9911796707
TMI Blog2023 (2) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case. The said issue pending before the Hon ble Supreme Court is neither required to be dealt with at this stage, nor does it have any direct bearing for deciding the issues of maintainability and substitution. There is no impediment in deciding the issue of maintainability and substitution. Further, the question as to whether the applications under section 43, 45 or 66 would survive beyond the conclusion of CIRP i.e. post approval of the Resolution Plan is now resolved and the issue is no more res integra. In the recent judgment dated 13.01.2023 of the division bench of Hon ble Delhi High Court in TATA Steel BSL ltd. vs. Venus Recruiter Private Limited Ors. [ 2023 (1) TMI 644 - DELHI HIGH COURT] , it has been held that The phrase arising out of or in relation to as situated under Section 60(5) (c) of the Insolvency and Bankruptcy Code. Is of a wide import and it is only appropriate that such applications are heard and adjudicated by the Adjudicating Authority, i.e. the NCLT or the NCLAT, as the case maybe, notwithstanding that the CIRP has concluded and the resolution applicant has stepped into the shoes of the promoter of the erstwhile corporate debtor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing provision for its effective implementation. In the instant case, the Resolution Plan is approved by the CoC and thereafter by the Adjudicating Authority and thus it contemplates that these pending Applications would be pursued by the successful Resolution Applicant at its own expense. If CoC is now asked to pursue these applications through RP, it would not only amount to foisting them with additional burden of the litigation cost not contemplated in the resolution plan but would also be contrary to the approved Resolution Plan. Hence, the Applications for substitution to pursue the pending applications by the Applicant herein under Section 43, 45 or 66 are hereby allowed. Application allowed. - IA No. 532 of 2022, IA No. 2852 of 2021, IA No. 721 of 2021, CP (IB) No. 4258/(MB) 2019 - - - Dated:- 9-2-2023 - Hon ble Member (Judicial) : Justice P.N. Deshmukh (Retd.) And Hon ble Member (Technical) : Mr. Shyam Babu Gautam Piramal Capital Housing Finance Limited (Formerly known as Dewan Housing Finance Corporation Limited) Versus Bank of Baroda, State Bank of India, HDFC Bank Ltd., Kotak Mahindra Bank Limited, Development Credit Bank, Barclays Bank PLC, Mumbai Branch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al with respect to the Resolution Plan on 24th February 2021. This Application was approved by the Tribunal vide Order dated 7th June 2021 by which the Resolution Plan was approved and permission was granted for the reverse merger of the erstwhile Piramal into and with the Corporate Debtor resulting into the creation of the instant Applicant in a new avatar. After the reverse merger took place on 30th September 2021, the Applicant remains the continuing legal entity for all practical purposes. 3. The Applicant submits that the present Application was necessitated on the following grounds. The Administrator filed I.A. No. 721 of 2021 under Sections 25(2)(j), 43, 44 arraying 13 Respondents and praying for setting aside/ avoiding the preferential transactions in accordance with the said provisions of the Code. Even though the Resolution Plan was approved by this Tribunal on 7th June 2021, these Applications are still pending for adjudication. The Applicant submits that the Resolution Plan specifically lays down that applications filed by the Administrator seeking avoidance of transactions which appear to be preferential/ fraudulent/ undervalued/ extortionate are to be pursued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being discharged from its responsibilities; (2) the Corporate Debtor being taken over by a new management post the reverse merger; and (3) the Applicant being duly authorised by the Resolution Plan approved by this Tribunal to pursue I.A. No. 721 of 2021 in place of the Administrator, it is only reasonable to allow substitution of the Administrator with the present Applicant. 6. The Respondent No. 6 filed an Interlocutory Application being I.A. No. 532 of 2022 in the present Application i.e. I.A. No. 2852 of 2021 seeking dismissal of the present Application on the following grounds. The said Application 532 of 2022 has been considered as reply to the main substitution Application 2852 of 2021. Firstly, it is submitted that the I.A. 721 of 2021 was filed by the Administrator on 10th February 2021 i.e. 435 days from the CIRP Admission date which is way beyond the statutory limit of 135 days from CIRP date. Secondly, it is stated that at no point in time was the Respondent No. 6 aware of the provisions of the Resolution Plan including those related to the avoidance applications and despite repeated requests made to the Administrator and the Applicant, no copy of the Resolution Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h appear to be preferential/fraudulent/undervalued/extortionate are to be pursued by the Resolution Applicant the same is reproduced above. 10. Further, whether a Resolution Plan is a confidential document in this regard the Respondents have placed reliance on the Judgement passed by Hon ble NCLAT in Association of Aggrieved Workmen of Jet Airways (India) Ltd vs. Jet Airways (India) Ltd. the Respondents have also relied on Section 24 (3) and 29 (2) of the Insolvency and Bankruptcy Code, 2016. Hence the Respondent in the IA 532 of 2022 i.e. Piramal Capital and Housing Finance Ltd. prays to dismiss the Application and allow the substitution Applications. FINDINGS 11. We have heard the Counsel appearing for the Applicant and the Counsel for the Respondents at length. We have also taken due note of the submissions and documents placed before us in all other connected substitution Applications. On perusal of the documents annexed to the present Application, it is evident that the issues for consideration before us are :- a. Whether the Applications under section 43,45 66 would survive beyond conclusion of CIRP; b. Whether Applications under Section 66 to seek Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at avoidance applications can survive the successful resolution of the Corporate Debtor. Regulation 36 provides for the preparation of an Information Memorandum. Details of avoidable transactions can be made a part of the Information Memorandum to be prepared by the RP. During the pendency of the present LPAs, the IBBI also inserted Regulation 38(2)(d) which mandates that all Resolution Plans to be submitted before NCLT for approval on or after 14.06.2022 must provide for treatment of avoidance applications. 53.Therefore, the general position of law is that an avoidance application will survive the CIRP if all suspect transactions and applications filed in their respect have been accounted for in the Resolution Plan. Ultimately, all details of such pending applications are required to be placed before the NCLT for approval of the Plan under Section 31 of the IBC. There is nothing in the impugned judgment to imply otherwise. In fact, the impugned Judgment acknowledges that a Resolution Plan can permit the RP to function post CIRP. 54. Insofar the Resolution Plan submitted by Tata Steel Ltd. is concerned, there is no such clause that provides for treatment of avoidance appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce application is independent of the resolution of the corporate debtor and can survive CIRP. c) The endeavour of the IBC and its rules and regulations is to ensure that all processes within the insolvency framework are time efficient. While the law mandates a resolution plan to necessarily provide for the treatment of avoidance applications if the same are pending at the time of submission of resolutions plans, it cannot be accepted that avoidance applications will be rendered infructuous in situations wherein the resolution plan could not have accounted for avoidance applications due to exigencies that delayed initiation of action in respect of avoidable transactions beyond the submission of a resolution plan before the adjudicating authority. This is because such an interpretation will render the provisions pertaining to suspect transactions otiose and let the beneficiaries of such transactions walk away, scot-free. Money borrowed from creditors is essentially public money and the same cannot be appropriated by private parties by way of suspect arrangements. Therefore, in cases such as the present one, wherein such transactions could not be accounted the Adjudicating Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as it may deem fit . As against the same, Section 339 (1) of the Companies Act, 2013 reads as under :- 339. Liability for fraudulent conduct of business (1) if in the course of the winding-up of a company, it appears that any business of the company has been carried on with intent to defraud creditors of the company or any other persons or for any fraudulent purpose, the Tribunal, on the application of the Official Liquidator, or the Company Liquidator or any creditor or contributory of the company, any, if it thinks it proper so to do, declare that any person, who is or has been a director, manager, or officer of the company or any persons who were knowingly parties to the carrying on of the business in the manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Tribunal may direct : Provided that on the hearing of an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o shall pursue the applications under Sections 43, 45 or 66 : It is to be noted that Section 43, 45 and 66 of Insolvency Bankruptcy Code contemplates filing of applications thereunder only by RP/liquidator as the case may be. However, there is no embargo on who shall pursue any such application filed by RP which has also been accounted for in the approved resolution plan on successful completion of CIRP process and passing of an order under Section 31. Thus, post successful completion of CIRP process and order of adjudicating authority under Section 31, the pending applications under Section 43, 45 and 66 can be pursued by any such person or entity, as may have been agreed by CoC while approving the resolution plan having provision for its effective implementation. In the instant case, the Resolution Plan is approved by the CoC and thereafter by the Adjudicating Authority and thus it contemplates that these pending Applications would be pursued by the successful Resolution Applicant at its own expense. If CoC is now asked to pursue these applications through RP, it would not only amount to foisting them with additional burden of the litigation cost not contemplated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
