Punjab National Bank vs Mr Ashish Chhawchharia & Ors

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 (Arising out of Order dated 22.06.2021passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Court No.-I in IA No.2081 of 2020 in CP(IB) No.2205/MB/2019)

IN THE MATTER OF:

Punjab National bank Zonal Sastra Centre Mumbai, Maharashtra-400099. .... Appellant

Vs

1. Mr. Ashish Chhawchharia Resolution Professional (Erstwhile) Jet Airways (India) Limited, Siroya Centre, Sahar Airport Road, Andheri (East), Mumbai - 400099.

2. Jalan Kalrock Consortium C/o Murari Lal Jain Lead Partner Villa HT-21, Emirates Hilla, Dubai, United Arab Emirates.

3. Committee of Creditors of Jet Airways (India) Limited Through State Bank of India, Sarg, 21st Floor, Maker tower, E-Wing, Cuffee Parade, Mumbai - 400005. .... Respondents

Present: For Appellant: Mr. R. Venkatramani, Sr. Advocate with Mr. Piyush Beriwal, Mr. Ankit Raj, Chitvan Singhal, Ms. Divya Srivastava, Mr. Praveen Vignesh, Advocates for PNB.

Mr. Sunil Aggarwal, Sr. Standing Counsel Mr. Tushar Gupta, Jr. Standing Counsel Mr. Parinay Gupta, Advocate (for Applicants in I.A. 2720/21)

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 1 For Respondents: Mr. Malhar Zatakia, Mr. Dhiraj Kumar Totala, Ms. Aditi Bhansali, Ms. Tanya Chib and Mr. Parimal Kashyap, Advocates for RP (AZB & Partners) Mr. Raghav Chadha, Advocate.

Mr. Abhinav Vashisht, Sr. Advocate with Ms. Vishrutyi Sahni, Ms. Aishna Jain, Advocates for R-3.

Mr. Krishnendu Datta, Sr. Advocate with Mr. Rajat Sinha, Mr. Burjis Shabir, Ms. Srishty Kaul, Mr. Anant Singh, Mr. Aashish Vats, Advocates for SRA.

Mr. Raunak Dhillon, Ms. Isha Malik and Ms. Niharika Shukla, Advocates for Respondent No.2.

Mr. Sunil Aggarwal, Mr. Tushar Gupta, Mr. Sumit Kr. Advocates

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by Financial Creditor of the Corporate Debtor, i.e., Jet

Airways (India) Limited has been filed against the order dated 22.06.2021

passed by the National Company Law Tribunal, Mumbai Bench Court No.I

allowing I.A. No.2081 of 2020 filed by Resolution Professional for approval

of the Resolution Plan.

2. The brief facts of the case giving rise to this Appeal are:

(i) In the year 2016-17, the Appellant has extended various loans

credit to Jet Airways (India) Limited. The Corporate Debtor

committed default in making the repayment of the loan. On

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 2 30.03.2019, the Promoter of the Corporate Debtor executed a

Share Pledge Agreement in favour of the Appellant to secure

their outstanding dues and 2,95,46,679 equity Shares were

Pledged in favour of the Appellant.

(ii) On 20.06.2019, the Corporate Insolvency Resolution Process

("CIRP") of the Corporate Debtor commenced on Section 7

[Insolvency and Bankruptcy Code, 2016 (hereinafter referred

to as the "Code")] Application filed by State Bank of India,

another Financial Creditor.

(iii) In pursuance of the publication made by the Interim

Resolution Professional ("IRP"), the Appellant filed its claim for

Rs.963.47 crores with the Resolution Professional ("RP"). The

Appellant submitted revised claim for a sum of Rs.956.11

crores and again revised the claim to Rs.956.21 crores. The

Resolution Professional admitted the claim of the Appellant for

a sum of Rs.9,562,165,500/-, which was reflected on the List

of Creditors published by the RP as on 15.01.2020. In the List

of Creditors as on 15.01.2020, Note 2 mentions:

Notes:

2 The claim of Punjab National Bank has been provisionally admitted and remains subject to the outcome of the Civil Appeal No(s) 5443/2019 in the matter of PTC India Financial Services Ltd. versus Mr. Venkateshwarlu Kari & Anr. in the Supreme Court of India.

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 3

(iii) The RP issued an email dated 19.09.2020 stating that claim of

the Appellant would be reduced by the Fair Market Value of

the Pledged Shares. The RP updated the List of Creditors as

on 25.09.2020.

(iv) On 22.09.2020, the Appellant has filed a claim of Rs.994.16

crores. The Respondent No.1 has reduced the claim of the

Appellant on the ground that on invocation of the Pledged

Shares, the Appellant had become beneficiary owner of the

Pledged Shares and accordingly, the Appellant's claim must be

reduced with the total value of the Shares of the Corporate

Debtor as transferred to the Appellant pursuant to the

invocation of the pledged. In the list of creditors published on

25.09.2020, the admitted claim of the Appellant stood reduced

by approx. Rs.202 crores. Note-2 of the List of Creditors

mentions the following:

Notes:

2 The claim of Punjab National Bank was provisionally admitted and remains subject to the outcome of the Civil Appeal No(s) 5443/2019 in the matter of PTC India Financial Services Ltd. versus Mr. Venkateshwarlu Kari & Anr. in the Supreme Court of India. Now the admitted claim is reduced by INR 2,020,992,844 in terms of the order passed by the Hon'ble National Company Law Appellate Tribunal in the matter of India Power Corporation Ltd. vs. Meenakshi Energy Ltd. and Other (in Company Appeal (AT) (Insolvency) No.1220 of 2019) pronounced on September 10, 2020.

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 4

(v) In the meantime, two Resolution Plans were submitted by the

prospective Resolution Applicants. On 28.09.2020 in 16th

Committee of Creditors ("CoC") Meeting more than one

Resolution Applicants submitted their revised Plan, which

were discussed and deliberated on 03.10.2022 in 17th CoC

Meeting. In the 17th CoC Meeting, the Resolution Plan

submitted by Jalan Fritesch Consortium was approved. In

18th CoC Meeting also, the representative of the Appellant put

forth their contention that their claim of approximately Rs.200

crores has been rejected on the ground that they being equity

shareholders.

(vi) The Appellant filed an I.A. No. 2480 of 2020 on 04.12.2020,

where following prayers were made:

"(I) Allow the present application and direct the respondent to reverse its decision of reducing the claim of the applicant by the value of invoked shares pledged and transferred by the applicant bank.

(II) Pass any other order/ direction that the Hon'ble Adjudicating Authority may deem fit in the interest of justice and equity."

(vii) The RP filed an IA No.2081 of 2020 praying for approval of the

Resolution Plan. The I.A. No.2480 of 2020 filed by the

Appellant came up for hearing before the Adjudicating

Authority on 18.03.2021 and the Adjudicating Authority

directed the IA to be listed for final hearing on 13.05.2021. IA

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 5 No.2081 of 2020 was listed on 14.06.2021 when an order was

reserved and vide order dated 22.06.2021, IA No.2081 of 2020

was allowed and Resolution Plan was approved. IA No.2480 of

2020 filed by the Appellant was not adjudicated by the

Adjudicating Authority, while approving the Resolution Plan

submitted by Resolution Applicant.

(viii) The Appellant aggrieved by the order dated 22.06.2021 has

filed this Appeal.

(ix) In the appeal the Appellant has prayed for following reliefs:

"a) Allow the present Appeal and set aside the order impugned dated 22.06.2021 in I.A. No.2081 of 2020 in CP (IB) No.2205/MB/2019 passed by Hon'ble National Company Law Tribunal, Mumbai Bench - I; and/ or

b) To reinstate the erroneously reduced 'admitted Claim' of the Appellant by the Respondent No. 1/ RP amounting to Rs.202.09 Cr. (Approx. Two Hundred and Two Crore and Nine Lac); AND/ OR

c) Grant ad-interim stay on the order impugned dated 22.06.2021 in I.A. No.2081 of 2020 in CP (IB) No.2205/MB/2019 passed by Hon'ble National Company Law Tribunal, Mumbai Bench - I;

d) Direct the Hon'ble National Company Law Tribunal, Mumbai bench - I to decide the I.A. No.2480 of 2020 in CP (IB) No.2205/MB/2019 expeditiously and direct the successful resolution application/ respondents to maintain status quo

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 6 as on date in regards to the implementation of the resolution plan; and/ or

e) Award costs of and incidental to the appeal to the appellant; and/or

f) Pass any other order/ orders as this Hon'ble Tribunal may deem fit and proper under the facts and circumstances of the present case and in the interest of justice."

3. We have heard learned Senior Counsel for the Appellant and learned

Counsel for Resolution Professional, learned Counsel for Resolution

Applicant as well as learned Counsel appearing for Successful Resolution

Applicant.

4. The learned Senior Counsel appearing for the Appellant submits that

the RP after having admitted the claim of Rs.956 crores as on 20.08.2019,

could not have reduced the same to Rs.754 crores on 25.09.2020, which

was after submission of the final Resolution Plan by both prospective

Resolution Applicants. The RP had no jurisdiction to review and revise an

admitted claim of the Appellant. I.A. No.2480 of 2020 filed by the Appellant

for restoring its admitted claim was never adjudicated by the Adjudicating

Authority, causing great prejudice to the Appellant. The RP reduced the

claim of Appellant relying on judgment of this Tribunal in India Power

Corporation Ltd. vs. Meenakshi Energy Ltd. and Other in Company

Appeal (AT) (Insolvency) No.1220 of 2019, which judgment, in turn,

relied on judgment of this Tribunal in PTC India Financial Services Ltd.

Vs. Mr. Venkateshwaralu Kari and Mandava Holdings Pvt. Ltd.

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 7 Company Appeal (AT) (Ins) No. 450 of 2018 decided on 20.06.2019. The

judgment of Meenakshi Energy Ltd. delivered on 10.09.2020, which was

relied by RP for reduction of the claim. The judgment of the Hon'ble

Supreme Court in Civil Appeal No.5443 of 2019 titled PTC India

Financial Servics Ltd. v. Mr. Vemkateshwarlu Kari and Anr. having

delivered by Hon'ble Supreme Court on 12.05.2022 setting aside the

judgment of this Tribunal in PTC India Financial Services Ltd. Vs. Mr.

Venkateshwaralu Kari and Mandava Holdings Pvt. Ltd., the very basis

of reduction of the claim by RP stands knocked out and full claim of the

Appellant deserves to be revised, which was earlier admitted by the RP.

The Appellant, which is a Public Sector Bank suffered great prejudice by

reduction of the claim, which shall obviously affect their entitlement as per

the Resolution Plan. It is submitted that the Appellant before the CoC has

consistently raised the objection regarding reduction of their claim, which

was noted in the Minutes of the Meeting. In the 17th Meeting of CoC held

on 03.10.2020, when the Resolution Plan was discussed, the objection of

Appellant was noticed regarding reduction of the claim. The Appellant

being Assenting Financial Creditor to the Resolution Plan, cannot have any

objection regarding the approval of the Resolution Plan, however, the

Appellant is aggrieved by reduction of its admitted claim and Appellant is

entitled for payment of its full debt as per the Resolution Plan.

5. The learned Senior Counsel for the Appellant submits that in view of

the judgment of the Hon'ble Supreme Court delivered on 12.05.2022 in

PTC India Financial Services Ltd. Vs. Mr. Venkateshwaralu Kari and

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 8 Mandava Holdings Pvt. Ltd., the law shall be treated to be the same as

declared by the Hon'ble Supreme Court even on the day when amount of

claim of the Appellant was reduced by Resolution Professional. The

reduction of the claim being contrary to the law as declared by the Hon'ble

Supreme Court is untenable and full claim amount deserve to be restored.

6. The learned Counsel for the RP, refuting the submission of learned

Counsel for the Appellant submits that the Appellant is not entitled for any

relief in this Appeal. It is submitted that Appellant being Assenting

Financial Creditor to the Resolution Plan cannot be allowed to challenge

the approval of the Resolution Plan. The Appellant voted for Resolution

Plan, wherein Rs.747.94 crores have been admitted as Appellant's claim

and Appellant having exercised its commercial wisdom in approving the

Plan, the Appellant is estopped from questioning the approved Resolution

Plan. The Appellant is also guilty of suppressing several material facts in

the Appeal. The Appellant has filed four different claims and the allegation

of the Appellant that RP has unilaterally reduced the Appellant's claim is

not correct. The RP vide email dated 03.10.2019 had informed the

Appellant that its claim would be treated in accordance with the question

of law, specially the judgment of this Tribunal in PTC India Financial

Services Ltd. (supra). It is submitted that reduction of the claimed

amount was in accordance with existent law as was applicable at the

relevant time. The Appellant has invoked the Pledged Shares on

17.06.2019 and perfected its title to the Pledged Shares by registering itself

as beneficial owner in respect of the Pledged Shares in the record of the

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 9 depository. Even on 10.09.2020, this Tribunal in India Power

Corporation Ltd. v Meenakshi Energy Limited & Ors. once again

affirmed the decision of PTC India on 19.09.2020. The Respondent No.1

informed the Appellant that the aggregate claim filed by the Appellant

would be reduced to the extent Fair Market Value of the Shares of the

Corporate Debtor acquired by the Appellant as on the date of invocation of

the Pledge. Accordingly, Respondent No.1 reduced the claim of the

Appellant by Rs.202.09 crores as per the Market Value of the Pledged

Shares and the RP has acted in accordance with the Code. The Appellant

having voted in favour of the Resolution Plan, is now estopped from

challenging the approval of the Resolution Plan.

7. The learned Counsel for the Successful Resolution Applicant also

supported the submission of learned Counsel for the RP, submitting that

the Appellant having voted in favour of the Resolution Plan, is now

estopped from challenging the Resolution Plan or the impugned order

approving the Resolution Plan. The Resolution Plan provided for fixed

payout to the Financial Creditors and having participated in the CoC

Meeting and approving the Resolution Plan, it was in the commercial

wisdom of the CoC, no objection can be raised by the Appellant at this

stage.

8. The learned Counsel appearing for CoC submits that Resolution Plan

having been approved by the Appellant itself, the Appellant cannot be

allowed to challenge the same. The Appellant claim was provisionally

admitted. The CoC as per the Code could have voted on admitted claim,

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 10 the Resolution Applicant have directed for distribution of assets in its

Resolution Plan based on admitted claim. The Resolution Plan having been

approved by majority of 99.22% of the CoC, the same is binding. Even the

Dissenting Financial Creditors cannot challenge the approved Resolution

Plan, hence, there is no occasion for Assenting Financial Creditor to

challenge the Plan. The Resolution Plan is being presently implemented.

Interlocutory Application No.2720 of 2021

9. We also need to consider I.A. No.2720 of 2021 filed in this Appeal by

Principal Commissioner of Income Tax Central-3 Mumbai.

10. The Principal Commissioner in this IA prayed for intervention in the

appeal and has also prayed for further reliefs. The Applicant in paragraph

11 of the IA has made the following prayer:

"A) The Applicant be permitted to intervene in Appeal No 584/ 2021 filed by Punjab National Bank B) That the Applicant be permitted to bring on record the tax claims in the form of dues where appeals filed by the department are pending, both before the High Court and Apex Court as also the demands which have arisen/likely to arise from the completion of the proceedings for period prior to the date of admission of resolution application.

C) That the Applicant be permitted to seek a clarification regarding its entitlement to carry out proceedings, other than recovery proceedings, that have and may lead to detection of and bring on record various other criminal and other liabilities against the erstwhile company and its Directors.

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 11 Management, Third parties, and to seek a direction to the respondent to cooperate in the proceedings."

11. We have heard learned Counsel for the Applicant in IA No.2720 of

2021, learned Counsel for Resolution Professional, learned Counsel for

Successful Resolution Applicant and learned Counsel for CoC and have

perused the records.

12. In I.A. No.2720 of 2020, learned Counsel for the Applicant has

brought on record the order of the Hon'ble Supreme Court dated

15.09.2021 passed by the Hon'ble Supreme Court in Civil Appeal

No.3290 of 2017 - Commissioner of Income Tax-5 vs. Jet Airways

(India) Ltd. In the order dated 15.09.2021, the approval of Resolution Plan

by Adjudicating Authority has been noticed by the Hon'ble Supreme Court.

The Hon'ble Supreme Court directed that a copy of Resolution Plan be

handed over to learned ASG and mater was listed for further directions.

Subsequently, Hon'ble Supreme Court passed an order dated 16.11.2021

in the above Civil Appeal. It is useful to extract the entire order, which is

to the following effect:

"Learned Additional Solicitor General on the basis of the "Resolution Plan" handed over has placed before us some part of the relevant extract. The significant aspect as contained in para V of the "Resolution Plan"

(General Clauses) is Clause 12 dealing with legal proceedings which reads as under :

"12. LEGAL PROCEEDINGS

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 12 12.1 If any legal, taxation or other proceedings of whatever nature, whether civil or criminal (including, before any statutory or quasi-judicial authority or tribunal (except all litigations relating to or arising out of non-implementation of Resolution Plan in any manner or priority of Financial Creditors/avoidance transaction application) (the "Proceedings") by or against the Corporate Debtor is pending/arising at any time, if any, the same shall stand transferred to the Resultant company.

12.2 All legal proceedings of whatsoever nature by or against the Corporate Debtor pending and/or arising at the Appointed Date in relation to the Demerged Undertaking shall be continued and enforced by or against the Resulting Company, and the Resulting Company will bear the liabilities of such proceedings at its own cost. The Corporate Debtor shall extend all its assistance to defend such proceedings at the cost of the Resulting Company.

12.3 Subsequent to the Appointed Date, if any proceedings are initiated by any third party (including regulatory authorities) by or against the Demerged Company under any statute, such proceedings shall be continued and enforced only against the Resulting Company and the Resulting Company shall bear the liabilities of such proceedings at its own cost. The Corporate Debtor shall extend all its assistance to defend the liabilities of such proceeding at the cost of the Resulting Company."

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 13 As to what is the "Resulting Company" has been defined in Part II definition Clause 4.12 as under:

"4.12 - "Resulting Company" means Airjet Ground Services Limited, a company incorporated under the provisions of the Companies Act, 2013 with an authorised share capital of Rs. 1,00,00,000/- and paid up share capital of Rs. 50,00,000/-"

In view of the aforesaid, the submission of the learned Additional Solicitor General is that the "Resolution plan" itself protects the rights of the appellant-department to recover as though there was no outstanding liability on that date, the assessee having succeeded, the claim of the revenue department had been entertained through the present appeals and thus if the appellant succeeds on merits in the appeals, it would be entitled to make appropriate recovery against the "Resulting company".

He further submits that in any case, he has advised the department to approach the NCLAT as the objections to the "Resolution Plan" by one of the creditors is still pending consideration.

In view of the aforesaid, we consider it appropriate to await the decision of the NCLAT before we bestow our consideration in appeals itself.

List after the NCLAT decides that matter and liberty to the parties to mention for listing of the matters after the said decision.

The "Resolution Plan" placed before us today in Court be kept in a sealed cover."

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 14

13. It is after order of the Hon'ble Supreme Court the I.A. No.2720 of

2021 has been filed on 02.12.2021. The learned Counsel for the Applicant

has relied on paragraph 5 of the Resolution Plan, Clause 12 of which has

been quoted by the Hon'ble Supreme Court in its order dated 16.11.2021.

It is submitted that since the Resolution Plan itself contemplates and takes

care of the any liability arising out of taxation proceedings against the

Corporate Debtor, the Applicant is entitled to raise a claim in the

proceedings, which has been tabulated in Exhibit-C to the Application. It

is submitted that all proceedings relate to the period of assessment year

2012 to 2017-18. The learned Counsel for the Applicant has referred to

prayer (b) and (c) as noted above.

14. The learned Counsel appearing for RP refuting the submission of

learned Counsel for the Applicant submits that Applicant did not file any

claim in the CIRP of Jet Airways. Even till the date of approval of the

Resolution Plan, no such claim was filed or raised. The Resolution Plan

was approved without considering dues of the Applicant. The learned

Counsel for the RP, referring to the judgment of the Hon'ble Supreme Court

in Ghanshyam Mishra & Sons (P) Ltd. vs. Elelweiss Asset

Reconstruction Co. Ltd. - (2021) 9 SCC 657 submits that all such

claims/ dues owed to the State/ Central Government or any legal

authorities including tax charges, which are not part of the Resolution

Plan, shall stand extinguished. Applicant's claim being grossly belated,

cannot now be admitted. The mere fact that proceedings are pending

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 15 before the Hon'ble Supreme Court, does not help the Applicant, when it

has not filed any claim with the RP.

15. The learned Counsel for the Resolution Applicant opposing the

submission of the learned Counsel for the Applicant contends that

Applicant has sought only intervention and intervenor cannot claim any

relief for itself. Reliance is placed on judgment in (1999) 3 SCC 141 -

Saraswati Industrial Syndicate Ltd. vs. Commissioner of Income Tax

Haryana Rohtak. Learned Counsel for the Successful Resolution

Applicant further submits that Clause-12 of the Resolution Plan, which has

been relied by Applicant is part of Scheme of Arrangement between Jet

Airways (India) Ltd., Demerged Company of Corporate Debtor and Airjet

Ground Services Limited (Resulting Company). He submits that Clause-

12 cannot fasten any liability on Resolution Applicant, nor the liability has

been taken care in the Resolution Plan.

16. We have considered the submission of learned Counsel for the

parties in Appeal as well as in IA and have perused the record.

17. From the facts brought on record in the Application and replies filed

thereto, it is clear that Applicant did not file any claim in the CIRP of

Corporate Debtor till the approval of Resolution Plan. It is submitted that

neither any claim nor proof of filing in the proceedings has been filed and

hence, at this stage there is no occasion to admit the claim, which is

brought on record as Exhibit-C to the Application, in the CIRP of the

Corporate Debtor. Now coming to Clause-12 of Part-V, on much reliance

has been placed by learned Counsel for the Applicant, it is clear from the

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 16 Resolution Plan brought on record that Clause-12 is part of Part-V of

Scheme of Arrangement. The Scheme of Arrangement containing details of

Part-VI of the Scheme as detailed in the Scheme of Arrangement is as

follows:

"SCHEME OF ARRANGEMENT BETWEEN JET AIRWAYS (INDIA) LIMITED (DEMERGED COMPANY OR CORPORATE DEBTOR) AND AIRJET GROUND SERVICES LIMITED (RESULTING COMPANY) The Scheme (more particularly defined below) is divided into the following parts:

1. Part I deals with Introduction, Rationale and Operation of the Scheme:

2. Part II deals with the Definitions and Share Capita;

3. Part III deals with demerger of the Demerged Undertaking of the Corporate Debtor into Resulting Company;

4. Part IV deals with the Accounting Treatment;

5. Part V deals with the General Clauses; and

6. Part VI deals with the General Terms and Conditions."

18. Now when we come to Clause-12, it does contemplate all proceedings

including taxation against the Corporate Debtor, which is pending. The

Clause contemplate that "the same shall stand transferred to the

Resultant Company". The Resultant Company is Airjet Ground Services

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 17 Limited. The Scheme of Arrangement was entered with regard to various

objects as noted in the Scheme. There are other Clauses of the Scheme,

reference to Clause 6.10 and 6.11 of Part-III is also made, which are in line

of the Clause 12 of Part-V.

19. Now we come to the submission of the learned Counsel for the

Resolution Applicant that Intervenor cannot pray for any relief in the

present Application. In Saraswati Industrial Syndicate Ltd. (supra)

Hon'ble Supreme Court while considering the submission of Counsel for

the Intervenor has observed that only purpose of granting an intervention

application is to entitle the Intervener to address arguments in support of

one or the other side. In paragraph 12 of the judgment, following has been

observed:

"12. Learned counsel for the interveners submits that he is entitled to the same order as we have just passed. We cannot pass such an order in an intervention application. The only purpose of granting an intervention application is to entitle the intervener to address arguments in support of one or the other side. Having heard the arguments, we have decided in the assessee's favour. The interveners may take advantage of that order."

20. We have permitted the Applicant (Intervenor) in the matter and heard

the argument of all the parties. We, however, are of the view that apart

from permitting the intervention by the Applicant in this Appeal, none of

the reliefs in Relief (b) and (c) of the Intervention Application can be granted

by this Tribunal. The Clauses of Scheme of Arrangement as relied by

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 18 parties are self-explanatory and no clarification is required by this Tribunal

in these proceedings.

Interlocutory Application No.2720 of 2021 is disposed of accordingly.

Appeal

21. There is no dispute between the parties regarding facts and sequence

of the events. The Appellant has filed its claim before the RP firstly on

04.07.2019. In paragraph 14 of the reply filed by the RP in this Appeal,

details of the claims submitted by Appellant, the claimed amount and the

claim admitted have been tabulated, which is to the following effect:

"14. Pursuant to the initiation of the CIRP of the Corporate Debtor, the Appellant submitted the following claims with Respondent No.1.

S.No. Date Claim Claim amount admitted Claim July 04, 2019 Rs.963.47 Rs.963.47 No.1 Crores Crores Claim August 02, Rs.956.11 Rs.956.10 No.2 2019 Crores Crores Claim January 07, Rs.956.21 Rs.956.21 No.3 2020 Crores Crores Claim September 22, Rs.994.16 Rs.747.94 No.4 2020 Crores Crores (Note: Crores)

22. By email dated 23.08.2019, the Appellant has informed the RP that

Appellant had only invoked the Pledged Shares and the said Shares had

not been sold by the Appellant and no proceeds had been appropriated by

the Appellant towards the debt due from the Corporate Debtor. The RP in

its reply affidavit filed in this Appeal has categorically stated that reduction

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 19 of the claim of the Appellant was on the basis of the judgment of this

Tribunal in India Power Corporation Ltd. vs. Meenakshi Energy Ltd.

(supra), in paragraphs 21 and 22 of the affidavit, the following has been

stated:

"21. On September 20, 2020 this Hon'ble Tribunal in India Power Corporate Ltd. v. Meenakshi Energy Limited & Ors. ("India Power Corporation Ltd.") once again affirmed the decision of PTC India. Annexed hereto and marked Exhibit E is a copy of the above judgment in India Power Corporation Ltd.

22. Accordingly, on September 19, 2020, Respondent No.1, through his legal counsel, informed the Appellant that the aggregate claim filed by the Appellant would be reduced to the extent of the fair market value of the shares of the Corporate Debtor acquired by the Appellant as on the date of invocation of the pledge. Accordingly, Respondent No.1 reduced the claim of the Appellant by Rs.202.09 crores (as per the market value of the Pledged Shares (based on the closing rate of INR 68.4 as on June 17,2019)) as on the date of invocation of the pledge i.e., June 17, 2019, in line with the decision of the NCLAT in India Power Corporation Ltd."

23. The List of Creditors updated as on 25.09.2020 contains Note-2,

which is to the following effect:

Notes:

2 The claim of Punjab National Bank was provisionally admitted and remains subject to the outcome of the

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 20 Civil Appeal No(s) 5443/2019 in the matter of PTC India Financial Services Ltd. versus Mr. Venkateshwarlu Kari & Anr. in the Supreme Court of India. Now the admitted claim is reduced by INR 2,020,992,844 in terms of the order passed by the Hon'ble National Company Law Appellate Tribunal in the matter of India Power Corporation Ltd. vs. Meenakshi Energy Ltd. and Other (in Company Appeal (AT) (Insolvency) No.1220 of 2019) pronounced on September 10, 2020.

24. The claim of the Appellant, which was lastly admitted by the RP was

for an amount of Rs.956.21 crores admitted on January 7, 2020, which

stood reduced to Rs.747.94 crores submitted by Appellant on 22.09.2020.

The reduction was affected by Resolution Professional on the ground of

invocation of Shares of the Corporate Debtor Pledged to the Appellant as

noticed above. As noted, the reduction of the claimed amount was affected

by the RP on the basis of judgment of this Tribunal India Power

Corporation Ltd. vs. Meenakshi Energy Ltd (supra) and judgment of PTC

India Financial Services Ltd. Against the judgment PTC India

Financial Services Ltd., a Civil Appeal No.5443 of 2019 was filed, which

has now been decided by Hon'ble Supreme Court on 12.05.2022. After

considering the entire law on the subject, the Hon'ble Supreme Court has

allowed the appeal and set aside the judgment of this Tribunal in PTC

India Financial Services Ltd. In paragraph 105 of the judgment of the

Hon'ble Supreme Court following law has been laid down:

"105. In view of the aforesaid findings, it has to be held that registration of the pawn, that is the dematerialised shares, in favour of PIFSL as the 'beneficial owner' does not have the effect of sale of shares by the pawnee. The

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 21 pledge has not been discharged or satisfied either in full or in part. PIFSL is not required to account for any sale proceeds which are to be applied to the debt on the 'actual sale'. The two options available to PIFSL as the pawnee under Section 176 of the Contract Act remain and are not exhausted."

25. In view of the law laid down by Hon'ble Supreme Court in PTC India

Financial Services Ltd., the reason for reduction of the claim of the

Appellant by RP is knocked out. The declaration of law by the Hon'ble

Supreme Court has to be treated as law of the land at all relevant times

including the date when claim was reduced by the RP. The law declared

by the SC has to be given effect specially when Note-2 admitting the claim

of the Appellant was subject to the decision of the Civil Appeal no.5443 of

2019, which was pending in the Hon'ble Supreme Court at the relevant

time. Note-2 clearly indicate that reduction of the claim by the RP was to

abide by the judgment of the Hon'ble Supreme Court in Civil Appeal

No.5443 of 2019 and judgment of the Hon'ble Supreme Court having been

delivered on 12.05.2022, which has to be given effect to with regard to the

claim of the Appellant.

26. The learned Counsel for the RP has strenuously submitted that the

Appellant is now estopped from raising the question with regard to approval

of the Plan, it having voted in favour of the Resolution Plan. We need to

notice two facts in the above context. The claim of the Appellant was

reduced by the Resolution Professional on 25th September 2020, the Plan

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 22 came to be discussed in the 17th Meeting of CoC held on 03.10.2020. The

Representative of the Appellant in the CoC Meeting held on 03.10.2020 had

raised the issue of reduction in their claimed amount, relevant extract of

the Minute noticing the aforesaid is follows:

"The representative from PNB enquired on the reason for the reduction in their claim amount to which the RP explained that the said reduction is to the extent of the fair market value of the shares held by PNB as on the date of invocation of the pledge and the communication in this regard was sent to the PNB on September 19, 2020. The RP further clarified that based on the prevailing case laws, a decision was taken on the matter the change was also reflected in the List of Creditors version 9."

27. The next CoC Meeting was held on 20.10.2020, where the record of

e-voting was noticed where also issue of reduction of claim of Appellant

was raised and noted. Following was notice in the Minute:

"The representative of PNB was not agreeable to the proposal and requested the RP to minutise its dissent as PNB's claim of approx. INR 200 crores was rejected and they would suffer twice if such distribution methodology is allowed."

28. Secondly, the Appellant had filed an Application being IA No.2480 of

2020 objecting the reduction of their claim by Rs.202.90 crores. The

Application was pressed and was listed for hearing, but unfortunately,

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 23 could not be adjudicated when Adjudicating Authority passed the order on

22.06.2021 approving the Resolution Plan.

29. We, thus, are satisfied that Appellant never acquiesced to the

reduction of their claim and they were throughout agitating the same even

before the CoC and has even filed a separate Application, which remained

pending. In view of the aforesaid, no estoppel can be pressed against the

Appellant in so far as reduction of claim of Rs.202.90 crores is concerned.

As noted above, apart from the aforesaid factum of reduction of their claim,

no other part of Resolution Plan has been objected by the Appellant, who

has already voted in favour of the Plan. The Appellant is not praying for

setting aside the impugned order on any other ground and their prayer in

essence is only to accept the entire admitted claim and direct for

distribution of assets under the Plan accordingly.

30. In the facts of the present case, we are of the view that the Appellant

is entitled to the relief as prayed, it is not necessary to issue any direction

for modifying the Resolution Plan or modifying the order of Adjudicating

Authority approving the Resolution Plan. The interest of justice will be

served in issuing direction to the Resolution Applicant to make distribution

to the Appellant as per its admitted claim of Rs.956.21 crores as noted

above, which however, shall be without affecting distribution of amounts

to other Financial Creditors both Assenting and Dissenting Financial

Creditors and other stake holders. In result, we allow this Appeal with

following directions:

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 24 (I) It is held that Appellant is entitled to their accepted admitted

claim of Rs.956.21 crores. Reduction of their claim by

Resolution Professional is set aside.

(II) The Appellant shall be entitled for distribution under the

Resolution Plan as per their admitted claim of Rs.956.21

crores, however, without affecting in any manner the payments

to other Financial Creditors both Assenting and Dissenting

Financial Creditors and other stake holders.

(III) The liability of payment of additional amount to the Appellant

in consequence of directions as above, shall be borne by

Resolution Applicant from amount reserved under the

Resolution Plan.

The Appeal is disposed of in view of above terms. No costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI

21st October, 2022

Ashwani

Company Appeal (AT) (Insolvency) No. 584 of 2021 & Interlocutory Application No.2720 of 2021 25