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TMI Blog2022 (9) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 14-9-2022 - [ Justice Anant Bijay Singh ] Member ( Judicial ) And [ Ms. Shreesha Merla ] Member ( Technical ) For the Appellant : Mr. Abhishek Sharma, Ms. Harshita Agarwal, Kiran Rahate Grishma Dalvi, Advocates For the Respondent No. 1 : Mr. Gopal Jain, Sr. Advocate with Mr. Bishwajit Dube, Ms. Aishwarya Gupta Mr. Spandan Biswal, Advocates for R-1 For the Respondent No. 2 : Mr. Savar Mahajan , Advocate for R - 2 / RP. JUDGEMENT [ Per ; Shreesha Merla , Member ( T ) ] 1. This Appeal is preferred against the Impugned Order dated 19.10.2020 passed by the Learned Adjudicating Authority (National Company Law Tribunal, New Delhi, Principal Bench) in CA 925/2018 in CP (IB) No.- 50(PB)/2018, whereby the Adjudicating Authority has approved the Resolution Plan by JSW Steel Coated Products Limited /the Successful Resolution Applicant ( SRA ) which was approved with 79.3% voting share of the Committed of Creditors ( CoC ). 2. Facts in brief are that the Appellant is an Operational Creditor of M/s. Asian Color Coated Ispat Ltd. /the Corporate Debtor and entered into four contracts dated 24.12.2009 and 25.05.2010. The Corporate Debtor defa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not in the name of the Corporate Debtor and therefore cannot be included in the Resolution Plan. It is contended that as per Section 18(f) of the IBC, the RP can only take control and custody of any asset over which the Corporate Debtor has ownership rights as recorded in the Balance Sheet or with the Information Utility or any other registry that records the ownership of assets. It is strenuously contended that the personal property of the third-party Mortgager does not fall within the definition of Section 18(f) of the IBC. 5. It is argued that the Tribunal, without giving an opportunity to the Appellant of being heard passed the Impugned Order. No Notice was given to the Appellant and the Resolution Plan was approved, in violation of the principles of natural justice. The Adjudicating Authority failed to appreciate that the RP and the SRA, in view of the undertaking given in the email dated 04.02.2019 to resolve the Appellant s Mortgage Deed over the personal property were estopped from taking the steps for unilateral Assignment of Mortgage from the Appellant under the guise of the Resolution Plan. The RP is aware about the terms of the settlement arrived at between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Respondent in accordance with the terms of the Resolution Plan. The Appellant filed this belated Appeal on 19.02.2021, challenging the Impugned Order, after the Plan was already implemented. Learned Counsel placed reliance on the ratio of the Judgement of the Hon ble Supreme Court in K. Sashidhar Vs. Indian Oversees Bank , (2019) 12 SCC 150, in support of his argument that the commercial decision of the CoC is non-justiciable. It is submitted that in the present case, the CoC approved the Plan with a majority of 79.3% and the Operational Debt owed to the Appellant and all rights incidental and ancillary thereto including the security, mortgages, encumbrances and collaterals were assigned to the purchaser in lieu of the payments made under the Resolution Plan. Hence, the Operational Debt would be deemed to be permanently extinguished subsequent to the approval of the Plan. Learned Counsel drew our attention to Schedule-I of the Resolution Plan which provides as under: Purchaser: shall mean the SPV or a nominee of the Resolution Applicant, in whose favour (i) the Remaining Debt; and (ii) the Operational Debt owed to Jyoti Strips, CMI FPE Limited and Ajay Metal Alloy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d . It is the case of the Appellant that the personal property of the Promotor, Mr. Pradeep Agarwal could not have been made a part of the Resolution Plan as it is not an asset of the Corporate Debtor . A Mortgage Deed was executed between Mr. Pradeep Agarwal the Ex-Promotor of the Corporate Debtor , the Company/M/s. Asian Color Coated Ispat Limited and the Operational Creditor /M/s. CMI FPE Ltd. whereby, Mr. Pradeep Agarwal is arrayed as the Mortgager and the Corporate Debtor as the Confirming Party . 11. Learned Counsel for the Appellant drew our attention to Clauses 4 8 of the Mortgage Deed in support of his argument that if the confirming party i.e., the Corporate Debtor fails to make the payment of the outstanding within the timeline stipulated by the Mortgagee, the Mortgagee may exercise its right available pursuant to applicable law. The Mortgager is the sole and absolute owner and beneficiary of the said land and is entitled to the same and to all incidental rights thereof. The Learned Counsel relied on paras 25, 26 26.1 of the Judgement of the Hon ble Supreme Court in State Bank of India (Supra), wherein it is observed as follows: 25. Section 31 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts by persons who have unlimited liability to pay them. And such guarantors may be complete strangers to the debtor often it could be a personal friend. It is for this reason that the moratorium mentioned in Section 101 would cover such persons, as such moratorium is in relation to the debt and not the debtor. 12. Learned Counsel also drew our attention to the Judgement of the Hon ble Supreme Court in Lalit Kumar Jain (Supra), in which in para 120-122, the Hon ble Supreme Court has discussed the liability of the Personal Guarantor: 120. The rationale for allowing Directors to participate in meetings of the CoC is that the Directors' liability as personal guarantors persists against the creditors and an approved resolution plan can only lead to a revision of amount or exposure for the entire amount. Any recourse under Section 133 of the Contract Act, 1872 to discharge the liability of the surety on account of variance in terms of the contract, without her or his consent, stands negated by this Court, in V. Ramakrishnan [SBI v. V. Ramakrishnan, (2018) 17 SCC 394 : (2019) 2 SCC (Civ) 458] wherein it was observed that the language of Section 31 makes it clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Gupta, 2019 SCC OnLine NCLAT 388] being contrary to Section 31(1) of the Code and this Court's judgment in V. Ramakrishnan case [SBI v. V. Ramakrishnan, (2018) 17 SCC 394 : (2019) 2 SCC (Civ) 458] , is set aside. 122. It is therefore, clear that the sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor's liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself. However, this Court has indicated, time and again, that an involuntary act of the principal debtor leading to loss of security, would not absolve a guarantor of its liability. In Maharashtra SEB [Maharashtra SEB v. Official Liquidator, (1982) 3 SCC 358] the liability of the guarantor (in a case where liability of the principal debtor was discharged under the Insolvency law or the Company law), was considered. It was held that in view of the unequivocal guarantee, such liability of the guarantor continues and the creditor can realise the same from the guarantor in view of the language of Section 128 of the Contract Act, 1872 as there is no discharge under Section 134 of that Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or NCLT and NCLAT, functioning as the adjudicatory authority and appellate authority under the IBC respectively, from judicially interfering in the framework envisaged under the IBC. As we have noted earlier in the judgment, the IBC was introduced in order to overhaul the insolvency and bankruptcy regime in India. As such, it is a carefully considered and well thought out piece of legislation which sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC .. 15. Having regard to the peculiar facts of this attendant case, the ratio of the Hon ble Supreme Court in the aforenoted Judgements the fact that the Resolution was already approved vide Impugned Order dated 19.10.2020 and almost two years have passed and specifically that there are contrary stands taken by both parties with respect to the possession and the ownership of the subject land and also t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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