Africa Power Company Cc vs Jyoti Structures Limited

Thane Maharashtra 400604 Respondent

For Appellant:Mr. Vijay Purohit, Ms Nikita Bangera, Mr Faizan Mithaiwala, Advocates. For Respondent:Mr. Sunil Fernandes, Mr. Sagar Dhawan, Mr Vijayant Paliwal, Ms Charu Bansal, Ms Mohana Nijhawan, Ms Mehak Nayak, Ms Rashi Sharma, Ms Diksha Dadu, Advocates for R1. Mr Dhruv Dewan, Mr. Y. Sharma, Advocates.

JUDGEMENT

JUSTICE M. VENUGOPAL, MEMBER (JUDICIAL)

The 'Appellant/Petitioner' has preferred the instant Company

Appeal (AT)(Inst) No.1084/2023 as an 'Aggrieved Person' in respect

of the impugned order dated 06.07.2023 in IA No.1020 of 2023 in

CP(IB)No.1137 of 2017 passed by the Adjudicating

Authority/NCLT, Mumbai Bench.

2. Earlier, the Adjudicating Authority/NCLT, Mumbai Bench,

while passing the impugned order dated 06.07.2023 in IA

No.1020/2023 in CP (IB) No.1137/2017 (filed under Section 60(5)

and (7) of I&B Code, 2016) had observed the following:-

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 3

"Though the Ld. Counsel for the Applicant is present has

not mentioned the Appearance in the Attendance Sheet.

Ms Kriti Kalyani, Ld. Counsel for the Respondent is

present. The present Interlocutory Application has been

filed by the Applicant, Africa Power Company CC,

seeking direction against the Respondent to pay the

Applicant an aggregate amount of ZAR 1,17,81,893.174

(South African Rands One Crore Seventeen Lakhs Eighty

One thousand Eight Hundred and Ninety Three and

Seventeen Cents) or the equivalent amount in Indian

National Rupees, alongwith the applicable interest

therein for the dues pending from the Respondent in

respect of the equivalent leased by the Applicant top the

Respondent, after the admission of the Respondent in

Corporate Insolvency Resolution Process (CIRP) and the

equipment not returned by the Respondent to the

Applicant. The Resolution Plan for the corporate Debtor

was approved on 27.03.2019. Hence the present

Interlocutory Applicant filed by the Applicant is not

maintainable; hence rejected, as per the law laid down

by the Hon'ble Supreme Court in the case of Ghanshyam

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 4

Mishra & sons. Vs Edelweiss Asset Reconstruction

Company Limited, wherein the Hon'ble Supreme Court

observed that after the approval of the Resolution Plan,

all the claims which are not part of the Resolution Plan,

stands extinguished. Therefore, IA 1020 of 2023 is

dismissed."

and resultantly dismissed the Application.

Appellant's Submissions

3. The Learned counsel for the Appellant contends that the

impugned order dated 06.07.2023 in IA 1020 of 2023 in CP(IB)

1137/2017 passed by the Adjudicating Authority/NCLT, Mumbai

Bench (filed by the Appellant/Petitioner under Section 60(5) and

Section 7 of the of I&B Code 2016) in dismissing the application as

'not maintainable' and the same being was rejected, is 'per se'' an

illegal and invalid one in the eye of law because of the fact that the

said order is a non-speaking one and the Tribunal while dismissing

the application had not applied its judicial mind, which has

resulted in serious miscarriage of justice.

4. According to the Appellant/Petitioner, the facts of the instant

case are 'unique', and that the Adjudicating Authority/Tribunal

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 5

should have borne in mind that the principles enunciated in the

Judgement of the Hon'ble Supreme Court of India in Ghanashyam

Mishra & sons (P) Ltd Vs. Edelweiss Asset Reconstruction Co Ltd,

reported in (2021) 9 SCC 657, do not apply, in as much as the

Appellant's claim arose during the 'Corporate Insolvency

Resolution Process' and after the Resolution Plan for 1st

Respondent was approved by the Adjudicating Authority/Tribunal,

Mumbai.

5. It is represented on behalf of the Appellant/Petitioner that it

was impossible for the Appellant/Petitioner to have filed the 'claim'

before the 2nd Respondent. As a matter of fact, even for the 'claims'

that arose before the approval of the Resolution Plan, the Appellant

could not have approached the 2nd Respondent for these claims as

it was never informed of the 1st Respondent 'CIRP'.

6. The learned counsel for the Appellant, points out that the

'Reasons' are the 'soul of justice' and the 3rd Pillar of 'Natural

Justice'. In short, it is project on the side of Appellant/Petitioner

that 'No decision of a Court Of Law' or an 'Administrative authority'

can be sustained without proper 'Reasons'.

7. Advancing his argument, the Learned counsel for the

Appellant proceeds to point out that 'Right to reason', is an COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 6

'indispensable' part of a sound 'judicial system', 'reasons' at least

are sufficient to indicate an 'application of mind', to the matter

before Court and to fortify his plea, relies upon the judgement of

the Hon'ble Supreme Court in the matter of UPSRTC Vs Jagdish

Prasad Gupta reported in (2009)12 SCC 609(vide paragraph 8

and 9).

8. According to the Appellant, the Appellant, is not enforcing a

'Foreign Judgement' dated 06.10.2020, passed by the Hon'ble High

Court of South Africa Gauteng Local Division Johannesburg,

through this Tribunal.

9. Added further, it is the stand of the Appellant that the object

of annexing the South Africa Hon'ble High Court Judgement was

to disclose in 'Good Faith', the action taken by the 'Appellant',

before approaching the 'Adjudicating Authority'/'Tribunal',

Mumbai, through an 'Interlocutory Application'.

10. It is represented on behalf of the Appellant that the I&B Code,

2016 does not impose 'any bar' upon this 'Tribunal', to take

cognizance of a 'Foreign Judgement'. In this connection the

Learned Counsel for the Appellant, refers to the order of the

'Adjudicating Authority'/'Tribunal', Chennai, dated 27.04.2018 in

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 7

M/s Stanbic Bank Ghana Limited Vs M/s Rajkumar Impex Private

Limited (vide Company Petition/670/IB/2017, paragraph No.m).

11. According to the Appellant, the aforesaid order dated

27.04.2018, in 'M/s Stanbic Bank Ghana Limited' case was

assailed before this 'Tribunal', in an Appeal and this 'Tribunal'

held that a 'Record of Decree', is a 'Proof of Debt' and the 'Appeal'

was dismissed (vide decision in V. R. Hemantraj Vs Stanbic Bank

Ghana Ltd & Anr reported in SCC OnLine NCLAT 451 (paragraph

No.5) and this order was questioned before the 'Hon'ble Supreme

Court of India' and the Hon'ble Supreme Court, had refused to

interfere with the order of this 'Tribunal', as per decision in V. R.

Hemantraj Vs Stanbic Bank Ghana Ltd & Anr reported in 2018

SCC OnLine SC 3712.

12. The Learned counsel for the Appellant points out that the

'Hon'ble High Court of South Africa's Judgement' does not prevent

the Appellant from initiating the present proceeding and that the

Appellant, had approached the 'Adjudicating Authority/Tribunal',

Mumbai, independently on the 'original and underlying cause of

action'. Indeed, the I&B Code, 2016, according to the 'Appellant',

does not contemplate such an exclusion and a reference is made

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 8

to the decision, in Intesa Sanpaolo S.P.A. V Videocon Industries

Ltd, reported in 2013 SCC OnLine Bom 1910 (paragraph No.51).

13. Continuing further, it is the version of the Appellant that 2nd

Respondent in paragraph 10 of the Affidavit in 'Reply' dated

23.10.2023 had stated that 1st Respondent, did not have an office

at the address mentioned, in the 'contract' nor did the 1st

Respondent, have 'Business Operation' at the 'Masa Ngwedi C&D

sites', and this is a blatant lie.

14. According to the Appellant/Petitioner, the 1st Respondent

had issued a Press Release dated 27.06.2016 to the Indian Stock

Exchanges in respect of the turnkey contract awarded to the 1 st

Respondent for Masa Ngwedi sites in South Africa.

15. The Learned counsel for the Appellant points out that in

terms of the information available on the portal of the Companies

and 'Intellectual Property Commission' (which is like the Registrar

of Companies in India), South Africa, the 'Registered Address of

the Local office of 1st Respondent', corresponds to the address,

mentioned in the Rental Agreement. In addition, the purchase

order issued by the 1st Respondent on its letterhead, do contain

the same address, as that of the rental agreement and the 'CIPC

Report'.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 9

16. The Learned Counsel for the Appellant, points out that the

2nd Respondent in paragraph 9 of the 'Affidavit' in Reply dated

23.10.2023, had mentioned that she has not authorised Mr. Sudip

Sharma viz. the person who executed the 'Rental Agreement', on

behalf of the 1st Respondent to enter into the 'Rental Agreement',

and she has not authorised any payments to be made, to the

Appellant/Petitioner and this argument raises a serious question,

on the management of the internal affairs of the 1st Respondent,

during the 'Corporate Insolvency Resolution Process'.

17. It is the version of the Appellant that on appointment, the

management of the 1st Respondent was wholly under the aegis of

the 2nd Respondent, meaning that the powers of the Board of

Directors/1st Respondent were transferred to the 2nd Respondent.

Also that Section 18 of the I&B Code, 2016 delineates the 2nd

Respondent duties.

18. The Learned counsel for the Appellant/Petitioner adverts to

Section 18 of the I&B Code, 2016, on the aspect of duty of

'Resolution Professional' and the same is as under:-

(a) to collect all information relating to the assets, finances and

operations of the corporate debtor for determining the financial

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 10

position of the corporate debtor, including information relating

to-

(i) business operations for the previous two years;

(ii) financial and operational payments for the previous

two years;

(iii) list of assets and liabilities as on the initiation date;

and

(iv) such other matters as may be specified.

19. The Learned counsel for the Appellant submits that it is the

duty of the 'Interim Resolution Professional' to collect all the

'information' relating to the 'operation' and decide the financial

position of 1st Respondent. Further, the 2nd Respondent is to know

all the existing 'Business Transactions and Contracts' that the 1st

Respondent may have entered.

20. The stand of the Appellant, is that the Appellant/Petitioner

and the 1st Respondent had entered into a 'Rental Agreement', in

October, 2017 and January, 2018, which was later, orally,

extended to May and August, 2018 and that the formation and

execution of these 'Agreements' was during 1st Respondent's CIRP.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 11

21. According to the Appellant, the Respondent No.2, cannot

feign ignorance and deny its existence on the premise, that she

had not authorised the execution of these 'Agreements' and this is

an internal affair of the 1st Respondent, which casts a 'cloud of

doubt' on how the 2nd Respondent had managed the affairs of the

1st Respondent. In any event, according to the Appellant, it cannot

be deprived of its 'legitimate dues' under the pretext of 'Lack of

Authority'. Furthermore, the 1st Respondent had effected 'Partial

Payments', to the Appellant, based on the 'Rental Agreements' and

these payments were not authorised, how they were made in the

first place.

22. According to the Appellant, even if the 2nd Respondent

assertion of not having knowledge of the existence of the rental

agreement and Appellant's dues under it, before the Appellant's

letter dated 07.05.2021, informing the 2nd Respondent of the

Appellant's dues, the 2nd Respondent should have sought the

assistance of the Adjudicating Authority/Tribunal, Mumbai as per

Section 19 of the I&B Code, 2016, to unearth all the 'data' relating

to the 1st Respondent's operations in South Africa.

23. While summing up, the Learned counsel for the Appellant

prays for the allowing of the instant Appeal, by setting aside the COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 12

'impugned order', passed by the 'Adjudicating

Authority/Tribunal', Mumbai Bench, in IA No.1020/2023 in CP

(IB) 1137 of 2017, in the interest of justice.

1st Respondent's Plea.

24. According to the 1st Respondent, the Adjudicating

Authority/Appellate Tribunal lacks the necessary jurisdiction to

execute a 'Foreign Judgement, under the I&B Code, 2016. Also

that the 'Claimed Amount', was never accounted into/or

recognised as 'CIRP Cost/Costs' incurred during the period when

the 1st Respondent, was managed by the 'Erstwhile Resolution

Professional' coupled with the Monitoring Committee.

25. According to the 1st Respondent the 'Adjudicating

Authority/Tribunal', through an order dated 04.04.2017, had

directed the initiation of 'CIRP', against the 1st Respondent and

Ms Vandana Garg was appointed as an 'Interim Resolution

Professional', and later, confirmed as 'Resolution Professional' of

the 1st Respondent.

26. It is represented on behalf of the 1st Respondent that the

'Erstwhile Resolution Professional', was Incharge of managing the

affairs of the 1st Respondent, post the initiation of 'CIRP' and

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 13

subsequently the 'Adjudicating Authority/Tribunal', on

27.03.2019 had 'approved' the 'Resolution Plan', given by a

'Resolution Applicant' and the 'CIRP' had concluded.

27. Since the 'Plan Approval Order', the 1st Respondent, was

placed under the management and control of the 'Erstwhile

Resolution Professional', who was performing and discharging the

duties, as mentioned by the 'Monitoring Committee' comprising of

the 'Erstwhile Resolution Professional', the 'Representative' of the

'Successful Resolution Applicant' and the 'Committee of Creditors'.

28. According to the 1st Respondent, under the terms of the

'Resolution Plan', on 9.11.2021, the transfer of control to the

management of 1st Respondent took place, and that on 09.11.2021

the Resolution Plan was implemented and the time period between

the 'Plan Approval Order' and the 'date of transfer of control', to

the new management, was referred to as the 'MC Period'.

29. The Learned counsel for the 1st Respondent, points out that

the new management of the 1st Respondent had paid, all costs,

accrued towards 'CIRP costs', as defined under the I&B Code, 2016

and had informed to the 1st Respondent. Also that, the costs, as

communicated, to have been incurred, during the 'MC Period', also

had not included 'any such costs', allegedly owed to the Appellant.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 14

30. According to the 1st Respondent, only when the

Appellant/Petitioner served a copy of the 'Adjudicating

Authority/Tribunal' application, on the 1st Respondent,

somewhere in February, 2023, only then, the new management of

the 1st Respondent was made aware of the purported 'Rental

Agreements', entered into between the 'Appellant and the 1st

Respondent', in the year 2017 and 2018.

31. Also that, according to the Appellant, when the records of the

1st Respondent, was handed over to the new management of the

1st Respondent at the time of 'transfer of control', the 1st

Respondent was not having the 'Purported Contract', or any

invoices raised thereunder. In this regard, on 28.9.2021, the

Erstwhile Resolution Professional had requested the Appellant, by

means of a letter, 'to provide the copy of the Contract or Agreement

between Africa Power Company CC and Jyoti Structures Ltd (Africa

Branch), Invoices pertaining to the debt incurred or any other

material document you deem fit so as to enable us to provide some

insight to the incoming management about the impugned matter'.

32. The Learned Counsel for the 1st Respondent, points out that

all the 'costs' incurred by the 1st Respondent, during the 'CIRP' and

accounted for as 'CIRP' costs, by the 'Erstwhile Resolution COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 15

Professional', as per Section 5(13) of the I&B Code, 2016, and

informed to the new management of the 1st Respondent that it was

paid already and further when the 'Resolution Plan', stood

'implemented' the 'claim' of the Appellant, in this Appeal, is a

'baseless' and a 'frivolous one', besides the same is not to be

entertained against the new management of the 1st Respondent.

33. The Learned counsel of the 1st Respondent, points out that

in regard to the 'part of the claimed amount' that was allegedly fell

due, during the 'MC Period' and not recognised by the 'Erstwhile

Resolution Professional', the same, cannot be saddled on the new

management, especially after four years of the 'Plan approval

order'.

34. The Learned counsel for the Appellant refers to Section VII(K)

and (L) of the Resolution Plan which reads as under:-

"K. The Company, the Proposed Investors, the Founder

Promoters, existing guarantors and security providers shall not

be liable to meet or discharge any claims raised by any

creditors in respect of amounts which have arisen to them prior

to the approval of the Final Resolution Plan by the CoC, if such

claims neither constitute "insolvency resolution process costs''

nor have been admitted by the Resolution Professional till the COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 16

Final Resolution Plan is approved by the CoC("Excluded

Claims''). The Creditors of such Excluded Claims shall have

no claims against the Company, the Proposed Investors, the

Founder Promoters, guarantors and/or security providers,

employees, directors, in respect of such Excluded Claims.

L. Other than the claims and settlements pertaining to the

Company that have been envisaged and set out under this

Final Resolution Plan, no other payment or settlement, of any

kind, shall be made to any other person or entity in respect of

any other claims (whether not admitted or filed with the

Resolution Professional) and all such claims against the

Company along with any related legal proceedings shall be

liable to be irrevocably and unconditionally abated, settled

and extinguished. This condition relating to such

extinguishment of claims and related legal proceedings being

liable to be irrevocably and unconditionally abated, settled

and extinguished, shall be deemed to form an integral part of

the order by the NCLT approving the Final Resolution Plan and

shall accordingly be binding on all the stakeholders including

the Company, its employees, workmen, financial and

operational creditors, guarantors, security providers, and other

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 17

stakeholders. The treatment accorded to the persons receiving

settlement under this Final Resolution Plan shall constitute an

absolute discharge and settlement of the dues."

and submits that 'no amounts' other than those covered

under the 'Approved Resolution Plan', such as the sum, allegedly

payable pursuant to the purported contract, can be claimed, from

the new management of the 1st Respondent and all such claims

stood extinguished under the I&B Code, 2016, upon the Approval

of the Resolution Plan by the Adjudicating Authority/Tribunal.

35. The Learned counsel for the 1st Respondent refers to the

Judgement of the Hon'ble Supreme Court in Committee of

Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta and

Others (vide Civil appeal No.8766-8767 of 2019) wherein at

paragraph 67 it is observed as under:-

"67.A successful resolution applicant cannot suddenly be

faced with "undecided" claims after the resolution plan

submitted by him has been accepted as this would amount to

a hydra head popping up which would throw into uncertainty

amounts payable by a prospective resolution applicant who

successfully take over the business of the corporate debtor. All

claims must be submitted to and decided by the resolution COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 18

professional so that a prospective resolution applicant knows

exactly what has to BE paid in order that it may then take over

and run the business of the corporate debtor. This the

successful resolution applicant does on a fresh slate, as has

been pointed out by us hereinabove."

36. The Learned counsel for the 1st Respondent cites the

Judgement dated 13.04.2021 of the Hon'ble Supreme Court of

India in the matter of Ghanashyam Mishra and sons Private Ltd Vs

Edelweiss Asset Reconstruction Company Ltd, (Civil Appeal No.8129/2019) wherein at para 95

"95. (i) On the date of approval of resolution plan by the

Adjudicating Authority, all such claims, which are not a

part of resolution plan, shall stand extinguished and no

person will be entitled to initiate or continue any

proceedings in respect to a claim, which is not part of the

resolution plan".

37. According to the 1st Respondent, the scheme of the I&B Code,

2016 is that a 'Public Announcement' be issued by the 'Resolution

Professional', on 'Admission of a 'Corporate Debtor', under

Corporate Insolvency Resolution Process and to invite all creditors,

to submit their claim, and such 'Public Announcement' is COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 19

published in newspapers with countrywide circulation. Besides

this, the information and status of the 'CIRP' is regularly updated

on the website of the 1st Respondent.

38. The Learned counsel for the 1st Respondent contends that the

IA 1020/2023 in CP (IB) 1137 of 2017 filed by the

Appellant/Petitioner (under Section 60(5) and Section 7 of the I&B

Code, 2016), under Section 60(5) of the Code covers 'Applications'

against a 'Corporate Debtor', undergoing 'CIRP' or 'claims against

such Corporate Debtors', undergoing 'CIRP'. More importantly,

the 'Adjudicating Authority/Tribunal' is given powers, under

Section 60(5) of the I&B Code, 2016, to determine 'any question

of law or fact', arising out of, in/or in relation to the Insolvency

Resolution or Liquidation proceedings of the Corporate Debtor or

Corporate Person under this Code.

39. According to the 1st Respondent, the Appellant/Petitioner, is

endeavouring to execute the 'Foreign Judgement' against the 1st

Respondent through specific order of the 'Adjudicating

Authority/Tribunal' and this Appellate Tribunal, when no such

powers are showered either upon the 'Adjudicating

Authority/Tribunal' or this 'Appellate Tribunal', as per Section

60(5) of the I&B Code, 2016.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 20

40. The Learned counsel for the 1st Respondent seek in aid of the

Judgement of this 'Tribunal' dated 30.11.2018 in the matter of

Usha Holdings LLC & Anr Vs Francorp Advisors Pvt Ltd (vide Comp

App (AT)(Ins) No.44 of 2018) wherein at paragraphs 6 and 7 it is

observed as under:-

"6. In "Binani Industries Limited Vs. Bank of Baroda & Anr. -

Company Appeal (AT) (Insolvency) No. 82 of 2018 etc.", this

Appellate Tribunal by its judgment dated 14th November,

2018 discussed the principles of 'I&B Code' and held as

follows:

1. The objective of the 'I&B Code'

As evident from the long title of the 'I&B Code', it is for

reorganisation and insolvency resolution of corporate

persons, partnership firms and individuals in a time

bound manner for maximisation of value of assets of

such persons to promote entrepreneurship, availability

of credit, balance the interests of all stakeholders. The

recent Ordinance explicitly aims to promote resolution

over liquidation.

2. The objective of the 'I&B Code' is Resolution. The

Purpose of Resolution is for maximisation of value of COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 21

assets of the 'Corporate Debtor' and thereby for all

creditors. It is not maximisation of value for a

'stakeholder' or 'a set of stakeholders' such as

Creditors and to promote entrepreneurship,

availability of credit and balance the interests. The

first order objective is "resolution". The second order

objective is "maximisation of value of assets of the

'Corporate Debtor'' and the third order objective is

"promoting entrepreneurship, availability of credit and

balancing the interests". This order of objective is

sacrosanct.

In the matter of "Arcelor Mittal India Pvt. Ltd. v.

Satish Kumar Gupta and Ors.", the Hon'ble Supreme

Court observed that "the 'Corporate Debtor' consists of

several employees and workmen whose daily bread is

dependent on the outcome of the CIRP. If there is a

resolution applicant who can continue to run the

corporate debtor as a going concern, every effort must

be made to try and see that this is made possible".

3. 'Financial Creditors' as members of the 'Committee

of Creditors' and their Role.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 22

a. The Bankruptcy Law Reforms Committee (BLRC),

which conceptualised the 'I&B Code', reasoned as

under:

i. Under Para 5.3.1, sub-para 4, the BLRC provided

rationale for 'Financial Creditors' as under:

"4. Creation of the creditors committee

...

The Committee deliberated on who should be on the

creditors committee, given the power of the creditors

committee to ultimately keep the entity as a going

concern or liquidate it. The Committee reasoned that

members of the creditors committee have to be

creditors both with the capability to assess viability,

as well as to be willing to modify terms of existing

liabilities in negotiations. Typically, 'Operational

Creditors' are neither able to decide on matters

regarding the insolvency of the entity, nor willing to

take the risk of postponing payments for better future

prospects for the entity. The Committee concluded that

for the process to be rapid and efficient, the 'I&B Code'

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 23

will provide that the creditors committee should be

restricted to only the 'Financial Creditors'.

ii. In Para 3.4.2 dealing with 'Principles driving

design', the principle IV reads as under:

"IV. The 'I&B Code' will ensure a collective process.

9. The law must ensure that all key stakeholders will

participate to collectively assess viability. The law

must ensure that all creditors who have the capability

and the willingness to restructure their liabilities must

be part of the negotiation process. The liabilities of all

creditors who are not part of the negotiation process

must also be met in any negotiated solution."

b. The 'I&B Code' aims at promoting availability of

credit. Credit comes from the 'Financial Creditors' and

the 'Operational Creditors'. Either creditor is not

enough for business. Both kinds of credits need to be

on a level playing field. 'Operational Creditors' need to

provide goods and services. If they are not treated

well or discriminated, they will not provide goods and

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 24

services on credit. The objective of promoting

availability of credit will be defeated.

c. The 'I&B Code' is for reorganisation and insolvency

resolution of corporate persons, ....for maximisation of

value of assets of such persons to.... balance interests

of all stakeholders. It is possible to balance interests

of all stakeholders if the resolution maximises the

value of assets of the 'Corporate Debtor'. One cannot

balance interest of all stakeholders, if resolution

maximises the value for a or a set of stakeholder such

as 'Financial Creditors'. One or a set of stakeholders

cannot benefit unduly stakeholder at the cost of

another.

d. The 'I&B Code' prohibits any action to foreclose,

recover or enforce any security interest during

resolution period and thereby prevents a creditor from

maximising his interests.

e. It follows from the above:

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 25

i. The liabilities of all creditors who are not part of

'Committee of Creditors' must also be met in the

resolution.

ii. The 'Financial Creditors can modify the terms of

existing liabilities, while other creditors cannot take

risk of postponing payment for better future

prospectus. That is, 'Financial Creditors' can take

haircut and can take their dues in future, while

'Operational Creditors' need to be paid immediately.

iii. A creditor cannot maximise his own interests in

view of moratorium.'

iv. If one type of credit is given preferential treatment,

the other type of credit will disappear from market.

This will be against the objective of promoting

availability of credit.

v. The 'I&B Code' aims to balance the interests of all

stakeholders and does not maximise value for

'Financial Creditors'.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 26

vi. Therefore, the dues of creditors of 'Operational

Creditors' must get at least similar treatment as

compared to the due of 'Financial Creditors'.

3. 'Resolution Plan'

The 'I&B Code' defines 'Resolution Plan' as a plan

for insolvency resolution of the 'Corporate Debtor' as a

going concern. It does not spell out the shape, colour

and texture of 'Resolution Plan', which is left to

imagination of stakeholders. Read with long title of the

'I&B Code', functionally, the 'Resolution Plan' must

resolve insolvency (rescue a failing, but viable

business); should maximise the value of assets of the

'Corporate Debtor', and should promote

entrepreneurship, availability of credit, and balance

the interests of all the stakeholders.

It is not a sale. No one is selling or buying the

'Corporate Debtor' through a 'Resolution Plan'. It is

resolution of the 'Corporate Debtor' as a going concern.

One does not need a 'Resolution Plan' for selling the

'Corporate Debtor'. If it were a sale, one can put it on

a trading platform. Whosoever pays the highest price

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 27

would get it. There is no need for voting or application

of mind for approving a 'Resolution Plan', as it will be

sold at the highest price. One would not need

'Corporate Insolvency Resolution Process', 'Interim

Resolution Professional', 'Resolution Professional',

interim finance, calm period, essential services,

Committee of Creditors or 'Resolution Applicant' and

detailed, regulated process for the purpose of sale. It

is possible that under a 'Resolution Plan', certain

rights in the 'Corporate Debtor', or assets and

liabilities of the 'Corporate Debtor' are exchanged, but

that is incidental.

It is not an auction. Depending on the facts and

circumstances of the 'Corporate Debtor', 'Resolution

Applicant' may propose a 'Resolution Plan' that entails

change of management, technology, product portfolio

or marketing strategy; acquisition or disposal of

assets, undertaking or business; modification of

capital structure or leverage; infusion of additional

resources in cash or kind over time; etc. Each plan has

a different likelihood of turnaround depending on

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 28

credibility and track record of 'Resolution Applicant'

and feasibility and viability of a 'Resolution Plan' are

not amenable to bidding or auction. It requires

application of mind by the 'Financial Creditors' who

understand the business well.

It is not recovery: Recovery is an individual effort

by a creditor to recover its dues through a process that

has debtor and creditor on opposite sides. When

creditors recover their dues - one after another or

simultaneously- from the available assets of the firm,

nothing may be left in due course. Thus, while recovery

bleeds the 'Corporate Debtor' to death, resolution

endeavors to keep the 'Corporate Debtor' alive. In fact,

the 'I&B Code' prohibits and discourages recovery in

several ways.

It is not liquidation: Liquidation brings the life of

a corporate to an end. It destroys organisational

capital and renders resources idle till reallocation to

alternate uses. Further, it is inequitable as it considers

the claims of a set of stakeholders only if there is any

surplus after satisfying the claims of a prior set of

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 29

stakeholders fully. The 'I&B Code', therefore, does not

allow liquidation of a 'Corporate Debtor' directly. It

allows liquidation only on failure of 'Corporate

Insolvency Resolution Process'. It rather facilitates and

encourages resolution in several ways."

7. In view of the aforesaid decision in "Binani

Industries Limited (Supra)", we hold that the

Adjudicating Authority not being a Court or 'Tribunal'

and 'Insolvency Resolution Process' not being a

litigation, it has no jurisdiction to decide whether a

foreign decree is legal or illegal. Whatever findings the

Adjudicating Authority has given with regard to

legality and propriety of foreign decree in question

being without jurisdiction is nullity in the eye of law.

41. The Learned counsel for the 1st Respondent points out that

the Appellant is not to be permitted, to circumvent the Law and

approach this 'Appellate Tribunal', to seek for an enforcement of

the 'Foreign Judgement'.

42. According to the 1st Respondent, as per Section 44A read with

Section 13 of the Civil Procedure Code, 1908, a 'Foreign

Judgement' where the proceedings, in which the 'Foreign COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 30

Judgement' was obtained, are opposed to the principles of natural

justice of 'Audi Alterem Partem', cannot be enforced in India. As

such, the Foreign Judgement, which was passed by the Hon'ble

High Court of South Africa, 'Ex Parte', cannot be enforced in India.

CONTENTIONS OF 2ND RESPONDENT

43. The Learned Counsel for the 2nd Respondent, submits that

for the first time, the 1st Respondent, through a letter dated

07.05.2021, was informed by the Appellant, in regard to the case

filed by the Appellant before the Hon'ble High Court of South Africa

Gauteng, Johannesburg, bearing case No.2020/14573 and the

Judgement dated 06.10.2020, passed therein. As a matter of fact,

the Appellant, had further enquired from the 1st Respondent as to

whether it wishes to 'settle the matter' amicably and that the 2nd

Respondent, gave a reply on 17.05.2021 informing the Appellant

about the ongoing 'CIRP' of the 1st Respondent and the same was

concluded on 27.03.2019, upon the Adjudicating

Authority/Tribunal approving the 'Approved Resolution Plan'.

44. According to the 2nd Respondent, it was clarified to the

Appellant that 'such claims' which were not admitted/submitted

to the 'Resolution Professional', shall stand abated'', settled and

extinguished. Moreover, the Appellant was informed by the 2 nd COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 31

Respondent, that it has 'no power' and authority to alter the

admitted liabilities of the Corporate Debtor (in the case Jyoti

Structures Ltd) which had already formed part of the Approved

Resolution Plan.

45. The Learned counsel for the 2nd Respondent, points out that

the 2nd Respondent through a letter dated 01.09.2021, had

informed the Appellant, that the impending documentation, for the

implementation of the 'Approved Resolution Plan', had commenced

and the 'take over process', was expected to be completed soon.

46. It is the version of the 2nd Respondent that the CIRP Process

was started on 04.07.2017 and the 'Moratorium', imposed by the

'Adjudicating Authority/Tribunal', was in operation, on the day on

which the purported contracts were said to have been executed.

In reality, the 2nd Respondent, was in control of its management,

pursuant to Section 23(1) of the I&B Code, 2016. Also that the 2nd

Respondent, had neither executed the alleged contract nor

authorised any personnel of the 1st Respondent to enter into the

same.

47. According to the 2nd Respondent, the two alleged contracts

dated 06.10.2017 and 01.01.2018 were concerned, they were

executed allegedly on behalf of the 'Corporate Debtor by Mr. COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 32

Sudeep Sharma', the Appellant had not produced any document

exhibiting that Mr. Sudeep Sharma had the 'Authority', to act on

behalf of the 'Corporate Debtor' and enter into legal relations on

behalf of the Corporate Debtor, by executing 'Deeds' and

'Contracts'.

48. It is represented on behalf of 2nd Respondent, that the 2nd

Respondent, had not authorised Mr. Sudeep Sharma, at any point

of time or any other person, to enter into such 'Contracts', on

behalf of the 'Corporate Debtor'. Likewise, the 2nd Respondent,

had not authorised or made any payment, to be made to the

Appellant, in regard to the purported contract or otherwise.

49. It is pointed out on behalf of the 2nd Respondent that at the

relevant point of time, neither did the 'Corporate Debtor' had any

office, at the address, mentioned in the two purported written

contracts nor was the 'Corporate Debtor', carrying on 'Business

Operations' in Masa Ngwedi C&D Cites in South Africa, as

mentioned in the 'Appeal'.

50. The Learned counsel for 2nd Respondent, points out that only

after the conclusion of the 'CIRP', through the Appellant letter

dated 07.05.2021, it was made aware of the purported contract.

Also that through a letter dated 28.09.2021, the 2nd Respondent COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 33

had requested the Appellant, to provide the copy of the alleged

contracts and the 'relevant invoices' relating to the 'claimed

amounts', to it.

51. According to the 2nd Respondent, Section 13 of the Civil

Procedure Code 1908 mentions that a 'Foreign Judgement', which

has not been passed on 'merits of the dispute', shall not be

regarded as being 'conclusive' and the instant case on hand, a

mere perusal of the 'Foreign Judgement', makes it clear that the

same was not a 'Judgement', which was passed on the 'merit of the

dispute', and it is only a 'Default Judgement'. Hence, the 'Foreign

Judgements', which forms 'substratum' of the Appellant's case, is

'ipso jure not recognisable and/or capable' of execution in India.

52. According to the 2nd Respondent, the 'Foreign Judgement'

cannot be deemed to represent a 'Debt' enforceable under 'Indian

Law'. Therefore, the Appellant is not to be allowed to recover

amounts, allegedly due to it on the basis of 'Foreign Judgement'

by invoking the ingredients of Section 60(5) of the Code, 2016

which in any case, does not vest the Adjudicating

Authority/Tribunal, as a judicial forum to recognise and enforce a

'Foreign Judgement'.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 34

53. The Learned counsel for the 2nd Respondent refers to the

Judgement of this Tribunal in Usha Holdings LLC and Ant V.

Francorp Pvt Ltd (vide Comp App (At)(Ins) No. 44/2018 dated

30.11.2018) wherein in paragraph 14 observed as under:-

"14. In the circumstances, we answer the first question in

favour of the Appellant and hold that the Adjudicating

Authority has no jurisdiction to decide the question of legality

and propriety of a foreign judgment and decree in an

application under Section 7 or 9 or 10 of the I&B Code. The

second question relating to maintainability is answered

against the Appellants, they being not the 'Operational

Creditors''

54. The Learned Counsel for the 2nd Respondent, contends that

the purported contract two of which are oral Contracts, cannot be

relied upon, having been allegedly entered into during the 'CIRP',

without the requisite 'Authorisation' of the 2nd Respondent.

Section 44A of Civil Procedure Code, 1908

55. The twin requirements mentioned in Section 44A of the Civil

Procedure Code are (i) the place where 'Decree' is passed must be

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 35

a reciprocating territory; (ii) 'Decree' must be passed by any of the

superior Courts of that reciprocating territory.

56. Under Section 44A (1) of the Civil Procedure Code, the fiction,

is to treat the judgement and 'Decree' of superior Court, outside

India, as equivalent to those of 'District Court', for the purpose of

execution in India. Also that, the ingredients of Section 44A of the

Civil Procedure Code are mentioned in the decision of Hon'ble

Supreme Court in 2000(8) SCC at pgs. 278, 303 and 304.

57. As a matter of fact, a 'Foreign Judgement' has to be executed

only before the 'District Court', as per decision in Hanifa

Kalangattu v. Shaiasta Khan, reported in AIR, 2017, Ker. at page

217.

DISCUSSIONS

58. The Appellant/Petitioner in IA 1020/2023 in main Company

Petition (IB) 1137/2017 before the Adjudicating

Authority/Tribunal (filed under Section 60(5) of the I&B Code,

2016) had prayed

(i) for an issuance of direction by the Adjudicating

Authority/Tribunal in ordering the 1st Respondent to pay the

Appellant/Applicant an amount of ZAR 90,53,355.58/-

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 36

(South African Rands Ninety Lakhs Fifty Three Thousand

Three Hundred and Fifty Five and Fifty Eight Cents only)

alongwith interest at the rate of 2% per month, compounded

monthly, from 15th June, 2020 till the date of payment, or the

equivalent amount in Indian National Rupees;

(ii) in directing the 1st Respondent to pay the Applicant an

amount of ZAR 40,66,000 (South African Rands Forty Lakh

and sixty thousand only) alongwith interest at 10% per

annum, from 14.7.2020, till the day of payment, or the

equivalent amount in Indian National Rupees.

59. In so far as the instant Appeal is concerned, this Tribunal

pertinently points out that Section 60(5) of the I&B Code, 2016

concerns with the 'Applications against a Corporate Debtor'

undergoing 'CIRP' or claims against such 'Corporate Debtor',

undergoing 'CIRP'. Also that the 'Adjudicating Authority/Tribunal'

is enjoined with the 'power to determine any question of 'Law or

Fact' arising out of in, or in relation to the 'Insolvency Resolution

or Liquidation Proceedings' of the Corporate Debtor, or Corporate

Person under this Code'.

60. It cannot be disputed that the Company was long out of the

Insolvency and CIRP of the Company stood completed upon COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 37

passing of the Plan Approval Order. Suffice it for this 'Tribunal' to

point out that the Approved Resolution Plan stood implemented as

on date.

61. Proceeding further, this 'Appellate Tribunal' is not the proper

and correct Forum to execute the 'Foreign Judgement' and in this

regard the Appellant/Petitioner is not to be allowed to circumvent

the 'Law', in the considered opinion of this Tribunal.

62. One has to keep in mind of a relevant fact that the

'Adjudicating Authority/Tribunal' not being a 'Court' and the

'Insolvency Resolution Process' not being a litigation, the

Appellant/Petitioner, cannot invoke, Section 60(5) of the I&B Code,

2016 to project the IA No.1020/2023 in CP (IB) No.1137/2017

before the 'Adjudicating Authority/Tribunal' seeking the reliefs in

respect of(i) issuance of direction to the 1st Respondent, to pay the

Appellant/Petitioner an amount of ZAR 90,53,355.58 alongwith

interest @ 2% per month, compounded monthly from 15.06.2020

till the date of payment or the equivalent amount in Indian

National Rupees; (ii) in directing the 1st Respondent to pay the

Applicant an amount of ZAR 40,66,000 (South African Rands)

alongwith interest at 10% per annum from 14.07.2020 till day of

payment or the equivalent amount in Indian National Rupees.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 38

63. At this juncture, this 'Tribunal' in a crystalline manner points

out that all such 'claims' which were not a part of the 'Resolution

Plan' stood extinguished, on the date of 'Approval of Resolution

Plan' and further no individual, is permitted to initiate or continue

any 'proceedings', in regard to a 'claim', which was not part of the

'Resolution Plan'.

64. Be that as it may, this Tribunal on going through the

respective contentions advanced on either side, in the instant

'Appeal', bearing in mind the principles laid down by the Hon'ble

Supreme Court, in the decision cited in the instant Appeal, taking

note of the facts and circumstances of the instant 'Appeal' and on

going through the 'impugned order' passed by the 'Adjudicating

Authority/Tribunal' dated 6th July, 2023 in IA No.1020/2023 in

CP (IB) No.1137/2017 comes to a consequent conclusion that the

view arrived at in holding that the IA 1020/2023 in CP No.(IB)

1137/2017 passed by the 'Petitioner/Appellant' was 'not

maintainable' and dismissing the 'Application' ultimately does not

suffer from any 'material irregularity or patent illegality' in the eye

of Law. Looking at from any angle, the instant 'Appeal' sans

merits.

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023 39

RESULT

65. In fine, the 'instant Comp App (AT)(Ins) No.1084/2023 is

dismissed. No costs.

(Justice M. Venugopal) Member (Judicial)

(Dr. Alok Srivastava) Member (Technical)

Date: 29-01-2024

bm/ss

COMPANY APPEAL (AT)(INS) NO.1084 OF 2023