Rishi Kapoor vs Kashi Vishwanathan Sivaraman

[Arising out of Order dated 16.08.2021 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench-II, in IA/445/2021 in CP(IB) 470 (ND)/2017]

IN THE MATTER OF:

Rishi Kapoor Office: E-11, Lower Ground Floor Jangpura Ext., New Delhi- 110014 Email: admin@kapoorandcompany.com ...Appellant

Versus

Kashi Vishwanathan Sivaraman Resolution Professional of Kindle Developers Private Limited R/o: E-10A, Basement, Kailash Colony, Greater Kailash-I, New Delhi- 110048 Email: kindle.developers@aaainsolvency.com ...Respondent

Present: For Appellant: Mr. Amar Dave, Mr. Akhil Shankwar and Mr. Satish Rai, Advocates. For Respondent: Mr. Nipun Gautam, Advocate (RP-R1) Mr. Kashi Vishwanathan Sivaraman (RP-R1)

JUDGMENT

(07th January, 2022)

Ashok Bhushan, J.

1. This Appeal has been filed against the order dated 16.08.2021 passed

by the Adjudicating Authority (National Company Law Tribunal), New Delhi

Bench-II in IA. 445/2021 filed by the Appellant. Brief facts of the case and

sequence of the events necessary to be noticed for deciding this Appeal are: 2

An Application under Section 7 of the Insolvency and Bankruptcy

Code, 2016 ("I&B Code" for short) was filed by one Shri Amit Kumar Malik

against 'Kindle Developers Pvt. Ltd.' (Corporate Debtor) being (IB)

470(ND)/2017. Notice was issued by the Adjudicating Authority on

20.11.2017. The Adjudicating Authority on 15.01.2018 recorded that

Respondents have been duly served but no one is present on behalf of the

Respondents. Respondents were ex-parte proceeded. On 30.01.2018, the

arguments were heard in the Application. On 09.03.2018, Application was

listed for pronouncement of the order before the Adjudicating Authority and

on 09.03.2018, order was pronounced by the Adjudicating Authority

admitting the Application under Section 7. One Mr. Yogesh Kumar Tyagi was

appointed as Interim Resolution Professional. Interim Resolution

Professional made public announcement on 03.08.2018. The Appellant

before us filed his claim in Form-B on 09.07.2019. I.A No. 1442 of 2020 was

filed by the Appellant praying for direction to the Resolution Professional to

verify, entertain and accept the claim of the Appellant which Application was

disposed off by the Adjudicating Authority on 26.07.2021 directing the

Resolution Professional to consider the claim of the Applicant (Appellant) on

merits. In the meantime, by an order passed on 30.07.2018, earlier Interim

Resolution Professional was changed and one Mr. Anurag Nirbhay was

appointed as the Interim Resolution Professional. An Application I.A. No. 445

of 2021 was filed by the Appellant praying for seeking amendment in earlier

Application I.A. No. 1442 of 2020. In I.A 445 of 2021, Applicant prayed that

in his earlier Application he may be permitted to add certain paragraphs. By

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averment which was sought to be added the Appellant claim that he is an

allottee in pursuance of Memorandum of Understanding dated 19.04.2018

and the claim of the Appellant should be verified as allottee for which Form

CA was annexed with the Application. The Application I.A No. 445 of 2021

came for consideration before the Adjudicating Authority who by order dated

16.08.2021 has rejected the said Application. Aggrieved by the said order,

this Appeal has been filed.

2. Shri Amar Dave, Learned Counsel for the Appellant submitted that the

Application filed by the Appellant for carrying out amendments in his earlier

Application has wrongly been rejected. It is submitted that the Appellant

although had earlier filed his claim as Operational Creditor but in view of the

Memorandum of Understanding dated 19.04.2018, he had become allottee

and was Financial Creditor of the Corporate Debtor and his claim ought to

have been verified as Financial Creditor. He further submitted that although

Application under Section 7 was admitted on 09.03.2018 but the said order

was uploaded only on 22.06.2018. The copy of order was neither sent to

Interim Resolution Professional nor to any of the parties. Hence, no one

knew about the initiation of the Corporate Insolvency Resolution Process

proceedings till 22.06.2018. It is submitted that the Memorandum of

Understanding dated 19.04.2018 thus cannot be said to be violating Section

14 of the 'I&B Code'. It is submitted that in the present case, Corporate

Insolvency Resolution Process shall be treated to have commenced only on

22.06.2018. It is submitted that in the publication which was made by the

Interim Resolution Professional in pursuance of Section 7 order, the date of

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commencement of Corporate Insolvency Resolution Process proceedings was

mentioned as 22.06.2018. It is submitted that the fact that order dated

09.03.2018 was uploaded on the website on 22.06.2018 is an admitted fact

which has been accepted by the Adjudicating Authority in its order dated

30.07.2018 passed in the proceedings. It is submitted that the Board of

Directors shall not be deemed to be suspended on 09.03.2018 and were

entitled to function till 22.06.2018 which is the date on which the order of

the Adjudicating Authority was uploaded on the website.

3. Learned Counsel appearing for the Respondent submits that the order

dated 09.03.2018 was pronounced by the Adjudicating Authority which was

duly shown in the cause list of the said date. Arguments were heard earlier

on 30.01.2018. The Corporate Insolvency Resolution Process proceedings

shall be commenced on 09.03.2018 and it cannot be said to have

commenced on 22.06.2018. The mere fact that earlier Interim Resolution

Professional in his public announcement has mentioned the date of

commencement as 22.06.2018 shall not change the legal position. It is

submitted that the Appellant had filed his claim as Operational Creditor in

Form-B and the endeavour to change the claim from Operational Creditor to

Financial Creditor was wholly unjustified. Section 7 proceedings having

commenced from 09.03.2018, there was no occasion for the Corporate

Debtor to enter into any Memorandum of Understanding with the Appellant

on 19.04.2018. The Memorandum of Understanding dated 19.04.2018 was

hit by Section 14 of the 'I&B Code' and was void and inoperative. It is further

submitted that against the order dated 09.03.2018, an Appeal was filed

Company Appeal (AT) (Ins.) No. 966 of 2021 5

being Company Appeal (AT) (Ins.) No. 512 of 2018 by one Mr. Paramjit

Gandhi which Company Appeal has been ultimately dismissed by this

Appellate Tribunal by judgment and order dated 28.02.2019 upholding the

order dated 09.03.2018. The order dated 09.03.2018 having been upheld by

this Appellate Tribunal, it is not open for the Appellant to contend that the

order dated 09.03.2018 was not effective and remain dormant till

22.06.2018.

4. We have considered the submissions of the Learned Counsel for the

Appellant and have perused the record.

5. One of the issues which has arisen for consideration in this Appeal is

as to whether the order passed by the Adjudicating Authority becomes

operative from the date it is pronounced or the order become operative only

when it is uploaded on the website. From the fact which has been brought

on record, it is clear that the order dated 09.03.2018 was pronounced by the

Adjudicating Authority, which was duly shown in the cause list for the date

09.03.2018 at Item No. 1 under the heading 'pronouncement of the order'.

6. It is also apparent from the record that the order was uploaded on the

website on 22.06.2018 which fact has been noticed in the subsequent order

of the Adjudicating Authority dated 30.07.2018. The fact that order has not

been uploaded till 22.06.2018 whether it shall be treated to have taken away

the implementation of the order dated 09.03.2018, is the question to be

answered.

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7. Before we answer the above question, it is relevant to notice that the

Application under Section 7 was filed in the year 2017 in which notice was

issued to the Corporate Debtor on 20.11.2017. Notices were served. Despite

service of notice, no one appeared for the Corporate Debtor which fact is

noticed in the order dated 15.01.2018 which is to the following effect:-

"The Affidavit of service is on record. Respondents were served vide email as well as by Speed Post. The tracking report reflects that the same has been duly serviced on them. Notice has already been duly served through the process of the Bench also. None is present on behalf of the Respondent.

They are therefore proceeded ex parte.

Ld. Counsel for the Petitioner prays for a adjournment on grounds that the arguing counsel is unwell.

At his request adjourned to 30th January, 2018."

8. Further, the arguments were heard in Application under Section 7 on

30.01.2018 when the Adjudicating Authority directed the matter to come up

for clarification/ orders. The cause list of the Court has been brought on

record along with the Reply which indicates that it was listed for

'pronouncement of order' on 09.03.2018 as Item No.1. The order was

pronounced on that date. The order dated 09.03.2018 which has been

Company Appeal (AT) (Ins.) No. 966 of 2021 7

brought on the record along with the Reply of the Respondent, on the top of

the order mentioned "order delivered on 09.03.2018".

9. Rule 150 of the National Company Law Tribunal Rules, 2016 provides

for 'pronouncement of order'. Rule 150 is as follows:-

"150. Pronouncement of Order.- (1) The Tribunal, after hearing the applicant and respondent, shall make and pronounce an order either at once or, as soon as thereafter as may be practicable but not later than thirty days from the final hearing.

(2) Every order of the Tribunal shall be in writing and shall be signed and dated by the President or Member or Members constituting the Bench which heard the case and pronounced the order.

(3) A certified copy of every order passed by the Tribunal shall be given to the parties.

(4) The Tribunal, may transmit order made by it to any court for enforcement, on application made by either of the parties to the order or suo motu.

(5) Every order or judgment or notice shall bear the seal of the Tribunal."

10. The order dated 09.03.2018 which was signed and pronounced on

09.03.2018 in accordance with Rule 150 was the order of the Adjudicating

Authority with all its legal and natural consequences. The order dated

09.03.2018 further indicates that by the same order one Mr. Yogesh Kumar

Tyagi was also appointed as Interim Resolution Professional. The order also

directed a Moratorium in terms of Section 14 of the 'I&B Code'. We are not

Company Appeal (AT) (Ins.) No. 966 of 2021 8

persuaded by the arguments of the Learned Counsel for the Appellant that

the order did not become effective on 09.03.2018 since it was admittedly

uploaded on 22.06.2018 on the website. In the order dated 30.07.2018, the

Adjudicating Authority has noticed the fact that the order was not uploaded

till 22.06.2018. The Adjudicating Authority has also observed that it appears

that there is some negligence on the part of the court staff who had failed to

take appropriate steps. Following observation has been made in the order

dated 30.07.2018:

"...............The applicant's petition was admitted on 09.03.2018. However since the same was not uploaded till 22nd June of 2018 and therefore subsequent steps could not be taken. It appears that there was negligence on the part of the Court staff who had failed to take appropriate steps..........."

11. Section 13 of the 'I&B Code' requires the Adjudicating Authority, after

admission of the Application under Section 7 or 9, by an order to declare a

Moratorium for the purposes referred to in Section 14. The order dated

09.03.2018 indicate that after admission, Moratorium was declared and an

Interim Resolution Professional was also appointed. The effect and

consequence of the order dated 09.03.2018 shall not remain suspended only

on the ground that the order was not uploaded on the website. The

submission of the Counsel for the Appellant was that the order should be

treated to have become effective only when the same is received and

communicated to the Interim Resolution Professional or has come to

knowledge of the public in general. If we accept the submission of the

Company Appeal (AT) (Ins.) No. 966 of 2021 9

Learned Counsel for the Appellant, there will be too much uncertainty and

vagueness. There shall be different dates. Then the date of the operation of

the order shall depend on knowledge of Interim Resolution Professional and

public in general which is not intent and purpose of the 'I&B Code'. Any

such interpretation will give ample rope to Corporate Debtor to defy the order

of admission passed by the Adjudicating Authority to suit its purpose and

object. When the statute specifically provides for declaration of Moratorium

after admission of the Application, the said declaration cannot remain

suspended and inoperative for any reason. When a Tribunal or Court

pronounce an order in accordance with Rule, the legal consequences from

the order flow from pronouncement of judgment and its operation shall not

be suspended on specious submission as was contended before us that since

order was uploaded on 22.06.2018, it shall not become operative.

12. In the present case, we have already noticed that the Application

under Section 7 was filed in the year 2017. Notices were served on the

Corporate Debtor as recorded by the Court on 15.01.2018. Application under

Section 7 was heard on 30.01.2018 and order was pronounced on

09.03.2018. It is not permissible either the Corporate Debtor or any other

stakeholders to contend that the order shall not become operative on

09.03.2018 when it was pronounced. We thus reject the submissions of the

Counsel for the Appellant that the order dated 09.03.2018 shall become

operative only on 22.06.2018 when it was uploaded. We hold that the order

dated 09.03.2018 become operative on 09.03.2018 when it was pronounced

in the Court and all legal consequences shall follow. The Application I.A No.

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445 of 2021 which was filed by the Appellant was for the purposes of

changing his nature of the claim from Operational Creditor to Financial

Creditor on the basis of Memorandum of Understanding dated 19.04.2018

along with Apartment Buyer Agreement. It is the case of the Appellant that

vide Memorandum of Understanding dated 19.04.2018 he has been allotted

20 units in lieu of the outstanding debt on account of legal services rendered

to Corporate Debtor. When Section 7 petition already admitted on

09.03.2018 and Moratorium has kicked in, there was no authority in the

Corporate Debtor to enter into a Memorandum of Understanding with regard

to its property and assets. The Memorandum of Understanding dated

19.04.2018 is wholly void and inoperative and the Adjudicating Authority did

not commit any error in rejecting the Application of the Appellant seeking

amendment in its earlier Application for incorporating his claim on the basis

of Memorandum of Understanding dated 19.04.2018.

13. Shri Amar Dave, Learned Counsel for the Appellant has also submitted

that his earlier claim which has been directed to be considered on the

strength of the order dated 26.07.2021 in I.A No. 1442/2020 may not be

prejudiced by rejection of his Application I.A No. 445 of 2021. When the

Adjudicating Authority on 26.07.2021 has directed Resolution Professional

to consider the claim of the Applicant pending before him on merits, we are

of the view that the apprehension of the Appellant is misconceived. Whatever

claims were submitted by the Appellant before the Resolution Professional,

in accordance with the procedure and law, need to be considered

Company Appeal (AT) (Ins.) No. 966 of 2021 11

accordingly. However, the same not being subject matter of the present case,

we express no opinion on the merits of such claim.

14. In view of the foregoing discussions, we do not find any error in the

impugned order of the Adjudicating Authority rejecting I.A No. 445 of 2021.

There is no merit in the Appeal. Appeal is dismissed, accordingly.

[Justice Ashok Bhushan] Chairperson

[Justice Jarat Kumar Jain] Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

New Delhi Anjali

Company Appeal (AT) (Ins.) No. 966 of 2021