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TMI Blog2021 (4) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... mya Gupta, Mr. Bharat Makkar and Ms. Yogita Rathore, Advocates for Vistra ITCL (India) Ltd. Mr. Arun Kathpalia, Sr. Advocate with Mr. Kaushik Moitra, Ms. Shreya Sircar, Ms. Ishita Jain, Mr. Anurag Tandon, Ms. Sanjukta Roy, Advocates for Kotak Mahindra Bank (Intervenor). JUDGMENT BANSI LAL BHAT, J. Appellant - 'Deccan Value Investors LLP' is aggrieved of impugned order dated 9th July, 2020 passed in I.A. No.225 of 2020 in CP(IB)No.42/ Chd./Hry/2017 passed by the Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh whereby and whereunder the Adjudicating Authority inter alia approved the Appellant's Resolution Plan dated 17th January, 2020 read with its addendum dated 7th February, 2020 in respect of 'Amtek Auto Limited' (Corporate Debtor). The impugned order is assailed on the ground that the Adjudicating Authority (for short 'AA') has gone beyond its jurisdiction in concluding that the requirement of the prior written consent of the mortgagee of the Ace Complex Limited as provided in the Resolution Plan has been rendered infructuous. This conclusion is said to be erroneous as the same is against the agreed terms of the Resolution Plan between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record to this effect. 2. For appreciating the contentions raised on behalf of Appellant reference to the factual matrix is inevitable. Corporation Bank, now merged with and known as Union Bank of India (Financial Creditor) filed Application under Section 7 of Insolvency and Bankruptcy Code, 2016 (for short 'the I&B Code') before AA for initiating Corporate Insolvency Resolution Process (for short the 'CIRP') against the Corporate Debtor - Amtek Auto Limited (for short 'CD' or 'AAL'). The Application came to be admitted in terms of order dated 24th July, 2017 and CIRP commenced. Respondent No.1 came to be appointed as Interim Resolution Professional (IRP). Public announcement was made and Committee of Creditors came to be constituted. IRP was replaced by RP after the appointment of Mr. Dinkar T. Venkatasubramaniam was confirmed. In its meeting held on 2nd April, 2018 after extension of CIRP period by 90 days, the COC approved the Resolution Plan of Liberty Housing Group (for short 'LHG'). The RP approached the AA with application under Section 31(1) of I&B Code for approval of Resolution Plan of LHG. Same was allowed by AA in terms of common order dated 25th July, 2018. CA No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a majority of 70.07% votes in its meeting held on 7th February, 2020. On 8th June, 2020 the Hon'ble Apex Court passed order relegating the matter to AA to consider the same and pass appropriate orders after hearing the parties within 15 days. The Adjudicating Authority listed all pending Applications for hearing. Meanwhile, RP filed Application under Section 31 (1) of I&B Code for approval of the Resolution Plan of Appellant, which was considered along with all pending Applications, which came to be disposed off in terms of the impugned order assailed in this Appeal. 3. Respondent No.1 contested the Appeal by pleading that the rejection of claim of Vistra was known to the Appellant and the same formed part of the Information Memorandum shared with the Appellant. It is pleaded that Vistra has not filed any Appeal against the rejection of its claim and Appellant is not entitled to contest the liabilities arising out of the claim of Vistra, which had been rejected by Respondent No.1 and affirmed by AA in the approval order. It is denied that the finalization and execution of the LOI was a material requirement for filing of the approval Application. It is also denied that issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d about 23% of its revenues are generated from the use of this land. It is submitted that the RP executed the lease on 28th January, 2020 without obtaining the prior consent of Vistra. The Appellant called him to comply with the condition in the Resolution Plan. Addendum to the Resolution Plan reiterated the requirement of execution of the long term lease on the Ace Complex Land. Respondent No.2 approved the Resolution Plan without obtaining the prior written consent of Vistra. It is further submitted that the Appellant has been consistently insisting upon the requirement of Acceptable Terms being fulfilled. 6. Mr. Vikram Nankani, learned Senior Counsel would further submit that the impugned order is contradictory as on one hand it holds that the requirement of Vistra's prior written consent for execution of the sale deed is infructuous while on the other hand the validity of the said lease deed and/ or the issue of rights of the third party thereon has been left open. 7. Thus, it is contended that the AA failed to satisfy itself that the Resolution Plan has provisions for effective implementation. It is further submitted that the impugned order is beyond jurisdiction as the scop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Batra, Advocate appearing on behalf of Respondent No.1 submitted that approval of Resolution Plan by AA was not contingent upon satisfaction of conditions precedent. It is submitted that fulfilment of the conditions precedence was neither a pre-condition for filing Application under Section 31 of IBC by RP nor a pre-condition for approval of Resolution Plan. It is submitted that the objections raised by the Appellant before AA in this regard was with ulterior objective to wriggle out of an otherwise binding Resolution Plan. It is further submitted that even the implementation of the approved Resolution Plan is not contingent on fulfilment of the condition precedent as it is clearly provided in the Resolution Plan that the implementation of Resolution Plan shall commence from the date of approval by AA. It is further submitted that the Appellant, under the approved Resolution Plan was to deposit upfront cash infusion of Rs. 500 crores in the designated account on or before the effective date. After approval of Resolution Plan IMC was constituted of which Appellant is a Member. However, the Appellant has neither nominated a representative nor participated in any of the IMC meetings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en approved. Even non-submission of the balance PBG was not an embargo for the RP to not proceed in filing Application under Section 31 of IBC for approval of Resolution Plan. 14. Mr. Batra further submits that the essence of the condition precedent was execution of 20 year long term lease deed on Ace Complex Land between Gateway Impex Private Limited (for short 'Gateway') and AAL and uninterrupted usage of Ace Complex Land on payment of lease rental. Both these conditions were duly satisfied upon execution of the long term lease of 20 years vide lease deed dated 27th January, 2020 between AAL and Gateway. Requirement of NOC from KKR India Financial Service Limited and L&T Finance Limited was not a pre-requisite for approval of implementation of Resolution Plan. It is submitted that objection raised by Vistra before AA in regard to execution of long term lease without such NOC was rejected but the same was not assailed in Appeal. Therefore, the lease deed can continue without prior NOC from KKR and L&T unless set aside by Court of Law. It is submitted that the Appellant was aware of contingency in respect of NOC but it agreed to submit the Resolution Plan and implement the same, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Plan on the pretext that its business has been materially affected. It is further submitted that the plea for force majeure sought to be raised by Appellant has already been rejected by the Hon'ble Apex Court. The Appellant cannot be permitted to re-agitate the issues already rejected by the Hon'ble Apex Court, same being barred by res-judicata. As regards the execution of long term lease of 20 years of the Ace Complex Land, it is submitted that the COC and the Appellant mutually agreed for inclusion of execution of long term lease of 20 years with respect to Ace Complex Land on acceptable terms as a condition precedent to the implementation of approved Resolution Plan only after taking into account the criticality of the piece of land owned by Gateway, but the said condition was not a condition precedent to the approval and acceptance of the Resolution Plan. It is further submitted that out of these conditions two have already been satisfied by lease deed executed on 28th January, 2020. In so far as, obtaining Vistra consent is concerned, the Appellant should have taken steps towards negotiating with Vistra for obtaining their no objection and not challenged the approval of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provisions of Resolution Plan are concerned. Thus, the COC was right in invoking the PBG. It is submitted that PBG provided by Appellant is payable on 1st written demand made by the creditor and the moment such written demand is made on the guarantor bank pursuant to breach of any condition, the guarantor Bank is duty bound to honour the payment under the Bank Guarantee. 18. As regards impleadment sought by Vistra it is submitted that the Appeal arises out of proceedings under Section 31 of I&B Code to which Vistra was not even a party. It is submitted that Vistra had filed CA No.62 of 2020 and CA No.237 of 2020, which was disposed off in terms of the impugned order. Vistra has only challenged order passed in CA No.62 of 2020 and no challenge has been raised in regard to order passed in CA No.237 of 2020. Once Appeal has not been filed, Vistra cannot seek impleadment in the instant Appeal. Otherwise also, the impugned order, taking note of 2020 lease while approving the Resolution Plan, sufficiently safeguards and satisfies the concerns of Vistra. 19. Mr. Sudhir K. Makkar, Senior Advocate representing Vistra seeking impleadment as Party Respondent submitted that Vistra is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is appears to have been done to deter the Appellant from resiling from its offer. The order dismissing the Application is final and has to be construed as a bar precluding the Appellant from seeking exit from its own offer. It also emerges from the order that the Hon'ble Apex Court, while rejecting the withdrawal offer emanating from Appellant, took notice of the various orders passed by it at the instance of Appellant. The tone and tenor of this order leaves no scope for the Appellant to resile from and wriggle out of the implication of the offer made by him, i.e. the Resolution Plan, which has been approved in terms of the order impugned in this Appeal. It is therefore manifest that the Appellant would not be permitted to backtrack and seek exit from its Resolution Plan on any pretext whatsoever. This is a closed chapter and cannot be permitted to be reopened. The question for consideration, however, is whether the issue raised in this Appeal, in the context of prayer sought for setting aside of impugned order dated 9th July, 2020 (in terms whereof the Resolution Plan submitted by Appellant came to be approved), can be looked into when curtain has been drawn on the endeavours of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, earlier order was recalled and RP was directed to invite fresh offers within thirty days of advertisement. COC was directed to evaluate the Plans within three weeks thereafter. COC after evaluation of Plans submitted by four prospective Resolution Applicants declared Appellant as H1 bidder. The Hon'ble Apex Court extended time by two weeks for concluding the voting on Resolution Plan of Appellant. The Resolution Plan with its addendum was placed before COC which was approved by it within the further extended time by 70.07% votes. Vide order dated 8th June, 2020, the Hon'ble Apex Court, keeping in view this development, relegated the matter of IA No.48906/2020 in Civil Appeal No.6707/2019 to AA for consideration and appropriate orders within fifteen days. It emerges from the impugned order that this IA, filed by COC, sought approval of Resolution Plan on account of special process having been undertaken under the inherent powers of Hon'ble Apex Court and since the issuance of LOI and the underlying purpose thereto in terms of RFRP became nugatory, such process was not required to be followed prior to filing of Application for approval of Resolution Plan. Thereafter, Applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visaged acquisition of the CD by the Appellant as a going concern and contingent on conditions including execution of a long term lease (subsisting for 20 years or more) for the Ace Complex Land with Acceptable Terms. At page 547 of the same Volume, we find Clause 2 substituting sub-section 1.8(iii), 1.6(vi) and insertion of 1.9 on the commercial proposal of Appellant for running the Corporate Debtor as going concern, wherein provision has been made to include purchase of Ace Complex Land. It is provided that the Appellant proposes to negotiate with Vistra for purchase of Ace Complex Land through its subsidiaries etc. The Appellant undertook to infuse purchase funds for purchase of Ace Complex Land at its discretion. Upon its purchase, Appellant would retain the right to not require the sale of the vacant area by the Corporate Debtor for six months from the date of purchase of Ace Complex Land. It would therefore emerge that the said condition of including execution of long term lease of 20 years with respect to Ace Complex Land on Acceptable Terms was a condition precedent to the implementation of the approved Resolution Plan and not to the approval of the Resolution Plan. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered accountable. Requirement of submission of PBG is in consonance with Regulation 36B of the CIR Regulations. The submission of PBG was a condition prefaced upon approval of the CoC and passing of directions by Hon'ble Apex Court. It is significant that the Appellant had undertaken to place PBG of Rs. 300 Crore in the Resolution Plan itself. Thus, it was bound to comply with the requirement and not hide behind the issue raised in respect of LOI to not adhere to the requirement of submission of PBG. After approval of Resolution Plan by the CoC, the Hon'ble Apex Court vide order dated 8th June, 2020 relegated the matter to NCLT for approval of Resolution Plan. The Appellant was a party to the proceedings before the Hon'ble Apex Court and question of intimating it by way of issuance of LOI became irrelevant. Appellant cannot be heard to backtrack from its Resolution Plan on account of non-grant of prayers under Section 9 of the Resolution Plan which cannot be construed as conditionalities to the implementation of the approved Resolution Plan. 25. Appellant, as the Successful Resolution Applicant, would suffer invoking of PBG of Rs. 150 Crores for breach of any of the conditions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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