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TMI Blog2021 (7) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... contested these applications before the Adjudicating Authority. The Appellant in rejoinder did not dispute the aforesaid facts, however, stated that the Application has no relevance to the determination of the issues involved in the present Appeal. The Appellant has not challenged the findings of the A M report dated 15.01.2019 and SEBI interim order dated 16.08.2018 - the Appellant has failed to convince that the RP has committed any material irregularity in exercise of powers during the CIRP. Whether the debts owed to the Operational Creditor (Appellant) of the Corporate Debtor have not been provided for in the Resolution Plan in the manner specified by the Board? - HELD THAT:- Appellant heavily placed reliance on the Judgment of Hon ble Supreme Court in the case of NTPC Ltd (Simhadri Project) [ 2020 (11) TMI 973 - SUPREME COURT ] - According to the Appellant, the claims of the Appellant was pending adjudication before the Arbitrator, therefore, according to the Appellant, the claim amount should have been reflected under the heading Claims of Operational Creditors . The Hon ble Supreme Court do not agree with this submission and held that the Appellant s claims has ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um to commence as prescribed under Section 14 of the IBC and Mr. Krishana Chamadia was appointed as Interim Resolution Professional (IRP). Thereafter, in view of moratorium period the arbitration proceedings were adjourned sine-die. On 28.05.2018 the IRP issued Form No. A for submissions of claim. On 05.06.2018 the Appellant filed six claims of ₹ 511,58,39,247/- alongwith interest @ 18% per-annum in Form-A before the IRP. On 15.06.2018 Mr. Krishna Chamadia was confirmed as Resolution Professional by the CoC. On 24.08.2018 the RP issued list of creditors. The Name of the Appellant was mentioned in the list of Operational Creditors. On 29.11.2018 the RP published an updated list of the Creditors of the Corporate Debtor, wherein the admitted claims of the Appellant was indicated as Nil , with an appended note 2, wherein it was stated that the claims of the Appellant were disputed and the pending Adjudication in Arbitration Proceedings the liability is subject to outcome of these proceedings. This was followed by an updated list of Creditors published by the RP on 10.12.2018 and 24.01.2019 wherein it was again recorded that the admitted claims of the Appellant as Nil with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide impugned order dated 28.11.2019 the Ld. Adjudicating Authority allowed M.A No. 691 of 2019 and approved the Resolution Plan of Kalpraj Dharamshi and by a separate order passed on the same date rejected the M.A. No. 1039 of 2019, which was filed by KIAL objecting the decision of CoC to approve the plan submitted by Kalpraj Dharamshi. 6. Being aggrieved with the impugned order, the Appellant (FDSL) filed present Appeal, whereas KIAL has filed Appeal CA (AT) (Ins) No. 344-345 of 2020 against the rejection of the Application M.A. No. 1039 of 2019 before this Appellate Tribunal. This Appellate Tribunal vide order dated 05.08.2020 allowed the Appeal of KIAL and set aside the impugned order and the matter was remanded back to the CoC to decide on the Resolution Plan submitted by KIAL within 10 days and during the event no decision to be taken by the CoC. The Ld. Adjudicating Authority was directed to proceed with the liquidation of the Company. 7. The Aforesaid Judgment pronounced by this Appellate Tribunal dated 05.08.2020 came to be challenged before the Hon ble Supreme Court by way of three Appeals filed by Kalpraj Dharamshi, Deutsche Bank and Krishna Chamadia. 8. The Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP/RP shall receive and collate all the claims submitted by the Creditors and shall maintain an updated list of claims. The RP clearly failed to discharge his mandatory duties by adjudicating the legitimate claim of the Appellant more so when the said claim was substantiated by all the supporting documents and proofs. The IRP/RP has no adjudicatory powers, however, he should have called for such evidence or documents as provided under Regulation 10 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016(Regulations) as held by the Hon ble Supreme Court in the case of Swiss Ribbons Pvt. Ltd. Anr. Vs. Union of India Ors. (2019) 4 SCC 17. He submitted that in the present matter the act of RP in disregarding the claim of the Appellant is clearly in gross violation of the scheme under the IBC and the Regulations thereto. It is submitted that the RP deliberately avoided the entire claim of the Appellant on the basis of a pending Arbitration proceedings without even verifying the claim by corroborating with the available records/documents. Moreover, instead of putting the disputed amount/claim in the contingency provision the RP has mechanically deferred the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the Appellant submitted that the RP has committed gross misconduct and fraud during the course of entire CIRP which is evident from the following instances and actions. (i). The RP had committed gross violation by act of non-determination/deferment of the legitimate claim of the Appellant. Instead of determining the Appellant s claim to the best estimate value in terms of Regulation 14 of the CIRP Regulations, the RP had kept it in abeyance. (ii). The RP had not made any effort to take recourse of the documents/material supplied by the Appellant in Form-B and had also not sought additional relevant documents to substantiate the claim. (iii). The RP has neglected the legitimate claim of the Appellant despite being the highest Operational Creditor. (iv). The RP appears to have prepared incomplete/false information memorandum which does not depict the true picture of affairs/financial status of the Corporate Debtor thereby facilitating the Resolution Applicant to escape from the material liability of payment to the highest Operational Creditor. (v). In grave dereliction of the duties provided under the IBC, the RP has deliberately not examined the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustodian of public interest is under statutory duty to exercise its power under Section 30(4) of the IBC reasonably and fairly. The CoC cannot be allowed to approve the Resolution Plan arbitrarily without considering the claims of the Appellant. The CoC be directed to reconsider the Resolution Plan submitted by the Respondent No. 2 3 keeping in view the claims of the Appellant. 19. Ld. Sr. Counsel for the Appellant submitted that the CoC had erroneously approved the Resolution Plan as presented by the RP despite the same being not inconformity with the mandatory requirements of the IBC as provided under Section 30(2), 53 of the IBC and in Regulation 38 (1A) of the CIRP Regulations. Therefore, the entire CIRP being carried out and the decision taken by the CoC were illegal. 20. Ld. Sr. Counsel for the Appellant submitted that the CoC is vested with the jurisdiction to approve the Resolution Plan by exercising their commercial wisdom. However, exercise of such commercial wisdom by the CoC cannot be arbitrary and discriminatory. The Hon ble Supreme Court in Land Mark Case of CoC of Essar Steel India Ltd. Vs. Satish Kumar Gupta 2019 SCC Online SC 1478 has laid down the paramete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 30(2) of the IBC. Ld. Adjudicating Authority failed to appreciate that due to collusive conduct of the RP, CoC and the Successful Resolution Applicant have illegally prioritised the interest of few Operational Creditors and has led to a situation where the Successful Resolution Applicant has held the entire CIRP to ransom at the cost of the Operational Creditors including the Appellant and have caused grave miscarriage of justice. The Resolution Plan being gross, illegal, arbitrary and discriminatory, ought to have been rejected by the Adjudicating Authority. 23. Ld. Sr. Counsel for the Appellant submitted that the Resolution Plan is also incontravention with Section 14 of the IBC which provides only a temporary calm period for the purpose of initiation of any suit or continuation of the pending suits and proceedings against the Corporate Debtor. Whereas in the present case on one hand the claim of the Appellant was pending adjudication before the Arbitrator and was stayed due to subsistence of moratorium period, however, on the other hand under the guise of approval of Resolution Plan the Appellant s claim was permanently extinguished. 24. Ld. Sr. Counsel for the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor, whereupon it claimed that the said claim was disputed by the Corporate Debtor in various Arbitrations/Appellate Authorities and the liability is subjected to the outcome of this proceedings. This fact was disclosed in the list of the Creditors by the RP. The non-admission of its claim by the RP was never challenged by the Appellant before the Adjudicating Authority. Thus, the RP has done his duty in terms of the Code and Regulations bonafidely. 27. Ld. Sr. Counsel for the Respondent No. 1 submitted that the Appellant having failed to challenge the non-admission of its claim before the Adjudicating Authority, the Appellant cannot challenge the non-admission of the claim now at this belated stage directly before this Appellate Tribunal under the garb of challenging the Resolution Plan which was approved by the Adjudicating Authority and subsequently by the Hon ble Supreme Court. Now the Resolution Plan has already been implemented, therefore, this Appeal rendered infructuous and the Appellant is not entitled to any relief. 28. Ld. Sr. Counsel for the Respondent No. 1 submitted that upon examination of books and accounts of Ricoh (Corporate Debtor) during the CIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity the Appellant did not raise any objection before the Adjudicating Authority. This being so the Appellant has no right or locus to challenge the approved Resolution Plan directly before this Appellate Tribunal at this belated stage. It is pertinent to note that in the rejoinder the Appellant has not denied this fact, however, it is stated that the said Application has no relevance to the determination of the issues involved in the present Appeal. 32. Ld. Sr. Counsel for the Respondent No. 1 submitted that a Successful Resolution Applicant cannot suddenly be faced with undecided claims after the Resolution Plan submitted by him and the same has been accepted. As this would amount to a hydra head popping up which would throw into uncertainty amounts be payable by the Prospective Resolution Applicant. For this proposition, he placed reliance on the Judgment of the Hon ble Supreme Court in the Case of CoC Essar Steel India Ltd. Vs. Satish Kumar Gupta Ors. 2019 SCC Online SC 1478. For this preposition, he also placed reliance on the Judgment of this Appellate Tribunal in the case of JSW Steel Ltd. Vs. Ashok Kumar Gulla Ors. 2019 SCC Online NCLAT 854 33. Ld. Sr. Counsel i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approached this Appellate Tribunal seeking reliefs under Section 61 of the IBC with the impugned order be set aside on various grounds including inter alia that the Appellant s claims have not been admitted by the RP, but this determination of the RP was never challenged by the Appellant at the first instance before the Adjudicating Authority in accordance with the provisions of the IBC. It is also submitted that the claims of the Appellant having been rejected and not being recognized as an Operational Creditor, no vested substantive right would accrue to the benefit of the Appellant in terms of the treatment and payment made by the Respondent Nos. 2 and 3 under the Resolution Plan. 38. Ld. Sr. Counsel for the Respondent No. 2 3 submitted that the impugned order has approved the Resolution Plan of the Respondent Nos. 2 3 which in turn has been upheld by the Hon ble Supreme Court. In view of this no further challenge can be made to the Resolution Plan and the findings in this regard operate as res-judicata against the Appellant. 39. It is submitted that the determination of the claims of the Appellant was reached by RP upon due examination and verification of books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Plan was submitted before the CoC on 12.02.2019 and subsequently, approved on 14.02.2019 by a thumping majority by the CoC in exercise of its commercial wisdom. The CoC has comprehensively considered the provisions of the Resolution Plan and duly considered the feasibility and viability of the Resolution Plan. It is well settled that the matter of distribution of amounts under a Resolution Plan is within the exclusive domain of the Commercial wisdom of the CoC, which is not amenable to judicial review, in the decisions of the Hon ble Supreme Court in K. Sashaidhar Vs. Indian Overseas Bank Ors. (2019) 12 SCC 150 at Para 32, 34, 35, 37, 52, 53, 55 to 64 and in CoC of Essar Steel (India) Ltd. Vs. Satish Kr. Gupta (2020) 8 SCC 531 at Para 54,56,60 to 73. 42. It is submitted that as per Section 31 (1) of the IBC, a Resolution Plan once approved by the Adjudicating Authority shall be binding on all the stakeholders and creditors of the Corporate Debtor. In this regard reference may be made to Article 4.1, 9.2(e) (f) of the Resolution Plan, which provides that it shall be binding on all the stakeholders of the Corporate Debtor upon approval by the Adjudicating Authority. In ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section 61 (3) Appeal may be filed on the grounds specified in (i) to (v). From the grounds projected in memo of Appeal it seems that the Appeal is filed on the following grounds: (i) Whether there has been material irregularity in exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution Period? (ii) Whether the debts owed to the Operational Creditor (Appellant) of the Corporate Debtor have not been provided for in the Resolution Plan in the manner specified by the Board? (iii) Whether this Appellate Tribunal can grant the relief as prayed in the Appeal? Issue No. (i) Whether there has been material irregularity in exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution Period? 48. On 14.05.2018 Mr. Krishna Chamadia was appointed IRP, on 28.05.2018 in terms of Regulation 6 of the Regulations a public announcement in Form-A was issued in various newspapers, inviting submission of claims with proof from the Creditors of the Corporate Debtor. Pursuant to the public announcement on 05.06.2018, the Appellant filed six claims of ₹ 511,58,39,247/- in Form A before the IRP. On 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Appellant (FDSL), including the manipulation in its books and accounts, which amounted to fraud. SEBI in the above referred order has held that on investigation, it has been uncovered that the erstwhile management in key managerial personnel of FDSL prominently figured in respect of fraudulent practices and manipulated books and accounts of the Corporate Debtor. The copy of the SEBI order dated 16.08.2018 is annexed as Annexure R-8 with the Reply filed on behalf of the Respondent Nos. 2 3 at pg. 87 to 131 we would like to refer certain paragraphs and findings of SEBI which are as under: (h) In most instances, the customers Pos were received through an email by Smriti Pandey, Senior Executive ITS Operations from Amalendu Mukherjee, MD of Fourth Dimension Solutions Limited (FDSL) or AS Jindal, Director, Jindal Infra Solutions Limited and not directly from the respective customers. Similarly, the corresponding invoices from Ricoh were sent by Smriti Pandey to Amalendu Mukherjee or AS Jindal and not to the customers. It was not clear as to why Smriti Pandey was the focal point of most of the communication with respect to the suspect transactions since she was not in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 16.08.2018. 53. On 19.01.2019 the RP taking serious note of the findings of A M report dated 15.01.2019, filed an Application being M.A No. 262 of 2019 under Sections 50, 51, 56 r/w Section 60(5) of the IBC before the Adjudicating Authority seeking reliefs against the fraudulent and undervalued transactions entered by the Corporate Debtor and third party including the Appellant. The avoidance application is annexure R-8 of the Reply filed by the Respondent No. 2 3 at page 224 to 290.Reliefs sought in the Application is as under: Only the reliefs against the Appellant are mentioned here: (a) ................... (b) Direct Manoj Kumar/R-1, Arvind Singhal/R2, Anil Seni/R3, (FDSL)/R4 and Redhex/R6 to contribute amount of INR72.29 Crores to the Corporate Debtor. (c) Direct Manoj Kumar/R-1, Arvind Singhal/R2, Anil Seni/R3, (FDSL)/R4 and Veda Vaag/R7 to contribute amount of INR 41.37 Crores to the Corporate Debtor. (d) Direct Manoj Kumar/R-1, Arvind Singhal/R2, Anil Seni/R3, (FDSL)/R4 and Jatalia/R8 to contribute amount of INR 12.41 Crores to the Corporate Debtor. (e) Direct Manoj Kumar/R-1, Arvind Singhal/R2, Anil Seni/R3, (FDSL)/R4 and Rudra/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Appellant unable to convince us that Mr. Krishna Chamadia has committed dereliction in the duties provided the IBC. 57. The Appellant in his argument made allegations against the RP that he has committed gross violation of the act of non-determination and neglected the legitimate claim of the Appellant. There are also allegations against the RP that due to collusive conduct of the RP, CoC and the Successful Resolution Applicants have illegally prioritised the interest of few Operational Creditors and has laid to a situation where the Successful Resolution Applicants has held entire CIRP to ransom at the costs of Operational Creditors including the Appellant. We are of the view that there is no material to substantiate the aforesaid allegations against the RP. 58. On the other hand, the Appellant has not answered following questions: (i). The RP has published the list of creditors on 24.08.2018, 29.11.2018, 10.12.2018 and finally on 24.01.2019 and in these lists the claims of the Appellant were shown as disputed claims. These lists were displayed on website, however, the Appellant has not raised any objection before the RP and CoC that the estimate of the amount of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-categorized this amount and propose the payments as follows: Definition Particulars Claim Amount Admitted (INR) Related Party OC Ricoh Company Ltd., Japan 2,60,95,176 Ricoh Asia Pacific Operations Ltd., Hong Kong 7,66,00,83,908 Ricoh Asia Pacific Ptd Ltd, Singapore 1,05,91,830 Ricoh Australia Pty Ltd 7,19,732 Ricoh Europe PLC 1,34,65,045 Non-Related Party OC Other non-related party Operational Creditors of Ricoh India Limited 19,07,33,409 Total 7,90,16,89,100 As a part of the Resolution Plan, the Resolution Applicant shall pay in full i.e. INR 19.07 Cr. (Indian Rupees Ninteen Crores Seven Lakhs Only) to the non-related party OC as a full and final settlement towards their claims. The payment s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the heading Claims of Operational Creditors . The Hon ble Supreme Court do not agree with this submission and held that the Appellant s claims has rightly been described in the memorandum as other creditors claims (Claims under Adjudication). The Appellant has raised this objection before the approval of Resolution Plan. In the present Appeal, the facts are quite different the Appellant s claims are not only disputed claims but are the fraudulent extortionate credit transactions. Thus, this Judgment is not helpful to the Appellant. 65. We find no force in the argument advanced by the Ld. Sr. Counsel for the Appellant. Issue No. (iii) Whether this Appellate Tribunal can grant the relief as prayed in the Appeal? 66. Now, we have considered whether we can grant relief which is sought in the Appeal. The Appellant has sought relief in the Appeal that the impugned order dated 28.11.2019 passed by the Adjudicating Authority whereby approved the Resolution Plan be set aside. The order dated 28.11.2019 upheld by the Hon ble Supreme Court in the Civil Appeal No. 2943-2944 vide Judgement dated 10.03.2021. The Appellant is also aware of this fact that once the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he questions framed by us as under: (i) That once a resolution plan is duly approved by the Adjudicating Authority under sub- section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan; (ii) 2019 amendment to Section 31 of the I B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I B Code has come into effect; (iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rationale of Section 31of the Code. A successful resolution applicant cannot suddenly be faced with undecided claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into amount payableinty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. 72. Hon ble Supreme Court has held that the Successful Resolution Applicants cannot suddenly be faced with undecided claims after the Resolution Plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a Prospective Resolution Applicant who successfully take over the business of the Corporate Debtor. All claims are submitted and decided by the RP so that a Prospective Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X
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