Gujarat Industrial Development ... vs Zaveri & Co. Pvt. Ltd. & Ors

1

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 & I.A. No. 5944, 5945, 5946, 5947, 5948 of 2023 IN THE MATTER OF: Gujarat Industrial Development Corporation ...Appellant Versus Zaveri & Co. Pvt. Ltd. & Ors. ...Respondents Present: For Appellant : Mr. Virender Ganda, Sr. Advocate, Ms. Tanya Hasija, Mr. Srijan Jain, Ms. Henna George, Mr. Arjun Seth, Advocates. For Respondents : Mr. Abhijeet Sinha, Sr. Advocate, Mr. Tirth Nayak, Mr. Palash S. Singhai, Mr. Saikat Sarkar, Advocates for R-1. Mr. P. Nagesh, Sr. Advocate, Mr. Raheel Patel, Mr. Akshay Sharma, Mr. Harsh Saxena, Mr. Shevaaz Khan, Advocates for R- 2. JUDGMENT

Per: Justice Rakesh Kumar Jain:

I.A. No. 5944 of 2023: This application is filed under Rule 31 of

the NCLAT, Rules, 2016 (in short 'Rules') seeking condonation of

delay of 27 days in refiling of the appeal. It is averred in the

application that the delay has been caused because of personal

difficulty of the counsel which was neither intentional nor

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 2

deliberate. We are satisfied with the reasons mentioned in the

application and thus, the application is allowed and the delay in

refiling is hereby condoned.

I.A. No. 5945 - 5946 of 2023: These applications are filed for

seeking condonation of delay of 15 days in filing the appeal

against the order dated 13.09.2023 passed in I.A. No. 136 of

2022 and 9 days in filing the other appeal against the order dated

19.09.2023 passed in I.A No. 4585 of 2021. Notices in the

applications were issued. Counsel for the Appellant/Applicant

has submitted that the present appeal has been filed against two

orders dated 13.09.2023 and 19.09.2023. It is submitted that the

Appellant was not intimated by its counsel about the

pronouncement of the orders and on 09.10.2023, the

officers/representative of the Appellant, on checking the records,

came to know about the impugned orders having been passed

and thereafter the Appellant took legal advice and filed the

present appeal but in this process, the delay has occurred. It is

submitted that thus the delay is neither intentional nor

deliberate, therefore, the same may be condoned. On the other

hand, Counsel appearing on behalf of Respondent has opposed

the prayer on the ground that the reason given in the application

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 3

is not sufficient. We have heard Counsel for the parties and after

taking into consideration the averments made in the application,

supported by an affidavit of the Appellant, are of the view that the

reasons given in the application are sufficient for the purpose of

condoning the delay. Hence, the applications are hereby allowed

and the delay is condoned.

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023

The Appellant has in fact challenged two orders in this

appeal, one passed in I.A. No. 136 of 2022 on 13.09.2023 and

other passed in I.A. No. 4585 of 2021 on 19.09.2023, therefore,

two appeal numbers have been assigned.

2. Brief facts of this case are that the Appellant, namely,

Gujarat Industrial Development Corporation, a Government

Corporation was established under Section 3 of the Gujarat

Industrial Development Act, 1962 (in short 'Act, 1962'), having

power under Section 14 of the Act, 1962 to lease its property on

such terms and conditions as it may deem fit. The Appellant

executed a lease deed on 21.02.2008 as lessor and Gujarat

Hydrocarbon & Power SEZ Ltd. (Corporate Debtor) as a lessee for

the land admeasuring 276-18-13 H-A sq. mts. situated in

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 4

industrial Plot No. 6 in Vilayat Industrial Estate, District

Bharuch for a period of 99 years for the purpose of setting up a

Special Economic Zone (SEZ) on the consideration of an amount

of Rs. 51,97,50,000/-, paid by the Corporate Debtor to the

Appellant. As per clause 3.9 of the lease deed, the Corporate

Debtor had applied to the Appellant for its permission to create a

charge in the form of mortgage in favour of the Financial

Creditor, SREI Infrastructure Finance Ltd., vide its letter dated

04.01.2011. The permission was granted to create a charge on its

lease hold interest in the land in favour of the Financial Creditor

but it was categorically mentioned that such mortgage shall not

effect the rights and powers of the lessor under the deed.

3. Subsequently, by way of a rectification deed dated

11.02.2011, the land allotted to the Corporate Debtor was

increased from 276-18-12 H-A sq. mts. to 296-47-81 H-A sq.

mts.

4. It is alleged that the Corporate Debtor failed to submit the

plan for construction on the land, therefore, the Appellant issued

a notice dated 11.03.2011 giving opportunity to the Corporate

Debtor to explain why such actions as per the agreement be not

taken. It is alleged that the Corporate Debtor did not utilise the

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 5

land for the purpose it was leased out and a letter dated

20.12.2018 was written to the Corporate Debtor to explain why

such defaults have continued.

5. The Appellant also initiated proceedings under the Gujarat

Public Premises Eviction of Unauthorised Occupants Act, 1972

and issued show cause notice dated 04.02.2019. The Corporate

Debtor was admitted to the CIRP on 18.11.2020 in CP (IB) No.

571/ND/2020 instituted against it by the Financial Creditor. The

Appellant filed its claim in From B for an amount of Rs.

1,806,253,182/- which consists of NU Penalty, Conversion Fees

and Revenue Charges.

6. Respondent No. 1 (Zaveri & Co. Pvt. Ltd.) submitted the

resolution plan which was approved by the CoC and an

application bearing I.A No. 4585 of 2021 was filed by Respondent

No. 2 /Rakesh Kumar Agarwal (RP) before the Adjudicating

Authority for the approval of the resolution plan under Section

30(6) r/w Section 31 of the Code and Regulation 39(4) of the IBBI

(Insolvency Resolution Process for Corporate Persons)

Regulations, 2016 (in short 'Regulations').

7. It is alleged that when the Appellant came to know about

the aforesaid application and the fact that Respondent No. 1 has

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 6

allocated Rs. 6,14,49,685/- against the verified claim of Rs.

1,80,62,53,182/-, it filed the application bearing I.A. No. 136 of

2022 under Section 60(5) of the Code giving complete history of

its relation with the Corporate Debtor and prayed for "a. remand

the matter to the CoC for reconsideration keeping in view the

status of the leased land as being owned and under the title of

the Applicant; or b. in the alternative reject the approval of the

resolution plan of the SRA; or c. pass any such other further

order/s as this Hon'ble Tribunal may deem fit".

8. It is alleged by the Appellant that it had executed power of

attorney/Vakalatnama in the name of Aashta Mehta, Adv. for

pursuing this case but the application bearing 136 of 2022, when

listed on 13.09.2023, was withdrawn on the statement of Prerna

Mohapatra, Adv. who had appeared on behalf of Aastha Mehta,

Adv.

9. While assailing the order dated 13.09.2023, it is submitted

that the Appellant, the Government Corporation, did not give any

instruction either orally or in writing to Ms. Aastha Mehta, Adv.

to withdraw the application bearing 136 of 2022 which has been

withdrawn by her through Adv. Prerna Mohapatra to whom the

power of attorney was not given by the Appellant. It is submitted

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 7

that the Appellant is thus not bound by the order dated

13.09.2023 which deserves to be set aside and the application

bearing 136 of 2022 deserves to be restored and decided in

accordance with law. In support of his submissions, Sr. Counsel

for the Appellant has relied upon a decision of the Hon'ble

Supreme Court in the case of Himalayan Coop. Group Housing

Society Vs. Balwan Singh & Ors., (2015) 7 SCC 373.

10. On the other hand, Sr. Counsel appearing on behalf of

Respondent No. 1, contesting the appeal has submitted that Adv.

Prerna Mohapatra has not withdrawn the application in the

absence of Aastha Mehta because Aastha Mehta presence has

also been marked in the order dated 13.09.2023 and has made

the statement to withdraw the application upon instructions. It is

therefore submitted that it is too late for the Appellant to submit

that the withdrawal of the application is not on their instructions.

He has further submitted that even otherwise this Court, in

appeal, cannot decide this kind of an issue which pertains to the

proceedings which took place before the Tribunal. In this regard,

he has relied upon a decision of the Hon'ble Supreme Court in

the case of State of Maharashtra s. Ramdas Shrinivas Nayak &

Ors. (1982) 2 SCC 463.

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 8

11. We have heard Counsel for the parties and perused the

record with their able assistance.

12. Since, we have narrated the facts in detail, therefore, for the

sake of brevity we will not give the facts again but it is suffice to

say that the Appellant is a Government Corporation, filed the

claim of Rs. 1,80,62,53,182/- which was admitted by the RP but

the amount proposed as full and final settlement against the

same is Rs. 6,14,49,685/-. It is also not in dispute that as soon

as the Appellant came to know about the application having been

filed by RP for approval of the resolution plan, it had filed an

application bearing 136 of 2022 and made a categoric prayer

therein for remand of the matter to the CoC for reconsideration

keeping in view the status of the leased land as being owned and

under the title of the Appellant and to reject the approval of the

resolution plan. The said application was listed on 13.09.2023

and on that date it was withdrawn on the statement of Prerna

Mohapatra who was not authorised by the Appellant to appear on

its behalf, however, it appears from the impugned order that

Aastha Mehta, Adv. who had been authorised to appear on behalf

of the Appellant was present and on her instructions the

application was withdrawn by the said counsel.

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 9

13. Nothing has been brought on record by Respondent No. 1

that the instructions much less in writing were given by the

Appellant to Aastha Mehta for the purpose of withdrawal of the

application. Moreover, no instruction were also given to Aastha

Mehta to ask some other counsel to appear on her behalf and

withdrew the application which was being seriously pursued. In

this regard, we are guided by the decision of the Hon'ble Supreme

Court in the case of Himalayan Coop. Group Housing Society

(Supra). The facts of that case were that Himalayan Coop. Group

Housing Society (Appellant) was a cooperative society registered

under the provisions of the Delhi Cooperative Societies Act,

1972. The members of the society did not pay the demand as

raised by the society of the amount towards allotment of

residential quarters/apartments and committed default. The

Appellant society following the due procedure had passed a

resolution expelling the respondents from the membership of

the society. The said resolution required confirmation from the

Registrar of Cooperative Societies under Rule 36 of the Delhi

Cooperative Societies Rules, 1973 and therefore, it was placed

before the Registrar for his consideration and approval. The

Registrar after due verification of the records of the Appellant

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 10

society and in compliance with the procedure as contemplated

under the provisions of the Act and the Rules approved the

resolution passed by the Appellant Society but in the interest of

justice the Registrar provided a last opportunity to the

Respondents to pay their outstanding dues but the Respondents

did not comply with the order and the said resolution was

confirmed. The order of registrar was challenged in appeal which

was withdrawn but a Revision Petition was filed by the

members of the society. The Revisional Authority confirmed the

order of the Registrar. This led to the filing of the writ petition

before the Hon'ble High Court for setting aside the order passed

by the Registrar and Revisional Authority. The Writ Court

upheld the order passed by the Registrar and Revisional

Authority, however, on a request made by the Respondents

seeking issuance of direction to the appellant for consideration of

their request to construct and allot the additional

quarter/apartments to them, the same being agreeable to the Ld.

Counsel appearing for the Appellant, the Court issued certain

directions to the Appellant for construction of additional

quarters/apartments and their allotment to the Respondents by

the judgment and order dated 25.11.2010.

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 11

14. In the said case, it was the case of the Appellant that it had

not authorised the Ld. Counsel of the Appellant before the writ

court to make any concession in favour of the respondents,

therefore, it preferred a review petition. The said review petition

was dismissed, therefore, the matter reached up to the Hon'ble

Supreme Court where it was argued by Counsel for the

Appellant that at no point of time the Appellant had authorised

the Counsel for the Appellant to make any concession before

the Writ Court and therefore, the Writ Court ought not to have

issued any further direction to the Appellant society solely on

the basis of a concession made by the lawyer appearing on its

behalf without any express consent by the Appellant society.

15. In this background, the Hon'ble Supreme court had

observed that "thus, according to generally accepted notions of

professional responsibility, lawyers should follow the client's

instructions rather than substitute their judgment for that of the

client. The law is now well settled that a lawyer must be

specifically authorised to settle and compromise a claim, that

merely on the basis of his employment he has no implied or

ostensible authority to bind his client to a

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 12

compromise/settlement". The Hon'ble Supreme Court has also

observed in para 32 and 33 which read as under:-

"32. Generally, admissions of fact made by a counsel is binding upon their principals as long as they are unequivocal; where, however, doubt exists as to a purported admission, the Court should be wary to accept such admissions until and unless the counsel or the advocate is authorised by his principal to make such admissions. Furthermore, a client is not bound by a statement or admission which he or his lawyer was not authorised to make. Lawyer generally has no implied or apparent authority to make an admission or statement which would directly surrender or conclude the substantial legal rights of the client unless such an admission or statement is clearly a proper step in accomplishing the purpose for which the lawyer was employed. We hasten to add neither the client nor the Court is bound by the lawyer's statements or admissions as to matters of law or legal conclusions. Thus, according to generally accepted notions of professional responsibility, lawyers should follow the client's instructions rather than substitute their judgment for that of the client. We may add that in some cases, lawyers can make decisions without consulting client. While in others, the decision is reserved for the client. It is often said that the lawyer can make decisions as to tactics without consulting the client,

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 13

while the client has a right to make decisions that can affect his rights.

33. We do not intend to prolong this discussion. We may conclude by noticing a famous statement of Lord Brougham: "an advocate, in the discharge of his duty knows but one person in the world and that person is his client."

16. On the other hand, the judgment relied upon by Respondent

No. 1 in the case of State of Maharashtra (Supra) is not

applicable to the facts and circumstances of this case. In the

said case, Abdul Rehman Antulay was the Chief Minister of the

State of Maharashtra till January, 1982. Ramdas Shrinivas

Nayak an erstwhile member of the Maharashtra Legislative

Assembly made a complaint under the provisions of IPC and

prevention of Corruption Act against him. The Learned

Metropolitan Magistrate refused to entertain the complaint

holding that it was not maintainable without the requisite

sanction of the Govt. against which R.S. Nayak filed a criminal

revision before the Hon'ble High Court. The State of Maharashtra

and Shri Antulay were impleaded as Respondents. During the

pendency of the criminal revision, Shri Antulay resigned his

position as the Chief Minister of the State of Maharashtra. The

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 14

Hon'ble High Court held that sanction was necessary and

dismissed the revision application. The High Court noticed that

an application had been filed to the Governor of Maharashtra for

grant of the requisite sanction and observed that the

application should not be decided by the Law Minister or any

other Ministers but as it deserves to be decided by the Governor

in his individual discretion. The State of Maharashtra though

not aggrieved by the dismissal of the criminal revision

application, filed special leave to appeal before the Hon'ble

Supreme Court on the issue of the direction to the Governor of

Maharashtra to exercise his individual discretion in deciding

the question whether sanction should or should not be granted

to prosecute Shri Antulay and in this regard, the Court recorded

that Counsel appearing on behalf of Respondent had conceded

that the Governor should act in the exercise of his individual

discretion. The concession made by the Attorney General before

the High Court was pointed out, the Counsel protested that he

never made any such concession. In this background, the

Hon'ble Supreme Court has held that it was very difficulty for it

decide as to what had transpired in the High Court, therefore, the

appropriate application should have been filed before the same

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 15

Court because the matter is fresh in their mind and they can

decide, the observation in this regard by the Hon'ble Supreme

Court is recorded in Para 4 of the said judgment which is

reproduced as under:-

"When we drew the attention of the learned Attorney General to the concession made before the High Court, Shri A.K. Sen, who appeared for the State of Maharashtra before the High Court and led the arguments for the respondents there and who appeared for Shri Antulay before us intervened and protested that he never made any such concession and invited us to peruse the written submissions made by him in the High Court. We are afraid that we cannot launch into an inquiry as to what transpired in the High Court. It is simply not done. Public Policy bars us. Judicial decorum restrains us. Matters of judicial record are unquestionable. They are not open to doubt. Judges cannot be dragged into the arena. "Judgments cannot be treated as mere counters in the game of litigation".(1) We are bound to accept the statement of the Judges recorded in their judgment, as to what transpired in court. We cannot allow the statement of the judges to be contradicted by statements at the Bar or by affidavit and other evidence. If the judges say in their judgment that something was done, said or admitted before them, that has to be the last word on the subject. The principle is well settled that statements of fact as to what transpired at the hearing, recorded in the judgment of the court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence. If a party thinks that the happenings in court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 16

in the minds of the judges, to call attention of the very judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error. (2) That is the only way to have the record corrected. If no such step is taken, the matter must necessarily end there. Of course a party may resile and an Appellate (I) Per Lord Atkinson in Somasundaran v. Subramanian, A.I.R 1926 P.C. 136. (2) (Per Lord Buckmaster in Madhusudan v.

Chanderwati, A.I.R. 1917 P.C. 30. Court may permit him in rare and appropriate cases to resile from a concession on the ground that the concession was made on a wrong appreciation of the law and had led to gross injustice; but, he may not call in question the very fact of making the concession as recorded in the judgment."

17. This decision in the case of State of Maharashtra (Supra) is

in regard to concession having been made and the Court had

directed that the application should have been filed before the

same Court but in the subsequent case i.e. Himalayan Coop.

Group Housing Society (Supra) which is decided by three judges,

the same issue about the concession was dealt with and it was

held that if there is no instruction given to make a concession to

Counsel then the said concession cannot be taken into

consideration against the interest of the party.

18. In the present case, the controversy is as to whether

instructions were given to Aastha Mehta for the purpose of

withdrawal of the application bearing no. 136 of 2022. There is

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 17

no material on record which could suggest that the Appellant

being a Government Corporation had given the instructions to

Aastha Mehta for this purpose who was further even not

authorised to ask her colleague Prerna Mohapatra to appear on

her behalf and withdraw the application. The word 'upon

instructions' appearing in the said order is in regard to the

instructions received by Prerna Mohapatra from Aastha Mehta

and not the instructions given by the Appellant to Aastha Mehta

for the purpose of withdrawal.

19. In view of the aforesaid facts and circumstances, we are of

the considered opinion that there is merit in the submissions

made by the Appellant which is supported by law laid down by

the Hon'ble Supreme Court in the case of Himalayan Coop.

Group Housing Society (Supra) and therefore, the appeal

succeeds in respect of I.A. No. 136 of 2022 and the order is

hereby set aside. Once we have set aside the order dated

13.09.2023, the natural corollary is that the I.A. No. 136 of 2022

is hereby restored. In these circumstances, it is incumbent upon

the Tribunal to decide I.A No. 136 of 2022 at the first instance

because it was withdrawn on 13.09.2023 before the order dated

19.09.2023 could have been passed.

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023 18

20. Thus, in view thereof, the order dated 19.09.2023 passed in

I.A. No. 4585 of 2021 does not survive and the same is also

hereby set aside. For the purpose consideration and disposal of

I.A. No. 136 of 2022, the parties are directed to appear before the

Tribunal on 09th September, 2024.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

New Delhi 08th August, 2024

Sheetal

Comp. App. (AT) (Ins.) No. 1648 & 1649 of 2023