Ca Rajeev Bansal vs Soma-Indus Varanasi Aurangabad ...

[Arising out of Order dated 09/10/2023 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench, Chandigarh) in I.A No. 1626 of 2022 in CP(IB) No. 97/Chd/Hry/2018]

IN THE MATTER OF:

C A Rajeev Bansal, Liquidator of Isolux Corsan India Engineering & Construction Prviate Limited, Regn. No. IBBI/IPA-001/IP-P00226/2017- 18/104252163A Reg. Address: 2163A, Shri Nagar Colony, Jagadhri, Yamunanagar, Haryana Mob:- 9315373372 ...Appellant Email: liquidator.isoluxcorsanindia@gmail.com Versus Soma-Indus Varanasi Aurangabad Tollway Pvt. Ltd. (Erstwhile Soma Isolux Varanasi Aurangabad Tollway Pvt. Ltd.) 5th Floor, Block-2, Vatika Business Park, Sector-49, Sohna Road, Gurugram, Haryana - 134109 E-mail: viveksood@roadis.co.in ...Respondent

Present:

For Appellant: Mr. Abhinav Mishra, Nivedita Chauhan, Komal Singh, Jagriti Dosi, Advocates For Respondents: Mr. Gauhar Mirza, Ms. Hiral Gupta, Ms. Sukanya Singh, Advocates

JUDGMENT

ASHOK BHUSHAN, J.

1. This Appeal has been filed by the Liquidator of Corporate Debtor

challenging the Order dated 09th October, 2023 passed by National Cont'd.../ -2-

Company Law Tribunal, Chandigarh Bench, Chandigarh (hereinafter

referred to as 'The Adjudicating Authority") in I.A. No. 1626 of 2022 filed

by the Liquidator under Section 66 of the Insolvency and Bankruptcy

Code, 2016 (hereinafter referred to as 'The Code').

2. Brief facts of the case giving rise to this Appeal are:-

i. National Highway Authority entered into a Concession Agreement

with Soma Isolux Varanasi Aurangabad Tollway Pvt. Ltd.

(hereinafter referred to as "Concessionaire') to construct, operate

and maintain the project. Engineering procurement and

construction contract dated 21st January, 2011 was entered

between Soma Isolux Varanasi Aurangabad Tollway Pvt. Ltd.

(Concessionaire) and the Isolux Corsan India Engineering and

Construction Pvt. Ltd. (hereinafter referred to as "Corporate

Debtor'). Corporate Debtor was to design and execute the work from

Km 871 to 978 Six Lane Varanasi-Aurangabad Section of NH-2.

ii. There were certain issues between the Corporate Debtor and the

Concessionaire. On 14th June, 2017, Concessionaire terminated the

agreement with the Corporate Debtor and invoked Bank

Guarantees.

iii. Corporate Insolvency Resolution Process was initiated against the

Corporate Debtor at the instance of Oriental Bank of Commerce

vide order dated 11.10.2018. The Appellant was appointed

Liquidator in the Liquidation Proceedings of the Corporate Debtor

vide Order dated 06.02.2020.

Company Appeal (AT) (Insolvency) No. 1695 of 2023 -3-

iv. Forensic Audit Report was conducted in the Liquidation

Proceedings of the Corporate Debtor. Liquidator on 07.09.2021

gave a notice of claim for additional cost on account of changes in

the scope of work, price variation and prolongation of working due

to the delay caused along with the supporting document on behalf

of the Corporate Debtor to the tune of INR 570.14 Crores to the

Concessionaire.

v. I.A. No. 609 of 2021 was filed by the Liquidator on 05.10.2021

under Section 60(5) read with Section 33(5), 35(1)(k) seeking

approval of the Adjudicating Authority to initiate arbitration

proceedings against the Respondent with regard to NH-2 Project.

vi. There were certain conciliation meetings between the Liquidator

and the Concessionaire during the period. In I.A. No. 609 of 2021

the Respondent No. 1 the Concessionaire was also impleaded as

one of the Respondent for which I.A. No. 96 of 2022 was filed which

was allowed by the Adjudicating Authority. On 3rd November, 2022

Liquidator filed I.A. No. 1626 of 2022 under Section 66 read with

section 67 of the Code relying on the transaction audit report in

which application the Respondent No. 1 herein was Respondent No.

8. On 3rd July, 2023 I.A. No. 609 of 2021 was allowed and disposed

of granting leave to the Liquidator to initiate proceedings under

arbitration. On 09.10.2023, I.A. No. 1626/2022 was listed on

which date, the Adjudicating Authority passed an order directing

that Respondent No. 1 herein (Respondent No. 8 in the Application)

to be deleted from the array of the party. The Adjudicating

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Authority observed in the Order that in I.A. No. 609 of 2021

Liquidator has already prayed for initiation of arbitration in which

Respondent No.1 was a party. The Adjudicating Authority observed

that Liquidator cannot be allowed to take two opposite pleas

simultaneously hence the Adjudicating Authority directed deletion

of Respondent No. 8 to the I.A. No. 1626 of 2022 from the array of

the party.

vii. Liquidator aggrieved by the Order dated 09.10.2023 passed in I.A.

No. 1626 of 2022 has come up in this Appeal.

3. Learned Counsel for the Liquidator submits that the invocation of

bank guarantee by Concessionaire after termination of the agreement was

wrongful and fraudulent hence the Liquidator has rightly impleaded the

Concessionaire as Respondent No. 8 in the Application and the

Adjudicating Authority committed error in deleting the Respondent No. 8

from Section 66 Application.

4. Learned Counsel appearing for Respondent No. 1 opposing the

submissions of Appellant submits that Liquidator himself has filed I.A.

No. 609 of 2021 seeking leave of the Adjudicating Authority to proceed in

arbitration against the Respondent No. 1 Concessionaire which leave has

been granted on 3rd July, 2023, there is no occasion to proceed against

the Respondent No. 8 in Application under Section 66 because allegation

are only with regard to invocation of bank guarantee which is also subject

matter of the arbitration claim as submitted by the Liquidator. It is

submitted that the Adjudicating has rightly taken the view that Liquidator

cannot be allowed to pursue two proceedings simultaneously. It is further

Company Appeal (AT) (Insolvency) No. 1695 of 2023 -5-

submitted that Liquidator has not even filed any arbitration proceeding

even though leave was granted on 3rd July, 2023.

5. We have considered the submissions of Learned Counsel for the

parties and have perused the record.

6. I.A. No. 609 of 2021 was filed by the Liquidator where following

prayers have been made:

"A. to authorize the Liquidator/Applicant to institute Arbitration to ensure recovery for the beneficial liquidation of the Corporate Debtor.

B. Pass any other such order(s), which this Hon'ble Tribunal deems fit in the interest of justice, equity and good conscience."

7. In the Application I.A. No. 609 of 2021, the Liquidator has pleaded

all necessary facts regarding concession agreement, the project agreement

between the Concessionaire, termination of the Agreement, details of the

claims which Liquidator may have against the concessionaire mentioned

in detailed in different heads in paragraph 4.18 of the Application. In

paragraph 4.8(i), compensation with regard to wrongful invocation of

bank guarantee was also included. Paragraph 4.8(i) is as follows:

"(i) COMPENSATION FOR ILLEGAL TERMINATION OF THE EPC CONTRACT, SETTLEMENT AGREEMENT & FIRST AMENDMENT AGREEMENT & WRONGFUL INVOCATION OF BANK GUARANTEES The claim pertains to the Compensation for illegal termination of the EPC Contract, Settlement Agreement & First Amendment Agreement & Wrongful Invocation of Bank Guarantees under which the Corporate Debtor has substantiated in detail the

Company Appeal (AT) (Insolvency) No. 1695 of 2023 -6-

unilateral/wrongful/concocted/malfide and illegal termination of a series of contractual relations between the Corporate Debtor and the Concessionaire and the wrongful/uncalled for/malafide and unwarranted invocation of the Bank Guarantees and the compensation arising in favour of the Corporate Debtor directly from the Concessionaire to the tune of INR 89,10,96,000/- (Indian Rupees Eighty Nine Crore Ten Lakh Ninety Six Thousand Only)"

8. Learned Counsel for the Appellant has submitted that Section 66

Application has been filed against the Respondent No. 1 where Appellant

is alleging wrongful and fraudulent invocation of guarantee by the

Concessionaire hence the Adjudicating Authority ought not to have

deleted Respondent No. 1 from the Section 66 Application. I.A. No. 609 of

2021 was filed by the Liquidator where details of all claims including

invocation of bank guarantee was included in the Application. The claims

which have been mentioned in the Application against the Concessionaire

are to the tune of Rs. 570.14 Crores. The Adjudicating Authority have

already granted leave to the Liquidator to proceed in arbitration against

the Concessionaire where claim on basis of wrongful invocation of

guarantee is also included, we are of the view that the Adjudicating

Authority did not commit any error in directing deletion of name of

Respondent No. 1 in application under Section 66 of the Code. We

however observe that after a decision by the Arbitrator in the arbitration

proceeding to be filed by the Liquidator in event facts and findings come

in the proceeding which may oblige the Liquidator to file an application

under Section 66 against the Concessionaire, the liberty is granted to the

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Appellant and the deletion of name by the order impugned shall not come

into way in filing a fresh application under Section 66 of the Code, if any

such circumstance arises. We thus are not inclined to interfere in the

order impugned passed by the Adjudicating Authority in I.A. No. 1626 of

2022 deleting Respondent No. 1 (Respondent No. 8 in the Application).

The Appeal is dismissed subject to liberty as granted above.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

NEW DELHI 10th January, 2024

Basant

Company Appeal (AT) (Insolvency) No. 1695 of 2023