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TMI Blog2020 (2) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant has not made out good case that if it was heard, Impugned Order could have been different. We are not convinced with the argument that amended Sub-Section (4) of Section 30 requires only Secured Financial Creditors to contribute towards interim finance and not the Unsecured Financial Creditors. No such interpretation can be drawn. We will not interfere in the collective decision of COC in this regard - The dissenting Financial Creditor in COC cannot be allowed to scuttle CIRP process otherwise the provision permitting COC to take decisions with regard to subjects stated in Section 28(1) by given majority of 66% under Section 28(3) would be rendered nugatory. Appeal dismissed. - Company Appeal (AT) (Ins) No.887 of 2019 - - - Dated:- 20-12-2019 - Justice A.I.S. Cheema Member (Judicial), Kanthi Narahari Member (Technical) And V.P. Singh Member (Technical) For the Appellant : Shri Sanjeev Sen, Sr. Advocate with Shri Arjun Krishnan, Shri Sumit Srivastava, Ms. Khushboo Mittal, Shri Soumo Palit and Shri Sayan Ray, Advocates For the Respondent : Counsel for Respondent present but did not mark appearance JUDGEMENT A.I.S. CHEEMA, J. : 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural Gas Corporation (ONGC in short) in terms of Gas Supply Agreement dated 19th April, 2017 and balance quantity of gas was being procured from GAIL India Ltd. in terms of Gas Supply Agreement dated 24th December, 2015. On 30th April, 2019, the Agreement between Corporate Debtor and ONGC completed its term. On mutual understanding, ONGC continued to supply gas to the Corporate Debtor till 10th May, 2019 but now had stopped supply of gas under the erstwhile Agreement. The RP entered into fresh negotiations with ONGC but it was informed that RP would have to participate in fresh tender/bid for gas supply. Inter alia, it was mentioned in the Application to the Adjudicating Authority that the Agreement with GAIL was due to expire on 6th August, 2019 and GAIL had asked the Corporate Debtor to open/renew and submit Standby Irrevocable Resolving Letter of Credit with Face Value as mentioned. That, GAIL further clarified that aggregate liability of issuing bank under the Letter of Credit should also be for the amount as mentioned. The RP then referred to the 6th meeting of COC and the decision taken. RP stated that in spite of decision of COC, Financial Creditor M/s. Edelweiss A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the CoC members including M/s. Edelweiss Asset Reconstruction Company Limited and Axis Bank to release the Letter of Comfort within 24 hours from hereof or else by 5.00 p.m. on or before 22.08.2019. 7. It is a going concern running with 100 employees, in case this interim finance has not been released, the Corporate Debtor will come to a grinding halt, therefore, this application is fit for the relief sought, therefore, we held that this application is fit for granting the reliefs as sought by the Resolution Professional. 3. Against developments as above, the Appellant EARC has filed this Appeal and it is claimed that in view of amendment to Section 30(4) of IBC read with Section 52(8) of IBC, Insolvency Resolution Process costs which includes interim finance can only be recovered from secured creditors and not from unsecured creditors like Appellant. It is also claimed that the Appellant is unsecured creditor and commercially it is injudicious in precarious condition for the Appellant to incur additional liabilities in the form of interim finance/Letter of Comfort and the Appellant cannot be compelled to do so. According to the Appellant, the COC is free to raise CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he COC Resolution and the objection which had been raised by the Appellant in the COC meeting. It is argued that Section 14(2) while dealing with Moratorium, provides that the supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interpreted during Moratorium. The learned Counsel then referred to Regulation 32 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ( Regulations in short) to submit that essential supplies mean - (1) electricity, (2) water, (3) telecommunication services and (4) information technology services, to the extent they are not direct input to the output produced or supplied by the Corporate Debtor. According to the Counsel, the decision taken by the COC for entering into further arrangement with ONGC/GAIL for supply of gas was not essential service and the Appellant could not be forced to make provisions so that Company remains functional. Except for essential services, it is claimed that Appellant could not be compelled. 5. Against this, the learned Counsel for Resolution Professional referred to the resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 20 gives authority to the IRP under Clause c to raise interim finance provided that no security interest shall be created over any encumbered property of the Corporate Debtor without prior consent of the creditors whose debt is secured over such encumbered property. Clause (e) of Sub-Section (2) of Section 20 states that the IRP has the authority to take all such actions as are necessary to keep the Corporate Debtor as a going concern . Section 25 of IBC which deals with Duties of Resolution Professional in Sub-Section (2)(c) provides that the Resolution Professional shall undertake to raise interim finances subject to approval of the Committee of Creditors under Section 28. (Section 28(3) requires approval of vote of 66% of the voting shares.) Relevant part of Section 28(1) reads as follows:- 28. (1) Notwithstanding anything contained in any other law for the time being in force, the resolution professional, during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors namely:- (a) raise any interim finance in excess of the amount as may be decided by the committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct were considered and the observations as above were made. Relying on the above Judgement of the Hon ble Supreme Court, the learned Counsel for the Appellant is submitting that the Appellant cannot be forced to contribute or incur further liability under CIRP as it would amount to forcing the Appellant to contribute. We are not convinced that the Judgement helps the Appellant in the facts and law applicable in present matter. When COC in a meeting of the Financial Creditors by requisite majority takes a decision with regard to CIRP costs which includes execution of responsibility put by law on the IRP/RP to keep the Company a going concern, the same cannot be treated as forcing the Appellant to part with property or forcing to incur liability. Appellant has itself sought to be part of COC and joined it. Nobody is forcing Appellant to file claim and/or to be part of COC. If the Appellant is part of COC and wants to remain part of COC, the Appellant cannot expect to only claim benefits from the process and claim that it would not take any of the liabilities and responsibilities which in the present matter, are apparently based on legal provisions for the duties to be performed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loading of any additional debt on the Corporate Debtor could be detrimental to the value of its assets. The learned Senior Counsel referred to para 39 of the Judgement in the matter of K. Sashidhar v. Indian Overseas Bank and Others 2019 SCC OnLine SC 257 to state that the commercial wisdom of the individual Financial Creditor is non-justiciable. It would be appropriate to reproduce the portion from Judgement of the Hon ble Supreme Court from para 39 which reads as under:- There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject matter expressed by them after due deliberations in the CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made nonjusticiable. G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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