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TMI Blog2023 (1) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Financial Services Ltd. Versus Sintex Plastics Technology Ltd., Zielem Industries Private Limited, Sintex - BAPL Limited, DSP Investment Managers Private Limited Amit Patel Versus KKR India Financial Services Ltd., Mr. Ashish Chhawchharia DSP Investment Managers Pvt. Ltd. Versus Sintex Plastics Technology Ltd., Zielem Industries Private Limited, Sintex - BAPL Limited, KKR India Financial Services Ltd. Insolvency and Bankruptcy Board of India Versus Sintex Plastics Technology Ltd, Zielen Industries Private Limited, M/s. DSP Investment Managers Pvt. Ltd. [ Justice Ashok Bhushan ] Chairperson And [ Dr. Alok Srivastava ] Member ( Technical ) For the Appellant : Mr. Vikas Mehta and Mr. Apoorv Khator, Advocates for IBBI For the Respondents : Mr. Arvind Kumar Gupta, Ms. Henna George, Ms. Shivani Sharma, Advocates for R-1. Mr. Arun Kathpalia, Sr. Advocate with Mr. Samar S. Kachwaha, Ms. Shivangi Nanda, Ms. Kavita Vinayak, Ms. Rini Mehra, Advocates JUDGMENT PER: DR. ALOK SRIVASTAVA: 1. This common Judgement disposes of following six Appeals filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "IBC") and the Orders impugned in these A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Appellant- DSP Investment Managers Pvt. Ltd. with a prayer to set aside the Impugned Order dated 29th June, 2021 passed by the Adjudicating Authority in I.A. No. 18 of 2021 in CP(IB) No. 759 of 2019 releasing the corporate debtor from all rigours of CIRP and allow the resumption of CIRP against the corporate debtor; f) Company Appeal (AT) Ins. No. 814 of 2021 filed by the Appellant- Insolvency and Bankruptcy Board of India (hereinafter referred to as "IBBI") with a prayer to stay order dated 29.06.2021 in I.A. No. 18 /AHM/2021 in CP(IB) No. 759/AHM/2019 with Inv. P.1 /AHM/2021 in I.A. No. 18 of 2021 releasing the corporate debtor from all rigours of CIRP. 2. The impugned order dated 29.06.2021 in I.A. No. 18 of 2021 in CP(IB) No. 759 of 2019 with Inv. P.1/AHM/2021 in I.A. No. 18 of 2021 relates to the release of the corporate debtor from the rigours of CIRP. This order effectively closes the CIRP against the corporate debtor-Sintex Plastics Technology. Ltd. initiated on 18.12.2020 by the Adjudicating Authority after the application admitted vide order dated 18.12.2020 was allowed to be withdrawn by the Adjudicating Authority. 3. Briefly, the case of the Appellant-KKR I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Account. 4. The Appellant-KKR India Financial Services Ltd. then filed an application I.A. No. 18 of 2021 before the Adjudicating Authority highlighting the conduct of the SBI and seeking direction to SBI for reversing the unauthorised withdrawal of Rs. 116.41 Crores and also releasing hold put on an amount of Rs. 31.27 Crores. 5. Company Appeal (AT) Ins. No. 729 of 2022 is filed by the Sintex Plastics Technology Ltd. challenging the Order dated 29.06.2022 whereby the Adjudicating Authority has ordered that CIRP against the corporate debtor-Sintex BAPL Limited shall be proceeded with based on another Section 7 Application filed by the financial creditor-KKR India Financial Services Pvt. Ltd. It may be recalled that the Appeal filed against the order dated 29.06.2021 permitting withdrawal of the Section 9 Proceedings against the corporate debtor was stayed by the NCLAT vide order dated 12.07.2021 with the further direction that IRP appointed in CP(IB) No. 759 of 2019 will continue to operate and manage the affairs of the corporate debtor. Soon after and subsequently, by an order dated 19.07.2021, a fresh CIRP was initiated against the corporate debtor in CP(IB) No. 276 of 2020 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority on 29.06.2021 but since the Appellate Tribunal stayed the withdrawal Order by its order dated 12.07.2021 with further direction that the IRP appointed in CP(IB) No. 759 of 2019 (Section 9 Application) shall continue to operate and manage the affairs of the corporate debtor. 9. The Learned Sr. Counsel of KKR India Financial Services Ltd. has further argued that the Section 7 Application filed by the Appellant-KKR India Financial Services Ltd. was also admitted vide order dated 19.07.2021 passed in CP(B) No. 276 of 2020 which only seeks to start a fresh CIRP against the same corporate debtor whereas the earlier CIRP initiated as a result of admission of Section 9 Application was continuing with the IRP in the control of the operation and management of the corporate debtor. He has pointed to the operative part of the NCLAT Order dated 12.07.2021 to emphasize that the Appellate Tribunal took note of the fact that it was not proper for the Adjudicating Authority to pass an order on 19.07.2021 for initiation of CIRP on an application under section 7 once a 'stay' had been granted on the withdrawal application by the appellate tribunal on 12.07.2021 which meant that CIRP against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1] and of the NCLAT in the matter of Anuj Tejpal Vs. Rakesh Yadav and Anr. [In I.A. No. 815 of 2021 in Company Appeal (AT) Ins. No. 298 of 2021] to claim that the proceedings are only between the applicant-operational creditor and the corporate debtor till the constitution of CoC and no rights accrue to other creditors till then. Therefore, KKR India Financial Pvt. Ltd. and the other creditor DSP Investment Managers Pvt. Ltd. can not claim any rights on the basis of admission of Section 9 Application which was withdrawn before the constitution of CoC. He has also pointed out that it was not appropriate for the Appellant-KKR India Financial Services Ltd. to have intervened during the consideration of the withdrawal application and his rights would accrue on after admission of the Section 7 Application which it had filed and which was admitted on 19.07.2021 by an order of the Adjudicating Authority. 13. The Learned Counsel for the IBBI, which is appellant in Company Appeal (AT) Ins. No. 814 of 2021 has argued that the Adjudicating Authority, while passing the impugned order dated 29.06.2021 in I.A. No. 18 of 2021 has, inter alia, made certain observations about the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeared. On 14.06.2021 hearing in IA/18(AHM)2021 was completed after hearing the learned Sr. Counsel appearing on behalf of this Intervenor. The contentions raised on behalf of such Intervenor find mention in our order dated 29.06.2021. Thus, due to technical error occurring in our daily proceeding order dated 14.06.2021, which has not been pointed by any of the parties till 29.06.2021 including our Court Master. Be that as it may, to avoid any adverse situation to any of the parties, our order dated 29.06.2021 is stayed till 07.07.2021." 18. Therefore, the order to maintain status quo-ante with regard to the corporate debtor and its assets means that the withdrawal of Rs. 116.41 Crores by State Bank of India on 30.06.2021 was against this 'stay order' and this amount should be put back in the account of the corporate debtor, and additionally the hold put by SBI on amount of Rs. 31.27 Crores which is in the the Trust and Retention Account should also be released so that the amount remains as an asset and under the control of the corporate debtor. We also find that the KKR India Financial Services Ltd. had intervened during hearing in CP(IB) 759(AHM)2019 and thus shown its inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd NCLAT in allowing an application of withdrawal of insolvency resolution order keeping in view the interest of the concerned parties. We are of the view that the fact of present case and the turn of events, particularly, the orders of NCLT and NCLAT staying the Order permitting withdrawal of Section 9 Application and the order of NCLAT restoring 'status quo ante' position, present totally different circumstance from that in the matter of Anuj Tejpal (supra). 21. We also note that Hon'ble Supreme Court in the matter of "Ashok Rajani Vs. Beacon Trusteeship and Ors." [Civil Appeal No 4911 of 2021] has held that before the Committee of Creditors is constituted, there is no bar for withdrawal of an application admitted under Section 7 of IBC, 2016 and rule 11 of NCLT Rules, 2016 enable the NCLT to pass order for meeting the ends of justice, and further that a settlement cannot be stifled before the constitution of CoC in anticipation of a debt and claim of a third person. This Judgement of the Hon'ble Supreme Court is distinguished on the basis of the fact that, in the instant case, the Adjudicating Authority itself permitted a stay of its own order dated 29.06.2021 (which permitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution of corporate debtor's insolvency. 23. With regard to the contention of the Learned Counsel for the IBBI, we peruse the relevant portion in the Impugned Order dated 29.06.2021, particularly paragraph 17, wherein the following comments have been made: "17. Admittedly, NCLT is the Adjudicating Authority in terms of provisions of Section 5(1) of IBC, 2016. The Hon'ble Supreme Court, in the case of B.K. Educational Society, has also held that provisions of NCLT Rules, 2016 would be applicable while discharging of the functions by NCLT as Adjudicating Authority under IBC, 2016. Thus, having regard to provisions of Section 469(2) of Companies Act, 2013, NCLT can exercise its inherent jurisdiction under Rule 11 of NCLT Rules, 2016 for a situation not specifically covered under any provisions of IBC, 2016. It is needless to mention that NCLT Rules, 2016 are also applicable to IBC Proceedings where no specific Rules/Regulations have been prescribed under IBC, 2016 for that situation. It has also been held that Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 cannot be applied to this situation since this Regulation is inconsistent w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2021 since we are giving final orders now. 25. The appeals being considered in this judgement are, therefore, disposed of with the following directions: i. The Application for withdrawal of Section 9 Application filed vide CP(IB) No. 759 (AHM) 2019 is set aside and consequently the CIRP initiated as a result of admission of Section 9 Application vide Order dated 18.12.2020 is allowed to run its due course and be completed in accordance with the provisions of IBC, 2016; ii. The amount of Rs. 116.41 Crores withdrawn by State Bank of India from the Trust and Retention Account held by the corporate debtor-Sintex BAPL Limited be deposited back by SBI in the account of the corporate debtor and SBI shall also release its hold on the amount of Rs. 31.27 Crores in the Trust and Retention Account of the Corporate Debtor so that these amounts continue to be part of the assets of the corporate debtor-Sintex BAPL Limited. Additionally, any asset of the corporate debtor which may have been given to any creditor, or alienated from the corporate debtor after the section 9 admission order shall revert to the position as on 29.06.2021. iii. The admission order dated 19.07.2021 passed on S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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