9911796707
TMI Blog2024 (7) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... . Appellant was entitled to proceed against the corporate debtor since debt and default continues and debt against the corporate debtor is not wiped off and in any manner or diminished. The interim injunction order dated 29.09.2021 can have no effect on continuous of Section 7 application. An order of court continues to bind the parties till it is set aside. Till the order of the court subsist, same is liable to be complied with. By proceeding with Section 7 application by the Appellant, no non-compliance of the interim injunction order dated 29.09.2021 can be read. Present is a case where the Appellant is not contending that order dated 29.09.2021 be ignored rather the submission is that the said order has no effect on continuance of Section 7 application which has been revived by the Adjudicating Authority itself to proceed. The debt and default on the part of the corporate debtor still continues. The intending assignment having never taken place, the debt cannot be held to be assigned to Respondent No.2 so that the Respondent No.2 may step into the shoes of the financial creditor of the corporate debtor. Adjudicating Authority committed error in dismissing Section 7 application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn, Appellant filed an application to withdraw Section 7 application which was allowed by the Adjudicating Authority by order dated 23.01.2020 while granting the Appellant the liberty to revive the Company Petition in case the settlement (Agreement to Assign) failed. As per Assignment Agreement, an amount of Rs.4.50 Crores was to be paid by intending assignee by 31.01.2020 which having not paid, on 27.02.2020, Appellant wrote to Respondent No.2 to make the payment along with interest otherwise it would be considered as an event of default under the Agreement to Assign. Respondent No.2 having failed to honour the terms of the Agreement to Assign, letter dated 02.03.2020 was issued by the Appellant to the intending assignee revoking and cancelling the Agreement to Assign and further forfeiting the amount paid by the Respondent No.2 with observations that amount submitted shall be adjusted to the outstanding dues payable by the Corporate Debtor. After receiving the letter dated 02.03.2020, there were certain correspondences made by the Respondent No.2 with Appellant proposing payments in September 2020. A pay order of Rs. 1 Crore was also sent to the Appellant which was not encashed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. 3. We have heard Shri Abhijit Sinha, Learned Senior Counsel for the Appellant, Shri Krishnendu Datta, Learned Senior Counsel and Ms. Sadapurna Mukherjee for the Respondent No.1 and Shri Sunil Fernandes, Learned Senior Counsel for the Respondent No.2. 4. Learned Senior Counsel for the Appellant submits that the Adjudicating Authority in the impugned order has misconstrued the Agreement to Assign while holding that application under Section 7 is not maintainable against Howrah Mills Company Ltd., the Corporate Debtor. It is submitted that the agreement dated 15.01.2020 entered between the Appellant and the Respondent No.2 was Agreement to Assign which was dependent on payment of consideration amount of Rs.26.01 Crores. The Agreement mentioned the Appellant as intending assignor and Respondent No. 2 as intending assignee which clearly indicates that agreement dated 15.01.2020 was not an assignment agreement, hence, corporate debtor continues to be liable for its debt and default. It is further submitted that Company Petition was withdrawn by order dated 23.01.2020 with liberty to revive, if agreement fails. Respondent No.2 having not made the payment which was due by 31.01.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o picture as assignee of the debt of the corporate debtor and on payment of 25% of the amount i.e. Rs.6.5 Crores on signing of the agreement, the Appellant was precluded from pursuing Section 7 application. Counsel for the Respondent No.2 has relied on clause 7.4.5 of the Agreement to support his submission that Appellant was legally not entitled to prosecute Section 7 application. After receipt of 25% of the consideration as per agreement, Appellant is bound by the agreement and could not have proceeded with Section 7 application. It is submitted that at best the appellant has remedy against Respondent No.2 but could not have proceeded with Section 7 application and the Adjudicating Authority has rightly dismissed Section 7 application with liberty to the Appellant to proceed against Respondent No.2. It is submitted that injunction order dated 29.09.2020 passed by the Commercial Court is still operative and binds the appellant. The injunction order cannot be ignored on the spacious plea of the appellant that injunction order is without jurisdiction and till the order is set aside, order continues to operate. Counsel for Respondent No.2 relied on judgment of the Hon ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples relating to the assignment of Financial Assets and all its rights, title and interest thereunder. 9. Clause 2 deals with assignment . Clause 2 of the agreement is as follows:- 2. ASSIGNMENT (a) For and against the Purchase Consideration paid by the Intending Assignee to the Intending Assignor and upon terms and conditions set forth herein, the Intending Assignor hereby agrees to sell, assign and transfer all its rights, title and interest in the Financial Assets to the Intending Assignee/nominee appointed by Intending Assignee and the Intending Assignee hereby agrees to purchase from the Intending Assignor or arrange purchase by its nominee from Intending Assignor, so that the Intending Assignee/ its nominee shall become the full and absolute legal owner and the only person legally entitled to the Financial Assets or any part thereof as defined herein above in the instant agreement. After the payment of Purchase Consideration, the Intending Assignor shall transfer/deliver or cause to be transferred/ delivered to the Intending Assignee / its nominee all such available original loan documents, deeds and/or writings related to Financial Assets. (c) The Parties irrevocably and un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s registration of the documents between the Intending Assignor and Intending Assignee and any other legal expenses shall be borne by the Intending Assignee. 7.4.4 Immediately upon execution of this Agreement, JMFARC shall file petition to National Company Law Tribunal (NCLT), Kolkata Bench, Kolkata for withdrawal of its application under Insolvency and Bankruptcy Code (IBC) filed before National Company Law Tribunal, Kolkata Bench, Kolkata being C.P (IB) No. 4/KB/2019 against Howrah Mills Company Ltd (hereinafter referred to as Howrah Mills ). If however, the application filed by JMFARC is admitted by NCLT, Kolkata Bench, Kolkata before execution of registered Deed of Assignment between JMFARC and Intending Assignee/its nominee, then this Agreement shall become null and void and all sums received by JMFARC from Assignee till date of admission shall be refunded back to the Intending Assignee preferably within 4 (four) weeks. 7.4.5 Upon receipt of initial 25% of the consideration, JMFARC shall keep in abeyance all legal actions and legal proceedings initiated by JMFARC against Howrah Mills and its guarantors. 12. From the clauses of the agreement to assign, following is decipherable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding with company petition under Section 7 filed by the appellant. 14. Adjudicating Authority has based its order on the interim injunction passed by Commercial Court dated 29.09.2021 in T.S. No.22 of 2020 filed by the Respondent No.2. The order of the Commercial Court has been quoted by the Adjudicating Authority in the impugned order, copy of which order has also been brought on record by Respondent No.2 in its reply which order has been extended from time to time. The order passed by the Commercial Court was Order under 39 Rule 1 and 2 read with Section 151 CPC i.e. Order of temporary injunction. Temporary injunction granted by Trial Court is as follows : - Hence, it is, ORDERED The respondent No. 1 and or his men and agents is restrained from giving any further effect or acting on the basis of the letter March 02, 2020 till 08.10.2021. Plaintiff/petitioner is directed to comply the provisions U/O 39 rule 3(a) and (b) of the code of Civil Procedure at once and furnish to the respondents: 1. a copy of the injunction application; 2. a copy of the affidavit filed in support of the temporary injunction application: 3. a copy of the plaint; 4. copies of documents on which the plainti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that on receipt of 25% of the consideration, JMFARC shall withdraw the application under Section 7 filed before the NCLT, Kolkata Bench, Kolkata which contemplation is in Clause 7.4.4. There is no dispute that after receipt of 25% of the consideration, Section 7 application was prayed to be withdrawn which was permitted by order dated 23.01.2021. Clause 7.4.5 has to be read along with Clause 7.4.4 where withdrawal was contemplated of Section 7 application and upon receipt of initial 25% of the consideration, JMFARC had to keep in abeyance all legal actions and legal proceedings initiated by JMFARC. Clause 7.4.5 was complied with as noticed above and application to revive Section 7 application i.e. Restoration Application was filed only on 31.07.2020 when further consideration as per time schedule of the Agreement to Assign was not complied with by Respondent No.2. Clause 7.4.5 thus, only contemplated of keeping in abeyance of all legal actions and legal proceedings initiated by JMFARC after receipt of 25% of the consideration but the said clause cannot prohibit the JMFARC not to take any proceeding when further instalments of purchase consideration were not paid as per the Agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, JMFARC can proceed against Abhinandan for any default committed by Abhinandan in terms of agreement but not against Howrah Mills, its financial assets being already purchased by Abhinandan as explained above. 21. The view of the Adjudicating Authority that Appellant cannot proceed against Howrah Mills Co. Ltd. anymore is wholly erroneous and not in accordance with law. Appellant was entitled to proceed against the corporate debtor since debt and default continues and debt against the corporate debtor is not wiped off and in any manner or diminished. The interim injunction order dated 29.09.2021 can have no effect on continuous of Section 7 application. 22. Now we come to the judgment of the Hon ble Supreme Court relied by Counsel for the Respondent No.2 i.e. judgment in Anita International (supra). Appellant has relied on paragraphs 54 and 55 of the judgment, which is as follows : - 54. We are also of the considered view, as held by the Court in Krishnadevi Malchand Kamathia case, that it is not open either to parties to a lis or to any third parties to determine at their own that an order passed by a court is valid or void. A party to the lis or a third party who consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding with Section 7 application by the Appellant, no non-compliance of the interim injunction order dated 29.09.2021 can be read. Present is a case where the Appellant is not contending that order dated 29.09.2021 be ignored rather the submission is that the said order has no effect on continuance of Section 7 application which has been revived by the Adjudicating Authority itself to proceed. 24. In view of the foregoing discussions, we are of the considered opinion that debt and default on the part of the corporate debtor still continues. The intending assignment having never taken place, the debt cannot be held to be assigned to Respondent No.2 so that the Respondent No.2 may step into the shoes of the financial creditor of the corporate debtor. Adjudicating Authority committed error in dismissing Section 7 application filed by the financial creditor. Debt and default having been proved, we are of the view that the Adjudicating Authority ought to have admitted Section 7 application and initiated CIRP against the corporate debtor. 25. By IA No. 3031 of 2024, Respondent No.1 has prayed that Respondent No.1 may be deleted from array of the parties. Respondent No.1 being corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
