One City Infrastructure Pvt. Ltd vs Pratham Expofab Private Limited

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No.287 of 2024 (Arising out of Order dated 23.01.2024 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench (Court-II) in IA-188/2024 in C.P. (IB)-995/(ND)/2018)

IN THE MATTER OF: One City Infrastructure Pvt. Ltd. Through its Authorized Representative Mr. Apoorv Jain, 8D, Hansalaya 15, Barakhamba Road, New Delhi - 110001 ... Appellant

Vs

1. Pratham Expofab Private Limited Through: Brij Bhushan Gupta (Director) Reg. Office Flat No. 251- B 1st Floor Lig Flats, Pocket-12, Jasola New Delhi - 110025.

2. Dr. Ashish Naithani S/o S.P. Naithani R/o Gyan Park, Krishna Nagar Delhi- 110051 Email: dr.ashish.realcraft@gmail.com,

3. Mr. Anil Matta Resolution Professional of Primrose lnfratech Pvt. Ltd. Having its office at: Residency of B-98, Chetak Society Sector-9 Rohini New Delhi- 110085 Email: mattaassociates@gmail.com.

4. Navneet Arora E-8/1, LGF, Near Geeta Bhawan Mandir, Malviya Nagar, New Delhi- 110017 Email:arprimrose694@gmail.com info@navneetaroracs.com ... Respondents

Present: For Appellant: Mr. Sunil Fernandes, Sr. Advocate with Mr.Prantik Hazarika, Mr.Nitin Pandey, Ms.Diksha Dadu, Advocates

Company Appeal (AT) (Insolvency) No.287 of 2024 1 For Respondent: Mr. Anupam Lal Das, Sr. Advocate with Mrinal Harsh Vardan, Kailash Ram, Advocates for R-1 and R-2

Mr. Arvind Nayyar, Sr. Advocate with Ms. Anuja Pethia, Mr. Subhashish Kumar, Mr. Akshay Joshi, Advocates for R-3

Mr. P Moryia, Advocate for Homebuyer

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by a Successful Resolution Applicant ("SRA") has been

filed against the order dated 23.01.2024 passed by National Company Law

Tribunal, New Delhi Bench (Court-II) in IA No.188/2024 filed by

Respondent No.1.

2. Brief facts of the case necessary to be noticed for deciding the Appeal

are:

(i) The Corporate Insolvency Resolution Process ("CIRP") of the

Corporate Debtor - M/s. Primrose Infratech Pvt. Ltd.

commenced by order dated 21.12.2018. Public announcement

was made on 03.01.2019.

(ii) CA No.315 of 2019 filed by Ex-Director, seeking withdrawal of

CIRP was rejected by the Adjudicating Authority on

08.04.2019, which order was challenged in Company Appeal

(AT) (Insolvency) No.564 of 2019. The second Application

being IA No.1511 of 2019 was filed by the Ex. Director under

Company Appeal (AT) (Insolvency) No.287 of 2024 2 Section 12A, which was directed to be placed before the

Committee of Creditors ("CoC").

(iii) On 13.02.2020, the Resolution Plan submitted by the

Appellant was approved by the CoC with 80.84% voting share.

IA No.1489 of 2020 was filed by the Resolution Professional

("RP") for approval of Resolution Plan, which is pending before

the Adjudicating Authority. In the meeting held on

19.02.2020, the proposal of Ex. Director for withdrawal of

CIRP was considered and rejected by the CoC with 80.22% vote

share.

(iv) An IA No.188 of 2024 dated 11.01.2024 was filed by

Respondent No.1 - Ex. Director before the Adjudicating

Authority, where, following prayers were made:

"1. Allow the instant application filed by the Applicants,

2. Pass an appropriate order to allow the Applicants to place the settlement proposal under Section 12(A) of IBC, 2016 read with Regulation 30(A) before the committee of creditors for voting, and allow consequent withdrawal and suspension of CIRP admitted under section 9 of IBC, 2016.

Pass any other such order(s) and/or direction(s) as this Hon'ble Tribunal may deem fit an proper in the interest of justice be served."

(v) On the Application, i.e., IA No.188 of 2024, the Adjudicating

Authority passed an order on 23.01.2024 directing the

Applicant to deposit Rs.1 crore in CIRP Account of Corporate

Company Appeal (AT) (Insolvency) No.287 of 2024 3 Debtor and the RP was directed to call a meeting of the CoC to

examine the proposal made by Applicant vis-à-vis proposal

made by SRA. Aggrieved by the said order, this Appeal has

been filed.

3. We have heard Shri Sunil Fernandes, learned Senior Counsel

appearing for the Appellant; Shri Arvind Nayyar, learned Senior Counsel

has appearing for the RP; Shri Anupam Lal Das, learned Senior Counsel

has appeared for Respondent Nos.1 and 2.

4. Learned Counsel for the Appellant, challenging the order submits

that after approval of Resolution Plan of the Appellant by the CoC, there

was no occasion for directing consideration of fresh settlement proposal

submitted by Ex. Directors to be placed before the CoC, where the earlier

Applications filed by the Ex. Directors under Section 12A were already

considered and rejected twice by the CoC. It is submitted that after

approval of Resolution Plan, there is no jurisdiction in the Adjudicating

Authority to direct for consideration of any Application under Section 12A.

The learned Counsel for the Appellant submits that Adjudicating Authority

in the impugned order has relied on judgment of this Tribunal in Nehru

Place Hotels States Pvt. Ltd. vs. Mr. Sanjeev Mahajan and Ors. -

Company Appeal (AT) (Insolvency) No.1715/ 1716 of 2023 decided on

08.01.2024, where the Adjudicating Authority failed to notice that direction

issued by the Adjudicating Authority for arriving at an acceptable

settlement by the next date was set aside by this Tribunal. The

Adjudicating Authority although noticed the judgment, but failed to notice

Company Appeal (AT) (Insolvency) No.287 of 2024 4 the ultimate direction passed by the Appellate Tribunal. Learned Senior

Counsel for the Appellant has relied on judgments of this Tribunal in Hem

Sigh Bharana vs. Pawan Doot Estate Pvt. Ltd. - Company Appeal (AT)

(Insolvency) No.1481 of 2022 and Ebix Singapore Pvt. Ltd. vs.

Committee of Creditors of Educomp Solutions Ltd. and Anr. - (2022)

2 SCC 401. The learned Senior Counsel for the Appellant further submits

that Adjudicating Authority has passed order in IA 188 of 2024 on the first

date of hearing without giving any opportunity to the Appellant to respond

to the Application. In the Appeal, learned Counsel for the Appellant has

taken a specific ground that no opportunity was given to the Appellant to

respond to the Application and on the first date of hearing, an order was

passed on the Application, which is in violation of principles of natural

justice.

5. Learned Senior Counsel appearing for the RP supported the

submissions of learned Senior Counsel for the Appellant and submits that

the Resolution Plan of the Appellant having been approved by the CoC, no

direction could have been issued to place the Application filed by the Ex.

Directors being IA No.188 of 2024 for consideration before the CoC. It is

submitted that Adjudicating Authority itself has made observation that

plan approval application was impeded at every stage by the Ex. Directors,

inspite of the above observation, the Adjudicating Authority has directed

the Application to be placed before the CoC. It is submitted that there was

no jurisdiction for placing any proposal under Section 12A, after the

approval of a Resolution Plan by the CoC. The learned Senior Counsel for

Company Appeal (AT) (Insolvency) No.287 of 2024 5 the RP has also relied on judgment of this Tribunal in Hem Sigh Bharana

and submits that the Appeal against the judgment has also been dismissed

by Hon'ble Supreme Court on 30.01.2023.

6. The learned Senior Counsel appearing for Respondent Nos.1 and 2

opposing the submissions of learned Senior Counsel for the Appellant

submits that Adjudicating Authority is not precluded from directing for

consideration of 12A proposal submitted by the Ex. Director, since the

Application for withdrawal of proceeding can be allowed at any stage of the

CIRP. The mere fact that the Resolution Plan of the Appellant has been

approved by the CoC, does not preclude the consideration of 12A proposal

submitted by the Appellant. It is submitted that Adjudicating Authority

has directed for consideration of the Application with certain conditions

including deposit of Rs.1 crore by the Applicant. The learned Counsel for

Respondent Nos.1 and 2 has relied on judgment of Hon'ble Supreme Court

in Brilliant Alloys Pvt. Ltd. vs. S. Rajagopal and Ors. - (2022) 2 SCC

544, where the Hon'ble Supreme Court has taken the view that there are

no restriction in Section 12A and stipulation under Regulation 30A has to

be construed as directory depending on the facts of each case. The learned

Counsel for Respondent Nos.1 and 2 has also relied on the judgment of this

Tribunal in Shaji Purushothaman Vs Union Bank of India & Ors. -

Company Appeal (AT) (Insolvency) No.921 of 2019, where this Tribunal

has observed that if an application is filed under Section 12A, the CoC may

decide whether the proposal given by the Appellant for settlement is better

than the Resolution Plan as approved by the CoC. It is submitted that as

Company Appeal (AT) (Insolvency) No.287 of 2024 6 per the above judgment, the CoC can very well consider the proposal

submitted by the Applicant.

7. We have considered the submissions of learned Counsel for the

parties and have perused the record.

8. From the facts, which have been brought on record, it is clear that

earlier applications filed under Section 12A by the Ex. Director was

considered and not approved by the CoC. On 13.02.2020, the Resolution

Plan of the Appellant was approved by the CoC and an IA No.1489 of 2020

for approval of the Resolution Plan filed by the RP is pending consideration

before the Adjudicating Authority. We have looked into IA No.188 of 2024,

which was filed by Respondent Nos.1 and 2, where the Applicant have

referred to proceeding subsequent to filing of the Application for approval

of the Resolution Plan. Filing of IA No.5403 of 2023 seeking certain

clarification of orders passed by the Adjudicating Authority has also been

referred to. Reference to affidavit filed by SRA clarifying the issues has also

been noticed in paragraph-6 of the Application specifically. The Applicant

has submitted a proposal in paragraph-9 of the Application. The

Application, which was filed by Respondent Nos.1 and 2 dated 11.01.2024,

came for the first time before the Adjudicating Authority on 23.01.2024, on

which date order was passed by the Adjudicating Authority, directing the

Applicant to deposit Rs.1 crore and subject to deposit, the RP was directed

to call a meeting of the CoC to examine the proposal. The Adjudicating

Authority in the impugned order has relied on judgment of this Tribunal in

Nehru Place Hotels States Pvt. Ltd. vs. Mr. Sanjeev Mahajan and Ors.

Company Appeal (AT) (Insolvency) No.287 of 2024 7

- Company Appeal (AT) (Insolvency) No.1715/ 1716 of 2023 in which

judgment, this Tribunal has set aside the part of direction issued by the

Adjudicating Authority giving opportunity to Ex. Director to arrive at an

acceptable settlement before the next date. The direction with regard to

opportunity granted to Ex. Director, so that any settlement can be arrived,

was set aside. However, this Tribunal directed Application for approval of

Resolution Plan should be considered and decided and it was also open for

the Adjudicating Authority to consider IA No.2594 of 2023 filed by

Respondent No.1. In the operating portion of the order, following was

observed in last paragraph:

"27. In view of the aforesaid discussion and our conclusions, we are of the view that the Adjudicating Authority committed error in giving an opportunity to Respondent No. 1 to arrive at acceptable settlement. Thus, following observations in the Order are deleted from the order "Since, the matter is an old one, last opportunity is granted, so that any acceptable settlement can be arrived. If not settlement arises before the next date of hearing, the Resolution Plan will be heard on merits." We are of the view that application for approval of the Resolution Plan which has already been filed and pending consideration, the Adjudicating Authority ought to have considered and decided the Application for approval of the plan. It was also open for the Adjudicating Authority to consider I.A. No. 2594 of 2023 and to take a final decision. The plan having been approved on 08th January, 2023 and application is pending for about last one year before the Adjudicating Authority, we are of the view that Adjudicating Authority may proceed expeditiously to decide application filed by the Resolution Professional for approval of the plan i.e. I.A. No. 987 of 2023. It would be also open for the Adjudicating Authority to consider and decide I.A. No. 2594 of 2023 filed by Respondent No. 1. 11 th

Company Appeal (AT) (Insolvency) No.287 of 2024 8 January, 2024 is also fixed in the matter, we request the Adjudicating Authority to proceed to decide the aforesaid application on the date fixed or as early as possible."

9. We are further of the view that in the Application, which was filed by

the Ex. Director, where a proposal was submitted for settlement, the

Adjudicating Authority ought to have given an opportunity to SRA to

submit a response to the Application, specifically when Applicant in his

Application IA No.188 of 2024 has referred to various affidavits filed by SRA

in the proceedings for Plan approval. The Appellant in the Appeal in ground

(u), stated following:

"u. Furthermore, the impugned order has been passed without affording an opportunity. to the Appellant to file its appropriate -response to the said Application wherein the Impugned Order has been passed as the same has a direct bearing on the Resolution Plan submitted by the Appellant and prejudice the rights of the Appellant."

10. In the facts of the present case, we are of the view that Adjudicating

Authority, ought to have allowed opportunity to SRA to respond to the

Application (IA No.188 of 2024 filed by Respondent Nos.1 and 2), whose

Resolution Plan has been approved by the CoC and which is pending

consideration before the Adjudicating Authority. Without giving an

opportunity to the Appellant, direction to the CoC to consider the Plan,

cannot be sustained. To obviate any further delay in the matter, we allow

two weeks' time to the Appellant to file its objection to IA No.188 of 2024.

The Application for approval of Resolution Plan being pending

consideration, it shall be open for the Adjudicating Authority to consider

Company Appeal (AT) (Insolvency) No.287 of 2024 9 IA No.188 of 2024 along with its objection. In view of giving opportunity to

the Appellant to file objections to the IA No.188 of 2024, we desist from

entering into various issues, which may arise for consideration by the

Adjudicating Authority while deciding IA No.188 of 2024 along with its

objections.

11. In result, the impugned order of the Adjudicating Authority dated

23.01.2024 passed in IA No.188 of 2024 is set aside. Liberty is granted to

the Appellant to file its objection to IA No.188 of 2024 within two weeks'

time before the Adjudicating Authority. It shall be open for the Adjudicating

Authority to decide IA No.188 of 2024 along with its objections in

accordance with law. The Appeal is disposed of. No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical)

NEW DELHI

28th February, 2024

Ashwani

Company Appeal (AT) (Insolvency) No.287 of 2024 10