Future Lifestyle Fashion Limited vs Mohan Clothing Company Private Limited ...

Comp. App. (AT) (Ins) No. 2126 of 2024 & I.A. No. 7919 of 2024 IN THE MATTER OF: Future Lifestyle Fashions Ltd., Through Its RP Ravi Sethia ...Appellant

Versus

Mohan Clothing Company Pvt. Ltd. & Anr. ...Respondent

Present: For Appellant : Mr. J. Rajesh, Dhrupad Vaghani, Md. Arsalan Ahmed, Yashwardhan Agarwal, Adv. For Respondents : Mr. Aman Arora, Aradhana More, Adv.

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain: (Oral)

30.07.2025 : This appeal is directed against the order dated 28.08.2024

by which an application filed by Respondent No. 1 bearing I.A No. 3630 of

2023 has been dismissed but the Tribunal has issued certain directions

which were not even prayed for.

2. In brief, Bank of India filed an application under Section 7 of the Code

which was registered as CP (IB) No. 959(MB)/2022, against the Corporate

Debtor/CD, namely, Future Lifestyle Fashions Ltd. which was admitted on

04.05.2023 and Ravi Sethia was appointed as the IRP who was later on

confirmed as the RP.

3. Pursuant to the announcement made by the IRP, in terms of Section

13 and 15 of the Code, Respondent No. 1, namely, Mohan Clothing Company

Pvt. Ltd. filed its claim on 18.05.2023 in Form B of an amount of Rs.

8,10,03,206/-.

4. The commercial relationship between the CD and Respondent No. 1

came into being with MOU dated 02.03.2019 as per which the CD having

various stores all over the India, agreed to keep the products / goods of Respondent No. 1 for sale or on return basis which means that if the goods

are sold then the CD would charge margin money for providing the space but

the revenue would be collected by the CD and after deducting the margin

money would return rest of the amount to Respondent No. 1.

5. It is alleged that in this process, the CD sold goods worth Rs.

5,61,86,231/- but 11,696 pieces of cloths remained unsold which were of the

value of Rs. 2,64,97,821.

6. After admission of the application and the appointment of the IRP/RP,

the unsold goods in the custody of the CD came under the control and

custody of RP/Appellant in terms of Section 14(1)(d) of the Code.

7. The claim of Respondent No.1 of Rs. 8,10,03,206/- was verified and

admitted by the RP on 29.01.2024, however, Respondent filed an application

bearing I.A No. 3630 of 2023, invoking Section 60(5) of the Code for seeking

various reliefs which are reproduced as under:-

8. The application was contested by the Appellant, inter alia, on the

ground that Respondent No. 1 can take only one stand either for the claim of

the amount of the goods unsold or claim the return of the unsold goods but

claiming both the things was not justified.

9. Strangely enough, the Tribunal dismissed the application bearing I.A

No. 3630 of 2023 specifically by observing that "I.A No. 3630 of 2023 is hereby

dismissed leaving parties to bear their own costs" but at the same issued

certain direction which have been assailed by the Appellant in the present

appeal on the ground that firstly, the direction issued are not part of the

application and secondly even if there is an omnibus prayer made in clause

6(f) by which Respondent has prayed for other relief in the facts and

circumstances of the case may warrant, yet the said prayer could not have

been granted by the Tribunal because the application itself has been

dismissed.

10. It is also submitted by the Appellant that Respondent cannot effect

double recovery i.e. of the price of the unsold goods as well as of the return of

the same unsold goods, namely, 11,696 pieces.

11. Faced with this argument, Counsel for Respondent vehemently argued

that the plan was submitted by the resolution applicant, namely, Space

Mantra Pvt. Ltd. but before it could have been approved by the CoC, the same

was purportedly withdrawn by the resolution applicant on 25.09.2024. He

has further submitted that if the resolution plan is not there then the next

step has to be taken by the CoC is of directing the RP to file an application

for liquidation after passing the resolution. In that situation, he has to put

his claim again before the Liquidator of the amount of the goods which has

been sold and the amount is lying with the CD.

12. On the other hand, Counsel for the Appellant has submitted that CoC

had in fact approved the plan on 27.09.2024. Thereafter, an application was

filed by the resolution applicant bearing I.A No. 4704 of 2024 for withdrawal

of the plan before the AA but the said application has not been decided in one

way or other and is still pending adjudication for 07.08.2025.

13. We have heard Counsel for the parties and after examining the available

record, are of the considered opinion that there are two error in this order,

firstly, the Tribunal, after having dismissed the application I.A No. 3630 of

2023, could not have issued further direction in the matter which were not

even prayed for. Secondly, Respondent has referred to the subsequent events

i.e. the events which had taken place after on 28.08.2024 when the impugned

order was passed. The case has to be examined on the date when the

impugned order was passed and at that time it is apparent that Respondent's

claim of Rs. 8,10,03,206/- was admitted by the RP/Appellant which included

the value of unsold pieces of cloths i.e. 11,696 amounting to Rs.

2,64,97,821/- but at the same time, the Tribunal has directed that RP should

return the same pieces of the cloths i.e. 11,696 to Respondent which is not

justified at all.

14. Thus, in view of the aforesaid facts and circumstances, we find merit in

the contention of the Appellant and also in the appeal, therefore, the same is

hereby allowed and the impugned order is hereby set aside. No costs.

I.A.s, if any, pending are hereby closed

[Justice Rakesh Kumar Jain] Member (Judicial)

[Justice Md. Faiz Alam Khan] Member (Judicial)

[Indevar Pandey] Member (Technical) Sc/RR