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TMI Blog2021 (5) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;Financial Debt' under Section 5(8) of the Code. When the audited books of accounts of the Corporate Debtor were available for the concerned years and reflected the financial debt under consideration, and in view of the clear provisions of the Code and the Regulations, the RP was duty bound to determine the financial position of the CD, verify the credits in the name of the Creditor from the books of accounts and put up the same before the CoC, with the complete factual and legal position, rather than reject it behind its back. Whether the financial creditor is eligible to have its claim considered, if not presented or submitted within the period stipulated under Regulation 12(2) of the Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016? - HELD THAT:- In accordance with the provisions of section 60(5)(c) of I B code read with Rule 11 of NCLT Rules 2016 this Adjudicating Authority passes the following orders and directs the Resolution Professional as under: (1) IA 85 of 2021 C.P. (IB) No. 51/BB/2018 is disposed of with the directions that the claim filed by the Applicant, the State of Karnataka, Department of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant: Jagadeesh, Addl. Director, Sumesh Dhawan, Advocate, Vivek Reddy, Sr. Advocate, Deepayan Mandal and Varsha, Advocates For the Respondent: Vivek Reddy, Sr. Advocate, Deepayan Mandal, Sandeep Huilgol and Sumesh Dhawan, Advocates ORDER Ashutosh Chandra, Member (T) The Oriental Bank of Commerce, being a Financial Creditor had initiated proceedings under section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of CIRP and the same was allowed vide our order dated 26.10.2018 in this CP i.e., C.P. (IB) No. 51/BB/2018, initiating CIRP in r/o the Corporate Debtor, imposing moratorium etc. The IAs mentioned above are taken up through this common order as all of them emanate from the actions of the Resolution Professional while conducting the CIRP in respect of the Corporate Debtor, Associate Decor Limited, and are directed against him. In all the IAs a common prayer is that the Resolution Plan submitted to this Adjudicating Authority for approval should not be approved until their respective prayers are considered/accepted by the CoC. 2. Before examining the individual IAs, we may observe that in the instant CP i.e., C.P. (IB) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Professional (RP) to take on record and admit the claims of the Applicant filed vide Form C, include it in the Committee of Creditors, and pass any other / further order as this Tribunal may deem fit and proper to secure the ends of justice. 2. The Applicant states that the Corporate Debtor, Associate Decor approached the Applicant, which is a Government authority, being the Department of Industries and Commerce, which acts as a catalyst for the overall development of the industrial sector in the state of Karnataka, to avail sanction of loan from the Applicant under the Special Incentives and Concession scheme. Accordingly, the project proposal of Corporate Debtor to establish a wood based industry for manufacture of Particle Boards / MDF and Furniture Components etc., (Production Capacity of 3 Lakh Cu. Mtrs. per annum) with an investment of Rs. 495.29 Crs. in 60 acres of land at KIADB Industrial Area, IV Phase, Malur, Kolar District was approved and recommended for sanction of Special Incentives and concessions, in its proceedings of the 26th SHLCC (State High Level Clearance Committee) meeting on 09.11.2011. The Applicant issued the Govt. Order dated on 28.12.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. (2) The Petitioner released the following interest free VAT loan to the Corporate Debtor against the submission of Bank Guarantees as a security: Bank Guarantee Issued Date of Issue Name of the Issuer Bank Amount of BG (Rs.) Expiry of BG Govt. of Karnataka 19.06.14 Corporation Bank 2,75,00,000 18.06.19 Govt. of Karnataka -2910IGFIN001715 31.03.15 Bank of Baroda 2,24,13,654 31.03.20 Govt. of Karnataka 19.01.16 Corporation Bank 4,34,01,847 19.01.21 Govt. of Karnataka -29101GFIN001716 08.08.16 Bank of Baroda 7,43,50,886 08.08.21 Govt. of Karnataka-29101GFIN001317 10.03.17 Bank of Baroda 4,03,77,909 10.03.22 TOTAL AMOUNT OF LOAN ARREARS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as requested. A copy of the notice dated: 16.10.2020 is annexed to the Application. (7) In the meanwhile, it was learnt that the Respondent has illegally constituted the Committee of Creditors (CoC) in the first meeting of Committee of Creditors held on 26.12.2018, excluding the petitioner from the Committee of Creditors though the Applicant is the Secured Financial Creditor. (8) Subsequently, the said Respondent has verified the resolution plan submitted by a resolution applicant, M/s. METL and placed the same for approval before the CoC. The said Respondents as the Committee of Creditors have unanimously accepted the said resolution plan on 11.2.2020 to restructure the Corporate Debtor. (9) Further, the Respondent approved waiver of the loan granted by the Applicant which in turn was further approved by the CoC, whereas, the Audited Balance Sheet of the Corporate Debtor for the Financial Year 2014-15 has reflected the Secured Loan liability arrears amount payable to the Applicant being a Secured Financial Creditor. (10) The Applicant filed a Writ Petition before the Hon'ble High Court of Karnataka, at Bengaluru bearing W.P. No. 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2018 were verified, collated and admitted, as under: It is stated that based on these Claims, as provided in the IBC 2016 and its Regulations the Committee of Creditors ( CoC ) was constituted with the voting powers as follows: Sr. No. Financial Creditor Admissible Amount Voting Percentage 1 Oriental bank of Commerce (Now Punjab National Bank) 1,38,68,90,516.00 24.16% 2 Bank of Baroda 1,99,23,73,126.75 34.67% 3 Corporation Bank (Now Union Bank of India) 2,36,42,54,748.00 41.18% 5,74,35,18,390.75 100.00% (3) It is submitted that no claim was received from the Government of Karnataka by the Department of Industries and Commerce (i.e., the Applicant herein) in respect of the VAT benefit/loan of INR. 20.84 Crore. Further, the time when the claims were made by the financial creditors, the Bank ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid and in force as on 18.02.2020 (viz., the date on which the Applicant intimated the CD). The Applicant, for reasons best known to it, chose not to have the Bank Guarantee with Corporation Bank renewed within the timelines, (the bank guarantee had expired on 18-06-2019) as indicated in the Bank Guarantees issued by the Bank itself and hence had lapsed. The entire application before this Bench rests on the fact that the Bank Guarantee with Corporation Bank (Now Union Bank of India) was not renewed due to lapse of the Applicant. Corporation Bank [now Union Bank of India] informed the applicant on 19.08.2019 to return the original guarantee as the guarantee expired on 18.06.2019. In response to the applicant's further request of 20.03.2020 for extension of the Bank Guarantee of Rs. 2,75,00,000, the Corporation Bank informed the Applicant of its inability to extend the guarantee or pay any claim against the said expired guarantee. The said Bank has shared these correspondence with the Resolution Professional on 04.02.2021 and the same are annexed to the Statement of Objections. The Applicant is guilty of suppression of above-mentioned material facts before this Bench and the IA n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be a reason to reject the claim of an Applicant. In this regard, reference has been made to the decision of the Hon'ble NCLT, Delhi in Edelweiss Asset Reconstruction Co. Pvt. Ltd. v. Adel Landmarks Ltd.. (3) Moreover, since the proposed Resolution Plan as approved by the COC is yet to be approved by this Adjudicating Authority, there is no occasion for the RP to reject the claim of the Applicant only on account of delay. It has further been clarified by the Hon'ble Supreme Court in 'Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company' (Judgment dated 13.04.2021 in Civil Appeal Number 8129 of 2019) that claims not included in the Resolution Plan will stand extinguished once the Plan is approved by the Ld. Adjudicating Authority - which admittedly has not yet happened in the present case. (4) It is stated that the RP had not followed the provisions of the Code or the Regulations. In this regard our attention has been drawn to Section 21 of the IBC, 2016, regarding constitution of the COC; Regulation 4 of the 'IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016', regarding accessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Vivek Reddy, learned Senior Counsel for the Respondent/RP. We have carefully perused the pleadings of the Parties, the material brought on record, and also extant provisions of the Code, and Rules made thereunder. 7. The Applicant State of Karnataka, Department of Industries Commerce, filed a Writ Petition before the Hon'ble High Court of Karnataka, at Bengaluru bearing W.P. No. 14815/ 2020, and the Court was pleased to grant an ad-interim stay of the proceedings pending before us in this CP, vide order dated 22.12.2020. Subsequently, on 04.03.2021, when the Writ Petition was listed, the Hon'ble High Court directed the Applicant to file an application before this Tribunal in respect of its claim, within seven days. It was made clear that the interim order passed by this Court shall not come in the way of the NCLT considering the application filed by the State Government. The present IA has been filed in compliance to the said order of the Hon'ble High Court. The Claim in Form C has also been filed. 8. The first question that arises for our consideration in IA 85 of 2021, is whether under the facts and circumstances of the case, the liability of the Corporate D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loan Agreement that the entire assets of the corporate debtor have been charged and mortgaged in favour of the Applicant State Government. On availing the facility, a Bank Guarantee to the extent of Rs. 2.75 crore had been furnished by the corporate debtor to the Applicant, and it was the duty of the Corporate Debtor to keep the same alive, though the same had become 'stale' after the expiry of the term. We are also of the view that the Applicant's claims preferred before the RP vide the Claim Form cannot in any manner be affected in law on account of purported non extension of the bank guarantees. (6) The argument of the Respondent RP that since there was no concept of time value of money in the loan agreement is further found untenable as the said loan was given to the Corporate Debtor on account of a special scheme under the Karnataka Industrial Policy which expressly qualifies as 'factoring of a discount in the payment'. Therefore, the Claims of the Applicant are in the nature of a 'Financial Debt'. In this regard, the Hon'ble Supreme Court has in its decision in 'Phoenix ARC Private Limited v. Spade Financial Services Ltd. and Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be rejected merely on account of non-submission of claim within the stipulated time period. Thus, once the Corporate debtor itself has recognised the Claims of the Applicant as a 'Secured Financial Debt' in its Audited Balance Sheets, as also for the reasons mentioned above, there is no reason for the RP to contend that the same is not a financial debt. 9. Hence, we are of the view that the Respondent's argument that no actual money was disbursed for the time value of money and that there was no financial debt has to be rejected and the said transaction has to be considered as 'Financial Debt' under Section 5(8) of the Code. 10. As per Section 21 of the Code the RP is required to constitute the COC after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor . The word and implies that both these conditions are to be fulfilled and the RP can proceed to form the CoC only after determination of the financial position of the corporate debtor. In terms of Regulation 4 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 the RP is mandated to acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isagree with the Applicant's contention regarding the delay. As a result the Applicant had to take the matter before the Hon'ble High Court. As per its directions, the present Application and the claim in Form C has been filed during the course of these proceedings. The same, however, is filed before the approval of the Resolution Plan of METL by the Adjudicating Authority. Besides, as far as the timelines for submissions are concerned, we find that this provision has been held to be directory in nature by various benches of the NCLT, and not mandatory. (2) The Principal Bench of the NCLT, New Delhi, in its decision in the case of Edelweiss Asset Reconstruction Co. Pvt. Ltd. vs. Adel Landmarks Ltd. in (IB) - 1083(PB)/2018, vide order dt. 06.06.2019 has held as follows: The claim of the applicant in these two applications have been rejected by the Resolution Professional on the ground of delay. We have repeatedly held that rejection of claim on the ground of delay is not sustainable because the provision has been held to be directory. In that regard reference may be made to the orders dated 01.05.2019 passed in CA-727(PB)/2019 in CP. No. (IB)-737(P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT in its order in Company Appeal (AT) (Insolvency) No. 291 of 2018 in M/s. Prasad Gempex vs. Star Agro Marine Exports Pvt. Ltd. Ors. where the RP had rejected its claim as 'financial creditor', and it was not placed before the 'Committee of Creditors', held that the RP has no jurisdiction to decide the claim of one or other creditor and the RP's order was set aside. Reliance was placed on the case of Dynepro Private Limited' vs. Mr. V. Nagarajan - Company Appeal (AT) (Insolvency) No. 229 of 2018 etc' It was stated that as per section 60(1) of the Code, only the NCLT had the jurisdiction to adjudicate on issues of admission of a claim. (6) Further, in view of the provisions and the scheme of the IBC, 2016, the Hon'ble NCLAT in its Judgment dated 24.01.2020 in Company Appeal (AT) (Insolvency) Nos. 871-872 of 2019 has categorically held that- 23. It is further observed in respect of Company Appeal (AT) (Insolvency) No. 892-893 of 2019 Company Appeal (AT) (Ins) No. 924 -925 of 2019 that various claims are collected by the Resolution Professional during the CIRP process by inviting the claim from individual, organisations e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble High Court. Reconstitution of the CoC will also be considered. It is directed accordingly. II. IA No. 227 of 2020: 1. IA No. 227 of 2020 in C.P. (IB) No. 51/BB/2018 is filed by Swamitva Landmarks and 2 others, (hereinafter referred to as 'Applicants') U/s. 60(5) of the I B Code, 2016 read with Rule 32 and Rule 11 of the National Company Law Tribunal, Rules, 2016 inter alia seeking direction to the Resolution Professional to place the Resolution Plan submitted by the Applicants for consideration before the Committee of Creditors of the Corporate Debtor; and decide the present application before hearing the RP under section 30 and 31 of the Code, 2016. 2. The Oriental Bank of Commerce filed a petition under section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of CIRP against the Corporate Debtor, Associate Decor Limited, and the same was allowed vide order dated 26.10.2018. Thereafter the Resolution Professional invited the 'expression of interest' for submission of Resolution plan, in Form-G vide newspaper advertisement dated 23.08.2019. Copy of the newspaper advertisement is annexed to the Application. 3. The Applicants ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail the RP failed to provide the audited Balance Sheets. As the Applicants were keen to expand their business and wanted to submit a viable resolution plan, they engaged their own resources and obtained the details required from the MCA. The RP was informed that they are in the process of preparing a Plan in the interest of all stakeholders and for maximisation of the value of assets, for submission to him. However, due to the nationwide lockdown imposed on account of the coronavirus pandemic on 24.03.2020, and ensuing difficulties, sometime was consumed in finalising the Resolution Plan which was submitted to the Resolution Professional by email dated 27.05.2020. Vide e-mail dated 26.05.2020 the RP was requested to place the Resolution Plan before the CoC for its consideration. Copy of the email dated 27.05.2020 along with copy of sealed envelope containing the Resolution plan dated 26.05.2020 is annexed to the Application. (4) The Applicant's reminder mail dated 16.06.2020 to the Resolution Professional for placing the resolution plan of the applicants before the Committee of Creditors was also rejected vide reply dated 18.06.2020 stating that the CIRP was over on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... randum, Evaluation Matrix and Request for Resolution Plan to all the Resolution Applicants including the Applicants on 09.10.2019 and the Virtual Data Room access was provided to the Applicants on 15.10.2019. Further it is stated that as per clause 1.10.5 of the Request for Resolution Plan (RFRP), of the Corporate Debtor was to be resolved on an as is where is basis with the available data and resources as available with the Corporate Debtor at the time of invitation for the resolution plan. Further, up to the last date of submission of plans being 07.12.2019, the Corporate Debtor has audited accounts only for FY 2014-15 which was updated with the Ministry of Corporate Affairs. Unaudited and provisional balance sheets for FY 2015-16 to 2018-19 were provided. Details of all assets and an opportunity to all prospective Applicants to do the due diligence was provided. All the Resolution Applicants had access to the same set of documents. (3) It is submitted that the Applicants vide email dated 05.11.2019 requested for site visit, on the next day being 06.11.2019 the Applicants sent an email declining their participation in submission of resolution plan on the basis of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, which cannot be changed or altered. Reliance has also been placed on the decision of the Hon'ble NCLAT in the case of Chhattisgarh Distilleries vs. Dushyant Dave and Ors. (company Appeal (At) (Ins) no. 461 of 2019)] to state that the AA cannot direct the CoC to consider the second Resolution plan submitted before the Authority although the second Resolution Applicant is ready to invest more amounts in comparison to the first Resolution Applicant. The role of the Adjudicating Authority in matters challenging the decision of CoC, accepting or rejecting the resolution plan is limited to the grounds mentioned in section 30(2) and the purely commercial decisions of CoC cannot be adjudicated by the Adjudicating Authority as they are non-justiciable. 5. After the last date of hearing the Ld. Counsel for the Respondent has filed a fresh counter affidavit on 8th April 2021, basically summarising the earlier objections and para wise replies to the Applicant's submissions. In this submission the factual position has again been mentioned. It is stated, inter alia, that opportunity was provided to all RAs to do the due diligence. As per the RFRP the RAs were solely responsible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the amounts claimed by them, etc. Details of the guarantees that have been given in relation to the debts of the CD shall also be provided as per Sub Regulation (2)(f). We emphasize that making these details available to the prospective resolution applicants is mandatory, without which they cannot be expected to make an accurate assessment of the CD and prepare a viable plan. (2) However, it is seen that as per the RFRP the Plan was to be admittedly submitted by the prospective Applicants on an as is where is basis, i.e. with the available audited financial data for only FY 2014-15; and only unaudited and provisional financial statements, i.e.. Balance Sheets and P L Accounts for the remaining years were provided at the time of invitation. We are of the firm view that preparing an IM and calling for EOIs on the basis of information on an as is where is basis is in itself not in conformity with the Code. (3) It is clearly seen from the e-mail sent by the Applicant on 06.11.2019 that it had opted to withdraw precisely for the reason that it was not made available the updated audited financial statements after 2014-15, as required by the above-mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the 13th meeting in November 2019, though requested by several RAs, the audited financial statements were not made available. In the 14th CoC meeting one of the RAs opted out for want of audited financial statements. In spite of several RAs demanding the audited financial statements, in the 15th meeting in December, the two Plans submitted were discussed. It was much after, in February that the statutory orders shared the audited accounts for the years 2015-16 onwards as is seen form the CoC meeting minutes. This left very little time to other RAs to formulate their Plans. In this background the Applicant's plea that it was prevented by this late audit of accounts as was mandatorily to be supplied to it, appears to be justifiable. (7) As regards the delay in submission of the Plan, the RP has submitted that the last date of submission of Resolution Plan was 07.12.2019, whereas the Plan was received by him on 27.05.2020 which is 72 days even after the completion of CIRP, and also that the lockdown was declared by the government after the CIRP was over. Once we hold that the RP had not followed the correct procedure, which prevented the Applicant from preparing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key features, it must then pass the resolution plan, other things being equal. (Emphasis added). It was clearly laid down in the above case that if the Adjudicating Authority finds, on a given set of facts, that the parameters of the Code, i.e. the provisions and objects of the Code have not been adhered to, it may send a resolution plan back to the Committee of Creditors to re-submit such a plan after satisfying the aforesaid parameters. (2) In the IAs 85 of 2021 as well as this IA 227 of 2020, we have held that the RP had not complied with the provisions of law contained in Regulation 36(2)(b), (c), (d) and (f), and which fall within the domain of judicial review contemplated in section 30(2)(e) of the Code, being framed in exercise of the powers conferred by the Code, as referred to in the decision of Essar Steel cited above. (3) Further, in not accepting the Resolution Plan submitted by the Applicants in this IA 227 of 2020 and not placing the same before the CoC for its consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time the Swamitva Landmark group Resolution Plan was submitted on 27.05.2020. Had their Plan been put up before the CoC by the RP, which he was duty bound to do, the CoC could have exercised its option to recall the earlier Plan submitted by METL, if the Swamitva Landmark Plan was found to be more viable commercially and in terms of the objects of the Code. Due to the erroneous action of the RP in rejecting the same at his level, even though 330 days were not over and exclusion of time could also have been granted in view of the pandemic and lockdown, keeping the Quinn Logistics case in view, the CoC was deprived of this opportunity, which needs to be remedied. (6) Further, the Hon'ble National Company Law Appellate Tribunal vide its order dated 14.11.2018 in the case Binani Industries Ltd. Vs. Bank of Baroda being Company Appeal (AT) (Insolvency) No. 82 of 2018 had approved the resolution Plan submitted by Ultratech Cement Ltd., despite the approval by the CoC to the Plan submitted by another company, i.e. Rajputana Properties Pvt. Ltd. It is pertinent to note that the Hon'ble Supreme Court vide its order dated 19.11.2018 in Civil Appeal No. 10998 of 2018 has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack to the RP, even if on technical grounds as mentioned in the Essar Steel case (supra), can it be said that the same cannot be restored to the RP because the Resolution Plan was submitted to the Adjudicating Authority for approval on or after the 270th or 330th day? The obvious answer is that in this situation this Authority would exercise its inherent power to by extending the time as is considered necessary for the RP to carry out the directions of this Adjudicating Authority. Otherwise no judicial review would be possible in any case, if a Resolution Plan is submitted for approval of the Adjudicating Authority on or after the CIRP. Hence our directions for extension of time, as given at the end of this order, will be strictly adhered to. (2) Secondly, though the extension granted above is sufficient, we may emphasize that a case is clearly made out also for exclusion of time from the permissible CIRP period. In the Essar Steel case, the Hon'ble Supreme Court further conferred the power on the Adjudicating Authority to consider the issue of extension/exclusion of time from the statutory period prescribed under the provisions of the Code, in exceptional circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have been liberally granting extension of time in view of our inherent powers u/s. 60(5) of the Code, taking support from the cases of Essar Steel and Quinn Logistics (supra). (5) Again, prior to the approval of the Resolution Plan by this Authority, filed in IA 161 of 2020, IA 227 and 225 of 2020 were filed by the Swamitva Landmark group also seeking directions to the RP to put up their Resolution Plan before the CoC for its consideration and not to approve the Resolution Plan submitted by METL in IA 161. This has been pending disposal. IA 248 of 2020 was also filed seeking impleadment by an ex-Promoter of the CD. (6) The Hon'ble High Court of Karnataka, vide its order dated 22.12.2020 in the petition filed by a financial creditor Govt. of Karnataka, ordered interim stay of these proceedings, including consideration of all IAs and approval of the Resolution Plan. On 04.03.2010 it directed the Petitioner to file its application for our consideration. Thus IA 85 of 2021 seeking inclusion of its Financial debt of Rs. 20.84 crore, reconstitution of the CoC and stay on approval of the METL Resolution Plan been under consideration before us. 12. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia seeking an order setting aside the RP's order rejecting the entire claim of the Applicant for Rs. 54,46,13,819/-; to admit its entire claim; to suitably revise the IM and EOI in the CIRP of Associate Decor after taking into account its claim for Rs. 54,46,13,819/-; and rejection of any resolution plan that fails to provide for payment of the Applicant's claim. This was filed on 05.03.2020 when the CIRP was in progress. 2. The Applicant has submitted as under: (1) That the 2nd Respondent M/s. Associate Decor failed to file its tax returns on the supplies of taxable goods for the tax periods 'September 2017 to October 2018' as required under section 39 of the KGST Act read with Rule 61(5) of the KGST Rules, 2017. As such notices under section 46 were issued directing the Respondent to file its returns within 15 days. There was no response. A 'best judgment assessment' order was passed against the Respondent under section 62 and a tax liability for the above period was computed at Rs. 84,82,50,692/-. As no response was received, garnishee notices were issued to various banks as well as creditors. Associate Decor filed Writ Petition bearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 54,46,13,819/-. Further, the Applicant issued endorsement dated 25.04.2019 calling upon the Respondents to pay the balance unpaid tax, interest and penalty payable under the best judgment assessment orders. However, the Respondent No. 2 filed WP No. 45290/2019 on 19.09.2019 disputing the Applicant's claim. There is no order passed by the Hon'ble High Court that the best judgment assessment orders no longer survive or exist. (4) The Applicant submits that its claim was rejected by the 1st Respondent. As on 21.01.2019, its claim was classified as Amount of claim under verification not yet admitted . Subsequently as per the list of creditors as on 21.02.2019, a note was appended to the above classification that the IRP is still to receive documents / clarifications from Operational Creditors / Workmen / Employees / Others. No response was received to its letter of 27.09.2019. In February 2020, it found that the RP had rejected the claim of the Applicant as Amount of claim rejected as on 07.10.2019. No reasons were assigned. 3. The Counsel for the RP/Respondent No. 1 has filed Objections to the Application by way of a counter affidavit contending as bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... darane, (2020) 117 taxmann.com 468 and of the Hon'ble Supreme Court in Swiss Ribbons (P) Ltd. v. Union of India, (2019) 101 taxxman.com 389 that the RP is merely empowered to verify and collate claims and the RP has no adjudicatory powers. (3) It is contended that the Respondent's claim that actual tax liability has been discharged is false as only the self-assessed tax liability has been remitted by the Respondent Company. The actual tax liability and its liability for interest, penalty and late fee has yet to be determined by the jurisdictional statutory authority as per the provisions of the KGST Act. 5. We have also taken into account the written arguments filed by the Respondent through its Counter Affidavit on 08.04.2021. 6. Heard Shri Sandeep Huilgol, learned Counsel for the Applicant and Shri Vivek Reddy, learned Senior Counsel for the Respondent/RP. We have carefully perused the pleadings of the Parties and also extant provisions of the Code, and Rules made thereunder. 7. We make it clear that this is not an appellate forum for the Commercial tax/GST proceedings, and certain matters are still before the Hon'ble High Court. As is apparent, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derail the process before the Adjudicating Authority and therefore the same ought to be dismissed. 2. Since IA 225 of 2020 has already been deemed to be disposed of as per our order dated 29.07.2020 since the prayer for urgent hearing was accepted on fixing the IAs for hearing, IA 248 which is filed in IA 225 does not survive for our consideration and becomes infructuous. However, it is well settled that the erstwhile Promoter has a direct interest in the principle of maximising value and to point out the deficiencies in the CIRP. In the case of Mr. Kapil Wadhawan vs. The Administrator and Ors. (supra), even though a Resolution Plan was pending before the Adjudicating Authority for its approval, restored the matter to the RP with the directions that the Settlement Proposal of the erstwhile Promoter be placed before the CoC for its consideration. 3. We have already given a finding above, in dealing with IAs 85 of 2021, 227 of 2020 and 134 of 2020, that the procedure laid down in the Code and the Regulations was not followed by the RP. Hence, all the issues raised in IAs 225 and 248 of 2020 shall be considered by the CoC in taking a commercial decision while evaluating the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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