Ms. Manorama Shandilya vs Mr.Aashish Gupta Rp

Suchi Paper Mills &Ors. ...Appellants

Versus

Ashish Gupta RP in the matter of AnushFinlease and Construction Pvt. Ltd. &Ors. ...Respondents

Present: For Applicant: Dr. Amit George, Ms. Preeti Goel, Mr. Siddhartha Jain, Mr. Arkaneil, Advocate and Mr. Anubhav Goel, CA For Respondent: Mr. Gaurav Mitra, Mr. Iswar Mohapatra, Mr. Abhijeet Sinha, Mr. Aditya Shukla and Ms. Heena Kochar, Advocates for R-2. Mr. Suresh Dobhal and Mr. Shikar Kumar, Advocates for R3-R5.

JUDGMENT

Per: Justice Rakesh Kumar Jain:

Phoneix ARC Pvt. Ltd. filed an application under Section 7 of the

Insolvency and Bankruptcy Code, 2016 (in short 'Code') bearing C.P No. (IB)-

474(PB)/2018 as a Financial Creditor to initiate Corporate Insolvency

Resolution Process (in short 'CIRP') in the matter of Anush Finlease &

Construction Pvt. Ltd. (Corporate Debtor). This petition was disposed of as

withdrawn in terms of a settlement arrived at between the parties.

2. However, Phoneix ARC Pvt. Ltd. again filed an application under

Section 7 of the Code bearing CP (IB) No. 1705(PB)/2018 against the

Corporate Debtor. Thispetition was admitted vide order dated 30.05.2019

and Aashish Gupta was appointed as an Interim Resolution Professional (in

short 'IRP').

Company Appeal (AT) (Ins) No. 830 of 2020 2

3. The IRP was appointed as RP in the first meeting of Committee of

Creditors (in short 'COC') held on 01.07.2019. TheExpression of Interest

(EOI) was invited by publication of Form-G for the 3rd time on 12.12.2019

with the approval of the CoC. The Respondent No. 2 'Kendriya Bhandar'

(Central Govt. Emp. Consumer Cooperative Society Ltd.) submitted its plan

which was discussed by the CoC in its 08th meeting held on 13.03.2020 and

was passed it on 17.03.2020.

4. The pleaded case of the Financial Creditor before the Adjudicating

Authority was that the State Bank of India, State Bank of Mysore and State

Bank of Bikaner & Jaipur granted term loan facilities to the Respondent

pursuant to various sanction letters and disbursed loan of an amount of Rs.

18,00,00,000/-, Rs. 16,00,00,000/- and Rs. 14,98,00,000/- in various

tranches.

5. Subsequently, by way of three different assignment agreements, all

the above three banks assigned its debts in favour of Phoenix ARC Pvt. Ltd.

6. The RP and RA (M/s Kendriya Bhandar, Delhi) filed two unnumbered

applicationsbefore the Adjudicating Authority seeking approval of the

resolution plan which was duly approved by the CoC with 77.54% voting

rights. The Adjudicating Authority allowed the applications vide its

impugned order dated 01.04.2020 which read as under:-

"The RP (Ashish Gupta) and the RA (M/s Kendriya Bhandar, Delhi) filed two unnumbered applications seeking approval of the resolution plan approved by the CoC of the Corporate Debtor namely Anush Finlease and Construction Pvt. Ltd. with 77.54% on 14.03.2020, in pursuance of it, Kendriya Bhandra also

Company Appeal (AT) (Ins) No. 830 of 2020 3

executed a performance security for Rs. 12 Crore by way of fixed deposits on 23.03.2020.

2. The reason for urgent hearing is, in the wake of coronavirus outbreak in the country, the RA is proposing to convert the hotel and commercial complex in construction into a temporary shelter which could accommodate 2500-3000 persons and cater the needs of the Govt. as a measure to control spread of the pandemic. A copy of the lay out plan of the temporary night shelter as proposed by the applicant is at page-11 of the application filed by the RA.

3. The entire cost of the project Rs.2.55 Crore is said that it would be met by the Applicant and the Work would be carried out in collaboration through an NGO, PURARVAS(Pratibha Uthaan Rashtriya Vikas Sanstha). The applicant stated that the project shall be implemented as soon as the resolution plan is approved by the Tribunal.

4. In view of the urgency, I hereby approve the resolution plan under Section 31 of the IBC looking at the approval given by the CoC making it clear that the exemptions or discounts anything asked in this plan, which is not permitted under law, are not approved.

5. Accordingly, these two applications are allowed."

7. It has been averred in the memorandum of appeal that Delhi

Development Authority had auctioned a plot admeasuring 8446 sq. mts. for

construction of Hotel and Commercial Complex at 11, Central Business

District Centre, Shahdara East, Delhi at Rs. 68,45,90,000/- vide letter of

allotment dated 06.02.2007. The Corporate Debtor substantially raised the

construction of a proposed Hotel, namely, Indus Hotel and Spa. on the

aforesaid plot, comprising 237 rooms with management and operations tied

up with intercontinental hotel groups. The Hotel comprises of three

basements, ground floor and nine floors.

Company Appeal (AT) (Ins) No. 830 of 2020 4

8. The impugned order has been challenged, inter alia, on the ground of

flawed valuation report and that the Resolution Applicant, being a co-

operative society, could not have participated in the process and file the

resolution plan as it was not permissible for it to engage in any process of

asset reconstruction.

9. This Tribunal on 23.02.2021 passed an interim order that "we direct

that the implementation of the successful resolution plan shall be subject to

the outcome of the appeal". The order is still in operation.

10. It is pertinent to mention that the impugned order was initially

challenged by as many as 19 Appellants but during the pendency of this

appeal, 15 Appellants withdrew their appeal (names) except for the four,

namely, Appellant Nos. 2, 16, 18 and 19.

11. On 09.02.2023, Counsel for the Respondent challenged the

maintainability of the appeal even on behalf of Appellants No. 2, 16, 18 &

19.The order was reserved and it was made clear that if it is found that the

appeal is maintainable on behalf of any of them, then it shall be put up for

hearing on merits and if it is found that the appeal is not maintainable at all

at the instance of remaining four Appellants then an appropriate order shall

be passed. The Order dated 09.02.2022 is also reproduced as under:-

"This appeal was initially filed by 19 appellants against the order dated 01.04.2020. During the pendency of this appeal, all other Appellants except Appellant Nos. 2, 16, 18 & 19 withdrew their appeals.

Counsel for the Respondents have raised objection about the maintainability of appeal even at the instance of the remaining Appellants.

Company Appeal (AT) (Ins) No. 830 of 2020 5

We have heard Counsel for the parties in this regard without referring to the merits of the case and the judgment is reserved.

It is however, made clear that if it is found that the appeal is maintainable, it shall be revived for hearing the same on merits and if it is found that the appeal is not maintainable even at the instance of the remaining four Appellants then the appropriate order shall be passed.

Counsel for the Respondents may file short note/synopsis of not more than three pages within two days."

12. Counsel for Respondent has submitted that the appeal at the instance

of the Appellant No. 2 is not maintainable because the Appellant No. 2 is not

an aggrieved person. It is submitted thatthe appeal has been filed through

the Director of Suchi Paper Mills Ltd. whereas the Company, namely, Suchi

Paper Mills Ltd. is already in CIRP because an application bearing CP (IB)

No. 603/ND/2020 filed under Section 9 of the Code by Flourish Paper &

Chemicals Ltd. against it before the Adjudicating Authority has been

admitted on 12.09.2022. It is therefore, submitted by Counsel for

Respondent that the appeal could have beenfiledby the IRP of Suchi Paper

Mills Ltd (Appellant No. 2).

13. In this regard, Counsel for Appellant No. 2 has submitted that the

order of admission dated 12.09.2022 is challenged in CA (AT) (Ins) No. 1161

of 2022 in which an interim order has been granted by this Tribunal on

27.09.2022 which read as under:-

"27.09.2022: Learned Counsel for the Appellant submits that the principal amount which was claimed was Rs.13,42,230/- in Section 9 Application which application has been admitted by the impugned order dated 12.09.2022. He submits that there was dispute regarding the claim of the Operational Creditor and Application ought not to have admitted. However, he has

Company Appeal (AT) (Ins) No. 830 of 2020 6

brought Demand Draft of Rs.13,42,230/- drawn in the name of the Respondent Company and he is ready to deposit the same. Learned Counsel for the Respondents submits that he does not have any instructions to accept the Demand Draft.

2. Let Demand Draft of Rs. 13,42,230/- drawn in favour of "The Pay and Accounts Officer, Ministry of Corporate Affairs, New Delhi" be deposited by 29.09.2022. Learned Counsel for the Respondent No.1 who accepts notice may file Reply within two weeks. Rejoinder, if any, may be filed within one week thereafter.

3. List the Appeal on 21.10.2022. In the meantime, no further steps shall be taken in pursuance of the order dated 12.09.2022. IRP shall ensure that the Corporate Debtor remains as a going concern with the co-operation of the ex- management and their employees."

14. The IRP for Suchi Paper Mills Ltd. (Appellant No. 2) has also filed a

rejoinder dated 03.11.2022 referring to the order dated 27.09.2022 passed

in CA (AT) (Ins) No. 1161 of 2022 in which it has been ordered that no

further steps shall be taken in pursuance of the order dated 12.09.2022 and

the IRP shall ensure that the CD shall remain as a going concern with the

co-operation of the ex-management and their employees.The Rejoinder is

filed and signed on behalf of the IRP for Suchi Paper Mills Ltd. (Appellant

No. 2), therefore, the appeal preferred by Appellant No. 2may be treated to

have been filed by the IRP andit is submitted that the same is maintainable.

15. In so far as, Appellant No. 16 (Raj Kumar Mittal) is concerned,

Counsel for the Respondent has submitted that since he was a joint allottee

of the unit with Jagdish Dhingra who had also filed the appeal as Appellant

No. 15 and during the pendency of theappeal, he withdrewhis name from

the array of Appellants by filing of an application i.e. I.A. No. 3144 of 2022

which was allowed on 12.09.2022 with the following order:-

Company Appeal (AT) (Ins) No. 830 of 2020 7

"This application has been filed at the instance of Appellant No. 15 seeking permission to withdraw from this appeal. Notice in this application. At this stage, Mr. Abhijeet Sinha accepted the notice on behalf of the non-applicant and submits that he does not want to file any reply to the application.

In view of the averments made in the application supported by an affidavit of the Appellant, the application is, therefore, allowed. The Appellant is permitted to withdraw from the Appeal. The registry is directed to make necessary correction/insertion about this fact in the memo of parties."

16. He further argued that Raj Kumar Mittal and Jagdish Dhingrawere co-

allottees, therefore, withdrawal of the appeal at the instance of one of the co-

allottees shall deem to be withdrawal of the appeal at the instance of the

other allottee as well because the unit is one and cannot be bifurcated in

two andin this regard relied upon a decision of the Hon'ble Supreme Court

in the case of Manish Kumar Vs. Union of India, (2021) 5 SCC 114, para

187 read as under:-

"187. As far as the situation projected about, there being no clarity regarding whether, if there is a joint allotment of an apartment to more than one person, is it to be taken as only one allottee or as many allottees as there are joint allottees, it would appear to us, on a proper understanding of the definition of the word 'allottee' in Section 2(d) and the object, for which the requirement of hundred allottees or one-tenth has been put, and also, not being oblivious to Section 399(2) of the Companies Act, 1956, as also the Explanation in Section 244(1) of the Companies Act, 2013, in the case of a joint allotment of an apartment, plot or a building to more than one person, the allotment can only be treated as a single allotment. This for the reason that the object of the Statute, admittedly, is to ensure that there is a critical mass of persons (allottees), who agree that the time is ripe to invoke the Code and to submit to the inexorable processes under the Code, with all its attendant perils. "

Company Appeal (AT) (Ins) No. 830 of 2020 8

17. On the other hand, Counsel appearing on behalf of the Appellant has

submitted that no doubt Raj Kumar Mittal and Jagdish Dhingra are co-

owners/joint allottees of one unit purchased by them but until and unless

there is a partition of the unit, both are co-sharers of the said unit and by

the withdrawal of appeal by one of the co-shares the right to maintain the

appealwith the other co-shares still survives. In this regard, he has relied

upon the decisions in the case of India Umbrella Manufacturing Co. Vs.

Bhagabandei Agarwalla (Dead) by Lrs. Savitri Agarwalla and Ors., (2004) 3

SCC 178, Sri Ram Pasricha Vs. Jagannath &Ors., (1976) 4 SCC 184 and Pal

Singh Vs. Sunder Singh (Dead) by Lrs. &Ors., (1989) 1 SCC 444.

18. It has also been argued by the Respondent that Jagdish Dhingra was

the co-allottee and voted in favour of the resolution plan but Raj Kumar

Mittal neither voted in favour nor against the approval of the resolution

plan, therefore, he is not an aggrieved person.

19. On the other hand, Counsel for the Appellant has submitted that the

authorised representative represents the members of class of creditors in the

CoC and all the creditors in a class are bound by the voting done by the AR

in the CoC irrespective of the fact that one individual has voted in favour or

against the resolution plan and since the AR has voted against the

Resolution plan, therefore, each member of creditor in class is mandatorily

bound by the decision of AR irrespective of the fact that the Appellant No. 16

(Raj Kumar Mittal) has neither voted in favour nor against the Resolution

Plan. In this regard, he has relied upon a decision of the Hon'ble Supreme

Company Appeal (AT) (Ins) No. 830 of 2020 9

Court in the case of Jaypee Kensington Boulevard Apartments Welfare

Association Vs. NBCC India Ltd., (2022) 1 SCC 401.

20. As regards Appellant No. 18 (Diesel Power International) is concerned,

the Respondent has submitted that it has not voted eitherin favour or

against the Resolution Plan and is thus not eligible. However, in reply,

Counsel for the Appellant has submitted that even if the Appellant No. 18

hasnot challenged the resolution plan by voting against it, it can still

maintain the appeal as an aggrieved person.

21. Counsel for the Respondent has further argued that in so far as

(Udayan Chaudhari& Association Pvt. Ltd.) Appellant No. 19 is concerned, it

did not file any claim in the CIRP process and had rather filed an application

in the proceedings pending before the Adjudicating Authority. In this regard,

he has relied upon a decision of the Hon'ble Supreme Court in the case of

Ghanashaym Mishra and Sons Pvt. Ltd. Through the Authorised Signatory

Vs. Edelweiss Asset Reconstruction Company Limited Through the Director

&Ors., MANU/SC/0273/2021, and has referred to Para 86 and 95 which

read as under:-

"86. As discussed hereinabove, one of the principal objects of I&B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held

Company Appeal (AT) (Ins) No. 830 of 2020 10

between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an on- going concern. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in subsection (2) of Section 30 of the I&B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable.

95. In the result, we answer the questions framed by us as under:

(i) That once a resolution plan is duly approved by the Adjudicating Authority under sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan;

(ii) 2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I&B Code has come into effect;

(iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued."

Company Appeal (AT) (Ins) No. 830 of 2020 11

22. In reply, Counsel for the Appellant No. 18 has submitted that claim

could not be filed before the IRP because admission of the Corporate Debtor

into CIRP was not within its knowledge. It is further submitted that the

Appellant was in possession of the commercial unit which wasunder his lock

and key after paying morethan 90% sale consideration to the Corporate

Debtor who had failed to execute the sale deed in its favour.It is also

submitted that the allotted unit was renovated and business operation post

Puja was started which were disrupted when the electricity supply in the

complex was stopped in October, 2018 and possession notice dated

29.04.2019 was issued by the PNB.Therefore, the Appellant filed an

application bearing CA No. 1511 of 2019 in CP No. IB-1705(PB)2018 before

the Adjudicating Authority for seeking various reliefs. It is further submitted

that it was the duty of the RP to inform the Appellant to file its claim. It is

therefore, submitted that the decision in the case of Ghanashayam Mishra

(Supra) is not applicable in the facts and circumstances of the case.

23. We have heard Counsel for the parties and perused the record.

24. The Respondent has raised a preliminary issue of maintainability of

appeal at the instance of the Appellants No. 2, 16, 18 & 19.

25. In so far as the Appellant No. 2 is concerned, we have found that the

Appel has been filed by the Director of Suchi Paper Mills Ltd. which of

course has been driven into CIRP by the order dated 12.09.2022 passed by

the Adjudicating Authority but the order dated 12.09.2022 has been stayed

in CA (AT) (Ins) No. 1161 of 2022 and the IRP has been directed to ensure

that the Corporate Debtor (Suchi Paper Mills Ltd.) shall remain as a going

Company Appeal (AT) (Ins) No. 830 of 2020 12

concern with the co-operation of the ex-management and their employees.

The IRP of Suchi Paper Mills Ltd. has also filed a rejoinder and an affidavit

supporting the case of the Appellant, therefore, in our considered opinion,

the Appeal filed by the Appellant No. 2 is maintainable.

26. As regards, the Appellant No. 16 (Raj Kumar Mittal) is concerned, it

has been the case of the Respondent that he has purchased one-unit

alongwith Jagdish Dhingra and both were the Appellants in the appeal as

Appellant No. 15 & 16. Jagdish Dhingra has no doubt withdrew his name

from the appeal but the Appellant No. 16 being a co-sharer is continuing

with the appeal. In this regard, the Hon'ble Supreme Court in the case of

India Umbrella Manufacturing Co. (Supra) held as under: -

"6.Having heard the learned counsel for the parties we are satisfied that the appeals are liable to be dismissed. It is well settled that one of the co- owners can file a suit for eviction of a tenant in the property generally owned by the co-owners. (See: Sri Ram Pasricha Vs. Jagannath &Ors., (1976) 4 SCC 184; Dhannalal Vs. Kalawatibai&Ors., (2002) 6 SCC 16, para 25). This principle is based on the doctrine of agency. One co-owner filing a suit for eviction against the tenant does so on his own behalf in his own right and as an agent of the other co-owners. The consent of other co- owners is assumed as taken unless it is shown that the other co-owners were not agreeable to eject the tenant and the suit was filed in spite of their disagreement. In the present case, the suit was filed by both the co-owners. One of the co-owners cannot withdraw his consent midway the suit so as to prejudice the other co-owner. The suit once filed, the rights of the parties stand crystallised on the date of the suit and the entitlement of the co- owners to seek ejectment must be adjudged by reference to the date of institution of the suit; the only exception being when by virtue of a subsequent event the entitlement of the body of co-owners to eject the tenant comes to an end by act of parties or by operation of law."

Company Appeal (AT) (Ins) No. 830 of 2020 13

27. It has been held in the aforesaid decision that if the suit is filed by

both co-owners then one of the co-owners cannot withdraw his consent

midway the suit so as to prejudice the right of the other co-owner. The

Respondent has also raised an argument that Appellant No. 16 had neither

voted in favour nor against the plan and therefore he is not an aggrieved

person whereas the case of the Appellant is that the Appellant No. 16

belongs to a class of creditors who is represented by the authorised

representative before the CoC and are bound by the voting done by the AR.

It is also case of the Appellant that AR voted against the resolution plan and

therefore, each of the member of the creditor in the class is bound by the

decision of the AR irrespective of the fact that the Appellant No. 16 has

neither voted in favour or against the resolution plan. The argument of the

Appellant in this regard is supported by the decision of the Hon'ble Supreme

Court in the case of Jaypee Kensington Boulevard Apartments Welfare

Association (Supra) and therefore, we are of the considered opinion that the

appeal filed by the Appellant No. 16 is also maintainable.

28. In so far as the appeal filed by the Appellant No. 18 is concerned, it is

not maintainable because it is not a case of being a part of class and

represented by the authorised representative.Therefore, the Appellant No.

18, having not voted against the resolution plan is now not an aggrieved

person for the purpose of maintaining the appeal, therefore, the appeal at

the instance of Appellant No. 18 is not maintainable.

29. As far as the Appellant No. 19 is concerned, it is an admitted case of

the Appellant that it did not file any claim. The reason assigned by the

Company Appeal (AT) (Ins) No. 830 of 2020 14

Appellant that the fact of the admission of the Corporate Debtor into CIRP

was not within its knowledge is of no excuse because the IRP had made the

publication for the purpose of inviting the claim but no claim was filed by

the Appellant No. 19, therefore, its case is squarely covered against it in view

of the decision of the Hon'ble Supreme Court rendered in the case of

Ghanashayam Mishra (Supra). Therefore, the appeal filed by the Appellant

No. 19 is also not maintainable as it is not covered by the definition of an

aggrieved person to invoke the Section 61 of the Code.

30. In view of the aforesaid facts and circumstances narrated hereinabove

and discussed in detail, we are of the considered opinion that the appeal at

the instance of Appellants No. 2 & 16 is maintainable and the appeal at the

instance of Appellants No. 18 & 19 is not maintainable.

31. We had observed in our order dated 09.02.2022 that if it is found that

the appeal is maintainable on behalf of any of the Appellant then it shall be

revived for hearing on merits. Therefore, the main appeal is ordered to be

listed for hearing on 09th May, 2023 at the instance of Appellants No. 2 and

16.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

New Delhi

26th April, 2023

Sheetal

Company Appeal (AT) (Ins) No. 830 of 2020