Bank Of Baroda vs Asahi Industries Limited

IN THE MATTER OF: Bank of Baroda ...Appellant Vs. Asahi Industries Ltd. & Ors. ...Respondents

Present: For Appellant: Mr. Ravi Raghunath, Ms. Aakashi Lodha, Ms. Rathina Maravarman, Advocates For Respondent: Ms. Bindu Bhatia, Mr. Abhishek Anand, Advocates for R-2(RP) Mr. Abhijeet Sinha, Mr. Milan Singh Negi, Advocates for R-3 Mr. Vaibhav Tyagi, Advocate for R-6,7 & 9 Mr. Lokesh Malik, Advocate for R-8 & 11 Mr. Prateek Gupta, Advocate for R-4, 5 & 10.

With

Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021

IN THE MATTER OF: Bank of Baroda ...Appellant Vs. Safex Realtors Pvt. Ltd. & Ors. ...Respondents

Present: For Appellant: Mr. Ravi Raghunath, Ms. Aakashi Lodha, Ms. Rathina Maravarman, Advocates

For Respondent: Mr. Abhijeet Sinha, Mr. Milan Singh Negi, Advocates for Contemnor 1 to 4 Ms. Bindu Bhatia, Mr. Abhishek Anand, Advocates for Contemnor - 5 (RP) Mr. Vaibhav Tyagi, Advocates for Contemnor 8, 9 and 11 Mr. Lokesh Malik, Advocate for Contemnor 10 and 13 Mr. Prateek Gupta, Advocate for Contemnor - 6, 7 & 12.

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 1 ORDER

(Through Virtual Mode)

13.01.2022: The appeal and contempt application has been

heard together since the contempt arises out of the orders passed

in the Company Appeal.

2. We may first notice the necessary facts giving rise to

Company Appeal (AT) (Ins) No. 322 of 2021. The appeal has been

filed against the order dated 22.03.2021 by which order the

Adjudicating Authority has vacated the interim order of status quo

granted on 06.01.2021. The CIRP process were initiated against

the Corporate Debtor Asahi Industries Ltd. by order dated

13.11.2019.

3. The CoC approved the Resolution Plan submitted by M/s

Safex Realtors Pvt. Ltd. (R-3 in the appeal) with majority of 82% of

voting. The Adjudicating Authority also by order dated 13.11.2020

approved the Resolution Plan.

4. The case of Bank of Baroda is that after approval of

Resolution Plan, it came to know that all the members of the CoC

being R4-R11 to the appeal who were admitted as members of CoC

were all related parties of the Corporate Debtor and they could not

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 2 be lawfully admitted in CoC. The Appellant Bank has also referred

to an order dated 11.02.2014 passed by the Ld. Securities

Appellate Tribunal ('SAT').

5. In the above context and IA No. 2326 was filed by the

Appellant on 11.12.2020 before the Adjudicating Authority praying

that the Resolution Plan be sent back to CoC for reconsideration

with Appellant as the only Financial Creditor in the said IA on

06.12.2021.

6. In the said IA, notice was issued by the Adjudicating

Authority and on 29.12.2020 the matter was directed to be fixed

for 04.01.2021. On 06.01.2022, the Adjudicating Authority

passed an order directing to maintain the status-quo in relation to

RP and not to disburse the amount until any further order. IA

was adjourned and on 22.03.2021, the IA came for consideration

before the Adjudicating Authority and on this date, request was

made on behalf of the Learned Counsel for the Bank of Baroda for

adjournment which was not acceded to. The Adjudicating

Authority has vacated the status quo order and directed it to be

listed on 27.04.2021.

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 3

7. Aggrieved by the said order, this appeal has been filed by the

Bank of Baroda. In the appeal, this Tribunal issued notice on

19.04.2021 and passed the following interim order:-

xx xx xx xx xx

"Till next date, Impugned Order

dated 22.03.2021 is stayed and in the

meanwhile, the Order dated 06th January,

2021 of the Adjudicating Authority

directing maintaining of status-quo shall

continue."

8. The impugned order dated 22.03.2021 has been stayed and

in the meanwhile, the order dated 06.01.2021 of the Adjudicating

Authority directing to maintain the status quo shall continue.

9. Reply was called for, from the Respondent. The contempt

petition came to be filed by the Bank of Baroda on 25.05.2021 and

hard copy filed on 02.07.2021 praying for initiation of contempt

against the Respondents mentioned in the contempt application

for violation of order dated 19.04.2021.

10. In the contempt case, the Appellant's case was that after the

order dated 19.04.2021, the contemnors R1-4 with collusion with

R 5-13 to violate the order, by issuing E Demand Draft and Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 4 cheque, withdrawn, several amounts from bank after order dated

19.04.2021 was communicated, details of certain payments

received by R6 to R13 has been mentioned by the applicant.

11. This court issued notice on the contempt petition on

11.06.2021. Further, while issuing notice to the Respondents,

following was directed in paragraphs 7, 8 and 9:-

"7. Issue Notice to the

Respondents/Contemnors in

contempt case (AT)(No. 13 of 2021

to say why the Contempt Case

should not be accepted and action

for contempt as alleged should not

be taken against the Respondents-

alleged Contemnors.

8. Respondents/Contemnors to

file Reply-Affidavits within two

weeks. The RP who is

Chairperson of the Monitoring

Committee has been heard. He is

additionally required to collect all

the necessary information and put Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 5 up Report before this Tribunal in

the Contempt Case, especially the

documents with regard to date of

encashment of cheques from the

records of the concerned banks. If

any of the cheques as alleged in

Contempt Case have not yet been

encashed, the parties/Banks

concerned will not encash the

same. Applicant Bank and

Resolution Professional will inform

Banks concerned to keep the

cheques etc. in safe custody.

9. We have

already directed in our Orders

dated 19th April, 2021 in the

Company Appeal (AT)(Ins.) No.

322 of 2021 that the earlier Order

of the Adjudicating Authority to

maintain status quo shall

continue. We further direct that Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 6 the execution of the Resolution

Plan shall remain stayed till next

date".

12. In the contempt application, reply has been filed by the

Respondents including the Resolution Professional. Appellant in

the contempt application has filed a detailed chart with Dy. No.

45811 on 19.08.2021 which chart has been given in compliance of

the order dated 12.08.2021 passed by this Tribunal, giving the

details of transactions and documents and details of the payment/

encashment.

13. It is clear that several encashments have been made from

the bank account in favour of R6-R13 and there has also been

certain payments which have been made even after 19.4.2021 e.g.

on 26.04.2021, RTGS payment was made in favour of 'Kausar

Textiles Pvt. Ltd.' (R-8) for an amount of Rs. 19,07,561/- which

referred to an earlier cheque which was bounced. There has been

also encashment of Demand Draft on 18.06.2021.

14. We have heard Learned Counsel for the parties both on the

appeal and in the contempt application. We may first consider the

submission in the appeal.

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 7

15. The submission of the Appellant is that in IA filed by the

Appellant, the Interim Order was passed on 06.01.2021 directing

the parties to maintain the status quo. The said order was passed

on the application No. 2366 of 2020, the details of which have been

noticed above. The order which was passed on 06.01.2021 is to

the following effect:-

"The matter is taken up through

virtual hearing(VC).

Counsel for the applicant, Ms.

Rathina Maravarman and Counsel for the

Respondent, Ms. Bindu Bhatia are

present and sought four weeks' time for

filing reply.

Counsel for the applicant is directed

to serve one more notice to all the

respondents clearly indicating the next

date of hearing.

Parties are directed to maintain

status quo in relation to the Resolution Plan

and not to disburse any amount until

further orders.

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 8 List this matter on 08.02.2021."

16. On 22.03.2021, when the appeal was taken, request was

made by the Learned Counsel for Bank of Baroda i.e. Applicant for

some time due to personal difficulties.

17. The Adjudicating Authority observed that status quo is

stopping the implementation of plan. The order is vacated.

18. Learned Counsel for the Appellant submits that the

adjournment was sought due to illness of the Learned Counsel for

the Appellant, in the appeal, details of several medical test

conducted on 22.03.2021 have been given. Thus, the Learned

Counsel for the Appellant submits that there was no occasion to

refuse the adjournment made on the request of personal ground of

the Appellant.

19. Learned Counsel for R1-4 Shri Abhijeet Sinha candidly

submits that the Respondent have no objection if the matter goes

back and the application No. 2366/2020 is heard again.

20. We have considered the submissions of the parties and

perused the records. Any request made on behalf of the personal

ground of appearing Advocate has to be considered by the court

and unless there are reasons, such requests are not to be declined.

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 9

21. We may refer in this context judgement of Hon'ble Supreme

Court in Rais Ahmad Vs. State of UP & Ors. in C.A. No. 4446

of 1999 decided on 13.08.1999 in paragraph 10, the

following observation has been made.

10. "Traditions" of a Court are built upon

the edifice of cooperation between

Judges and lawyers over a period of

years. "Traditions", are doctrines,

customs, practices, beliefs and usages

which are handed down from generation

to generation. As pointed out earlier, one

of the traditions of the Allahabad High

Court, which is now more than 130 years

old and has seen many generations of

lawyers, is that a case would be

adjourned on the "Illness Slip" of a

counsel. This and other traditions of the

Court bind the lawyers and Judges in a

sacred relationship of mutual trust and

understanding. The adjournment of a

case on the "Illness Slip" reflects the

Court's respect for the counsel and its

consciousness that a lawyer or counsel,

though an officer of the Court, is Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 10 nevertheless a human being who can fall

ill. It also reflects the faith and trust the

lawyer has in the Court that the Court

would, on his "illness slip", adjourn the

case".

22. We are of the view that the Adjudicating Authority has

committed error in vacating the interim order on 22.03.2021,

when the Learned Counsel for the Appellant was not present and

request for adjournment was made. There was no difficulty in

adjourning the matter for one or two days.

23. We are of the view that the order dated 22.03.2021 is

unsustainable and deserves to be set aside.

24. The Appellant raised another submission in reference to

application 2366 of 2020. Learned Counsel for the Appellant

submit that in view of notice issued against the contemnors and

they having withdrawn the huge amounts in violation of this court

dated 19.04.2021, they need not to be allowed to participate in

hearing of the IA No. 2366/2020 unless they purged their

contempt.

25. We examined the contempt application filed by the Appellant

against the Respondents.

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 11

26. In so far as the contempt application with respect to

Respondent No. 5, we are of the view that RP after completion of

the CIRP proceedings does not have much role with regard to

disbursement of amount to Creditors under the Resolution Plan.

The Contempt is sought to be made on the ground of disbursement

of amount in violation of the order.

27. We are of the view that contempt proceedings need to be

discharged as far as Respondent No. 5 is concerned.

28. Learned Counsel for the Appellant has submitted that not

only the Respondent violated this Court on 19.04.2021 rather they

have filed wrong affidavits justifying their action which is nothing

but a perjury.

29. As noticed above, Learned Counsel for the Appellant has filed

a chart in pursuant of the order dated 12.08.2021 giving the

details of transactions which according to the Appellant has

violated the interim order dated 19.04.2021. Bank Statement from

where the charts have been made have also brought on record.

30. Respondent No. 1 to Respondent No. 4 have filed the affidavit.

In the reply affidavit, it is admitted that the order dated 19.04.2021

was received at 2.32 in the afternoon of 19.04.2021. Thus R1-

R4 were well aware of the order passed by this court. Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 12

31. Shri Abhijeet Sinha, Learned Counsel for R1-R4 sought to

justify the action of R1-4 by submitting before 19.04.2021, letters

and cheques were issued in favour of other members of the CoC

for their payment as was entitled under the Resolution Plan and

there is no wilful disobedience on the part of R1-4. It is submitted

that payment sought to be made on 19.04.2021 and reflected in

Bank statement were payment on the expense of Demand Draft.

32. Learned Counsel for other Respondent Nos. 6-13 have

submitted that they tender unconditional apology to this Court

and they are ready to refund the amounts which have been

received on 19.04.2021 or thereafter by any of R1-13.

33. Learned Counsel for R1-4 also submit that R1-4 also

requested the other members of CoC who have received the

payment and they are agreed to refund the amount received. R1-

R4 also submitted that this Court may order that the amount even

received prior to 19.04.2021 should be refunded to R1-4. There is

no occasion to issue any order to be refunding the amount which

was received prior to 19.04.2021. Although submissions have

been made making allegations and counter allegations by the

Appellant and Respondents and various materials and documents

have been referred to, but in view of the fact that the Respondents Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 13 have tendered the unconditional apology and they are ready to

refund the entire amount to Respondent No. 1 the SRA. We see

no justification in continuing this contempt proceeding any

further.

34. We thus, as prayed by Learned Counsel for R 6-13, direct that

the amounts, which were received by any of them on 19.04.2021

or thereafter pursuant to the Resolution Plan of the Respondent

No. 1 shall be returned by a Bank Draft or the Bankers' Cheques

in favour of R-1 within 15 days from today.

35. In view of the foregoing discussion, we allow the appeal and

set aside the impugned order and request the Adjudicating

Authority to proceed and decide the application 2366/2020 in

accordance with law. The Adjudicating Authority shall give liberty

of hearing to Respondents and other members of CoC only being

satisfied that they have returned the amount taken by them on

19.04.2021 or thereafter to Respondent No. 1.

The Contempt Application is disposed of accordingly.

36. The order dated 22.03.2021 is set aside and the order dated

06.01.2021 passed by the Adjudicating Authority is revived.

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 14

37. Learned Counsel for Respondent No. 6 submitted that they

have not encashed the Demand Draft, it will be open for them to

refund the demand drafts to the Respondent No. 1.

The appeal is allowed. The Contempt application is

disposed of as above.

[Justice Ashok Bhushan] Chairperson

[Dr. Ashok Kumar Mishra] Member (Technical)

ss/nn

Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 15