Jc Flower Assest Recosntruction ... vs Bank Of Baroda & Anr

National Company Law Appellate Tribunal7 March 2024Ashok Bhushan

CitationCompany Appeal (AT) (Insolvency) No. 490 of 2024

Ratio decidendi

The rule this decision rests on

The Adjudicating Authority, when considering an interim application under the Insolvency and Bankruptcy Code, is not bound to refuse interim relief merely because the relief sought is the restraint of the Committee of Creditors from considering or approving resolution plans; interim relief in insolvency proceedings is governed by the usual considerations of prima facie case, balance of convenience and irreparable loss, tempered by the need to respect the statutory timelines of the corporate insolvency resolution process, so that stay or restraint is not the norm. A Resolution Professional cannot abdicate its duty to verify the claims submitted before admitting them, and a contention that the quantum of interest or charges on a financial creditor's claim is a matter for the Committee of Creditors is not legally tenable, since the Committee has no role under the Code or the Regulations in admitting claims or the interest component thereof. Where an adjudicating authority finds that the interest charged on admitted claims requires examination, it may, to balance the interests of the parties pending that examination, direct that no further steps be taken towards considering and approving a resolution plan, without this amounting to an error warranting appellate interference.

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

Judgment

As delivered

NATIONAL COMPANY LAW APPELLATE TRIBUNAL,PRINCIPAL BENCH, NEW DELHICompany Appeal (AT) (Insolvency) No. 490 of 2024

In the matter of: J.C. Flowers Asset Reconstruction Pvt. Ltd. ....Appellant Vs. Bank of Baroda & Anr. ...Respondents For Appellant Appeared but not marked appearance. For Respondents Mr. Rajiv Panday, Mr. Alok Jain, Advocates for R2 Mr. Arun Kathpalia, Sr. Advocate with Mr. Shyam Kapadia, Ms. Sonali Jain, Advocates for R1.

ORDER

(Hybrid Mode)

07.03.2024: Heard Learned Counsel for the Appellant and Learned

Counsel for the Respondents.

2. This Appeal has been against the order dated 15.02.2024 passed by the

Adjudicating Authority (National Company Law Tribunal), Court-V, Mumbai

Bench in IA No.529 of 2024 filed by the Bank of Baroda by which order the

Adjudicating Authority has issued following directions in paragraphs 15, 16

and 17:-

"15. After having heard the Ld. Counsels for the parties and having perused the documents placed on record, we are of the considered opinion that the matter requires further consideration with respect to the exorbitantly high interest and charges admitted in the case of Respondent Nos. 2 to 8 by Respondent No. 1/RP. Particularly when the Transaction Audit Report clearly mentions the rate 2

of interest in case of YBL @ 14.40%. At the moment we confine ourselves only to the consideration of grant of interim relief. On the one hand, we are conscious of the governing principles for grant of interim relief i.e. a) Prima facie case in favour of the party seeking the interim relief, b) the balance of convenience and c) the irreparable loss being caused to the party. On the other hand, we have to keep in mind the timelines of the BC because of which interim relief of stay/restraint are not the norm. Now applying the principles of grant of ad- interim relief to the facts of the present case/case of the applicant, it is pertinent to note that the Applicant is a public sector bank which has agitated the issue in the month of April, 2023 and it is in the response of RP dated 01.05.2023 that the admitted interest rate of each of the financial creditors finds mention. In addition, the contention of the Respondent No.1/RP stating that the instant matter of 'interest and charges' falls within the ambit of COC is not legally tenable. It is pertinent to note that the COC has no role under the IBC and the Regulations regarding admission of claim/interest. The RP cannot be allowed to abdicate its responsibility of verifying the claims submitted by the parties before admitting the same.

16. Thus, we therefore deem it appropriate to intervene and grant the interim relief of restraining the COC from considering and approving the resolution plans during the pendency of the present I.A.

Company Appeal (AT) (Insolvency) No. 490 of 2024 3

17. We are of the considered opinion that restraining the COC from further considering the resolution plans during the pendency of the present LA. will not cause any irreparable loss or prejudice to the interest of the respondents but not granting the said relief is bound to cause prejudice to the interest of the applicant, as the voting rights of the applicant have been adversely affected. Thus, prayer (c) of the I.A. is allowed and the respondents are restrained from voting upon the resolution plans till the disposal of the present I.A."

3. Learned Counsel for the Respondent contends that the observations

made by the Adjudicating Authority that interest was exorbitantly charged was

incorrect and all calculations are in accordance with the relevant documents.

4. Learned Counsel for the Resolution Professional also supports the

calculation of the interest and the admission of the claim by the Resolution

Professional.

5. The Adjudicating Authority in the impugned order having noticed

certain instances and decided that with regard to claim charging of the interest

should be examined and adjudicated, we see no error in the order of the

Adjudicating Authority when direction has been passed to examine the

interest charge in the claims. Till the issues are finalized, the Adjudicating

Authority to balance the interest of the parties has directed that no further

steps shall be taken for consideration and approval of the Resolution Plan.

Company Appeal (AT) (Insolvency) No. 490 of 2024 4

6. It is further to be noticed that the next date fixed is 12.03.2024 and in

the interest of all concerned, Adjudicating Authority may take a decision on

the application and thereafter further steps may proceed in accordance with

the law. We make it clear that we have not expressed any opinion on the issue

which is to be considered and decided by the Adjudicating Authority.

7. The Appeal is disposed of accordingly.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

Anjali/nn

Company Appeal (AT) (Insolvency) No. 490 of 2024

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