Rakesh Rajpal vs R.P. Of Rajpal Abhikaran Pvt. Ltd

IN THE MATTER OF: Rakesh Rajpal ...Appellant

Versus

R.P. Rajpal Abhikaran Pvt. Ltd. & Ors. ...Respondents

Present:

For Appellant : Mr. Giriraj Subramanium, Mr. Kushagra Singh, Mr. Abhishek Chaudhary, Mr. Simarpal Singh, Mr. Abhishek Singh & Mr. Alok Kumar, Advocates.

For Respondents : Ms. Shraddha Deshmukh & Mr. Utkarsh Kokcha, for R-1. Mr. Vikas Mehta & Mr. Apoorv Khator, for IBBI. Mr. Siddharth Sangal & Mr. Chirag Sharma, for SBI.

ORDER

[Per : Justice Rakesh Kumar Jain (Oral)]

23.02.2023 This appeal is directed against the order dated

25.08.2022 passed by the 'Adjudicating Authority' (National Company Law

Tribunal, Indore Bench) by which an IA/12(MP)2022 filed in CP (IB) 6 of

2020 by the 'Resolution Professional' under Section 30(6) read with Section

31 of the Insolvency & Bankruptcy Code, 2016 (the 'Code') for approval of

the Resolution Plan submitted by the Resolution Applicant, namely,

Aggarwal Real City Private Limited, has been allowed.

2. Shorn of unnecessary details, the facts given to us in court are that

M/s Chandraudai Automobiles Private Limited filed an application under

Section 9 of the Code as an Operational Creditor against Rajpal Abhikaran

Private Limited (Corporate Debtor) for resolution of an amount of Rs. 69 lakhs. The said application was admitted by the 'Adjudicating Authority' on

26.03.2021.

3. The Appellant herein is the Suspended Director of the Corporate

Debtor. It is submitted that the Appellant had also submitted an

application under Section 12A of the Code to the Committee of Creditors

which was rejected on 07.12.2021.

4. The present appeal has been filed to raise an issue that the Resolution

Professional as well as the Appellate Authority has not made any provision

for the payment of VAT Dues of the Department of VAT of the State of

Madhya Pradesh. He has elaborately referred to the decision of the Hon'ble

Supreme Court rendered in the case of State Tax Officer vs. Rainbow

Papers Ltd. MANU/SC/1109/2020 to contend that the controversy

involved in this case is squarely covered by the aforesaid decision.

5. During the course of hearing he has also referred to Summary of the

Resolution Plan and particularly referred to the table depicting the dues of

the Operational Creditor (Unsecured). The said table is reproduced herein

for a ready reference :-

Financial Claims and Discharge Creditors S.No. Name of Creditor Amount Claim Admitted RPlan Claimed (Rs.) by RP (Rs.) Proposal Total Secured FC (A)

1. State bank of India 23,02,07,114 23,02,07,114 19,11,00,000 23,02,07,114 23,02,07,114 19,11,00,000 Unsecured Financial Creditors (B) 2 Shri Ram City Union Finance 7,90,51,925 7,90,51,925 33,27,869 Limited 3 Toyota Financial Services India 11,12,96,691 11,01,55,835 46,37,258 Limited 4 Volark Auto Pvt. Ltd. 1,59,96,000 1,59,68,482 6,72,229 5 Suraksha Assets Reconstruction 41,94,66,519 41,94,66,519 1,76,58,388

2|Page Limited 6 PPG Asian Paints Private 59,75,957 59,75,957 2,51,571 Limited 7 AU Small Finance bank Limited 13,66,01,607 12,32,75,186 51,89,547 8 Sundaram Finance Limited 1,04,75,594 62,50,699 2,63,137 Total Unsecured FC (B) 77,88,64,293 76,01,44,603 3,20,00,000 TOTAL FC (A+B) 1,00,90,71,407 99,03,51,717 22,31,00,000

Operational Creditors (UNSECURED) Received within 90 days 1 Chandraudai Automative 69,34,699 69,34,699 0 Private Limited 2 ESIC (Regional Office) 11,10,587 11,10,587 0 3 Rajpal Abhikaran (Bhopal) 1,49,26,343 1,49,26,343 0 Private Limited 2,29,71,629 2,29,71,629 Received after 90 days 4 Commercial Tax Department 12,61,84,867 12,61,47,345 MP O/o Assistant Commissioner, Circle 11 Indore (M.P.) TOTAL OC 14,91,56,496 14,91,18,974

6. Counsel for the Appellant has submitted that nothing has been kept

in the proposed plan to discharge the debts of the Department of VAT of the

State of Madhya Pradesh. He has further submitted that in the case of

Rainbow Papers Ltd. (Supra) the Hon'ble Supreme Court has held that :-

"52. If the Resolution Plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the Adjudicating Authority is bound to reject the Resolution Plan."

7. On this premise, it is submitted that the Resolution Plan deserves to

be rejected even if the decision of the Hon'ble Supreme Court has been

rendered after the 'impugned order' has been passed.

3|Page

8. Mr. Sumesh Dhawan, appearing on behalf of the Successful

Resolution Applicant- Respondent No. 2, has submitted that the Appellant

does not have the locus standi to maintain the present appeal because of

the reason that the issue raised by him in regard to the government dues is

being pursued by the government itself in their own appeal i.e Company

Appeal (AT) (Ins.) No. 1265 of 2022 - Commercial Tax Department vs.

Mrs. Teena Saraswat Pandey & Anr. . It is also submitted by him that

had it been a case where the appeal is not being pursued by the department

itself, then the matter would have been altogether different, but in the

presence of the person aggrieved in regard to the outstanding dues of the

Government, the Appellant does not have the locus standi to maintain this

appeal.

9. Counsel for the Appellant, faced with this argument, has then referred

to Section 61 of the Code to contend that the appeal can be preferred by an

aggrieved person and has also submitted that as per Section 61(3)(i) the

appeal can be filed if the "the approved resolution plan is in contravention of

the provisions of any law for the time being in force;".

10. It is submitted that the contravention of the law is writ large because

of the reason that nothing has been reserved for the payment of the dues of

the VAT Department of the Government of Madhya Pradesh and therefore

the Resolution Plan is not in accordance with law and deserves to be set

aside.

11. We have heard Learned Counsel for the Parties in respect of the

submissions made herein above.

4|Page

12. The issue involved in this case about the locus standi of the Appellant

to maintain the present appeal.

13. Section 61 of the Code deals with the remedy of appeal before the

Appellate Authority. Section 61 is reproduced as under :-

"61. Appeals and Appellate Authority. -

(1) Notwithstanding anything to the contrary contained under the Companies Act 2013 (18 of 2013), any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal.

(2) Every appeal under sub-section (1) shall be filed within thirty days before the National Company Law Appellate Tribunal: Provided that the National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days.

(3) An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely: -

(i) the approved resolution plan is in contravention of the provisions of any law for the time being in force;

(ii) there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;

(iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board;

5|Page

(iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or

(v) the resolution plan does not comply with any other criteria specified by the Board.

(4) An appeal against a liquidation order passed under section 33, or sub-section (4) of section 54L, or sub-

section (4) of section 54N, may be filed on grounds of material irregularity or fraud committed in relation to such a liquidation order.

(5) An appeal against an order for initiation of corporate insolvency resolution process passed under sub-section (2) of section 54-O, may be filed on grounds of material irregularity or fraud committed in relation to such an order."

14. An appeal under Section 61 can be maintained by a person aggrieved.

15. The person aggrieved is not defined in the Code. In the present case

the person aggrieved, in so far as, the amount which has not been reserved

for the purpose of payment to the State Government towards the tax dues

would be the Department of Tax only and per chance the said department

has already preferred their Appeal bearing Company Appeal (AT) (Ins.) No.

1265 of 2022 which is pending before this Court for adjudication.

16. In so far as Section 61(3)(i) is concerned, it pertains to the grounds

which can be raised in appeal for the purpose of challenging the Resolution

Plan but the question is at whose instance the said ground can be raised.

6|Page

17. After taking into consideration the aforesaid facts and circumstances,

we are of the considered opinion that in the presence of the Tax Department,

having filed their own appeal, bearing Company Appeal (AT) (Ins.) No. 1265

of 2022 titled as Commercial Tax Department vs. Mrs. Teena Saraswat

Pandey & Anr., challenging the same 'impugned order' pertaining to the

approval of the Resolution Plan, appeal at the instance of the present

Appellant i.e. Ex- Director of the Board of Directors is not maintainable for

espousing the cause of the Tax Department. The Appellant has not raised

any other issue nor we have touched the merit of the case.

18. As a consequence, thereof, the present appeal is hereby dismissed on

the ground being not maintainable for lack of locus-standi.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical) Sim/RR

7|Page