Deccan Value Investors L. P. & Anr vs Dinkar Venkatasubramanian & Anr

Deccan Value Investors L. P. & Anr. ...Appellants

Vs

Dinkar Venkatasubramanian & Anr. ....Respondents

Present:

For Appellants: Mr. Amit Singh Chadha, Sr. Advocate with Mr. Mahesh Agarwal, Mr. Rajeev Kumar, Ms. Swati Sinha, Ms. Srishti Govil and Ms. Nikita Mishra, Advocates. For Respondents: Mr. Abhinav Vashisth, Sr. Advocate with Ms. Anannya Ghosh, Advocate for R-1. Mr. Siddhant Kaul, Mr. Anoop Rawal and Mr. Samar Panda, Advocates for CoC. Ms. Srishti Khare and Mr. Shreyas Gupta, Advocates.

ORDER

08.03.2019: This appeal has been preferred by 'Deccan Value Investors L. P.'

and 'DVI PE (Mauritius) Ltd.' (Resolution Applicants) against order dated 27th

February, 2019 passed by the Adjudicating Authority (National Company Law

Tribunal), Mumbai Bench, by which, the Miscellaneous Application

No.1462/2018 preferred by the Successful Resolution Applicants (Appellants

herein) seeking direction against Resolution Professional for making available

forensic audit report and other records, has been rejected.

2. Before the Adjudicating Authority, the Appellant, Resolution Applicant

made the following prayer:

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"1. The Resolution Applicants DECCAN VALUE

INVESTORS L.L.P. and D.V.I. PE (Mauritius) Ltd. have filed this

Miscellaneous Application No. 1462/2018 seeking direction

against the Resolution Professional that the transaction and

forensic audit report of the Corporate Debtor be undertaken

and the requests made for appointing a reputed independent

expert for this purpose. The Applicant has further sought

direction against the Resolution Professional and the

Committee of Creditors to furnish to the Applicants among

other things the following documents that have come to light

from the minutes of the Committee of Creditors viz:

i) The final transaction audit report and the final forensic

audit report reported by M/s S. P. Chopra;

ii) Cost audit report of the company for the financial years

2012-2013, 2013-14, 2014-15, 2015-16, 2016-17 and

after that up to 15th December, 2017;

iii) Historical production data relied upon by Mott McDonald

India in their reports dated 30th September, 2016 and

19th June, 2018, including the number of units produced

and the line-wise declared capacity.

iv) Historical production data relied on indicating the

maximum production achieved by the Original

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Respondent Company / Corporate Debtor before the

commencement of the Corporate Insolvency Resolution

Process; and

v) Any other material information that may have come to

light to the Resolution Professional and would affect the

outcome of the CIRP;

2. Applicant has further requested that pending the

hearing and disposal of the CIRP in MA 956 be stayed."

3. Learned senior counsel appearing on behalf of the Appellant submitted

that the Resolution Professional on the instruction of Committee of Creditors

had made final transaction audit report; final forensic audit report and cost audit

report of the Corporate Debtor for financial years 2012-13 to 2016-17 and

thereafter upto 15th December, 2017. The aforesaid reports were not brought to

the notice of the Resolution Applicants before submission of the resolution plan.

According to the Appellants, they are important documents which are required

to be taken into consideration to decide whether the Resolution Applicants at

this stage should proceed further for getting their plan approved or to withdraw

the plan. It is submitted that the Appellants (Resolution Applicants) to be on the

safe side have also filed application for withdrawal of their resolution plan but

no order has been passed by the Adjudicating Authority in view of objection of

the Committee of Creditors.

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4. Learned counsel appearing on behalf of the Resolution Professional

submitted that no forensic audit was conducted by any person on the direction

of the Committee of Creditors. There is no separate cost and audit report of the

Company which was provided to the Resolution Professional or was available in

the office of the Corporate Debtor. The Resolution Professional has denied

existence of any such reports and records. It is informed that a forensic audit

report was made by erstwhile lenders of the Corporate Debtor and not by the

Committee of Creditors. It is also submitted that after issuance of the Expression

of Interest and Information Memorandum, the Resolution Applicants (Appellants

herein) submitted their resolution plan. The same has been considered in the

meeting of Committee of Creditors in which Resolution Applicants were also

present but they never asked for such report.

5. Learned senior counsel appearing on behalf of the Appellants submits that

they had no knowledge about the forensic audit report which was considered in

the meeting of Committee of Creditors held on 13th July, 2018.

6. In the present case we find that the Committee of Creditors have already

approved the resolution plan submitted by 'Deccan Value Investors L. P.'

alongwith 'DVI PE (Mauritius) Ltd.' (Appellant herein). The matter is pending

consideration before the Adjudicating Authority for passing appropriate order

under Section 31. It is informed that 270 days have already crossed and the

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resolution plan was submitted prior to it. It is now pending consideration before

the Adjudicating Authority under Section 31 of the I&B Code.

7. In the case of 'Arcelormittal India Pvt. Ltd. Vs. Satish Kumar Gupta & Ors.'

in Civil Appeal Nos.9402-9405 of 2018, (2019) 2 SCC 1, Hon'ble Supreme Court

observed:-

"79. Given the timeline referred to above, and given the fact

that a resolution applicant has no vested right that his

resolution plan be considered, it is clear that no challenge can

be preferred to the adjudicating authority at this stage. A writ

petition under Article 226 filed before a High Court would also

be turned down on the ground that no right, much less a

fundamental right, is affected at this stage. This is also made

clear by the first proviso to Section 30(4), whereby a Resolution

Professional may only invite fresh resolution plans if no other

resolution plan has passed muster."

"82. Take the next stage under Section 30. A Resolution

Professional has presented a resolution plan to the Committee

of Creditors for its approval, but the Committee of Creditors

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does not approve such plan after considering its feasibility and

viability, as the requisite vote of not less than 66% of the voting

share of the financial creditors is not obtained. As has been

mentioned hereinabove, the first proviso to Section 30(4)

furnishes the answer, which is that all that can happen at this

stage is to require the Resolution Professional to invite a fresh

resolution plan within the time-limits specified where no other

resolution plan is available with him. It is clear that at this

stage again no application before the adjudicating

authority could be entertained as there is no vested

right or fundamental right in the resolution applicant

to have its resolution plan approved, and as no

adjudication has yet taken place."

8. In the view of decision aforesaid, as the Appellants have not accrued any

right, we are not inclined to interfere with the impugned order. The question as

to whether any audit report and other documents was available with the

Resolution Professional or Committee of Creditors and whether forensic audit

report or any other documents are relevant or not cannot be decided in this

appeal. However, if Appellants have filed any application for withdrawal of the

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resolution plan, in such case, the Adjudicating Authority may decide the

application before passing appropriate order under Section 31 of the I&B Code.

The appeal stands disposed of with aforesaid observations. No costs.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice A. I. S. Cheema] Member (Judicial)

am/gc

Company Appeal (AT) (Insolvency) No. 222 of 2019