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TMI Blog2017 (9) TMI 1534X X X X Extracts X X X X X X X X Extracts X X X X ..... cating Authority under the IBC proceedings. BIFR proceedings have finally been concluded by passing final orders due to the reasons stated above. It is settled position of law that Assignee cannot get more rights than what its original Assignor has. Admittedly, the EXIM Bank was a party to all concerned proceedings for resolving dispute in question as stated supra. We have carefully examined various orders passed by the BIFR especially touching upon material allegations made by the applicant herein and are satisfied that all interim orders having a material bearing on the issue and also other relevant documents like MRA 2007 etc are valid and thus declared as such and are binding on the parties. The issue cannot be adjudicated in isolation ignoring all developments taken place. At the same time, it is to point out here, that in normal parlance, whatever, interim order(s) passed in a case would merge in the final orders. However, this principle would not be applicable in the present case for the reasons stated supra. The Adjudicating Authority, i.e. NCLT in the instant case, cannot go into roving enquiry especially in the case where several issues have been settled by BIFR and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proof of claim (revised claim submitted on February 20, 2017) before the Respondent No. 1/the Interim Resolution Professional (IRP) is ₹ 88,20,28,260.97 (Rupees Eighty Eight Crores Twenty Lakhs Twenty Eight Thousand Two Hundred and Sixty and ninety seven paise only). 2) The present Application is filed by the Applicant seeking certain reliefs from this Hon'ble Tribunal in order to protect its claim and voting right in the committee of creditors as despite being one of the largest financial creditors of the Corporate Debtor, its voting right in the committee of creditors is under a threat as a result of incorrect admission of claims and constitution of invalid committee of creditors by the IRP as reflected in the Initial Information Memorandum (Initial IM) prepared by the IRP pursuant to regulation 36(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for corporate persons) Regulations, 2016 (CIRP Regulations). By virtue of the collation of claims against the Corporate Debtor being incorrect, it follows that the constitution of the Committee of Creditors by the IRP under the Initial IM is invalid. 3) The IRP has to start a transparent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l dated February 11, 2017 sought detailed calculation sheet of the claimed amount and justification/documentation for the applied interest rate. Accordingly, by email dated February 13, 2017, the Applicant forwarded Form 8 filed by the Applicant with Registrar of Companies (ROC) creating charge and also requested IRP to issue communications to the concerned persons from the Applicant as mentioned in the said email. 7) Thereafter, on February 14, 2017, the IRP sent an email to the Applicant seeking an undertaking as per section 29(2) of the IBC in order to enable her to share the Initial Information Memorandum prepared by the IRP as per Regulation 36 of the CIRP Regulations. Accordingly, an undertaking was submitted by the Applicant by email dated February 15, 2017. Upon receipt of the aforesaid undertaking, the IRP by her email dated February 15, 2017 sent notice along with agenda and initial information memorandum (as an annexure 2 to the agenda) for first meeting of CoC scheduled on February 22, 2017 at 2.00 p.m. at Hotel Park Inn by Radisson, 1 2, Ring Road, Vikram Vihar, Lajpat Nagar-4, Near Moolchand Metro Station, New Delhi 110 024 along with the following agenda:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IRP respectively. 8) The Applicant has objected to the proposed delegation of authority to SCL for the reasons that SCL is both a related party as well as a secured creditor of the Corporate Debtor as is also recorded in the Initial Information Memorandum. Therefore, the agenda for the proposed meeting of the CoC is far reaching especially in view of the fact that the Initial IM submitted by IRP has prima facie defects and cannot be relied upon for the purpose of deciding the voting rights of the members of the CoC for agendas listed at item No. 9 of list B of the said notice dated February 15, 2017 for the CoC meeting on February 22, 2017. Further, the agenda No. 9 which pertains to approval on the possession, control and custody of the assets of Corporate Debtor and necessary delegation of authority to Synergies Casting Limited (SCL) under purported existing lease agreement, when the order dated November 21, 2013 of the BIFR in Case No. 135 of 2005, explicitly recorded that the lease agreement between the Corporate Debtor and SCL had expired on March 31, 2013 and no extension of an expired lease agreement can take place. This was reiterated by the BIFR in its subsequent order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Applicant and without taking cognizance of concerns raised by the Authorized Representative of the Applicant in the meeting, the Respondent No. 1 proceeded with the said First meeting of CoC and approved all the agenda(s) of the meeting. The minutes of the First Meeting CoC (Minutes) were received by the Applicant vide Respondent No. 1's email dated February 24, 2017. However, it is noticed that some of comments of its Authorized Representative were not included. And its grievances were not attended by IRP. 3. The application was opposed by the Respondent No. 1 (Resolution Professional) by filing a reply dated 4th March, 2017. The following are her main contentions: 1) The Application has become infructuous since with respect to the first prayer, a meeting of Committee of Creditors was already held on 22.02.2017 in accordance with the directions passed by the Tribunal. 2) That with respect to the second prayer, that before conducting the scheduled meeting, the applicant was given a detailed reply dated 21.02.2017. The above factual matrix was duly noted and deliberated at the meeting of the Committee of Creditors held on 22.02.2017. The said fact is clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Creditors was constituted by her on 15.02.2017 and a report to that effect was also filed before this Tribunal on 17.02.2017 in accordance with Regulation 17(1) of IBBI Regulations 2016. As per Regulation 17(2), first meeting of the Committee of Creditors should be convened within 7 days of filing of report certifying constitution of Committee of Creditors. Since the report was filed on 15.02.2017, a meeting had to be convened meeting on or before 22.02.2017. 7) It is stated that Information Memorandum was prepared in accordance with Regulation 36 and it consists the following: a) Assets and Liabilities as on 25.01.2017; b) Audited Financial Statement(s) of the Corporate Debtor for the financial year ended 31.03.2015 and 31.03.2016; c) Provisional Financial Statement for the current financial year made up to 12.12.2016 i.e. the date of filing of application for the initiation of CIRP. d) List of Creditors; e) Particulars of debt due from or to the Corporate Debtor with respect to related parties; f) Details of Guarantees; g) List of members of Corporate Debtor; h) Details of material litigation and ongoing investigation or proceedings; i) Details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor. 12) With respect to taking note and approving the possession, control and custody of the assets of the Corporate Debtor and necessary delegation of authority of Synergies Castings Ltd. under an existing Lease Agreement, the Applicant herein was informed that the operations of the Corporate Debtor were managed under the said Lease Agreement since 2005 and also during the pendency of the reference of the Corporate Debtor before the BIFR and even prior to the filing of the reference by the Corporate Debtor, the lease in favour of the Synergies Castings Ltd. was duly agreed between the Financial Creditors of the Corporate Debtor in the CDR. 13) It is contended that a plain reading of the provisions of Section 60(5)(c) of the IBC will establish beyond doubt that said Section empowers this Hon'ble Tribunal to determine question of priorities or question of law or facts arising out of or in relation to the insolvency resolution of the Corporate Debtor. Question of priorities or question of law or facts as amenable to the jurisdiction of this Tribunal can be only in terms of the existing debts or liabilities of a Corporate Debtor. The aspect of inter-se transfer betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In fact, the principal amount due to EXIM Bank is much less than the amounts as mentioned in the MRA. The said order of the BIFR though under challenge before the Appellate Authority in Appeal No. 137 of 2012, no stay order was existing on the date of the assignment, despite the said EARC acquired the debts from EXIM Bank without either any intimation or permission to BIFR or the AAIFR. Thus, it is evident that EARC in the present case acquired the debts during the pendency of the reference of the Corporate Debtor with the BIFR and existence of an order of the BIFR for settlement of the dues of EXIM Bank, on the premise of its commercial wisdom without either intimating the BIFR or the Corporate Debtor. The Corporate Debtor was not aware about the acquisition of the debts of EXIM Bank by EARC and the acquisition cost for the said debt. In the instant case, the Corporate Debtor had the following Lenders:- IDBI, ICICI Bank EXIM Bank of India State Bank of India Indian Overseas Bank Andhra Bank JP Morgan Chase (Assignee of HSBC) IDBI Bank The existence of the above mentioned Lenders was always in the knowledge of EXIM Bank i.e. the original lender of the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponse to the Public Notice dated 27.01.2017 and 28.01.2017 issued by the Interim Resolution Professional and the IRP as on 14.02.2017 has determined the outstanding liability of the Corporate Debtor towards its Financial Creditors in the following manner:- Name of the Financial Lender Amount outstanding (Rs. in Crores) Percentage Alchemist Asset Reconstruction Company (Assignee of JP Morgan Chase) 122.07 16.47% EARC (Assignee of EXIM Bank) 65.01 8.77% Synergies Castings Ltd. (Assignee of Andhra Bank Indian Overseas Bank) 63.87 8.61% Millennium Finance Ltd. (Assignee of Debt of SCL, which SCL, had originally acquired from ARCIL, IDBI and SBI) 490.39 66.15% TOTAL 741.33 100% 16) EXIM Bank/EARC is the sole party defeating the rehabilitation of the Corporate Debtor The present case is a clear case of one minority creditor attempting to steal a march ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 filed its reference with the BIFR, which was registered as BIFR Case No. 135 of 2005. The BIFR vide its order dated 14.02.2007 declared the Corporate Debtor as a Sick Industrial Company and appointed IDBI as the Operating Agency. It is relevant to state that at the time of declaration of the Corporate Debtor as a Sick Industrial Company, EXIM Bank from whom debts have been acquired by EARC had specifically stated no objection before the BIFR. In view of the fact that the reference of the Corporate Debtor was pending with the BIFR, the Corporate Debtor had filed an Application being MA No. 136 of 2012 with the BIFR on 29.03.2012 seeking permission to continue with the arrangement of lease till the sanction of the scheme. The BIFR vide its order dated 29.05.2012 permitted the Corporate Debtor to continue with the lease till sanction of the scheme or till 31.03.2013, whichever was earlier. However, as the scheme could not be sanctioned by the BIFR in view of the non-cooperative and adamant approach of EXIM Bank (now EARC), the Corporate Debtor filed MA No. 171 of 2013 with the BIFR seeking extension of the lease arrangement which was otherwise to expire on 31.03.2013 and this a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor. Thus, the alleged objection of EARC on the aspect of leasing which was initially with the due consent of EXIM Bank i.e. the original lender from whom EARC has acquired the debts, is legally untenable and liable to be rejected by this Hon'ble Tribunal. 20. That the present Application filed by the Applicant herein is thus, evidently gross abuse of the process of law and hence not maintainable. The Application deserves outright dismissal and rejection by this Hon'ble Tribunal. 21. Therefore, it is prayed to dismiss the application under reply as devoid of any merit with costs. 4. We have heard Mr. S. Niranjan Reddy, Senior Advocate with Ms. Jyoti Singh, Ms. Rubaina Khatoon and Mr. P. Mohith Reddy, Advocates, Mr. A.D. Gupta, Mr. Krishnendu Datta, Mr. P. Vikram, Mr. Nitish Bandary, Advocates for the Respondents. We have carefully considered various lengthy averments made by the parties along with material papers filed in their support. 5. By reading of various averments made by the parties as briefly stated above, the following main points arise for consideration by the Tribunal. (1) Whether the Interim Resolution Professional/RP has followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be held on 22.2.2017 in New Delhi. Accordingly, the applicant also attended the first meeting of CoC. The Applicant also filed a revised claim on 20.2.2017, by rectifying certain errors to its claim to the original claims. In the meeting held on 22.2.2017, it was agreed that the register of claims and inter-se voting rights would automatically stand revised on the basis of admission or rejection or modification of the revised claim so submitted. The issue has been considered by this Tribunal on 22.02.2017, and permitted to conduct the proposed meeting of the Committee of Creditors to be held on 22.02.2017 by granting liberty to the applicant to participate in the meeting and raise its objections/grievances. Accordingly, the Petitioner availed the said meeting by raising some other objections just before 10 minutes of the scheduled time and those objections are stated to be similar to the objections raised by the Applicant. 8. So far as the issue relating to allegation of related party, it is to be mentioned here that the applicant like that of MFL got subsequently assigned debt of original lenders. The litigation started by the applicant right from initiation of case bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious orders and agreements made by the parties as both the parties are relying on the orders passed by the BIFR on several issues. It is not in dispute that parties are also parties in those proceedings and have raised their contentions before competent BIFR as was existing then. It is not in dispute that Master Restructuring Agreement 2007 was duly signed by all the parties including the Assignee (EXIM Bank) of the applicant and thus all parties bound by all covenants among themselves. The applicant cannot claim any special privilege in comparison to other similarly situated Financial Creditors. It is settled position of law that Assignee cannot get more rights than what its original Assignor has. Admittedly, the EXIM Bank was a party to all concerned proceedings for resolving dispute in question as stated supra. We have carefully examined various orders passed by the BIFR especially touching upon material allegations made by the applicant herein and are satisfied that all interim orders having a material bearing on the issue and also other relevant documents like MRA 2007 etc are valid and thus declared as such and are binding on the parties. The issue cannot be adjudicated in i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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