Corporate Insolvency Resolution Process (CIRP).
3. Rights of the secured financial creditor (SREI Equipment Finance Ltd.) and their intervention in the appeal.
4. Withdrawal of the appeal by Indiabulls Housing Finance Ltd.

Detailed Analysis:

1. Validity of the Arbitral Award and its Enforcement:
The arbitral award dated 29th August 2016 was in favor of Kalpataru Properties Pvt. Ltd., directing the Corporate Debtor to sell, transfer, and assign the subject property. This award was challenged under Section 34 of the Arbitration and Conciliation Act, 1996, but was upheld by the Bombay High Court and the Supreme Court. The National Company Law Tribunal (NCLT) Mumbai allowed Kalpataru's application (I.A. No. 1921 of 2021) to enforce the award during the CIRP.

2. Role and Rights of the Interim Resolution Professional (IRP) During CIRP:
The IRP was appointed on 06.11.2019. The IRP acknowledged that the subject property was not part of the CIRP and recognized the entitlement of Rs. 75,30,00,000/- to the Corporate Debtor. The NCLT directed the IRP to execute the conveyance deed and other required documents for the sale of the property against the balance consideration.

3. Rights of the Secured Financial Creditor (SREI Equipment Finance Ltd.) and Their Intervention in the Appeal:
SREI Equipment Finance Ltd., a secured financial creditor and member of the Committee of Creditors (CoC), filed I.A. No. 2623 of 2021 seeking intervention, arguing that the enforcement of the arbitral award during the CIRP was impermissible under Section 14(1)(b) of the IBC. SREI contended that the NCLT's order prejudicially affected their rights and that the arbitral award should not be enforced during the CIRP. However, the tribunal noted that SREI did not file a separate appeal against the NCLT's order and thus could not claim relief in the present appeal.

4. Withdrawal of the Appeal by Indiabulls Housing Finance Ltd.:
Indiabulls Housing Finance Ltd. sought to withdraw its appeal (Company Appeal (AT) Ins. No. 880 of 2021) following a statement made before the Supreme Court that the appeal would be withdrawn if Kalpataru deposited Rs. 75.30 crores. The Supreme Court's order dated 14.11.2022 allowed the withdrawal of the appeal upon deposit of the amount. The tribunal allowed Indiabulls to withdraw the appeal, noting that SREI, as an intervener, could not oppose the withdrawal without having filed a separate appeal.

Conclusion:
The tribunal upheld the enforcement of the arbitral award in favor of Kalpataru Properties Pvt. Ltd. and allowed the withdrawal of the appeal by Indiabulls Housing Finance Ltd. The intervention application by SREI Equipment Finance Ltd. was rejected, as they did not file a separate appeal against the NCLT's order. The tribunal emphasized the importance of adhering to the timelines prescribed under the IBC and the principle that interveners cannot claim relief without filing an independent appeal.