Jogihali Wind Energy Private Limited vs Yogesh Mehra And Ors & Ors

[Arising out of the Order dated 24.08.2022, passed by the 'Adjudicating Authority' (National Company Law Tribunal, Ahmedabad Division Bench, Court-1), IA 15 of 2020, IN CP(IB) 14 of 2018]

IN THE MATTER OF: 1. JOGIHALI WIND ENERGY PVT. LTD. Through its Authorised Representative Mohammad Zaheen Khan IL&FS Financial Centre C-22, G Block, Bandra-Kurla Complex Bandra (East), Mumbai - 400051 Email:kaustubh.srivastava@dmd.law ...Appellant

Versus

1. YOGESH MEHRA Managing Director, Wind World (India) Limited Wind World Towers Plot No. A-9, Veera Industrial Estate Veera Desai Road, Andheri (West) Mumbai, Maharashtra - 400053 Email:varsha.banerjee@dhirassociates.com ..Respondent No.1 2. WIND WORLD (INDIA) LIMITED Through Mr. Ravi Sethia (Resolution Professional) KPMG Restructuring Services LLP, Building No. 10, Tower C 8th Floor, DLF Cyber City, Phase II, Gurgaon, Haryana-122002 Email: ravisethia @kpmg.com .Respondent No. 2 3. COMMITTEE OF CREDITORS Through Mr. Ravi Sethia (Resolution Professional) KPMG Restructuring Services LLP, Building No. 10, Tower C 8th Floor, DLF Cyber City, Phase II, Gurgaon, Haryana-122002 Email: ravisethia @kpmg.com .Respondent No. 3

Present: For Appellant : Mr. Kuber Dewan, Ms. Neeharika Aggarwal, Mr. Kaustubh Srivastava, Advocates. For : Mr. Alok Dhir, Ms. Varsha Banerjee, Respondent Ms. Aishwarya Nabh, Advocates for R-1. Ms. Sanaea Laskari, Ms. Neha Naik, Advocates for R2/RP. Ms. Fatema Kachwala, Ms. Vishrutyi Sahni, Ms. Ridhima Sharma, Advocates for R-3.

JUDGMENT

(Hybrid Mode)

[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]

The instant appeal has been preferred by the appellant against the

judgment dated 24.08.2022, passed by the Ld. National Company Law

Tribunal, Ahmedabad, Court-I (Adjudicating Authority) with regard to IA/15

(AHM)2020 filed in CP (IB) No. 14/NCLT/AHM/2018, whereby the Ld.

Adjudicating Authority has rejected the Resolution Plan submitted by the

Resolution Professional, however, has also made certain observations with

regard to the appellant in paragraph no. 25 and 28 of the same.

2. Brief factual matrix as appears from the record is that vide order

dated 20.02.2018 passed in CP (IB) No. 14/NCLT/AHM/2018, the Wind

World India Ltd. (CD) was admitted into Corporate Insolvency Resolution

Process (CIRP) and Mr. Shailen Shah Resolution Professional (RP) was

appointed as the Interim Resolution Professional (IRP). On 08.03.2018,

appellant and its associate companies filed their claims to the tune of Rs.

4,822,378,082/- out of this claim amount the claim with regard to Rs.

4,114,335,826/- was admitted. The consortium of Suraksha Asset

Reconstruction Pvt. Ltd., Suraksha Reality Ltd. and Lakshdeep Investments

and Finance Ltd. (herein after referred as Suraksha Consortium) was

Company Appeal (AT) (Ins) No. 1249 of 2022 2 of 16 approved by the CoC with a majority vote of 69.87% in its 13th meeting held

on 16.11.2018.

3. It is further reflected from the record that on 19.11.2018, IA/476

(AHM)/2018 was filed by the Resolution Professional (RP) under Section 30

(6) of the Code for approval of the Resolution Plan submitted by the

aforesaid Suraksha Consortium.

4. Ld. Adjudicating Authority vide its order dated 03.12.2019, directed

the CoC to revisit the Resolution Plan in view of the law laid down by the

Hon'ble Supreme Court in Committee of Creditors (CoC) of Essar Steel Ltd.

vs. Satish Kumar Gupta & Ors. and on 23.12.2019, in the 14th CoC

meeting of the CoC the Resolution Plan filed by the Suraksha Consortium

passed with the addendum dated 13.11.2018 with a majority vote of

93.63%.

5. In the meantime, the Respondent No. 1 Suspended Director of the CD

filed an application bearing IA No. 15 of 2020 wherein amongst other the

following prayer was made:

"20 (d) Be pleased to declare constitution and thus the acts of committee of creditors as null and void due to the wrongful inclusion of IL&FS group companies as Financial Creditors and part of Committee of Creditors".

6. In the aforesaid application it was contended by the

applicant/Respondent No. 1 that enforcement directorate (ED) has initiated

money laundering case against IL&FS Financial Services and its group

companies under the prevention of Money Laundering Act, 2002 (PMLA) and

in view of the law declared by this appellate tribunal in CA (AT) (Ins) No. 633

of 2018, Asset Reconstruction Company (I) Ltd. (ARCIL) vs. Mr.

Koteswara Rao Karuchola and Ors. a financial creditor cannot be allowed

Company Appeal (AT) (Ins) No. 1249 of 2022 3 of 16 to be a member of CoC if a money laundering Case has been initiated

against such creditor and since the IL&FS group companies are group

companies of IL&FS finance against whom money laundering cases have

been initiated they cannot be the part of the CoC.

7. It is also reflected that reply to this application was filed by the

appellant on behalf of IL&FS group companies stating that Sipla Wind

Energy Ltd. (SWEL), Mahidad Wind Energy Pvt. Ltd. (MWEPL) and Jogihali

Wind Energy Pvt. Ltd. (JWEPL)/Appellant are together referred to as IL&FS

group companies and these group companies along with 5 other companies,

which are direct/indirect subsidiaries of IL&FS Energy Development

Company Ltd. (IEDCL) had executed memorandum of understanding on

28.06.2010, with the CD for execution of wind power projects and these

IL&FS group companies made certain advances to the corporate debtor (CD)

and discharged their liabilities under the MoU but the CD delayed the

implementation of the projects, which increased the IL&FS group companies

exposure in CD and the CD agreed to reimburse/compensate the IL&FS

group companies an amount of Rs. 1,227,000,000/- towards cost incurred

by the group companies for the period 01.04.2015 to 31.03.2016 which was

ultimately settled vide agreement dated 01.10.2016, to Rs. 8,717,000,000/-

and subsequently it was agreed by the IL&FS group companies to adjust the

exposure only to the extent of Rs. 6,917,000,000/- (revised project cost).

However, the default has been committed by the CD to and upon issuing of

public announcement in the CIRP of the CD the IL&FS group companies

had filed their claim and their claim was admitted up to the extent of Rs.

4,114,335,826/-.

Company Appeal (AT) (Ins) No. 1249 of 2022 4 of 16

8. It was also stated in the reply that no money laundering case against

the IL&FS group companies in connection with this transaction involving

the CD has been initiated.

9. Ld. Adjudicating Authority disposed of IA No. 15/2020 along with

many other applications including the Resolution Plan approval application

i.e. IA/476 (AHM)2018 and while rejected the Resolution Plan made

following observations in paragraph no. 25 and 28 of the impugned

judgment:

"25. The IDBI Bank is another financial creditor of the corporate debtor challenged the resolution plan on the ground that IL&FS group companies ought not to be the member of the CoC. The same objection is raised by Mr. Yogesh Mehra- the Managing Director of the corporate debtor. According to him, the RP committed a grave error by the inclusion of IL&FS Group Companies as a member of the CoC and by allotting them voting percentage. According to both IDBI Bank and Mr. Yogesh Mehra, due to this, the entire CIRP gets vitiated. Hence, the resolution plan approved by the CoC, having one unauthorized member as a part of the CoC, is required to be rejected to maintain the purity of the process.

28. The MoU dated 27.07.2010 and subsequent WRAP agreement in between IL&FS Group Companies and the corporate debtor dated 25.03.2015 show that IL&FS Group Companies advanced money to the corporate debtor because the corporate debtor agreed to design, develop, construct, commission, operate and maintain all projects of IL&FS Group Companies. Following that the WRAP agreement was entered into. We have every doubt in our mind "whether only because of subsequent execution of the WRAP agreement, the nature of debt from operational to financial would get converted"? But we leave, the controversy here only for the simple reason that if at all we do not count the voting percentage of the Group Companies, still the fact remains in the record that the resolution plan was approved by more voting percentage than the threshold as sated under section 30(4) of the IBC, 2016. It takes us to consider another controversy that Enforcement Directorate has initiated money laundering case against IL&FS Financial Services and its group companies under the Prevention of Money Laundering Act, 2002. The Hon'ble Appellate Tribunal, the matter of Asset Reconstruction Company Ltd. (ARCIL) vs. Mr. Koteswara Rao Karuchola and

Company Appeal (AT) (Ins) No. 1249 of 2022 5 of 16 Ors. (CA(AT) (Ins) No. 633 of 2018, has held that a financial creditor cannot be allowed to be a member of CoC, if a money laundering case has been initiated against such a creditor. Admittedly, the IL&FS Group Companies in the instant case are group companies of IL&FS Finance, against whom money laundering cases have been initiated by the Enforcement Directorate. This clarifies that the IL&FS Group Companies must not be allowed to be a part of the CoC".

Aggrieved by which the instant appeal has been preferred by the appellant

who is the part and parcel of IL&FS group companies.

10. Ld. Counsel for the appellant submits that the appellant is aggrieved

by the aforesaid observations made by Ld. Adjudicating Authority without

considering the reply filed by the appellant and without providing an

opportunity of being heard to the appellant and there was absolutely no

necessity to make such observations when the plan itself was rejected by the

Adjudicating Authority.

11. It is further submitted that the observations in paragraph no. 28

appears to have arrived from the allegations made by the Respondent No. 1

in his application IA No. 15/2020 wherein the allegations were labelled that

the ED investigation has been initiated against IL&FS finance and its group

companies including the IL&FS group companies, which were baseless and

were not supported by any evidence and in response the appellants have

placed correct facts by submitting their reply and clarified that the appellant

and its associate companies are wholly owned subsidiaries of IL&FS Energy

Development Company Ltd. (IEDCL) which is a completely different and

separate entity from IL&FS financial services ltd. (IFIN) and there is no

investigation pending against IEDCL or appellant and its associated

Company Appeal (AT) (Ins) No. 1249 of 2022 6 of 16 companies therefore, the observations made by the adjudicating authority in

paragraph no. 28 are not supported by any evidence.

12. It is further submitted that the adjudicating authority has not even

discussed the reply filed by the appellant and also the documents enclosed

therewith while to demonstrate that the appellant and its associated

companies are not connected with group companies of IL&FS finance,

against whom money laundering cases have been initiated.

13. It is further submitted that in terms of the provisions of the

Companies Act, 2013, a holding company is a company which controls

another (subsidiary i.e. owns more than 50% of the subsidiary and a fellow

subsidiary is another subsidiary of the same holding company, and the

companies under a common control i.e. the holding company), collectively

known as group companies thus a company drives its group entity from the

holding company alone and not a fellow subsidiary.

14. It is further submitted that IEDCL and IFIN are fellow subsidiaries

under holding company Infrastructure Leasing and Finance Services Ltd.

(IL&FS). The appellant and its associate companies being wholly owned

subsidiary of IEDCL, which in turn is a wholly owned subsidiary of IL&FS

and are therefore group companies of IL&FS and not of IFIN. Thus, the

observations and conclusions arrived at by the adjudicating authority in the

aforesaid paragraphs are factually incorrect.

15. It is further submitted that the adjudicating authority has failed to

appreciate that the above stated observations have been made as a passing

remark without recording any reasons and were not also having any bearing

of the facts of this case and therefore are required to be expunged.

Company Appeal (AT) (Ins) No. 1249 of 2022 7 of 16

16. The appellant has prayed that this Appellate Tribunal may expunge

certain observations against the appellant and its associate companies in

para 25 and 28 of the impugned order. The modification sought is on the

following lines:

"Modify the Impugned Order to the extent that the observations that

'25. The IDBI Bank is another financial creditor of the corporate debtor challenged the resolution plan on the ground that IL&FS group companies ought not to be the member of the CoC.

28... Admittedly, the IL&FS Group Companies [Appellant and its associate companies] in the instant case are group companies of IL&FS Finance. against whom money laundering cases have been initiated by the Enforcement Directorate. This clarifies that the IL&FS Group Companies must not be allowed to be a part of the CoC'

be expunged from the Impugned Order:"

17. We notice that after conclusion of the submissions on 16.12.2025 we

provided opportunity to Ld. Counsel for the parties to file the written

submissions and also to file relevant documentary evidence in order to show

as to against which of the IL&FS group companies investigation is being

done by the ED. However, it is only the Appellant who has filed written

submission in pursuance of the aforesaid order.

18. Ld. Counsel for the Respondent No. 1 while relying on the reply to the

appeal filed by him submits that no illegality has been committed by Ld.

Adjudicating Authority in making the observations in para no. 25 and 28 of

the impugned judgment, which were emerging from the record and it was

evident that the appellant companies could not be the members of the CoC

as apart from investigation by the Serious Fraud Investigation Office (SFIO)

Company Appeal (AT) (Ins) No. 1249 of 2022 8 of 16 the investigation by Directorate of Enforcement (ED's) was also going on in

respect of IL&FS Finance and all its group companies, which includes

IEDCL, IFIN and other subsidiaries and none of the IL&FS group companies

are financial creditors of the corporate debtor, therefore the Ld. Resolution

Professional has committed illegality in including the Appellant companies

in the CoC. It is further submitted that voting share of approximately 8.73%

was also wrongly allotted to the appellant companies by the RP in the CoC.

It is further submitted that RP had also committed an illegality in admitting

the claim of the appellant companies as financial debt as the CD in its books

of account never acknowledged the claim of the appellant as financial debt.

It is further submitted that answering Respondent has also sent a

representation to the RP on 23.12.2019 seeking removal of the appellant

and two other companies from the CoC which was not considered

appropriately. It is further submitted that the observations made by the Ld.

Adjudicating Authority in paragraph no. 25 and 28 are based on the

material available with the Adjudicating Authority and the same are not

required to be interfered with and the appeal of the appellant is liable to be

dismissed.

19. Ld. Counsel for the Respondent No. 2/RP of Wind World (India) Ltd.,

submits that in paragraph no. 25 of the impugned judgment Ld.

Adjudicating Authority has recorded that IDBI Bank is another financial

creditor of the CD and has challenged the Resolution Plan on the ground

that IL&FS group companies ought not to be the member of the CoC and

this fact has been wrongly recorded as the IDBI Bank has not challenged the

resolution plan before the adjudicating authority and no such submission

Company Appeal (AT) (Ins) No. 1249 of 2022 9 of 16 has been made on its behalf, thus the said statement in paragraph no. 25 is

incorrect.

20. It is further submitted that the observation made in paragraph no. 28

of the impugned order with regard to the initiation of ED investigation

against the IL&FS group companies and these companies are the group

companies of IL&FS finance is also erroneous and the appellant and its

associated companies referred to as IL&FS entities are not undergoing any

investigation by the ED and the no money laundering cases have been

initiated against the aforesaid companies and thus as such there was no bar

on including these IL&FS entities as a member of the CoC.

21. Ld. Counsel for the Respondent No. 3/ CoC submitted that the

present appeal is between the appellant and the Respondent Nos. 1 and 2

and the answering Respondent No. 3 (CoC) of the CD is a proforma party.

22. It is further submitted that the facts in the impugned order precisely

in paragraph no. 25 with regard to the challenge of plan by the IDBI Bank

and also making submissions by the IDBI Bank pertaining to wrong

inclusions of the appellant in the CoC have been inadvertently recorded as

the IDBI has not made any such statement and the Respondent No. 3 has

been neutral towards this issue and would comply any direction which may

be issued by the NCLT or NCLAT.

23. Having heard Ld. Counsel for the parties and having perused the

record, it is reflected that along with the application filed by the Resolution

Professional for acceptance of the Resolution Plan being IA No. 476 of 2018

under Section 30 (6) of the Code various other applications were moved by

the parties were also disposed of by Ld. Adjudicating Authority vide order

Company Appeal (AT) (Ins) No. 1249 of 2022 10 of 16 dated 24.08.2022 including IA No. 15 of 2020 which was moved by the

Suspended Director/Promoter of the CD namely, Yogesh Mehra (Respondent

no. 1).

24. It is pertinent to mention here that since the observations which has

been made by the adjudicating authority in para no. 25 and 28 of the

impugned judgment has been challenged by the appellant we will confine

our discussion only with regard to these observations.

25. It may be recalled that the Ld. Adjudicating Authority, while dealing

with the controversy with regard to the nature of debt noted that the voting

percentage of the appellant in the CoC was not sufficient to change the fate

of Resolution Plan, observed in para no. 25 that Yogesh Mehra and IDBI

Bank (a member of the CoC) has raised the issue that due to the inclusion of

the appellant in the CoC, grave error has been committed by the RP and the

whole CIRP has been vitiated and goes on to observe in para no. 28 that

admittedly the IL&FS group companies in the instant case are group

companies of IL&FS finance against whom money laundering cases have

been initiated by the ED and thus held that appellant IK&FS group

companies must not be allowed to be part of the CoC.

26. The Respondent No. 2/Resolution Professional of the CD as noted

earlier has categorically taken a stand that observation in para no. 25 with

regard to the fact that IDBI has challenged the Resolution Plan on the

ground that IL&FS group companies ought to be not the member of the CoC,

is not correct as IDBI has not challenged the plan and no such submission

has been made on behalf of the IDBI before Ld. Tribunal.

Company Appeal (AT) (Ins) No. 1249 of 2022 11 of 16

27. We also notice that Respondent No. 3/CoC in his reply as well as in

its submissions also stated that this submission as recorded in para no. 25

has been wrongly recorded.

28. Having perused the observation as has been made in para no. 25 of

the impugned judgment we do not find any material or record which may

suggest that this submission has been made by the IDBI before Ld.

Adjudicating Authority, thus, the name of the IDBI Bank appears to have

been inadvertently cropped up along with Respondent No. 1-Yogesh Mehra

who has taken this ground in his application i.e. 15/2020.

29. Coming to the observation made in para no. 28 of the impugned

judgment with regard to initiation of the ED investigation against IL&FS

financial services and its group companies, it is to be noted that ld.

Adjudicating authority in para no. 28 has stated that admittedly the IL&FS

group companies (appellant and two other related companies) are the group

companies of IL&FS finance, against whom and group companies' money

laundering cases have been registered by the ED and these companies must

not be allowed to be part of the CoC.

30. We notice that Ld. Adjudicating Authority while recording this

observation has not discussed any material or evidence which may suggest

that appellant and other two related companies known as IL&FS group

companies are the group companies of IL&FS finance. The Adjudicating

Authority's finding in para 28 has two parts. The first part holds that IL&FS

group companies in the instant case are group companies of IL&FS Finance

and in the second part Adjudicating Authority records that money

laundering cases have been initiated against IL&FS Finance by the

Company Appeal (AT) (Ins) No. 1249 of 2022 12 of 16 Enforcement Directorate and accordingly IL&FS group companies must not

be allowed to be a part of the CoC.

31. In this regard, we take note of Annual Report of IEDCL for the FY

2019-20 wherein the organisational structure of the IEDCL has been given

as part of annual statements of accounts. The relevant page of notes forming

part of the IND AS Financial Statements is extracted below:

Company Appeal (AT) (Ins) No. 1249 of 2022 13 of 16

32. We can see from the above statement of IEDCL that:

a) Holding company of IEDCL is Infrastructure and Leasing and

Financial Services Ltd. (IL&FS);

b) The subsidiary companies of IEDCL include among others

i. Mahidad Wind Energy Private Limited

ii. Sipla Wind Energy Limited

iii. Jogihali Wind Energy Private Limited

c) IL&FS Financial Services Ltd. (IFIN) is a fellow subsidiary of IEDCL

under the holding company IL&FS.

33. It is clear from the above that the three IL&FS group companies

referred to in para 28 of the impugned order are the subsidiaries of IEDCL

and group companies of IL&FS. We note that contrary to the material on

records the Adjudicating Authority gave a finding that the IL&FS group

companies in the instant case are group companies of IL&FS finance.

34. We also notice that even in the application moved by the Respondent

No. 1 being IA No. 15/2020, no such material was placed which may

suggest that appellant and its two group companies are group companies

the IL&FS Financial Services Ltd. Moreover, in the reply filed by the

appellant before Ld. Adjudicating Authority, it was categorically stated in

para no. 5 that IL&FS group companies and other five companies which are

direct and in direct subsidiaries of the IL&FS Energy Development Company

Ltd. (IEDCL) had executed MoU with the CD and in para no. 18 further

stated that no money laundering case against the IL&FS group companies

involving the CD has been registered.

Company Appeal (AT) (Ins) No. 1249 of 2022 14 of 16

35. Regarding the second issue about It appears that the Ld. Adjudicating

Authority has not taken cognizance of these objections filed by the appellant

and other two IL&FS group companies. We failed to understand that when

there was no ECIR lodged by the ED or any other relevant material before

the ld. Adjudicating Authority, which may reflect some shadow on the

appellant and its associated group companies with regard to lodging of the

ECIR or initiation of investigation by the ED, on what basis the impugned

observations have been made in para no. 28 of the impugned order and also

where from the admission of the appellant to this fact has been derived by

Ld. Adjudicating Authority, when the appellant has categorically denied

there involvement in any investigation being done by the ED.

36. In our considered view, there was no material available with the ld.

Adjudicating Authority, on the basis of which the observations made in the

para no. 28 of the impugned judgment may be made with regard to the

commencement of the investigation of the ED against appellant and its

group companies. As we have noted earlier that the financial statement of

FY 2019-20 of IEDCL records that the appellant and two other companies

(IL&FS companies) are the group companies of IL&FS. It is not understood

as to on what basis the Adjudicating Authority has recorded his findings

that these are group companies of IL&FS Finance.

37. It is also reflected that though before this appellate tribunal the

Respondent No. 1 has filed annual report of IEDCL of the financial year

2019-2020 but this report has not been considered by the Ld. Adjudicating

Authority nor has been mentioned in the impugned judgment. In this regard

the reply filed by the Respondent No. 2 may also be referred wherein para

Company Appeal (AT) (Ins) No. 1249 of 2022 15 of 16 no. 7 it has been stated that no ED investigation is going on against these

IL&FS entities and there was no bar in including them as members of the

CoC of the CD.

38. During the hearing we requested the counsel for Respondent No.1 to

produce any document to show evidence of any existing money laundering

proceedings against the appellant and its sister companies. However, Ld.

Counsel could not submit any papers in support of his contentions.

39. Therefore, we hold that the aforesaid observations in para 28 have

also been made without any evidence/material available before Ld.

Adjudicating Authority and consequential direction have been passed that

IL&FS companies must not be allowed to be a part of the CoC and these

observations in our considered opinion may not be allowed to remain in the

judgment.

40. We are of the considered view that exclusion of any member of the

CoC, howsoever small voting share it is having, is a serious issue and the

same could only be decided after providing ample opportunity of being heard

to the parties.

41. In view of the findings above, we allow the appeal and expunge the

portions of para 25 and 28 of the impugned order as prayed. There would be

no order as to costs. Pending I. A.'s if any are closed.

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

[Indevar Pandey] Member (Technical) New Delhi.

22.01.2026.

sr/sa

Company Appeal (AT) (Ins) No. 1249 of 2022 16 of 16