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TMI Blog2021 (7) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... icant seeking to intervene in the Avoidance application filed by the erstwhile Resolution professional prior to the approval of resolution plan is not maintainable and no direction prayed in the present application can be granted to the applicants. Application dismissed. - C.A. No. 1424/ND/2020 and IB-1089/(ND)/2018 - - - Dated:- 1-7-2021 - P.S.N. Prasad, Member (J) And Narender Kumar Bhola, Member (T) For the Appellant : Vaibhav Mahajan, Advocate, Abhishek Anand, Kunal Godhwani and Pathik Choudhary For the Respondents : Mohit Nandwani and Akshat Bajpai, Advocates ORDER P.S.N. Prasad, Member (J) 1. This is an application filed by the Successful Resolution Applicant and Monitoring Committee (Applicant No. 1 and 2) under section 60(5) read with Rule 11 of NCLT Rules, 2016 seeking intervention in support of C.A. (IB) No. 785/ND/2019 filed by Ex Resolution Professional under section 66 read with section 43 of IBC, 2016 and to allow the applicants access to all the reports, findings and other documents submitted in connection with C.A. (IB) No. 785/ND/2019. The details of transactions leading to the filing of this application as averred by the Applicants are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2019. vi. That in terms of the clause 12 of the Resolution Plan, a Monitoring Committee (Applicant No. 2) consisting of three members was conceptualized for supervising the implementation of the Resolution Plan by the successful Resolution Applicant. The applicants states that the Monitoring Committee in its 1st meeting held on 18.11.2019 resolved as under: RESOLVED THAT all pending application including application u/s. 66 shall be pursued by RA in consultation with MC amp; the erstwhile RP may continue to cooperate as and when required by Hon'ble NCUT and the erstwhile RP is discharged from all functions from the date of order approving resolution plan. vii. Applicants submitted that by virtue of Schedule 4(3)(c)(i), any benefit that may arise out of the said Application C.A. (IB) No. 785/ND/2019 shall inure to the benefit of the Corporate Debtor/Successful Resolution Applicant and the same may also be shared with other Financial Creditors and therefore the Applicants have a vested interest in prosecution and in intervention of the said Application with a right to be heard before final disposal of the said Application. The Applicant further cited an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction in respect of an avoidance application similar to the avoidance application i.e., CA. 785/ND/2019 after the approval of the Resolution Plan. The relevant extracts of the judgment are reproduced herein below: 73.....the argument that avoidance applications relating to preferential and other transactions can therefore survive beyond the conclusion of CIRP is contrary to the scheme of the code. 84. ... Section 26 of the IBC also cannot he read in a manner so as to mean that an application for avoidance of transactions under section 25(2)(j) can survive after the CIRP process. Once the CIRP process itself comes to an end, an application for avoidance of Transactions cannot be adjudicated. 88. ...Moreover, if an avoidance application for preferential transaction is permitted to be adjudicated beyond the period after the Resolution Plan is approved in effect, the NCLT would be stepping into the shoes of the new management to decide what is good or bad for the company. Thus, if the COC or RP are of the view that the are any transactions which are objectionable in nature, the order in respect thereof would have to be passed prior to the approval of the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as well as the Respondent No. 1, it is evident that the applicants prayed to intervene in C.A. No. (IB) 785/ND/2019 and to continue the said application in place of the erstwhile Resolution Professional. Whereas, the Respondent No. 1 has contended that the present application is not maintainable as it is seeking intervention in an avoidance application which in itself cannot be adjudicated post approval of the plan. 4. The learned counsel for the applicant No. 2 while advancing the arguments submitted that w.e.f. 05.11.2019 the Resolution Professional (Respondent No. 1) having become functus officio, the application C.A. No. 785 of 2019 still being sub-judice shall see the day of light. 5. The judgment of the Hon'ble High Court of Delhi in Venus Recruiters Pvt. Ltd. vs. Union of India Ors. in WP(C) 8705/2019 CM Appl 36026/2019, wherein the Hon'ble High Court decided the question of whether an application filed under Section 43 of the Code, for avoidance of preferential transactions, can be adjudicated upon by the National Company Law Tribunal (NCLT), after the approval of a resolution plan and conclusion of CIRP. The relevant extracts of the judgment have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... look at the ILC Report shows that as per Clause 2.4 the successful Resolution Applicant cannot be permitted to file such avoidance applications, as the same was not factored into the bid. The relevant extract reads as under: 2.4. The Committee also considered if the successful resolution applicant should be permitted to file such applications. However, it was agreed that this would possibly result in the resolution applicant being entitled to a return that was not factored in at the time of submitting their bid. Therefore, the Committee decided that the resolution applicant should not be permitted to file applications against improper trading or applications to avoid transactions Thus, the Resolution Applicant whose Resolution Plan is approved itself cannot file an avoidance application. The purpose is clear from this itself i.e., that the avoidance applications are neither for the benefit of the Resolution Applicants nor for the company after the resolution is complete. It is for the benefit of the Corporate Debtor and the CoC of the Corporate Debtor. The RP whose mandate has ended cannot indirectly seek to give a benefit to the Corporate Debtor, who is now under the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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