Prudential International Insurance ... vs The Administrator Dewan Housing ...

And its Principal place of business at 751 Broad Street, Newark, NJ, USA, 07102. ...Appellant

Versus

The Administrator, Dewan Housing Finance Corporation Ltd. Having his office at 6th Floor, HDIL Towers, Anant Kanekar Marg, Station Road, Bandra (East) Mumbai - 400051.

Also at Warden House, Second Floor, Sir P M Raod, Fort, Mumbai, Maharashtra, - 400 001. ...Respondent No. 1

Piramal Capital & Housing Finance Ltd. (Formerly known as Piramal Housing Finance Ltd.) Having its registered office at 4th Floor, Piramal Tower, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai, Maharashtra - 400 013. ...Respondent No. 2

Committee of Creditors of Dewan Housing Finance Corporation Ltd. through State Bank of India Having its office at State Bank Bhavan, Madame Cama Raod, Nariman Point, Mumbai, Maharashtra - 400 021. ...Respondent No. 3

Cont'd......./ 2

For Appellant: Mr. Amit Sibal, Sr. Advocate with Ms. Misha, Mr. Siddhant Kant and Ms. Moulshree Shukla, Advocates. For Respondents: Mr. Arun Kathpalia, Sr. Advocate with Ms. Liz Mathew, Ms. Sonali Jain and Mr. Rohan Rajadhyaksha, Advocates for R-1. Dr. Abhishek Manu Singhvi and Mr. Ashish Dholakia, Sr. Advocates with Mr. Avishkar Singhvi, Mr. Ketan Gaur, Mr. Ashish Bhan, Ms. Chitra Rentala, Mr. Aayush Mitruka, Ms. Samriddhi Shukla, Advocates for R-2 (SRA). Mr. Ramji Srinivasan, Sr. Advocate with Mr. Raunak Dhillon, Mr. Aditya Marwah, Mr. Animesh Bisht, Ms. Richa Roy, Ms. Saloni Kapadia, Advocates for R-3 (CoC).

ORDER

(Virtual Mode)

28.06.2021: The Appellant - 'Prudential International Insurance Holdings

Ltd.' has filed this appeal against impugned order and judgment dated 7th June,

2021 passed by the Adjudicating Authority (National Company Law Tribunal),

Mumbai Bench in I.A. No. 449/2021 in CP (IB) No. 4258/MB/2019 vide which

impugned order the Adjudicating Authority approved the Resolution Plan dated

22nd December, 2020 submitted by Respondent No. 2 - Successful Resolution

Applicant.

2. We have heard Mr. Amit Sibal, Learned Counsel for the Appellant. The

Appellant is admittedly a third party unconnected with the CIRP of the Corporate

Debtor. Learned Senior Counsel accepts Appellant is neither Financial Creditor

nor Operational Creditor of Corporate Debtor.

Company Appeal (AT) (Insolvency) No. 443 of 2021 3

3. Appellant claims that it has certain pre-existing and continuing contractual

arrangements with the Corporate Debtor and is 49% shareholder of the Joint

Venture Company, 'Pramerica Life Insurance Limited', in which the Corporate

Debtor was shareholder till 31st March, 2017. According to the Appellant, the

Corporate Debtor continues to be bound by obligations of its shareholding under

the Shareholders' Agreement dated 25th July, 2013 and as per the Articles of the

Joint Venture Company mentioned above. It is argued that the Resolution

Applicant sought certain reliefs and waivers under the Resolution Plan and it is

claimed that the same impacts rights of the Appellant. According to the Appellant,

the relief sought by the Resolution Applicant would impact future and

uncrystallised liabilities arising from the rights clamed including those arising from

certain put option rights in the SHA which would be extinguished. It is argued and

mentioned in the appeal that the Appellant is aggrieved with the impugned order

as follows:

"The Appellant is aggrieved to the extent that the Impugned Order:

(a) allows the application for approval of resolution plan

being I.A. 449/2021, which admittedly had three separate

reliefs including a specific relief seeking grant of reliefs and

concessions sought by the Resolution Applicant, without an

express reference to the reliefs and concessions sought

thereunder against the Appellant or any reference to I.A. 929 of

2021 ("Appellant's Application"), wherein the Appellant has

Company Appeal (AT) (Insolvency) No. 443 of 2021 4

inter-alia placed its objections to any term of the Resolution

Plan that seeks to unilaterally modify or terminate the SHA, the

Articles or any continuing agreements between the Corporate

Debtor and the Appellant, well before the approval of the

Resolution Plan, and which is still sub judice before the Ld.

Adjudicating Authority.

(b) Holds that the Resolution Plan is compliant with law,

without stating expressly whether this observation applies to

the reliefs and concessions sought against the Appellant,

despite the fact that such reliefs are specifically challenged,

under the Appellant's Application, as rendering the plan in

'contravention of law' and the said question also remained sub-

judice before the Ld. Adjudicating Authority.

(c) Requires that applications for waiver of any statutory

obligations/liabilities or waivers sought from any Authority

(that cannot be construed to have been given on account of

approval of the Resolution Plan, and would have to be sought

from such an Authority) would have to be considered in light of

the decision of Hon'ble Supreme Court in the matter of

Ghanshaym Mishra and sons v. Edelweiss Asset

Reconstruction Company Limited., (2021 SCC OnLine SC 213)

("Ghanshyam Mishra"). Consequently, these observations of

the Ld. Adjudicating Authority applied to the reliefs sought

Company Appeal (AT) (Insolvency) No. 443 of 2021 5

against the Appellant and would amount to pre-deciding the

Appellant's Application on merits, without considering if

Ghanshyam Mishra would be applicable to the facts of the

case.

(d) The Impugned Order, to the extent it has the effect of

granting reliefs against the Appellant, does so without giving

the Appellant a right of hearing, and without a just or proper

adjudication of the Appellant's Application on merits, and

without even applying its mind to the facts or prayers of the

Appellant's Application opposing such reliefs which is sub

judice before the Ld. Adjudicating Authority. In fact, it is in

contravention of the assurance given by the Ld. Adjudicating

Authority itself during the hearing of Appellant's Application on

02 June 2021, that the reliefs sought against the Appellant as

part of the Plan Approval Application would not be granted till

the Appellant's Application is heard and disposed off. Thus,

the Impugned Order impacts the rights of the Appellant without

giving it a proper and effective hearing while its Application is

still sub-judice.

(e) The Impugned Order, to the extent it has the effect of

granting 'reliefs and concessions' sought against the Appellant,

does so without considering that such reliefs and concessions

cannot be granted by the Ld. Adjudicating Authority, and

Company Appeal (AT) (Insolvency) No. 443 of 2021 6

granting of such reliefs would render the Resolution Plan non-

compliant with Section 30(2) of the Code and in contravention

of law to the extent of such reliefs."

4. It is argued that Appellant filed application to protect itself. Copy of I.A. No.

929 of 2021 said to have been filed by the Appellant is at Annexure A-10 (page 454)

and inter alia prayers (b) to (d) read as under:

"(b) pass an order directing the Respondent No.1 and Respondent

No. 2 to give an undertaking confirming that the Resolution Plan

does not alter/amend/adversely modify or extinguish the rights of

the Applicant and obligations and liabilities of the Corporate Debtor

under the SHA. Distribution Agreement and Articles, in whatsoever

manner, whether directly or indirectly; and/or

(c) Pass an order rejecting the Resolution Plan, if and to the extent

that it unilaterally alters/ amends/modifies the mutually agreed

terms of the SHA, Distribution Agreement and Articles or affects or

extinguishes the rights of the Applicant and obligations and

liabilities of the Corporate Debtor under the SHA, Distribution

Agreement and Articles, in whatsoever manner, whether directly or

indirectly, and/or

(d) Pass an order directing the Respondents to modify the

Resolution Plan, if and to extent that it unilaterally alters/ amends/

modifies the mutually agreed terms of the SHA. Distribution

Company Appeal (AT) (Insolvency) No. 443 of 2021 7

Agreement and Articles or affects or extinguishes the rights of the

Applicant and obligations and liabilities of the Corporate Debtor

under the SHA, Distribution Agreement and Articles, in whatsoever

manner, whether directly or indirectly; and/or"

5. It is argued that when the I.A. had come before the Adjudicating Authority

on 12th May, 2021 order as at Annexure A-11 was passed and time to file reply was

given. It is argued that the Application I.A. No. 929 of 2021 is yet not decided by

the Adjudicating Authority and would be coming up before the Adjudicating

Authority on 30th June, 2021. The Learned Senior Counsel submitted that without

deciding the application of the Appellant the present impugned order approving the

Resolution Plan has been passed.

6. Senior Advocate Shri Arun Kathpalia appears for Respondent No. 1 opposing

the admission of the appeal and submits that the Resolution Plan as was submitted

had been approved and the Administrator, when presented the Resolution Plan to

Adjudicating Authority had submitted and sought following reliefs:

"a) To consider and approve the Resolution Plan (including the

Scheme or Arrangement specified in Schedule VIII of the Resolution

Plan) submitted by the Successful Resolution Applicant (i.e.

Piramal Capital & Housing Finance Limited) which was placed

before the CoC in its eighteenth meeting dated December 24, 2020

and was approved by the requisite majority vote of the CoC during

Company Appeal (AT) (Insolvency) No. 443 of 2021 8

the voting window pursuant to the CoC which remained open from

December 30, 2020 to January l5, 2021.

b) To declare that the Resolution Plan, upon its approval by this

Hon'ble Tribunal, shall be binding on the Corporate Debtor and its

employees, members, creditors, guarantors and other

stakeholders involved in the Resolution Plan;

c) Grant such reliefs as specifically sought by Respondent

No. 2 (the Successful Resolution Applicant) under the

Resolution Plan, including as set out in Part C of the

Resolution Plan."

7. The Learned Senior Counsel submitted that the concern of the Administrator

regarding Resolution Plan was with regard to prayer (a) and (b) and that prayer (c)

was left for the Successful Resolution Applicant to convince the Adjudicating

Authority. It is stated that the Resolution Plan which has been approved, is as was

produced and which was approved by the CoC.

8. The Learned Senior Counsel for the CoC, Mr. Ramji Srinivasan submitted

that the plan which has been approved is not conditional and could not be

interfered with at the instance of a third party like the Appellant. The Learned

Counsel submitted that the Appellant had filed claim of Rs.4100 Crore on count of

losses which was rejected by the Resolution Professional and the same was not

Company Appeal (AT) (Insolvency) No. 443 of 2021 9

challenged. The Learned Counsel submitted that issue in such context, the

Adjudicating Authority would deal when I.A. No. 929 of 2021 is taken up.

9. The Learned Senior Counsel, Dr. Abhishek Manu Singhvi appeared on behalf

of the Successful Resolution Applicant and submitted that the Appellant delayed

filing of the Application before the Adjudicating Authority so as to prolong the

matter before the Adjudicating Authority. Learned Counsel submitted that once

the Resolution Plan has been approved, such Applications like I.A. No. 929* of 2021

would have been deemed to be rejected. Referring to para 107 of Judgment in the

matter of "Committee of Creditors of Essar Steel India Ltd. vs. Satish Kumar Gupta

& Ors." (2020) 8 SCC 531, it is stated that after grant of approval to Resolution

Plan, such claims like that of Appellant cannot be entertained. However, Learned

Senior Counsel for Appellant is relying Judgment in the matter of "Jaypee

Kensington Boulevard Apartments Welfare Association & Ors vs. NBCC (India) Ltd.

& Ors." 2021 SCC Online SC 253 to state that in that matter it was held that

modification in Concession Agreement without approval of concerned authority,

that is, YEIDA, established by State Government could not have been done in

Resolution Plan.

10. Counsel for the parties are raising such and various issues with regard to

the rights claimed by the Appellant and whether or not the Appellant has right to

question the Resolution Plan. We are not elaborating or commenting on the same

for the reason that I.A. No. 929* of 2021 is admittedly stated to be coming up before

the Adjudicating Authority on 30th June, 2021. Without rights claimed by

Company Appeal (AT) (Insolvency) No. 443 of 2021 10

Appellant being adjudicated before Adjudicating Authority, Appellant cannot

maintain challenge to approval of Resolution Plan by way of Appeal. Keeping in

view the prayers in I.A. No. 929 of 2021, we are not making any comments on the

merits of rival claims. Suffice it to state that the Appellant - third party is trying

to maintain this appeal challenging the Resolution Plan approved, without getting

decided I.A. No. 929 of 2021, one way or other. We decline to entertain the appeal.

11. The appeal is disposed of as premature with liberty to the Appellant to raise

admissible issues as the Appellant may want to raise after decision of I.A. No. 929

of 2021.

[Justice A.I.S. Cheema] The Officiating Chairperson

[Dr. Alok Srivastava] Member (Technical) Archana/gc.

* See Speaking to Minutes Order dated 29.06.2021. Corrected accordingly.

Company Appeal (AT) (Insolvency) No. 443 of 2021