Mr. Sanjay Chaturvedi vs Asset Reconstruction Company India Ltd ...

1. Mr. Sanjay Chaturvedi, S/o Sh. Rameshwar Dass Sharma, R/o 97D, Eastern Avenue, Sainik Farms New Delhi - 110062 ...Appellant

Versus

1. Shamken Cotsyn Limited, 94 KM Stone, Delhi Mathoadura, R VIII - Kotwan Mathura, Uttar Pradesh - 281403 ...Respondent No. 1 2. Mr. Anshul Gupta, Flat No. 1501, Tower IV, Spring Grove Towers, Lokhandwala Township, Kandivali (East), Mumbai - 400101 ...Respondent No. 2 3. Assets Reconstruction Company (India) Limited, IDBI Tower, 3rd Floor, D Wing, Cuffe Parade, Mumbai - 400005 ...Respondent No. 3 4. IDBI Bank, IDBI Bank Ltd. IDBI Tower, WTC Complex, Cuffe Parade, Colaba, Mumbai 400005 ...Respondent No. 4

5. Life Insurance Corporation of India, Central Office, Yogakshema JeevanBima Marg, Nariman Point, Mumbai 400021 ...Respondent No. 5

6. UCO Bank, UCO Bank Head Office, 10, BTM Sarani, Kolkata - 700001, West Bengal India ...Respondent No. 6

7. Dhanlaxmi Bank, Dhanlaxmi Bank Ltd, Corporate Office, -2-

Punkunnam, Thrissur, Kerala - 680002 ...Respondent No. 7

8. Stressed Asset Stabilization Fund 3rd Floor, IDBI Tower, WTC Complex, Cuffe Parade, Colaba, Mumbai - 400005 ...Respondent No. 8

9. SICOM Ltd. Solitaire Corporate Park, Building No. 4, Guru Hargovindji Road, Mumbai, Maharashtra 400093 ...Respondent No. 9

10. AXIS Bank, Axis Bank Limited, "Axis House", C-2, Wadia International Centre, Pandurang Budhkar Marg, Worli, Mumbai - 400025 ...Respondent No. 10

11. General Insurance Corporation of India, 170, Jamshedji Tata Road, Churchgate, Mumbai - 400020, India ...Respondent No. 11

12. UTI Asset Management Company Pvt. Ltd PMS Division, UTI Tower, G N Block, Bandra-Kurla Complex, Bandra €, ...Respondent No. 12 Mumbai - 400051

13. Federal Bank, P B No. 103, Federal Towers, Aluva, Kochi, Kerala - 683101, INDIA ...Respondent No. 13

14. Mr. Sanjay Gupta, (Liquidator Shamken Cotsyn Limited) E-10A, Kailash Colony, Greater Kailash- I, New Delhi, Delhi 110048 ...Respondent No. 14

For Appellant: Mr. Arun Saxena, Ms. Nalini, Mr. Vikas Ashwani and Mr. Prashant Kumar, Advocates

For Respondent: Mr. Nikhil Jha and Mr. Milan Singh Negi for RP/R-2. Mr.

Company Appeal (AT) (Insolvency) No. 333 of 2022 with Company Appeal (AT) No. 157 of 2022 -3-

Dinkar Singh, Mr. Gagan Garg, Mr. Rohit Singh for ARCIL. Ms. Shalya Agarwal, Mr. Amar Vivek & Mr. Aditya Gauri for Liquidator.

With

Company Appeal (AT) No. 157 of 2022

IN THE MATTER OF:

1. Mr. Sanjay Chaturvedi, R/o 97D, Eastern Avenue, Sainik Farms New Delhi - 110062 E-mail s-Shamken@hotmail.com ...Appellant

Versus

1. Assets Reconstruction Company (India) Limited, 10th Floor, The Ruby, 29, Senapati Bapat Marg, Dadar West, Mumbai, Maharashtra - 400028 ...Respondent No. 1 2. Mr. Sanjay Gupta, Liquidator Shamkeen Spinners Limited E-10A, Kailash Colony, Greater Kailash - 1, New Delhi - 110048 ...Respondent No. 2 3. Shamken Cotsyn Limited, 94 KM Stone, Delhi Mathoadura, R VIII - Kotwan Mathura, Uttar Pradesh - 281403 ...Respondent No. 3

For Appellant: Mr. Arun Saxena, Ms. Nalini, Mr. Vikas Ashwani and Mr. Prashant Kumar, Advocates

For Respondent: Mr. Dinkar Singh, Mr. Gagan Garg, Mr. Rohit Singh for ARCIL.

Company Appeal (AT) (Insolvency) No. 333 of 2022 with Company Appeal (AT) No. 157 of 2022 -4-

JUDGEMENT

ASHOK BHUSHAN, J:

1. These two Appeals have been filed by the same Appellant-Suspended

Director of the Corporate Debtor challenging two separate and different

decisions of the Adjudicating Authority (National Company Law Tribunal,

Allahabad Bench, Prayagraj).

2. Company Appeal (AT) Ins. No. 333 of 2022 has been filed against the

Order dated 31st January, 2022 by which the Adjudicating Authority has

allowed CA No. 86/ALD/2019 filed by the Resolution Professional seeking

liquidation of the Corporate Debtor-Shamken Cotsyn Limited. By the same

Order, CA No. 64/ALD/2019 filed by the Appellant praying to stay the

decision of the CoC to liquidate the Corporate Debtor taken in 11th CoC

Meeting held on 18th February, 2019 has been rejected. Appellant aggrieved

by the Order dated 31st January, 2022 has come up in this Appeal.

3. Company Appeal (AT) No. 157 of 2022 has been filed against the Order

dated 14th June, 2022 passed by the National Company Law Tribunal,

Allahabad Bench, Prayagraj in T.P. No. 01/ALD/2017 (earlier CP No.

10/ALD/2010). By which Order, petition filed under Section 391/394 of

Companies Act, 1956 which was transferred from the High Court of

Allahabad in terms of Section 434 of the Companies Act, 2013 has been

dismissed as infructuous in view of the initiation of 'Corporate Insolvency

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Resolution Process' (CIRP in short) on 29th May, 2018 and subsequently

liquidation order passed on 31.01.2022.

4. Learned Counsel for the Appellant - Mr. Arun Saxena in support of

Company Appeal (AT) Ins. No. 333 of 2022 submits that the scheme under

Section 391 & 394 of the Companies Act, 1956 was filed before the

Companies Judge of Allahabad High Court where an Order was passed on

15th May, 2008 for convening the Meeting of Secured Creditors. An

application was filed by ING Vysya Bank Ltd. objecting convening of the

meeting of the creditors on the ground that ING Vysya Bank Ltd. is a

secured creditor. The case of ING Vysya Bank Ltd. was that proceedings are

pending before the AAIFR. Application under Section 391 & 394 is not

maintainable. Against the Order dated 18th January, 2010, Special Appeal

1396/2010 was also dismissed by the Division Bench of High Court on 08th

September, 2010 which matter was taken to before the Hon'ble Supreme

Court in SLP Civil Appeal No. 121 of 2011 and the matter is still pending

before the Hon'ble Supreme Court hence the Adjudicating Authority ought

not to have rejected the petition filed under Section 391 & 394 of the

Companies Act, 1956.

5. It is stated that scheme or arrangement being already submitted and

under consideration, the Adjudicating Authority ought not to have passed

the Impugned Order dated 31st January, 2022 directing for liquidation of the

Corporate Debtor.

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6. In support of Company Appeal (AT) No. 157 of 2022, Mr. Arun Saxena

submits that Adjudicating Authority erred in rejecting the T.P. No.

01/ALD/2017 on 14th June, 2022 on the ground that Corporate Debtor is

already under Liquidation. It is submitted that the scheme or arrangement

ought to have been considered on merits and in event the scheme or

arrangement is approved, there was no occasion for sending the Corporate

Debtor into liquidation.

7. Learned Counsel appearing for the liquidator refuting the submissions

of Learned Counsel for the Appellant submits that CIRP against the

Corporate Debtor was initiated by Order dated 29th May, 2018 which Order

was never challenged by the Appellant and became final. In CIRP, Form-G

was issued on two occasions but no Resolution Plan could be submitted or

approved by the CoC. The period of CoC was coming to an end on 23rd

February, 2019 hence CoC passed a Resolution on 18.02.2019 in its 11 th

CoC Meeting to liquidate the Corporate Debtor. In CIRP, no plan having been

approved, CoC rightly had taken a decision to liquidate the Corporate

Debtor.

8. Replying the submissions of Appellant in Company Appeal (AT) No.

157 of 2022, Learned Counsel submits that when CIRP has begun on 29th

May, 2018, no scheme or arrangement, no proceeding for approval of the

scheme or arrangement under Companies Act could have proceeded with

and the scheme or arrangement if any could be submitted only by the

Liquidator. Adjudicating Authority has rightly dismissed the Company

Petition filed under Section 391 & 394 on the ground of initiation of

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Corporate Insolvency Resolution Process and Liquidation by Order dated 31st

January, 2022.

9. We have considered the submissions of Learned Counsel for the

parties and have perused the record.

10. CIRP against the Corporate Debtor-Shamken Cotsyn Limited

commenced on 29th May, 2018. Resolution Professional issued Form-G twice

but no Resolution Plan was either submitted or approved by the CoC. The

CIRP period was coming to an end on 23rd February, 2019. In 11th CoC

Meeting held on 18th February, 2019, CoC passed a Resolution to liquidate

the Corporate Debtor after noticing that no Resolution Plan has been

received in the CIRP and the Plan which was submitted in pursuance of

issuance of Form-G, was withdrawn by the Resolution Applicant. In 11th CoC

meeting, Mr. Pravin Bansal was appointed as liquidator of the Corporate

Debtor. Resolution Professional in pursuance of the Resolution dated

11.02.2019 filed an CA No. 86 of 2019 seeking liquidation which has been

allowed by the Impugned Order. CoC having resolved by 100% voting share

to liquidate the Corporate Debtor, we do not find any error in the decision of

the CoC to liquidate the Corporate Debtor. When no Resolution Plan was

received even after issuance of Form-G twice, the Adjudicating Authority had

no option except to resolve for liquidation of the Corporate Debtor.

11. Learned Counsel for the Appellant has placed reliance on 12th CoC

Meeting held on 22nd July, 2021 in item no. 6 it was noticed by the CoC that

Resolution Plan on 23rd March, 2021 through an email from Mr. S.N.

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Sharma has been received which email was forwarded to all members of

CoC. The email by which Resolution Plan was claimed to be sent, the

Resolution Applicant was noticed but CoC did not decide to revisit its earlier

decision to liquidate the Corporate Debtor.

12. When no Resolution Plan having been deliberated or received in the

11th CoC meeting, any email by the Resolution Applicant after close of the

period of CIRP, is meaningless and could not have put the clock back. We

thus do not find any substance in the submission of Learned Counsel for the

Appellant that the email received by the Resolution Applicant which was

placed in CoC Meeting dated 22nd July, 2021 ought to have considered. The

decision of the liquidation is validly taken by the CoC. We thus do not find

any good ground to interfere with the Order passed by the Adjudicating

Authority in C.A. No. 86/ALD/2019 filed by the Resolution Professional for

liquidation. C.A. No. 64/ALD/2019 as filed by the Suspended Director of the

Corporate Debtor-Mr. Sanjay Chaturvedi, was rightly rejected. There is no

merit in the Appeal. Company Appeal (AT) Ins. No. 333 of 2022 is dismissed.

13. Now coming to Company Appeal (AT) No. 157 of 2022 filed by the

Appellant, ex-Director of the Corporate Debtor, the Adjudicating Authority

held Company Petition filed under Section 391/394 of the Companies Act,

1956 as infructuous. In paragraph 8 and 9 of the Order, following has been

observed.

"8. It is noted that the present case is pending before this Adjudicating Authority from 2017 and in the meantime the company has went into CIRP on

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29.05.2018 and subsequently liquidation order was also passed on 31.01.2022. The pendency of appeal before the Hon'ble Supreme Court will not have any bearing in the present matter as the liquidation order has already been passed. In any case, any scheme or arrangement with the creditors can now be brought only by the Liquidator once the Liquidator is appointed by this Adjudicating Authority under IBC.

9. Therefore, no useful purpose would be served in keeping this petition pending as the liquidation has already been initiated, thus, the present petition is dismissed as infructuous. Liberty is, however, available to the Liquidator to move the Adjudicating Authority in case there is a viable scheme and the same meets with the requirements of law."

14. CIRP has been initiated against the Corporate Debtor on 29.05.2018

which Order was never challenged and subsequently the Order of

Liquidation has been passed on 31st January, 2022. There is no occasion for

consideration of any scheme or arrangement which was pending

consideration since the year 2008. After a moratorium has been imposed on

Section 14, all the proceedings have to keep in abeyance. Further when

Order of Liquidation has been passed on 31st January, 2022, any scheme or

arrangement can only be placed by the Liquidator for consideration before

the Adjudicating Authority. Adjudicating Authority in paragraph 8 has made

following observation:

""8. .... In any case, any scheme or arrangement with the creditors can now be brought only by the

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Liquidator once the Liquidator is appointed by this Adjudicating Authority under IBC."

15. We have already upheld the Order of the Liquidation dated 31st

January, 2022 while considering Company Appeal (AT) Ins. No. 333 of 2022.

We thus do not find any merit in Company Appeal (AT) No. 157 of 2022 as

observed by the Adjudicating Authority, any scheme or arrangement with the

creditors can now be brought only by the Liquidator.

16. In view of the foregoing discussion, we do not find any merit in both

the Appeals. Both the Appeals are dismissed.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical)

NEW DELHI

28th September, 2022

Basant

Company Appeal (AT) (Insolvency) No. 333 of 2022 with Company Appeal (AT) No. 157 of 2022