Praveen Arjun Patel vs Jk Lakshmi Cement Ltd

Praveen Arjun Patel Appellant

Vs

JK Lakshmi Cement Ltd Respondent

AND IN THE MATTER OF

Haryana Construction, E-149, Gamma-I, Greater Noida (UP) Applicant

I.A. NO.1141 OF 2018 IN COMPANY APPEAL(AT) (INSOLVENCY) NO.264 OF 2018

IN THE MATTER OF:

Praveen Arjun Patel Appellant

Vs

JK Lakshmi Cement Ltd Respondent

AND IN THE MATTER OF

Ved Contracts Private Ltd, Applicant U-158, Vats Complex, Main Vikas Marg, Shakarpur, Delhi-110092.

I.A. NO.1142 OF 2018 IN COMPANY APPEAL(AT) (INSOLVENCY) NO.264 OF 2018

IA No.1140, 1141, 1142 of 2018 in CA(AT)(Insolvency) No.264/2018 2

IN THE MATTER OF:

Praveen Arjun Patel Appellant

Vs

JK Lakshmi Cement Ltd Respondent

AND IN THE MATTER OF

Space Height Structure Pvt Ltd, Applicant 306 Block II Ganga Shopping Centre, Sector 29, Noida 201303

Present: - Mr. Santosh Kumar and Mr. Sanjeev Arora, Advocates for the Appellant. Mr. Pankaj Bhagat, Mr. Amitav Bachchan and Ms Tusharika Sharma, Advocates for the Applicants. Shri Amit P. Deshpandey, Advocate for the Respondent.

ORDER

BALVINDER SINGH, MEMBER (TECHNICAL)

1. These three IAs being IA No.1140, 1141 and 1142 of 2018 has been filed

by the respective applicants being aggrieved of the order dated 12.6.2018

passed by this Appellate Tribunal in Company Appeal (AT) (Ins) No.264 of

2018, Pravin Arjun Patel, through Ravi Kant Seth Vs J.K. Lakshi Cement Ltd.

In all these three IAs the applicants have sought the following reliefs:-

a) Recall and/or modify the order dated 12.6.2018 to make the same

in line or in sync with the mandate of Section 12A of the IBC in the

manner as may be deemed fit, just, proper and in the interest of;

b) Stay the operation of the order dated 12.6.2018 passed by this

Appellate Tribunal till the disposal of the present application or direct

IA No.1140, 1141, 1142 of 2018 in CA(AT)(Insolvency) No.264/2018 3

the Ld. Adjudicating Authority, Principal Bench, NCLT, Delhi not to

pass any order permitting withdrawal of Section 9 Application by JK

Lakshmi Cement Ltd, till the disposal of the present application;

c) pass ad-interim ex parte orders in terms of prayer (b) above.

d) Pass any other order as may be deemed fit and proper in the facts

and circumstances of the case.

2. The brief facts in all the three IAs are similar. The applicants have

stated that the National Company Law Tribunal, New Delhi was pleased to

admit application under Section 9 of the Insolvency & Bankruptcy Code, 2016

filed by the operational creditor against the Corporate Debtor, namely, PAN

Realtors Pvt Ltd. Accordingly an Interim Resolution Professional for the

Corporate Debtor was appointed and claims from the Creditors of PAN

Realtors Pvt Ltd were invited. Applicants herein filed their claims before the

due date i.e. 4.6.2018 before the IRP. Applicants further stated that they

enquired about the status of their claim from IRP and the IRP informed that

Appellate Tribunal has passed an order on 12.6.2018 recording the settlement

arrived at between the Operational Creditor and the Corporate Debtor and the

IRP showed their inability to proceed further with the claims filed by the

creditors including the present applicants. Applicants further stated that they

obtained a copy of the order dated 12.6.2018 and came to know that the

appeal filed by one Mr. Praveen Arjun Patel on behalf of the corporate debtor

was listed on 30.5.2018 and was adjourned to 2.7.2018. It is further stated

that the corporate debtor in connivance with the operational creditor filed an

application for recording of settlement before the Appellate Tribunal which

was listed before the Vacation Bench and the Bench ordered that in view of

IA No.1140, 1141, 1142 of 2018 in CA(AT)(Insolvency) No.264/2018 4

the settlement arrived at, the parties were allowed to withdraw Section 9

application.

3. Being aggrieved by the said order dated 12.6.2018 the applicants have

filed respective IAs thereby stating that on 6.6.2018 the Hon'ble President had

promulgated the Insolvency & Bankruptcy Code (Amendment) Ordinance

2018 by which certain provisions of IBC have been amended and as per that

amendment, Section 12 A of the IBC provides that the Adjudicating Authority

may allow the withdrawal of application admitted under Section 7 or Section

9 or Section 10, on an application made by the applicant with the approval of

ninety percent voting share of the committee of creditors, in such manner as

may be prescribed.

4. In view of the above amendment in Section 12A of the IBC, the

applicants have stated that the order dated 12.6.2018 passed by this Appellate

Tribunal permitting unilateral withdrawal of Section 9 application by the

operational creditor without the approval of the 90% of the voting share in the

Committee of Creditors of the Corporate Debtor is contrary to the said

mandate and deserves to be recalled/modified. The applicants have further

stated that the order dated 12.6.2018 is against the letter and spirit of Section

12A of the IBC and the said order has caused serious prejudice to the other

creditors of the Corporate Debtor including the present applicants herein. The

applicants have further stated that the Corporate Debtor and Operational

creditor have acted in connivance with each by settling the matter without

knowledge/consent of the Committee of Creditors by-passing the provisions

of law. The applicants further stated that the settlement arrived at between

the parties is behind the back of the other creditors to their detriment and

IA No.1140, 1141, 1142 of 2018 in CA(AT)(Insolvency) No.264/2018 5

prejudice. The applicants have further stated that the operational creditor and

corporate debtor acted in hand in glove with each other and have not

presented the true and correct legal position before this Appellate Tribunal

when the order dated 12.6.2018 was passed. Further the Operational Creditor

and Corporate Debtor got the date of hearing fixed by this Tribunal preponed

and filed the application before the Vacation Bench without intimating the

other creditors and even to IRP.

5. I have heard the learned counsel for the parties and perused the entire

record.

6. Learned counsel for the applicants have argued that the operational

creditor and corporate debtor in connivance with each other and without

informing the Appellate Tribunal about the amendment in Section 12 A of the

IBC persuaded it and the order dated 12.6.2018 have been passed in

ignorance of the said amendment. Learned counsel for the applicants further

argued that approval of 90 per cent voting share of committee of creditors have

not been taken. Learned counsel for the applicants argued that the order

dated 12.6.2018 passed by the Appellate Tribunal amounts to exceeding

jurisdiction as the same has been passed in complete ignorance of the

provisions and mandate of Section 12 A of the IBC 2016.

7. Learned counsel for the applicants rebutted the arguments of the

corporate debtor that the order dated 12.6.2018 has been passed in the light

of natural justice is misconceived as natural justice cannot take away vital

rights accrued in favour of the applicants by virtue of Section 12 A of the IBC

2016. Learned counsel for the applicants further argued that without

compliance of statutory provisions cannot be held to be for Natural Justice.

IA No.1140, 1141, 1142 of 2018 in CA(AT)(Insolvency) No.264/2018 6

In the order dated 12.6.2018 the rights of the Committee of Creditors and all

other applicants have been affected as the settlement is to the detriment of all

the stake holders and the corporate debtor would suffer no injury. Learned

counsel for the applicants argued that the reliance placed by the applicants

in the case of International Recreation & Amusement Vs SR Construction is

bad as the same is distinguishable both in facts and law. Learned counsel for

the applicants argued that the said judgement is much prior to promulgation

of Ordinance, 2018 and the issue before the Appellate Tribunal in the case of

International Recreation case was that no notice was received by the corporate

debtor therein. Learned counsel for the applicants argued that the order dated

12.6.2018 has been passed by non-compliance of statutory provisions.

8. Learned counsel for the appellant argued that the persons who are not

parties to judgement/order have no locus standi to the file the application for

recall/modify of the order 12.6.2018. Learned counsel for the appellants

further argued that the mere disagreement with view of the judgement/order

cannot be ground for invoking jurisdiction of the Appellate Tribunal for recall

of the order. Learned counsel for the appellants further argued that the

application for recall of the order dated 12.6.2018 is not maintainable as the

applicants have neither pleaded nor contended that glaring omission has

crept. Learned counsel for the appellants further argued that application for

recall of the order cannot be permitted to reopen a concluded matter.

9. Learned counsel for the appellants argued that the order dated

12.6.2018 does not create any embargo for applicants to move before

Appropriate Forum. Learned counsel for the appellants argued that the

remedy is available to the applicants to get adjudication of its grievance. The

IA No.1140, 1141, 1142 of 2018 in CA(AT)(Insolvency) No.264/2018 7

applications moved by the applicants for recall of the order dated 12.6.2018

is abuse of the process of Court. Learned counsel for the applicants argued

that Section 12 A of the IBC (Amendment) Ordinance 2018 is not applicable

in the facts and conspectus of the case and is applicable to the Adjudicating

Authority under the Statute. Learned counsel for the applicants argued that

the committee of creditors was not formed, therefore, the pre-requisite

condition of the applicability of Section 12 A of the IBC does not arise.

10. Having heard the arguments of both the parties it is to say that Section

12 A of IBC would be applicable when admission for insolvency resolution

application has been admitted by the Adjudicating Authority and there is no

challenge to the admission of the application. Subsequently the Adjudicating

Authority may allow the withdrawal of application in terms of Section 12A and

obviously the admitted application for withdrawal will have to meet the criteria

as specified in the said Section. However, in this case admission of the

application filed under Section 9 of the IBC Code was challenged before the

Appellate Tribunal which has set aside the admission. Consequently, there is

no valid admission of the application under IBC Code. In these circumstances

the position for withdrawal of application will be in terms of Rule 8 of The

Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules

2016. Therefore, there is no impact of Section 12 A on this decision in this

case.

11. In terms of Section 9 of the Code any operational creditor can initiate

insolvency resolution proceedings. Therefore, the applicants herein have their

rights protected by IBC that they are entitled to initiate insolvency resolution

IA No.1140, 1141, 1142 of 2018 in CA(AT)(Insolvency) No.264/2018 8

proceedings and withdrawal of this application by a third party does not

impact their rights under the IBC.

12. In the light of the above observations, I do not find any merit in these

applications and are accordingly dismissed.

(BALVINDER SINGH) MEMBER (TECHNICAL) NEW DELHI DATED 21-8-2018

bm

IA No.1140, 1141, 1142 of 2018 in CA(AT)(Insolvency) No.264/2018