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TMI Blog2022 (8) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... proponents. Brief Facts: Appellant's Submissions: 2. Aggrieved by the order dated 05.05.2020, the Appellant prayed this Bench to declare that the Respondents are ineligible as scheme proponents under Section 29 A (c) of the I&B Code, 2016. The Learned Counsel appearing for the Appellant submitted the brief facts. 3. It is submitted that the impugned order dated 05.05.2020 in MA No. 1140/2019 passed by the Adjudicating Authority whereby the Hon'ble Adjudicating Authority in contravention to Section 29A read with Section 35(1)(f) of the IBC and Regulation 2B(1) proviso of the IBBI (Liquidation Process), 2016, allowed the Promoters to take back the Corporate Debtor under the scheme for compromise and arrangement under Section 230 to 232 of the Companies Act, 2013. 4. Vide impugned order dated 05.05.2020 the Adjudicating Authority pleased to revoke the liquidation process of the Corporate Debtor to enable the Corporate Debtor in liquidation to revive and reconstruct by implementing the scheme of the Promoters. 5. It is submitted that the impugned order is also bad to the extent that it provide scope for erroneous interpretation in relation to payment of fees of the liquidator and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . While sanctioning the scheme, the Adjudicating Authority vide its order dated 05.05.2020 disposed of the said MA 1140/2019 and specifically observed at para 10, 34 and 35 of the order. 11. The Appellant filed IA. 399/2020 before the Adjudicating Authority seeking payment of the fees with immediate effect. The Learned Adjudicating Authority vide its order dated 20.07.2020 (impugned order) disposed of the Application and held that 'in respect of the fees payable to the Liquidator, as already dealt with vide order dated 05.05.2020, the fees will become payable only upon the occurrence of the events of respective receipts and disbursal at the specified percentage payable and not otherwise and in the circumstances we direct the Liquidator to desist from claiming the amounts towards the Liquidator fees as immediately payable'. 12. It is submitted that while approving the scheme vide its order dated 10.01.2020 the Hon'ble Adjudicating Authority clearly noted that the Respondents were never disqualified under Section 29A of the Code, however, the Adjudicating Authority gave an opportunity to the Appellant and directed him to file a report with respect to in-eligibility of the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the appeal is misconceived and the Appellant being officer of Court neither has any vested right nor any locus standi to challenge the scheme filed by himself before the NCLT and the Learned NCLT approved the scheme as approved by a majority of 98% of creditors. 16. The Appellant illegally and unauthorisedly, due to reasons best known to him delayed in handing over of the Corporate Debtor to these Respondents on one pretext or other for 10 months. After much delay a partial handover was done by the Appellant to these Respondents wherein only dredgers of the Corporate Debtor were handed over by the Appellant. Because of the delay in handing over, the Respondents incurred an expense of Rs.2 crores in repairing the dredgers. The Appellant has been in-charge of managing the Affairs of Corporate Debtor since the very initiation of CIRP of the Corporate Debtor and thus all the contemporaneous records of the Corporate Debtor as mentioned hereunder, continue to be in the control and possession of the Appellant. "a. Books of Accounts including the bank account opened for liquidation; b. Income tax records up to the period 2019-20; c. Audited Balance sheets for 2017-18, 2018-19 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said scheme. As per Clause 4.5 of the Scheme, it was provided that the liquidator's fee will be decided and approved by the IBBI. In order to get more clarity with respect to his fees again preferred an application being MA No. 1140/2019 seeking fixation or approval of the fee of the liquidator. The said MA No.1140/2019 allowed vide order dated 05.05.2020 and fixed the fees payable to the Appellant and the Learned NCLT relied on the calculations submitted by the Appellant on the basis of the estimated fees payable if the said distribution was happening under Section 53 of the Code. However, the Learned Adjudicating Authority vide impugned order dated 20.07.2020 reaffirmed its directions passed vide orders dated 10.01.2020 and 05.05.2020, hence the present appeal is barred by the principles of estoppel. 21. It is submitted that the CIRP cost was duly paid by the Respondents as per the directions of the Learned NCLT in its orders dated 15.05.2020 and 22.05.2020. 22. It is submitted that the conduct of the Appellant was in fact strongly deprecated by the Learned NCLT while passing the impugned order due to repeated and consistent endeavour to abuse his power and to derail the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2018 and appointed the Appellant as Liquidator. While so, the Promoters of the Corporate Debtor filed an Appeal CA (AT) (Ins) No. 696/2018 against the order of liquidation and this Tribunal disposed of the said Appeal on 07.03.2019 with an observation and direction as under: "Learned Counsel appearing on behalf of the Appellant submits that a sum of Rs.14 cores was due and out of which a settlement for Rs.10.38 crores has been made. Earlier, also two financial creditors paid total amount of Rs.37 crores to Asset Reconstruction Company (India) Limited and Rs. 2.5 crores to L&T Finance, who have given no dues certificate. However, on completion of the resolution process we cannot allow any settlement with the Promoters and the creditors." This Tribunal however, directed the Liquidator to proceed with in terms of the decision made in "Y. Shivram Prasad Vs. S. Dhanapal & Ors. (NCLAT judgment)." 28. In view of the judgment of this Tribunal, the Respondent submitted a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013 on 01.06.2019 in the light of the judgment in the matter of Y. Shivram Prasad. The liquidator moved an Application MA No. 793/2019 bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Hon'ble Supreme Court in M/s Meghal Homes Pvt. Ltd. Vs. Shree Nivas Girni Vs. KK Samiti & Ors. in Civil Appal No.3179-3181/2005 while considering the erstwhile provisions of Section 391 read with Section 394A of the Companies Act, 2013, it was held that the liquidator is well within the power to obtain a scheme under relevant provisions either from the members or creditors of the company in liquidation, and in the said circumstances the scheme cannot be shut out from being considered by the Adjudicating Authority. 32. Thus, the Adjudicating Authority considered the following aspects: (i) The Judgment of the Hon'ble Supreme Court in M/s Meghal Homes. (ii) The Promoters paid off fully the debt amounts to the creditors and the rights of creditors have been fully discharged to their satisfaction. (iii) This Tribunal vide order dated 07.03.2019 allowed the Promoters to file the scheme before the Liquidator and the Liquidator to proceed in terms of Y. Shivram Prasad vs. S. Dhanpal and Ors. in CA (AT) (Ins.) No. 224/2018. 33. The Adjudicating Authority has considered all aspects including the scheme submitted by the Respondents. The Adjudicating Authority also rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affidavit as directed Above within a week from the date of this order and the Liquidator after application of his mind in relation to the contents of the affidavit and the veracity of the statements made therein filing a report before this Tribunal within a period of one week thereafter. In relation to statutory authorities to whom notice was ordered to be issued, save Income Tax whose observations have already been extracted in paragraphs supra none of the other authorities have responded. Taking into consideration the decision rendered by the Hon'ble NCLAT while approving the Resolution Plan in relation to Vardhaman Industries Ltd. in Company Appeal (AT) (Insolvency) No. 467 of 2019 vide its Judgment saving the right of the Income Tax and also in terms of the Judgment cited by the revenue of the Hon'ble Supreme Court in Marshall Sons & Co (supra) and in accordance with both the above Judgments the right of the revenue is preserved accordingly." 35. In view of the directions passed by the Adjudicating Authority, the Appellant obtained an affidavit from the Respondents dated 17.01.2020, whereby the Respondents have clearly stated that they were eligible to submit the scheme unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority to approve the Appellant's fee in the capacity as Liquidator. The Adjudicating Authority disposed of the said M.A. by passing a speaking order dated 05.05.2020. the Adjudicating Authority in its order dated 05.05.2020 at para 10 observed as under: "Even though the compliance with the direction of this Tribunal the Liquidator has filed the report before this Tribunal dated 24.01.2020 wherein certain observations have been made in relation to the sanction of the scheme per-se by this Tribunal, however, during the course of the submissions, the learned counsel for the Appellant/Liquidator as well as the Liquidator who was present in person, decided not to press for other observations made in relation to Section 29A of the IBC, 2016." 39. Further, the Adjudicating Authority in its order dated 05.05.2020 at para 12 observed that the Adjudicating Authority cannot review its own order dated 10.01.2020 with respect to the scheme filed before it, since the order to that affect has already been passed on merits as well as on the aspects of law and the Liquidator is not an aggrieved person. Overview: 40. This Tribunal intend to have a glance on the sequence of events and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g an application before the Adjudicating Authority seeking approval of the scheme as per the directions of this Tribunal. In this regard, the Hon'ble Supreme Court in Arcellormittal India Pvt. clearly held at para 54, that the person must first pay off its debt of the Corporate Debtor in order to become eligible under Section 29A(c). The Appellant is a party even to the Appeal filed by the promoters before this Tribunal in C.A. (AT)(Ins) No. 696/2018 dated 07.03.2019 and subsequent to all other proceedings. Being a party to the proceedings the Appellant is bound by the decisions of the Adjudicating Authority and this Tribunal and the precedents of the Hon'ble Supreme Court. As held supra the order of the Adjudicating Authority dated 10.01.2020 to which the Appellant is a party has not challenged the said order dated 10.01.2020 and the same has attained finality. Therefore, the Appellant is estopped from challenging the said order in this Appeal. The filing of the present Appeal is an abuse of process of law and wasting the precious time of this Tribunal. 42. Having discussed all the issues, this Tribunal comes to an irresistible and inescapable conclusion that the Appeal is frivol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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