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TMI Blog2021 (3) TMI 1413X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the sum of 400 Crore offered by the Appellant in the Plan, without the consent of the Appellant/Resolution Applicant - HELD THAT:- In the instant case, the Adjudicating Authority, instead of approving or rejecting waivers, approvals and extinguishment sought in the Resolution Plan, has only directed the Resolution Applicant to seek such waivers, approvals and extinguishment from relevant authorities. Therefore, it cannot be concluded that the Adjudicating Authority has unilaterally altered or modified the Resolution Plan. Thus, the Appellants contend that the Adjudicating Authority has unilaterally altered the plan duly approved by the CoC , without the Resolution Applicant s consent is without any basis. Therefore, the Appellants contend that by not granting the waiver, the Adjudicating Authority has interfered in the CoC commercial decision is misconceived. The Adjudicating Authority has not in any manner mandated or directed SSN to make payments of the transfer fee, consideration, premium, arrears of lease rent, penalties, interest or any other payment to WBIDC . The CoC has approved the Resolution Plan, fully aware of Clause 15.3, Clause 15.12 and Clause 15.14 (VI)(g). The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mill asset - the Adjudicating Authority has also mentioned the above things in its Order and stated that the Corporate Debtor s right to hold the Wind Mill asset is not affected unless the Debt Recovery Appellate Tribunal reverses it. Thus it is clear that the Adjudicating Authority has neither exceeded its jurisdiction nor has determined the title of the property but has merely taken note of the facts at hand in passing the impugned Order - appeal dismissed. Approved Resolution plan - eligibility of S.S. Natural Resources Private Limited a Successful Resolution Applicant (from now on referred to as the H-1 Bidder) to submit a Resolution Plan regarding Ramsarup Industries Ltd (from now on referred to as the Corporate Debtor) - HELD THAT:- Shyam Ferro is not an NPA and does not have an investment in a company that is an NPA. Neither Shyam Emco Infrastructure Ltd nor Emco Power Ltd is NPA. They do not have an investment in an NPA company. By merely having a group company, which has shareholders, who are also shareholders in an NPA entity, does not disqualify the Successful Resolution Applicant SSN - eligibility criteria under Section 29 A of the Code are not violated, and SSN is eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation 8 of the CIRP Regulations. Verification of claim by the Resolution Professional cannot be treated as an adjudicatory exercise. Therefore, Appellants contention that Resolution Professional has exceeded jurisdiction is not sustainable. The RP had rejected the claim of the Appellant for want of sufficient evidence as required under Regulations. The Adjudicating Authority also found no illegality or irregularity rejected the Company Application against Resolution Professional s order - Appeal dismissed. Approval of Resolution plan - Appellant contends that the Adjudicating Authority has approved the Resolution Plan even though the Resolution Plan in respect of the Corporate Debtor envisages the transfer of land belonging to the Appellant and not the Corporate Debtor - HELD THAT:- Since Mr Ashish Jhunjhunwala, the Appellant and the Corporate Debtor promoter, had filed An Application under Section 10 of I B Code, 2016 of the Corporate Debtor. Therefore, after the same was admitted on 8 January 2019, he has been a part of almost all CoC meetings from the beginning, including the 1st CoC meeting, which was conducted on 7th February 2018. Time and again, various issues about the Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Jain] Member (Judicial) AND [V. P. Singh]Member (Technical) For the Appellant : Mr Sumant Batra, Mr Sanjay Bhatt, Ms Niharika Sharma, Mr Abhirup Das Gupta and Mr Rahul Mendiratta, Advocates. For the Respondent : Mr Darpan Wadhwa, Sr Advocate with Ms Smiriti Churiwal, Advocates for CoC (R-5) Mr Rony O. John, Mr Deep Roy, Advocates for R-1 Mr RN Ghosh, Advocates for Impleadment Mr Krishnendu Datta Sr Advocate with Mr Vikram Mehta, Mr Debolina Roy, Advocates for R-4 Mr Dinkar Singh, Advocate for ARCL Mr Mahendra Ralhan, Advocate. Mr Utsav Mukherjee and Mr Jaivir Sidhant, Advocates for CoC JUDGMENT [Per; V. P. Singh, Member (T)] These eight Appeals emanate from the common Order dated September 4, 2019, passed by the Adjudicating Authority/National Company Law Tribunal, in Company Petition (I.B.) No.349/K.B./2017, Kolkata Bench, Kolkata, whereby the Adjudicating Authority has approved the Resolution Plan submitted by S S Natural Resources Private Limited (in short 'SSN') under Section 31of the Insolvency and Bankruptcy Code, 2016 (in short 'I&B Code'). Their original status in Company Petition represents the Parties in all these appeals for the sak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Plan. This resulted in an increase in significant financial costs, which has adversely affected the plan's very basis and substratum, affecting the feasibility and viability of the Plan, making it incapable of being implemented. * The Adjudicating Authority has no power to unilaterally modify or change the Plan without the Appellant's approval. * The Adjudicating Authority has failed to notice Clause 11 of the Plan, which clearly states that if the Plan is approved with variation, the 'SSN' shall be bound by the Plan only if the variation is acceptable in the Plan. 6. The Appellant further contended that the 'CoC' in the commercial wisdom approved the Resolution Plan. However, while approving the Resolution Plan, the Adjudicating Authority modified the core commercial terms of the Resolution Plan, making the same commercially unviable and unworkable for the Appellant. It is submitted that the modifications made are contrary to express assumptions made by the Appellant in the Resolution Plan and against the CoC's commercial decision. It is further contended that the Hon'ble Supreme Court in case of K. Sashidhar v Indian Overseas Bank (2019) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause, the Appellant prays that the impugned Order approving the Resolution Plan be set aside as the Appellant has since withdrawn the Resolution Plan due to subsequent events which have made the Resolution Plan financially, economically and operationally unviable for the reasons beyond the control of the Appellant. 10. In reply to the above, Resolution Professional contends that the Appeal is solely premised on the ground that a waiver sought from the Adjudicating Authority in its Resolution Plan has not been granted. The 'SSN' had sought transfer of the lease of the land of about 315 acres lying in Kharagpur to 'Ramsarup Industries Ltd'. The 'SSN' has contended that the Adjudicating Authority has not sanctioned the waiver on transfer about payment of any fee, consideration, premium, arrears of lease rent or penalty or interest; therefore, the Resolution Plan has purportedly become unviable and unfeasible. 11. As per Clause 15.3, Clause 15.12 and Clause 15.14 (vi) (g) of the Resolution Plan, if the waiver sought are not granted or the assumptions made are not true, it will not have a bearing on the successful implementation of the Resolution Plan. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N' because no claim has been submitted by 'WBIDC' about arrears of lease rentals, interest or premium, for a period before the commencement of the Corporate Insolvency Resolution Process of the Corporate Debtor. As per the Resolution Plan, such amounts will be written off in full and shall be deemed to be permanently extinguished by the Order approving the Resolution Plan. The 'SSN' or the Corporate Debtor at no point in time be directly or indirectly held responsible or liable about it. 17. It is further contended that it is neither established nor borne out from the records that 'SSN' is required to pay an amount higher than ₹ 400 crores. The alleged assumption of an amount higher than ₹ 400 crores is based on presumptions only. Therefore, after the Resolution Plan's approval, the alleged payment is not required to be made as claimed of 'SSN. 18. The Resolution Professional further contends the transfer of Kharagpur land to the Corporate Debtor under Clause 15.15 of the Resolution Plan is not a mandatory condition of the Resolution Plan and are covered under the approvals, extinguishment and waiver sought under Annexure 3 of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for 'CoC' contended that the waiver from payment of transfer fees, penalties and arrears are payable under sub-lease deed, as the sublease right of the Kharagpur land ("the land in question") was granted by the 'WBIDC' to one unit of the Corporate Debtor namely Ramsarup Loh Udyog, which was merged with the Respondent No. 1 way back on September 18, 2008. Therefore, there cannot be any requirement of payment of any transfer fees as contended in the absence of any transfer. Accordingly, the objections raised by the Appellants are untenable. The Lease Deed entered into between the 'WBIDC' and the Corporate Debtor's unit does not contemplate any transfer fees. 'WBIDC', being a member of the Committee of Creditors, was aware of all terms and conditions in the Plan and had therefore voted in favour of the Plan. Accordingly, it is now estopped from claiming what it has already waived in the Plan, which has even received the Adjudicating Authority's approval. 23. The Learned Counsel for the Committee of Creditor's contended that the claim of 'WBIDC' has only been raised pursuant to the filing of the captioned Appeal an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the judgement of the Hon'ble Supreme Court in case of Committee of Creditors of Essar Steel India Ltd v Satish Kumar Gupta 2019 SCC Online SC 1478. Further, after it received the approval of the 'CoC' and the Adjudicating Authority, the entire process of Resolution Plan is to offer a fresh slate, on which the restructuring of the Corporate Debtor can be carried out. Reliance in this regard is placed on the judgement of this Tribunal in case of State of Haryana versus Uttam Strips Ltd in Company Appeal (AT) (Insolvency) No. 319 of 2020 wherein it is observed that the Successful Resolution Applicant is not to be burdened with undecided claims at the stage of implementation of the Resolution Plan. Further, it is observed that; "A successful Resolution Applicant is to be provided by the company free from past liabilities. It has been rightly understood that a successful Resolution Applicant cannot be saddled with past liabilities indefinitely. Such an Act will make it impossible for the successful Resolution Applicant to run the business of the Corporate Debtor effectively. In fact, saddling a Resolution Applicant with past claims will defeat the entire purpose an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, 'SSN') has challenged the impugned Order mainly on the ground that a waiver sought from the Adjudicating Authority in its Resolution Plan has not been granted. The Resolution Applicant has sought to transfer 315 acres of land lying in Kharagpur to Ramsarup Industries Ltd. The Appellant has contended that such transfer has been sought without the payment of any fee, consideration, premium, arrears of lease rent, penalty interest, and as the Adjudicating Authority has not sanctioned the same, the Resolution Plan has purportedly become unviable and unfeasible for 'SSN'. 30. As per Clause 15.3, Clause 15.12 and Clause 15.14 (iv) (g) of the Resolution Plan, if the waivers sought are not granted, or the assumptions made are not true, it will not have a bearing on the successful implementation of the Resolution Plan. The 'CoC' has approved the Resolution Plan, fully aware of these Clauses in the Resolution Plan. Further, the Adjudicating Authority has not in any manner mandated or directed 'SSN' to make payment of transfer fee, consideration, premium, arrears of lease rent, penalties, interest or any other payment to 'WBIDC'. 31. It is pertine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 15.3, Clause 15.12 and Clause 15.14 (VI)(g). The Resolution Plan explicitly states that if waivers are not granted or the assumptions made are not true, it will not have a bearing on the Resolution Plan's successful implementation. 36. Regarding the objection of the Appellant in context with a transfer fee of Kharagpur land, it is important to mention the Ramsarup Loh Udyog is merged with the Corporate Debtor on the appointed date, i.e. 01 April 2007. The lease over the Kharagpur land has been granted in favour of the Corporate Debtor vide indenture of sub-lease, which was executed on 13 September 2009, after the merger. Therefore, when providing the lease, the Corporate Debtor was the legal entity, and Ramsarup Loh Udyog was merely its unit. The Successful Resolution Applicant 'SSN's allegations that it has to pay an amount higher than ₹400 crores is neither established nor borne out from the records. No calculations or facts have been provided to establish that amount higher than ₹400 crores are required to implement the Resolution Plan. 37. It is also important to mention that the Order dated 25 September 2019, passed by this Tribunal, has stayed the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted September 4, 2019, in Company Application CA (IB) No. 461/KB/2090, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, in Company Petition No. 349/KB/2017 has filed this Appeal. 42. The Appellant contends that the Adjudicating Authority by the Impugned Order has allowed and approved the Resolution Plan despite the fact that the total payment to the creditors of the Corporate Debtor under the Resolution Plan is ₹ 364.5 Crores, which is far less and below the liquidation value of the Corporate Debtor, which is ₹ 614 crores and the Resolution Plan has been approved despite the fact that there is no maximisation of the assets of the corporate debtor to satisfy the debts of the all the stakeholders concerned. 43. The Appellant contends that the Adjudicating Authority has failed to appreciate that the Resolution Plan is conditional and contingent in as much as the Applicant has sought for a direction to the effect that upon the Resolution Plan getting sanctioned, the land in Durgapur and Kalyani would be transferred in the name of Resolution Applicant which cannot be allowed. 44. It is further contended that the Adjudicating Authority has failed to conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eply to the above, the Counsel for the 'CoC' contends that in the instant case 'CIRP' initiated on January 8, 2018, and has now reached a stage where the Resolution Plan has been approved by the Adjudicating Authority based on the 'CoC' approval with a vote share of 74.41%. 50. As per the approved Resolution Plan, the upfront payment is ₹ 364.5 crores less than the liquidation value of the Corporate Debtor, which is ₹614 crores. The Resolution Plan could not have been approved given the judgement of this Tribunal in Maharashtra Seamless Ltd v Padmnabhan Venkatesh, Company Appeal (AT) (Insolvency) No. 1 to 8 of 2019. 51. However the aforesaid judgement has been overruled by the Hon'ble Supreme Court in case of Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467 : 2020 SCC OnLine SC 67 at page 487 wherein it is held that; "28. No provision in the Code or Regulations has been brought to our notice under which the bid of any resolution applicant has to match liquidation value arrived at in the manner provided in Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mportant to note that the commercial decisions are not amenable to precise mathematical formula. It is not that a 'Corporate Debtor' is viable, or a resolution plan is viable and feasible, while the realisations for "Financial Creditor" under the plan exceeds 'liquidation value' of the 'Corporate Debtor'." 53. The commercial decision of the Committee of Creditors is non-justiciable. Whether a relevant Resolution Plan is feasible, viable, and maximising the Corporate Debtors value is a commercial decision. It is to be made by the Committee of Creditors by applying their commercial wisdom, and such a decision is non-justiciable. 54. Hon'ble Supreme Court in case of K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222: 2019 SCC OnLine SC 257 at page 183 has held that; "52. As aforesaid, upon receipt of a "rejected" resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors. Many hybrid structures of these broad categories can be envisioned. The Committee believes that there is only one correct forum for evaluating such possibilities, and making a decision: a creditors committee, where all financial creditors have votes in proportion to the magnitude of debt that they hold. In the past, laws in India have brought arms of the Government (legislature, executive or judiciary) into this question. This has been strictly avoided by the Committee. The appropriate disposition of a defaulting firm is a business decision, and only the creditors should make it." 59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors. The fact that substantial or majority per cent of financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 6-6-2018, 66%) of voting share of the financial creditors. To put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waive any penalty arrears of lease rent or any interest on the arrears. Hence, the Resolution Plan was contingent upon such conditions. Therefore the conditional Resolution Plan could not have been approved by the Adjudicating Authority. 58. It is pertinent to mention that the distinction can be made with creditors that are not similarly situated. Financial Creditors and Operational Creditors must be given roughly the same treatment. Further, there is no bar in making distinctions between the creditors who do not belong to the same class and can be treated differently. The creditors who do not belong to the same class are not similarly situated are treated differently. Judicial precedents make it clear that the Resolution Plan must not discriminate among creditors who are similarly situated and that the creditors must be given roughly the same treatment. 59. Hon'ble Supreme Court in case of Essar Steel India Ltd. Committee of Creditors vs. Satish Kumar Gupta, (2020) 8 SCC 531 : 2019 SCC OnLine SC 1478 at page 606 held that; "88. By reading para 77 (of Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17]) dehors the earlier paragraphs, the Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Order that they do not go ahead and realise their security in legal proceedings, but instead are incentivised to act within the framework of the Code as persons who will resolve stressed assets and bring a corporate debtor back to its feet. Shri Sibal's argument that the expression "secured creditor" does not find mention in Chapter II of the Code, which deals with the resolution process, and is only found in Chapter III, which deals with liquidation, is for the reason that secured creditors as a class are subsumed in the class of financial creditors, as has been held in Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17]. Indeed, Regulation 13(1) of the 2016 Regulations mandates that when the resolution professional verifies claims, the security interest of secured creditors is also looked at and gets taken care of. Similarly, Regulation 36(2)(d) when it provides for a list of creditors and the amounts claimed by them in the information memorandum (which is to be submitted to prospective resolution applicants), also provides for the amount of claims admitted and security interest in respect of such claims." 60. It is also important to mention that dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 22.01.2020 in Civil Appeal No. 4242 of 2019 entitled Maharashtra Seamless Limited v. Padmanabhan Venkatesh in which this Court has categorically held as under: "26. No provision in the Code or Regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This point has been dealt with in the case of Essar Steel (supra). We have quoted about the relevant passages from this judgment." 62. The Resolution Plan proposes that the Financial Creditors get 5.8% of the admitted claim amounting to ₹ 5853 crores; the said Plan also contemplates the payment of ₹ 10.5 crores to the Operational Creditor, which amounts to 4.68% of the admitted claim amount of ₹ 224.05 crores. The workman's payment is 90% of the admitted claim, and the statutory authorities have been offered ₹ 3 crores. Thus the total claim of the Operational Creditor inclusive of statutory authorities would come to 5.82%. 63. In the light of the aforesaid, it is clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the feasibility and viability of the Resolution Plan and hence it is up to the 'CoC' to decide whether the upfront payment is to be more or less than the liquidation value. 68. In K. Sashidhar (supra), it is held that the Adjudicating Authority, while approving the Resolution Plan, is only required to satisfy itself that the Resolution Plan meets the requirements specified in Section 30(2) and can do nothing more nothing less. 69. Hon'ble Supreme Court in case of Arcelormittal India (P) Ltd. vs. Satish Kumar Gupta, (2019) 2 SCC 1 : 2018 SCC OnLine SC 1733 at page 88 has held that; "84. If, on the other hand, a resolution plan has been approved by the Committee of Creditors, and has passed muster before the adjudicating authority, this determination can be challenged before the appellate authority under Section 61, and may further be challenged before the Supreme Court under Section 62, if there is a question of law arising out of such Order, within the time specified in Section 62. Section 64 also makes it clear that the timelines that are to be adhered to by the NCLT and NCLAT are of great importance, and that reasons must be recorded by either the NCLT or NCLAT if the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Plan. 71. The Appellant contended that the Adjudicating Authority failed to notice that the entire 'CIRP' has been conducted illegally from the very inception since the Process Adviser for the Resolution Professional, namely Grant Thornton, has a consultant Mr Anup Krishna, who was also a Director of the group company of the Resolution Applicant, whose Plan has been approved by the Learned Adjudicating Authority by the Impugned Order dated September 4, 2019. In its reply affidavit in the instant Appeal, the Resolution Professional has admitted the fact that Mr Anoop Krishna was appointed as Additional Independent Director of Shayam Metallics and Energy India Ltd under a letter of appointment dated February 18, 2019, for a tenure of 5 years. Mr Anoop Krishna continued in the said Shayam Sel and Energy Ltd office from April 18, 2019, till September 5, 2019. It is contended that 'CIRP' was manifestly illegal and void ab initio, and the entire process of selecting the Successful Resolution Applicant was vitiated by fraud. Since fraud vitiates all transactions, the entire process has to be set aside, and fresh Resolution Plans should be called for. It is alleged that the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaining to the actual position of charges over the assets of the corporate debtor which were not within the knowledge of financial creditors. The learned Adjudicating Authority further went forward to hold that not only was there is no concealment of facts on the part of the resolution professional, but the Appellant had suppressed material facts pertaining to the corporate debtor. The Appellant has not come with clean hands, and the present appeal is only a desperate attempt to jeopardise the entire resolution process. The adjudicating authority further noted in his Order that; "the overall conduct of the applicant in filing multiple applications cannot be considered as with genuine object to get the relief as prayed for, with object to protract the matter….. If this kind of approach is not prevented, it would air a wrong message to the similarly situated directors of the corporate debtor company". 76. Therefore, in view of the, it appears that instant appeal is a mala fide attempt on the part of the Appellant to disturb the Resolution Process, and the same cannot be sustained. In the circumstances as stated above, we believe that the Appeal sans merit and deserves to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been withdrawn ,once the Adjudicating Authority approves the Resolution Plan. The Impugned Order not only wrongly declares the 'Wind Mill Project' as an asset of Respondent No.1, Corporate Debtor, but the ramification of approving the Resolution Plan without deleting the said asset, despite the issue pending before the DRAT, ranks direct prejudice to the Appellant. 82. The Appellant further contends that Clause VII aims to circumvent the proceedings as pending before the insolvency commencement date and closes the Appellant's rights and the subsequent purchasers right in the garb of the approved Resolution Plan. The provisions of Clause VII of the approved Resolution Plan ought to have been deleted by the Adjudicating Authority as the Appellant stand to lose its legitimate and admitted claim and its right to recover the same under the law, leaving the Appellant effectively remediless. 83. The Appellant contends that the Adjudicating Authority erred in dismissing the Application filed under Section 60(5) of the I&B Code. The Adjudicating Authority has failed to take note of the fact that the 'Wind Mill Project' at Dhule, Maharashtra was hypothecated by Respondent No.1/Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Applicants have been made aware of the Appeal's pendency. Successful Resolution Applicant is to be bound by order of the Appeal, which may either confirm or set aside the sale of Wind Mill asset. 87. The Adjudicating Authority has also mentioned the above things in its Order and stated that the Corporate Debtor's right to hold the 'Wind Mill' asset is not affected unless the Debt Recovery Appellate Tribunal reverses it. Thus it is clear that the Adjudicating Authority has neither exceeded its jurisdiction nor has determined the title of the property but has merely taken note of the facts at hand in passing the impugned Order. 88. In the circumstances as discussed above, we find no merit in the Appeal; hence deserves to be dismissed. Civil Appeal (AT) (Ins.) No.1159 of 2019 89. The present Appeal is filed against the Resolution Plan's approval because of the Appellant's Application CA (I.B.) No.497/K.B./2019 under Section 29A read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016 challenging the eligibility of 'S.S. Natural Resources Private Limited' a Successful Resolution Applicant (from now on referred to as the H-1 Bidder) to submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G Iron & Steel Private Limited have common shareholders. On this ground also, H-1 is disqualified from being a Resolution Applicant under Section 29 A of the I&B Code. 92. The Appellant further contends that Clause 15.3 of the Approved Resolution Plan of H-1 bidder is only a part of the waiver and extinguishments of the claim through the Resolution Plan. There are other inbuilt waivers and extinguishment's into the said Resolution Plan. Upon approval of the Resolution Plan by the Impugned Order dated September 4, 2019, those other waivers are deemed to have been allowed. However, such waiver and extinguishment's could not have been allowed. 93. Appellant further contends that during the hearing before the Adjudicating Authority, the Learned Counsel appearing on behalf of the H-1 bidder submitted that the H-1 is unwilling to vary and modify its Plan. Further, if the waiver is not granted, the actual bidder may withdraw from implementing the said Plan. Such submission was recorded in the Impugned Order. Given the undertaking recorded in Clause 15.3 of the said Plan, the Learned Adjudicating Authority has rejected such an offer. The Appellant has prayed that the H-1 bidder s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... check the eligibility of 'S.S. Natural Resources Ltd' (in short 'SSN') under Section 29 A of the I&B Code. The 'SSN' has submitted an affidavit stating that it is eligible to submit a Resolution Plan under Section 29 A of the Code as required under Section 30(1) of the Code. The 'CoC' also discussed the matter and checked the Resolution Applicant 'SSN' eligibility under Section 29 A of the Code. 98. The Appellant contends that the Successful Resolution Applicant 'SSN' is ineligible under Section 29 A of the Code. Because one of the 'SSN' Group Companies, namely Shyam Ferro Alloys Ltd, has a shareholder that is also a shareholder in a Non-Performing Asset entity, namely 'BRG Iron and Steel Co Private Limited', and therefore SSN is ineligible. It is also pleaded that some of 'SSN' shareholders are also shareholders in an entity, namely Shyam Emco Infrastructure Ltd and Emco Power Ltd (a subsidiary of an NPA company, namely Emco Ltd), and therefore 'SSN' is ineligible. 99. The Resolution Professional submits that Shyam Ferro Alloys is not an NPA and does not have an investment in a company that is an NPA. Neither Shyam Emco Infrastructure Ltd nor Emco Power Ltd is NPA, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the National company law tribunal, Kolkata in C.P. (I.B.) No. 349/K.B./2017." In pursuance of the above Order, the Applicant had moved the Application before the Adjudicating Authority, but by the impugned Order, the Adjudicating Authority rejected it. 106. The Appellant has assailed the Impugned Order on the basis that the direction passed by the Hon'ble Supreme Court on May 6, 2019, in the peculiar facts and circumstances of the case in exercise of extraordinary jurisdiction under Article 142 of the Constitution of India read with its power as Appellate Court under Section 62 of the Insolvency and Bankruptcy Code, 2016 is binding on the Adjudicating Authority and all the parties appearing before it. The directions were passed by the Hon'ble Supreme Court post-approval of Resolution Plan by the Committee of Creditors, and the Hon'ble Supreme Court was informed about these developments. This explains why the Hon'ble Supreme Court order dated May 6, 2019, was passed in peculiar circumstances and with all the parties' consent. 107. The Hon'ble Supreme Court direction of participation would be rendered utterly meaningless if the Appellant were not pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the 'CIRP' period has already expired and that the Successful Resolution Plan had been approved by the 'CoC' and accordingly, the Civil Appeal had become infructuous. Given the same, the Hon'ble Supreme Court granted the Appellant liberty to participate in the Corporate Insolvency Resolution Process. 113. In reply to the above, the Resolution Professional submitted that this appeal preferred by the Appellant is liable to be dismissed for being time-barred. While granting the liberty to file the Appeal before this Appellate Tribunal, the Hon'ble Supreme Court did not pass any direction overriding the statutory limitation prescribed in Section 61 of the Code. Hon'ble Supreme Court in Suman Devi v Manisha Devi (2018) 9 SCC 808 laid down the law that "the grant of liberty" to pursue an alternative remedy "cannot obviate the bar of limitation", especially when the remedy is governed by a "complete code" was under the Insolvency and Bankruptcy Code, 2016. Further, the Appellant's SLP before the Hon'ble Supreme Court was filed on 25 October 2090, i.e. beyond the maximum period of 45 days prescribed for filing an Appeal before this Appellate Tribunal. The Appellant had preferred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the 'Participation in the proceeding before the Adjudicating Authority'. In this context, Resolution Professional stated that he is willing to consider and verify the Appellant's claim if so directed by the Hon'ble Supreme Court. At no point it is represented that the 'CoC' of the Corporate Debtor should be reconstituted and the Resolution Plan be once more put to the vote before the 'CoC'. Further, such consent, as indicated by the Appellant, may not be within the Resolution Professional's powers under the Code. 117. We have heard the arguments of the Learned Counsel for the parties and perused the record. It is submitted that while passing the order dated 6th May 2019, the Hon'ble Supreme Court had been informed that the 'CIRP' had already expired. The Resolution Plan had been approved by the 'CoC', and accordingly, the Civil Appeal had become infructuous. Given the same, the Hon'ble Supreme Court granted the Appellant the liberty to participate in the Resolution Process before the Adjudicating Authority and disposed of the Civil Appeal. 118. It is pertinent to mention that the Hon'ble Supreme Court in case of Committee of Creditors of Essar Steel India Ltd vs Sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order has been passed under Article 142 of the Constitution of India, i.e. in the exercise of extraordinary jurisdiction. No such recording is present in the order. The Appellant has attempted to make its case without the Hon'ble Supreme Court stating so in the order. The Appellant is now seeking to turn back the clock on the entire Resolution Process and jeopardise the Successful Resolution Plan approved by the 'CoC'. 123. The 'CoC' took considerable time and efforts to finalise and approve the Resolution Plan with a 74.41% vote share. The 'COC' has taken approximately one year and three months on the Resolution Process of the Corporate Debtor and could approve the corporate debtor's final Resolution Plan. The Appellant is now seeking to turn back the clock in the garb of the Hon'ble Supreme Court's order by misinterpreting it, which is not sustainable. The appellant wants to cover up its shortcomings. There is a hiatus on the Appellant part for not filing its claim with the Resolution Professional within the prescribed timelines. Appellant is now seeking to turn back the clock of the entire resolution process spanning a period of approximately 15 to 16 months, jeopardising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Authority has stated in its order that; "Only production of financial statement itself cannot be held that all the requirements for substantiating the claim has been fulfilled on the side of the Applicants. It has come out in evidence that the Applicant Mr Aashish Jhunjhunwala, was asked to provide the document evidencing the contract for the loans in support of the amount shown in the financial statement evidencing that such amount was actually drawn by the Corporate Debtor and further evidence proving that, that fund has not been paid back to the related parties. No valid explanation is forthcoming as to non-production of the above said documents asked for from the Applicants here in this case in hand. There are various correspondence by way e-mail referred to us on the side of the Applicants. None of the e-mails referred to us enabled us to hold that the Applicants have meted out the requirement in order to see that the claim of the Applicants has been substantiated as alleged on the side of the Applicants. ……. That being so, non-admission of the claim of the Applicants found not in violation of any of the provisions of the Code and Regulation and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Professional' has no adjudicatory power. The 'Resolution Professional' has to vet and verify the claims made and ultimately determine the amount of each claim. As opposed to this, the 'Liquidator' in the Liquidation proceedings under the I&B Code has to consolidate and verify the claims and either admit or reject such claims under Sections 38 to 40 of the Code. 9. In the present case, it is informed that the 'resolution plan' has already been approved by the 'Committee of Creditors' and the 'Resolution Professional' had placed the same before the Adjudicating Authority on 4th October, 2018 in 'M/s. Prasad Gempex' with regard to the 'corporate insolvency resolution process' initiated against 'M/s. Star Agro Marine Exports Pvt. Ltd.' (subject matter of Company Appeal (AT) (Insolvency) No. 291/18). A 'resolution plan' has already been approved and placed before the Adjudicating Authority (Chennai) on 4th October, 2018. However, till date no order under Section 31 has been passed. We find that 270 days have passed." 133. In the case mentioned above, this Appellate Tribunal has clarified that this Tribunal has not expressed any opinion with regard to the claim made by 'Srei I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amount has been repaid or not. The Resolution Professional further submits that on reviewing the annual report, the balance sheet, ledger and excel document shared by the Appellant, he found no conclusive proof to substantiate the claim of the Appellant. In the circumstances, the Resolution Professional had rejected the claim of the Appellant. 137. It is pertinent to mention that under Regulation 13(1) of the 'CIRP' Regulations, Resolution Professional is empowered to verify the claims. Regulation 13 is given below for ready reference: "13. Verification of claims.-- (1) The interim resolution professional or the resolution professional, as the case may be, shall verify every claim, as on the insolvency commencement date, within seven days from the last date of the receipt of the claims, and thereupon maintain a list of creditors containing names of creditors along with the amount claimed by them, the amount of their claims admitted and the security interest, if any, in respect of such claims, and update it. 14. Determination of amount of claim.-- (1) Where the amount claimed by a creditor is not precise due to any contingency or other reason, the interim resolution prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mouza, J.L. No 65, Durgapur in the Burdwan District, West Bengal (hereinafter referred to as "the said premises"). In the eyes of the law, the Appellant is a stranger to the Corporate Insolvency Resolution Process initiated against the Corporate Debtor. 143. The Appellant contends that the premises belong to it. The Adjudicating Authority has failed to appreciate that it has no jurisdiction to adjudicate upon the disputes regarding rights, title, and interest in respect of the property. It has failed to consider that no transfer or conveyance of the said premises can be permitted without first obtaining the express consent of the owner of the land, i.e. Appellant herein. 144. The Appellant further contends that the Adjudicating Authority has failed to appreciate the provision of Section 18 of the Code read with the Regulation 37(a) of the Insolvency Resolution Process for Corporate Person's Regulation, 2016, which bars the transfer of title of the third party such as the Appellant herein in favour of the Resolution Applicant. Further, the Adjudicating Authority has erred in essentially giving effect to the provisions of the SARFAESI Act, 2002 by allowing the Resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans "security interest created in respect of an asset of the Corporate Debtor" and not security interest created by a separate legal entity or a third party on behalf of the Corporate Debtor. Regulation 37(d) provides for satisfaction or modification of any security interest created by the Corporate Debtor for its own assets and not of the assets belonging to third parties. 148. The Resolution Professional contended that the Appellant's property was mortgaged with the Banks/Financial Creditors. Thus, the Resolution Applicant is entitled to transfer the said premises by way of the Resolution Plan. In this context, it is relevant to mention that no possession has been taken under Section 13(4) of the SARFAESI Act, 2002 by any Financial Creditors regarding the Durgapur land. The Appellant has also challenged the notice under Section 13(2) of the SARFAESI Act, 2002 and proceedings under Section 17 of the SARFAESI Act, 2002, pending before DRT, Kolkata. If during the pendency of the proceedings under Section 17 of the SARFAESI Act, 2002 the said premises is transferred by way of Resolution Plan, the entire proceedings before the DRT would be rendered infructuous, especial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is wholly owned by the promoter of the Corporate Debtor. 153. On perusal of the factory license (page 125 of the convenience compilation), it appears that the Appellant has provided the right to use the land to the Corporate Debtor since September 2006. The Corporate Debtor had constructed a plant and factory on the said land to set up, establish and run the plant and factory for its wire business from the said land. 154. The Appellant herein is the Corporate Guarantors to the loans availed by the Corporate Debtor from Financial Creditors. For this purpose, the Appellant had duly executed Deeds of Guarantee dated May 27, 2009. Accordingly, for the purpose of securing the loan granted to the Corporate Debtor, the present Appellant secured the said loans by way of creating an equitable mortgage of the property owned by it, more particularly the land, building and structure along with the immovable property situated at Durgapur. 155. The Guarantee described above gave all rights in respect of the mortgaged properties to the Financial Creditors. Clause 10 of the deed, as mentioned earlier, dated July 27 2009, is as under; "In case the bank sells the hypothecated, pledged or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant under the guarantee obligations and the mortgage provided, the Resolution Applicant's 1st seeking a direction to allow the transfer of the land from the Applicant to the Corporate Debtor. * Failing this, the Resolution Plan suggests that the assignee of the loan and security should be allowed to enforce under SARFAESI Act and transfer the land to the Corporate Debtor. 159. It is pertinent to mention that Regulation 37 (B) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 provides that "a Resolution Plan shall provide for the measures, as may be necessary for Insolvency Resolution of the Corporate Debtor for maximisation of value of its assets, including but not limited to the sale of all or part of the assets whether subject to any security interest or not." 160. As per Section 31 of the Insolvency and Bankruptcy Code, 2016, the approved Resolution Plan binds all the stakeholders, including the Corporate Debtor's Guarantors. Thus Vanguard, being corporate Guarantor of the Corporate Debtor, is bound by the approved Resolution Plan. In light of the above discussion, we believe th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial sector regulator." 40. If NCLT has been conferred with jurisdiction to decide all types of claims to property, of the corporate debtor, Section 18(1)(f)(vi) would not have made the task of the interim resolution professional in taking control and custody of an asset over which the corporate debtor has ownership rights, subject to the determination of ownership by a court or other authority. In fact an asset owned by a third party, but which is in the possession of the corporate debtor under contractual arrangements, is specifically kept out of the definition of the term "assets" under the Explanation to Section 18. This assumes significance in view of the language used in Sections 18 and 25 in contrast to the language employed in Section 20. Section 18 speaks about the duties of the interim resolution professional and Section 25 speaks about the duties of resolution professional. These two provisions use the word "assets", while Section 20(1) uses the word "property" together with the word "value". Sections 18 and 25 do not use the expression "property". Another important aspect is that under Section 25(2)(b) of the IBC, 2016, the resolution professional is obliged to rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the term assets under the explanation to Section 18 of the Code. It is further observed that Section 14(1)(D) of I&B Code, 2016, which prohibits, during the period of moratorium, the recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor, will not go to the rescue of the Corporate Debtor, since what is prohibited therein, is only the right not to be dispossessed, but not the right to have the renewal of the lease of such property. The right not to be dispossessed, found in Section 14(1)(D) will have nothing to do with the rights conferred by a mining lease expressly on government land. What is granted under the deed of mining lease in ML 2293 dated January 4, 2001, by the Government of Karnataka, to the Corporate Debtor, for the right to mine, excavate and recover red oxide for a specified period of time. The deed of lease contains a schedule divided into several parts. The restrictions and conditions subject to which the grant can be enjoyed are found in part 3rd of the Schedule. Therefore, NCLT did not have jurisdiction to entertain an Application against the government of Karnataka for a direction to exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance to the corporate debtor nor towards protecting any facility or security of the corporate debtor, it cannot be said that the corporate debtor owes them any "financial debt" within the meaning of Section 5(8) of the Code; and hence, such lenders of JAL do not fall in the category of the "financial creditors" of the corporate debtor JIL." 168. From the facts of the above-mentioned case, it is clear that in the above case, the Hon'ble Supreme Court was dealing with the issue relating to the preferential transaction. The facts and ratio of the above case are distinguishable from the instant case; therefore, the above case law does not apply to this case. 169. It is pertinent to highlight that the Financial Creditors such as Punjab National Bank and Axis Bank had provided their respective loans to the Corporate Debtor on the basis that the repayment by the Corporate Debtor was secured by way of a mortgage over the land (provided by the Appellant) and by way of Corporate Guarantees provided by the Appellant itself. By creating the mortgage over the land, the Appellant has created a security interest over the land in favour of Punjab National Bank (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor. Therefore, after the same was admitted on 8 January 2019, he has been a part of almost all 'CoC' meetings from the beginning, including the 1st 'CoC' meeting, which was conducted on 7th February 2018. Time and again, various issues about the Durgapur unit/land had been discussed in the 'CoC' meetings in the presence of Mr Jhunjhunwala. However, he failed even once to point out that the Appellant was to be treated as a separate entity, and the land could not be part of the Resolution Process. For the 1st time, in the 21st 'CoC' meeting held on 11 February 2019, Mr Ashish Jhunjhunwala raised an objection stating that the land at the Durgapur does not belong to the Corporate Debtor. The same was done only at the fag end and when Mr Jhunjhunwala realised that the 'CIRP' was at the final stage against his expectations. Therefore, with the only aim of spoiling the resolution process, such objections were raised at such a belated stage which is only an afterthought. For the 1st time on 20th February 2019, the Appellant wrote to the Resolution Professional stating that the land does not belong to the Corporate Debtor and to exclude from the Resolution Process. The same is also i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aration plant And Sinter Plant, respectively, the following should have been the correct calculation. Air separation plant Sinter plant TL Value TL Value Pegasus 222.02 21.48 Peagasus 222.02 18.10 Total 222.02 21.48 SBI 174.36 14.251 Total 396.78 32.35 178. Details have been set out in chart to show that the Appellant has exclusive and paripassu charge with the 'SBI' over Air Separation Plant (which was exclusively financed by the assignor of the Appellant and over which the Appellant has first, and exclusive charge and Sinter Plant ,which the assignor State Bank of India financed, and over the said asset the Appellant has first paripassu charge along with the State Bank of India. 179. It is submitted by the plant that the Adjudicating Authority has made a gross error in law by arbitrarily dismissing the Application of the Appellant without considering the correct factual position and not considering the error made by the Resolution Professional while calculating the distribution as per Section 30 and 53 of the Code. Appellant has prayed that the Appellant's charge position be corrected to prevent the monetary loss, which the Appellant may suffer. 180. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gasus does not have a first exclusive charge on the Air Separation Plant. The initial understanding may have been that Allahabad bank has a first exclusive charge over the Air Separation Plant. However, subsequent to such an initial understanding, discussions and decisions taken collectively by the consortium of lenders has resulted in a change of position of security currently held by Pegasus. The Resolution Professional pleaded that the Adjudicating Authority has rightly approved the distribution methodology, which requires no interference at Appellate Stage. 184. The Respondent No. 3-ARCIL contended that the Appellant filed its limited objection to the Plan by way of Company Application No. (IB)/424/KB/2019 in CP (IB)/349/KB/2017. The main objection of the Appellant is that RP failed to consider that the Appellant has an exclusive charge over two plants-Air Separation Plant and Sinter Plant of the Corporate Debtor. The RP and the process advisers committed an error in the methodology of distribution of the proceeds in respect of these 2 plants and wrongly allocated the proceeds also to IDBI/ARCIL. 185. The Adjudicating Authority considered the objections of the Appellant and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the IDBI Bank/Appellant's charge on the assets of the Corporate Debtor situated at Kharagpur. 186. The Appellant further contends that it cannot be treated as a dissenting Financial Debtor for the purpose of Section 30 (2) (B) of Insolvency and Bankruptcy Code, 2016. The Appellant, in principle, approved the Plan and agreed for distribution of the Resolution amount allocated to Financial Creditors as per facility -wise distribution methodology based on security structure. 187. It is pertinent to mention that the Appellant in its Application before the Adjudicating Authority did not raise its entitlement as per dissenting creditor as stipulated under Section 30 (2) of I&B Code albeit the Appellant prayed in the Application to pass necessary direction to the Resolution Professional to modify the Resolution Plan to the extent of "Facility wise distribution methodology based on security structure". 188. The Adjudicating Authority has observed that the Pegasus Asset Reconstruction Private Limited has failed in proving that it has an exclusive charge over Air Separation Plant and Sinter Plant. Admittedly, 'IDBI' had also issued loans to the Corporate Applicant, which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders. 191. It is also important to mention that the security interest was always available with Pegasus during the corporate insolvency resolution process of the Corporate Debtor. However, concerns were raised only after approval of the Resolution Plan by the 'CoC'. The distribution of proceeds amongst the lenders being an inter-creditor issue. It was the 'CoC' along with the Process Advisers to the 'CoC' that prepared and confirmed the methodology of distribution of proceeds on the basis of security structure. The security interests recorded for each creditor has been made available, to be scrutinised and inspected by the 'CoC' during the 'CIRP'. The distribution methodology has been repeatedly shared with the members of 'CoC' vide various emails. The 'CoC' in its 24th meeting held on 6 March 2019 discussed the methodology of distribution and was put to vote. The members of the 'CoC' were specifically asked to review the final distribution methodology that was prepared. The Pegasus sent an email to the RP on 19 March 2019, i.e. after the voting on the Resolution Plan had concluded, and the Resolution Plan along with the distribution methodology as per the security interest was ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions with the sole aim of evading its obligations under the approved Resolution Plan and has not paid a single penny on the pretext of the order dated 25th September 2019 without there being any stay of the payments up to Rs.400 crores. This clearly shows a failure on Successful Resolution Applicant S.S. Natural Resources Pvt. Ltd. in implementing the approved Resolution Plan. After approval of the Resolution Plan, it took about 1½ year. To date, not a single penny had been paid on the pretext of the order of this Tribunal dated 25th September 2019 without there being any stay on the payments up to Rs.400 crores. The relevant portion of our order dated 25th September 2019 is as under: "In the meantime, the operation of the impugned order, in so far it relates to the payment of amount in excess of Rs.400 crores shall remain stayed." 197. Based on the above order, it is clear that there was no stay for implementation of the Resolution Plan, but after about 1½ year period after the date of approval of the Resolution Plan, Appellant has not taken any stay towards the implementation of the Plan. The approved Resolution Plan contemplates Financial Creditors to get only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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