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TMI Blog2020 (3) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferee'. It is well settled that the Resolution Professional is required to examine and confirm the Resolution Plan subject to the same being in conformity with the ingredient of Section 30(2) of the Code. A Resolution Professional can submit his ex facie opinion to the 'Committee of Creditors' that the law was or was not violated. It is true that the Section 30(2)(e) of the Code does not authorise the Resolution Professional to determine whether the Resolution Plan does or does not violate the relevant provisions of Law - In reality, ascribing conditions in the 'Resolution Plan' by the Appellant/Resolution Applicant is an unacceptable one, in the considered opinion of this Tribunal. Therefore, the Adjudicating Authority in the impugned order came to the right conclusion that the plan of the Resolution Applicant/Appellant was in negation of Law. The Adjudicating Authority is not empowered to pass an order of eviction and it is for an 'Aggrieved party' to move the appropriate forum for redressal of its grievances in accordance with Law. In short, the Committee of Creditors had approved the Resolution Plan in utter disregard regard to the ingredient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice calling for the EoI/Plan as is where is and as is what is basis, whether the RP/CoC were in position to waive that condition while accepting the plan of M/s. K.L.Jute, I found that RP/CoC exactly did the same thing when they approved the plan submitted by M/s. K.L.Jute. I examined the plan of K.L.Jute products private Limited. M/s. K.L.Jute has made it clear in the resolution plan that the plan is subject to extinguishment of all claims (except criminal proceeding) against the corporate debtor upon approval of their plan by this authority. They gave list of such conditions precedent in the plan itself and stated that the plan is submitted subject to compliance of those conditions. Those conditions, were relating to exemption of all taxes/dues by the government/local authorities, disposal of all proceedings pending against the corporate debtor relating to such dues. How having submitted the plan after considering the invitation of plan on the basis of as is where is and as is what is basis, it was not proper on the part of K.L.Jute to put all above conditions in the plan. In my considered opinion, such plan ought not to have been approved by the CoC. 25. One can understa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order of eviction of the corporate debtor/tenant. Successful Resolution Application filed appeal against the order refusing to evict the tenant. The Hon'ble NCLAT considering that facts held that, Adjudicating Authority is not competent to pass any order for eviction . In this case M/s. Daaksh Jute LLP is lessee in possession of Jute Mill owned by the Corporate Debtor. The Lease period is yet to over. It may be true that lease deed was executed by the corporate debtor after receipt of notice under section 13(2) of SARFAESI Act. Real question is whether this authority has jurisdiction to hold that the lease is bad in law a pass order of eviction of the Daaksh Jute LLP from possession of the premises of the corporate debtor, as per the condition laid down in the resolution plan of Successful Resolution Applicant? 27. My answer to this question is that this Authority does not have such jurisdiction. M/s. K.L.Jute has submitted plan to the CoC stating the above conditions i.e. eviction of Daaksh Jute LLP. The CoC having issued public notice of invitation of EoI/Plan as as is where IIS and as is what is basis, the CoC made exception to the above condition and approved the plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajbhar as a Liquidator etc. 3. Assailing the correctness, validity and legality of the impugned order dated 13-02-2019 passed by the 'Adjudicating Authority' ('National Company Law Tribunal, Kolkata Bench'), the Learned counsel for the Appellant/Resolution Applicant submits that the 4th Respondent/Small Industries Development Bank of India, ('an unsecured Financial Creditor having 22.40% voting share in the Committee of Creditor formed later') projected an Application under section 7 of the 'Insolvency and Bankruptcy Code, 2016' against the 1st Respondent - ('Tirupati Jute Industries Ltd - a closely held public limited Company') to initiate 'Corporate Insolvency Resolution Process' against the Corporate Debtor, in respect of a default of ₹ 7,18,21,128/- ('Rupees Seven Crore Eighteen Lakh Twenty-One Thousand One Hundred and Twenty-Eight Only'), which was admitted by the 'Adjudicating Authority' on 12-01-2018. 4. The Learned Counsel for the Appellant contends that the 5th Respondent/Federal Bank Ltd had earlier declared the 1st Respondent/Corporate Debtor's 'Non-performing Asset' on 31-10-2015, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the 'Adjudicating Authority'. Moreover, based on the instructions of the 'Committee of Creditor' a public notice was published in the 'Indian Express' Newspaper on 06-05-2018 calling for 'Expression of Interest' and 'Resolution Plans' on the basis of the status of the 1st Respondent/Corporate Debtor on as is where is and as is what is basis in regard to the status of assets and documents thereof, pursuant to which the 'Resolution Professional/3rd Respondent' received three Resolution Plans on different dates prior 15-06-2018 and the same were discussed in the meeting of 'Committee of Creditors' that took place on 09-08-2018. The three resolution plans related to: i. K.L.Jute Products Pvt. Ltd/Appellant, ii. Madan Mohan Mal ( Objector No.1/8th Respondent ) (a related party to the Corporate Debtor/1st Respondent). iii. Prashant Damani ( Objector No.2/9th Respondent ) (Director of Abinandan Holdings Pvt. Ltd/6th Respondent). 8. The learned counsel for the Appellant proceeds to point out that the 'Resolution Plan' submitted by the 'Resolution Applicant/Appellant - K.L.Jute Products Pvt. Ltd sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. Satish Kumar Gupta ors. C.A No. 8766-67/2019. In this regard, the learned counsel for the Appellant submits that 'Unregistered Lease' confers no rights on a 'Lessee' as per Section 17 49 of the Indian Registration Act 1908 and Section 107 of the Transfer of Property Act, 1882. Moreover, on the side of the Appellant, it is projected that a 'Lease' for a period exceeding one year can only be made by way of a registered instrument and cites the decisions of Hon'ble Supreme Court (a) Anthony V. KC Itoop and Sons 7 ors. [2000] 6 SCC 394 (b) Park Street Properties (Pvt.) Ltd. v. Dipak Kumar Singh Ors. AIR 2016 SC 4038. 13. The Learned counsel for the Appellant contends that the 'Adjudicating Authority had failed to take into account that C.A 36/KB/19 praying for cancellation of the 'Unregistered Lease Agreement' dated 01-08-2016 was already pending prior to the date of passing of the impugned order. It is version of the Appellant that the 'Adjudicating Authority had passed an impugned order in rejecting the 'Resolution Plan' of the Appellant without considering the Application C.A 36/KB/219 filed by the 'Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Seven Crore Sixty Five lac thirty Thousand Seven Hundred Forty Five Only). Thereafter, i.e., from 01-08-2016, the unit is being run by M/s. Daaksh Jute L.L.P. (Respondent No.2) as and when payable. iv. Claim of Respondent No.2 - M/s. Daaksh Jute L.L.P's claim to the extent of ₹ 19,45,855/- (Rupees Nineteen Lac Forty-Five Thousand Eight Hundred Fifty-Five Only), as provided to the Operational Creditors of the Corporate Debtor. Therefore, even the claim of Respondent No.2 was accepted in the Resolution Plan which shows that the plan is a complete plan and considered all the aspects as per approval of Resolution Plan as provided under the Code. 17. The Learned counsel for the Appellant submits that as per Regulation 35A of the IBBI (Insolvency Resolution process for Corporate Persons) Regulations, 2016 a 'Resolution Professional' is perforced to investigate the affairs of 1st Respondent/Corporate Debtor as per Sections 43, 45, 50 and 66 of the 'I B Code'. Added further, the 'Resolution Professional' had failed in its dues, and he has filed an Application for cancellation of the 'Lease Deed' dated 01-08-2016 only after the expiry of 270 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o exercise rights in judicial, quasi-judicial proceedings, the resolution professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). 40 - Therefore, in the light of the statutory scheme as culled out from various provisions of the IBC, 2016 it is clear that wherever the corporate debtor has to exercise a right that falls outside the purview of the IBC, 2016 especially in the realm of the public law, they cannot, through the resolution professional, take a bypass and go before NCLT for the enforcement of such a right. 41- In fact the Resolution Professional in this case appears to have understood this legal position correctly, in the initial stages. This is why when the Government of Karnataka did not grant the benefit of deemed extension, even after the expiry of the lease on 25-05-2018, the Resolution Professional moved the High Court by way of a writ Petition in WP No. 23075 of 2018. The prayer made in WP No. 23075 of 2018 was for a declaration that the mining lease should be deemed to be valid upto 31-03-2020. if the NCLT was omnipotent, the Resolution Professional would have moved the NCLT itself for such a declaration. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yaman Investments Pvt. Ltd., represented by the said Mr. Poobalan, whereby the Corporate Debtor agreed to pay ₹ 11.5 crores; (viii) that the said agreement was purportedly executed at Florida, but witnessed at Chennai; (ix) that Mr. Poobalan even communicated to the Director; Department of Mines Geology as well as the Monitoring Committee, taking up the cause of the Corporate Debtor as its authorized signatory; (x) that the CIRP was initiated by M/s. Udhyaman Investments Pvt. Ltd. Represented by its authorized signatory, Mr. Poobalan; (xi) that the Resolution Applicant namely, M/s. Embassy Property Development pvt. Ltd. As well as the Financial Creditor who initiated CIRP namely, M/s. Udhyaman investments Pvt. Ltd are all related parties and (xii) that Mr. Poobalan had not only acted on behalf of the Corporate Debtor before the statutory authorities, but also happened to be the authorized signatory of the Financial Creditor who initiated the CIRP, eventually for the benefit of the Resolution Applicant which is a related party of the Financial Creditors. 48- In the light of the above averments, the Government of Karnataka thought fit to invoke the jurisdiction of the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and' or property of the 1st Respondent/Corporate Debtor to the 2nd Respondent. 24. The Learned counsel for the 2nd Respondent contends that the 'Resolution Plan' of the Appellant is a conditional one and for cancellation of the 'Lease Agreement' of 2nd Respondent, only a 'Civil Court' has jurisdiction and that the Adjudicating Authority has no jurisdiction to cancel the said 'Agreement'. 25. The other plea taken on behalf of the 2nd Respondent is that the 'Resolution Plan' of the Appellant was contrary to the 'Expression of Interest' and the 'Information Memorandum' as such the same was rightly rejected by the 'Adjudicating Authority', although, the said plan was approved by the 'Committee of Creditor'. 26. The Learned counsel for the 2nd Respondent submits that the provisions under section 13(13) of the SARFAESI Act, 2002 is not applicable to the Lease Agreement dated 01-08-2016 and the said bar is only under those situations when the borrower after receiving of notice under section 13(2) of the SARFAESI Act, 2002 transfers by means of 'Sale', 'Lease' any of its secured assets with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession Notice' on 06-05-2017 and that actual physical possession of the property of the 1st Respondent/Corporate Debtor was not taken by the said Bank. 32. The Learned counsel for the 2nd Respondent contends that since 21-02-2017 the 'Federal Bank' had not taken any step to enforce or relied upon the notice under section 13(2) of the SARFAESI Act and the said bank, as one of the 'Financial Creditors' had submitted Form 'C' before the Applicant, which was not disclosed and also that the bar under section 13(13) of the SARFAESI Act, 2002 will not impede the validity of the 'Lease Agreement' read with 'Addendum' dated 20-01-2016 because of the fact that the 'Federal Bank' had waived its right under section 13(2) of the SARFAESI Act, 2002 by not enforcing the same, because of the fact that no litigant can accept and reject the same transactions. 33. The Learned counsel for the 2nd Respondent contends that the 'Resolution Professional' had acknowledged the claim of the 2nd Respondent of a sum of ₹ 79,05,224/- on 20-06-2018 and in fact that the 'Resolution Professional had knowledge of the purported 'Lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of application on the ground that 270 days had already expired is an incorrect one and in fact the said period of litigation is to be excluded for the period of calculation of CIRP period. 37. It is represented on behalf of the 3rd Respondent that the relief of eviction sought for by the Appellant was not violation of any Law because of the fact that the possession of 2nd Respondent is 'void ab initio'. 38. The Learned Counsel for the 8th Respondent submits that after the impugned order dated 13-02-2019 passed by the 'Adjudicating Authority' (NCLT, Kolkata bench), the 8th Respondent, as an Applicant before the 'Adjudicating Authority' filed in C.A(IB) No. 974/KB/2018. Further, it is represented on behalf of the 8th Respondent, the 8th Respondent one of the 'Resolution Applicant' took part in 'CIRP of the 1st Respondent/Corporate Debtor also that on 12-01-2018, the Application filed by the 4th Respondent/Small Industries Development Bank of India (Applicant/Financial Creditor) under section 7 of the I B Code was admitted on 12-01-2018. The 3rd Respondent (Mr. Pinaki Sircar) was appointed as an 'Interim Resolution Professional' and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the pretext of a Resolution etc. 44. It is represented on behalf of the 8th Respondent that in the 'CoC' meeting that took place on 03-10-2018, the 8th Respondent had requested the Resolution Professional to confirm and state on record whether the last directive issued by him on 27-09-2018 to the effect that the resolution plans to be submitted by the Resolution Applicant would not contain any clause/condition for Termination and/or cancellation of the Lease deed etc; 45. The Learned Counsel for the 8th Respondent submits that the 3rd Respondent in the CoC meeting that took place on 03-10-2018 had informed the 8th Respondent that the Resolution Plan submitted by the Resolution Applicant in a sealed cover on 01-10-2018 was rejected and the 8th Respondent was required to leave the meeting under this circumstances. 46. The Learned Counsel for the 8th Respondent refers to C.A(IB) No.974/KB/2018 filed by him seeking among other things to assail the rejection of its resolution plan by the Resolution Professional and the CoC of the 1st Respondent/Corporate Debtor and also the wrongful acceptance of the plan submitted by the Appellant as a successful Resolution Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;Resolution Plan' of the Appellant spoke of continuation of Wiling Workers in short 'Resolution Professional' had not admitted the workers of 'whole claim' and that he functioned in a manner to benefit the cause of the Appellant. It is the stand of the Respondent No.10 11 that the 'Resolution Plan' of the Appellant was contrary to Law. 52. It is to be pointed out that Section 5(24) of the I B Code, 2016 defines Related party in relation to a Corporate Debtor. Section 5(24) (A) of the I B Code, 2016 defines Related party in relation to means an individual as defined in the Code. Section 5(25) of the Code, defines Resolution Applicant . Section 5(26) of the Code defines Resolution Plan . Section 5(27) of the Code, defines Resolution Professional . 53. Indeed Section 5(25) of the Code, relating to Resolution Applicant is to be read in consonance with the duties of Resolution Professional to invite certain categories of individuals to furnish the Resolution plan(s). 54. One of the pivotal functions of a Resolution Professional is to prepare a 'Information Memorandum' which will enable him to submit a Resolution plan. The Resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refers to an opinion of a 'Liquidator' or a 'Resolution Professional', that was reached during the 'Resolution stage'. An action under section 43 of the I B Code can lie only when the 'Liquidator' or 'Resolution Professional' arrived an opinion that an 'undue preference' was given to a particular 'Creditor' or 'Guarantor' or 'Surety' with a view to place a beneficiary in a profitable pedestal in regard to other creditors position in regard to other 'Creditors' when the Corporate Debtor entered into transaction with any individual. Section 43 of the Code speaks of 'avoidance of preference' given by a Corporate Debtor in the run up to 'Insolvency'. Section 43 (2) of I B Code mentions the circumstances when a Transactions entered into by a Corporate Debtor shall be treated as a deemed preference on a fiction of Law. The 'Term', 'Transfer' includes 'sale', 'Relinquishment', 'Exchange', and an Adjudicating Authority under section 49 of the Code can restore a status quo ante in a given matter by protecting a person's interest. Section 49 of the I B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant/Resolution Applicant initially had firstly submitted a 'Resolution Plan' containing necessary details etc, and later submitted an 'Addendum' to the Resolution Plan by it specifying certain details. Suffice it for this Tribunal to point out that the said 'Addendum' to the 'Resolution Plan' in unequivocal terms mentioned that acceptability of 'Resolution plan' by the 'Resolution Applicant shall be subject to and directly related to termination of all erstwhile 'agreement entered into by the old management of the Corporate Debtor, including but not limited to agreement with M/s. Daaksh Jute LLP, agreement with M/s. Stylish interlocking Pavers (P) Ltd., etc., peaceful and satisfactory handover of the entire unit of the Corporate Debtor with all its movable and immovable properties free from all encumbrances, complete management and operation rights of the entire unit of the Corporate Debtor and waivers/reliefs sought from Hon'ble NCLT. 62. A year before filing of an application under section 7 of the I B Code by the Financial Creditor, the 1st Respondent/Corporate Debtor had executed an unregistered Lease Deed dated 01-08-2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of Liquidation, the question of preferential transactions under section 43 of I B Code can be decided by an Adjudicating Authority? and (ii) Whether the Liquidator has jurisdiction to decide such issued?, this Tribunal is of the considered opinion that Section 43 of the Code can be invoked during the pendency of Resolution Process or Liquidation proceedings, if there are genuine, reasonable grievances relating to 'preferential transactions' at a relevant time and in fact a Liquidator by filing an 'Application' can seek one or other order from the Adjudicating Authority as per tenor and spirit of Section 44 of the I B Code. Section 35 of the Code showers 'powers and duties' of a Liquidator' and that he must act under the supervision of an Adjudicating Authority. Section 35 of the I B Code is like Section 290 of the Companies Act, 2013 a Transfer must be made by a 'Debtor' in lieu of an operational 'Debt' or an antecedent financial 'Debt' or other liabilities saddled on him. As per Section 35(b) of the Code, a 'Liquidator' is to take into his custody or control all assets, property, effects and actionable claims of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2019, on the basis that the Liquidator on 15-03-2019 had admitted its claim under the category of Secured Financial Creditor and since the Resolution Plan had not provided anything to the Applicant's claim was considered under the category of other creditor, it is to be pointed out that the plan of Resolution Applicant was rejected by the Adjudicating Authority and in the main case an order of liquidation was passed by the Adjudicating Authority on 13-02-2019, and as such it is open to the Applicant/Intervener Bank to stake its claim before the Liquidator for redressal of its grievance(s), in accordance with law if it so desires/advised. Accordingly, the said Interlocutory Application stands disposed of. 68. I.A No. 4285 of 2019 filed by the Applicant seeking Leave to place the judgment of Hon'ble Supreme Court dated 03-12-2019 in CA No. 9170-72 of 2019 M/s. Embassy Property Developments Pvt. Ltd v. State of Karnataka ors., is taken on record. 69. For the foregoing detailed discussions, and also this Tribunal taking note of the attendant facts and circumstances of the present case, in a conspectus fashion, comes to an irresistible consequent conclusion that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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