Rec Limited (Largest Member Of The ... vs Power Trust Promoter Of Hiranmaye ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Comp. App. (AT) (Ins) No. 1112 of 2024 IN THE MATTER OF: REC Ltd. ...Appellants (Largest Member of the Committee of Creditors of Hiranmaye Energy Ltd.) Versus Power Trust, ...Respondents (Promoter of Hiranmaye Energy Ltd.) & Anr.

Present: For Appellant : Mr. Abhinav Vasisht Sr. Advocates a/w Mr. Vaijayant Paliwal, Mr. Saurav Panda, Ms. Charu Bansal, Ms. Mohana Nijhawan, Ms. Kirti Gupta, Ms. Anushri and Ms. Priya Sen, Advocates. For Respondents : Mr. Joy Saha, Mr. Krishnendu Datta and Mr. Abhijeet Sinha Sr. Advocates with Mr. Pranjit Bhattacharya, Mr. Raj Sarit Khare and Ms. Kriti Gera, Advocates. Mr. Arvind Nayyar Sr. Advocate with Mr. Madhav Kanoria, Ms. Srideepa Bhattacharya, Ms. Neha Shivhare and Mr. Akshay Joshi, Advocates for R2.

WITH Comp. App. (AT) (Ins) No. 1295 of 2024 & I.A. 4923 of 2024 IN THE MATTER OF: Committee of Creditors of Hiranmaye ...Appellants Energy Ltd. Through Rec Ltd. Versus Power Trust Promoter of Hiranmaye Energy Ltd. ...Respondents & Anr.

Present: For Appellant : Mr. Abhinav Vasisht Sr. Advocates a/w Mr. Vaijayant Paliwal, Mr. Saurav Panda, Ms. Charu Bansal, Ms. Mohana Nijhawan, Ms. Kirti Gupta, Ms. Anushri and Ms. Priya Sen, Advocates. For Respondents : Mr. Joy Saha, Mr. Krishnendu Datta and Mr. Abhijeet Sinha Sr. Advocates with Mr. Pranjit Bhattacharya, Mr. Raj Sarit Khare and Ms. Kriti Gera, Advocates. Mr. Arvind Nayyar Sr. Advocate with Mr. Madhav Kanoria, Ms. Srideepa Bhattacharya, Ms. Neha Shivhare and Mr. Akshay Joshi, Advocates for R2.

ORDER

(Hybrid Mode)

30.09.2024: These Appeals have been filed by the same appellant

challenging the two orders dated 24.05.2024 and 01.07.2024 passed by

National Company Law Tribunal, Kolkata Bench in I.A. No. 1049/KB/2024 and

I.A. No. 1178/KB/2024 respectively.

2. Brief facts necessary to be noticed for deciding the two appeals are; CIRP

against the corporate debtor Hiranmaye Energy Ltd. commenced by order

dated 02.01.2024. The respondent No.1 who is the promoter of a corporate

debtor had filed an appeal challenging the order dated 02.01.2024 which

appeal came to be dismissed by this Tribunal vide order dated 25.01.2024,

challenging the order dated 25.01.2024 civil appeal no. 2211 of 2024 was filed

by respondent no.1 in the Supreme Court in which appeal notices were issued

on 20.02.2024 and on an I.A. No. 84962 of 2024 which was filed by the

respondent No.1 Power Trust following order was passed on 03.05.2024.

2 of 8 Comp. App. (AT) (Ins) No. 1112 & 1295 of 2024 "O R D E R IA No. 84962 of 2024 It will be open for the appellant to submit a proposal for settlement to the first respondent. If such a proposal is submitted, the same shall be processed in accordance with law. The application is accordingly disposed of.

Civil Appeal No.2211 of 2024.

The notice has been already issued on the statutory appeal. Therefore, the same shall be treated as admitted for final hearing. List on 5th September, 2024.

Subsequent to the order of Hon'ble Supreme Court 03.05.2024 the respondent

No.1 submitted the proposal to the Resolution Professional, thereafter filed the

I.A. No. 1049/KB/2024. The Adjudicating Authority vide in its order dated

24.05.2024 noticed the order of Hon'ble Supreme Court dated 03.05.2024. The

Adjudicating Authority vide order passed on 24.05.2024 directed following:

i. We are of the considered opinion that the Appellant being permitted by the Hon'ble Apex Court to submit a proposal for settlement, to the first Respondent, settlement proposal on behalf of the Power Trust if any be communicated to the RP in three days. j. The RP upon receipt of such proposal shall place it before the CoC by callingan appropriate meeting for the purpose. k. The CoC will consider the proposal, in light of the order passed by the Hon'ble Apex Court on 03.05.2024 (as referred to supra) and take a decision within a period of two weeks thereafter on the proposal.

l. Till such time, in the interim, we deem it appropriate to direct that the CIRP proceedings be kept in abeyance till a decision is arrived at by the CoC on the settlement proposal of the Power Trust.

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3. The CA No. 1112 of 2024 has been filed challenging the said order which came to be considered by this Tribunal on 31.05.2024 by which following order was passed:-

"ORDER (Hybrid Mode) 31.05.2024: Issue Notice.

2. Counsel for the Respondent submits that the CoC be also impleaded in the application. Counsel for the Appellant submits that they shall implead the CoC. Let CoC be impleaded as party.

3. Let this appeal be listed on 02.07.2024. The application having already been directed to be listed on 14.06.2024 before the Adjudicating Authority, it shall be open for the parties to advance their submissions on the next date."

It appears that subsequent to said order the 6th CoC meeting was held on

07.06.2024 in which CoC meeting the proposal which was given by the

respondent no.1 was not accepted. Thereafter, the respondent no.1 filed

another application I.A. No. 1178 of 2024 seeking directions challenging the

decision of CoC dated 07.06.2024 rejecting the proposal for settlement and

further directing the respondent to reconsider the proposal of settlement

submitted by the respondent together with necessary modifications. The said

application was heard by Adjudicating Authority on 01.07.2024 and after

noticing the earlier proceedings the Adjudicating Authority in paragraph- 15

and 16 following was directed by Adjudicating Authority.

"15. Admittedly the Power Trust has not been afforded any hearing opportunity to revise its offer or to lead evidence that its offer proposal will not amount to a haircut of 79%.

4 of 8 Comp. App. (AT) (Ins) No. 1112 & 1295 of 2024

16. Hence, we deem it appropriate, particularly in the light of the admission of appeal against the order of admission of CD into CIRP and the liberty granted by the Hon'ble Apex Court to the Power Trust to submit proposal for settlement that also casts a duty upon the Respondent / RP and the CoC to process the proposal in accordance with law, to grant a hearing to the representative of Power Trust at the earliest and consider whether its proposal or revised proposal, if any, against a payment Rs. 5190.05 Crores that was required to make by the year 2042 would still lead to a substantial haircut. A decision be taken and communicated to Power Trust before proceeding any further with the CIRP."

Aggrieved by the said order the appellant Committee of Creditors Hiranmaye Energy Ltd. has come up with this appeal in which appeal the order was passed on 10.07.2024. Subsequently, on 18.07.2024 this court has observed that pendency of the appeal shall not preclude respondent no. 1 to approach the CoC with revised proposal, if any. On 09.08.2024 respondent no.1 has given a revised proposal.

4. We have heard the Ld. Counsel for the appellant as well as Ld. Counsel

appearing for respondent No.1 and Counsel for the Resolution Professional.

5. Ld. Counsel for the appellant submits that in the appeal which was filed

by respondent no.1 in the Supreme Court the Supreme Court did not grant any

stay on the CIRP process either in the time of issuing notice or on 03.05.2024

and hence there was no occasion for Adjudicating Authority to direct for stay of

CIRP Process by the impugned order dated 01.07.2024. It is submitted that in

so far as the earlier order which was challenged, in response to which order

CoC has already considered the settlement proposal on 07.06.2024 hence the

5 of 8 Comp. App. (AT) (Ins) No. 1112 & 1295 of 2024 said order has run its course. It is submitted that in the CIRP Process several

resolution plans have been received which are under consideration before the

CoC and the promoters have been filing applications to obstruct the

proceedings. Ld. Counsel for the appellant submitted that the Adjudicating

Authority ought not could not have be directed for hearing of the respondent

no.1 and for leading further evidence in the matter.

6. Shri Joy Saha Ld. Counsel appearing for respondent No.1 refuting the

submissions submits that the settlement proposal which was submitted before

the CoC in pursuance of the liberty granted by Hon'ble Supreme Court on

03.05.2024 require consideration. It is submitted that the corporate debtor is a

running/going concern and is earning profits and the promoters are keen to

revive the corporate debtor and have submitted the revised financial proposal

which is much more than any resolution plan. It is submitted that the since

the respondent no.1 has given the revise proposal on 09.08.2024 the same is

also required to be considered by CoC. Simultaneously with the resolution

plans and ofcourse, it is the commercial wisdom of the CoC to take decision in

the best interest of corporate debtor.

7. We have considered the submissions of counsel for the parties and

perused the records. Civil Appeal filed by the respondent no.1 challenging the

order admitting CIRP is pending for consideration before the Supreme Court

and as noticed above by the order dated 03.05.2024 Supreme Court granted

liberty to respondent no.,1to submit a proposal for settlement to the IRP.

Although the settlement which was submitted on 27.05.2024 considered and

6 of 8 Comp. App. (AT) (Ins) No. 1112 & 1295 of 2024 rejected by CoC on 07.06.2024 and thereafter I.A. No. 1178/KB/2024 was filed

before the Adjudicating Authority by the appellant on which IA directions dated

01.07.2024 have been issued. Revised settlement proposal have been

submitted by the respondent no. 1 on 09.08.2024 which is yet to be

considered. Ld. Counsel for the appellant submitted that in the CIRP resolution

plan has been received and the CoC is entitled to evaluate the resolution plan

for successful revival of the corporate debtor. Ld. Counsel for the respondent

no.1 also contends that the revised settlement proposal given by respondent

no.1 is capable of fully reviving the corporate debtor. As noted above the liberty

has already been granted to respondent no.1 to submit settlement proposal.

Settlement proposal was initially rejected but revised proposal have been

submitted and pending which needs to be considered by CoC in accordance

with law.

8. We make it clear that it will be open for the CoC to consider the

resolution plan as well as the settlement proposal simultaneously. We however

make it clear that it is not necessary for CoC to either hear the respondent no.1

unless CoC itself decides to call the respondent no.1 for necessary negotiations

and deliberations. The revised settlement proposal having been submitted by

respondent no.1 there is no occasion to submit any evidence or any further

material unless required by the CoC or the IRP. CIRP has neither been stayed

by the Supreme Court which is clearly from the order dated 03.05.2024. We

are unable to uphold the order of the Adjudicating Authority by which CIRP

7 of 8 Comp. App. (AT) (Ins) No. 1112 & 1295 of 2024 process has been stayed. It goes without saying that it is only in the CIRP

Process that settlement proposal as well as the plans can be considered.

9. We thus are of the view that order dated 01.07.2024 passed by

Adjudicating Authority needs to be modified as above. We make it clear that it

is for the CoC to evaluate and consider the resolution plans as well as

settlement proposal in their commercial wisdom and the process and

consideration is something to be decided by the CoC itself.

10. In view of the aforesaid CA (AT)(Ins) No. 1112 of 2024 has become

infructuous and dismissed as infructuous and CA (AT) (Ins) No. 1295 of 2024

is disposed of modifying the order dated 01.07.2024 as above.

11. The respondent no.1 was permitted to file an affidavit vide order dated

18.07.2024 within the 10 days which could not be filed within the time allowed

and hence appellant has raised an objections that the said affidavit be not

considered. Ld. Counsel for the respondent no.1 has fairly submitted that he

is not relying on the affidavit which has been filed.

The Parties shall bear their own cost.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) harleen/NN

8 of 8 Comp. App. (AT) (Ins) No. 1112 & 1295 of 2024