Mack Star Marketing Private Limited vs Mr Ashish Chhawchharia

Mack Star Marketing Pvt. Ltd. .... Appellant/Applicant

Vs Ashish Chawchharia Resolution Professional of Jet Airways (India) Pvt. Ltd. ... Respondent

For Appellant: Shri Abhijeet Sinha, Mr. Aditya Shukla, Mr. Prakshal Jain, Ms. Angelika Awasthi and Ms. Shivani Rawat, Advocates.

For Respondent: Mr. Dhiraj Kumar Totala, Ms. Tanya Chib, Ms. Trisha Sarkar and Mr. Rohan Rajadhyaksha, Advocates for RP.

ASHOK BHUSHAN, J.

This Application by the Appellant/Applicant has been filed praying

for correction and clarification in the judgment dated 06.05.2022 by

which judgment Company Appeal (AT) (Ins.) No. 389 of 2021 has been

finally disposed of by this Tribunal.

2. The Appeal was filed by the Appellant challenging the order dated

18.03.2021 passed by the Adjudicating Authority (National Company Law

Tribunal), Mumbai Bench, Court No.I to which order I.A

Cont'd.../ -2-

No.453/MB/2020 filed by the Appellant seeking a declaration that

monthly fees payable to the Applicant under the Service Agreement for

the relevant period shall form part of the CIRP costs in terms of the IBC.

Further direction was sought directing the Liquidator to treat any claims

of the Applicant relating to monthly fees for the relevant period under the

Service Agreements as IRP costs. The Application was disposed of by the

Adjudicating Authority holding that the Applicant (Appellant) is not

entitled to any payment with respect to license fee after 31.05.2019.

Aggrieved by the said order, the Appeal was filed by the Appellant which

after hearing the Learned Counsel for the parties has been disposed of by

judgment dated 08.05.2022. This Application has been filed by the

Applicant/ Appellant praying for following reliefs:-

"(a) Allow the present application and correct the judgment dated 6 May 2022 passed in Company Appeal (AT) (Insolvency) No. 389 of 2021 by clarifying that since the resolution plan for the Corporate Debtor approved by the Ld. Adjudicating Authority vide Order dated 22 June 2021 provides for the payment of CIRP costs over and above those specifically provisioned for in the estimate of CIRP costs, the Appellant/Applicant is entitled to the consequential direction of payment of the Monthly Fees for the period the Corporate Debtor was undergoing CIRP as CIRP costs as per actual.

(b) Direct the Respondent to file and place on record the resolution plan for the Corporate Debtor

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approved by the Ld. Adjudicating Authority vide Order dated 22 June 2021; and

(c) Pass any other order(s) as this Hon'ble Tribunal may deem fit in the facts and circumstances of the instant case."

3. Shri Abhijeet Sinha, Learned Counsel for the Appellant submits

that this Tribunal vide its judgment dated 06.05.2022 held that

Appellant/Applicant was entitled for CIRP costs during the CIRP period. It

is submitted by Learned Counsel for the Applicant that during the course

of hearing, this Tribunal made a query to the Counsel for the Respondent

that whether in the Resolution Plan which was approved on 22.06.2021

any payment towards CIRP costs has been envisaged which query was

replied in negative by the Counsel for the Respondent. Hence, this

Tribunal directed that no monthly fees shall be payable to the Appellant

during the CIRP period. Whereas under the Resolution Plan, there was

specific clause (g) that if the CIRP costs exceeds the current estimates,

the excess amount as per the actual would be borne by the Successful

Resolution Applicant subject to a maximum Rs.475 Crores and the above

clause of the Resolution Plan ought to have brought before this Tribunal

at the time of hearing. Ultimate direction could have been in accordance

with the findings recorded by this Tribunal that Appellant was entitled for

CIRP costs. It is submitted that the order needs correction and

clarification to that effect.

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4. Learned Counsel for the Resolution Professional refuting the

submissions of the Learned Counsel for the Appellant submits that the

present Application is nothing but a Review Application is disguise. The

Appellant seeks review of the finding in the impugned judgment dated

06.05.2022 whereas this Tribunal does not have any jurisdiction to

review any judgment. It is submitted that the statement made by Counsel

for the Respondent No.1 at the time of hearing that Resolution Plan does

not contemplate payment of any CIRP costs to the Appellant was a correct

statement. There was no requirement on the part of the Respondent No.1

to tell about the provisions of the Resolution Plan contained in clause (g)

on which reliance has been placed by the Learned Counsel for the

Appellant. Even if two views are possible on the point involved, the same

is not a good ground to review and appraise the evidence on record and

finding out an error which is impermissible in law. The Applicant has

sought relief in the modification in exercise of inherent jurisdiction of this

Tribunal under Rule 11 of the NCLAT Rules, 2016 which jurisdiction is

required to be exercised ex debito justitiae. The Applicant is attempting to

expand the scope of Application of Rule 11 of the NCLAT Rules, 2016

which he cannot be allowed to do under law. Learned Counsel for the

Respondent placed reliance on the judgment of this Tribunal in "Action

Barter Private Limited vs. SREI Equipment Finance Limited and

Ors.- 2020 SCC OnLine NCLAT 1137". Learned Counsel for the

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Respondent has also placed reliance on the judgments of this Tribunal in

"Adish Jain vs. Sumit Bansal and Another- 2021 SCC OnLine NCLAT

52" and "Deepak Kumar Director of Sovereign Infrastructure &

Developers Ltd. vs. Phoenix ARC Pvt. Ltd. & Anr- 2020 SCC OnLine

NCLAT 648" where this Tribunal has held that under NCLAT Rules there

is no express provision for review. It is submitted that what the Applicant

is attempting to do is seek this Tribunal's intervention to revisit the

findings in the judgment which are not open to re-examination by way of

this modification IA.

5. We have heard Learned Counsel for the parties and perused the

record.

6. We first notice the findings of this Tribunal as contained in the

judgment dated 06.05.2022. Paragraphs 15 and 16 of the judgment are

as follows:-

"15. Present is a case where the Resolution Professional has continued in the possession of the premises and exposed the Corporate Debtor for liabilities to pay license fees during the CIRP period which could be CIRP costs. The mere fact that CIRP has triggered and Moratorium has been imposed does not absolved the Corporate Debtor to pay for premises and facilities which is being enjoyed by the Corporate Debtor during the CIRP period.

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Sufficient ground has been made out by the Appellant in this Application to treat the license fees of the premises to be treated as CIRP costs. The Adjudicating Authority erroneously relying on Clause 21.3 alone has justified the continuance of occupation of the Respondent in the premises. The Adjudicating Authority directed for refund of security without any direction to the Respondent to handover the possession of the premises. The premises which was in occupation of the Corporate Debtor is a commercial premises and the Appellant have been deprived for the use of the premises for long period without any justifiable reason.

16. We have been informed by the Counsel for the parties at Bar that the Resolution Plan with regard to Corporate Debtor has been approved by the Adjudicating Authority by order dated 22.06.2021. By approval of the Resolution Plan, the CIRP period has come to an end and after 21.06.2021 still the premises are in occupation of the monitoring professional. It is not the case of the Respondent that any amount towards the license or damages have been paid or determined. On a pointed query, Learned Counsel for the Respondent submitted that no amount towards any payment to the leave and license fees of the premises have been contemplated in the Resolution Plan. Thus, Resolution Plan does not deal with any entitlement to the Appellant. Resolution Plan having been approved with no provision for making any

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payment to the Appellant since the Resolution Professional never accepted the amount as CIRP costs which was also approved by the Adjudicating Authority on 18.03.2021 by the impugned order erroneously. We, thus, are of the view that no direction in this Appeal can be given for payment of leave and license fees to the Appellant during the CIRP period even though we are satisfied that the Appellant was entitled for determination that monthly fees payable to the Appellant under the Service Agreement should have been treated as part of the CIRP costs. We, thus, dispose of this Appeal with following directions:-

(i) The impugned order dated 18.03.2021 is set aside.

(ii) It is held that no monthly fees shall be payable to the Appellant during the CIRP period.

(iii)The Respondent is directed to handover the vacant possession of the premises within 15 days from today.

(iv)The Appellant is at liberty to take appropriate steps for its claim of license fees subsequent to 22.06.2021 (end of the CIRP period).

(v) After possession of the premises is handed over to the Appellant by the Respondent, the Appellant shall communicate within 30 days to

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the Respondent with regard to refund of security deposit, if any.

The parties shall bear their own costs."

7. This Tribunal recorded a categorical finding in paragraph 16 that

the Tribunal is satisfied that the Appellant was entitled for determination

that monthly fees payable to the Appellant under the Service Agreement

should have been treated as part of the CIRP costs but noticing the

statement made at the Bar during the course of the submissions by the

Learned Counsel for the Respondent that no amount towards any

payment to the Leave and License fee of the premises has been

contemplated under the Resolution Plan, this Tribunal could not issue

any direction for payment of CIRP costs since Resolution Plan had already

been approved.

8. Now before us, relevant extract of the Resolution Plan as set out in

the order of the Adjudicating Authority dated 22.06.2021 has been

placed. Clauses (g) and (h) of the Resolution Plan which is also extracted

in paragraph 6 of the Application to which there are no denial in the reply

filed by the Respondent No.1 to this Application are as follows:-

"g. It is further submitted that if the CIRP cost exceeds the current estimates, the excess amount as per actuals would be borne by the SRA subject to a maximum of Rs.475 Crores. Consequently, the

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payments towards Assenting FCs would get proportionately reduced."

"h. The Resolution Plan provides that the payment of CIRP cost in full shall have precedence over payment to any other Creditors, in terms of section 30(2)(a) of the Code."

9. The Resolution Plan thus, clearly contemplated that if the CIRP cost

exceeds the current estimates, the excess amount as per actuals would

be borne by the Successful Resolution Applicant subject to a maximum of

Rs.475 Crores. Thus, payment of the CIRP costs which was not included

in the estimates under the Resolution Plan was also contemplated upto

Rs. 475 Crores. Unfortunately, at the time of hearing of the Appeal, the

aforesaid clauses (g) and (h) of the Resolution Plan were not brought into

the notice of this Tribunal.

10. Now we may notice the objection raised by the Counsel for the

Respondent No.1 that this Application of review of the judgment in guise

of Application under Rule 11 of the NCLAT Rules, 2016. The prayers of

the Application have already been noticed above which does not in any

manner pray for review of the judgment. Present is not a case where the

Applicant is questioning any finding recorded by this Tribunal in its

judgment dated 06.05.2022 nor Applicant is praying for review of the

judgment. The only limited prayer is correction / clarification of the

judgment in view of the fact that before the Tribunal at the time of

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hearing clauses (g) and (h) of the Resolution Plan were not brought into

notice under which CIRP costs even if not part of the estimates in the

Resolution Plan is payable subject to a maximum of Rs.475 Crores. Had

the above fact has been brought before the Tribunal at the time of

hearing, Court might have issued direction in consonance with the

findings of the Tribunal. There is no dispute to the proposition that this

Tribunal does not have any jurisdiction to review its judgment.

11. Judgments relied by the Counsel for the Respondent in "Adish

Jain vs. Sumit Bansal and Another- 2021 SCC OnLine NCLAT 52"

and "Deepak Kumar Director of Sovereign Infrastructure &

Developers Ltd. vs. Phoenix ARC Pvt. Ltd. & Anr- 2020 SCC OnLine

NCLAT 648" lays down that there is no express provision for review in

the Code. There can be no quarrel to the proposition laid down by this

Tribunal in the above two cases. We however, are satisfied that the

present is not an Application for review of the judgment.

12. The Judgment on which much reliance has been placed by counsel

for the Respondent is a judgment of this Tribunal in "Action Barter"

(supra). The above case is also a case where after final Appeal decided by

this Tribunal, IAs were filed for rectification of errors which crept in the

judgment. With regard to Rule 11 of the NCLAT Rules, 2016, this

Tribunal laid down following:-

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"6.......................Rule 11 of the NCLAT Rules is reproduced hereunder:-

"11. Inherent powers.-Noting in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders or give such directions as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal"

Rule 11 is merely declaratory in the sense that this Tribunal is armed with inherent powers to pass orders or give directions necessary for advancing the cause of justice or prevent abuse of the Appellate Tribunal's process. Even in absence of Rule 11 this Appellate Tribunal, being essentially a judicial forum determining and deciding rights of parties concerned and granting appropriate relief, has no limitations in exercise of its powers to meet ends of justice or prevent abuse of its process. Such Powers being inherent in the constitution of the Appellate Tribunal, Rule 11 can merely be said to be declaring the same to avoid ambiguity and confusion. Having said that, we are of the firm view that the Rule cannot be invoked to revisit the findings retuned as regards the assertion of facts and pleas raised in the appeal and it is not open to reexamine the findings on questions of fact, how- so-ever erroneous they may be. The mistake/error must be apparent on the face of the record and must have occurred due to oversight, inadvertence or human error. Of course it would be open to correct the conclusion if the same is not compatible

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with the finding recorded on the issues raised. We accordingly decline to entertain any plea in regard to the merits of the matter involved at the bottom of the appeal and confine ourselves to the interpretation of the findings recorded and the conclusions derived therefrom as regards fate of the application under Section 7 of I&B Code filed by the Financial Creditor and the disposal of appeal."

13. This Tribunal has clearly laid down that findings on questions of

fact, how-so-ever erroneous cannot be allowed to be questioned. However,

mistake which have due to oversight, inadvertence or human error can be

corrected. Further it was held that it would be open to correct the

conclusion if the same is not compatible with the finding recorded on the

issues raised. Ultimately, the I.As were disposed of rectifying final

judgment of the Tribunal, in paragraph 8 following has been held:-

"8. The I.As are accordingly disposed of by re casting para 5 of the judgment of this Appellate Tribunal, which, after rectification, would read as under:-

"5. The case of the Appellant is covered by the decision of the Hon'ble Supreme Court in Forech India Ltd. (supra), therefore, we hold that the Application under Section 7 of the I&B code filed by the Respondent - SERI Equipment Finance Limited is maintainable. In so

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far as pending winding up petition before the Hon'ble Bombay High Court is concerned, the Appellant in terms of the decision of the Hon'ble Supreme Court in Forech India Ltd (supra) may move before the Hon'ble High Court of Bombay.

The appeal is dismissed with the aforesaid observations. No costs." Rectified version of the Judgment in terms of this order be issued and placed on the file of Company Appeal (AT) (Insolvency) No. 1434 of 2019."

14. The Application in consideration does not question any finding nor

is asking this Tribunal to revisit the findings recorded by this Tribunal in

its final order dated 06.05.2022. The Appellant is asking only for

correction of the error and submitting that the ultimate conclusion is not

in accordance with the findings recorded by this Tribunal due to fact that

Court was not apprised of the relevant clauses (g) and (h) of the

Resolution Plan which could be brought only before this Tribunal by this

Application. It is also relevant to notice that Resolution Professional does

not question that clauses (g) and (h), as quoted above, were part of the

Resolution Plan. Counsel submits that the statement made by Counsel

for the Respondent before the Court as recorded in paragraph 6 is the

correct statement made by Counsel for the Respondent. We accept the

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submission of the Counsel for the Respondent No.1 that the statement

made by him as recorded in paragraph 16 of the judgment is the correct

statement. The Court being not aware of clauses (g) and (h) of the

Resolution Plan nor the said clauses could be brought before the Court.

Ultimate conclusions recorded by the Court were not in consonance with

the findings in paragraph 16 that the Appellant was entitled for

determination was finding to the following effect:-

"16. ..........the Appellant was entitled for determination that monthly fees payable to the Appellant under the Service Agreement should have been treated as part of the CIRP costs."

15. We, thus, are of the view that in exercise of jurisdiction of this

Tribunal under Rule 11 of the NCLAT Rules, present is a fit case where

judgment dated 06.05.2022 needs correction and clarification. The last

line of the paragraph 16 of the judgment containing direction is rectified

and following is treated as rectified direction:-

"(i)The impugned order dated 18.03.2021 is set aside.

(ii)The Respondent is directed to handover the vacant possession of the premises within 15 days from today.

(iii) The Appellant is at liberty to take appropriate steps for its claim of license fees subsequent to 22.06.2021 (end of the CIRP period).

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(iv) After possession of the premises is handed over to the Appellant by the Respondent, the Appellant shall communicate within 30 days to the Respondent with regard to refund of security deposit, if any."

16. We further clarify that it shall be open for the Applicant/ Appellant

to approach the Monitoring Committee entrusted with the implementation

of the Resolution Plan for its CIRP cost as per the provisions of the

approved Resolution Plan. The Application I.A No. 1467 of 2022 is

disposed of accordingly.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical)

[Shreesha Merla] Member (Technical)

NEW DELHI

30th May, 2022

Anjali

I.A. No. 1467 of 2022 IN Company Appeal (AT) (Insolvency) No. 389 of 2021