9911796707
TMI Blog2024 (5) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... s clear that it was the Corporate Debtor who was to carry out all obligations under the contract including pecuniary liabilities and FEMC was only technical partner. Under the JV Agreement all liabilities including VAT liabilities were discharged by the Corporate Debtor, hence, the refund made by the VAT Department transferred to the account of Corporate Debtor is in accordance with the rights and obligations of the parties as per the JV Agreement. There are two main reasons due to which there are no fault in the impugned order passed by the Adjudicating Authority rejecting application filed by the Appellant. Firstly, as per the terms of the JV Agreement between the parties, all contractual liabilities including pecuniary liabilities were to be discharged by the Corporate Debtor. Both the projects were completed prior to initiation of insolvency resolution process and all the liabilities including the VAT liabilities were discharged by the Corporate Debtor, hence, the VAT refund which was made by the VAT Authorities in the account as communicated by the Liquidator cannot be held to be erroneous. Non relinquishing of security interest as part of liquidation estate, having not compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was entered dated 01.09.2013 where it was agreed that FEMC would be paid 1.25% of CC-18 GCV as consultancy service fee for providing the requisite technology, support, etc. (vi) By Third Supplementary Agreement dated 28.01.2013, the consultancy fee was renegotiated and fixed @ 1.325% GCV. (vii) With regard to another project CC-23 another JV Agreement dated 21.05.2012 was entered between the Corporate Debtor and FEMC, which project was also allotted to FEMC Pratibha JV. (viii) For execution of CC-18 project, the FEMC Pratibha JV availed loan facility from four banks namely the Yes Bank, Allahabad Bank, Central Bank of India and Lakshmi Vilas Bank. Subsequently, a working capital consortium agreement dated 17.05.2013 was executed between the FEMC Pratibha JV and the consortium of banks, with the lead bank being the Yes Bank. (ix) A security interest was created in favour of consortium towards CC-18 project specific assets being first ranking pari pasu charge over all the moveable fixed assets of FEMC Pratibha and/ or the project both present and future; first ranking pari passu charge over all current assets of the borrower and/or the Project both present and future; first ranki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received as VAT refund, which amount was transferred by the Liquidator to the designated bank account of the Corporate Debtor. The application was filed by the Yes Bank praying for reliefs, as noticed above. The Adjudicating Authority after hearing the parties dismissed the application. Aggrieved by which order this Appeal has been filed. 2. We have heard Shri Chitranshul A. Sinha, learned counsel for the Appellant and Ms. Prachi Johri, learned counsel for the Respondent Liquidator. 3. Learned counsel for the Appellant submits that the Liquidator has received VAT refund of Rs.32.11 Crores for DMRC Project on 30.05.2019 in the bank account opened by Respondent No.2. Thereafter, Respondent No.2 transferred the entire VAT refund to the account of the Corporate Debtor. I.A. No.628 of 2022 was filed by the Appellant praying for VAT refund which should be brought back to the bank account of Respondent No.2. It is submitted that FEMC Pratibha JV is a separate legal entity and the VAT refund was for FEMC Pratibha JV and the VAT refund ought to come to FEMC Pratibha JV in favour of the consortium lenders. It is submitted that there was no requirement for the Appellant to comply with Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided with Bank of Baroda which was subsequently freezed by bank officials on 01.01.2018. The Liquidator opened another bank account in the same bank and intimated the same to the VAT Authorities for processing the VAT refund and on 30.05.2019 an aggregate of Rs.32.11 Crore had been remitted by the VAT Authorities in the aforesaid bank account. In the Secured Creditor s meeting, the Liquidator has informed about the expenses incurred by the Corporate Debtor for the said CC-18 and CC-23 Projects and in the claim form submitted by the Yes Bank, they informed that bank is not relinquishing its Security as part of liquidation estate. Liquidator issued notice dated 02.11.2021, requesting the lead bank to make payment. No response was given to notice dated 02.11.2021, hence, the security interest was treated to have been relinquished by the Yes Bank. 5. We have considered the submissions of learned counsel for the parties and perused the record. 6. Before we proceed to enter into the respective submissions of the parties, it is required to notice certain Clauses of the JV Agreement dated 14.03.2012. The JV Agreement provided that JV formed for the purposes of execution of CC-18 Project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y party of First Part to the party of Second Part or its Nominee shall be Rs.13,61,98,750/- (Indian Rupees Thirteen Crore Sixty-One Lakh Ninety-Eight Thousand Seven Hundred Fifty Only) which is calculated as under : Contract Amount Consultancy Services Fees (1.25% of Contract Amount) Rs.10,89,59,00,000/- Rs.13,61,98,750/- 10. Further, it provides: FEMC shall not have any interest whatsoever in the shareholdings in Joint Venture and physical execution of the Works, payments/monies received from client. FEMC shall also have no cam whatsoever, on the payments/monies so received from the client except for the Consultancy Services Fees stipulated in the table hereinabove. By Third Supplementary Agreement, consultancy fee was renegotiated as @ 1.325%. 11. In the CIRP of the Corporate Debtor, Yes Bank has filed its claim in Form B. In Form B which was filed by the Yes Bank, Yes Bank has clearly acknowledged that in the JV, FEMC was only technical partner and pecuniary liability was of the Corporate Debtor only. In Column 5 of Form B, following has been stated: 1. Pratibha Industries Limited The Financial Creditor has sanctioned multiple credit facilities to the Corporate Debtor (as detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts opened for the CC-18 Project, we note that this security was not relinquished in terms of Section 52 of the Code, the Applicant has failed to comply with sub-regulation (2) of Regulation 21A of the Liquidation Regulations, under which the Applicant was required to make payments in terms of clause (a) of sub-section (1) and sub-clause (i) of clause (b) of Section 53 of the Code. 72. Failure to comply with sub-regulation (2) of Regulation 21A of the Liquidation Regulations automatically leads to inclusion of the assets secured with the Applicant to be part of the liquidation estate of the Corporate Debtor in terms of sub regulation (2) and sub-regulation (3) of Regulation 21A of the Liquidation Regulations. 73. Hence, the liquidator was correct in including the refund amount of VAT of Rs. 32.11 crore in liquidation estate of the Corporate Debtor. We hereby vacate the earlier interim order dated 21.03.2022 passed in the present matter, wherein the Respondent No. I was ordered to set aside an amount of INR 32.11 Crores out of cash balance available. The said amount to be distributed in terms of section 53 of the Code. 14. In the Reply filed by the Liquidator, the Liquidator has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Professional of the Corporate Debtor with all the members of the Committee of Creditors ( CoC ) of the Corporate Debtor including you in the 25th meeting of the CoC held on 08.01.2021. However, it is a matter of record that till date you have not paid any amount to the Liquidator in respect of sub-regulation (2) of the Regulation 21A of the Liquidation Regulations was INR 52,01,032/-. It is further pertinent to mention that the has incurred substantial amount aggregating to INR 14,15,82,244/- as costs in preserving and protecting the assets, properties, actionable claims, including secured asset charged to you, of the Corporate Debtor and carrying on the business of the Corporate Debtor as a going concern till 29th October 2021 which does not includes project specific cost. Sub-Regulation (3) of Regulation 21A of the Liquidation Regulations provides that where a secured creditor fails to comply with sub-regulation (2), the asset, which is subject to security interest, shall become part of the liquidation estate. In view of the aforesaid, as more than ninety days' time has lapsed from the liquidation commencement date, you are requested to show cause within seven (7) day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this sub-regulation is not certain by the date the amount is payable under this sub-regulation, the secured creditor shall pay the amount, as estimated by the liquidator: Provided further that any difference between the amount payable under this sub-regulation and the amount paid under the first proviso shall be made good by the secured creditor or the liquidator, as the case may be, as soon as the amount payable under this sub-regulation is certain and so informed by the liquidator. (3) Where a secured creditor fails to comply with sub-regulation (2), the asset, which is subject to security interest, shall become part of the liquidation estate. [ Explanation.- It is hereby clarified that the requirements of this regulation shall apply to the liquidation processes commencing on or after the date of the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019. ] 17. The Liquidator having sent the email and asked the Bank to provide its share and the Yes Bank having failed to provide its share, which was required to be discharged by it, no error was committed in treating the assets as part of the liquidation assets. 18. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
