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TMI Blog2024 (11) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... C.P. (IB) No. 3622(MB)/2018. By the Impugned Order, Adjudicating Authority has dismissed the I.A.1370/2021, aggrieved by which Order, this Appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: i. The TJSB Sahakari Bank Ltd. filed an Application under Section 7 against Corporate Debtor M/s. Unimetal Castings Limited, (UCL) in C.P. (IB) No.3622/I&B/MB/2018. ii. Vide Order dated 25.01.2019, for debt and default of Rs.6,38,78,417/-, Section 7 Application was admitted and Tejas Jatin Parikh, Respondent No. 1 herein was appointed as Interim Resolution Professional (IRP) who was subsequently confirmed as Resolution Professional (RP). iii. Public announcement was made by the IRP. Committee of Creditors (CoC) was constituted with TJSB Sahakari Bank Ltd., Reliance Asset Reconstruction Company Ltd. and Mahindra & Mahindra Financial Services Ltd. iv. On 15.07.2019, CoC unanimously, voted for Liquidation of the Corporate Debtor. v. Respondent No. 4, the Promoter & Executive Director of the Corporate Debtor, UCL as well as Joshi Deodhar Engineering Company Limited (JDECL) (sister concern) sent a communication to the RP intimating his in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22, Adjudicating Authority directed the RP to proceed for Liquidation of the Corporate Debtor. Adjudicating Authority heard the I.A. No. 1370/2021 which was opposed by the CoC by filing a Reply. Adjudicating Authority heard the I.A. No. 1370/2021 and by Impugned Order dated 26.07.2022, rejected the Application. Adjudicating Authority by rejecting the Application also imposed a cost of Rs.1 Lakh on the Appellant. Adjudicating Authority also returned a finding that I.A. is nothing but a collusive Application filed by the Appellant at the behest of Respondent No. 3 to 6, who were the Promoters of the Corporate Debtor. It was held that withdrawal of CIRP under 12A with regard to JDECL cannot be legally reversed. 3. Learned Counsel for the Appellant challenging the Order submits that first & second MoU, both contemplated closure of the CIRP of JDECL by 12A Application and approval of Resolution Plan in the CIRP of Corporate Debtor by 30.09.2020 which fact having not accomplished, the Appellant was entitled to refund of the amount which was submitted towards the closure of CIRP of JDECL and approval of the Plan of the Corporate Debtor. Adjudicating Authority did not approve the Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution, Appellant could have taken recourse of the Clause XII of the MoU for its claim, if any, and the Application filed before the Adjudicating Authority for refund of the amount was not maintainable. 5. We have considered the submission of Counsel for the Parties and perused the record. 6. We have noted above that CIRP of the Corporate Debtor commenced by Order dated 25.01.2019. The CIRP against the JDECL was also initiated on an Application filed by the TJSB Sahakari Bank Ltd. The MoU dated 07.08.2020 which was termed as a revised MoU between the Financial Creditor of the Corporate Debtor, UCL and Financial Creditors of JDECL and Promoter Directors is filed as an (Annexure A-6) contains the terms and conditions. The MoU itself contains a statement that Promoter/Directors of the UCL and JDECL and the professionals and investors have formed a company, i.e., Globemet Engineering Private Limited for investment in the process of Resolution of debt of UCL and JDECL. The MoU 07.08.2020 refers to earlier MoU dated 16.03.2020 in Para 11 of the revised MoU. Para 11 of the revised MoU is as follows: "11) Finally, the Memorandum of Understanding (MOU) was executed between the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 months from effective date of NCLT order approving the Resolution Plan 25 2 Last week of the subsequent quarter after previous instalment 25 3 Last week of the subsequent quarter after previous instalment 50 4 Last week of the subsequent quarter after previous instalment 50 5 Last week of the subsequent quarter after previous instalment 50 6 Last week of the subsequent quarter after previous instalment 75 7 Last week of the subsequent quarter after previous instalment 75 8 Last week of the subsequent quarter after previous instalment 75 9 Last week of the subsequent quarter after previous instalment 75 10 Last week of the subsequent quarter after previous instalment 75 11 Last week of the subsequent quarter after previous instalment 75 12 Last week of the subsequent quarter after previous instalment 100 13 Last week of the subsequent quarter after previous instalment 100 14 Last week of the subsequent quarter after previous instalment 100 Total 950 b) On payment of Rs.9.75 Crores as stated in para (a) above, all the secured assets mortgaged for the credit facilities of "UCL" along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) GEPL will make payment of Rs.3 Crore (Rupees Three Crore Only) to the Financial Creditors No. 1 and 2 on execution of this MOU towards one time full and final settlement against all dues of JDECL. b) The parties noted that UCL is a holding company of JDECL in which UCL holds more than 80% of equity shares and since UCL is undergoing CIRP under the Code, it will not be possible to resolve the debts of JDECL till the resolution plan for UCL is approved by the NCLT. It is, therefore, a pre-requisite for the settlement of the dues of JDECL that the resolution plan for UCL is approved by the NCLT so that the management control of JDECL will vest with the new management. It was, therefore, agreed that the effective date for the settlement of JDECL dues to the Financial Creditors No. 1 and 2 will be the date of approval of resolution plan by the NCLT. c) On payment of Rs.3 Crore as stated above, the Financial Creditors No. 1 and 2 will release all mortgages, charges, hypothecation, lien etc. on all properties and assets of JDECL excluding that are collateral for UCL and Promoter/ Directors. The personal guarantees and promises given by the Promoter Directors of JDECL will also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, 12A Application was filed which was allowed by the Adjudicating Authority approving the 12A and the CIRP of JDECL thus came to be closed. Entire debt of the Financial Creditor with JDECL was Rs.3 Crores, which CIRP stood closed and entire debt also discharged. MoU also indicates that Rs.25 Lakhs was to be paid with regard to debt of Corporate Debtor on execution of MoU and rest of the payments were made within 4 years as per the schedule given in revised MoU as noted above. No further payment with regard to dues of Corporate Debtor could be paid since the Resolution Plan could not be approved by the Adjudicating Authority, although CoC has approved the Resolution Plan for the Corporate Debtor. 11. Now we come to the Application which was filed by the Appellant being I.A.1370/2021. Application filed by the Appellant was under Section 60(5) of the Insolvency and Bankruptcy Coder (for short `The Code' or `The IBC') read with Rule 11 of the NCLT Rules, 2016. After relating the facts and details of both the MoU, Appellant has made following prayers: "a. Direct the members of CoC to forthwith refund and release the amount to the tune of INR 3,25,00,000 (Indian Rupees Thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses and proceedings had already culminated and now cannot be reversed. 4. It is very surprising to observe that the applicant while arraying the promoters and directors of both the companies as Respondent Nos. 3 to 6 is praying refund only from COC i.e. Respondent No.2. 5. It is also observed that Respondent Nos. 3 to 6 are the people who are really responsible for failure of CIRP process of M/ s Unimetal Castings Ltd and the same Respondents are also part of the present Applicant M/ s Globomet Engineering Pvt. Ltd. Therefore, it is very clear from the above conduct of the Applicant that the applicant is trying to take advantage of their own wrong and demanding refund only from COC by exonerating its own people from their personal liability. Therefore, the above I.A. is nothing but a collusive application filed by Applicant at the behest of Respondent Nos. 3 to 6." 13. We have noticed the revised MoU dated 07.08.2020, which contemplated payment of Rs.9.75 Crores as full and final settlement of dues of Corporate Debtor and Rs.3 Crores as full and final settlement of dues of JDECL. Amount of Rs.3 Crores was received with regard to dues of JDECL, due to which the 12A Applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SPUTE RESOLUTION This Memorandum of Understanding shall be governed by and construed in accordance with the laws of India. All disputes and differences of opinion arising out of or in connection with this Agreement shall be referred to a sole arbitrator to be appointed by the parties with mutual agreement. The arbitration shall be in accordance with the provisions of the Indian Arbitration & Conciliation Act, 1996 as amended from time to time. The place of arbitration and sitting/ venue shall be in Mumbai. The language of arbitration proceeding shall be in English. This Clause shall survive the termination of this Agreement. The cost of arbitration shall be shared equally by the parties." 16. Any dispute arising out of MoU between the Financial Creditors and Appellant thus was subject to dispute resolution Clause. 17. We have noticed above that Adjudicating Authority has returned a finding that Application was not maintainable under Section 60(5), which findings have been questioned before this Tribunal by the Counsel for the Appellant and are supported by submission of Counsel for the Respondent. In the facts of the present case, we are of the view that Application filed by A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Money Deposit or Bank Guarantee as required under RFRP issued in case of UCL and the conditions of UCL shall stands modified accordingly. Clause VI (b) of MoU is as follows: "b) The Financial Creditors undertake that the said amount of Rs.325 lakhs shall not be withdrawn or appropriated by them till the resolution plan for UCL and the withdrawal of CIRP proceedings under Section 12 A of the Code in case of JDECL have been approved by NCL T as the said amount is not payable to them without the aforesaid approvals from NCL T. The Financial Creditors shall not exercise lien, attachment etc on the amount deposited in the aforesaid No Lien Account under any circumstances." 22. We find that in the MoU there was no Clause of forfeiting the amount of Rs. 25 Lakhs paid towards the resolution of Corporate Debtor, UCL and further Resolution Applicant was not required to pay any EMD or Performance Guarantee. The amount of Rs. 25 Lakhs paid did not form the asset of Corporate Debtor to take control of it in the Liquidation Proceeding of Corporate Debtor. 23. The amount of Rs.3,25,00,000/- consist of two payments (i) Rs.3 Crores for 12A Application under JDECL and Rs.25 Lakhs for approval o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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