Dalian Huarui Heavy Industry ... vs Dhiren Shantilal Shah & Anr

Company Appeal (AT) (Insolvency) No. 589 of 2022 IN THE MATTER OF: Dalian Huarui Heavy Industry International Co. Ltd. ...Appellant

Versus

Dhiren Shantilal Shah ...Respondents Resolution Professional of Tuticorin Coal Terminal Pvt. Ltd. & Anr. Present: For Appellant : Mr. Akshay Sapre, Mr. Vinam Gupta and Mr. Aamir Siraj, Advocates

For Respondents : Mr. Nitesh Jain, Mr. Dhiran Shah, RP and Mr. Vatsal Chandra, Advocates for R-1

ORDER

21.10.2022 Heard learned Counsel for the Appellant as well as

Respondents.

2. This Appeal has been filed against an order dated 06.04.2022 passed in

I.A. No. 1255 of 2020 by which the Adjudicating Authority has imposed a cost

of Rs. 1 lakh on the Application for non-compliance of the order of the Bench

within usual period. The CIR process was initiated against the Corporate Debtor

on 20.02.2020 at the instance of Bank of India.

3. An application was filed by the Appellant before us being I.A. No. 1255 of

2020, who was Operational Creditor. The Applicant has filed Application in the

CIR process of the Corporate Debtor where he has made a prayer for certain

equipment. The Adjudicating Authority has passed an order on the said

application on 01.02.2021. Paragraph-3 of the order is as follows:

...

"3. Both the sides are directed to file Ledger Accounts

of each other in their respective books of Accounts as well

as the relevant portion of notes to the Accounts and

respective schedules of the Balance Sheet where, that

particular assets has been explained in their respective

Annual Reports."

4. Subsequent to passing of the aforesaid order, the Application was again

taken up by the Adjudicating Authority on 03.01.2022. Adjudicating Authority

while considering the Application No. 1255/2020 passed the following order:

"IA-1255/2020

4. This is an application filed by the Application

having a claim on the assets of the3 Corporate Debtor.

The Counsel for the Applicant submits that an award has

been passed by the Singapore International Arbitration

Centre (SIAC). However, the RP present in person and

submits that he is yet to finalise the response of the same

with respect to further course of the action."

5. The Application 1255/2020 was thereafter taken up and the impugned

order dated 06.04.2022 was passed in I.A. No. 1255/2020. The Adjudicating

Authority has passed the following order:

"10. I.A.-1255/2020: With respect to order dated

01.02.2021 passed by this Bench, both sides, were

directed to file Ledger Accounts of each other in their

respective Books of Accounts as well as relevant portion Company Appeal(AT)(Insolvency) No. 589 of 2022 Page 2 of 5 of notes to the Accounts and respective schedules of the

Balance Sheet where that particular assets have been

explained in their respective Annual Reports.

11. It has been observed that the RP has filed a copy

of the Ledger Account and relevant details. However, the

Application in this IA has failed to submit the same,

thought the period of 13 months has already passed.

12. The conduct of the Applicant has been viewed

seriously by this Bench and a cost of Rs. 1,00,000/- is

imposed on the Applicant for non-compliance of the order

of this Bench within a reasonable period. The Applicant

is also directed to file the same within 15 days in this

IA."

6. Learned Counsel for the Appellant, aggrieved by the said order, has

come up with the present appeal.

7. It is submitted by the learned Counsel for the Appellant that

subsequent to direction issued by the Court to file the Ledger Account, the

Applicant has brought in to the notice of the Adjudicating Authority that

International Arbitration Award is in favour the Applicant and taking note of

that, Adjudicating Authority has directed the IRP file Status Report and the

matter was listed subsequent to the order passed by Adjudicating Authority

for Status Report and on that day the order passed by the Adjudicating

Authority imposing cost of Rs. 1 lakh. It is submitted that there was no

occasion for imposing cost since the Appellant was now claiming the right on

the basis of International Arbitration Award.

Company Appeal(AT)(Insolvency) No. 589 of 2022 Page 3 of 5

8. Learned Counsel for the Respondent submits that when the order was

passed by the Adjudicating Authority, both the parties failed to file Ledge

Account. The Appellant did not file Ledger Account for 13 months and hence

the Adjudicating Authority has rightly imposed the cost.

9. Learned Counsel for the Respondent further submits that Arbitration

Award does not come in the aid of the Appellant since it was passed after

moratorium.

10. We have considered the submissions of the parties. In the Appeal, the

Appellant has challenged that part of the order in which cost of Rs. 1 lakh

has been imposed. In the facts of the case, when the order was passed by the

Adjudicating Authority subsequently on 03.01.2022, after noticing the award

by International Arbitration centre and asking Resolution Profession to file

Status report, we see no reason to impose cost of 1 lakh on the Appellant by

the Adjudicating Authority. In the event, Ledger has not been filed by the

parties, it was open to the Adjudicating Authority to take appropriate

decision. Hence we are satisfied that imposition of cost was unjustified.

11. Now, we come to the submission of the Respondent where he was

contending that the Award is nullity.

12. We are of view that for the said issue, the Application filed by the

Appellant being I.A. No. 1255/2020 is already pending consideration before

the Adjudicating Authority and has not yet been decided on merits, hence it

is not necessary for us to make any observation. The contentions of both the

parties with regard to the merits of Application No. 1255/2020 are left open

and it is open for the parties to make their submissions before the

Adjudicating Authority.

Company Appeal(AT)(Insolvency) No. 589 of 2022 Page 4 of 5

13. The learned Counsel for the Appellant has also contended that in view

of the award by Singapore International Arbitration Centre, the Title and

Goods is settled and the Adjudicating Authority cannot go with regard to Title

of the equipment.

14. As observed above, we are not required to express any opinion on the

contentions of the parties on merit and it is for the Adjudicating Authority to

hear the parties and take steps in accordance with law.

15. In view of the foregoing, we allow this Appeal and set aside the

impugned order dated 06.04.2022 imposing a cost of Rs. 1 lakh on the

Appellant.

16. It is open to the Adjudicating Authority to decide the entire issue on

merits after considering all the contentions of the parties. Appeal is allowed

to the extent as above.

(Justice Ashok Bhushan) Chairperson

(Dr. Alok Srivastava) Member(Technical)

(Mr. Barun Mitra) Member(Technical) akc/Nn

Company Appeal(AT)(Insolvency) No. 589 of 2022 Page 5 of 5