Acrow Construction Pvt.Ltd. & Ors vs Punjab National Bank And Ors

IN THE MATTER OF: Acrow Construction Pvt. Ltd. & Ors. ...Appellants

Versus

Punjab National Bank & Ors. ...Respondents

Present: For Appellant: Mr. K. Datta, Sr. Advocate with Mr. Kumar Anurag Singh, Mr. Zain A. Khan and Ms. Ekta Bharati, Mr. Prateek Gupta, Advocates. For Respondents: Mr. G. Aniruth Purusothaman, Advocate for R-1, 2 & 3. Mr. Abhijeet Sinha, Mr. Nikhil Kumar Jha, Advocates for R-4 (RP). ORDER

(Virtual Mode)

10.03.2022: Heard Learned Sr. Counsel for the Appellant-Mr.

Krishnendu Datta, Learned Counsel for the Respondent Nos. 1 to 3-Mr. G.

Aniruth Purusothaman and Mr. Abhijeet Sinha, Advocate for the Resolution

Professional.

2. This Appeal has been filed challenging the Order dated 03.01.2022

passed by the Adjudicating Authority(National Company Law Tribunal,

Ahmedabad, Court-2) in IA 338 of 2021 in CP(IB) 271 of 2019. By which

Order, Adjudicating Authority has directed the Resolution Professional to once

again grant inspection to the Respondent Nos. 1 to 3 who are applicants before

the Adjudicating Authority, of the claims documents and further allow copies

of the documents so inspected as required by the Respondent Nos. 1 to 3. The

Appellant has also challenged the earlier Order dated 02nd December, 2021 of -2-

the Adjudicating Authority by which direction was issued to the Resolution

Professional to grant inspection.

3. The 'CIRP' proceedings were initiated against the Corporate Debtor by

Order dated 09.11.2020 on an Application filed by the Appellants before

Adjudicating Authority under Section 7 of the Insolvency and Bankruptcy

Code, 2016 (IBC in short). Public Announcement was made by the IRP on

12.11.2020 in response to which claims were filed. Appellants have also filed

the claim Forms claiming to be Financial Creditors. The Respondent Nos. 1 to

3 who were also Financial Creditors filed their claims. The Committee of

Creditors (CoC in short) was constituted and 1st Meeting was held on 10th

December, 2020. An Application was filed by the Respondent Nos. 1 to 3 before

the Adjudicating Authority being I.A.-338/2021 wherein apart from Appellants

before us there were other 16 entities who were impleaded as Respondent Nos

1 to 20 and Respondent No. 21 was Resolution Professional. In the said

Application, following prayers have been made by the Applicants:

"A. Declare the Respondent Nos. 1, 2, 4, 5, 6, 7, 8, 10, 11, 12, 13, 14, 15, 17, 18, 19 and 20 as related parties of the Corporate Debtor.

B. Declare that the material decisions taken by the CoC shall not affect the CIRP of the Corporate Debtor and the same be set aside as null and void.

C. Direct the Respondent No. 21 to permit inspection by the Applicant or their Authorised Representative in respect of the claim documents submitted for claim verification by the Respondent

Company Appeal (AT) (Insolvency) No. 74-75 of 2022 -3-

No. 1 to 20 and to furnish copies of the same to the Applicant.

D. Direct the Respondent No. 21 to remove the Respondent Nos. 1, 2, 4, 5, 6, 7, 8, 10, 11, 12, 13, 14, 15, 17, 18, 19 and 20 from the Committee of Creditors of the Corporate Debtor.

E. Direct the Respondent No. 21 to reconstitute the Committee of Creditors of the Corporate Debtor on the basis of the revised voting share.

F. Direct the Respondent No. 21 to cease and desist from convening the meetings of the

Committee of Creditors to take material decisions relating to Corporate Insolvency Resolution Process of the Corporate Debtor, until the Committee of Creditors is reconstituted.

G. Direct disciplinary proceedings to be initiated against the Respondent No. 21 for having admitted claims of the Respondent Nos. 1, 2, 4, 5, 6, 7, 8, 10, 11, 12, 13, 14, 15, 17, 18, 19 and 20 in collusion without verification.

H. Pass ad-interim and interim reliefs in terms of Clause A,B,C,D, E, and F.

I. Pass such other order/directions as this Hon'ble Bench may deem fit and proper in the facts and circumstances of the case."

4. The Application came for hearing before the Adjudicating Authority on

02.12.2021 and the Adjudicating Authority directed the RP to permit

inspection of the claim documents to the Applicants therein (Respondents 1

Company Appeal (AT) (Insolvency) No. 74-75 of 2022 -4-

to 3 herein). In the Order it was also noted that earlier date was fixed for

inspection but when the Applicants reached no inspection was given by the

RP. Noticing the aforesaid submission, Adjudicating Authority directed the RP

to again provide inspection. The Adjudicating Authority directed that let the

Copies of the Claim Documents shown to the Applicant who are Financial

Creditors/Public Sector Banks. After the Order dated 2.12.2021 the matter

was taken up by the Adjudicating Authority on 03.01.2022 when again the

grievance was raised that inspection was not provided by the RP to the

Applicants. The Adjudicating Authority again directed to give inspection of the

claim documents mentioned in the Order dated 02.12.2021 through their

authorised representative being the authorised Bank officials to visit the office

of the RP and let the inspection be given in the office of the RP on 07.1.2022

in the office of RP. The Court further issued following direction:

"Copies of the documents which are inspected in the said meeting be provided if asked for by the applicant. The Learned Counsel for the RP states that RP does not have any power to supply the copies under the provisions of the Code to CoC Members. RP is directed to comply the direction passed above."

5. Aggrieved against the Order dated 02.12.2021 and 03.01.2022, Four

Appellants who are Financial Creditors of the Corporate Debtor have come up

in this Appeal.

6. We have heard Mr. Krishnendu Datta, Sr. Advocate for the Appellant.

Mr. Datta, at the very outset, submits that he is not raising any grievance in

Company Appeal (AT) (Insolvency) No. 74-75 of 2022 -5-

the present Appeal in so far as the Direction to inspect the document has been

issued by the Adjudicating Authority. He submits that he is not questioning

the inspection direction however he submits that the direction for giving copies

of the claims documents is not permissible in accordance with the provisions

of law and CIRP Regulations. He submits that power under Section 21(9) of

the Code is of the Committee of Creditors to ask for documents from the

Resolution Professional and the applicants who are only members of the CoC

cannot pray for giving copies of the claims documents. He submits that the

Applicants who are Respondents are intending to hold a fishing and roving

inquiry to find out something in support of their Application being I.A. 338 of

2021.

7. Learned Counsel appearing for the Respondent Nos. 1 to 3 submits that

the Adjudicating Authority has passed the Order for copies of the claims

documents due to the peculiar facts and circumstances of the case as has

been noticed in the Order dated 03.01.2022. He submits that earlier the

Adjudicating Authority directed for inspection but looking to the subsequent

facts which were before the Adjudicating Authority the conscious order has

been passed directing to give the copies of the claims documents which are to

be inspected by the Respondents. It is submitted that the Order passed by the

Adjudicating Authority is order quo the specific Respondent Nos. 1 to 20

regarding the claims of Respondent No. 1 to 20 in the Application and is not

an order in rem. It is submitted that Applicants have raised serious allegations

regarding the inclusion of the several Respondents in the CoC. It is contended

that the case of the Applicant was that the Respondents are related parties of

Company Appeal (AT) (Insolvency) No. 74-75 of 2022 -6-

the Corporate Debtor and cannot be part of the CoC and Orders were passed

during the course of the hearing of I.A. No. 338 of 2021.

8. Mr. Abhijeet Sinha, Advocate appearing for the Resolution Professional

submits that RP is ready to comply any direction issued by the Adjudicating

Authority or by this Tribunal and he does not have to make any submission

regarding either inspection or providing copies of the claims documents and

in an event, Court passes any order, the RP has to comply the Order of the

Adjudicating Authority.

9. We have considered the submissions of Learned Counsel for the parties

and perused the record.

10. In so far as the Direction passed by the Adjudicating Authority on

02.12.2021 for inspection of all the documents relating to admitted claims of

the Respondents, no grievance is raised before us hence no exception can be

taken to the Order dated 02.12.2021 where direction for inspection has been

issued. Issue which has been raised by the parties before us is regarding the

direction of the Adjudication Authority for providing copies of the claims

documents so inspected by the Applicants i.e. Respondent Nos. 1 to 3. Section

21(9) and Section 21(10) of I&B Code, 2016 which has been referred to by the

Appellants provides as follows:

"21(9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process.

Company Appeal (AT) (Insolvency) No. 74-75 of 2022 -7-

21(10) The resolution professional shall make available any financial information so required by the committee of creditors under sub-section (9) within a period of seven days of such requisition."

11. We have also been referred to provisions of the Regulation 13(2) of the

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for

Corporate Persons) Regulations, 2016. Under the Regulation, after public

announcement, the claims have to be filed as per Regulation 13(2) is required

to be given. Regulation 13(2) provides for verification of the claims. It is further

submitted that under the Regulation 13(2) the only list of creditors is to be

available for inspection by the persons who submitted proofs of claim as well

as available for inspection by members, partners, directors and guarantors of

the corporate debtor or their authorised representatives. Present is the case

where the Adjudicating Authority has directed for giving copies of the claims

documents as required by the Applicants after inspection. The argument of

Resolution Professional has been noted in the Order dated 03.01.2022 that

Resolution Professional does not have any power to supply the copies under

the provisions of the Code to the CoC Members. There is no doubt that RP by

himself cannot share the documents with any individual member of CoC

unless the CoC takes a decision under Section 21(9) asking any documents

from the Resolution Professional. Thus RP was right in its submissions that

he, under the IBC cannot provide the copies of the claims documents. Noticing

the said argument, direction was given by the Adjudicating Authority for giving

copies of the claims documents to the Applicants. Learned Counsel for the

Appellants has submitted that the allegation of the Applicants in I.A. No. 338

Company Appeal (AT) (Insolvency) No. 74-75 of 2022 -8-

of 2021 is that the Respondents are related members of the Corporate Debtor

and they be ousted form the CoC, have no bearing on the claims documents

which are submitted by the Appellants.

12. It is relevant to notice that there were 20 Respondents in the Application

and direction was issued to provide inspection of all the Respondents

including the present Appellants but only 4 Appellants have come up in this

Appeal challenging the said Order. The Adjudicating Authority who is

empowered to take appropriate decision on application filed by the

stakeholders has exercised its inherent power under Rule 11 of the NCLT

Rules, 2016 in the facts of the present case. It cannot be accepted that

Adjudicating Authority has no jurisdiction to issue any direction for giving

copies of particular claims documents filed in the CIRP process. The Order of

the Adjudicating Authority for directing copies is case specific and based on

the application in the present case filed by the Respondent Bank. The

Resolution Professional is obliged to give such documents if any decision is

taken under Section 21(9) of the Code by CoC. The direction of the

Adjudicating Authority to give copies of claims documents to the particular

Financial Creditors cannot be held to be not within domain of the Adjudicating

Authority and in particular facts of the present case such power can very well

be exercised by the Adjudicating Authority and direction issued by the

Adjudicating Authority for supplying copies of the claims documents needs no

interference in exercise of our appellate Jurisdiction.

Company Appeal (AT) (Insolvency) No. 74-75 of 2022 -9-

13. We are also of the opinion that for deciding the Application i.e. I.A. 338

of 2021 filed by the Public Sector Banks and for consideration of prayers made,

giving of copies of the documents was necessary.

We are thus of the view that no error has been committed by the

Adjudicating Authority in passing the Impugned Order dated 03.01.2022 and

02.12.2021. We do not find any merit in the Appeal, the Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical)

Basant/nn

Company Appeal (AT) (Insolvency) No. 74-75 of 2022