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TMI Blog2022 (4) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... d 07.06.2021 passed by NCLT, Mumbai Bench approving the Resolution Plan of Petitioner Piramal Capital & Housing Finance Limited for the Dewan Housing and Finance Limited. The Respondent Company M/s. Nayati Healthcare & Research NCR Private Limited (CIN No. U 24233 DL 2007 PTC 171542) against whom, the initiation of Corporate Insolvency Resolution Process has been prayed for, was incorporated on 17.12.2007 having its registered office situated at A-14, Duggal Colony, Devil Road, Khanpur, South Delhi-110062. Since, the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code. 3. Further, it is submitted that vide a sanction letter dated 30.08.2018, DHFL sanctioned a loan amount for Rs. 144,00,00,000/- in favour of Respondent for corporate fund for construction of a hospital located at Plot No. 1202/1203/1204, Sector 28, Golf Road, Gurgaon, Haryana. In terms of the sanction letter the corporate debtor wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rregularities in the application that the Board Resolution dated 23.07.2017 and old Power of Attorney dated 31.10.2017 was executed by erstwhile management of the Petitioner. The new management took over the company by virtue of order dated 07.06.2021 and the Administrator and the Monitoring Committee were discharged. It has been argued that the old documents of erstwhile Board of Financial Creditor are not tenable in law. The respondent has placed reliance on the judgment of Palogix Infrastructure Pvt. Ltd. v. ICICI Bank Ltd. reported as (2018) 3 Comp LJ 97, passed by Hon'ble NCLAT in support of its objection against the Board Resolution and Power of Attorney. 6. The respondent also submitted that the Financial Creditor before NCLT Mumbai in CP. IB. No. 4258/2019 has filed an I.A. 257/2021 dated 02.02.2021 tilted as "Administrator of Dewan Housing Finance Corporation Limited v. Kapil Wadhawan & Anr." in which the Financial Creditor has submitted that the transactions with corporate debtor are fraudulent & collusive in nature, therefore, the Financial Creditor cannot be allowed to take different stands at the same time. Further, it is also pleaded that the Petitioner has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aud against the corporate debtor. It is further stated that the defects as pointed out by the corporate debtor have been cured by Petitioner. The Petitioner has filed fresh Board Resolution dated 10.11.2021 passed by new Board of Directors of the Petitioner. The Petitioner further submitted that while the resolution plan extinguishes the claims against the Financial Creditor, it does not and cannot extinguish claims that are owed to the Financial Creditor and since the corporate debtor is admittedly unable to pay its debt, the present application deserves to be admitted. 9. We have heard Ld. Counsels for the both the parties and thoroughly perused the records. On hearing the arguments and going through the record, the following points of determination have arisen: I. Whether the present petition has been filed by duly Authorised officer of DHFL and he is entitled to pursue the same on behalf of PCHFL as well? II. Whether the petitioner bank actually extended the loan facility to the respondent corporate debtor? III. Whether the petitioner bank is entitled to trigger the CIR proceedings on the basis of default in repayment of the amount involved herein? IV. Relief? FINDING ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rney is an authorization by the principal to its agent to do an act. A fortifier such an authorization can only be of the acts that are in the contemplation and in the knowledge of the principal as on date, when such authorization is given. If principal is itself is unaware of the eventuality, it cannot authorize its agent for such eventuality. In the matter in hand, the power of attorney stood terminated on initiation of CIR proceedings, hence, the Power of Attorney also stand terminated on triggering of CIR proceedings. 12. Before embarking upon further discussion, it would be appropriate to go through the citation "Palogix Infrastructure Private Limited Vs. ICICI Bank Limited (2018) 3 Comp LJ 97", wherein it is held by Hon'ble NCLAT that a 'Power of attorney' is distinct from an 'Authorized Person', the relevant para read as under: "32. The I&B Code' is a complete Code by itself. The provision of the Power of Attorney Act, 1882 cannot override the specific provision of a statute which requires that a particular act should be done by a person in the manner as prescribed thereunder. 33. Therefore, we hold that a 'Power of Attorney Holder' is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency proceeding against the Petitioner/financial creditor herein dated 03.12.2021. 14. Admittedly, in CP(IB)-4258/2019, the Insolvency proceedings were ordered to be initiated on 03.12.2019 against the Petitioner/Financial Creditor herein. Therefore, the Authorization Letter based on Power of Attorney dated 26.09.2017/31.10.2017, issued on the basis of Resolution dated 21.07.2017/23.08.2017 stand terminated on triggering of insolvency proceedings against the Financial Creditors, as Board of Financial Creditor i.e. DHFL was no more in existence after 03.12.2019. On appointment Resolution Professional, it has to be represented by RP only. Further the Administrator was appointed on 24.12.2019, thus, the present petition was required to be filed on behalf of DHFL either through its Administrator or Resolution Professional only and none else. Any such subsequent ratification of the acts & deeds of Authorised Officer Mr. Amit Kumar Dubey, does not made him as duly Authorised Officer, as he was also no more in existence due to lack of value valid power of attorney Mr. Vivek Jaigadkar. Had, the petition would have filed before the appointment of Resolution Professional & Administrator, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition IB-472/ND/2021 was filed on 26.08.2021 taking all together contradictory & inconsistently pleas alleging that on 01.09.2018 a loan of sum of Rs. 144 Crores was extended to the Respondent and thereafter, another sum of Rs. 43 Crore were advanced over & above the sanctioned limit. In this petition u/s. 7 of code, altogether a diametric stand is taken alleging loan documents were executed between the petitioner and respondent qua Rs. 144 crores, whereas in an IA No. 257/2021 filed in IB-4258/2019 it is being alleged that the said amount was fraudulently & collusively transferred and while extending the said amount, the standard procedure prescribed for providing the loan facility was not followed. In IA No. 257/2021, the petitioner herein itself also claimed that DHFL failed to register the charge before Registrar of Companies qua security. No valuation of security was got done and no end user certificate was obtained. Further, yes bank also placed loan documents and security document of the property of the property of the corporate debtor on the record, which clearly established that the said property was already mortgaged with it. Hence, in that situation, it has become more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery the would so to the Resolution Petitioner/future Corporate Debtor. CoC is comprised of 77 Financial Creditors and after constant deliberations they have protected their interest and ascribed the value based on their Commercial Wisdom and Adjudicating Authority has limited jurisdiction to interfere with the same. During the course of various hearings Learned Senior Counsels appearing for the Administrator, CoC, Successful Resolution Petitioner submitted that after hard bargain, various rounds of negotiations the plan amount was increased substantially by the Successful Resolution Petitioner to finally Rs. 37,250 Crores. They also submitted that 63 Moons Technologies Limited, also voted in favour of the plan and it cannot agitate the same when 94.5% of CoC members approved the plan. The COC by exercising its Commercial Wisdom have accepted, approved the resolution plan including the monies to be recovered if any from the Fraudulent Transactions. Therefore, we as Adjudicating Authority reluctant to substitute our wisdom at this stage as against their Commercial Wisdom of the CoC. Further by following the judicial precedents, discipline and various Judgements of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SCC p. 511, paras 70-71) 70. The definition of "financial debt" in Section 5(8) then goes on to state that a "debt" must be "disbursed" against the consideration for time value of money. "Disbursement" is defined in Black's Law Dictionary (10th Edn.) to mean: 1. The act of paying out money, commonly from a fund or in settlement of a debt or account payable. 2. The money so paid; an amount of money given for a particular purpose." 71. In the present context, it is clear that the expression "disburse" would refer to the payment of instalments by the allottee to the real estate developer for the particular purpose of funding the real estate project in which the allottee is to be allotted a flat/apartment. The expression "disbursed" refers to money which has been paid against consideration for the time value of money". In short, the "disbursal" must be money and must be against consideration for the time value of money", meaning thereby, the fact that such money is now no longer with the lender, but is with the borrower, who then utilises the money." (emphasis supplied) 47. The report of the Insolvency Law Committee dated 26-3-2018 has discussed the interpretation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WLR 1020 (CA)], QB p. 802) "But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Wagon Co. v. Maclure, (1882) LR 21 Ch D 309 (CA)] and Stoneleigh Finance Ltd. v. Phillips/Stoneleigh Finance Ltd. v. Phillips, (1965) 2 QB 537 : (1965) 2 WLR 508 (CA) 1), that for acts or documents to be a "sham". with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a 'shammer" affect the rights of a party whom he deceived." (emphasis supplied) 50. This Court in Prem Chand Tandon v. Krishna Chand Kapoor [Prem Chand Tandon v. Krishna Chand Kapoor, (1973) 2 SCC 366] had to determine whether a usufructuary mortgage was a sham transaction entered into by the respondent there ("the borrower") to avoid payment to creditors. This Court examined the real nature of the transaction to hold that the parties entered the transaction with an ulterior motive, A.N. Grover, J., speaking for this Court, held: (SCC p. 371, para 9) "9. As regards the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not constitute a "financial debt". Hence, Spade and AAA are not financial creditors of the corporate debtor. 106. In conclusion, we hold that: 106.1. The decision of the NCLAT, inasmuch as it referred to Spade and AAA as financial creditors, is set aside. Due to the collusive nature of their transactions alleged to he a financial debt under Section 5(8), Spade and AAA cannot he labelled as financial creditors under Section 5(7)." 22. Learned Counsel for the petitioner were relying upon citations Innoventive Industries Limited V. ICICI Bank and Anr. (2018) 1 SCC 407, Rajendra Narottamdas Sheth and Anr. V. Chandra Prakash Jain, Vineet Khosla v. Edelweiss Asset Reconstruction Company Limited & Ors. in Company Appeal (AT) (Insol) 441 of 2019, Harkirat S. Bedi v. Oriental Bank of Commerce in Company Appeal (AT) (Insol) No. 499 of 2019, Karan Goel v. Pashupati Jewellers & Anr., Company Appeal (AT) (Insol) No. 1021 of 2019, Neeraj Jain v. Yes Bank Limited, Company Appeal (AT) (Insol) No. 323 of 2019, Vikas Kumar Garg V. DMI Finance Pvt. Ltd. Company Appeal (AT) (Insol) No. 113 of 2021, Vikas Kumar Garg v. DMI Finance Pvt. Ltd. Civil Appeal No. 5619 of 2021, Axis Bank Ltd. v. Lotus Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce transactions. Respondent No. 2 has not factored in the avoidance transactions, in the Resolution Plan amount. In the matter in hand, the amount of Rs. 40 crores (approx.) was factored as Rs. "1" and it is being observed in the Resolution plan itself that these avoidance transactions amount are not likely to be recovered and if recovered it would go to Resolution Petitioner and not to other creditors (Although on that point, the matter is remanded back by Hon'ble NCLAT). It is clearly discussed & decided among the members of CoC too that the present amount, which was allegedly transferred to the account of the Corporate Debtor, were pertaining to fraudulent/avoidance transactions and there were least chance of recovery, accordingly, the same were valued as rupees one. 25. No doubt, lacking of security while extending facility of loan may not be ground for not considering the above said amount as financial debt, but in the matter in hand, Apparently that there are number of above said irregularities qua the transactions made by the petitioner, which leads to the conclusion that the same does not come under the purview of 'financial debt' and falls in the category of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties should not blow hot and cold by taking inconsistent unnecessarily." stands and prolongs proceedings" 26. In this regard, the reliance can also be placed on citation in R.N. Gosain vs Yashpal Dhir, reported as (1992) 4 SCC 683, wherein, the Hon'ble Supreme Court, observed the following: "10. Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that "a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage" (See: Verschures Creameries Ltd. v. Hull and Netherlands Steamship Co. Ltd. [(1921) 2 KB 608, 612 (CA)], Scrutton, L.J.] According to Halsbury's Laws of England, 4th Edn., Vol. 16, "after taking an advantage under an order (for example for the payment of costs) a party may be precluded from saying that it is invalid and asking to set it aside" (para 1508)" Further, Hon'ble Supreme Court in Mumbai International Airport (P) Ltd. v. Gol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 50. Ashutosh Mookerjee, J. speaking for the Division Bench of the Calcutta High Court in Dwijendra Narain Roy v. Joges Chandra De [ AIR 1924 Cal 600/, held that it is an elementary rule that a party litigant cannot he permitted to assume inconsistent positions in court, to play fast and loose, to blow hot and cold, to approbate and reprobate to the detriment of his opponent. This wholesome doctrine, the learned Judge held, applies not only to successive stages of the same suit, but also to another suit than the one in which the position was taken up, provided the second suit grows out of the judgment in the first. 54. In New Bihar Biri Leaves Co. v. State of Bihar [ (1981) 1 SCC 537] this Court observed that it is a fundamental principle of general application that if a person of his own accord, accepts a contract on certain terms and works out the contract, he cannot he allowed to adhere to and abide by some of the terms of the contract which proved advantageous to him and repudiate the other terms of the same contract which might be disadvantageous to him. The maxim, qui approbate non reprobate (one who approbates cannot reprobate), applies in our laws too. 27. Similar pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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