Dsp Investment Managers Private ... vs Sintex Plastics Technology Limited & ...

1. Sintex Plastics Technology Ltd., ...Appellant Through authorized signatory, Mr. Amit Dineshchadra Patel, Having address at, 07th Floor, Abhijeet-1, Mithakali Six Roads, Ellis Bridge, Ahmedabad - 380006

Versus

1. Mahatva Plastic Products and Building Materials Pvt. Ltd., Survey No. 650, Welspun City, Village Versamedi, Taluka Anjar, District Kutch, Anjar, Gujarat 370110 mukulraj_raghotry@welspun.com ...Respondent No. 1

2. Zielen Industries Private Limited, Having address at: Survey No. 459, At Post Tajpur (Oran) Nr. Majara Chokdi, Ta:Prantij District: Sabarkantha zip_crb@yahoo.co.in ...Respondent No. 2

3. Sintex BAPL Limited, Represented through the IRP, Mr. Ketulbhai Ramubhai Patel, R.S. Patel & Company Chartered Accountants, 801, Popular House, Nr. Income Tax Circle, Ashram Road, Ahmedabad, Gujarat - 380009 ketul@rspatelca.com ...Respondent No. 3

4. Asset Reconstruction Company (India) Limited, 10 Floor, The Ruby, 29, th

Senapati Bapat Marg, Dadar West, Mumbai, Maharashtra - 400028 ...Respondent No. 4

Cont'd.../ 2

Present:

For Appellant: Mr. Arvind Kumar Gupta, Ms. Henna George, Ms. Shivani Sharma, Advocates. For Respondents: Mr. Arun Kathpalia, Sr. Advocate with Mr. Aman Raj Gandhi, Mr. Parth Bose, Mr. Pranay Tuteja, Advocates for R-1 Mr. Arun Kathpalia, Sr. Advocate with Mr. Samar S. Kachwaha, Ms. Shivangi Nanda, Ms. Kavita Vinayak, Ms. Rini Mehra, Advocates for R-4/ARCIL

With Company Appeal (AT) (Insolvency) No. 730 of 2022

IN THE MATTER OF:

1. Sintex Plastics Technology Ltd., ...Appellant Through authorized signatory, Mr. Amit Dineshchadra Patel, Having address at, 07th Floor, Abhijeet-1, Mithakali Six Roads, Ellis Bridge, Ahmedabad - 380006

Versus

1. State Bank of India, Lead Bank of SBI Consortium, Having its Corporate Centre at: 58 Shrimali Society, Navrangpura, Ahmedabad - 390009

Having Branch Office At: Stressed Asset Management Branch 2nd Floor, Paramsiddhi Complex, Opp. V.S. Hospital, Ashram Road, Ahmedabad, Gujarat

2. Sintex BAPL Limited, Represented through the IRP, Mr. Ketulbhai Ramubhai Patel, 801, Popular House, Nr. Income Tax Circle, Ashram Road, Navrangpura, Ahmedabad - 380014

3. Bank of Baroda, Kalol (Ng) Branch, MG Road, Kalol - 382721

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 3

4. Yes Bank Ltd., Unit No. G/3, 102-103, CG Centre, CG Road, Ahmedabad - 380006

5. HDFC Bank Ltd., 3rd Floor, HDFC Bank House, Near Mithakali Six Roads, Navrangpura, Ahmedabad - 380009

6. Zielen Industries Private Limited, Having Address at: Survey No. 459, At post Tajpur (Oran), Nr. Majara Chokdi, Ta:Prantij District: Sabarkantha zip_crb@yahoo.co.in ...Respondents

Present: For Appellant: Mr. Arvind Kumar Gupta, Ms. Henna George, Ms. Shivani Sharma, Advocates. For Respondents: Mr. Malak M. Bhatt and Mr. Rajat Bector, Advocates for R-1.

With Company Appeal (AT) (Insolvency) No. 475 of 2021 & I.A. No. 1813 of 2021

IN THE MATTER OF:

1. KKR India Financial Services Ltd., ...Appellant A company registered with the Reserve Bank of India as non-banking financing company, having its registered office at 2nd Floor, Piramal Towers, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel (W), Mumbai 400013

Versus

1. Sintex Plastics Technology Ltd., A Copy incorporated under the Indian Companies Act, having its office at Near Seven Garnala Kalol, Gandhinagar - 382721.

2. Zielem Industries Private Limited, A company incorporated under the Indian Companies

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 4

Act, having its office at Survey No. 459, Mazara Chokdi B/H Sabar College, Tajpur (Oran) Chiloda, Himmatnagar, Highway, Taluka - Prantij, District - Sabarkantha, 383205 (Gujarat)

3. Sintex - BAPL Limited, Through its Interim Resolution Professional-Mr. Ketulbhai Ramubhai Patel, A Company registered under the Companies Act, 1956, Having its registered office at Abhijeet-I, Seventh Floor, Mithakali Six Roads, Ellisbridge, Ahmedabad - 380006

4. DSP Investment Managers Private Limited, A company incorporated under the Indian Companies Act, 1956 and having its registered office at Mafatlal Centre, 10th Floor, Nariman Point, Mumbai - 400021 ...Respondents

Present:

For Appellant: Mr. Arun Kathpalia, Sr. Advocate with Mr. Vividh Tandon, Ms. Kaazvin Kapadia, Mr. Ribhu Garg, Advocates For Respondents: Mr. Arvind Kumar Gupta, Advocate for R-1. Mr. Malak M. Bhatt and Mr. Rajat Bector, Advocates Mr. Varun Sharma, Ms. Vanshika Gupta, Mr. Shivam Goel, Advocates in I.A. 1032/ 2022.

with Company Appeal (AT) (Insolvency) No. 577 of 2021

IN THE MATTER OF:

1. Amit Patel, ...Appellant S/o Dineshchandra Patel, Having Address at: Abhijeet-1, Mithakali Six Roads, Ellis Bridge, Ahmedabad 380006

Versus

1. KKR India Financial Services Ltd., 2nd Floor, Piramal Towers, Peninsula Corporation Park, GK Marg, Lower Parel (W) Mumbai 400013

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 5

2. Mr. Ashish Chhawchharia, In his capacity as Interim Resolution Professional of Sintex-BAPL Limited (Corporate Debtor/CD) Grant Thornton, 10C Hungerford Street, Kolkata, West Bengal, 700017 ...Respondents

Present:

For Appellant: Mr. Arvind Kumar Gupta, Ms. Henna George, Ms. Shivani Sharma, Advocates. For Respondents: Mr. Arun Kathpalia, Sr. Advocate with Mr. Samar S. Kachwaha, Ms. Shivangi Nanda, Ms. Kavita Vinayak, Ms. Rini Mehra, Advocates

With Company Appeal (AT) (Insolvency) No. 674 of 2021

IN THE MATTER OF:

1. DSP Investment Managers Pvt. Ltd., ...Appellant A company incorporated and registered under the provisions of the Companies Act, 1956 and, having its registered office at Mafatlal Centre, 10th Floor, Nariman Point, Mumbai - 400021, Maharashtra

Versus

1. Sintex Plastics Technology Ltd., A Company registered under the Companies Act, 1956, Having its registered office at Near Seven Garnala Kalol, Gandhinagar - 382721

2. Zielem Industries Private Limited, A company incorporated under the Indian Companies Act, having its office at Survey No. 459, Mazara Chokdi B/H Sabar College, Tajpur (Oran), Taluka - Prantij, District - Sabarkantha, 383205 (Gujarat)

3. Sintex - BAPL Limited, Through its Interim Resolution Professional-Mr. Ketulbhai Ramubhai Patel, A Company registered under the Companies Act, 1956, Having its registered office at Abhijeet-I, Seventh Floor, Mithakali Six Roads, Ellisbridge, Ahmedabad - 380006

4. KKR India Financial Services Ltd., 2 Floor, Piramal Towers, Peninsula Corporation Park, nd

GK Marg, Lower Parel (W)

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 6

Mumbai 400013 ...Respondents

Present:

For Appellant: For Respondents: Mr. Arvind Kumar Gupta, Advocate for R-1. Mr. Arun Kathpalia, Sr. Advocate with Mr. Samar S. Kachwaha, Ms. Shivangi Nanda, Ms. Kavita Vinayak, Ms. Rini Mehra, Advocates

With

Company Appeal (AT) (Insolvency) No. 814 of 2021

IN THE MATTER OF:

1. Insolvency and Bankruptcy Board of India, ...Appellant Through its Authorised Representative, Having its Office at: 2nd Floor, Jeevan Vihar Building, 3, Parliament Street, New Delhi - 110001.

Versus

1. Sintex Plastics Technology Ltd., A Company registered under the Companies Act, 1956, Having its registered office at Near Seven Garnala Kalol, Gandhinagar - 382721 Email: smt.mishra@sintex.co.in

2. Zielen Industries Private Limited, Having Address at: Survey No. 459, At post Tajpur (Oran), Nr. Majara Chokdi, Ta:Prantij District: Sabarkantha zip_crb@yahoo.co.in

3. M/s. DSP Investment Managers Pvt. Ltd., having its registered office at Mafatlal Centre, 10th Floor, Nariman Point, Mumbai - 400021, Maharashtra Email Id: pritesh.majumdar@dspim.com ...Respondents Present:

For Appellant: Mr. Vikas Mehta and Mr. Apoorv Khator, Advocates for IBBI.

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 7

For Respondents: Mr. Arvind Kumar Gupta, Ms. Henna George, Ms. Shivani Sharma, Advocates for R-1. Mr. Arun Kathpalia, Sr. Advocate with Mr. Samar S. Kachwaha, Ms. Shivangi Nanda, Ms. Kavita Vinayak, Ms. Rini Mehra, Advocates

JUDGMENT

PER: DR. ALOK SRIVASTAVA:

1. This common Judgement disposes of following six Appeals filed under

Section 61 of the Insolvency and Bankruptcy Code, 2016 (hereinafter

referred to as "IBC") and the Orders impugned in these Appeals are order

dated 29.06.2021 passed by the Adjudicating Authority (National Company

Law Tribunal, Ahmedabad Bench, Ahmedabad) in IA 18(AHM)/2021 in CP

(IB) 759 (AHM)2019 and order dated 19.07.2021 passed by the Adjudicating

Authority in CP(IB) No. 276/7/NCLT/AHM/2020;

a) Company Appeal (AT) Ins. No. 729 of 2022 has been filed by the

Appellant-Sintex Plastics Technologies Ltd. wherein by order dated

29.06.2022, I.A. No. 413(AHM)2022 in I.A. 374(AHM)2022 filed by

Suspended Management was rejected, IA/374(AHM)2022 was allowed

and I.A./474(AHM)2022 in IA/374(AHM)2022 was disposed of in

CP(IB) No. 759 of 2019 has been challenged and seeking order to set

aside and quash the impugned order dated 29.06.2022 passed by the

Adjudicating Authority;

b) Company Appeal (AT) Ins. No. 730 of 2022 has been filed by the

Appellant-Sintex Plastics Technology Ltd. through the Authorised

Signatory-Mr. Amit Dineshchadra Patel challenging the order dated

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 8

29.06.2022 passed by the Adjudicating Authority in I.A. No. 380/2022

in CP(IB) No. 759 of 2019 seeking appropriate order setting aside and

quashing the impugned order dated 29.06.2022 passed by the

Adjudicating Authority Ahmedabad and staying the operation and

implementation of impugned order dated 29.06.2022;

c) Company Appeal (AT) Ins. No. 475 of 2021 has been filed by the

Appellant-M/s. KKR India Financial Services Ltd. with a prayer to set

aside order dated 29.06.202, to direct the IRP to continue with

responsibilities towards the corporate debtor and pass order for the

constitution of CoC against the order dated 29.06.2021 passed by the

Adjudicating Authority in I.A. 18(AHM)/2021 in CP(IB) 759(AHM)

2019 with Inv. P.1(AHM)/2021 in I.A. 18 of 2021 whereby the

Adjudicating Authority permitted the corporate debtor to be released

from the rigours of the Corporate Insolvency Resolution Process;

d) Company Appeal (AT) Ins. No. 577 of 2021 is filed by the Appellant-

Amit Dineshchandra Patel who is an Ex-Director of the Corporate

Debtor M/s. Sintex-BAPL Limited with a prayer to set aside the order

dated 19.07.2021 passed by the Adjudicating Authority in CP(IB) No.

276/07/NCLT/AHM/2020 whereby the Section 7 Application under

the Code filed by the Financial Creditor-KKR India Financial Services

Limited was admitted and CIRP was initiated against the corporate

debtor;

e) Company Appeal (AT) Ins. No. 674 of 2021 is filed by the Appellant-

DSP Investment Managers Pvt. Ltd. with a prayer to set aside the

Impugned Order dated 29th June, 2021 passed by the Adjudicating

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 9

Authority in I.A. No. 18 of 2021 in CP(IB) No. 759 of 2019 releasing

the corporate debtor from all rigours of CIRP and allow the

resumption of CIRP against the corporate debtor;

f) Company Appeal (AT) Ins. No. 814 of 2021 filed by the Appellant-

Insolvency and Bankruptcy Board of India (hereinafter referred to as

"IBBI") with a prayer to stay order dated 29.06.2021 in I.A. No. 18

/AHM/2021 in CP(IB) No. 759/AHM/2019 with Inv. P.1 /AHM/2021

in I.A. No. 18 of 2021 releasing the corporate debtor from all rigours of

CIRP.

2. The impugned order dated 29.06.2021 in I.A. No. 18 of 2021 in CP(IB)

No. 759 of 2019 with Inv. P.1/AHM/2021 in I.A. No. 18 of 2021 relates to

the release of the corporate debtor from the rigours of CIRP. This order

effectively closes the CIRP against the corporate debtor-Sintex Plastics

Technology. Ltd. initiated on 18.12.2020 by the Adjudicating Authority after

the application admitted vide order dated 18.12.2020 was allowed to be

withdrawn by the Adjudicating Authority.

3. Briefly, the case of the Appellant-KKR India Financial Services Ltd. as

stated in Company Appeal (AT) Ins. No. 475 of 2021 is that on an insolvency

application under Section 9 of the IBC filed by the operational creditor-

Zielen Industry Pvt. Ltd., CIRP was initiated upon the admission of the said

Application on 18.12.2020 along with appointment of IRP-Mr. Ketulbhai

Ramubhai Patel. It is stated by the Appellant that the operational debt owed

to the operational creditor by the corporate debtor-Sintex Plastics

Technology Ltd. was settled on the basis of an "MoU" whereupon the holding

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 10

company of the corporate debtor-Sintex Plastics Technology Ltd. filed an

appeal before the Appellate Tribunal seeking withdrawal of the insolvency

application under Section 9 filed by the operational creditor and set aside

the admission order dated 18.12.2020 initiating CIRP. He has further stated

that NCLAT dismissed the appeal filed by the Sintex Plastics Technology

Ltd.-the holding company of the corporate debtor-Sintex BAPL Limited on

04.01.2021 holding that the Appellate Tribunal was not correct forum for

filing the application for withdrawal of Section 9 Admission Order and

simultaneously stayed the constitution of the Committee of Creditors

(hereinafter referred to as "CoC") for a week upto 07.07.2021 which was

further extended by the NCLT during the adjudication of the settlement

application. The Appellant has further stated that the application bearing

I.A. No. 18 of 2021 filed before the NCLT for withdrawal of the Insolvency

Admission Order was allowed vide order dated 29.06.2021 (which was

uploaded on NCLT Website on 30.06.2021) whereby the corporate debtor

was released from the rigours of the insolvency resolution and the CIRP was

closed. At the request of the Appellant-KKR India Financial Services Ltd.,

the NCLAT granted stay on the implementation of the impugned order for a

period of one week up to 07.07.2021 so that funds lying in the credit of

"Trust and Retention Account" for the benefit of lenders of the corporate

debtor may not be misappropriated. The Appellant has alleged that despite

a stay on the order dated 30.06.2021, State Bank of India in its capacity as

lead bank of the lenders consortium withdrew an amount of Rs. 116.41

Crores without prior approval and knowledge of the IRP and also placed hold

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 11

over an additional amount of Rs. 31.27 Crores which was laying in the

Credit of Trust and Retention Account.

4. The Appellant-KKR India Financial Services Ltd. then filed an

application I.A. No. 18 of 2021 before the Adjudicating Authority

highlighting the conduct of the SBI and seeking direction to SBI for

reversing the unauthorised withdrawal of Rs. 116.41 Crores and also

releasing hold put on an amount of Rs. 31.27 Crores.

5. Company Appeal (AT) Ins. No. 729 of 2022 is filed by the Sintex

Plastics Technology Ltd. challenging the Order dated 29.06.2022 whereby

the Adjudicating Authority has ordered that CIRP against the corporate

debtor-Sintex BAPL Limited shall be proceeded with based on another

Section 7 Application filed by the financial creditor-KKR India Financial

Services Pvt. Ltd. It may be recalled that the Appeal filed against the order

dated 29.06.2021 permitting withdrawal of the Section 9 Proceedings

against the corporate debtor was stayed by the NCLAT vide order dated

12.07.2021 with the further direction that IRP appointed in CP(IB) No. 759

of 2019 will continue to operate and manage the affairs of the corporate

debtor. Soon after and subsequently, by an order dated 19.07.2021, a fresh

CIRP was initiated against the corporate debtor in CP(IB) No. 276 of 2020 as

a result of the Section 7 Application filed by the M/s. KKR India Financial

Services Pvt. Ltd. It is further claimed by the Appellant that as a result of

order dated 12.07.2021 in Company Appeal (AT) Ins. No. 475 of 2021, CIRP

against the corporate debtor which was initiated as a result of application

under Section 9 continues and the IRP is incharge of the management of the

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 12

corporate debtor. This Appeal which challenged the order of withdrawal of

Section 9 Application was finally disposed of vide order dated 27.07.2021

wherein Company Appeal (AT) Ins. No. 577 of 2021 was heard along with

Company Appeal (AT) Ins. No. 475 of 2021.

6. The main issue that arises in the above stated appeals is whether the

initiation of the first CIRP on the basis of Section 9 Application filed by the

Zielen Industry Pvt. Ltd., which was later permitted to be withdrawn by

order dated 29.06.2021 of the NCLT and which order was stayed vide order

dated 12.07.2021 of the NCLAT with the IRP continuing to operate and

manage the affairs of the corporate debtor, should be the effective CIRP

against the corporate debtor or the CIRP initiated vide order dated

19.07.2021 passed by the Adjudicating Authority in CP(IB) No. 276 of 2020

filed under Section 7 of IBC should be the effective CIRP which insolvency

resolution of the corporate debtor should be carried out.

7. We have heard the arguments of Learned Sr. Counsel for the

Appellant-KKR India Financial Services Ltd. and the Learned Counsel for the

corporate debtor-Sintex BAPL Limited and Sintex Plastics Technology Ltd.

8. The Learned Sr. Counsel for the Appellant-KKR India Financial

Services Pvt. Ltd. has argued that Company Appeal (AT) Ins. No. 475 of 2021

and Company Appeal (AT) Ins. No. 674 of 2021 are filed by two financial

creditors vis. DSP Investment Managers Pvt. Ltd. and KKR India Financial

Services Ltd. respectively, which pertain to the Section 7 Application filed

while the Section 9 Application against the corporate debtor was under

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 13

consideration, and the Section 9 Application was admitted earlier vide order

of Adjudicating Authority dated 18.12.2020, the Section 7 Application was

decided later. He has submitted that on the basis of a settlement between

the operational creditor-Zielen Industries Pvt. Ltd. and corporate debtor-

Sintex BAPL Limited, withdrawal of the Section 9 Application was permitted

by the Adjudicating Authority on 29.06.2021 but since the Appellate

Tribunal stayed the withdrawal Order by its order dated 12.07.2021 with

further direction that the IRP appointed in CP(IB) No. 759 of 2019 (Section 9

Application) shall continue to operate and manage the affairs of the

corporate debtor.

9. The Learned Sr. Counsel of KKR India Financial Services Ltd. has

further argued that the Section 7 Application filed by the Appellant-KKR

India Financial Services Ltd. was also admitted vide order dated 19.07.2021

passed in CP(B) No. 276 of 2020 which only seeks to start a fresh CIRP

against the same corporate debtor whereas the earlier CIRP initiated as a

result of admission of Section 9 Application was continuing with the IRP in

the control of the operation and management of the corporate debtor. He

has pointed to the operative part of the NCLAT Order dated 12.07.2021 to

emphasize that the Appellate Tribunal took note of the fact that it was not

proper for the Adjudicating Authority to pass an order on 19.07.2021 for

initiation of CIRP on an application under section 7 once a 'stay' had been

granted on the withdrawal application by the appellate tribunal on

12.07.2021 which meant that CIRP against the corporate debtor would

continue. He has claimed that in the facts and circumstances of this case,

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 14

the CIRP initiated under Section 9 Application should be the correct CIRP

and the amount withdrawn by the State Bank of India and by any other

creditor should be deposited back in the account of the corporate debtor for

a proper and appropriate insolvency resolution of the corporate debtor. He

has buttressed his argument by pointing out that order dated 12.07.2021 of

the appellate tribunal means that the corporate debtor's CIRP is continuing

and with the constitution of CoC situation the other debt of financial

creditors has also be considered in the insolvency resolution of the corporate

debtor.

10. The Learned Sr. Counsel for the Financial Creditor-KKR India

Financial Services Ltd. has further submitted that once it is decided that the

insolvency of the corporate debtor has to be resolved it is only appropriate

and necessary that this resolution takes place in accordance with the

objective and underlying spirit of the IBC by taking care of the interests of

all the creditors and to achieve such an objective the effective date of

initiation of CIRP should be the date of passing of the admission order given

on the application under section 9 of the IBC.

11. The Learned Counsel for the Respondent-Sintex Plastics Technology

Ltd. has referred to the turn of events in the two company petitions namely

CP No. 759 of 2019 and CP No. 276 of 2020 to claim that once the corporate

debtor and the operational creditor had settled the debt between themselves

which was acknowledged by the Adjudicating Authority and the application

for withdrawal was orally pronounced on 29.06.2021 (though this order was

uploaded on the website of NCLT on 30.06.2021) the CIRP had

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 15

automatically abated. He has further argued that the admission of Section 7

Application by the Adjudicating Authority has therefore given rise to a fresh

CIRP, and in such a situation there is no reason now to permit continuation

of the CIRP initiated as a result of Section 9 Application, and the CIRP

initiated as a result of Section 7 Application should be the correct insolvency

proceedings against the corporate debtor.

12. The Learned Counsel for the Respondent has referred to Judgements

of the Hon'ble Supreme Court in the matter of Ashok G. Rajani Vs. Beacon

Trusteeship Ltd. & Ors. [Civil Appeal No. 4911 of 2021] and of the

NCLAT in the matter of Anuj Tejpal Vs. Rakesh Yadav and Anr. [In I.A.

No. 815 of 2021 in Company Appeal (AT) Ins. No. 298 of 2021] to claim

that the proceedings are only between the applicant-operational creditor and

the corporate debtor till the constitution of CoC and no rights accrue to

other creditors till then. Therefore, KKR India Financial Pvt. Ltd. and the

other creditor DSP Investment Managers Pvt. Ltd. can not claim any rights

on the basis of admission of Section 9 Application which was withdrawn

before the constitution of CoC. He has also pointed out that it was not

appropriate for the Appellant-KKR India Financial Services Ltd. to have

intervened during the consideration of the withdrawal application and his

rights would accrue on after admission of the Section 7 Application which it

had filed and which was admitted on 19.07.2021 by an order of the

Adjudicating Authority.

13. The Learned Counsel for the IBBI, which is appellant in Company

Appeal (AT) Ins. No. 814 of 2021 has argued that the Adjudicating

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 16

Authority, while passing the impugned order dated 29.06.2021 in I.A. No. 18

of 2021 has, inter alia, made certain observations about the provisions of

the IBBI (Insolvency Resolution Process for Corporate Persons), Regulations

2016 which are completely out of place and uncalled for, since the

Adjudicating Authority does not have jurisdiction to comment on the

illegality of said provisions and therefore they should be expunged. He has

referred to the Judgement of the Hon'ble Delhi High Court in the matter of

Insolvency and Bankruptcy Board of India Vs. State Bank of India &

Ors., W.P (C) No. 10189/2018 [2022/DHC/00524] in this regard wherein

it is held that NCLT does not have the jurisdiction to decide whether any

legal provision is ultra vires.

14. We have considered the arguments submitted on behalf of the parties

and perused the pleadings submitted in all the Appeals

15. It is noted that the Adjudicating Authority admitted Section 9

Application filed by the operational creditor Zielem Industries Pvt. Ltd.

against the corporate debtor-Sintex BAPL Limited on 18.12.2020. It is also

noted that the operational creditor-Zielem Industries Pvt. Ltd. and the

corporate debtor entered into a settlement which led to the filing of an

Application bearing I.A. No. 18/AHM/2021 seeking withdrawal of the

Section 9 admission order and closure of the CIRP.

16. We also note that the said withdrawal application was challenged in

Company Appeal (AT) Ins. No. 475 of 2021 wherein this Tribunal, after

hearing both the Financial Creditor-KKR India Financial Services Ltd. and

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 17

Respondent-Sintex Plastics Technology Pvt. Ltd., passed order on

12.07.2021 which is as follows:

"..........In the meanwhile, we stay the impugned order and direct that status quo ante-before passing of the impugned order dated 29th June, 2021 shall be restored.

It is stated that the Interim Resolution Professional (IRP) is still incharge of the Management. The IRP will continue to be in Management.

The CIRP in CP(IB) 759(AHM)2019 shall continue during pendency of this Appeal or further orders in this regard by this Tribunal whichever is earlier.........."

17. We further note that when the Adjudicating Authority passed order

dated 29.06.2021 effecting withdrawal of admission order of section 9, it also

stayed the operation of the said order for a period of one week till

07.07.2021. The said 'stay order' is as follows:

"This matter was heard from time to time. Different counsels for the Intervenor i.e. M/s. KKR India Financial Services Limited, have appeared. On 14.06.2021 hearing in IA/18(AHM)2021 was completed after hearing the learned Sr. Counsel appearing on behalf of this Intervenor. The contentions raised on behalf of such Intervenor find mention in our order dated 29.06.2021. Thus, due to technical error occurring in our daily proceeding order dated 14.06.2021, which has not been pointed by any of the parties till 29.06.2021 including our Court

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 18

Master. Be that as it may, to avoid any adverse situation to any of the parties, our order dated 29.06.2021 is stayed till 07.07.2021."

18. Therefore, the order to maintain status quo-ante with regard to the

corporate debtor and its assets means that the withdrawal of Rs. 116.41

Crores by State Bank of India on 30.06.2021 was against this 'stay order'

and this amount should be put back in the account of the corporate debtor,

and additionally the hold put by SBI on amount of Rs. 31.27 Crores which is

in the the Trust and Retention Account should also be released so that the

amount remains as an asset and under the control of the corporate debtor.

We also find that the KKR India Financial Services Ltd. had intervened

during hearing in CP(IB) 759(AHM)2019 and thus shown its interest and

claim even when the withdrawal application was under consideration of the

Adjudicating Authority. This fact has been noticed by the Adjudicating

Authority in its Order dated 30.06.2021 while staying the operation of its

own order dated 29.06.2021. Further when an appeal was filed against the

'withdrawal' order dated 29/30.06.2021 which bears Company Appeal (AT)

Ins. No. 475 of 2021, the Appellate Tribunal took note of the fact that other

financial creditors and operational creditors had large claims pending for

payment by the corporate debtor-Sintex BAPL Limited. Therefore, a 'stay' on

the impugned order dated 29.06.2021 given in Company Appeal (AT) Ins.

No. 475 of 2021 restoration of 'status quo ante' was also ordered with the

stipulation that the IRP will continue to be in Management of the corporate

debtor and CIRP would also continue.

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 19

19. We also find strength in the argument of Learned Sr. Counsel for the

Financial Creditor-KKR India Financial Services Ltd. that if the CIRP under

Section 9 Application is allowed to be closed, some creditors may have

withdrawn amounts or received payments from the corporate debtor just as

the SBI has done, which would be detrimental to the interest of the other

creditors, particularly when another Section 7 Application filed by the KKR

India Financial Services Ltd. for insolvency resolution of the same corporate

debtor was pending. We also note the fact that the Adjudicating Authority,

while imposing a stay on its own Order dated 29.06.2021, recognized that

Intervenor-KKR India Financial Services Ltd. had raised its claim and

interest before the Adjudicating Authority, and later the Appellate Tribunal

also took note of the existence of Section 7 Application to pass a 'stay' vide

order dated 12.07.2021, which was in the nature of 'status quo ante', we feel

that it would not only lead to unnecessary complication in the Resolution

Process if withdrawal of Section 9 Admission order is upheld and CIRP were

to start afresh from the date of admission of the Section 7 Application, and it

may also result in an inadequate insolvency resolution of the corporate

debtor.

20. While coming to above conclusion, we consider the Judgement of this

Tribunal in Company Appeal (AT) Ins. No. 298 of 2021 in the matter of Anuj

Tejpal (supra), dated 07.07.2021 wherein use of Rule 11 of NCLT Rules,

2016 has been considered by both NCLT and NCLAT in allowing an

application of withdrawal of insolvency resolution order keeping in view the

interest of the concerned parties. We are of the view that the fact of present

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 20

case and the turn of events, particularly, the orders of NCLT and NCLAT

staying the Order permitting withdrawal of Section 9 Application and the

order of NCLAT restoring 'status quo ante' position, present totally different

circumstance from that in the matter of Anuj Tejpal (supra).

21. We also note that Hon'ble Supreme Court in the matter of "Ashok

Rajani Vs. Beacon Trusteeship and Ors." [Civil Appeal No 4911 of 2021]

has held that before the Committee of Creditors is constituted, there is no

bar for withdrawal of an application admitted under Section 7 of IBC, 2016

and rule 11 of NCLT Rules, 2016 enable the NCLT to pass order for meeting

the ends of justice, and further that a settlement cannot be stifled before the

constitution of CoC in anticipation of a debt and claim of a third person.

This Judgement of the Hon'ble Supreme Court is distinguished on the basis

of the fact that, in the instant case, the Adjudicating Authority itself

permitted a stay of its own order dated 29.06.2021 (which permitted the

withdrawal of Section 9 Application) and this order was further reinforced by

order dated 12.07.2021 passed by this Appellate Tribunal in Company

Appeal (AT) Ins. No. 475 of 2021 whereby 'status quo ante' was ordered to be

restored with further stipulation that the CIRP shall continue with respect to

the corporate debtor and the IRP shall remain in control of the management

of the corporate debtor. The passing of 'stay orders' of the 'withdrawal order'

is after acknowledging the situation that there are claims of other creditors

including KKR Indian Financial Services Ltd. which are relevant for

insolvency resolution of the corporate debtor, and further the pendency of

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 21 section 7 application against the same corporate debtor also makes the

situation and circumstance different in the present case.

22. Thus, in the light of the facts and circumstances of the present case

and the 'stay orders' whose effects are discussed in above-stated paragraphs

passed by the Adjudicating Authority and the Appellate Tribunal subsequent

to the permission of withdrawal of Section 9 Application, we are of the view

that once the claim and interest of financial creditor-KKR India Financial

Service Ltd. had been noticed by the Adjudicating Authority while

considering the withdrawal application and 'protection' was granted

through stay of its own order on 30.06.2021, which was further reinforced

by the order dated 12.07.2021 requesting restoration of 'status quo ante' by

this Tribunal, it would only be appropriate that the CIRP, which was

initiated as a result of Section 9 Application vide Order dated 18.12.2020, be

allowed to continue and run its due course as it would allow adequate and

proper insolvency resolution of the corporate debtor. While holding such a

view, we are also conscious of the fact that despite stay order having been

granted by the Adjudicating Authority on 30.06.2021, the State Bank of

India withdrew Rs. 116.41 Crores from the Trust and Retention Account of

the corporate debtor and further put a hold on an amount of Rs. 31.27

Crores lying in the same account which if allowed would be detrimental to

insolvency resolution of the corporate debtor as required by the IBC. In

holding such a view, we therefore, consider that if creditors like SBI

withdraw amounts from corporate debtor's account or CD's assets are

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 22

alienated, it would lead to inadequate and improper resolution of corporate

debtor's insolvency.

23. With regard to the contention of the Learned Counsel for the IBBI, we

peruse the relevant portion in the Impugned Order dated 29.06.2021,

particularly paragraph 17, wherein the following comments have been made:

"17. Admittedly, NCLT is the Adjudicating Authority in terms of provisions of Section 5(1) of IBC, 2016. The Hon'ble Supreme Court, in the case of B.K. Educational Society, has also held that provisions of NCLT Rules, 2016 would be applicable while discharging of the functions by NCLT as Adjudicating Authority under IBC, 2016. Thus, having regard to provisions of Section 469(2) of Companies Act, 2013, NCLT can exercise its inherent jurisdiction under Rule 11 of NCLT Rules, 2016 for a situation not specifically covered under any provisions of IBC, 2016. It is needless to mention that NCLT Rules, 2016 are also applicable to IBC Proceedings where no specific Rules/Regulations have been prescribed under IBC, 2016 for that situation. It has also been held that Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 cannot be applied to this situation since this Regulation is inconsistent with the provisions of Section 12A of IBC, 2016 as its source is Section 12A of IBC, 2016 only, hence, a situation which is not covered under Section 12A cannot be covered by Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as well. Now, we have to look into the scheme, structure and object of provision of IBC,

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 23

2016 to find out whether inherent jurisdiction under Rule 11 of NCLT Rules, 2016 can be invoked in the facts of the case. It is also relevant to mention that neither under Section 12A of IBC, 2016, Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 there is no specific bar for application against invocation of Rule 11 of NCLT Rules, 2016 nor any other provisions exists under IBC, 2016 which covers a situation that prior to constitution of Committee of Creditors, if there happens a settlement and application for withdrawal of CIRP is filed, what can be done. Thus, considering all legal aspects, exercise of jurisdiction under Rule 11 of NCLT Rules, 2016 to the fact situation can not be doubted in any manner"

24. We are of the view that above observations of the Adjudicating

Authority in paragraph 17 of the impugned order dated 29.06.2021 were

avoidable for the reason that NCLT does not have jurisdiction to comment

on the illegality or appropriateness of any provision of IBC or Regulation

framed thereunder. However, the observation that in appropriate case

jurisdiction under Rule 11 of NCLT Rules 2016 can be exercised is held to

be correct. We do not subscribe to the view of the Adjudicating Authority

that Regulation 30-A is inconsistent with Section 12A of IBC. The Regulation

30-A has been made to give effect to the provisions of IBC and the

Regulation 30-A has to be read harmoniously with the provisions of IBC.

The provision of the Regulation 30-A has to be given effect to, unless it is

contrary to any provisions of IBC. We do not find any inconsistency between

Section 12A and Regulation 30-A so as to make Regulation 30A unworkable.

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 24

Further such a comment would cause needless doubt in the mind of

practitioners. In so far as the prayer of IBBI in Company Appeal (AT) Ins. No.

814 of 2021 regarding stay of the impugned order dated 29.06.2021 is

concerned, we feel that there is no need, at this stage, to consider stay in the

operation of the impugned order dated 29.06.2021 since we are giving final

orders now.

25. The appeals being considered in this judgement are, therefore,

disposed of with the following directions:

i. The Application for withdrawal of Section 9 Application

filed vide CP(IB) No. 759 (AHM) 2019 is set aside and

consequently the CIRP initiated as a result of admission

of Section 9 Application vide Order dated 18.12.2020 is

allowed to run its due course and be completed in

accordance with the provisions of IBC, 2016;

ii. The amount of Rs. 116.41 Crores withdrawn by State

Bank of India from the Trust and Retention Account held

by the corporate debtor-Sintex BAPL Limited be deposited

back by SBI in the account of the corporate debtor and

SBI shall also release its hold on the amount of Rs. 31.27

Crores in the Trust and Retention Account of the

Corporate Debtor so that these amounts continue to be

part of the assets of the corporate debtor-Sintex BAPL

Limited. Additionally, any asset of the corporate debtor

which may have been given to any creditor, or alienated

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021 25

from the corporate debtor after the section 9 admission

order shall revert to the position as on 29.06.2021.

iii. The admission order dated 19.07.2021 passed on Section

7 Application in CP(IB) No. 276(AHM)2020 is set aside

and the related CIRP shall stand closed with immediate

effect.

iv. Any other asset which is in the possession of the

corporate debtor particularly the machine which is

claimed to be owned by KKR India Financial Services Ltd.,

shall be dealt with by the Resolution Professional under

the provisions of IBC, 2016.

v. With the above stated directions, these Appeals are

disposed of.

26. There is no order as to costs.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical)

03rd January, 2023 New Delhi

Basant B.

Company Appeal (AT) (Ins.) No. 729 & 730 of 2022 & 475, 577, 674, 814 of 2021