in the matter of Duncans Industries Ltd.

National Company Law Tribunal26 April 2024

CitationI.A (IB) No. 378-KB-2023 in Company Petition (IB) No. 184-KB-2018

Ratio decidendi

The rule this decision rests on

The Tribunal held that where the Information Memorandum disclosed the status of the corporate debtor's leasehold interests, including the expiry of most of them, and the resolution applicant with that information chose to bid, the expiry of those leases does not by itself furnish a ground to stay or interfere with approval of the resolution plan, since the resolution applicant had bid with its eyes open and the plan had been approved by the Committee of Creditors. A person seeking a stay of final approval of a resolution plan on the ground of expiry of the corporate debtor's leasehold interest, where that expiry was disclosed in the Information Memorandum and the plan was approved by the Committee of Creditors by a substantial majority, lacks locus standi to make that application. An application challenging a resolution plan brought after an unexplained delay of about a year from the Committee of Creditors' approval is not maintainable where its evident purpose is to disrupt the resolution process rather than to protect any legitimate interest.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

IN THE NATIONAL COMPANY LAW TRIBUNALDIVISION BENCH [SPECIAL], COURT NO. IIKOLKATAI.A (IB) No. 378/KB/2023InCompany Petition (IB) No. 184/KB/2018An Application under section 60 (5) of the Insolvency andBankruptcy Code, 2016 read with Rule 11 of the NationalCompany Law Tribunal Rules, 2016IN THE MATTER OF:Sangita Fiscal Services Pvt. Ltd & Ors… Financial Creditor/ Applicant.VersusDuncans Industries Ltd… Corporate Debtor/ Respondent.AndIN THE MATTER OF:Trinamool Cha Bagan Sramik Union… ApplicantVersusRam Ratan Modi, Resolution Professional… RespondentDate of Pronouncement: 26.04. 2024.CORAM:SMT. BIDISHA BANERJEE, MEMBER (JUDICIAL)SHRI. BALRAJ JOSHI, MEMBER (TECHNICAL)Appearance:For Applicant: Mr. Swatarup Banerjee, Adv.; Mr. SourojitDasgupta, Adv.; Mr. Rajib Mullick, Adv. and Mr. BishwaroopGhosh, Adv.For Resolution Professional: Mr. Joy Saha, Sr. Adv.; Ms. SanjanaNandi, Adv. and Mr. Ram Ratan Modi, RP in person.KOLKATA BENCH, (COURT NO. II)KOLKATAI.A (IB) No. 378/KB/2023InCompany Petition (IB) No. 184/KB/2018ORDERPer: Bidisha Banerjee, Member (Judicial)1. The Court congregated through a hybrid mode.2. We have heard the Ld. Counsels for both the parties.3. This application has been preferred by the Trinomool Chabegan Sramik Union, hereinafter referred to as Applicantunder Section 60(5) of the Insolvency and Bankruptcy Code,2016, for brevity “I&B Code” seeking the following reliefs:a. The Application filed for approval of the Resolution Planbeing I.A (I.B.C)/237(KB) of 2022 be stayed till thedisposal of the Complaint filed by the Applicant againstthe Respondent with the IBBI dated 24th January 2023(Annexure “B” of the instant Application).b. Ad-interim orders in terms of prayers above;c. Such further or other order or orders be passed and/ordirection or directions be given as this Hon’ble Tribunalmay deem fit and proper.4. Submission of the Applicant:4.1 The Learned Counsel for the applicant contended thatthe UniGlobal Papers Private Limited is the SuccessfulResolution Applicant (“SRA”) in respect of theCorporate Debtor. However, the Resolution Plan of theSRA is pending approval of this Adjudicating Authority.As such, there is no finality on the said Resolution Plansubmitted by the SRA.

KOLKATA BENCH, (COURT NO. II) KOLKATA I.A (IB) No. 378/KB/2023 In Company Petition (IB) No. 184/KB/2018 4.2 Further it is submitted that the Resolution Professional/ Respondent has given a free way to the SRA to treat the tea gardens including “Gangaram tea estate” as an asset of the corporate debtor and enter into various agreements and receive consideration based on such Resolution plan. 4.3 The Resolution Professional is hand in gloves with the SRA, and in continuously acting with mala fide motive and in violation of the provisions of the Insolvency and Bankruptcy Code 2016 and the Rules made thereunder. 4.4 It is alleged that on 22nd August 2022, the Resolution Professional applied before the Tea Board with a Demand Draft dated 19th August 2022, for issuance of a duplicate registration certificate in respect of “Gangaram Tea Estate”. The said demand draft dated 19th August 2022 was returned by the Tea Board under of a letter dated 12th December 2022.The Demand Draft dated 19th August 2022 which was submitted by the Resolution Professional categorically reflects the name of one Jitendra Agarwal, who is one of the directors cum CEO and authorized representatives of the SRA. 4.5 It is submitted that on 21st June 2023, the Resolution Professional has allowed the SRA to enter into and execute a Memorandum of Understanding with one Green Haven Villa Private Limited, for development and KOLKATA BENCH, (COURT NO. II) KOLKATA I.A (IB) No. 378/KB/2023 In Company Petition (IB) No. 184/KB/2018 conversion of the “Gangaram Tea Estate” into a building complex, for a hefty consideration of Rs. 231 Crore. In the said Memorandum of Understanding dated 21st June 2023, the SRA has itself stated that this Adjudicating Authority would approve the Resolution Plan and has therefore transferred the purported rights in respect of the said Gangaram Tea Estate to the said third Party. 4.6 In view of such clear and unholy nexus between the Resolution professional and SRA and in view of the acts of the SRA based on the representations of the Resolution Professional, the Resolution Professional deserves to be removed and must be subjected to such further penalty and punishment as applicable in law.

5. Per contra Resolution Professional would submit: 5.1 That the Corporate Debtor, Duncan Industries Ltd, had leasehold rights of a total number of 14 Tea Estate and forceful possession of 12 Tea Gardens has been obtained by outsiders. 5.2 That the Gangaram Tea Estate, whose lease has been duly renewed by the state of West Bengal and which is valid till 06.08.2038, is the only tea estate of the corporate debtor which is presently under the possession and control of the Resolution Professional. 5.3 That the successful resolution applicant was desirous of obtaining a certificate from the relevant authority

KOLKATA BENCH, (COURT NO. II) KOLKATA I.A (IB) No. 378/KB/2023 In Company Petition (IB) No. 184/KB/2018 being the Tea Board to the effect that the lease of the said garden had been duly renewed. 5.4 That the duplicate registration certificate was requested by the successful resolution applicant for its own purpose and in order to complete its own diligence, the Resolution Professional directed the payment and/or fees to be made for obtaining such certificate to be deposited by the Successful resolution applicant. 5.5 It is claimed that the resolution plan or the conduct of the Resolution Professional or the CIRP cannot be sought to be challenged and/or disrupted by a fake union who is manifestly acting against the interest of the workmen and at the behest and instances of the ex-promoters.

Analysis and Findings 6. We have duly considered the contentions placed by both the parties. 7. It is the case of the applicant that all the tenures of the leasehold interests granted by the Government of West Bengal in favour of the Duncans the Corporate Debtor, were terminated prior to the commencement of the CIRP, i.e., on 05.03.2022. It is claimed that the lease hold interest has not been thereafter renewed. 8. However, we find the following depiction in the Information Memorandum (IM).

KOLKATA BENCH, (COURT NO. II) KOLKATA I.A (IB) No. 378/KB/2023 In Company Petition (IB) No. 184/KB/2018

9. It is evident from the IM that except Ganganda, Killcott and Bagracote - I, the leasehold right in regard to all the tea estates

KOLKATA BENCH, (COURT NO. II) KOLKATA I.A (IB) No. 378/KB/2023 In Company Petition (IB) No. 184/KB/2018 mentioned in the above table have expired. Upon approval of the plan, it would be liability of the purchaser to get the leases renewed. 10. Further, we would note that the resolution plan submitted by the Successful Resolution Applicant - Uniglobal Papers Private Limited has been approved by the COC by 99.20% majority on 24.02.2022. This application has been preferred on 09.02.2023 which is after a long delay of almost a year from the date of approval of the plan by the COC. 11. The Resolution Applicants, being already notified vide Information Memorandum about the status of lease would express their interest to acquire the Debtor Company, and with their eyes wide open would either bid or refrain from bidding having noticed that the company’s lease has already expired. If the present successful Resolution Applicant has given its offer to acquire the Corporate Debtor with its assets as mentioned in the IM, we find no reason to interfere. Moreover, we are of the view that the applicant herein has no locus standi to seek stay of final approval of the resolution plan on the ground of expiry of leasehold interest of the corporate debtor. 12. We are of the view that the present application preferred by the Trinamool Cha Bagan Sramik Union (Applicant herein) is only to put a spanner in the wheel to derail the entire resolution process. 13. Hence, we are of the considered opinion that this application is not maintainable and accordingly we dismiss this same.

KOLKATA BENCH, (COURT NO. II) KOLKATA I.A (IB) No. 378/KB/2023 In Company Petition (IB) No. 184/KB/2018 14. Urgent certified copy of this order, if applied for, be supplied to the parties, subject to compliance with all requisite formalities.

Balraj Joshi Bidisha Banerjee Member (Technical) Member (Judicial)

This Order is signed on the 26th Day of April, 2024.

Bose, R. K. [LRA]/ Tiwari, V. [LRA]

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