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TMI Blog2023 (4) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... for CoC. Mr. Raunak Dhillon, Mr. Nihood D., Advocates for SRA JUDGMENT Ashok Bhushan , J. These two Appeals by the same Appellant, the Shareholder of the Corporate Debtor have been filed against the common order dated 11.08.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in IA (IB) No. 389/KB/2023 & IA (IB) No.391/KB/2023 respectively. The above IAs were filed by the Appellant for recall of the order dated 08.10.2021 passed by this Tribunal admitting the Corporate Debtor namely- 'SREI Infrastructure Finance Limited' (SIFL) and 'SREI Equipment Finance Limited' (SEFL) into CIRP. Both the Applications i.e. IA No. 391 of 2023 and IA No. 389 of 2023 having been rejected by the Adjudicating Authority, these Appeals have been filed challenging the said order dated 11.08.2023. 2. Brief background facts need to be noted for considering the issue raised in these Appeals:- 2.1. SIFL and SEFL are financial service providers registered with Reserve Bank of India (RBI). RBI passed an order dated 01.10.2021 in exercise of jurisdiction under Section 45- IE of the RBI Act, 1934 superseding the Board of Directors of SEFL and SIFL. One Mr. Rajneesh Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... memo of both the Appeals were also rejected. Aggrieved by the order dated 21.12.2022, Appellant filed Civil Appeal No. 473 of 2023 and Civil Appeal No. 486 of 2023 before the Hon'ble Supreme Court. Hon'ble Supreme Court on 30.01.2023 dismissed both the Appeals filed by the Appellant being Civil Appeal No. 473 of 2023 and Civil Appeal No. 486 of 2023. After dismissal of Civil Appeals by the Hon'ble Supreme Court upholding the order of this Tribunal dated 21.12.2022, Appellant filed IA No. 391/KB/2023 as well as IA No. 389/KB/2023 on 14.02.2023 praying Adjudicating Authority to recall the order dated 08.10.2021 in the CIRP of the Corporate Debtor. The applications filed by the Appellant being IA No. 391/KB/2023 and IA No. 389/KB/2023 were opposed both by the RBI as well as Administrator. CIRP against the Corporate Debtor proceeded and Resolution Plans were submitted and received in the CIRP of the Corporate Debtor. CoC on 14.02.2023 approved the Resolution Plan submitted by NARCL. Application was filed before the Adjudicating Authority for approval of the Resolution Plan which remain pending. Intervention applications were filed both by the Consortium of CoC of SIFL and SEFL before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application can be filed. It is submitted that as per Financial Service Providers Rules, 2019, the application under Section 227 has to be in accordance with the provisions of the Code. It is submitted that the Adjudicating Authority committed error in rejecting the recall application. It is further submitted that the Appeals filed by the Appellant against the order dated 08.10.2021 was dismissed by this Tribunal on account of rejection of the application praying for condonation of re-filing delay and the issues raised by the Appellant were never decided on merits. Order of the Hon'ble Supreme Court dated 30.01.2023 dismissing Civil Appeals upholding the order of this Tribunal rejecting the application for condonation of re-filing delay, hence, neither this Tribunal nor the Hon'ble Supreme Court adverted to the issue raised on merits by the Appellant for recall of the order dated 08.10.2021. The Adjudicating Authority committed error in observing that since the similar grounds were raised by the Appellant in this Tribunal and the Hon'ble Supreme Court, Appellant cannot be allowed to re-agitate the said ground which observations are erroneous and incorrect. Issues have never been de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Directors of the SIFL having been superseded by the RBI on 01.10.2021, it was Administrator who was representing the Corporate Debtor and the order dated 08.10.2021 passed by the Adjudicating Authority was after hearing the Administrator, hence, there was no question of violation of principle of natural justice. There was no requirement of law to issue any notice to any shareholder of the Corporate Debtor. It is further submitted that Section 10A of the IBC shall not apply to financial service providers. Section 10A is applicable with regard to application filed under Sections 7, 9 and 10 and there is nothing in Section 10A to indicate that it shall apply to application filed by RBI under Section 227 of the IBC. It is submitted that no debt was owed by the Corporate Debtor to the RBI who was only sectoral regulator. RBI considered various factors such as serious deterioration in the Corporate Debtors' financial position, several supervisory concerns, non-compliances with regulations etc. hence, the order was passed. In the petition for CIRP, default towards numerous lenders were also indicated. It is submitted that no grounds have been made out to recall the judgment dated 08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Board of Directors of SIFL was superseded by order dated 01.10.2021 passed by the RBI under Section 45- IE. Order dated 01.10.2021 passed by the RBI is as follows:- "CO.DOR.ISG.No. 51467/20.27.007/2021-2022 October 01, 2021 Supersession of the Board of Directors of M/s Srei Infrastructure Finance Limited, Kolkata, West Bengal under Section 45-IE of the Reserve Bank of India Act, 1934 Order Srei Infrastructure Finance Limited, Kolkata (SIFL) is a Non-Banking Finance Company (CoR No.B.05.02773 dated March 31, 2011), governed by the provisions of the Reserve Bank of India Act, 1934. 2. The statutory inspection of the SIFL conducted by Reserve Bank of India under Section of 45-N of Reserve Bank of India Act, 1934 with reference to its financial position as on March 31, 2020 revealed serious deterioration in its financial position. 3. SIFL has defaulted in its payment obligations in respect of bank borrowings and market borrowings, which reveals serious concerns about the conduct of the affairs of the company. 4. Taking into account the defaults committed by SIFL in meeting various repayment obligations and concerns emanating from the inspection/special audit con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice that the supersession order dated 01.10.2021 indicate that the SIFL has defaulted with 12 lenders aggregating to Rs.3,566 Crores. Reasons for supersession were noticed in the Annexure to the order as extracted above. 12. Administrator was appointed by order dated 01.10.2021, Shri Rajneesh Sharma with immediate effect. The order dated 01.10.2021 was challenged by the Appellant before the Bombay High Court by Writ Petition No. 2272 of 2021 which were dismissed by the Bombay High Court by order dated 07.10.2021. The Bombay High Court while dismissing the Writ Petition in paragraphs 9.1 and 9.2 noticed as follows:- "9.1. From a perusal of the order dated 01.10.2021, we find that statutory inspection of respondent No.2 was conducted by Reserve Bank of India under section 45N of the Reserve Bank of India Act, 1934 ('RBI Act' hereinafter) with reference to its financial position as on March 31, 2020. Such inspection revealed serious deterioration in its financial position. Respondent No.2 has defaulted in its payment obligations in respect of bank borrowings and market borrowings, which is a matter of serious concern. Because of such defaults, Reserve Bank of India in exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code, in such manner as may be prescribed. [ Explanation.- For the removal of doubts, it is hereby clarified that the insolvency and liquidation proceedings for financial service providers or categories of financial service providers may be conducted with such modifications and in such manner as may be prescribed. ] " 14. The applications being CP (IB) No. 294/KB/2021 and CP (IB) No. 295/KB/2021 came for consideration before the Adjudicating Authority on 08.10.2021. The Administrator of the Corporate Debtor was present during the hearing which is noticed in the order. In paragraph 14 of the order dated 08.10.2021, following was observed:- "14. The RBI vide its notification dated 04/10/2021 has superseded the Board of SIFL and appointed Mr. Rajneesh Sharma, ex-Chief General Manager, Bank of Baroda as the Administrator. The RBI has proposed the name of Mr. Rajneesh Sharma as the Administrator of the Corporate Debtor. He has also filed his written consent in Form 2 to act as such Administrator, which has been placed on record at pages 10-11 of the petition. The Form-2 appears to have been amplified by the Administrator by including certain caveats. Therefore, we were constraine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the Appeals were after detailed hearing dismissed by this Tribunal on 21.12.2022. As the application praying for condonation of 321 days' delay in re-filing the appeal was not allowed, consequently memo of appeal is also rejected. Against the order passed by this Tribunal on 21.12.2022, Civil Appeal No. 473 of 2023 and Civil Appeal No. 486 of 2023 were filed by the Appellant which were dismissed by the Hon'ble Supreme Court by order dated 30.01.2023 which is as follows:- "1 We find no error in the order of the National Company Law Appellate Tribunal dated 21 December 2022 in Company Appeal (AT)(Insolvency) Nos 1293 and 1294 of 2022. 2 The appeals are accordingly dismissed. 3 Pending application, if any, stands disposed of." 18. It was after above prolonged litigation on behalf of the Appellant being unsuccessful in challenging the order dated 08.10.2021, the recall applications being IA (IB) No. 389/KB/2023 & IA (IB) No.391/KB/2023 were filed on 15.02.2023 before the Adjudicating Authority. It is well settled that the Tribunal is not vested with any jurisdiction to review its judgment. It is however well established that the Tribunal has jurisdiction to recall a judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Adjudicating Authority by passing the order dated 08.10.2021. Counsel for the Appellant has advanced submission that order dated 08.10.2021 is in violation of principle of natural justice which submission is wholly unfounded. As noted above, the Board of Directors of the Corporate Debtor was superseded by RBI on 01.10.2021 and Mr. Rajneesh Sharma was appointed as Administrator with immediate effect, the Corporate Debtor, thus, had to be represented by the Administrator alone. Administrator was present on the date when order was passed on 08.10.2021, hence, the submission that the order was passed in violation of principle of natural justice cannot be accepted. There was no requirement of issue any notice to shareholders of the Corporate Debtor before passing of the order dated 08.10.2021. 20. The next submission which has been much pressed by the Appellant is bar of Section 10A. The submission is that the application was not maintainable under Section 10A on account of bar of Section 10A. The submission is that there is apparent error on the record since default noticed in the order was during 10A period but the Adjudicating Authority ignoring the bar of Section 10A has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ially applications to review the judgment dated 08.10.2021 when appeals filed by the appellant were unsuccessful up to the Hon'ble Supreme Court. The ground which is urged in applications are grounds seeking review of the judgment on the merits which jurisdiction is not vested with the Adjudicating Authority. Furthermore, as noted above, the Resolution Plan filed by NARCL was approved by the CoC. It is submitted that the Resolution Plan was submitted in the CIRP of the Corporate Debtor. EOI was invited on 25.02.2022. The Resolution Plans were submitted in December 2022 and 1st week of January 2023. Challenge process was undertaken by the CoC on 03.01.2023 and further the plan is approved by the CoC in voting held on 15.02.2023 and application filed before the Adjudicating Authority for approval of the plan, the plan was approved on 11.08.2023 against which Company Appeal (AT) (Ins.) No. 1072 of 2023 was also dismissed on 05.01.2024 which order has also been affirmed by the Hon'ble Supreme Court. Plan having been approved and implemented which has also been affirmed by the Hon'ble Supreme Court, there is substance in the submission of the Counsel for the SRA that the Appeals are inf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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