Axis Trustee Services Limited vs Daiichi Sankyo Company Limited

Axis Trustee Services Ltd. ...Appellant

Versus

Daiichi Sankyo Company Ltd. & Ors. ...Respondents

Present:

For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Mr. Nikhil Mehndiratta, Mr. Toyesh Tewari, Advocates.

For Respondents: Ms. Astha Ahuja, Ms. Shyla Hoon, Mr. Tanmay Arora, Advocates for R-1. Mr. Rachit Mittal, Mr. Parish Mishra, Ms. Ritika Dawali, Mr. Adarsh Srivastava, Advocates for RP. Mr. Rajiv Dewan and Mr. Manoj Kumar, Advocates for R-4.

ORDER

(Hybrid Mode)

21.02.2024: This appeal has been filed against the order dated

24.04.2023 passed by the Adjudicating Authority by which order the

Adjudicating Authority has allowed the application I.A. No.5662 of 2023 filed

by Daiichi Sankyo Company Ltd. and the order admitting CIRP was set aside.

2. The CIRP commenced against the Corporate Debtor by order dated

16.12.2022. The order admitting CIRP was challenged by M/s Daiichi Sankyo

Company Ltd. in Company Appeal (AT) (Ins.) No. 279 of 2023, which was

entertained and interim order was passed that in the CIRP no final decision

Cont'd.../ -2-

shall be taken with regard to resolution plan. The application filed by the

M/s Daiichi Sankyo Company Ltd. was on the ground that the Corporate

Debtor is a NBFC and no CIRP can be commenced under Section 7 by a

Financial Creditor against a NBFC. The Adjudicating Authority noticed that

in the RBI portal the status of the Corporate Debtor was always shown as

NBFC, however, despite the fact the Corporate Debtor was NBFC CIRP

proceeded by the impugned order. The Adjudicating Authority allowed the

application and set aside the CIRP.

3. Appellant who was Applicant in Section 7 application has filed this

appeal only on limited ground i.e. observation made in the last line of Para 13

and direction issued in Para 16 in so far as direction that entire cost be paid

by the Applicant/Appellant.

4. Learned counsel for the Appellant submits that in so far as last line of

Para 13, when application under Section 65 was dismissed, there was no

occasion to observe that order dated 16.12.2023 was obtained by parties by

concealment of material fact or playing fraud on the Court.

5. We accept the above submission that when Section 65 application has

been dismissed, there was no necessity for making such observation, hence,

observation made in last line of Para 13 of the order is deleted.

6. Now we come to direction issued in Para 16 of the impugned order,

which is as follows:

Company Appeal (AT) (Insolvency) No.208 of 2024 -3-

"16. Nevertheless, since the CIRP in IB-605/2022 got initiated due to sheer negligence of the Financial Creditor M/S Axis Trustee Ltd., we order (a) imposition of cost of Rs. 50,000/- (Fifty Thousand) only to be paid by the Petitioner M/s Axis Trustee Ltd. to the Prime Minister's Relief Fund within 15 days of this order; and (b) direct that the entire CIRP cost and legitimate expenses of IRP/RP (who, in IB-605/2022, being the Section 7 petition, was appointed on the recommendation of the Financial Creditor) shall be borne by the Petitioner M/s Axis Trustee Ltd."

7. In so far as imposition of cost of Rs.50,000 is concerned, the Appellant

has already deposited the said amount. The said direction is maintained.

8. Coming to the second part of the direction, it is submitted that the

Resolution Professional has claimed total cost of Rs.67,89,245/- out of which

an amount of Rs.37,04,401 has already been discharged and the balance

amount is Rs.30,84,844. Learned counsel for the Appellant submits that the

Appellant has only 2% share in the CoC and if the minutes of the CoC are

looked into, the decision to continue the proceeding was by majority of CoC

and Appellant could not have stopped the CoC to proceed and further after

Resolution Professional having coming to know that status of Corporate

Debtor as NBFC is still shown in the portal of RBI, appropriate steps ought to

have been taken. It is submitted that the application was filed by the

Resolution Professional, which was withdrawn.

Company Appeal (AT) (Insolvency) No.208 of 2024 -4-

9. In a situation where CIRP has been admitted and there is interim order

passed by the Appellate Authority to the effect that in the CIRP no final

decision shall be taken with regard to resolution plan since the order was

challenged on the ground that CIRP cannot proceed against a NBFC, we are

of the view that the CoC and the Resolution professional should have been

more cautious in proceeding and incurring costs in the CIRP of the Corporate

Debtor.

10. We are of the view that ends of justice be served in giving liberty to the

Resolution Professional to file an application before the Adjudicating

Authority to take a decision on payment of balance cost, as to whether entire

balance cost is fully payable and as to whether entire cost be borne by the

Appellant or shared by all the members of CoC and/or Resolution

Professional. Taking into consideration the sequence of events and facts

which have taken place in the CIRP proceedings of the Corporate Debtor, the

Adjudicating Authority shall pass orders in the application as above.

11. The direction issued in Para 16(b) that entire cost be paid by the

Applicant is modified as above.

12. In view of the fact that we have already set aside the observation against

the Appellant, learned counsel for the Appellant submits that contempt filed

by the Resolution Professional cannot proceed.

13. We are of the view that contempt application filed by the Resolution

Professional also stands closed.

Company Appeal (AT) (Insolvency) No.208 of 2024 -5-

14. Appeal is disposed of accordingly.

[Justice Ashok Bhushan] Chairperson

[Justice Yogesh Khanna] Member (Judicial)

[Barun Mitra] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No.208 of 2024