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TMI Blog2021 (8) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench feels that this provides an escape route to both the promoter as well as to the Corporate Debtor Company to conveniently wriggle out of the partial mini settlement at any point of time - The Bench is also aware of the fact that the present Application is not strictly speaking as per the procedure prescribed in Regulation 30A of the CIRP Regulations. The Regulation 30A of the CIRP Regulations requires that the Applicant have to put any application for withdrawal under Section 12A through the IRP, before the constitution of the Committee of Creditors. The Bench is fully aware that after passing the Admission Order dated 13.05.2021 and after the commencement of CIRP, the proceeding are in rem and therefore, any decision regarding the continuation or otherwise of CIRP has to be decided in the interest of all stakeholders and not just a handful of employees. The Bench is fully aware of the fact that under Section 53 of IBC the debts of the Workmen rank equally with the financial debt owed to the secure/ unsecured creditors - the fact cannot be ignored while taking a decision, the Bench also has to take into account the interest of all stakeholders. The Hon ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k withdrawal of the Company Petition as the Insolvency Resolution professional (IRP) has delayed filing of the application under Section 12A of the Code. Submissions by the Applicant: 3. The Applicant was an employee of the Corporate Debtor from 01.04.2013. the Applicant was relieved from the services of the Corporate Debtor on 14.06.2019 without settlement of arrears of salary and other dues. Therefore, Applicants / Operational Creditor/ Petitioner along with various other ex-employees filed the Petitions u/s 9 of the Insolvency and Bankruptcy Code, 2016 (Code) before this Hon'ble Tribunal. This Bench while hearing the Petitions took up one Petition in respect of each Rolta Group Company for hearing and heard both the parties extensively on 16.04.2021and reserved for Orders. 4. This Bench proceeded to pass order dated 13.05.2021 admitting the present petition under Section 9 of the Code, initiating Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor and appointed Ms. Vandana Garg as IRP of the Corporate Debtor. 5. Thereafter, further negotiations took place between the parties and the Corporate Debtor through its promoter director Mr. Kamal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case, even the Committee of Creditors is also not formed and as such the approval of 90% voting share of the Committee of Creditors is also not required. Therefore, this Bench has to exercise its jurisdiction and allow withdrawal of the Applications filed by the Applicants / Operational Creditors u/s 12A of the Code. 13. It is submitted by the Applicant that the Financial Creditors and the ex-employees who have not yet filed their Petitions have their own course to recover the dues payable to them by the Corporate Debtor. 14. The Applicant mentions that the Hon'ble NCLAT in its Order dated 07.07.2021 in the matter of Anuj Tejpal v/s Rakesh Yadav Oyo Hotels and Homes Pvt. Ltd. permitted the withdrawal of the Company Petitions which were admitted by the Hon'ble NCLT. Therefore, the ratio of the said judgement has to be followed by this Tribunal. Submissions by the Promoter: 15. The present Applications have been filed by the Applicants seeking withdrawal in terms of Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 of the respective Company Petitions, admitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list provided by the IRP, the Promoter has settled with all employees. For ease in reference, the list of such employees is provided hereinbelow: Sr. CP No. Employee Name Settlement Agreement date ROLTA INDIA LIMITED 1 1932/2019 Hiten Valia Joint Settlement Agreement dated 10.06.2021 2 1470/2020 Deepak Gupta Joint Settlement Agreement dated 10.06.2021 3 1466/2020 Anjali Sagar Kavishwar Joint Settlement Agreement dated 10.06.2021 4 38/2021 Sameer Anilkumar Lawande Joint Settlement Agreement dated 10.06.2021 5 1371/2020 Vipin Dayaram Yadav Joint Settlement Agreement dated 10.06.2021 6 151/2021 Jagdish A163/2021swath Joint Settlement Agreement dated 10.06.2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 Sanjay Jagasia Joint Settlement Agreement dated 23.06.2021 26 Rahul Karanjawala Joint Settlement Agreement dated 23.06.2021 27 Samir Cahadgaonkar Joint Settlement Agreement dated 23.06.2021 28 Rakesh Plaha Joint Settlement Agreement dated 23.06.2021 29 343/2021 Trupti Pol Joint Settlement Agreement dated 10.06.2021 30 294/2021 Sandip Lad Joint Settlement Agreement dated 10.06.2021 31 453/2021 Mahesh Jha Joint Settlement Agreement dated 10.06.2021 32 537/2021 Naresh Sawant Joint Settlement Agreement dated 10.06.2021 Thus, in total, 32 employees who have filed application under Section 9 of the Code as on 27.05.2021, 10.06.2021 and 23.06.2021, have been settled. These employees have also filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intact. 23. The Hon ble Supreme Court in Swiss Ribbons Pvt. Ltd. vs. Union of India has categorically held that at any stage where the CoC is not yet constituted, a party can approach NCLT directly, the Tribunal may in exercise of the inherent powers under Rule 11 of NCLT Rules may allow or disallow an application for withdrawal of CIRP. The claim and rights of other creditors as it stands is not prejudiced/altered by the withdrawal of CIRP of Corporate Debtor. 24. This has been affirmed by this Tribunal in the case of a. ISGEC Heavy Engineering Limited V/s Cane Agro Energy (India) Limited (Para iii/ Page 127) b. Haresh Enterprises v. Mohota Industries Limited (Para 9.1/Page 176) 25. And Hon ble Appellate Tribunal in the case of a. Hon ble Tribunal in the recent judgment of Anuj Tejpal vs Rakesh Yadav (Para 41, Page 167) ( OYO Hotels Case ). b. Mr. K.C. Sanjeev vs. Mr. Easwara Pillai Kesavan Nair (Para 5/Page 181). 26. It is further submitted that the promoter has adhered with the directions of this Tribunal and has settled with 32 employees. If interventions of third parties are allowed at this stage, the settlement with 32 employees will be jeopardize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further mentions that at this juncture, it is pertinent to point out here that by a perusal of the joint settlement agreements dated 10.06.2021 and 24.06.2021 executed between the employees and the promoter of the Corporate Debtor, it is evident that the ex-management of the Corporate Debtor (Promoter) has agreed to pay to these petitioners the agreed amount, upon withdrawal of the petitions only and that too jointly and/or severally with the Corporate Debtor. 32. That such an arrangement is liable to be referred to as preferential payments made after the admission of the company petitions under IBC, contrary to the interests of the rest of the creditors and stakeholders of the Corporate Debtor. The relevant extracts of the joint settlement agreements executed by the promoter of the Corporate Debtor with the employees whose petitions are pending before this Hon ble Tribunal under Section 9 of IBC are reproduced hereunder: 33. Joint Settlement Agreement dated 10.06.2021 5. Upon the Adjudicating Authority approving (i) withdrawal of the Admitted Petitions under Interim Application No.1196 of 2021, Interim Application No. 1197 of 2021, Interim Application No. 1198 of 2021 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(1), an Application under 12A has to be filed by the Applicant through Interim Resolution Process (IRP) for a settlement achieved before constitution of Committee of Creditors. 36. At this juncture it is pertinent to reproduce Regulation 30A for ready reference of this Hon ble Tribunal: Regulation 30A of the CIRP Regulations: 30 A. Withdrawal of application (1) An application for withdrawal under section 12A may be made to the Adjudicating Authority (a) before the constitution of the committee, by the applicant through the interim resolution professional; (b) after the constitution of the committee, by the applicant through the interim resolution professional or the resolution professional, as the case may be: Provided that where the application is made under clause (b) after the issue of invitation for expression of interest under regulation 36A, the applicant shall state the reasons justifying withdrawal after issue of such invitation. (2) The application under sub-regulation (1) shall be made in Form FA of the Schedule accompanied by a bank guarantee- (a) towards estimated expenses incurred on or by the interim resolution professional for purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iple, therefore, from all the above noted decisions is that the reference to the triggering of a petition under Section 7 of the IB Code to consider the same as a proceeding in rem, it is necessary that the Adjudicating Authority ought to have applied its mind, recorded a finding of default and admitted the petition. On admission, third party right is created in all the creditors of the corporate debtors and will have ergaomnes effect. The mere filing of the petition and its pendency before admission, therefore, cannot be construed as the triggering of a proceeding in rem. Hence, the admission of the petition for consideration of the Corporate Insolvency Resolution Process is the relevant stage which would decide the status and the nature of the pendency of the proceedings and the mere filing cannot be taken as the triggering of the insolvency process. 41. That hence, it is evidently clear that the applicants have lost control of the proceedings and the proceedings now are a proceeding in rem. Therefore, the applicant today does not have an inherent right to seek withdrawal before this Hon ble Tribunal, without consideration of the all the claims and Petitions filed against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BANK OF BARODA 10,969,142,702.53 CANARA BANK 3,966,441,261.00 TOTAL (RS.) 54,347,410,707.33 TOTAL (IN CRORES) 5,434.74 47. The financial debt owed to the Financial Creditors is substantial. Considering the nature of the Financial Creditors i.e. that they are public sector lenders, enormous public interest and public monies are involved in the present matter. 48. It is submitted that the present case is not a fit case for this Tribunal to exercise its discretion under Section 12A of Insolvency and Bankruptcy Code, 2016. The present case is a fit case for this Tribunal to exercise its discretion in rejecting the present application under Section 12A. 49. In support of the aforesaid submission, the Financial Creditors rely upon the following judgments in respect of the scope and ambit of Section 12A: a. Swiss Ribbons V. Union of India, (2019) 4 SCC 17 b. Indus Biotech V. Kotak India, 2021 SCC Online SC 268 c. Jai Kishan Gupta vs. Green Edge Buildtech LLP, Company Appeal (AT) (Ins) No. 969-970 of 2019 d. CFM Assets R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c sector banks is public money which fact needs to be taken into consideration before CIRP initiated against these Corporate Debtors is permitted to be withdrawn under Section 12A of IBC, 2016. 54. It is further submitted that the Corporate Debtor herein apart from having several petitions filed and against it under Section 7 and Section 9 of the IBC, 2016 before this Hon ble Tribunal, this Corporate Debtor has once previously already been admitted into the CIRP by way of an order dt. 22nd October dt. 22.10.2019 of this Hon ble Tribunal admitting a CP (IB) No. 4375/ NCLT/ MB/ 2018 which order was subsequently nullified by the Bombay High Court by its order dt. 29.11.2019 in Writ Petition (L) No. 3280 of 2019. 55. It is also submitted that the Corporate Debtor is a habitual defaulter who has defaulted on repayment of its financial obligations to its employees and Financial Creditors. The Corporate Debtor ought to be admitted into CIRP forthwith and no indulgence ought to be granted to the Corporate Debtor and/or its ex-management / promoters. The IBC does not contemplate a misuse of the provisions of 12A by constantly admitting petitions, enjoying the moratorium and thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he NLCT Rules, 2016 by Mr. Dinesh Gupta, an employee of the Corporate Debtor Company in the capacity of Operational Creditor seeking withdrawal of the present company Petition in terms of Regulation 30(A) of the IBC. The present Company Petition was Admitted vide Order dated 13.05.2021 of this Bench, thereby initiating CIRP against the Corporate Debtor and appointing Ms Vandana Garg as IRP of the Corporate Debtor. The Applicant mentions that he had approached the IRP for filing the Application in Form FA under Regulation 30(A)(1)(a) to seek withdrawal of the Admitted Company Petition. However, he says that the IRP did not co-operate and, therefore, the Applicant is compelled to file the present Application on their own motion under rule 11 of the NCLT Rules seeking withdrawal of the Admitted Company Petition. The bench notes that in this case written submissions have been filed by the IRP. Written submissions have also been filed by the Intervenors who are basically Financial Creditors viz. Union Bank of India, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, for a total amount of about ₹ 5,434.74/- crores. 61. The IRP mentions that she has received cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y application for withdrawal under Section 12A through the IRP, before the constitution of the Committee of Creditors. However, this Bench is not going to get into that issue in terms of the view of the Hon ble Supreme Court in Swiss Ribbons Pvt. Ltd. vs. Union of India that at any stage where the Committee of Creditors is not yet constituted, a party can approach NCLT directly, the Tribunal may in exercise of the inherent powers under Rule 11 of NCLT Rules may allow or disallow an application for withdrawal of CIRP. The claim and rights of other creditors as it stands is not prejudiced/altered by the withdrawal of CIRP of Corporate Debtor. (Emphasis supplied) 65. It is also a fact that this Bench during the initial phase of hearing was considering favourably this Application regarding settlement of claims only with the employees. However, very soon during the course of the hearing the Bench realised that the list of employees is much more than 32 and the number of employees runs upwards of 100. The Bench also noted that as per the details provided by the IRP, the total claims of the Financial Creditors are about ₹ 5,434.74/- crore. These Financial Creditors are mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 82 . We make it clear that at any stage where the Committee of Creditors is not yet constituted, a party can approach NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the parties concerned and considering all relevant factors on the facts of each case. (Emphasis supplied) 67. The Hon ble Supreme Court has recently in the matter of Indus Biotech Pvt. Ltd. vs. Kotak India Venture (Offshore) Fund Ors. (2021 SCC OnLine SC 268) has clearly observed that when a petition under is admitted/triggered it becomes a proceeding in rem and even the creditor who has triggered the process would also lose control of the proceedings as Corporate Insolvency Resolution Process is required to be considered through the mechanism provided under the IB Code. The relevant extracts of the Indus Biotech Judgment are reproduced hereunder for ready reference: .. 25. In the case of Swiss Ribbons Private Limited vs. Union of India (2019) 4 SCC 17 and Pioneer Urban Land and Infrastructure Limited vs. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide 7 the status and the nature of the pendency of the proceedings and the mere filing cannot be taken as the triggering of the insolvency process. (Emphasis Supplied) 68. That in a similar situation the Hon ble NCLT Principal Bench did Ranjeet Ramakrishna Yadav vs. JNC Construction Pvt. Ltd. [C.P.(IB) No. 272(PB)/2019] vide its order dated 07.2018, directed the Applicant and the Ex-management to propose a plan to settle all the claims received by IRP. The Hon ble Principal Bench NCLT held as follows: .In the present case settlement was reached on 18.06.2019 and CoC has been constituted on 19.06.2019. In the mean while the Interim Resolution Professional, who is present in the Court has received 308 claims from the other financial creditor-home buyers. It is true that in some of the earlier cases we have taken the view that even if the claims have been filed before the IRP and the Committee sof Creditors has not been constituted then the application for withdrawal could be entertained and allowed. However, in the present case the CoC has been constituted day after the compromise has been entered and the claims as on today by 308 other home buyers have also been fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court and NCLAT clearly shows that even in the event of the original creditor the Corporate Debtor settling their disputes prior to the constitution of the CoC, the Tribunal has sufficient jurisdiction to reject an application under Section 12A of the IBC if the facts and circumstances of the case warrants such rejection. 71. The Bench also notes that this Corporate Debtor in the past had defaulted in the repayment of its financial obligation to its employees and Financial Creditor. The Bench also is also aware of the fact that a Judicial authority ought not to pass Orders which would lead to further multiplicity of proceedings. Even if this Bench permits withdrawal, it is a fact that all the dues of all the employees of the Corporate Debtor Company are not being settled. As the Bench is aware and as submitted by the RP, about more than 100 employees have lodged their claims against the Corporate Debtor, However, only some employees claims are being settled by the ex-management/ Promoter of the Company. Therefore, the purported settlement lacks bona fide. The Bench, therefore, is of the considered view that, be that as it may, the interest of the employees would in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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