Mr. Dhiren Shantilal Shah vs Amma Lines Pvt Ltd

[Arising out of Impugned Order dated 05.05.2020 passed by the Adjudicating Authority (National Company Law Tribunal Division Bench-I, Chennai) in MA/1140/2019 in CA/1026/CAA/2019] IN THE MATTER OF: Mr. Dhiren Shantilal Shah Liquidator of Meka Dredging Company Pvt. Ltd. Having office at: B-102, Bhagirathi Niwas, Sri M.V. Road Near Natraj Studio, Andheri East Mumbai - 400069 ...Appellant Versus

1. Amma Lines Pvt. Limited Having Registered Office at: Flat No. G-3, Eshwaripriya Apartments 95/2, Aryagowda Road Extn. West Mambalam, Chennai - 600033 ...Respondent No.1 2. Meka Infrastructure Pvt. Ltd. 304, Shiv Smriti Chambers 49, Dr. Annie Besant Road Worli, Mumbai - 400018 ...Respondent No.2 Present: For Appellant : Mr. Nitesh Jain and Mr. Dhiren S Shah, Advocates For Respondent : Mr. Sumant Batra, Sr. Advocate for R-1 and R2

(Virtual Mode)

KANTHI NARAHARI, MEMBER (TECHNICAL) Preamble:

The Present Appeal is filed against the Impugned Order dated

05.05.2020 passed by the Adjudicating Authority (National Company Law

TA No. 90 of 2021 1 of 21 Tribunal Division Bench-I, Chennai) in MA/1140/2019 in

CA/1026/CAA/2019, whereby the Adjudicating Authority revoked the

liquidation process enabling the Corporate Debtor to revive and reconstruct

by implementing the scheme sanctioned in terms of the order dated

10.01.2020 and carry forward its business activity by the scheme proponents.

Brief Facts:

Appellant's Submissions:

2. Aggrieved by the order dated 05.05.2020, the Appellant prayed this

Bench to declare that the Respondents are ineligible as scheme proponents

under Section 29 A (c) of the I&B Code, 2016. The Learned Counsel appearing

for the Appellant submitted the brief facts.

3. It is submitted that the impugned order dated 05.05.2020 in MA No.

1140/2019 passed by the Adjudicating Authority whereby the Hon'ble

Adjudicating Authority in contravention to Section 29A read with Section

35(1)(f) of the IBC and Regulation 2B(1) proviso of the IBBI (Liquidation

Process), 2016, allowed the Promoters to take back the Corporate Debtor

under the scheme for compromise and arrangement under Section 230 to 232

of the Companies Act, 2013.

4. Vide impugned order dated 05.05.2020 the Adjudicating Authority

pleased to revoke the liquidation process of the Corporate Debtor to enable

the Corporate Debtor in liquidation to revive and reconstruct by implementing

the scheme of the Promoters.

TA No. 90 of 2021 2 of 21

5. It is submitted that the impugned order is also bad to the extent that it

provide scope for erroneous interpretation in relation to payment of fees of the

liquidator and the same is also contrary to Section 53 of the IBC read with

Regulation 4(3), 42 and 44 of the IBBI (liquidation process) Regulations, 2016.

The liquidator fee to be paid as per Clause 4.5 of the Scheme which provides

that the liquidator's fee will be decided and approved by IBBI and the same

will be paid in the same proportion and time as CIRP cost. As IBBI is not the

Adjudicating Authority, the Hon'ble NCLT vide impugned order dated

05.05.2020 determined and decided the liquidator's fee in terms of

unamended Regulation 4 of the IBBI (liquidation process) Regulations, 2016

which is the correct finding, but left scope for erroneous interpretation of the

impugned order dated 20.07.2020, by which the Hon'ble NCLT held that the

liquidator's fees will be payable only as per the occurrence, in the table

contained in para 22 at page 17 of the order dated 05.05.2020.

6. The Leaned Counsel for the Appellant raised the following points in the

grounds of appeal stating that the Learned Adjudicating Authority erred in

not appreciating the IBBI (liquidation process) Regulations, 2016 in toto. The

Adjudicating Authority failed to appreciate Regulation 2B (1) of the IBBI

(liquidation process) Regulations, 2016.

7. The Learned Counsel submitted that the appeal deserves to be allowed

on the basis of the points raised in the facts in issue, question of law and the

grounds raised in appeal.

TA No. 90 of 2021 3 of 21 Respondent's Submissions:

8. The Learned Senior Counsel for the Respondents submitted that the

initiation of CIRP against the Corporate Debtor and the subsequent orders

passed by the Hon'ble Appellate Tribunal and the Tribunal on various

occasions are as detailed out here at.

9. It is submitted that the Shareholders and Creditors of the Corporate

Debtor unanimously approved the scheme in the meeting convened by the

Appellant on 05.09.2019. Vide order dated 10.01.2020 in CA No. 1026/2019

the Learned Adjudicating Authority directed the Appellant to file a report

certifying that the Respondents herein did not suffer from any disqualification

as provided under Section 29A of the Code. As per the directions of the

Adjudicating Authority the Appellant/Liquidator filed his report dated

24.01.2020 before the Authority.

10. While so, the Appellant filed MA 1140/2019 in CA 1026/2019 before

the Learned Adjudicating Authority inter alia seeking determination of the

fees payable to the Appellant. While sanctioning the scheme, the Adjudicating

Authority vide its order dated 05.05.2020 disposed of the said MA 1140/2019

and specifically observed at para 10, 34 and 35 of the order.

11. The Appellant filed IA. 399/2020 before the Adjudicating Authority

seeking payment of the fees with immediate effect. The Learned Adjudicating

Authority vide its order dated 20.07.2020 (impugned order) disposed of the

Application and held that 'in respect of the fees payable to the Liquidator, as

already dealt with vide order dated 05.05.2020, the fees will become payable

TA No. 90 of 2021 4 of 21 only upon the occurrence of the events of respective receipts and disbursal at

the specified percentage payable and not otherwise and in the circumstances

we direct the Liquidator to desist from claiming the amounts towards the

Liquidator fees as immediately payable'.

12. It is submitted that while approving the scheme vide its order dated

10.01.2020 the Hon'ble Adjudicating Authority clearly noted that the

Respondents were never disqualified under Section 29A of the Code, however,

the Adjudicating Authority gave an opportunity to the Appellant and directed

him to file a report with respect to in-eligibility of the Respondents under

Section 29A of the Code. The Learned NCLT clearly noted in its order that at

the time of liquidation the account of the Corporate Debtor was not a Non-

Performing Asset as the amounts owed to the secured financial creditors were

fully settled by the Respondents in December 2018 to the tune of Rs.39.75

crores out of total debt of Rs.39.75 crores.

13. The Appellant never even contested the issue of ineligibility of the

Respondents before the Adjudicating Authority. Further the Appellant himself

filed CA 1026/2019 for approval of the scheme before the NCLT. As per the

recent amendment made under Regulation 2B of the Liquidation Regulation

as inserted by notification dated 06.10.2019, any person ineligible for the

reasons mentioned under Section 29A of the Code shall not be able to submit

a scheme of compromise or arrangement. The said issue of applicability as

well as ineligibility of the Respondents was discussed in detail by the Learned

TA No. 90 of 2021 5 of 21 NCLT and the Learned NCLT held that the eligibility of the Respondents was

not attracted under Section 29A of the Code.

14. It is submitted that the NCLT vide its order dated 10.01.2020 directed

the Appellant to file a report of such eligibility of the Respondents. However,

the said issue was never raised by the Appellant before the Learned NCLT. In

fact, the Appellant himself submitted before the NCLT that the issue of

ineligibility of the Respondents shall not be pressed by the Appellant.

However, the issue of applicability of Section 29A in the present appeal is

nothing but an afterthought and a counter reaction to the Respondents not

ceding to the unreasonable demands of the Appellant in respect of the fees

demanded by the Appellant which is contrary to law and against the

impugned order.

15. The Respondents submitted their scheme of compromise and

arrangement to the Appellant and the Appellant himself submitted the said

scheme before the NCLT and convened a meeting of creditors and

shareholders of the Corporate Debtor. The scheme was approved by a majority

of 98% of the creditors, statutory authorities and members of the Corporate

Debtor. The Learned NCLT approved the scheme of the Respondents vide

order dated 10.01.2020. The Learned NCLT specifically recorded in the order

dated 05.05.2020 passed in MA 1140/2019 that the liquidation process has

been revoked and the scheme was directed to be implemented. Therefore, the

appeal is misconceived and the Appellant being officer of Court neither has

TA No. 90 of 2021 6 of 21 any vested right nor any locus standi to challenge the scheme filed by himself

before the NCLT and the Learned NCLT approved the scheme as approved by

a majority of 98% of creditors.

16. The Appellant illegally and unauthorisedly, due to reasons best known

to him delayed in handing over of the Corporate Debtor to these Respondents

on one pretext or other for 10 months. After much delay a partial handover

was done by the Appellant to these Respondents wherein only dredgers of the

Corporate Debtor were handed over by the Appellant. Because of the delay in

handing over, the Respondents incurred an expense of Rs.2 crores in

repairing the dredgers. The Appellant has been in-charge of managing the

Affairs of Corporate Debtor since the very initiation of CIRP of the Corporate

Debtor and thus all the contemporaneous records of the Corporate Debtor as

mentioned hereunder, continue to be in the control and possession of the

Appellant.

"a. Books of Accounts including the bank account opened for liquidation;

b. Income tax records up to the period 2019-20; c. Audited Balance sheets for 2017-18, 2018-19 and 2019- 20; d. Tax audit reports, GST returns (filed copies), PF returns; e. ROC returns for 2017-18, 2018-19 and 2019-20, inter alia. f. Removal of charge from ROC for the assets secured. g. Files and the correspondences of the legal cases going on and attended by Liquidator."

17. It is submitted that the above-mentioned record till date have not ben

handed over by the Appellant which clearly depicts that the Appellant

TA No. 90 of 2021 7 of 21 disregards the facts that the Corporate Debtor is in the process of

resuscitation and the Appellant is only concerned about his fees.

18. It is submitted that the Appellant is guilty of misrepresenting the facts

in the appeal. The Appellant in the memo of parties still mentions that he is

a Liquidator of the Corporate Debtor, whereas by virtue of operation of the

orders dated 10.01.2020, 05.05.2020, 15.05.2020 passed by the NCLT, it is

clear that on approval of the said scheme, the scheme proponents took over

the management of the Corporate Debtor in terms of the Scheme and thus,

the Appellant was appointed as the independent observer on the board of the

Corporate Debtor. The Appellant deliberately concealed material facts that he

is not acting as liquidator but appointed as independent observer to oversee

the enforcement and implementation of the said scheme.

19. It is submitted that the findings in the impugned order dated

20.07.2020 are nothing but a reiteration of its findings in its orders dated

10.01.2020, 05.05.2020 and 15.05.2020 which have duly been accepted by

the Appellant. Further, the present Appeal is only endeavour of the Appellant

to make a wilful gain to himself and cause a wilful loss to the Corporate Debtor

without performing his responsibilities during the process of the

implementation of the scheme. On this account itself the conduct of the

Appellant being a professional deserves to be deprecated and required to pass

strict directions against the Appellant and the present Appeal is deserves to

be dismissed with punitive costs.

TA No. 90 of 2021 8 of 21

20. Further the Appeal is barred by the estoppel for the reasons that the

Appellant himself filed an application bearing MA No.793/2019 seeking leave

of the Learned NCLT to convene a meeting of creditors and shareholders for

consideration of the scheme proposed by the Respondents. The scheme was

duly presented by the Appellant himself and the NCLT vide its order dated

10.01.2020 approved the said scheme. As per Clause 4.5 of the Scheme, it

was provided that the liquidator's fee will be decided and approved by the

IBBI. In order to get more clarity with respect to his fees again preferred an

application being MA No. 1140/2019 seeking fixation or approval of the fee of

the liquidator. The said MA No.1140/2019 allowed vide order dated

05.05.2020 and fixed the fees payable to the Appellant and the Learned NCLT

relied on the calculations submitted by the Appellant on the basis of the

estimated fees payable if the said distribution was happening under Section

53 of the Code. However, the Learned Adjudicating Authority vide impugned

order dated 20.07.2020 reaffirmed its directions passed vide orders dated

10.01.2020 and 05.05.2020, hence the present appeal is barred by the

principles of estoppel.

21. It is submitted that the CIRP cost was duly paid by the Respondents as

per the directions of the Learned NCLT in its orders dated 15.05.2020 and

22.05.2020.

22. It is submitted that the conduct of the Appellant was in fact strongly

deprecated by the Learned NCLT while passing the impugned order due to

TA No. 90 of 2021 9 of 21 repeated and consistent endeavour to abuse his power and to derail the

implementation of the scheme in order to suit his personal agenda which is

most unbecoming of a Liquidator under the provisions of the Code.

23. It is submitted that the Appellant filed the present Appeal

misrepresenting and by concealing the facts only in order to unjustly enrich

himself. In view of the facts as stated above the appeal deserves to be

dismissed with cost.

Analysis / Appraisal:

24. Heard the Learned Counsel appeared for the respective parties, perused

the pleadings, documents filed in support of their case. After analysing the

pleadings, the issue that felt for consideration is whether the Appellant has

made out any prima facie case seeking the reliefs as prayed in the Appeal and

whether the order passed by the Adjudicating Authority need any

interference.

25. In the present Appeal, the Appellant challenged the orders dated

10.01.2020 and 05.05.2020 passed by the Adjudicating Authority praying

this Bench to set aside both the orders by raising two pleas viz.

i. Questioning the qualification of the Respondents to be scheme proponents under Sections 230 to 232 is in contravention to Section 29A read with Section 35(1)(f) and the IBBI Regulations.

ii. payment of fee to the Appellant stating that the Adjudicating Authority erroneously interpreted the impugned order and held that the liquidator's fee will be payable only as per the occurrence

TA No. 90 of 2021 10 of 21 of the event reflected in the table contained in para 22 at page 17 of the order dated 05.05.2020.

26. The Appellant filed an Appeal bearing No.791/2020 before this

Tribunal challenging the order dated 20.07.2020 passed by the Adjudicating

Authority mainly contending on the issue of fee payable to him and the said

Appeal also heard along with this Appeal and a separate judgment is passed.

Therefore, in this judgment we restrict to the first relief i.e. whether scheme

proponents are eligible under Section 29A or in-eligible as contended by the

Appellant.

27. It is an admitted fact that the CIRP initiated against the Corporate

Debtor i.e. Meka Dredging Company Pvt. Ltd. on 09.02.2018. In absence of

any Resolution Plan the CoC passed a resolution for liquidation of Corporate

Debtor. In pursuance thereof the RP filed an Application No. MA 344/2018

seeking liquidation of the Corporate Debtor. While so, the Adjudicating

Authority passed an order of liquidation in respect of the above Corporate

Debtor on 28.09.2018 and appointed the Appellant as Liquidator. While so,

the Promoters of the Corporate Debtor filed an Appeal CA (AT) (Ins) No.

696/2018 against the order of liquidation and this Tribunal disposed of the

said Appeal on 07.03.2019 with an observation and direction as under:

"Learned Counsel appearing on behalf of the Appellant submits that a sum of Rs.14 cores was due and out of which a settlement for Rs.10.38 crores has been made. Earlier, also two financial creditors paid total amount of Rs.37 crores to Asset Reconstruction Company (India) Limited and Rs. 2.5 crores to

TA No. 90 of 2021 11 of 21 L&T Finance, who have given no dues certificate. However, on completion of the resolution process we cannot allow any settlement with the Promoters and the creditors."

This Tribunal however, directed the Liquidator to proceed with in terms

of the decision made in "Y. Shivram Prasad Vs. S. Dhanapal & Ors. (NCLAT

judgment)."

28. In view of the judgment of this Tribunal, the Respondent submitted a

scheme of compromise and arrangement under Section 230 of the Companies

Act, 2013 on 01.06.2019 in the light of the judgment in the matter of Y.

Shivram Prasad. The liquidator moved an Application MA No. 793/2019

before the Adjudicating Authority seeking leave to convene a meeting of the

creditors and shareholders for considering scheme proposed by the

Promoters. The Adjudicating Authority allowed the said I.A. on 02.08.2019.

The meeting of creditors and shareholders convened and the Promoters

proposed a scheme to settle all class of creditors.

29. The scheme proponents filed the scheme of compromise and

arrangement under Section 230 of the Companies Act, 2013. Thereafter, the

Liquidator filed an application being CA 1026/2019 before the Adjudicating

Authority seeking relief that the scheme of compromise or arrangement

approved by the equity shareholders and creditors of the company in

liquidation be approved so as to bind the equity shareholders and creditors.

The Adjudicating Authority passed a detailed order on 10.01.2020.

TA No. 90 of 2021 12 of 21

30. The Adjudicating Authority recorded the submissions of the Liquidator

whereby it was brought to the notice of the Adjudicating Authority regarding

this Tribunals judgment in the matter of Jindal Steel and Power Limited Vs.

Arun Kumar Jagatramka & Ors. dated 24.10.2019. This Tribunal in the

aforesaid judgment observed that if the Promoter is in-eligible under Section

29A cannot make an application for compromise and arrangement for taking

back the immovable and movable property or actionable claims of the

Corporate Debtor. The Liquidator also pointed out that the

Respondents/Promoters of the company, suffered the disqualification. While

so, the scheme Proponent/Respondents submitted that the disqualification

as prescribed under Section 29A of the Code, 2016 may not be applicable in

the instant case as the amounts due to the Financial Creditors as reflected at

the time of liquidation has been fully settled and which has also been brought

forth in the order of this Tribunal dated 07.03.2019 in relation to the company

under liquidation.

31. The Adjudicating Authority gave an opportunity to both the parties to

make their submissions in relation to the disqualification. The counsel for the

liquidator after pointing out the judgment of this Tribunal in Jindal Steel, left

to the discretion of the Adjudicating Authority to take a decision in view of

change in the circumstances as the Promoters of the Company have paid the

debt amount to the Financial Creditors in full. After hearing the respective

counsel appeared for the parties and relying upon the judgment of the Hon'ble

Supreme Court in M/s Meghal Homes Pvt. Ltd. Vs. Shree Nivas Girni Vs. KK

TA No. 90 of 2021 13 of 21 Samiti & Ors. in Civil Appal No.3179-3181/2005 while considering the

erstwhile provisions of Section 391 read with Section 394A of the Companies

Act, 2013, it was held that the liquidator is well within the power to obtain a

scheme under relevant provisions either from the members or creditors of the

company in liquidation, and in the said circumstances the scheme cannot be

shut out from being considered by the Adjudicating Authority.

32. Thus, the Adjudicating Authority considered the following aspects:

(i) The Judgment of the Hon'ble Supreme Court in M/s Meghal Homes.

(ii) The Promoters paid off fully the debt amounts to the creditors and the rights of creditors have been fully discharged to their satisfaction.

(iii) This Tribunal vide order dated 07.03.2019 allowed the Promoters to file the scheme before the Liquidator and the Liquidator to proceed in terms of Y. Shivram Prasad vs. S. Dhanpal and Ors.

in CA (AT) (Ins.) No. 224/2018.

33. The Adjudicating Authority has considered all aspects including the

scheme submitted by the Respondents. The Adjudicating Authority also relied

upon the judgment of the Hon'ble Supreme Court in Arcelormittal India Pvt.

Ltd. Vs. Satish Kumar Gupta & Ors. in Civil Appal No.9402 to 9405 of

2018, the Hon'ble Supreme Court interpreted Section 29A(c) as follows:

"Para 54. The interpretation of Section 29A(c) now becomes clear. Any person who wishes to submit a resolution plan, if he or it does so acting jointly or in concert with other persons, which person or other persons happen to either manage or control or be promoters of a corporate debtor, who is classified as a non-performing asset and whose debts have not been paid

TA No. 90 of 2021 14 of 21 off for a period of at least one year before commencement of the corporate insolvency resolution process, becomes ineligible to submit a resolution plan. This provision therefore ensures that if a person wishes to submit a resolution plan, and if such person or any person acting jointly or any person in concert with such person, happens to either manage, control or to be promoter of a corporate debtor declared as a non-performing asset one year before the corporate insolvency resolution process begins, is ineligible to submit a resolution plan. The first proviso to sub-clause (c) makes it clear that the ineligibility can only be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the non- performing asset in question before submission of a resolution plan. The position in law is thus clear. Any person who wishes to submit a resolution plan acting jointly or in concert with other persons, any of whom may either manage, control or be a promoter of a corporate debtor classified as a non-performing asset in the period abovementioned, must first pay off the debt of the said corporate debtor classified as a non- performing asset in order to become eligible under Section 29A(c)."

34. The Adjudicating Authority taking into consideration the observations

of the Hon'ble Supreme Court (supra) passed the following order as under:

"33. Thus while sanctioning the Scheme, we direct the Liquidator in any case to obtain an affidavit from the Proponents of the Scheme, that while presenting the Scheme to the Liquidator as per the leeway provided by the Hon'ble NCLAT that they did not suffer any of the disqualifications as provided under Section 29A of I&B Code, 2016 and the sanction

TA No. 90 of 2021 15 of 21 is subject to the submission of the affidavit as directed Above within a week from the date of this order and the Liquidator after application of his mind in relation to the contents of the affidavit and the veracity of the statements made therein filing a report before this Tribunal within a period of one week thereafter. In relation to statutory authorities to whom notice was ordered to be issued, save Income Tax whose observations have already been extracted in paragraphs supra none of the other authorities have responded. Taking into consideration the decision rendered by the Hon'ble NCLAT while approving the Resolution Plan in relation to Vardhaman Industries Ltd. in Company Appeal (AT) (Insolvency) No. 467 of 2019 vide its Judgment saving the right of the Income Tax and also in terms of the Judgment cited by the revenue of the Hon'ble Supreme Court in Marshall Sons & Co (supra) and in accordance with both the above Judgments the right of the revenue is preserved accordingly."

35. In view of the directions passed by the Adjudicating Authority, the

Appellant obtained an affidavit from the Respondents dated 17.01.2020,

whereby the Respondents have clearly stated that they were eligible to submit

the scheme under Sections 230-232 of the Companies Act, 2013 and did not

suffer from any disqualification under Section 29A of the Code. Further, the

Adjudicating Authority also directed by the aforesaid order to the Appellant to

submit a report before the Adjudicating Authority within a period of one week

after application of his mind in relation to the contents of the affidavit and the

veracity of the statements made therein. Accordingly, and incompliance of the

order of Adjudicating Authority, the Appellant filed his report dated

TA No. 90 of 2021 16 of 21 22.01.2020. The Appellant in its report clearly stated at para 4(iii) as "further

the Hon'ble Tribunal in paragraph 31 of the said order held that, in view of the

settlement of the claims of Financial Creditors 'pre-liquidation' of the Company,

and in absence of other disqualification being demonstrated, the proponents of

the scheme are not disqualified under Section 29A of the I&B Code. However, I

wish to bring to the kind attention of the Hon'ble Tribunal that the settlement

by the scheme proponents with Financial Creditors i.e. ARCIL & L&T Finance

Ltd. took place pursuant to the order of liquidation of the Company viz. order

dated 28.09.2018."

36. The order of the Adjudicating Authority dated 10.01.2020 has not been

appealed by the Appellant and the said order has attained finality. Further,

the Appellant filed its report before the Adjudicating Authority after receipt of

affidavit from the Respondents.

37. The Learned Counsel for the Respondent took legal plea that the

present Appeal also filed challenging the order dated 10.01.2020 belatedly

hence, the same is barred by limitation and the Appeal is liable to be

dismissed on the issue of limitation. This Tribunal is also of view that the

Appellant filed the present Appeal on 05.10.2020 whereas the limitation

period expires on 09.02.2020 and the Appellant has not filed any application

seeking condonation of delay. Even otherwise, this Tribunal cannot condone

the delay beyond the period as prescribed under Section 61(2) of the I&B

Code, 2016. On this ground itself the Appeal is liable to be dismissed to the

extent challenging the order dated 10.01.2020. However, this Tribunal has

TA No. 90 of 2021 17 of 21 dealt with the issue even on merits to give a quietus to the litigation initiated

by the Appellant.

38. The Appellant also filed another application being MA No. 1140/2019

in CA No. 1026/2019 praying the Adjudicating Authority to approve the

Appellant's fee in the capacity as Liquidator. The Adjudicating Authority

disposed of the said M.A. by passing a speaking order dated 05.05.2020. the

Adjudicating Authority in its order dated 05.05.2020 at para 10 observed as

under:

"Even though the compliance with the direction of this Tribunal the Liquidator has filed the report before this Tribunal dated 24.01.2020 wherein certain observations have been made in relation to the sanction of the scheme per-se by this Tribunal, however, during the course of the submissions, the learned counsel for the Appellant/Liquidator as well as the Liquidator who was present in person, decided not to press for other observations made in relation to Section 29A of the IBC, 2016."

39. Further, the Adjudicating Authority in its order dated 05.05.2020 at

para 12 observed that the Adjudicating Authority cannot review its own order

dated 10.01.2020 with respect to the scheme filed before it, since the order to

that affect has already been passed on merits as well as on the aspects of law

and the Liquidator is not an aggrieved person.

Overview:

40. This Tribunal intend to have a glance on the sequence of events and

the orders of this Tribunal and the judgment of the Hon'ble Supreme Court

on this aspect.

TA No. 90 of 2021 18 of 21

a) This Tribunal vide its order dated 07.03.2019 clearly held that the promoters have been paid in full. However, observed that on completion of the resolution process the Tribunal did not allow the settlement with the promoters and the creditors. However, the Appellant was directed to proceed with in terms of the decision in Y. Shivram Prasad.

b) The Adjudicating Authority vide its order dated 10.01.2020 sanctioned the scheme, however, directed the Appellant to obtain an affidavit from the Respondents and the same shall be filed in the form of report before it.

c) The judgment of the Hon'ble Supreme Court in M/s Meghal Homes Pvt. Ltd. held that the Liquidator is well within the power to obtain a scheme under relevant provisions either from the members or creditors of the company in liquidation, and the said circumstance, the scheme cannot be shut out from being considered by the Tribunal.

d) Further, the Hon'ble Supreme Court in Arcellormittal India Pvt. Ltd. held while interpreting Section 29A(c) that any person who wishes to submit a resolution plan acting jointly or in concert with other persons, any of whom may either manage, control or be a promoter of a corporate debtor classified as a non-performing asset in the period above mentioned, must first pay off the debt of the said corporate debtor classified as non-performing asset in order to become eligible under Section 29A(c).

e) The Respondents have filed their affidavit dated 17.01.2020 clearly stating that they are eligible to submit the scheme under Sections 230-232 of the Companies Act, 2013 and did not suffer from any disqualification under Section 29A of the Code.

TA No. 90 of 2021 19 of 21

f) The Appellant after considering the affidavit of the Respondents, filed a report dated 22.01.2020 before the Adjudicating Authority stating that the Respondents settled their dues with the Financial Creditors in full.

g) The Appellant and his counsel decided not to press any observations made by them in I.A. No. 1140/2019.

h) The impugned order dated 10.01.2020 is barred by limitation as held (supra) and attained its finality.

Finding:

41. From the sequence of events, the Respondent have submitted scheme

as directed by this Tribunal. The consequences thereof follow namely

convening meeting of creditors and shareholders and filing an application

before the Adjudicating Authority seeking approval of the scheme as per the

directions of this Tribunal. In this regard, the Hon'ble Supreme Court in

Arcellormittal India Pvt. clearly held at para 54, that the person must first pay

off its debt of the Corporate Debtor in order to become eligible under Section

29A(c). The Appellant is a party even to the Appeal filed by the promoters

before this Tribunal in C.A. (AT)(Ins) No. 696/2018 dated 07.03.2019 and

subsequent to all other proceedings. Being a party to the proceedings the

Appellant is bound by the decisions of the Adjudicating Authority and this

Tribunal and the precedents of the Hon'ble Supreme Court. As held supra the

order of the Adjudicating Authority dated 10.01.2020 to which the Appellant

is a party has not challenged the said order dated 10.01.2020 and the same

has attained finality. Therefore, the Appellant is estopped from challenging

TA No. 90 of 2021 20 of 21 the said order in this Appeal. The filing of the present Appeal is an abuse of

process of law and wasting the precious time of this Tribunal.

42. Having discussed all the issues, this Tribunal comes to an irresistible

and inescapable conclusion that the Appeal is frivolous and vexatious and the

same is liable to be dismissed.

43. Accordingly, the Appeal is dismissed. No order as to costs. Applications

if any, pending stand closed.

[Justice M. Venugopal] Member (Judicial)

[Kanthi Narahari] Member (Technical) 2nd August, 2022

pks

TA No. 90 of 2021 21 of 21