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TMI Blog2024 (2) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... for Applicant in I.A. 3218/2023. Mr. Amit K. Mishra, Mr. Akshat Hansaria, Advocates for Homebuyers/Intervenors. Mr. Vierat K. Anand, Ms. Srishty Kaul, Mr. Harish Nadda, Advocates For the Appellant : Mr. Krishnan Venugopal, Sr. Advocate with Mr. Anupam Chaudhary, Mr. Sarvesh Mehra, Mr. Krishnan Aggarwal, Mr. Avinash Mathews, Advocates For the Respondents : Mr. Sumant Batra, Mr. Sanjay Bhatt, Mr. Sarthak Bhandari, Ms. Mehreen Garg, Advocates for IMC of JIL/R-1. Mr. Krishnendu Datta, Sr. Advocate with Mr. Mahesh Agarwal, Ms. Geetika Sharma, Ms. Eshna Kumar, Mr. Sagar Bansal, Ms. Varsha Himatsingka, Mr. Rajat Sinha, Advocates for SRA, R- 3 & 4. Mr. Varinder Kumar Sharma, Ms. Parul Sharma, Advocates in I.A. No. 3701, 3702 of 2023. Mr. Vierat K. Anand, Ms. Srishty Kaul, Mr. Harish Nadda, Mr. Vikalp Singh, Mr. Kumar Shashank, Mr. Rishabh Singh, Ms. Deepannita Chakraborty, Mr. Arun Yadav, Mr. Anant Singh, Mr. Abhishek Sharma, Advocates JUDGMENT Ashok Bhushan, J. These two Appeals have been filed against the same order dated 07.03.2023 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Special Bench approving the Resolution Plan submitted by Consortium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Hon'ble Supreme Court permitting IRP to take over the management of JIL. Orders were also passed against JAL. Hon'ble Supreme Court passed final judgment in Writ Petition of Chitra Sharma on 09.08.2018 (Judgment Reported in (2018) 18 SCC 575). The Hon'ble Supreme Court held that the promoters of JAL/JIL cannot participate in the Resolution Process of the Corporate Debtor in view of Section 29A. CIRP period having come to an end, Hon'ble Supreme Court took the view that the CIRP should be revived and CoC be re-constituted as per the amended provision to include the homebuyers. The Hon'ble Supreme Court in exercising jurisdiction under Article 142 of the Constitution revived the CIRP process. After the order of the Hon'ble Supreme Court dated 09.08.2018, the IDBI Bank filed an application before the Adjudicating Authority for excluding certain period. In the Appeal filed by IDBI Bank, NCLAT granted the exclusion of time which order was challenged by Jaiprakash Associates Limited and Ors. in the Hon'ble Supreme Court by Civil Appeal No.8437 of 2019 which Appeal was finally disposed of by the Hon'ble Supreme Court by judgment and order dated 06.11.2019. The Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of 2021 filed by the IRP was allowed and other applications were dismissed. Challenging the order dated 07.03.2023, Company Appeal (AT) (Insolvency) No.548 of 2023 has been filed by Jaiprakash Associates Limited and Company Appeal (AT) (Insolvency) No.559 of 2023 has been filed by Manoj Gaur, promoter/director. 2.3. It is also relevant to notice that the order dated 07.03.2023 has also been challenged by other several entities who were aggrieved by the order dated 07.03.2023. 2.4. The Income Tax Department has filed a Company Appeal (AT) (Insolvency) No.549 of 2023- "Deputy Commissioner of Income Tax vs. Anuj Jain, IRP of M/s. Jaypee Infratech Limited" which has been decided by judgment of this Tribunal dated 26.09.2023. 2.5. YEIDA also filed a Company Appeal being Company Appeal (AT) (Insolvency) No.493 of 2023 challenging the order dated 07.03.2023 which is still pending. 3. We have heard Shri Krishnan Venugopal, Learned Senior Counsel on behalf of the Appellant, Shri Sumant Batra, Learned Counsel appearing for Monitoring Committee and Learned Senior Counsel Shri Krishnendu Datta for the SRA. We have also heard several Learned Counsels who have filed I.As on behalf of diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue subsidy on account of the land for development given by YEIDA to JIL could not be written off in the Resolution Plan as these were future liabilities in respect of which no demand had yet been raised. 4.3. The Resolution Plan extinguishes an amount of Rs.3334 Crores for assessment years 2010-11 and 2012-13 in respect of which IT Department had filed its claim in Form B on 28.09.2017. However, the Resolution Plan also sought to extinguish the future liability of Rs.33,000 Crores. The Adjudicating Authority by approving the Resolution Plan has wiped out the entire liability owing to the IT Department including the amounts in respect of which the IT Department did not raise any demands. The IT Department had not filed any objections before the Adjudicating Authority but they have preferred Company Appeal (AT) (Insolvency) No.549 of 2023 against the impugned order which has been decided by this Tribunal vide order dated 26.09.2023. Against the judgment of this Tribunal dated 26.09.2023, Suraksha Realty has filed Civil Appeal No.7412 of 2023. 4.4. It is submitted that the treatment of the dues to the IT Department not severable from the Resolution Plan and makes it unworkable. Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing unjustly enriched by taking over an asset rich company at a hefty haircut while depriving JAL and Shri Manoj Gaur of their statutory rights of discharge under Section 135 of the Contract Act, right to get possession of the securities under Section 141, and their right to become creditors of JIL as the principal debtor under Section 140 of the Contract Act. Thus, the Resolution Plan being contrary to the provisions of the law for the time being in force in terms of Section 30(2)(e) of the IBC. 4.6. Coming to the reliefs and concessions, Counsel for the Appellant submits that out of 38 reliefs and concessions sought by Suraksha Realty, Adjudicating Authority has granted only 8 reliefs and concessions. Rejection by the Adjudicating Authority of certain clauses i.e. by denying the reliefs and concessions, it is clear that the Resolution Plan does not confirm to the parameters laid down in Section 31(1) and are inconsistent with Section 30(2). Adjudicating Authority having denied several reliefs and concessions, the Resolution Plan ought not to have been approved and the plan ought to have been sent back to the CoC for re-submission after satisfying the parameters. Giving directio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to re-open the issue of liability of the Income Tax Department. Appellant by making submission is seeking review of the order dated 26.09.2023 which is not permissible. 5.2. Coming to the submission advanced by Counsel for the Appellant with regard to the claim of Yamuna Expressway, it is submitted that the Yamuna Expressway has already filed its appeal being Company Appeal (AT) (Insolvency) No.493 of 2023 and they have raised issues in support of their appeal. YEIDA being affected by order dated 07.03.2023, it has raised ground to challenge which is to be considered in the said appeal. Counsel for the Respondent has also referred to the order dared 05.12.2023 passed by this Tribunal in Company Appeal (AT) (Insolvency) No.493 of 2023 where this Tribunal has noted that a proposal has been submitted by Suraksha Realty for settlement which has been forwarded to the State Government which is under active consideration. It is submitted that the claim of YEIDA will be considered and decided in Company Appeal (AT) (Insolvency) No.493 of 2023 and Appellant cannot be allowed to raise the issue nor the said issue can be decided in this Appeal which may cause prejudice to the rights of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the Adjudicating Authority cannot enter into any quantitative analysis to adjudge whether the prescription of the resolution plan results in maximisation of the value of assets of not. 6. Learned Counsel for the SRA has also advanced submission on the same line as was advanced on behalf of Monitoring and Implementation Committee of the Corporate Debtor. It is submitted that the Adjudicating Authority has rightly treated the debt of the Income Tax Department as operational debt and further the appeal being Company Appeal (AT) (Insolvency) No.549 of 2023 filed by the Income Tax has already been dismissed which is under challenge by the SRA in the Hon'ble Supreme Court. It is not open for the Appellant to raise any issue on behalf of the Income Tax Department. SRA has filed limited appeal in the Hon'ble Supreme Court for quashing the observations made in paragraphs 24 and 25 of the judgment of this Tribunal dated 26.09.2023 is binding on all parties and Appellant cannot be raised any amount pertaining to Income Tax dues. 6.1. With regard to claim of YEIDA, it is submitted that the amicable settlement efforts in progress with YEIDA in which no prejudice shall be caused to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or not the reliefs and concessions are granted. Reliefs do not have any bearing on the implementation of the plan. It is submitted that no grounds have been made out on behalf of the Appellant to interfere with the order of the Adjudicating Authority approving the Resolution Plan. Adjudicating Authority has considered all objections raised by the Appellant and there is no error in the order to approve the Resolution Plan. 7. In Company Appeal (AT) (Insolvency) No. 548 of 2023, several IAs have been filed praying to intervene in the appeal. We need to notice the different IAs and prayers made therein. 7.1. IA No.2643 of 2023 has been filed by one Ayush Agarrwal, allottee of unit in Kosmos. Applicant claims to have been issued allotment letter dated 11.12.2009 and submit that he has deposited certain amount till June 2022. Applicant submits that the Applicant who is not a resident of Delhi NCR never came to know about the insolvency proceeding of the Corporate Debtor. Being unaware of the aforesaid proceeding, he could not file his claim in the CIRP. In the application, following prayers have been made:- "In view of the facts abovesaid, the Applicant humbly prays that the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of subsection (2) of Section 30 of the Code and the Resolution Plan deserves to be set aside on this ground alone? (iv) Whether YEIDA is a Secured Creditor of the Corporate Debtor? (v) Whether the Resolution Plan violates provision of Section 30(2)(e) of the Code in removing the right of subrogation to the guarantors whereas under Indian Contract Act a surety or guarantor has right to subrogation and further upon discharge of principal debtor to repay the debt the liability of surety also gets extinguished? (vi) Whether the Adjudicating Authority having denied several reliefs and concessions which clearly means that those provisions of Resolution Plan have been disapproved, the Adjudicating Authority ought not to have been approved the Resolution Plan and only course available for the Adjudicating Authority was to send the plan back to the CoC for reconsideration? (vii) Whether the Adjudicating Authority in granting various reliefs and concessions has exceeded the jurisdiction vested in the Adjudicating Authority and by issuing various directions, Adjudicating Authority travelled beyond its jurisdiction and further no direction could have been given to statutory auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raudulent transaction has taken place and in respect of which an order has been made by the adjudicating authority under the IBC is prohibited from participating. The Court must bear in mind that Section 29- A has been enacted in the larger public interest and to facilitate effective corporate governance. Parliament rectified a loophole in the Act which allowed a backdoor entry to erstwhile managements in the CIRP. Section 30 IBC, as amended, also clarifies that a resolution plan of a person who is ineligible under Section 29-A will not be considered by the CoC:" 13. Further in paragraph 42, it was further held: "42. The bar under Section 29-A would preclude JAL/JIL from being allowed to participate in the resolution process. Moreover, the facts which have been drawn to the attention of the Court leave no manner of doubt that JAL/JIL lack the financial capacity and resources to complete the unfinished projects. To allow them to participate in the process of resolution will render the provisions of the Act nugatory. This cannot be permitted by the Court." 14. The writ petition of Chitra Sharma was ultimately decided vide its judgment and order dated 09th August, 2018, followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng was held: 19. Indeed, the third proviso to Section 12(3) predicates time-limit for completion of insolvency resolution process, which has come into effect from 16-8-2019. The same reads thus: 'Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.' Taking an overall view of the matter, we deem it just, proper and expedient to issue directions under Article 142 of the Constitution of India to all concerned to reckon 90 days' extended period from the date of this order instead of the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. That means, in terms of this order, the CIRP concerning JIL shall be completed within a period of 90 days from today. 20. We do not deem it necessary to dilate on the arguments of the respective counsel for the nature of order that we intend to pass, including about the locus standi of JAL which, in our opinion, already stands answe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted above, the revised resolution plans in the CIRP of the Corporate Debtor were submitted by Suraksha Realty and NBCC. The Resolution Plan came to be approved by the Committee of Creditors, application was filed by the IRP for approval of the plan before the Adjudicating Authority, the Adjudicating Authority vide order dated 03rd March, 2020 approved the Resolution Plan submitted by NBCC India Limited with 97.36% voting share. NBCC aggrieved by certain part of the order filed an appeal before the NCLAT being Company Appeal (AT) Ins. No. 475 of 2022 which was transferred by the Hon'ble Supreme Court. Jaypee Kensington Boulevard Apartments Welfare Association and Ors. have also filed appeal questioning the order dated 22nd April, 2020 passed by NCLAT. Hon'ble Supreme Court decided the civil appeal filed by the Jaypee Kensington along with Appeal filed by the NBCC which was transferred. Hon'ble Supreme Court delivered a detailed and elaborate judgment dated 14th March, 2021, in (2022) 1 SCC 401, Jaypee Kensington Boulevard Apartments Welfare Association and Ors vs. NBCC India Limited & Ors. In paragraph 18 of the Judgment, Hon'ble Supreme Court noticed points for determination. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of the Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject-matter expressed by them after due deliberations in CoC meetings through vot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etailed reference to the aforesaid report of the Bankruptcy Law Reforms Committee of November 2015. Apart from the passage from the said report that was noticed in K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] (reproduced hereinabove), the Court noticed various other passages from this report in Essar Steel [Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] ; and one part thereof, which further underscores the rationale for only financial creditors handling the process of resolution, could be usefully reproduced as under (part of para 56 at pp. 578-79 of SCC): "56. ... 5.3.1. Steps at the start of the IRP *** 4. Creation of the creditors committee The creditors committee will have the power to decide the final solution by majority vote in the negotiations. The majority vote requires more than or equal to 75% of the creditors committee by weight of the total financial liabilities. The majority vote will also involve a cram down option on any dissenting creditors once the majority vote is obtained. ... The Committee deliberated on who should be on the creditors committee, giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king over of management of the corporate debtor and corporate resolution by the acceptance of a resolution plan by the requisite majority of the Committee of Creditors. Most importantly, under Section 30(4), the Committee of Creditors may approve a resolution plan by a vote of not less than 66% of the voting share of the financial creditors, after considering its feasibility and viability, and various other requirements as may be prescribed by the Regulations. *** 64. Thus, what is left to the majority decision of the Committee of Creditors is the "feasibility and viability" of a resolution plan, which obviously takes into account all aspects of the plan, including the manner of distribution of funds among the various classes of creditors. As an example, take the case of a resolution plan which does not provide for payment of electricity dues. It is certainly open to the Committee of Creditors to suggest a modification to the prospective resolution applicant to the effect that such dues ought to be paid in full, so that the carrying on of the business of the corporate debtor does not become impossible for want of a most basic and essential element for the carrying on of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exercisable by the resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with Section 31(1) of the I&B Code. No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (Nclat) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters "other than" enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/Nclat) have been endowed with limited jurisdiction as specified in the I&B Code and not to act as a court of equity or exercise plenary powers." 23. Hon'ble Supreme Court held that approval of the Resolution Plan is exclusively in the domain of the commercial wisdom of the CoC, the scope of judicial review is circumscribed. In paragraph 107.1, 107.2, following has been held: "107.1. Such limitations on judicial review have been duly underscored by this Court in the decisions abovereferred, where it has been laid down in explicit terms that the powers of the adjudicating authority de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Yeida. Any doubt in that regard stands quelled with reference to Regulation 37 of the CIRP Regulations that requires a resolution plan to provide for various measures including "necessary approvals from the Central and State Governments and other authorities". The authority concerned in the present case, Yeida, is the one established by the State Government under the U.P. Act of 1976 and its approval remains sine qua non for validity of the resolution plan in question, particularly qua the terms related with Yeida. The stipulations/assumptions in the resolution plan, that approval by the adjudicating authority shall dispense with all the requirements of seeking consent from Yeida for any business transfer are too far beyond the entitlement of the resolution applicant. Neither any so-called deemed approval could be foisted upon the governmental authority like Yeida nor such an assumption stands in conformity with Regulation 37 of the CIRP Regulations." 25. The Hon'ble Supreme Court also noticed that YEIDA has consistently maintained before the NCLAT as before the Hon'ble Supreme Court that it does not stand to oppose the resolution plan only for sake of opposition rather it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction in the matter of approval of a resolution plan, which is welldefined and circumscribed by Sections 30(2) and 31 of the Code. In the adjudicatory process concerning a resolution plan under IBC, there is no scope for interference with the commercial aspects of the decision of the CoC; and there is no scope for substituting any commercial term of the resolution plan approved by the Committee of Creditors. If, within its limited jurisdiction, the adjudicating authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission after satisfying the parameters delineated by the Code and exposited by this Court. .......... 273.3. The stipulations in the resolution plan, as regards dealings with Yeida and with the terms of concession agreement, have rightly not been approved by the adjudicating authority but, for the stipulations which have not been approved, the only correct course for the adjudicating authority was to send the plan back to the Committee of Creditors for reconsideration." 28. Hon'ble Supreme Court ultimately took the view that some of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information memorandum already issued by IRP and shall also take into account the facts noticed and findings recorded in this judgment. 282.4. After receiving the resolution plans as aforementioned, the IRP shall take all further steps in the manner that the processes of voting by the Committee of Creditors and his submission of report to the adjudicating authority (NCLT) are accomplished in all respects within the extended period of 45 days from the date of this judgment. The adjudicating authority shall take final decision in terms of Section 31 of the Code expeditiously upon submission of report by the IRP. 282.5. These directions, particularly for enlargement of time to complete the process of CIRP, are being issued in exceptional circumstances of the present case and shall not be treated as a precedent. 282.6. As noticed in paras 5.6 and 55.3 hereinabove, the proceedings relating to CIRP of JIL were initiated by the Allahabad Bench of National Company Law Tribunal but, later on, the same were transferred to its Principal Bench at New Delhi. Therefore, the proceedings contemplated by this judgment shall be taken up by the Principal Bench of the National Company Law Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s including the insolvency resolution plan in question to members of the Suspended Board of Directors. The facts were noticed in paragraph 1 of the Judgment which is as follows: "R.F. Nariman, J.- The present appeal arises out of an Appellate Tribunal's judgment [Vijay Kumar Jain v. Standard Chartered Bank Ltd., 2018 SCC OnLine NCLAT 855] rejecting the appellant's prayer for directions to the resolution professional to provide all relevant documents including the insolvency resolution plans in question to members of the suspended Board of Directors of the corporate debtor in each case so that they may meaningfully participate in meetings held by the Committee of Creditors (CoC)." 34. Hon'ble Supreme Court in the above case after noticing the relevant provisions of the IBC and Regulations noticed that members of erstwhile director who was often guarantors, are vitally interested in the resolution plan since the resolution plan binds them. In paragraph 19.3 to 19.5, following has been observed: 19.3. Even assuming that the Notes on Clause 24 may be read as being a one-way street by which erstwhile members of the Board of Directors are only to provide information, we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, and may, as persons aggrieved, file an appeal from the adjudicating authority's order to the Appellate Tribunal under Section 61 of the Code. Quite apart from this, Section 60(5)(c) is also very wide, and a member of the erstwhile Board of Directors also has an independent right to approach the adjudicating authority, which must then hear such person before it is satisfied that such resolution plan can pass muster under Section 31 of the Code." 35. Ultimately Hon'ble Supreme Court directed that Appellant will be given copies of all resolution plan submitted to the CoC within period of two weeks from the date of its judgment. In paragraph 25 of the Judgment, following has been held: "25. We may indicate that the time that has been utilised in these proceedings must be excluded from the period of the resolution process of the corporate debtor as has been held in ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta [ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] (decided on 4-10-2018) (at para 83). In each of these cases, the appellants will be given copies of all resolution plans submitted to the CoC within a period of two weeks from the date of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying down that unsuccessful resolution applicant has no right to challenge the approval of the Resolution Plan. Furthermore, the main reasons for dismissing the appeal has been contained in paragraph 48. The main reason, where the court has observed that one who does not come to a court with clean hand may not get any relief. It was held that conduct of the Appellant in both the appeals is not transparent. In the present case, there are several other facts which need to be noticed. For example, the Appellants were permitted to file objections before the Adjudicating Authority against the resolution plan and their objections were heard on merits, promoter and director was also impleaded as one of the parties in appeal of NBCC, objections of appellants were also noticed by Hon'ble Supreme Court in earlier round of litigation that is while deciding Jaypee Kensington Case. 38. In view of the above submissions, we are of the view that appeals of appellant cannot be thrown out on the ground of locus. As noted above, the limited ground to challenge approval of the resolution plan is that the same is not in conformity with Section 30(2). We thus reject the objection of the respondent on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the resolution plan qua the treatment of income tax dues which appeal has already been disposed of by this tribunal observing the order of the Adjudicating Authority in so far as treatment of the claim of the plan is not vitiated, it is not open for the Appellant to raise any further submissions with regard to dues of income tax. Learned Counsel for the Appellant has also contended that against the order of this tribunal dated 26.09.2023 passed in C.A.(AT) Ins No.549 of 2023, Suraksha Realty has also filed an appeal where it was contended on behalf of Suraksha Realty that in event the future liability of income tax is not extinguished, the plan shall become non-implementable. 42. Learned Counsel for the Respondent submits that the Suraksha Realty has filed the Appeal against only certain observations made in the Judgment of this Tribunal dated 26.09.2023 in respect of liability of Rs. 33,000 Crores and issues which have been closed by Judgment dated 26.09.2023 with regard to treatment of income tax dues in the resolution plan, cannot be allowed to be reopened by the Appellant. 43. As noticed above, the income tax department has itself filed an appeal being C.A.(AT) Ins. No. 549 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sway Industrial Development Authority vs. M/s Shakuntala Education and Welfare Society and Ors., 2022 SCC On Line SC 655". Learned counsel for the Appellant further submits that YEIDA is a Secured Creditor as per judgment of the Hon'ble Supreme Court in State Tax Officer vs. Rainbow Papers Limited, 2022 SCC OnLine SC1162. Learned counsel for the Appellant has also referred to Section 13 of the Uttar Pradesh Industrial Area Development Act, 1976. YEIDA being a Secured Creditor, Resolution Plan could not have treated as mere Operational Creditor and allocate only Rs.10 Lakhs to it. The allocation of amount to the YEIDA has clearly in breach of Section 30 Sub-section (2)(b)(iii). Entire amount of Rs. Rs.6,111.60 Crore of the claim of YEIDA is entitle to same treatment and in the same proportion of debt as given to other Secured Creditors. Consent of YEIDA was never obtained with regard to provision of Resolution Plan. The plan ultimately sought to modify the Concession Agreement, which is impermissible. 45. Learned counsel for the Respondent No.3 and 4 refuting the submissions of learned counsel for the Appellant submits that in so far as claim of YEIDA is concerned, YEIDA has alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list this appeal on 25th August, 2023 at 2.00 P.M." "25.08.2023: Mr. Gopal Jain, Learned Senior Counsel appearing for the appellant submitted that the proposal received by SRA is to be considered in the Board Meeting and it is likely to be held in the next month. List this appeal on 09.10.2023 at 2.00 P.M." "05.12.2023: Learned Counsel appearing for the appellant submits that the proposal has already been submitted before the State Government which is under active consideration and some more time may be required to take a decision on the proposal submitted to the State Government. List this appeal on 12.01.2024 at 2.00 PM." 48. The above orders indicate that the Successful Resolution Applicant has already submitted a proposal to the YEIDA which is under active consideration. Learned counsel for the YEIDA has submitted that proposal has been submitted with the State Government which is under active consideration. Recording the aforesaid statement made by learned counsel for the YEIDA, appeal filed by YEIDA adjourned to 12.01.2024. The appeal filed by YEIDA has not yet been decided and pending consideration. The Hon'ble Supreme Court in Jaypee Kensington Judgment while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to the claim of YEIDA and their ground to challenge the impugned order approving Resolution Plan are best suited to be examined and decided in the appeal filed by YEIDA where impugned order is under challenge and grounds have been raised. We, thus, are of the view that the issues raised by the Appellant, as noted above, need to be examined and considered in the appeal filed by YEIDA i.e. Company Appeal (AT) (Ins.) No.493 of 2023 and there is no necessity to consider those issues in this appeal which is filed by the Suspended Promoter and Director of the Corporate Debtor. Answer to both the questions is recorded accordingly. Question No. (v) 50. Another ground of attack by the Appellant to the Resolution Plan is on the ground that right of subrogation which is vested in a Corporate Guarantor and Personal Guarantor has been taken away by the Resolution Plan. It is submitted that under the provisions of Indian Contract Act, 1872 a surety or guarantor has a right to subrogation. The liability of a surety is co-extensive with that of the principal debtor and, upon the discharge of principal debtor from its obligation to repay the debt, the liability of surety also gets ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. 141. Surety's right to benefit of creditor's securities.-A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses, or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security." 52. We may first consider the submission advanced by the Appellant on right of subrogation. Subrogation is defined in P Ramanatha Aiyar's Advanced Law Lexicon in following words: "Subrogation. The acquisition of another person's rights usually as result of assuming or discharging that person's liabilities, particularly in connection with guarantees and insurance." 53. The Hon'ble Supreme Court in "Krishna Pillai Rajasekharan Nair (D) by Lrs. vs. Padmanabha Pillai (D) by Lrs. & Ors., (2004) 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that once a resolution plan is accepted, the corporate debtor is discharged of liability. As a consequence, the guarantor whose liability is co-extensive with the principal debtor i.e. the corporate debtor, too is discharged of all liabilities. It was urged therefore, that the impugned notification which has the effect of allowing proceedings before NCLT by applying provisions of Part III of the Code, deprives the guarantors of their valuable substantive rights." 55. The Hon'ble Supreme Court noted relevant provisions of the Contract Act including Section 141 of the Contract Act. The Hon'ble Supreme Court laid down that approval of Resolution Plan and finality imparted to it does not per se operate as a discharge of the guarantor's liability. Following was laid down in Para 122 and 125: "122. It is therefore, clear that the sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor's liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself. However, this Court has indicated, time and again, that an involuntary act of the principal debtor leading to l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract." 56. The Resolution Plan after approval is binding on the Corporate Debtor, its employees, members, creditors including its Directors and Guarantors. Section 31(1) of the IBC provides as follows: "31. (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve3 the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, 1[including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan. 2[Provided that the Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating Authority, each of the financial creditors shall be deemed to have agreed and acknowledged the following terms: (i) The payment to the financial creditors in accordance with this resolution plan shall be treated as full and final payment of all outstanding dues of the corporate debtor to each of the financial creditors as of the effective date, and all agreements and arrangements entered into by or in favour of each of the financial creditors, including but not limited to loan agreements and security agreements (other than corporate or personal guarantees provided in relation to the corporate debtor by the existing promoter group or their respective affiliates) shall be deemed to have been (i) assigned/novated to the resolution applicant, or any person nominated by the resolution applicant, with effect from the effective date, with no rights subsisting or accruing to the financial creditors for the period prior to such assignment or novation; and (ii) to the extent not legally capable of assigned or novatedterminated with effect from the effective date, with no rights accruing or subsisting to the financial creditors for the period prior to termination. (ii) In relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pending. It has been pointed out to us that Shri Prashant Ruia and other members of the promoter group, who are guarantors, are not parties to the resolution plan submitted by ArcelorMittal and hence, the resolution plan cannot bind them to take away rights of subrogation, which they may have if they are ordered to pay amounts guaranteed by them in the pending legal proceedings. 105. Section 31(1) of the Code makes it clear that once a resolution plan is approved by the Committee of Creditors it shall be binding on all stakeholders, including guarantors. This is for the reason that this provision ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were. In SBI v. V. Ramakrishnan [SBI v. V. Ramakrishnan, (2018) 17 SCC 394 : (2019) 2 SCC (Civ) 458] , this Court relying upon Section 31 of the Code has held: (SCC p. 411, para 25) "25. Section 31 of the Act was also strongly relied upon by the respondents. This section only states that once a resolution plan, as approved by the Committee of Creditors, takes effect, it shall be binding on the corporate debtor as well as the guarantor. This is for the reason th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment must also be set aside on this count." 58. The law is thus well settled that after approval of the Resolution Plan, the Personal Guarantors and Corporate Guarantors have no right of subrogation especially when in the facts of the present case under Clause 34.50 of the Resolution Plan, right of subrogation is expressly extinguished. The debt against the Corporate Debtor might have extinguished after approval of the Resolution Plan but said consequence shall not be with regard to the Corporate Guarantors and the Personal Guarantors. The same shall be as per the express provisions of the Resolution Plan. We, thus, do not find any substance in submission of the Appellant that debt is extinguished under Section 135 and they have right of subrogation under Section 140 and to receive pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a time bound manner as applicable under the prevailing laws in order to implement the Resolution Plan." As the relief sought is to facilitate implementation of the Resolution Plan, the same is granted." 62. From the above direction issued by the Adjudicating Authority it is clear that the SRA has prayed for issuance of necessary directions to SEBI, relevant stock exchanges and MCA for expediting the delisting of shares and take necessary actions in a time bound manner as applicable under the prevailing laws in order to implement the Resolution Plan. The above direction is only for the purpose of implementing the Resolution Plan and does not violate any statutory provisions. The use of expression "as applicable under the prevailing laws" clearly indicate that the SRA is not seeking any relief and concession in violation of any applicable law. The objection raised by the Appellant thus has no merit. 63. Now we come to Para 158 of the impugned order, which is as follows: "158. The next relief and concession sought by the SRA is at Serial No.27 of Annexure II reads thus: "27. Issuance of necessary directions to relevant RERA Authority(ies) to expeditiously make the approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions to the Ministry of Corporate Affairs, to waive the requirements under Section 140 of the Companies Act, 2013 in respect of the removal of the existing auditors of the Corporate Debtor. Issue directions to JAL to the effect that during the Transition Period, JAL, if so required by the Resolution Applicants, shall provide all facilitation to the Resolution Applicants /Corporate Debtor, with regard to maintenance and handing over the assets of the Corporate Debtor, for effective implementation of the Resolution Plan." Since the relief sought will expedite the implementation of the Resolution Plan, the relief is granted." 70. Section 140 of the Companies Act deals with 'Removal, resignation of auditor and giving of special notice'. Section 140(1) of the Companies Act is as follows: "140(1) The auditor appointed under section 139 may be removed from his office before the expiry of his term only by a special resolution of the company, after obtaining the previous approval of the Central Government in that behalf in the prescribed manner: Provided that before taking any action under this subsection, the auditor concerned shall be given a reasonable opportunity of bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t adverse effect on validity of the Resolution Plan or it can be said that any illegality has been crept in the Resolution Plan on the above ground. We thus answer the question accordingly. Question No. (viii) : 74. One of the submission which has been advanced by the Appellant is that the Successful Resolution Applicant has not taken into consideration 758 acres of land which was covered by six mortgage transactions which has been released from encumbrances as per order of the Hon'ble Supreme Court dated 26.02.2020 in "Anuj Jain Vs Axis Bank Ltd., (2020) 8 SCC 401". The above submission has been refuted by learned counsel for the Respondent. It is relevant to notice that Respondent No.1 in reply filed in this appeal as specifically pleaded that 858 acres of land was taken into consideration in the Resolution Plan submitted by Suraksha Realty. In the Reply filed by the Respondent No.1, in Para 15 (u) and (v) following has been pleaded: u. It is submitted that In terms of Anuj Jain Vs Axis Bank Ltd., 758 acres of land of the Corporate Debtor, which was earlier mortgaged to the lenders of JAL, was released from any encumbrances under the provisions of avoidance transactions. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of 2023 there is no reply to above pleading. In Para 4 of the Rejoinder following has been pleaded: "4. JAL is filing a composite and not a para-wise rejoinder to the Reply filed by JIL while reserving its right to file a para-wise rejoinder if such need does arise or a direction in this regard in given by this Hon'ble Tribunal. Further, JAL seeks leave of this Hon'ble Tribunal to reiterate, refer to and rely on its submissions made before the Adjudicating Authority in the underlying proceedings." 76. Although Appellant submitted that JAL is filing a composite and not a para-wise rejoinder to the reply filed by JIL, in none of the Para any pleading that land of 858 acres is not included in the Resolution Plan of Suraksha Realty has been made. A perusal of the Rejoinder indicates that although in some para reply to different sub-paragraphs of Para 15 have been given but there is no specific reply to Para 15 (u) and (v). 77. The judgment of Hon'ble Supreme Court in "Anuj Jain Vs Axis Bank Ltd." was delivered before approval of the Resolution Plan on 03.03.2020. From judgment of Jaypee Kensington of the Hon'ble Supreme Court it is noticeable that even in NBCC's plan relief was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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