9911796707
TMI Blog2025 (1) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to be noticed for deciding the Appeal are:- 2.1. The CIRP against the Corporate Debtor- M/s. Amtek Auto Limited commenced by order dated 24.07.2017 passed on an application by Corporation Bank (now Union Bank of India). In the CIRP, public announcement was made on 27.07.2017 in pursuance of which Appellant filed claim for an aggregate amount of Rs.876,42,09,926/-. The claim included an amount of Rs.39,61,54,488/- under Non Fund Based (Letter of Credit/ Bank Guarantee Facility). The Resolution Professional on verification did not admit the claim of Rs.39,61,54,488/- which had not crystalised as on Insolvency Commencement Date. The CoC was constituted in which the Appellant had vote share of 6.64%. The Resolution Professional after commencement of CIRP wrote to the Appellant to continue the Non Fund Based facility on account of business requirement of the corporate debtor to run it as a going concern. The Corporation Bank extended the Non Fund Based Facility to the corporate debtor starting from 24.07.2017 till 24.10.2018. Letter of Credit/ Bank Guarantee issued by Appellant during CIRP period were debited from the account of the corporate debtor. 2.2. A Resolution Plan w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3961 of 2022 filed by the CoC recalling the judgment and order dated 27.01.2022. The CoC was impleaded as party Respondent to the Appeal. Reply has been filed by the Respondent No.4 (CoC). Resolution Professional had already filed a reply to the appeal. Appeal was heard by this Tribunal and judgment was reserved on 09.12.2024. 3. We have heard Shri Abhijeet Sinha, Learned Senior Counsel along with Shri Alok Kumar, Learned Counsel for the Appellant, Shri N. Venkatraman, Learned ASG has appeared for the CoC and Shri Sumant Batra, Learned Counsel for the Resolution Professional. 4. Shri Abhijeet Sinha, Learned Senior Counsel for the Appellant submits that the letter of credit which was issued by the Bank were honoured during CIRP period due to the fact that the Resolution Professional had requested the Union Bank of India to continue its Non Fund Based facility to keep the corporate debtor as a going concern. Letter of credits issued by the bank were required to be honoured by the Bank and Appellant has not unduly enriched itself. The Resolution Professional having been regularly giving instructions with respect to debiting of cash credit account of the corporate debtor as and when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Appellant. It is submitted that in the meetings of the CoC held on 05.02.2020 and 07.02.2020, two options were placed. Firstly, to treat the aforesaid amount as interim finance as suggested by the Appellant or to deduct the said amount from the payouts of the Appellant. CoC after due deliberation by majority vote has approved the second option i.e. deduction of the amount from payouts of the Appellant. The Appellant being financial creditor having 6.64% voting share had no right or jurisdiction to challenge the decision of the CoC taken in exercise of commercial wisdom. Dissenting Financial Creditor and all other stakeholders are fully bound by the decision taken by the CoC. During CIRP period, the LCs issued were of Rs.1,49,66,13,386/- and payment debited by Appellant during the CIRP period was Rs.1,83,00,47,429/-. Thus, excess amount of Rs.33,34,34,043/- was deducted by the Appellant which has rightly been directed to be deducted from the payouts of the Appellant since Appellant was not entitled to make that recovery. It is submitted that when only an amount of LCs of Rs.1,49,66,13,386/- has been issued during the CIRP period by the Appellant, it had no jurisdiction to dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant as per the scheme of distribution of amount under Resolution Plan; and 3. Direct the Respondent Resolution Professional to further include amounts of Rs.6,22,58,072.64/- towards LC payments and Rs.61,39,000/- towards Bank Guarantee (BG) payments in the total admitted claim of Applicant; or 4. To pass such other order or relief be granted as this Hon'ble Tribunal deems fit and proper having regard to the facts and circumstances mentioned in the present Application." 9. Reply was filed by the Resolution Professional to the IA No.222 of 2020 which reply has been brought on the record by the Resolution Professional as Annexure R1 in the reply filed in this appeal. It is useful to notice the pleadings of the Resolution Professional which was made in the reply filed in IA No.222 of 2020. Details of the claim submitted by the Appellant and claim which was verified by the Resolution Professional has been mentioned in paragraph 6 of the reply which is as follows:- "6. It is submitted that pursuant to the Public Announcement made by the Answering Respondent as IRP, the Applicant filed its proof of claim dated 04.08.2017 as on the insolvency commencement date, for an aggrega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d further payments debited by Corporation Bank. Annexure R2 to the reply is as follows : - S. No. Particulars INR 1 NET LCs issued during CIRP period # [A] 1,49,66,13,386 2 Payments made/ debited by Corporation Bank on account of LCs expiring during CIRP [B] 1,83,00,47,429 3 Excess amounts debited by Corporation Bank [A-B] -33,34,34,043 #Represents the total amounts payable to Corporation Bank on account of LCs opened by Corporation Bank during CIRP starting from 24-Jul-17 S. No. Month LCs issued (INR) LCs Cancelled* (INR) NET LCs issued during CIRP period (INR) 1 Jul-17 3,47,82,522 32,25,200 3,15,57,322 2 Aug-17 18,88,67,838 1,70,12,232 17,18,55,606 3 Sep-17 12,46,75,988 42,68,670 12,04,07,319 4 Oct-17 7,95,16,397 12,39,020 7,82,77,377 5 Nov-17 13,82,13,132 69,77,961 13,12,35,171 6 Dec-17 13,34,90,426 24,63,162 13,10,27,264 7 Jan-18 6,49,64,611 62,27,878 5,87,36,733 8 Feb-18 7,61,18,847 1,35,36,488 6,25,82,359 9 March- 18 8,95,08,900 86,03,983 8,09,04,917 10 Apr-18 4,16,22,860 84,88,460 3,31,34,400 11 May-18 11,47,85,748 12,79,510 11,35,06,238 12 Jun-18 16,17,37,408 1,44,94,815 14,72,42,593 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or agreement to use the LCS continued, however the RP received a letter from the Bank stating continuation of Non Fund Based limits subject to resolution for NFB limits as proposed by accepted subject ("Continuation of Limits") to covering the limit by the Bank from a Scheduled commercial bank. (24 Oct 2018) l) Owing to concerns about the going concern of the CD, a reply to the Bank was sent by RP stating the delay in implementation of the Resolution Plan and requesting the bank not to withdraw the NFB limits during this period to support the going concern of the CD. (30 Oct 2018) m) Around Nov'18 this time the Bank despite the above understanding and communication stopped further LC issuance and started to recover the dues on account of the afore-mentioned LCs despite a contrary confirmation by the Bank's head office in Mangalore. The bank continued debiting outstanding amount of LCs and no fresh LCs were issued to support the Going concern of Corporate Debtor and recovered approximately Rs. 34 cr in LCs from AAL. n) The RP further stated that Corporation Bank was unduly enriched by the amount of LCs forcefully debited from the Operating Account of the corporate debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be dealt with, the LCs so recovered should be accorded the status of interim finance and not reduce if from the share of upfront proceeds due to the them. o) The RP proposed that the said matter can be put to vote along with resolution plan to chose from the below two alternatives; * Option 1: Accord interim Finance status to the Rs. 34 Cr LC adjusted by Corporation Bank to accord priority to this and thus the LC limits gets regularized and Existing Non fund-based limit be dame available to the Corporate Debtor/Resolution Applicant on the same terms and conditions as applicable to the facility utilized by the Corporate Debtor during CIRP. The facility to be utilized for purchase of steel and Scrap * Option 2: The amount of Rs. 34 Cr is deducted from the total amount to be distributed to Corporation Bank and made available to the whole CoC in excess of current Resolution Proceeds. p) Other members of the CoC were of the view that the same cannot be treated like interim finance and should be deducted from the amount to be distributed to Corporation Bank and be made available to the entire CoC in excess of the current resolution proceeds. q) The RP also presented the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section]: [Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.]" 16. One of the subject on which CoC is to approve a Resolution Plan is "the manner of distribution proposed". As noted above, the manner of distribution which was approved by the CoC in 31st CoC meeting contained an approval of deduction of Rs.33.34 Crores from payout of the Appellant. Appellant-Financial Creditor by IA No.222 of 2020 had challenged in effect the decision of the CoC taken in 31st CoC meeting held on 07.02.2020 approving the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal in the present appeal. Thereafter, on 18.11.2021, this Hon'ble Appellate Tribunal reserved its orders. In the meanwhile, the Hon'ble Supreme Court vide its' judgment and order dated 01.12.2021 in Committee of Creditors of Amtek Auto Limited through Corporation Bank Vs. Dinkar T. Venkatasubramanian [Civil Appeal No. 6707/2019], directed as follows: "...Therefore, we direct all the concerned parties to the approved resolution plan and/or connected with implementation of the approved resolution plan including IMC to complete the implementation of the approved resolution plan, within a period of four weeks from today, without fail. It is further directed and it goes without saying that on implementation of the approved resolution plan and even as per the approved resolution plan, an amount of Rs. 500 crores now deposited by DVI- successful resolution applicant be transferred to the respective lenders/financial creditors as per the approved resolution plan and/or as mutually agreed. Any lapse on the part of any of the parties in implementing the approved resolution plan with the time stipulated hereinabove shall be viewed very seriously. 11. With the above obs ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
