Odat Gmbh vs Ca Santanu Brahma Interim Resolution ...

In the matter of: ODAT GmbH Bahnhofstrabe 28, 49356 Diephoiz Deutschland/Germany ...Appellant

Versus

1. CA Santanu Brahma, Interim Resolution Professional of Darjeeling Tea Estates Private Limited R/o AH-276, Salt Lake City, Sector-II, Kolkata- 700091 Email: santanubhrahma@gmail.com ...Respondent No.1

2. The Committee of Creditors of Darjeeling Organic Tea Estates Private Limited Through the Lead Bank, Indian Bank, SAM Large Branch 14, India Exchange Place, Kolkata 700001 ...Respondent No.2

Present:

For Appellant :Ms. Purti Gupta, Ms. Henna George, Ms. Harshita Kakkar and Ms. Sangita Selwal, Advocates.

For Respondent :Mr. Shaunak Mitra, Mr. Dripto Majumdar and Mr. Akash Agarwal, Advocates for RP. Mr. Santosh Kumar Ray, Ms. Rituparna Sayal, Ms. Zeba Khan, Ms. Kirti Gera and Ms. Muskan Saha, Advocates for R- 2. ORDER

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

IA No. 7033 of 2024 is an application praying for condonation of 104 days

delay in refiling of Company Appeal (AT)(Ins) No. 1901 of 2024.

2. Notice was issued in respect of the above IA by this Tribunal vide order

dated 04.10.2024 and the IA was fixed for hearing on 11.11.2024. In the original

application filed by the Applicant for seeking condonation of delay in refiling the

appeal, the justification given for justifying the refiling delay is as reproduced

below:

"1. The Captioned Appeal was filed on 01.06.2024.

2. The Defect Sheet was collected by the counsel for the Appellant from the Registry on 14.06.2024. However, the appeal could not be refilled within 7 days during the personal difficulty of the Counsel.

3. A delay of 104 days thus accrued in the refiling of the captioned appeal."

3. When the matter came up for hearing on 11.11.2024, it was vehemently

contended by Shri Shaunak Mitra, the Ld. Counsel for the Respondent-

Resolution Professional that no worthwhile and satisfactory explanation has

been given by the Applicant to explain the delay in refiling. Reply was filed by

the Respondent to the Refiling Delay Condonation Application of the Applicant.

Page 2 of 10

I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024 The Ld. Counsel for the Respondent opposing the submissions of the Applicant

has made the following pleading in paragraph 5 of their reply as under:

"5. The appellant has not given any cogent explanation as to why there was an inordinate delay of 104 days in refiling the present appeal. The purported personal difficulty of the Learned Counsel for the appellant in refiling the appeal within 7 days from collection of the Defect Sheet i.e., June 14, 2024 does not justify as to why it took the appellant 104 days in filing the present appeal. No particulars as to when the Defect Sheet was ultimately collected on behalf of the appellant and as to why 104 days lapsed in refiling the present appeal has been averred by the appellant. In the absence of any such explanation or sufficient cause being demonstrated by the appellant, the appellant cannot be entitled to seek condonation of the inordinate delay of 104 days in filing the present appeal."

4. The contentions of the Respondent was contested on behalf of the

Applicant that the refiling delay was occasioned by bonafide and genuine

reasons and the Applicant should be allowed an opportunity to place on record

those reasons. Ms Purti Gupta, Ld. Counsel for the Applicant accordingly sought

liberty to file a better affidavit to explain the reasons for refiling delay in more

elaborate terms. The Ld. Counsel for the Respondent, had strenuously opposed

the prayer made by the Applicant and asserted that the Applicant was trying to

improve their case having failed to provide sufficient cause for delay in their

original application. In the interest of justice, the prayer of the Applicant had

been allowed by this Tribunal and the matter fixed for hearing on 22.11.2024.

5. In pursuance of the liberty granted by this Tribunal, the Applicant has

filed a detailed affidavit giving the explanation for delay at paragraphs 4 to 12

which are as reproduced below:

Page 3 of 10

I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024 "4. I State that the captioned appeal was filed on 01.06.2024. The defect sheet was collected on 14.06.2024. However, the same could not be refiled within 7 days thereof.

5. I state that the difficulty was faced by the Counsel in refiling the captioned appeal within the stipulated time in view of the following circumstances.

6. I state that the Appellant is based in Germany and the CIRP of the Corporate Debtor, Darjeeling Organic Tea Estate Pvt. Ltd. was ongoing.

7. I state that the Resolution Professional was wrongly appointed and subsequent to the Judgment dated 13.02.2024 passed by this Hon'ble Tribunal, the Appellant was directed to be reinstated in the CoC and proportionate voting rights in regard thereto were directed to be accorded to the Appellant. Accordingly, all resolutions which have been put to voting since the inception of the COC ought to have been set aside or alternatively, put to revoting.

8. I state that however, the RP despite being aware of the decision of the Hon'ble NCLAT, acted contrary to the orders passed by this Hon'ble Tribunal. The RP declined the request of the Appellant for putting to vote the earlier resolutions that were passed contrary to the submissions and recordings before the orders passed by this Hon'ble Tribunal and stated that he would take a legal opinion on the subject.

9. I state that such actions of the RP were/are not only biased but also coupled with malice. The RP who has to act neutrally and in accordance with law, acted as per his own whims and fancies.

10. I state that the Appellant was taking legal advice as to whether it should actually press the captioned appeal and take requisite steps for the listing of the appeal or not. However, the RP continued to act in a constant bias against the Appellant and an order was passed on 24.09.2024, whereby the Appellant was directed to pay the interim finance according to its voting share.

11. I state that grave prejudice was caused to the Appellant with the passing of the order dated 24.09.2024. Accordingly, the Appellant was advised to challenge the order dated 24.09.2024 and also to pursue the appeal filed against the order dated 30.04.2024.

Page 4 of 10 I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024

12. I state that the Counsel was thus in a personal difficulty since she did not have the necessary instructions to refile the appeal and take requisite steps for the listing of the captioned appeal."

(Emphasis supplied)

6. We have heard the rival contentions of both the parties and perused the

records carefully.

7. For better appreciation of the reply of the Refiling Condonation Delay of

the Application, it may be useful to capture the sequence of events of the matter

at hand without going into the merits of the matter.

8. ODAT GmbH, the present Applicant, is a Financial Creditor of the

Corporate Debtor-M/s Darjeeling Organic Tea Estate Pvt. Ltd. which had been

admitted into the rigors of Corporate Insolvency Resolution Process. Basis the

directions of this Tribunal dated 13.02.2024, the Applicant was included as a

Member of the Committee of Creditors ("CoC" in short) with proportionate voting

rights. The Applicant, after becoming member of the CoC, during the 4th CoC

meeting sought the setting aside of the resolutions passed by the CoC in the

three previous meetings which request of the Applicant was declined by the

Resolution Professional ("RP" in short). The Applicant thereafter filed an

application before the Adjudicating Authority seeking the setting aside of the

resolutions passed in the first three CoC meeting which was dismissed by the

Adjudicating Authority on 30.04.2024.

9. The impugned order dated 30.04.2024 passed by the Adjudicating

Authority has been challenged vide the present Company Appeal No. 1901 of

Page 5 of 10

I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024 2024 which was e-filed on 01.06.2024 with a delay of 2 days. Since, sufficient

cause had been shown for condonation of delay of two days in filing the Appeal,

the same was allowed by this Tribunal. The Registry after due scrutiny,

intimated the defects to the Applicant on 14.06.2024 and allowed time to remove

the defects in 7 days. The Applicant, however, refiled the Memo of Appeal on

03.10.2024 after a delay of 104 days.

10. When we look at the explanation provided by the Applicant behind delay

in refiling in their detailed affidavit, we find that it has been submitted that the

Applicant was based in Germany. It has also been pleaded that the Applicant

was being unjustly treated by the RP which had declined their request for putting

to re-vote the earlier resolutions passed in the first three CoC meetings and that

the Adjudicating Authority had also erroneously affirmed this decision which led

to the filing of the present Appeal. In the meantime, the RP had passed another

order on 24.09.2024 directing the Applicant to pay interim finance according to

their voting share which order caused grave prejudice to the Appellant. The delay

in refiling the appeal was because the Appellant was taking legal advice as to

whether it should challenge the order of the RP dated 24.09.2024 or pursue the

appeal against the impugned order passed by the Adjudicating Authority on

30.04.2024. Further, it was submitted that the Counsel was in a personal

difficulty as she did not receive necessary instructions from the client in a timely

manner to refile the appeal which caused delay in taking requisite steps for

listing of the appeal against the impugned order dated 30.04.2024. Submission

was pressed that the above cited reasons show that the delay was triggered by

Page 6 of 10

I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024 bonafide reasons, and in any case the Respondent was not entitled to raise any

objection to the Refiling Condonation of Delay Application since condonation of

refiling delay is a matter between the Appellant and the Appellate Tribunal in

which the Respondent cannot interfere. In support of their contention, attention

was adverted to the judgment of this Tribunal in Shree Sai Jagannath Vs

Adhunik Metaliks Ltd & Ors in IA No. 1670 of 2024 wherein it was held that

it is a well settled proposition of law that condoning of delay application is a

matter between the Petitioner and the Appellate Tribunal in which the

Respondents do not have any say.

11. Per contra, the Ld. Counsel for the Respondent has raised serious

objections to the grounds of delay pleaded by the Applicant. It has been

contended that even after receiving the defect sheet from the Registry on

14.06.2024, the Applicant had wilfully and deliberately let the application lie in

defects for an inordinately long time as a matter of strategy and not for any

genuine ground which prevented them from curing the defects on time. In

support of their contention that condonation of delay needs to be buttressed by

adequate and sufficient grounds, the Ld. Counsel for the Respondent placed

reliance on the judgment of this Tribunal in Adisri Commercial Pvt. Ltd. Vs

Reserve Bank of India in CA(AT)(Ins.) No. 1293 of 2022 and adverted

reference to paragraphs 18 and 19 therein which are as reproduced below:

"18. Any question of delay condonation must go through deep and sufficient scrutiny in the context of the Code. The circumstances cited for condonation of delay in re-filing has to be in consonance with the aims and objects of the Code and not frustrate the scheme of the Code. The

Page 7 of 10

I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024 natural corollary that follows is that condonation of delay in re-filing is not available just for the asking. This Tribunal needs to be fully satisfied that the delay was unavoidable and the applicant was consistently diligent in pursuing the matter. The question of condoning any delay in re-filing would have to be considered in the context of the plausible explanation given to show that the delay was on account of reasons beyond the control of the applicant and could not be avoided despite all possible efforts by the applicant.

19. We now proceed to test the conduct of the applicant on the anvil of whether the applicant acted with due diligence and dispatch. From the submissions and pleadings made by the Appellant, three grounds have been cited for the delay. The first ground raised has been the ill-health of the authorised representative. This has been contested by the Respondents on the grounds that the ill-health of one representative of the company cannot be a justified reason for having stalled the refiling of the appeal for 321 days and that the company could have authorised any other representative to undertake the re-filing of the Appeals. We also note that apart from a general statement, no proof of illness has been placed on record. Furthermore, there is substance in the argument raised by the Respondents that the Company could always have deputed another authorised representative to complete the task of refiling if it was serious. That the Appellant has admitted that they were pursuing another parallel litigation in another court during this period also shows that the grounds raised for inaction in the present refiling is only a pretence. In the face of such gross inaction on the part of the Appellant company, we are not convinced of this ground to be a good enough for condonation of delay."

12. Coming to our analysis, we have no doubts in our mind that delay in

refiling can be condoned only when the Tribunal is satisfied that there are

reasonable and cogent grounds for not refiling the appeal on time. While we

agree that an application for condonation of refiling delay is a matter which is

between the Applicant and the Bench in which the Respondent is not supposed

to have any determinative say, nonetheless, we cannot be unmindful of the fact

that the Bench is equally duty-bound to scrutinise the reasons for delay in

Page 8 of 10

I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024 refiling the petition and cannot allow any unexplained delay to pass muster.

Though the rigours of condonation of delay in refiling are not as strict as

condonation of delay in filing, we cannot be oblivious of the fact that IBC is a

time bound process and no wanton delay can be permitted in IBC proceedings.

13. Though a more liberal approach is usually taken while considering the

condonation of delay in refiling, yet there has to be an element of reasonableness

in the delay so that the balance of justice in respect of both parties does not

suffer any impairment. When we peruse the defect list pointed out by the

Registry, most of the defects were minor in nature which were easily curable. It

cannot be the prerogative of the Applicant to elect when it chooses to cure the

defects. By no yardstick, curing these routine defects would have been so time-

consuming so as to cause a delay of 104 days in refiling. Therefore, on this score,

the conduct of the Applicant cannot be said to have passed the test of diligence.

14. We would now like to examine whether the Applicant has been able to

successfully flesh out cogent grounds and circumstances beyond their control

which led to the said delay in clearing the defects. The prime explanation

attributed by the Ld. Counsel for the Applicant was difficulty faced by her in

obtaining instructions from the client with regard to refiling the appeal and to

take requisite steps for listing of the appeal. In the same breath, we also notice

that submission was made by the Ld. Counsel for the Applicant that the

Applicant was waiting and watching the proceedings before the CoC in respect

of the resolution plan. This submission clearly shows that instead of making

genuine endeavours to cure the defects, the Applicant was being opportunistic

Page 9 of 10

I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024 and trying to fine-tune the optimal timing for pressing the appeal. The Applicant

was thus deliberately keeping the appeal in defects as a matter of strategy.

Moreover, when the Applicant has been regularly participating in the CoC

meetings, it defies logic that they were prevented by personal difficulties caused

by their being based in Germany in imparting timely instructions to their legal

counsel to refile the appeal. Clearly therefore, the Applicant had slept over the

defects wilfully and deliberately for more than three months and grounds now

cited in the fresh affidavit cannot be construed to be genuine grounds for delay

caused by personal difficulty of Applicant.

15. Given this backdrop we do not see any merit in the Application filed for

seeking condonation of 104 days delay in refiling the appeal. The refiling delay

application is rejected. In view of the dismissal of the application for condonation

of delay in refiling the appeal, the Memo of appeal has also been rejected.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

Place: New Delhi Date: 29.11.2024 Abdul/Harleen

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I.A. No. 7033 of 2024 in Company Appeal (AT) (Insolvency) No. 1901 of 2024