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TMI Blog2020 (8) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... a Tribunal. Section 420(1) of the Companies Act, 2013 says that the Tribunal may, after giving the parties, to any proceeding before it, a reasonable opportunity of being heard pass such orders thereon as it thinks fit . Needless to state that the Tribunal is to ascribe reasons for arriving at a conclusion, of course resting upon the materials on record. The Hon ble President of NCLT , New Delhi, (in exercise of the powers conferred u/s 419 of the Companies Act, 2013) on 29.1.2020 had re-constituted the Benches at NCLT Mumbai for the purpose of exercising and discharging the functions assigned by the statute which was in partial modification of the order dated 25.07.2020. It is to be remembered the principle of qundo aliquid prohibetur, prohibetur et omne per quod devenitur ad illud is that an Authority is not to be permitted to evade a Law by shift or contrivance . In as much as the impugned order which was heard by the erstwhile Bench on 30.01.2020 wherein orders were reserved, until the next date of hearing i.e. on 28.02.2020 is beyond the jurisdiction of the re-constituted Bench of NCLT Court No. II, Mumbai, the said order with a view to prevent an aberratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l (AT) (Insolvency) No. 287 of 2020 , Company Appeal (AT) (Insolvency) No. 327 of 2020 - - - Dated:- 25-6-2020 - [Justice Venugopal. M] Member (Judicial) And [V.P. Singh] Member (Technical) For the Appellant : Mr. Abhinav Vasisht, Sr. Advocate with Mr. Avinash Subramanian, Mr. Aakrshan Sahay and Mr. Naqul Sachdeva, Advocates For the Respondent : Mr. Sudipto Sarkar, Sr. Advocate with Mr. Kumar Anurag Singh, Mr. Naman Joshi and Mr. Arun Kathpalia, Senior Advocates for Intervenor With JUDGMENT Venugopal M. J Company Appeal (AT) (Insolvency) No. 287 of 2020 Being dissatisfied with the impugned order dated 12.02.2020 passed by the Adjudicating Authority (Reconstituted National Company Law Tribunal , Bench No. II, Mumbai) in MA No. 515/2020 in C.P. (IB)- 1832(MB)/2017, the Appellant/ Monitoring Agency of the Corporate Debtor has focused the instant Appeal before this Tribunal. 2. The Learned Counsel for the Appellant contends that the Adjudicating Authority ( NCLT ) Bench No. II, Mumbai while passing the impugned order in M.A. No. 515/2020 dated 12.02.2020 had acted arbitrarily and exceeded its jurisdiction in staying the proceeding in M.A. No. 249 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at was not done. The Judgement of Mr. Justice B.C. Varma, therefore, became final so far, the High Court was concerned. If the Appellant had misused the bail or new materials came to light it would have been open to the prosecution to move for cancellation of the bail, but that is not the position in the present case. On the basis of the same materials and in the same circumstances in which the order was earlier passed in favor of the Appellant by the High Court the application for cancellation was made entirely as a sequel to the observations made by Mr. Justice Gupta while dealing with the application of another accused. It must be, therefore, held that Mr. Justice Gupta had no authority to upset the earlier order of the High Court. That which could not be done directly could also not be done indirectly. Otherwise, a party aggrieved by an order passed by one Bench of the High Court would be tempted to attend to get the matter reopened before another Bench and there would not be any end to such attempts. Besides, it was not consistent with the judicial discipline which must be maintained by Courts both in the administration of justice by assuring the binding nature of an order whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liberate delay and failure on the part of the Respondent / Successful Resolution Applicant was constrained to file M.A. No. 249/2020 before the Adjudicating Authority on 22.1.2020 among other things seeking an implementation of the Resolution Plan . 9. It is the stand of the Appellant that MA No. 249/2020 was heard at length and on 30.1.2020 and orders were reserved by the erstwhile Bench. However, on 29.1.2020 the Benches of NCLT Mumbai were re-constituted by the President of the National Company Law Tribunal (in exercise of the powers u/s 419 of the Companies Act, 2013) and the reconstitution of Benches was to come into effect from 3.2.2020. 10. The Learned Counsel for the Appellant points that in MA No. 515/2020 filed by the Respondent (Royale Partners Investment Fund Limited / Successful Resolution Applicant ) the re-constituted NCLT Mumbai Bench, Court no. II on 12.2.2020 at paragraph 4 had observed the following: - 4. Learned Senior Counsel for the Applicant pressed for Interim Relief mentioned at Clause (h) on page-24 of the MA. Learned Counsel appearing on behalf of the Monitoring Agency sought some time to file reply in the matter. Considering the subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r things, had sought stay of the proceedings before the erstwhile Bench in MA No. 249/2020. 15. The Learned Counsel for the Intervenor takes a stand that the 2nd Bench of NCLT Mumbai on 12.2.2020 in MA No. 515/2020 had stayed the proceedings before the 1st Bench, in MA No. 249 of 2029 (wherein orders were received), which is an invalid and illegal one in the eye of Law. Inspite of the said stay order, the 1st Bench of NCLT Mumbai (erstwhile Bench) had passed the final orders in MA No. 249/2020 on 18.02.2020 whereby the Respondent / RPIFL was directed to implement the Resolution Plan within a week and being aggrieved therefrom, the Respondent / RPIFL as an Appellant has preferred the Company Appeal (AT)(Ins.)No. 327/2020 before this Tribunal. 16. The Learned Counsel for the Intervenor prays for annulling the Impugned Order to promote substantial cost of justice. Respondent s Contentions 17. Conversely, it is the submission of Learned Counsel for the Respondent that in MA No. 249/2020 a reply was filed by the Respondent and the matter was heard extensively (after completion of pleadings) on 30.01.2020 before the Bench II of the NCLT , Mumbai and thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Committee was not arrayed as a party to the proceedings. 23. Yet another argument advanced on behalf of the Respondent is that in as much MA No.249/2020 had not dealt with the numerous challenges in implementing the approved Resolution Plan , by Respondent, the present Respondent (Appellant in Company Appeal (AT)(Ins.)No. 327/2020) had filed MA No. 515/2020 before the Adjudicating Authority and the same is pending. Discussions 24. There is no two opinion of a primordial fact that the erstwhile bench of NCLT , Mumbai on 30.01.2020 in MA No. 249/2020 in C.P.(IB)-1832(MB)/2017 after hearing had reserved the orders . Earlier, when MA No.249/2020 came up for hearing before the erstwhile Bench, the Respondent was directed to file Reply in next two days time i.e. by 29.1.2020 and it was categorically stated that the matter would be heard on 30.01.2020. However, MA No. 515/2020 was filed by the Successful Resolution Applicant / Royale Partners Investment Fund Ltd. (Appellant in Company Appeal (AT)(Ins.) No. 327/2020) seeking reliefs (a to j) mentioned therein. More specifically, in MA No. 515/2020 before the newly reconstituted Bench of NCLT Mumbai, Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal may, after giving the parties, to any proceeding before it, a reasonable opportunity of being heard pass such orders thereon as it thinks fit . Needless to state that the Tribunal is to ascribe reasons for arriving at a conclusion, of course resting upon the materials on record. 28. Be it noted, that Rule 60 of the National Company Law Tribunal Rules, 2016 speaks of Matters relating to the Judgements or Orders of the Tribunal . 29. Rule 62 of the National Company Law Tribunal Rules, 2016 under the caption reads as under:- Recusal:- (1) For the purpose of maintaining the high standards and integrity of the Tribunal, the President or a Member of the Tribunal shall recuse himself:- (a) in any case involving persons with whom the President or the Member has or had personnel, familial or professional relationship; 33(b) in any cases concerning which the President or the Member has previously been called upon in another capacity including as advisor, representative, experts or witness; or (c) if there exist other circumstances such as to make the President or the Member s participation seem inappropriate. (2) The President or any Member r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pramod Chandra Patnaik (2002)1 SCC 1 at paras 6 and 7; following in Union of India v. Hansoli Devi (2002) 7 SCC 273 at para 2) But no decision can be arrived at contrary to are inconsistent with the law laid down by the coordinate Bench. Kalyani Stores AIR 1966 SC 1686 and K.K. Narula AIR 1967 SC 1368 both have been rendered by the Constitution Benches. The said decisions, therefore, cannot be thrown out for any purpose whatsoever; more so when both of them if applied collectively lead to a contrary decision proposed by the majority. 33. Also, in the decision of Hon ble Supreme of Court Union of India Anr. Vs. Hansoli Devi Ors. (2002)7 Supreme Court Cases page 273 at special page 274 it is held that judicial discipline and propriety demands that a Bench of two learned judges should follow a decision of a Bench of three Judges. But if a judge of two Learned judges concludes that an earlier judgement of three Learned Judges is so very incorrect that in no circumstances can it be followed, the proper course for it to adopt is, to refer the matter before it to a Bench of three Learned judges setting out the reasons why it could not agree with a earlier judgement and then if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he erstwhile Bench. 37. Added further, in the instant case, the newly re-constituted Bench of NCLT Mumbai, Court No. II had the prudent option by passing an order in directing the office of registry of NCLT , Mumbai to place MA No. 515/2020 (filed by the Resolution Applicant / Appellant in Company Appeal (AT)(Ins.) No. 327/2020) before the President of NCLT , New Delhi for obtaining necessary orders so as to post the said MA No. 515/2020 before the earlier Bench for hearing which reserved orders on 30.01.2020 in MA No. 249/2020. Unfortunately, such a proper/traditional recourse, cemented on sound and healthy principle of judicial propriety was not resorted to. No doubt in our jurisprudence precedents do play a primary role in patronising the Rule of Law . At this juncture, it is worth to point out that in MA No.515/2020 pending hearing and final determination of the said application a relief was sought from the Tribunal to stay all proceedings in MA No. 249/2020. 38. To put it precisely, it is neither palatable / desirable nor permissible by the Co-ordinate Bench of a Tribunal to fetter the hands of erstwhile Bench in passing necessary orders in MA 249/2020 which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Resolution Plan and that the approved Resolution Plan require the Steering Committee to appoint a Monitoring Agency whose powers and functions are limited to the management of day-today affairs of the Corporate Debtor by virtue of clause 3.9 (o) of the approved Resolution Plan . Apart from that, on behalf of the Appellant it is brought to the notice of this Tribunal that clause 3.9 (1) and clause 3.9 (111) of the Resolution Plan sets out that the Monitoring Agency is required to function under the instructions, control and supervision of the Steering Committee which comprised of three representatives of the Committee of Creditors and two representatives of the Appellant. 42. The Learned Counsel for the Appellant contends that since the erstwhile Resolution Professional of the Corporate Debtor was managing the operations of the Corporate Debtor , the Steering Committee appointed the erstwhile Resolution Professional as the Monitoring Agency , albeit, in a different capacity and not to continue as a Resolution Professional . 43. In this connection, the stand of the Appellant is that as per Section 23 of the I B Code, the powers of Resolution Profes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NR 420/- crores (less payment towards) (i) balance insolvency resolution process costs; and (ii) potential workmen s dues, if any (upfront consideration) is required to be paid by the Appellant within 30 Business Days from the Effective Dates . 48. The Learned Counsel for the Appellant submits that the term Effective Date has been defined to mean the day on which the approved Resolution Plan becomes effective or comes into effect and the approved Resolution Plan only came into effect on and from 16.12.2019. Further, the Learned Counsel for the Appellant points out that this Appellate Tribunal through its order dated 29.08.2019 had categorically laid down that the order of approval of Resolution Plan will be subject to the decision of the Appeal, filed by ARCELOR Mittal India Pvt. Ltd. challenging the decision of the Committee of Creditors approving the Respondent s Resolution Plan . Accordingly, the approval order attained finality on 16.12.2019, when the said appeal was dismissed by this Tribunal. 49. The Learned Counsel for the Appellant contends that the period of 30 Business Days should have commenced from 16.12.2019 and accordingly after the Resolution Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, it is the plea of the Appellant that it is to be granted relief as claimed in MA No. 515/20 and then be directed to implement the approved Resolution Plan , in addition to the direction to the Monitoring Agency for sharing / providing all relevant information / data with regard to the Corporate Debtor . 52. The Learned Counsel for the Appellant submits that at the time of submission of Resolution Plan , the Appellant was provided with data / information of Corporate Debtor only as of 2017. Furthermore, for a successful revival of the Corporate Debtor as well as the implementation of approval of Resolution Plan the Appellant is required to be aware of / understand the ongoing projects (if any), assets converted to cash / receivables realized, receivables lost for non-completion of projects and other damages and recoveries by various Debtors . 53. The Learned Counsel for the Appellant brings it to the notice of this Tribunal that in terms of the Approval Order the erstwhile Resolution Professional was categorically directed by the Tribunal to hand over all records, premises/factories/documents to the Resolution Applicant to finalize the further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Creditors amount to INR 9552.99 Crores, out of which claims aggregating to INR 7487.45 Crores have been verified and admitted for the purposes of CIRP by the Resolution Professional ( Admitted Debt of Financial Creditors ) The Resolution Applicant understands that the Admitted Debt for Financial Creditors also includes all uninvoked/ invoked bank guarantees, which will continue until their expiry. Out of this aggregate amount of Admitted Debt, the Resolution Applicant has proposed to pay the following consideration to the Financial Creditors for full and final discharge of the Financial Creditors and for assignment of entire Claims and Admitted Debt of Financial Creditors to the Indian SPV: a. Upfront Consideration equivalent to INR 420 Crores (Indian Rupees Four Hundred Twenty Crores) less payment towards (i) Balance CIRP Costs; and (ii) Potential Workmen s Dues, if any within 30 Business Days; and b. Deferred Consideration equivalent to INR 480 Crore (Indian Rupees Four Hundred Eighty Crores) in the form of unlisted NCDs. 56. The Learned Counsel for the Appellant contends that clause 3.2(vi)(B) of the Resolution Plan sets out that the total consideration is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the approved Resolution Professional in isolation to state that all the cash balances accrued during the intervening period is payable to the Financial Creditors of the Corporate Debtor and this misinterpretation is made with a sole intent of unjustly enriching certain creditors of the Corporate Debtor at the expense of the Appellant. 61. The Learned Counsel for the Appellant contends that even assuming but not conceding that clause 3.2(vii) and 3.2(viii) of the approved Resolution Professional are in conflict and cannot be harmoniously interpreted, it is the settled position of law that when the earlier clause and a later clause of the contract are in conflict to each other and both the clauses cannot be given effect to, then the earlier clause will prevail over the later clause. In this connection, the learned counsel for the Appellant relies on the Hon ble Supreme Court decision in Radha Sundar Datta Vs. Mohd. Jahadur and Rahim and Others Reported in 1959 SCR at page 1309 wherein it is observed as under:- 11. Now it is a settled rule of interpretation that if there be two admissible constructions of a document, one of which will given effect to all the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Corporate Debtor on 10.01.2019 and the Resolution Professional of the Corporate Debtor filed an application (in terms of Section 30 and 31 of the I B Code) before the Adjudicating Authority for approving the Resolution Plan of the Successful Resolution Applicant and that the said application was allowed on 25.11.19. 65. The Learned Counsel for the Respondent/Monitoring Agency of the Corporate Debtor points out that the Monitoring Agency (created under the Resolution Plan ) because of delay and failure on the part of Successful Resolution Applicant was forced to file MA No. 249/20 on 22.1.2020 before the Tribunal praying for the implementation of Resolution Plan etc. After hearing the parties at length, on 30.1.20 the orders were reserved in MA No. 249/20 and before that, by virtue of an order dated 29.1.20 the Benches of the NCLT Mumbai were re-constituted, which was to come into effect only from 03.02.2020. 66. The Learned Counsel for the Respondent brings it to the notice of this Tribunal that the Successful Resolution Applicant /the Appellant in the present Appeal, on 06.02.2020 filed MA No. 515/2020 before the re-constituted NCLT Bench N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected the erstwhile Resolution Professional to keep this Tribunal informed about the implementation of the Resolution Plan . 70. Continuing further, it is the submission of Learned Counsel for the Respondent that as per Resolution Plan of the Successful Resolution Applicant / RPIFL (the Appellant) was required to pay upfront consideration of ₹ 420/- Crores to the Financial Creditor within 30 Business Days of the effective date viz. the date of approval of the Plan by the Adjudicating Authority. In fact, the said 30 Business Days expired on 10.01.2020 considering that the effective date commenced from 25.11.2019 i.e. the date of approval order. Only on account of violation of the Resolution Plan the Monitoring Agency / Respondent was forced to file MA No. 249/2020 before the Adjudicating Authority. 71. The Learned Counsel for the Respondent contends that the order in MA No. 249/2020 to implement the Resolution Plan within 07 days was passed on 18.02.2020 and that the order dated 29.08.2019 passed in Company Appeal (AT)(Ins.)No. 524/2019 passed by this Tribunal, relied on by the Appellant in no manner can be relied upon by the Successful Resolution Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were granted) (vide para 9 reply affidavit of the Respondent / Monitoring Agency of Corporate Debtor ). 77. The Learned Counsel for the Respondent points out that the Tribunal s order dated 25.11.2019 requires the Resolution Professional to hand over all records, premises, factories, documents to the Appellant to finalize the further line of action required for the starting of the operation and this part of the order is not a condition precedent or in parallel to the implementation of the Resolution Plan as was wrongly suggested by Successful Resolution Applicant . 78. The Learned Counsel for the Respondent contends that the Monitoring Agency in response to the e-mail dated 15.12.2019 from the Successful Resolution Applicant had specified to it, that it had already shared the entire back-up of documents made available on the virtual data room as part of the Resolution Plan Process through a flash drive on 29.11.2019 and the remaining information was shared on 24.12.2019, 26.12.2019 and in the Steering Committee that took place on 07.01.2020. Besides this, the Monitoring Agency together with the Corporate Debtor s team also made presentation to the Succe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adverts to the Letter of Intent dated 10.1.19 which was unconditionally accepted and acknowledged by the Successful Resolution Applicant provides the following: - 9. Notwithstanding anything contained in the Resolution Plan it is clarified that despite any assumption made in the Resolution Plan not being fulfilled satisfied or granted by the Adjudicating Authority, the Resolution Applicant hereby confirms that it shall still discharge the total consideration (as defined in the Resolution Plan and the cash balances of the Corporate Debtor as contemplated in the Resolution Plan to the Financial Creditors without limitation. 84. The Learned Counsel for the Respondent contends that the contents of the approved Resolution Plan , as modified by the Letter of Intent was unconditionally accepted by the Appellant / Successful Resolution Applicant and no other interpretation would come to the rescue of the Appellant because of the reason that the approved Resolution Plan is a clear and un-ambiguous one. 85. The Learned Counsel for the Respondent refers to the judgment of this Tribunal JSW Steel Ltd. Vs. Mahender Kumar Khandelwal Ors. (Company Appeal (AT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refraining from interfering with the contents and provisions thereof. Apart from that, it is the plea of the Intervenor that non-implementation of the Resolution Plan by the Successful Resolution Applicant is disapproved by the Tribunals and it is unexpectable if the Resolution Applicant seeks to wriggle out of its obligations. An Appraisal 91. It transpires that the Respondent / Monitoring Agency of Corporate Debtor filed MA No. 249/2020 against the Appellant / Successful Resolution Applicant / RPIFL praying interalia and issuance of direction to the Resolution Applicant forthwith implement the Resolution Plan as approved by the Adjudicating Authority on 25.11.2019 without prejudice to the right of Committee of Creditors to invoke and forfeit the Performance Guarantee . The Appellant / Successful Resolution Applicant (as Respondent) filed a preliminary reply before the Adjudicating Authority contending that (i) MA No. 249/2020 was not filed with the approval of the Steering Committee and that the powers and functions of the Monitoring Agency is limited to the conduct of day-today affairs of the Corporate Debtor etc. 92. The Appellant / Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ode. An Adjudicating Authority, at this juncture, is to apply his judicial mind to the Resolution Plan so submitted and if the said Plan fulfills the requirement of Section 30 of the I B Code, he may either approve or reject such plan. Indeed, the Adjudicating Authority is required to take a decision as per Section 31 of the I B Code, can peruse the reasoning to accept or reject one or other objection or suggestion and may express its own decision/opinion as per decision Rajputtanna Properties(P)Ltd. V. Ultratech Cements Ltd. reported in (2018) 144 CLA page 490(NCLAT). In fact, in the absence of any discrimination or perverse decision it is not open to Adjudicating Authority or the Appellate Tribunal to modify a Resolution Plan approved by the Committee of Creditors . 96. To put it succinctly, Section 31 of the Code enjoins that once the Resolution Plan is approved by an Adjudicating Authority it binding on all interested parties. Of course, a threadbare scrutiny of a Resolution Plan with great care, caution and utmost circumspection is very much required before recording a satisfaction in writing by an Adjudicating Authority . Satisfaction is a condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be implemented within the time specified. Also, that the Respondent / Monitoring Agency of the Corporate Debtor comes out with a plea that the Appellant was informed (for its e-mail dated 15.12.2019) that the entire back-up of documents was shared and made available on the virtual data room as part of the Resolution Plan Process through a flash drive on 29.11.2019 and the remaining information was shared on 24.12.19, 26.12.19 and in the Steering Committee Meeting that took place on 7.1.20 etc. Therefore, the plea of the Appellant that it was not supplied with detailed information of Corporate Debtor is not accepted by this Tribunal. 100. Dealing with the aspect that the Monitoring Agency has no Locus-Standi to file MA No. 249/2020 before the Adjudicating Authority, and further it can file the same only there being specific authorization from the Steering Committee , this Tribunal opines that the approval order of the Adjudicating Authority dated 25.11.2019 pin pointedly granted liberty if deem fit and legally permissible to move miscellaneous application if required in connection with the implementation of this Resolution Plan and as such the counter plea take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution Professional on several occasions had without any simmering doubt made it clear that any amendment to the provision to the Resolution Plan , as approved by the Committee of Creditors in its meeting dated 10.01.2019 and subsequently submitted before the Adjudicating Authority by means of an application as per Section 30 of the I B Code is an impermissible one. As such, the contra stand taken by the Appellant is not accepted by this Tribunal. 104. A cursory perusal of the ingredients of para 3.2 (viii) and 6(iv) of the Resolution Plan dated 25.11.2019 unerringly points out that till the date of implementation of the plan viz. till the date of payment of upfront consideration any cash which accrues to the Corporate Debtor s Company will only be paid to the Financial Creditors (less any balance CIRP costs) and not to the Appellant. Hence, the contra plea of the Appellant is legally untenable. 105. It is candidly clear from the Letter of Intent , (signed by the Appellant on 20.01.2019) that there was no condition imposed to implement the Resolution Plan other than the approval to be obtained from the Adjudicating Authority and the CCI , which were secure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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