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TMI Blog2022 (5) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... Successful Resolution Applicant to undertake visit of the plant for four days was noticed and not acceded to with observation that first the Appellant should deposit the substantial amount as required under the Resolution Plan and only then they can do undertake the necessary visit - It is also relevant to notice that the Appellant made request to the Monitoring Committee to permit the Appellant to make payment in a revised time schedule. The Monitoring Committee held its meeting on 29.08.2019, in which revised schedule for payment of the amount was decided and the lenders recorded their no objection. The Adjudicating Authority passed an order dated 03.09.2019 which order records the decision of the Monitoring Committee taken on 29.08.2019. After approval of the Resolution Plan, Monitoring Committee under the statutory scheme is to function for process of implementation of Resolution Plan and has not to act as any adversary body to the Resolution Applicant. If there were any genuine roadblocks found in the implementation of the plan, Monitoring Committee as well as Monitoring Professional is to use their good offices to sort out the difficulties and not to create roadblocks themsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to as 'IBC). In the Corporate Insolvency Resolution Process (CIRP), the Appellant submitted a Resolution Plan on 19.10.2018. The Resolution Plan of the Appellant offering total financial plan of INR 233.71 Crores was approved by the Committee of Creditors (CoC) on 27.12.2018. By order dated 30.05.2019, application filed under Section 31 of the IBC by the Resolution Professionals for approving Resolution Plan, was allowed. Plan of INR 235.86 Crores was approved. The first meeting of the Monitoring Committee was held on 06.06.2019 where it was noticed that the amount of INR 5 Crore has been credited in the account of the Corporate Debtor. The Successful Resolution Applicant also informed the Monitoring Professional that an amount of INR 3.55 Crores payable to Operational Creditors in terms of the approved plan shall be paid by 09.06.2019. By 10.06.2019 an amount of INR 10.55 Crores was credited in the account of the Corporate Debtor. In the Monitoring Committee meeting dated 06.06.2019 request was made on behalf of the representative of Successful Resolution Applicant to undertake detailed analysis and assessment of the plant for four days with their technical team which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent No.1 did not file application before the Adjudicating Authority seeking extension of time. On 29.10.2019, the Appellant filed C.A. 2357/2019 praying for extension of time period for implementation of the Resolution Plan. On 08.11.2019, the Appellant further paid an amount of INR 8.25 Crores to prove its bonafide. Total payment by the Appellant as on 08.11.2019 was INR 70.25 Crores. On 03.12.2019, the Adjudicating Authority directed the Appellant to file an affidavit undertaking to deposit the balance amount by specifying the last date by which balance payments can be deposited. In pursuance of order dated 03.12.2019, an affidavit was filed on 06.12.2019 by the Successful Resolution Applicant. In 6th Monitoring Committee meeting dated 07.12.2019, the Respondent No. 1 assured the Appellant to provide support for demarcation and fencing of property of the Corporate Debtor. On 30.12.2019, Monitoring Professional wrote a letter to the Sub-Divisional Magistrate Bhadurgarh, District Jhajjar, Haryana, where Sub-Divisional Magistrate informing that few local adjoining farmers have destroyed the demarcation and also created hindrances in the fencing work, therefore, assistance was so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the view that Sub-Divisional Officer concerned be also present on the date as intimated by the Appellant to assist the Appellant to see the status of the encroachment, if any and to do the needful. Learned Counsel for Respondent No. 2 Shri Dinkar Singh submits that the interest be also allowed, which submission we are not considering as on date. Learned Counsel for the Appellant has refuted the submission of Shri Dinkar Singh, he submits that the Appellant is not liable to pay any interest. Learned Counsel for the Appellant made a statement that on or before 27.12.2021 the Appellant shall deposit the amount of Rs. 165.31 crores in the registry of this Tribunal. List the matter on 03.01.2022. In the meantime, the impugned orders dated 01.11.2021 shall be kept in abeyance." 4. I.A. No. 2941 of 2021 was filed by the Appellant in Company Appeal (AT) (Insolvency) Nos. 954 of 2021 on 23.12.2021 bringing on record copy of the Report of the Sub-Divisional Officer (Civil) dated 21.12.2021 addressed to the Principal Bench, NCLT in compliance of order dated 07.12.2021 issued by this Tribunal as noticed above. The Sub-Divisional Officer in the Report noticed that in area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the plan. Visit to the factory premises was denied to the Appellant on 06.06.2019 i.e. within six days from approval of the Resolution Plan and Appellant had to file I.A. 1170/PB/2019 seeking direction to allow the Successful Resolution Applicant to have physical inspection of the plant and machinery of the Corporate Debtor, which Adjudicating Authority by order dated 03.09.2019 accepted and permitted visit to the plant to the officials and authorized representatives of the lending bank for processing the sanction of funds to the SRA. The Bank of Baroda who had agreed in principle to advance the amount to make the balance payment cannot be given necessary deeds and documents for financial sanction which was one of the reasons for Appellant not been able to make payment. In the Monitoring Committee meeting dated 07.10.2019, the Monitoring Committee itself opined that the Monitoring Professional may consider to move application before the Adjudicating Authority for seeking additional time for implementation of the plan. The Monitoring Committee was satisfied that additional time is required for implementation due to various issues which are to be sorted out. Unfortunately, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 submits that no reasons have been given in the order of the Adjudicating Authority as to why directions for initiation of prosecution has been issued. Neither there is any consideration in the order nor is any finding that present a case for initiation of any prosecution. In view of the order dated 03.09.2019 passed by the Adjudicating Authority and substantial payments made, very basis of the application filed by the Monitoring Professionals being C.A. 1246/2019 had become non-existent and the Adjudicating Authority committed error in allowing C.A. 1246/2019. The Respondent No. 1 has failed to protect the assets of the Corporate Debtor, it has failed to protect the immovable property and occupation of land and it has also failed to maintain plant and machinery of the Corporate Debtor. Learned counsel lastly submitted that the Appellant had always been ready and willing to make balance payment and is still ready to make balance payment. 10. Shri Arun Kathpalia, learned counsel appearing for the Respondent No. 1 submits that total area of agricultural land is 45 Acres and as per Report of 21.12.2021 of the Sub-Divisional Officer encroachment at best is of 5 Acres. It is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed came to be proved by Sub-Divisional Officer Report dated 21.12.2021, which was submitted to this Tribunal in pursuance to order dated 07.12.2021. The claim of the Respondent No.1 as made on 04.12.2021 that there is no encroachment has been proved to be false. Respondent No. 1 never filed any reply to C.A. No. 2357/2019 before the Adjudicating Authority nor at any point of time submitted any affidavit that there is no encroachment on the land. Shri Ganda further submitted that in the facts of the present case, the Appellant cannot be saddled with any liability of interest. It is submitted that Appellant's INR 70.25 Crores which were paid in the year 2019 itself already lying with Respondent No. 1 and being utilized by Respondent No.1. It is the Appellant who is suffering due to not having received the assets and having paid huge amount. Respondent No. 1 has not suffered any prejudice. CIRP cost, as stated in the plan, has already been paid to the Respondent No.1. The Respondent No. 1 instead of cooperating in removing the difficulties in implementation of the plan has adopted obstructive attitude. Filing of application under 74(3) in C.A. 1246/2019 was nothing but arm-twisting ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant made request to the Monitoring Committee to permit the Appellant to make payment in a revised time schedule. The Monitoring Committee held its meeting on 29.08.2019, in which revised schedule for payment of the amount was decided and the lenders recorded their no objection. The Adjudicating Authority passed an order dated 03.09.2019 which order records the decision of the Monitoring Committee taken on 29.08.2019. It is useful to extract the entire order dated 03.09.2019 which is to the following effect: "ORDER CA-1170(PB)/2019 & CA-1246(PB)/2019 In the aforesaid application arguments were heard on 26.08.2019. However, before the order could be pronounced. CA-1676(PB)/2019 has been filed under Rule 11 of the NCLT Rules with a prayer that order dated 08.08.2019 passed has been substantially complied with and permission has been sought for the Implementation Committee to accept the payment schedule as mentioned at paragraph 13. Accordingly the proposal for rescheduling the payment time line made in paragraph 13 by the successful resolution applicant was considered. The Monitoring Committee in its meeting dated on 29.08.2019 after consulting lenders has rescheduled th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved by the Hon'ble NCLT. 7. In case of any default on the part of SRA in remitting the amount payable as approved by the Hon'ble NCLT through this revised payment plan, the amount deposited till the date of default shall stand forfeited and he distributed amongst the lenders in their respective proportion of voting shares held in the Committee of Creditors after adjusting the cost as mentioned here-above. Concluding on the above revisions in the payment plan of SRA, there were discussions on the mechanism of consideration of the revised payment plan, whereby the lenders agreed that the counsel for CoC/ lenders be instructed to submit the no objection on behalf of lenders before Hon'ble NCLT as per the above decisions. The same was taken note by the participants." It is appropriate to mention that there was miniscule minority of 0.16% represented by Siemens. Even that has been clarified by accepting the aforesaid terms by the Siemens Financial Services Private Limited and with the aforesaid acceptance of the proposal for rescheduling payment has now been supported by 100% voting share. It is appropriate to mention that amount of Rs. 28.50 crores by way of RTGS has already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson expressed their intention to meet the SRA. The SRA agreed to meet and requested to share the contact details of him. Thereafter, various discussions were held and it was decided that MP and SRA may depute their personnel to start the inventorisation (itemized) of the Fixed assets, other than Immoveable Property, owned and possessed by CD. SRA also requested the MP to prepare a handover report in order to facilitate the handover. Further it was also discussed and agreed that considering the various processes and compliances to be made, MP may consider to move an application before AA for seeking additional time for implementation of Resolution Plan. 2. Demarcation of land owned by Allied Strips Limited; Inventorisation of legal documents pertaining to such land; and Bringing the land in a position so that peaceful enjoyment of total land, free from encumbrances(s) other than disclosed in IM, is vested in SRA upon take-over. As discussed in point x in above paras, the demarcation process was noted to be initiated, further the MP stated that if SRA found that it is warranted to file application with Tehsildar, they can move ahead with it and file the same. Monitoring Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading C.A. 1170/2019 para 1 to 7 are the pleadings of the applicant. Para 8 deals with reply of the Respondent. In Para 9 of the judgment, the Adjudicating Authority has referred to its order dated 23.01.2019 passed in C.A. No. 114(PB) of 2019 which was filed by the Appellant to forgo/dispense with the condition of the submission of Bank Guarantee till adjudication of the plan by the Tribunal. Resolution Plan was approved on 27.12.2018 by the Committee of Creditors. Letter of intent was issued on 03.01.2019 to the Appellant. The CoC asked the Appellant for Bank Guarantee of 25% of the amount. The Adjudicating Authority has noticed that by order dated 23.01.2019 application of the Appellant was dismissed with cost of Rs.50,000/- but failed to notice that said order was challenged before this Tribunal by filing an Appeal being Company Appeal (AT) (Ins.) No. 231 of 2019, in which this Appellate Tribunal on 12.03.2019 passed following order: "5. The Respondents may file reply within a week as to why the impugned order dated 23rd January, 2019 be not set aside and the Adjudicating Authority be not directed to consider the 'Resolution Plan' in terms of Section 31 of the 'I&B Code'. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Plan is as under: S.N Date of the Payment Amount 1. June 10, 2019 10.50 Crores 2. August 29, 2019 28.50 Crores 3. September 7, 2019 23.00 Crores 4. November 8, 2019 8.25 Crores AMOUNT PAID BY THE SRA 70.25 Crores BALANCE AMOUNT AS PER THE RESOLUTION PLAN 165.61 Crores GRANT TOTAL 235.86 Crores 4. I state that that approximately 7.5 Acres out of total acres of 45.56 Acres land of the Corporate Debtor, has been illegally encroached and is under the illegal possession of third party(ies). This fact was neither disclosed in the Information Memorandum of the Corporate Debtor nor was informed to the Successful Resolution Applicant any time before the Approval of the Resolution Plan. The details of such land of the Corporate Debtor has been are set out as under:" Village Khewat No. Khata No. Khasra No. Bigha Biswa Asauda Todran 108 193 3002/387 1 18 3003/387 1 9 3006/407 1 1 3007/407 0 18 3008/411 1 14 3009/411 1 9 5 69 8 9 99 177/178/179/180 3 6 11 15 Total 7.34 Acres 24. The Adjudicating Authority has not even noticed its own order dated 03.09.2019 by which revised timeline were approved as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed in those provisions. Enabling withdrawals or modifications of the Resolution Plan at the behest of the successful Resolution Applicant, once it has been submitted to the Adjudicating Authority after due compliance with the procedural requirements and timelines, would create another tier of negotiations which will be wholly unregulated by the statute. Since the 330 days outer limit of the CIRP under Section 12(3) of the IBC, including judicial proceedings, can be extended only in exceptional circumstances, this open-ended process for further negotiations or a withdrawal, would have a deleterious impact on the Corporate Debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time. A failed negotiation for modification after submission, or a withdrawal after approval by the CoC and submission to the Adjudicating Authority, irrespective of the content of the terms envisaged by the Resolution Plan, when unregulated by statutory timelines could occur after a lapse of time, as is Company Appeal (AT) (Insolvency) No. 1038 of 2021 28 the case in the present three appeals before us. Permitting such a course of action would either result in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Applicant and the CoC, have requested for modification of the Resolution Plan because of the uncertainty over the PPA, cleared by the ruling of this Court in Gujarat Urja (supra), a one-time relief under Article 142 of the Constitution is provided with the conditions prescribed in Section K.2." 23. Shri Saha relying on the paragraph 202 of the above judgment submits that Adjudicating Authority under the IBC cannot exercise jurisdiction, which is not provided in IBC. Hon'ble Apex Court in the said judgment has held that residual powers of the Adjudicating Authority cannot be exercised to create procedural remedies, which have substantive outcomes on the process of insolvency. The above observations have been made in a case where the question before the Hon'ble Apex Court was as to whether after submission of Resolution Plan, Resolution Applicant can withdraw the Plan. Hon'ble Apex Court held that it is only Section 12-A, which enables withdrawal from the CIRP, hence, it was held that Resolution Applicant cannot withdraw from the Plan. The Hon'ble Apex Court has also laid down in the above case that existing insolvency framework in India provides no scope for effecting further m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut before aforesaid dated an I.A. was filed by the Appellant being I.A. No. 2941 of 2021 when Appellant came to know about the Report of the Sub-Divisional Officer dated 21.12.2021 that there is encroachment on the immovable property. Learned counsel for the Appellant before us submitted that they are ready to deposit the entire balance amount of Rs.165.31 Crores within any time allowed by this Tribunal to finally implement the Resolution Plan. 29. We need to also consider submissions raised by learned counsel for the Respondent No. 1 and 2 that Appellant is liable to pay interest @ 11% p.a. in event Appellant is permitted to deposit the balance amount of Rs.165.31 Crores. Learned counsel for the Respondents have referred to decision of the Monitoring Committee dated 29.08.2019, where one of the decision agreed was Decision No. 3, which is to the following effect: "3. Interest @ 11% p.a. from the date of approval of resolution plan i.e. 30.05.2019 till the date money is credited to the account of corporate debtor will be paid by the SRA. Financial Creditors shall issue no dues certificate after receipt of balance payment along with interest due." 30. We may also notice that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal (AT) (Ins.) No. 1011 of 2021. In the application 1246/2019 following prayers have been made by the Applicant (Respondent No.1): "(a) Allow the present application; and (b) Issue appropriate directions against the Respondent M/s. G.P. Global Energy Pvt. Ltd. for knowingly and willfully contravening the terms of the resolution plan for the Corporate Debtor as approved by this Hon'ble Adjudicating Authority vide order dated 30.05.2019 and appropriate order be passed under Section 74(3) read with Section 235A of the Code against the Respondent; and (c) Issue appropriate direction for forfeiture of the amount of Rs.10.55 crores submitted by the Respondent being a consequence for contravening the terms of the approved resolution plan; and (d) exclude the period from the date of submission of resolution plan by the Respondent i.e. 19.10.2018 till the order of approval of resolution plan of the Respondent passed by this Hon'ble Adjudicating authority i.e. 30.05.2019 (224 days) for the purposes of calculation of 270 days of CIRP period of the Corporate Debtor and Committee of Creditors be reinstated to make another attempt for a fresh process for resolution plan for the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Resolution Plan amount within 7 days of approval of the resolution plan and further even has failed to make the entire payment as required under the resolution plan as approved by this Hon'ble Adjudicating Authority within a period of 30 days from the approval of resolution plan which expired on 30.06.2019. XXII. That Section 74(3) of the Code provides for the consequences where any person on whom the approved resolution plan is binding under Section 31, knowingly and wilfully contravenes any of the terms of such resolution plan or abets such contravention. That Section 74 (3) of the Code is reproduced as hereinunder:" 35. The Adjudicating Authority has not even adverted to Section 74(3) and had directed for making a reference to IBBI for taking appropriate action under Section 74(3), which order is unsustainable. 36. Adjudicating Authority has further directed for forfeiture of the amount of Rs.10.55 Crores. The Adjudicating Authority in the entire order has not even noticed that Appellant has deposited Rs.70.25 Crores till 08.11.2019. The Adjudicating Authority has not even referred to its earlier order dated 03.09.2019 by which the Adjudicating Authority has approv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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