Royal Partners Investment Fund Ltd vs Abhijit Guhathakurta Monitoring ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Company Appeal (AT) (Insolvency) No. 287 of 2020 [Arising out of Order dated 12.02.2020 passed by the National Company Law Tribunal, Court No. II, Mumbai Bench, Mumbai in M.A. 515/2020 in C.P.(IB)- 1832(MB)/2017].

IN THE MATTER OF: Mr. Abhijit Guhathakurta, Monitoring Agency of the Corporate Debtor ...Appellant

Versus Royale Partners Investment Fund Ltd. ...Respondent Present: For Appellant: Mr. Abhinav Vasisht, Sr. Advocate with Mr. Avinash Subramanian, Mr. Aakrshan Sahay and Mr. Naqul Sachdeva, Advocates

For Respondent: Mr. Sudipto Sarkar, Sr. Advocate with Mr. Kumar Anurag Singh, Mr. Naman Joshi and Mr. Arun Kathpalia, Senior Advocates for Intervenor

With Company Appeal (AT) (Insolvency) No. 327 of 2020 [Arising out of Order dated 18.02.2020 passed by the National Company Law Tribunal, Mumbai Bench, Mumbai in MA 249/2020 in C.P.(IB)-1832/MB/2017]

IN THE MATTER OF: Royale Partners Investment Fund Ltd. ...Appellant Versus Mr. Abhijit Guhathakurta Monitoring Agency of the Corporate Debtor ...Respondent Present: For Appellant : Mr. Sudipto Sarkar, Sr. Advocate For Respondent : Mr. Abhinav Vasisht, Sr. Advocate with Akshita Sachdeva, Advocate for R-1 Mr. Tushar A John, Advocate

Venugopal M. J

Company Appeal (AT) (Insolvency) No. 287 of 2020

Being dissatisfied with the impugned order dated 12.02.2020 passed by

the Adjudicating Authority (Reconstituted 'National Company Law Tribunal',

Bench No. II, Mumbai) in MA No. 515/2020 in C.P. (IB)- 1832(MB)/2017, the

Appellant/'Monitoring Agency' of the 'Corporate Debtor' has focused the instant

Appeal before this Tribunal.

2. The Learned Counsel for the Appellant contends that the Adjudicating

Authority ('NCLT') Bench No. II, Mumbai while passing the impugned order in

M.A. No. 515/2020 dated 12.02.2020 had acted arbitrarily and exceeded its

jurisdiction in staying the proceeding in M.A. No. 249 of 2020 which was heard

at length and reserved for 'Orders' by an Erstwhile Bench / Co-ordinate Bench

of 'NCLT', Mumbai.

3. The Learned Counsel for the Appellant submits that the Respondent

herein was provided with an adequate opportunity to file a 'Reply' to the said

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

2 miscellaneous Application No. 249/2020 and a reply was filed prior to the

hearing of the said miscellaneous application by the Adjudicating Authority.

4. The Learned Counsel for the Appellant submits that the 'Successful

Resolution Applicant' raised numerous Defenses in reply to MA No. 249/2020

which were raised again in MA No. 515/2020 by it and that too when orders

were reserved in MA No. 249/2020. Further, it is the contention of the

Appellant, when the erstwhile Bench of 'NCLT', Mumbai had reserved orders in

MA No. 249/2020 on 30.01.2020 the reconstituted Bench No. II, Mumbai had

acted arbitrarily and in excess of its jurisdiction had stayed the proceedings in

MA No. 249/2020 where the orders were reserved by the co-ordinate Bench. In

short, it is the plea of the Appellant that the erstwhile Bench had the requisite

jurisdiction to hear and reserve the matter on the day on which it was heard.

5. The Learned Counsel for the Appellant contends that the impugned order

dated 12.2.2020 passed by the Adjudicating Authority / ('NCLT') Mumbai Bench,

Court No. II is an example of 'Judicial Indiscipline' and, therefore, the same in

the interest of justice is liable to be set aside by this Tribunal. In this connection,

the Learned Counsel for the Appellant seeks in aid of the decision of Hon'ble

Supreme Court Vikramjit Singh Vs. State of Madhya Pradesh reported in

MANU/SC/0081/1992 whereby and whereunder at paragraph - 3 it is observed

as under:-

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

3 "3. The application was listed before Mr.

Justice Gupta who by the impugned judgement

cancelled the earlier order of Mr. Justice B.C.

Varma and while so doing made strong

remarks against grant of bail in cases like the

present one. The appellant has now challenged

the judgment before this Court. It appears that

the learned Judge while passing the impugned

order, failed to appreciate that no Bench can

comment on the functioning of a coordinate

Bench of the same Court, much - less sit in

judgement as an Appellate Court over its

decision. If the State was agreed by the order

of bail by Mr. Justice B.C. Varma it could have

approached this Court but, that was not done.

The Judgement of Mr. Justice B.C. Varma,

therefore, became final so far, the High Court

was concerned. If the Appellant had misused

the bail or new materials came to light it would

have been open to the prosecution to move for

cancellation of the bail, but that is not the

position in the present case. On the basis of the Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

4 same materials and in the same circumstances

in which the order was earlier passed in favor

of the Appellant by the High Court the

application for cancellation was made entirely

as a sequel to the observations made by Mr.

Justice Gupta while dealing with the

application of another accused. It must be,

therefore, held that Mr. Justice Gupta had no

authority to upset the earlier order of the High

Court. That which could not be done directly

could also not be done indirectly. Otherwise, a

party aggrieved by an order passed by one

Bench of the High Court would be tempted to

attend to get the matter reopened before

another Bench and there would not be any end

to such attempts. Besides, it was not

consistent with the judicial discipline which

must be maintained by Courts both in the

administration of justice by assuring the

binding nature of an order which becomes final

and the faith of the people in the judiciary. The

impugned order dated 16-7-91 is, therefore, set Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

5 aside and the order dated 6-7-90 granting bail

to the Appellant is restored".

6. The Learned Counsel for the Appellant cites the decision of Hon'ble

Supreme Court 'Sant Lal Gupta and Ors. Vs. Modern Co-operative Group

Housing Society Ltd. and Ors.' reported in MANU/SC/0859/2010 wherein at

paragraph 18 it is observed as follows: -

"18. A coordinate bench cannot

comment upon the discretion exercised or

judgment rendered by another coordinate

bench of the same court. The rule of

precedent is binding for the reason that there

is a desire to secure uniformity and certainty

in law. Thus, in judicial administration

precedents which enunciate rules of law form

the foundation of the administration of justice

under our system. Therefore, it has always

been insisted that the decision of a co-

ordinate bench must be followed. (Vide:

Tribhovandas Purshottamdas Thakkar v.

Ratilal Motilal Patel and Ors.

MANU/SC/0345/1967: AIR 1968 SC 372;

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

6 Sub-Committee of Judicial Accountability v

Union of India and Ors.

MANU/SC/0007/1992: (1992) 4 SCC 97;

and State of Tripura v. Tripura Bar

Association and Ors.

MANU/SC/1078/1998: (1998) 5 SCC 637)."

7. The Learned Counsel for the Appellant brings it to the notice of this

Tribunal that the Respondent / 'Royale Partners Investment Fund Limited'

and Appellant in Company Appeal (AT)(Ins.)No.327/2020 (being the

'Successful Resolution Applicant'), its 'Resolution Plan' was approved by the

'Committee of Creditors' of the 'Corporate Debtor' on 10.01.2019 and as per the

plan, the same was to be implemented within 30 business days from the date on

which the 'Adjudicating Authority' approved the same. Accordingly, when the

'Committee of Creditors' had approved the Plan on 10.01.2019 the 'Resolution

Professional' of the Corporate Debtor filed an application u/s 30 and 31 of the

'I&B' Code before the 'Adjudicating Authority' for approving the 'Resolution Plan'

of the 'Successful Resolution Applicant'.

8. The Learned Counsel for the Appellant proceeds to point out that the

application filed u/s 30 and 31 of the IBC by the 'Resolution Professional' of the

'Corporate Debtor' was allowed by the Adjudicating Authority on 25.11.2019 and

that the Appellant / Monitoring Agency (established under the 'Resolution Plan')

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

7 because of deliberate delay and failure on the part of the Respondent /

'Successful Resolution Applicant' was constrained to file M.A. No. 249/2020

before the Adjudicating Authority on 22.1.2020 among other things seeking an

implementation of the 'Resolution Plan'.

9. It is the stand of the Appellant that MA No. 249/2020 was heard at length

and on 30.1.2020 and orders were reserved by the erstwhile Bench. However,

on 29.1.2020 the Benches of 'NCLT' Mumbai were re-constituted by the

President of the 'National Company Law Tribunal' (in exercise of the powers u/s

419 of the Companies Act, 2013) and the reconstitution of Benches was to come

into effect from 3.2.2020.

10. The Learned Counsel for the Appellant points that in MA No. 515/2020

filed by the Respondent (Royale Partners Investment Fund Limited /

'Successful Resolution Applicant') the re-constituted 'NCLT' Mumbai Bench,

Court no. II on 12.2.2020 at paragraph 4 had observed the following: -

"4. Learned Senior Counsel for the Applicant

pressed for Interim Relief mentioned at Clause (h) on

page-24 of the MA. Learned Counsel appearing on

behalf of the Monitoring Agency sought some time to

file reply in the matter. Considering the submissions

made and the nature of the prayers, this Bench

deems it necessary that the prayer in Clause(h) on Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

8 page-24 of MA-515/2020 should be granted at this

pint of time. We therefore stay all proceedings in MA

249/2020 until the next date of hearing in the

present MA."

and the matter was directed to be listed on 28.2.2020.

11. On behalf of the Appellant, it is brought to the fore that on 27.1.2020,

the erstwhile 'NCLT' Mumbai Bench in MA No. 249/2020 had interalia directed

the Respondent to file its reply in next two days' time i.e. by 29.1.2020, (since

it was mentioned from the Respondent side that MA No. 249/2020 was received

about five days back and time was sought to file a reply) and it was specifically

made mention of that the matter would be heard on 30.01.2020.

12. While rounding up, it is the fervent submission of the Learned Counsel for

the Appellant that the Impugned Order dated 12.02.2020 is not consistent with

'Judicial Discipline' to be maintained by the Tribunal and, therefore, it is to be

set aside, in furtherance of substantial cause of justice.

Intervenor's Pleas

13. According to the Learned Counsel for the Intervenor (IDBI Bank - the

erstwhile 'Committee of Creditors'), in the present Appeal utmost significant

question is raised in the interest of members of former 'Committee of Creditors'

and accordingly, the Intervenor is heard.

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

9

14. The Learned Counsel for the Intervenor (IDBI Bank - the erstwhile

'Committee of Creditors') submits that post completion of pleadings in MA No.

249/2020 (with reference to Company Appeal (AT)(Ins.) No. 287/2020)

arguments were heard and the matter was reserved for orders by 1st Bench of

'NCLT' Mumbai on 30.01.2020 and thereafter only the notification dated

29.01.2020 was issued by the President of 'NCLT' reconstituting the Benches at

'NCLT' Mumbai w.e.f. 03.02.2020. In this connection, it is the plea of the

Learned Counsel for the Intervenor that notwithstanding the fact that the

arguments were heard at length and the orders were reserved in MA No.

249/2020 on 30.01.2020 by the erstwhile Bench of 'NCLT', Mumbai, the

Respondent / RPIFL attempted to mention the matter before the re-constituted

Bench, which was dis-allowed by the Bench. Also, it is represented that in

utter disregard to the rule of Law, the Respondent / RPIFL filed MA

No.515/2020 before the re-constituted Bench among other things, had sought

stay of the proceedings before the erstwhile Bench in MA No. 249/2020.

15. The Learned Counsel for the Intervenor takes a stand that the 2nd Bench

of 'NCLT' Mumbai on 12.2.2020 in MA No. 515/2020 had stayed the

proceedings before the 1st Bench, in MA No. 249 of 2029 (wherein orders were

received), which is an invalid and illegal one in the eye of Law. Inspite of the

said stay order, the 1st Bench of 'NCLT' Mumbai (erstwhile Bench) had passed

the final orders in MA No. 249/2020 on 18.02.2020 whereby the Respondent /

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

10 RPIFL was directed to implement the 'Resolution Plan' within a week and being

aggrieved therefrom, the Respondent / RPIFL as an 'Appellant' has preferred

the Company Appeal (AT)(Ins.)No. 327/2020 before this Tribunal.

16. The Learned Counsel for the Intervenor prays for annulling the 'Impugned

Order' to promote substantial cost of justice.

Respondent's Contentions

17. Conversely, it is the submission of Learned Counsel for the Respondent

that in MA No. 249/2020 a reply was filed by the Respondent and the matter

was heard extensively (after completion of pleadings) on 30.01.2020 before the

Bench II of the 'NCLT', Mumbai and thereafter reserved for orders, which was

pronounced on 18.02.2020.

18. Advancing his arguments, the Learned Counsel for the Respondent brings

to the notice of this Tribunal that pursuant to the reconstitution of the Benches,

the Respondent / Appellant in Company Appeal (AT)(Ins.) 327/2020 sought to

mention the said M.A. No. 249/2020 before the reconstituted Bench No. II of

'NCLT' on 04.02.2020 and that the Appellant's / Respondent's (in Company

Appeal (AT)(Ins.)No. 287/2020) Advocates were present in court for a different

matter were able to oppose the same as a malafide one and as a result thereof,

the re-constituted Bench No. II of 'NCLT' Mumbai had not permitted the

'mentioning'.

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

11

19. The Learned Counsel for the Respondent submits that there is no judicial

indiscipline in pronouncing the order dated 18.2.2020 in MA No. 249/2020 by

the earlier Bench, as in that matter, orders were reserved before MA No.

515/2020 was filed by the Appellant.

20. The Learned Counsel for the Respondent urges that the role of the

'Monitoring Agency' is limited to managing the day-today affairs of the

'Corporate Debtor' and that the said 'Agency' had without permission and

sanction of the steering Committee first filed MA 1 (MA No.249/2020). Further,

the plea of the Respondent is that it is the responsibility of the 'Steering

Committee' to implement the 'Resolution Plan' and it may file such application,

if so required. In reality, the 'Monitoring Agency' had not even consulted the

'Steering Committee' before filing of MA 1 (MA No.249/2020) and there was no

'Resolution' on record approving such an action.

21. The Leaned Counsel for the Respondent submits that in the absence of

any prior approval of the 'Steering Committee' for filing MA1, (MA No.249/2020)

the said 'Agency' does not have the 'locus-standi' to file MA1 or Company

Appeal (AT)(Ins.)No. 287/2020 before this Appellate Tribunal.

22. The Learned Counsel for the Respondent contends that the MA1 (MA No.

249/2020) filed by the 'Monitoring Agency' before the 'NCLT' Mumbai was a

'Premature' one and further there was malafide action on the part of 'Monitoring

Agency' in filing MA No. 249/2020. Further, it is a stand of the Respondent Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

12 that although MA No. 249/2020 was filed on 15.01.2020, the 'Monitoring

Agency' had not taken the approval of 'Steering Committee' for filing the said

Miscellaneous Application and further, the said Committee was not arrayed as

a party to the proceedings.

23. Yet another argument advanced on behalf of the Respondent is that in as

much MA No.249/2020 had not dealt with the numerous challenges in

implementing the approved 'Resolution Plan', by Respondent, the present

Respondent (Appellant in Company Appeal (AT)(Ins.)No. 327/2020) had filed MA

No. 515/2020 before the 'Adjudicating Authority' and the same is pending.

Discussions

24. There is no two opinion of a primordial fact that the erstwhile bench of

'NCLT', Mumbai on 30.01.2020 in MA No. 249/2020 in C.P.(IB)-1832(MB)/2017

after hearing had 'reserved the orders'. Earlier, when MA No.249/2020 came

up for hearing before the erstwhile Bench, the Respondent was directed to file

'Reply' in next two days' time i.e. by 29.1.2020 and it was categorically stated

that 'the matter would be heard on 30.01.2020. However, MA No. 515/2020

was filed by the 'Successful Resolution Applicant' / Royale Partners Investment

Fund Ltd. (Appellant in Company Appeal (AT)(Ins.) No. 327/2020) seeking reliefs

(a to j) mentioned therein. More specifically, in MA No. 515/2020 before the

newly reconstituted Bench of 'NCLT' Mumbai, Court No. II, the 'Successful

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

13 Resolution Applicant' in serial No. (h) of the relief portion had sought the

following: -

"That pending the hearing and final

determination of the present application,

this Tribunal may be pleased to stay all

proceedings in MA No. 249/2020."

25. As a matter of fact, the 'Adjudicating Authority' (erstwhile Mumbai Bench

of 'NCLT') when it reserved orders in MA No. 249/2020 on 30.01.2020 comprised

of different Members (both Judicial and Technical) than that of the newly

reconstituted Bench of 'NCLT' Mumbai Bench, Court No. II which passed the

orders on 12.2.2020. In the newly reconstituted Bench in Court No. II of 'NCLT',

Mumbai, the Members (both Judicial and Technical) were different, than the

former Bench of 'NCLT' and on 12.2.2020 the re-constituted Bench had stayed

the proceedings in MA No. 249/2020 until the next date of hearing of MA No.

515/2020 and directed the matter to be listed on 28.02.2020.

26. Be it noted, that Rule 16 of 'National Company Law Tribunal' Rules, 2016

speaks of 'functions of the President of the ''National Company Law Tribunal' which

reads as under: -

"16 Functions of the President: - In addition to the

general powers provided in the Act and in these Rules

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

14 the President shall exercise the following powers,

namely: -

a) Preside over the consideration of cases by the Tribunal;

b) Direct the Registry in the performance of its functions;

c) Prepare an annual report on the activities of the Tribunal;

d) Transfer any case from one Bench to other Bench when the

circumstances so warrant;

e) To withdraw the work or case from the court of a member;

f) Perform the functions entrusted to the President under

this Rules and such other powers (sic may) be relevant

to carry out its duties as head of the Tribunal while

exercising the general superintendence and control over

the administrative functions of the members, registrar,

secretary and other staff of the Tribunal."

27. Section 419(1) of the Companies Act, 2013 speaks of constitution such number

of Benches of the Tribunal, as may, by notification, be specified by the Central

Government etc. As a matter of fact, 'Constitution of Benches' and 'Assignment of

Cases' is left to the subjective administrative discretion of the President / Chairman

of a Tribunal. Section 420(1) of the Companies Act, 2013 says that 'the Tribunal

may, after giving the parties, to any proceeding before it, a reasonable

opportunity of being heard pass such orders thereon as it thinks fit'. Needless

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

15 to state that the 'Tribunal' is to ascribe reasons for arriving at a conclusion, of

course resting upon the materials on record.

28. Be it noted, that Rule 60 of the 'National Company Law Tribunal' Rules,

2016 speaks of 'Matters relating to the Judgements or Orders of the Tribunal'.

29. Rule 62 of the 'National Company Law Tribunal' Rules, 2016 under the

caption reads as under:-

"Recusal:- (1) For the purpose of

maintaining the high standards and

integrity of the Tribunal, the President or

a Member of the Tribunal shall recuse

himself:-

(a) in any case involving persons with

whom the President or the Member has

or had personnel, familial or

professional relationship;

(b) in any cases concerning which the

President or the Member has previously

been called upon in another capacity

including as advisor, representative,

experts or witness; or

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

16

(c) if there exist other circumstances such as

to make the President or the Member's

participation seem inappropriate.

(2) The President or any Member recuse himself

may record reasons for recusal;

Provided that no party to the proceedings or

any other person shall have right to know the

reasons for recusal by the President or the

Member in the case."

30. It comes to be known that the Hon'ble President of 'NCLT', New Delhi, (in

exercise of the powers conferred u/s 419 of the Companies Act, 2013) on

29.1.2020 had re-constituted the Benches at 'NCLT' Mumbai for the purpose

of exercising and discharging the functions assigned by the statute which was

in partial modification of the order dated 25.07.2020. The Benches comprised

of the following Members and the order of reconstituted Benches at 'NCLT'

Mumbai dated 29.1.2020 was to come into effect from 03.02.2020: -

"Bench at NCLT, Mumbai Court No. 1

1. Ms. Suchitra Kanuparthi, Member(Judicial)

2. Shri V.Nallasenapathy, Member (Technical)

Bench at NCLT, Mumbai Court No. II

1. Shri Rajasekhar V.K. Member (Judicial) Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

17

2. Shri Ravikumar Duraiswamy, Member (Technical)

Bench at NCLT, Mumbai Court No. III

1. Shri Bhaskara V.K. Member (Judicial)

2. Shri Shyam Babu Gautam, Member (Technical)

Bench at NCLT, Mumbai Court No. IV

1. Shri Rajasekhar V.K. Member (Judicial)

2. Shri Rajesh Sharma, Member (Technical)

Bench at NCLT, Mumbai Court No. V

1. Ms. Suchitra Kanuparthi, Member(Judicial)

2. Shri Chandra Bhan Singh, Member (Technical)"

31. It is to be pointed out that as against the final order passed in MA No.

249/2020 in allowing the application on 18.02.2020 by the erstwhile 'NCLT',

Mumbai Bench (which reserved orders in MA No. 249/2020 on 30.01.2020), the

Appellant (Royale Partners Investment Fund Ltd.) / 'Successful Resolution

Applicant' has preferred the Company Appeal (AT)(Ins.) No. 327 of 2020 before

this Tribunal.

32. At this juncture, this Tribunal worth recalls and recollects the decision of

Hon'ble Supreme Court in the State of Punjab and Another Vs. Devans

Modern Breweries Ltd. and Another, (2004) 11 Supreme Court Cases Page

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

18 26 at special page 157 wherein at paragraph 339 it is observed as

follows:-

"339. Judicial discipline envisages

that a coordinate Bench follow the

decision of an earlier coordinate Bench.

If a coordinate Bench does not agree

with the principles of law enunciated by

another Bench, the matter may be

referred to only to a larger Bench. (See

Pradip Chandra Parija Vs. Pramod

Chandra Patnaik (2002)1 SCC 1 at

paras 6 and 7; following in Union of

India v. Hansoli Devi (2002) 7 SCC 273

at para 2) But no decision can be

arrived at contrary to are inconsistent

with the law laid down by the

coordinate Bench. Kalyani Stores AIR

1966 SC 1686 and K.K. Narula AIR

1967 SC 1368 both have been rendered

by the Constitution Benches. The said

decisions, therefore, cannot be thrown

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

19 out for any purpose whatsoever; more

so when both of them if applied

collectively lead to a contrary decision

proposed by the majority."

33. Also, in the decision of Hon'ble Supreme of Court Union of India & Anr.

Vs. Hansoli Devi & Ors. (2002)7 Supreme Court Cases page 273 at special

page 274 it is held that 'judicial discipline and propriety demands that a

Bench of two learned judges should follow a decision of a Bench of three

Judges. But if a judge of two Learned judges concludes that an earlier

judgement of three Learned Judges is so very incorrect that in no

circumstances can it be followed, the proper course for it to adopt is, to

refer the matter before it to a Bench of three Learned judges setting out

the reasons why it could not agree with a earlier judgement and then if

the Bench of three learned judges also comes to the conclusion that the

earlier judgement of a Bench of three learned judges is incorrect, then a

reference could be made to a Bench of five learned judges etc."

34. It is to be remembered the principle of "qundo aliquid prohibetur,

prohibetur et omne per quod devenitur ad illud" is that an 'Authority is not

to be permitted to evade a Law by shift or contrivance'.

35. In a recent judgement of Hon'ble Supreme Court in Criminal Appeal No.

452 of 2020(arising out of SLP(CRL) No. 2433/2020 S.Kasi V. State Through Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

20 the Inspector Police, Samayanallur Police Station, Madurai dated

19.06.2020 it is held at paragraph 31 that 'a coordinate Bench cannot take

contrary view and in event there was any doubt, a coordinate Bench can only refer

the matter for consideration by a Larger Bench. The Judicial Discipline ordains so.'

36. It is not out of place for this Tribunal to make a pertinent mention that

'Probity', 'Judicial Decorum', 'Propriety' and 'Comity of Judicial Discipline'

require that a coordinate Bench cannot stay an order which was reserved by

another coordinate Bench of the same 'Tribunal'. In fact, the erstwhile Bench

('NCLT', Mumbai) which reserved orders in MA No. 249 of 2020 on 30.01.2020.

On 30.01.2020 till it pronounces the order is seized of the matter and retains

dominion over the said MA No. 249/2020 and when MA No. 515/2020 came up

for hearing before the newly re-constituted Bench (Court No. II) of Mumbai in

which an order of stay was granted on 12.02.2020 in respect of the

pronouncement of orders in MA No. 249/2020 by the erstwhile Bench, the said

order bristles with legal infirmity because of the fact that the newly re-

constituted Bench of 'NCLT' Mumbai, Court No. II cannot make an inroad in

respect of a matter viz. MA No. 249/2020 wherein the 'orders were reserved' on

30.01.2020 by the erstwhile Bench. In short, the passing an order of stay of

all proceedings in MA No. 249/2020 until the next date of hearing (28.02.2020)

in MA No. 515/2020 by the newly re-constituted Bench, 'NCLT' Mumbai, Court

No. II, on 12.02.2020 is perse an illegal, nullity and non-est one, in the eye of

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

21 Law, in the considered opinion of this Tribunal, because of the reason that the

newly re-constituted Bench cannot sit in judgement as an 'Appellate Authority'

in respect of a subject matter, in which an order was reserved by the erstwhile

Bench.

37. Added further, in the instant case, the newly re-constituted Bench of 'NCLT'

Mumbai, Court No. II had the prudent option by passing an order in directing

the office of registry of 'NCLT', Mumbai to place MA No. 515/2020 (filed by the

'Resolution Applicant' / Appellant in Company Appeal (AT)(Ins.) No. 327/2020)

before the President of 'NCLT', New Delhi for obtaining necessary orders so as to

post the said MA No. 515/2020 before the earlier Bench for hearing which

reserved orders on 30.01.2020 in MA No. 249/2020. Unfortunately, such a

proper/traditional recourse, cemented on sound and healthy principle of judicial

propriety was not resorted to. No doubt in our jurisprudence 'precedents' do

play a primary role in patronising the 'Rule of Law'. At this juncture, it is

worth to point out that in MA No.515/2020 pending hearing and final

determination of the said application a relief was sought from the Tribunal to

stay all proceedings in MA No. 249/2020.

38. To put it precisely, it is neither palatable / desirable nor permissible by the

'Co-ordinate Bench' of a Tribunal to fetter the hands of erstwhile Bench in

passing necessary orders in MA 249/2020 which was admittedly heard and

reserved for orders on 30.01.2020. In the case on hand, an order passed by a

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

22 co-ordinate Bench of the same Tribunal in reserving the matter in MA No.

249/2020, on 30.01.2020 must be reverred and the 'judicial precedent'

requires that as a 'rule of practice', the same cannot be interfered with by the

re-constituted Bench on any score. Only if the Members of the Adjudicating

Authority('NCLT') do not brush aside the orders passed by a 'Coordinate Bench'

of the same Tribunal, Certainty and uniformity in 'Law' can be achieved and

preserved in our administration of justice.

39. In as much as the impugned order dated 12.2.2020 in MA No. 515/2020

staying all proceedings in MA No. 249/2020(which was heard by the erstwhile

Bench on 30.01.2020 wherein orders were reserved) until the next date of

hearing i.e. on 28.02.2020 is beyond the jurisdiction of the re-constituted Bench

of 'NCLT' Court No. II, Mumbai, the said order with a view to prevent an

aberration of justice and with a view to secure the ends of justice, is set aside

by this Tribunal, of course in the interest of our institutional justice delivery

system, with a benign hope and trust that such slipup will not recur again in

future. Consequently, the Appeal succeeds.

Disposition

In fine, the present Appeal is allowed. No Costs. I.A. 754/2020 (stay

Application) and I.A. 755/2020 (seeking exemption to file certified copy of the

impugned order dated 12.02.2020 are closed. However, the Appellant is directed

to file the certified copy of the 'Impugned Order' within one week from today. Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

23 Company Appeal (AT) (Insolvency) No. 327 of 2020

Introduction

40. The Appellant / 'Successful Resolution Applicant' has projected the instant

Appeal being aggrieved with the impugned order dated 18.02.2020 passed by

the Adjudicating Authority ('National Company Law Tribunal') Mumbai Bench in

MA No.249/2020 in C.P.(IB)1832/2017('MA1') filed by the Respondent /

'Monitoring Agency' of the 'Corporate Debtor'.

Appellant's Contentions

41. The Learned Counsel for the Appellant submits that the 'Monitoring Agency'

does not have the 'Locus-Standi' to file MA No.249/2020 (MA No. 1) in which

the impugned order was passed on 18.2.2020. It is the stand of the Appellant

that the approved 'Resolution Plan' provides for an appointment of 'Steering

Committee' for implementation of the 'Resolution Plan' and that the approved

'Resolution Plan' require the Steering Committee to appoint a 'Monitoring Agency'

whose powers and functions are limited to the management of day-today affairs

of the 'Corporate Debtor' by virtue of clause 3.9 (o) of the approved 'Resolution

Plan'. Apart from that, on behalf of the Appellant it is brought to the notice of

this Tribunal that clause 3.9 (1) and clause 3.9 (111) of the 'Resolution Plan' sets

out that the 'Monitoring Agency' is required to function under the instructions,

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

24 control and supervision of the Steering Committee which comprised of three

representatives of the 'Committee of Creditors' and two representatives of the

Appellant.

42. The Learned Counsel for the Appellant contends that since the erstwhile

'Resolution Professional' of the 'Corporate Debtor' was managing the operations

of the 'Corporate Debtor', the Steering Committee appointed the erstwhile

'Resolution Professional' as the 'Monitoring Agency', albeit, in a different capacity

and not to continue as a 'Resolution Professional'.

43. In this connection, the stand of the Appellant is that as per Section 23 of

the 'I&B' Code, the powers of 'Resolution Professional' ceases the moment a

'Resolution Plan' is approved by the Adjudicating Authority and accordingly the

former 'Resolution Professional' was deemed to have handed over the charge

upon approval of the 'Resolution Plan' by the 'NCLT', Mumbai Bench and now

entrusted with the role and responsibility of the 'Monitoring Agency'.

44. The Learned Counsel for the Appellant proceeds to point out that in MA

No. 249/2020 (MA1), the 'Monitoring Agency' had claimed that it is seeking

implementation of the approved 'Resolution Plan' but neither MA No. 249/2020

(MA 1) deals with all the concerns for implementation of the 'Resolution Plan' nor

that filing such an application was within the ambit of the 'Monitoring Agency'.

Further, it is the responsibility of the 'Steering Committee' to implement the

'Resolution Plan' and it may file such an application if so required. Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

25

45. The grievance of the Appellant is that the 'Monitoring Agency' had not even

consulted with the 'Steering Committee' before filing MA No. 249/2020 and there

was no resolution on record approving such an action (in the absence of which

the 'Monitoring Agency' had no authority to file such an application).

46. The Learned Counsel for the Appellant comes out with an argument that

the rights, powers and the responsibilities of the 'Monitoring Agency' are

circumscribed under the 'Resolution Plan' and even if the 'Steering Committee'

wanted, it could not have abdicated its functions to the 'Monitoring Agency'.

Besides this, the Learned Counsel for the Appellant contends that the Steering

Committee' is making efforts to implement the 'Resolution Plan' and naturally

some delay had occurred due to economic fall out caused due to COVID-19 and

despite the same, the Appellant is making its best efforts to implement the

'Approved Resolution Plan', defending frivolous litigations had also delayed its

constructive actions.

47. The Learned Counsel for the Appellant submits that in as much as the

'Resolution Plan' is approved, the role of 'Resolution Professional' has come to an

end, but the Monitoring Agency is acting as if it is continuing in the capacity of

'Resolution Professional' which is in clear contradiction of Section 23 of IBC and

its powers as mentioned in the approved 'Resolution Plan'. Moreover, as per

clause 3.2(ii)(a) of the approved 'Resolution Plan' and upfront consideration

equivalent to INR 420/- crores (less payment towards) (i) balance insolvency

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

26 resolution process costs; and (ii) potential workmen's dues, if any (upfront

consideration) is required to be paid by the Appellant within 30 Business Days

from the 'Effective Dates'.

48. The Learned Counsel for the Appellant submits that the term 'Effective

Date' has been defined to mean the day on which the approved 'Resolution Plan'

becomes effective or comes into effect and the approved 'Resolution Plan' only

came into effect on and from 16.12.2019. Further, the Learned Counsel for the

Appellant points out that this Appellate Tribunal through its order dated

29.08.2019 had categorically laid down that the order of approval of 'Resolution

Plan' will be subject to the decision of the Appeal, filed by 'ARCELOR Mittal

India Pvt. Ltd.' challenging the decision of the 'Committee of Creditors'

approving the Respondent's 'Resolution Plan'. Accordingly, the approval order

attained finality on 16.12.2019, when the said appeal was dismissed by this

Tribunal.

49. The Learned Counsel for the Appellant contends that the period of 30

Business Days should have commenced from 16.12.2019 and accordingly after

the 'Resolution Professional' had handed over the charge to the Appellant.

However, the erstwhile 'Resolution Professional' had not till date been able to

comply with the approval order. This apart, the 'Monitoring Agency' without any

powers / responsibilities is claiming the payment of total consideration from

10.01.2020 and without any approval filed MA No.249/20 (MA No.1) on

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

27 15.01.2020. Indeed, the 'Monitoring Agency' at paragraph 7 of MA 249/20 had

submitted that the total consideration viz. upfront consideration and deferred

consideration aggregating to a sum of INR 480 crores paid by way of 'Non-

Convertible Debentures' (Deferred Consideration) was required to have been paid

on or before 10.01.2020. In fact, MA No. 249/20 was heard by the Adjudicating

Authority on 29.01.2020 and the filing of the said miscellaneous application was

a premature one and as a matter of fact, the impugned order does not even taken

into account the order dated 29.08.2019 and / or rule upon which date be

taken as an effective date.

50. The Learned Counsel for the Appellant submits that the 'Monitoring Agency'

in MA No. 249/2020 claimed a total payment of Rs. 948/- crores from the

Appellant, which is in violation of the approved 'Resolution Plan' and this is

evidently an attempt on the part of some 'Lenders' and 'Monitoring Agency' to

benefit from the resolution of the 'Corporate Debtor', at the expense of the

Appellant.

51. The Learned Counsel for the Appellant contends that the Appellant is a

Mauritius based Fund and it is required to raise funds from its investors and

then bring the said money to India for such payment. Also that, the Appellant

from 16.12.2019 onwards has been making best efforts to implement the

approved 'Resolution Plan' but it had, among other things, faced the following

hinderances: (i) non-submission of data / information by the 'Resolution

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

28 Professional' / 'Monitoring Agency' which ideally will have to be placed before its

investors, as it is a regulated entity which raises funds from its investors and is

answerable on its investments; (ii) defending litigations/proceedings initiated by

the Monitoring Agency; (iii) adjustments of cash balances lying with the

'Corporate Debtor'; (iv) delay in adjudication of Miscellaneous Application No.

515/20(MA 2) filed by the Appellant before the Tribunal and (v) recent impact on

the Indian and Global economy due to COVID-19. Therefore, it is the plea of

the Appellant that it is to be granted relief as claimed in MA No. 515/20 and

then be directed to implement the approved 'Resolution Plan', in addition to the

direction to the 'Monitoring Agency' for sharing / providing all relevant

information / data with regard to the 'Corporate Debtor'.

52. The Learned Counsel for the Appellant submits that at the time of

submission of 'Resolution Plan', the Appellant was provided with data /

information of 'Corporate Debtor' only as of 2017. Furthermore, for a successful

revival of the 'Corporate Debtor' as well as the implementation of approval of

'Resolution Plan' the Appellant is required to be aware of / understand the

ongoing projects (if any), assets converted to cash / receivables realized,

receivables lost for non-completion of projects and other damages and recoveries

by various 'Debtors'.

53. The Learned Counsel for the Appellant brings it to the notice of this

Tribunal that in terms of the 'Approval Order' the erstwhile 'Resolution

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

29 Professional' was categorically directed by the Tribunal to 'hand over all records,

premises/factories/documents' to the 'Resolution Applicant' to finalize the

further line of action required for starting of the operation etc. but the erstwhile

'Resolution Professional' pursuant to approval order or even after its

appointment as 'Monitoring Agency' has high handedly been awarding sharing

such data / information with the Appellant and only sought recovery of upfront

consideration.

54. The Learned Counsel for the Appellant contends that the receivable and

assets shown in 'information memorandum' have de-pleaded considerably as (i)

the office of the 'Corporate Debtor' has been shut for a long time i.e. at least 6

months; and (ii) there was 25 ongoing projects of the 'Corporate Debtor' at the

time of commencement of CIRP but as of February, 2020 there were less than 5

ongoing projects and none of the earlier projects have been completed by the

'Corporate Debtor'. Besides this, the 'Monitoring Agency' is also avoiding

finalization of the audited accounts for the financial year 2018-19 and it is

important for the Appellant to secure such information / data from the

'Monitoring Agency' as it is required to, interalia, understand the assets of

'Corporate Debtor' etc. Infact, the impugned order is in violation of Section 31

of 'I&B' Code and also para 28 of the approval order as it records 'sharing of data'

cannot be a condition precedent to implementation of the approved 'Resolution

Plan'.

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

30

55. The Learned Counsel for the Appellant contends that various provisions of

the approved 'Resolution Plan' categorically lay down that entire payment

obligation of the Appellant towards the 'Committee of Creditors' is limited to the

total consideration of INR 900 crores and a harmonious construction of these

clauses demonstrates that accrual of cash balances to the 'Committee of

Creditors' forms a part of total consideration and is not in addition to total

consideration. In this regard, the Learned Counsel for the Appellant refers to

the clause which runs as follows: -

"Clause 3.2(ii) of the Resolution Plan

categorically lays down that the Total

Consideration amounting to a sum of INR 900

Crores will be pad to the financial creditors of

the Corporate Debtor towards a full and final

discharge of all their claims against the

Corporate Debtor. For ease of reference and

clarity Clause 3.2(ii) is also reproduced

hereinunder: -

"As regards the Financial Creditors,

according to the List of Creditors, total claims

filed by the Financial Creditors amount to INR

9552.99 Crores, out of which claims aggregating

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

31 to INR 7487.45 Crores have been verified and

admitted for the purposes of CIRP by the

Resolution Professional ("Admitted Debt of

Financial Creditors") The Resolution Applicant

understands that the Admitted Debt for

Financial Creditors also includes all un-

invoked/invoked bank guarantees, which will

continue until their expiry. Out of this aggregate

amount of Admitted Debt, the Resolution

Applicant has proposed to pay the following

consideration to the Financial Creditors for full

and final discharge of the Financial Creditors

and for assignment of entire Claims and

Admitted Debt of Financial Creditors to the

Indian SPV:

a. Upfront Consideration equivalent to INR 420

Crores (Indian Rupees Four Hundred Twenty

Crores) less payment towards (i) Balance CIRP

Costs; and (ii) Potential Workmen's Dues, if any

within 30 Business Days; and

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

32 b. Deferred Consideration equivalent to INR

480 Crore (Indian Rupees Four Hundred

Eighty Crores) in the form of unlisted NCDs."

56. The Learned Counsel for the Appellant contends that clause 3.2(vi)(B) of the

'Resolution Plan' sets out that the total consideration is full and final settlement

dues of the 'Financial Creditors' and that they have waived off the balance sum of

their dues and the same is as follows:-

"It is hereby clarified that (ii)

notwithstanding anything contained in this

'Resolution Plan', the aggregate of upfront

consideration and deferred consideration

(total consideration') shall be there full and

final discharge provided to the claims of the

'Financial Creditors' upon receipt of which all

claims of 'Financial Creditors' in relation to

the admitted debt shall stand extinguished."

57. The Learned Counsel for the Appellant contends that if upon payment of INR

900/- Crores all claims and admitted debt of 'Financial Creditors' shall stand

extinguished there is no sum against which the cash accruals sought by the

'Financial Creditors' can be adjusted by them.

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

33

58. According to the Learned Counsel for the Appellant the Clause no. 3.2(vi)(D)

of the 'Resolution Plan', it does not propose to pay any sum over and above the total

consideration to the 'Financial Creditors' and shall have no further liability.

Further, the Learned Counsel for the Appellant adverts to Clause 3.2(vi) which

provides that the 'Secured Financial Creditors' will only be entitled to received

upfront consideration of INR 420 Crores and deferred consideration of INR 480

Crores (less the balance unpaid CIRP costs and admitted workmen's dues) and no

more. In fact, Clause 3.2(viii) of the 'Resolution Plan' mentions that the cash

balances of the 'Corporate Debtor' will accrue and be paid to the 'Financial

Creditors' (less any balance CIRP cost and workmen's dues) till the date of

implementation of the Plan i.e. till the date of upfront consideration.

59. The Learned Counsel for the Appellant submits that a combined and

harmonious reading of clauses 3.1(ii), 3.2 (vi) and clause 3.2(viii) of the approved

'Resolution Professional' demonstrates that any payment made under the terms of

clause 3.2 of the approved 'Resolution Professional' shall be adjusted from the

upfront consideration and not in addition to upfront consideration. Therefore, it is

a stand of the Appellant that the cash balances which are proposed to accrue to the

'Financial Creditor' ought to be adjusted from the upfront consideration payable by

the Appellant.

60. The Learned Counsel for the Appellant submits that 'Monitoring Agency' is

relying on clause 3.2 (viii) of the approved 'Resolution Professional' in isolation to

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

34 state that all the cash balances accrued during the intervening period is payable to

the 'Financial Creditors' of the 'Corporate Debtor' and this misinterpretation is made

with a sole intent of unjustly enriching certain creditors of the 'Corporate Debtor' at

the expense of the Appellant.

61. The Learned Counsel for the Appellant contends that even assuming but not

conceding that clause 3.2(vii) and 3.2(viii) of the approved 'Resolution Professional'

are in conflict and cannot be harmoniously interpreted, it is the settled position of

law that when the earlier clause and a later clause of the contract are in conflict to

each other and both the clauses cannot be given effect to, then the earlier clause

will prevail over the later clause. In this connection, the learned counsel for the

Appellant relies on the Hon'ble Supreme Court decision in Radha Sundar Datta Vs.

Mohd. Jahadur and Rahim and Others Reported in 1959 SCR at page 1309 wherein

it is observed as under:-

"11. Now it is a settled rule of

interpretation that if there be two admissible

constructions of a document, one of which

will given effect to all the clauses therein

while the other will render one or more of

them nugatory, it should be the former that

should be adopted on the principle expressed

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

35 in the maxim "ut res magis valeat quam

pereat"

.....

"13.............. In fact, there is a conflict

between the earlier clause and the later

clauses and it is not possible to give effect to

all of them, then the rule of construction is well

established that it is the earlier clause that

must override the later clauses and not vice

versa."

62. The Learned Counsel for the Appellant submits that the approved 'Resolution

Plan' does not entitle the 'Financial Creditors' any sum over and above the total

consideration and the total consideration shall never exceed 900/- crores and,

therefore, the cash receivables which are to be accrued to the 'Financial Creditor'

are within the purview of total consideration and not in excess thereof. Further, it

is the contention of the Appellant that the impugned order fails to comprehend the

provisions of the approved 'Resolution Plan' and amends the 'Resolution Plan' by

directing the Appellant to pay the total consideration (i.e. Rs. 900 crores) over and

above Rs. 42/- crores already deposited / appropriated. Moreover, the impugned

order directs the Appellant to make payment of Rs. 48/- crores towards additional

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

36 performance bank guarantee and as per the impugned order, the total consideration

payable by the Appellant will be Rs. 990 Crores instead of Rs. 900 Crores.

63. The Learned Counsel for the Appellant vehemently takes a plea that the

impugned order among other things fails to take into consideration that the

additional performance bank guarantee is not to be paid by the Appellant, once the

impugned order amends the 'Resolution Plan' and directs payment of the total

consideration within seven days. Also that it is represented on behalf of the

Appellant that the forfeiture of the performance Bank Guarantee' assumes failure

of implementation of the 'Resolution Plan' and its only consequence of such an event

would be liquidation of the 'Corporate Debtor'.

Respondent's Submissions

64. In response, the Learned Counsel for the Respondent submits that the

'Resolution Plan' of the 'Successful Resolution Applicant' (Respondent in Company

Appeal (AT)(Ins.) 287/20) and the present Appellant in this 'Appeal', was approved

by the 'Committee of Creditors' of the 'Corporate Debtor' on 10.01.2019 and the

'Resolution Professional' of the 'Corporate Debtor' filed an application (in terms of

Section 30 and 31 of the 'I&B' Code) before the Adjudicating Authority for approving

the 'Resolution Plan' of the 'Successful Resolution Applicant' and that the said

application was allowed on 25.11.19.

65. The Learned Counsel for the Respondent/Monitoring Agency of the 'Corporate

Debtor' points out that the Monitoring Agency' (created under the 'Resolution Plan') Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

37 because of delay and failure on the part of 'Successful Resolution Applicant' was

forced to file MA No. 249/20 on 22.1.2020 before the Tribunal praying for the

implementation of 'Resolution Plan' etc. After hearing the parties at length, on

30.1.20 the orders were reserved in MA No. 249/20 and before that, by virtue of an

order dated 29.1.20 the Benches of the 'NCLT' Mumbai were re-constituted, which

was to come into effect only from 03.02.2020.

66. The Learned Counsel for the Respondent brings it to the notice of this Tribunal

that the 'Successful Resolution Applicant'/the Appellant in the present Appeal, on

06.02.2020 filed MA No. 515/2020 before the re-constituted 'NCLT' Bench No. II

illegally seeking among other things a direction from reconstituted Bench No. II to

stay the proceedings in MA No. 249/2020 (which was heard at length and reserved

orders by the earlier bench of 'NCLT' Mumbai Bench No. II on 30.01.2020).

67. The Learned Counsel for the Respondent submits that by means of the

impugned order dated 18.02.2020 in MA No.249/2020, the 'Successful Resolution

Applicant'/ the present Appellant was directed to implement the 'Resolution Plan'

within seven days from the date of the order and as against the said order dated

18.02.2020 the present Appellant filed Company Appeal (AT)(Ins.)No. 327/20 before

this Tribunal on 25.02.2020 and a stay in respect of the impugned order.

68. The Learned Counsel for the Respondent contends that the 'ARCELOR Mittal

India Pvt. Ltd.' (AMIPL'), an 'Unsuccessful Resolution Applicant' had (pursuant to

the approval by the 'Committee of Creditors' of 'Successful Resolution Applicant's Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

38 plan) filed an application MA No.344/2019 before the Adjudicating Authority

seeking rejection of the 'Resolution Plan' of the Appellant / Royale Partners

Investment Fund Ltd. and that the said application was dismissed on 15.04.2019.

In this connection, the Learned Counsel for the Respondent points out that the

order in MA No. 344/2019 was assailed before this Tribunal, by the 'ARCELOR

Mittal India Pvt. Ltd.' and this Tribunal in Company Appeal (AT)(Ins.) No.

524/2019 on 29.08.2019 in the said Appeal at paragraph 4 had observed that

'pendency of the appeal will not come in the way of Adjudicating Authority

to pass appropriate order u/s 31 of the Code which if approved shall be

subject to the decision of this Appeal'.

69. The Learned Counsel for the Respondent points out that the Adjudicating

Authority had approved the 'Resolution Plan' of the 'Successful Resolution

Applicant' / Appellant in Company Appeal (AT)(Ins.)No. 327/2020 on 25.11.2019

and based on the approval of 'Resolution Plan' by the Adjudicating Authority, the

Company Appeal (AT)(Ins.)No.524/2019 was dismissed by this Tribunal on

16.12.2019 and indeed, numerous stakeholders had assailed the 'approval order'

in which the 'Successful Resolution Applicant' is also a party and in none of the

appeals, the implementation of the 'Resolution Plan' was stayed. However, in

Company Appeal (AT)(Ins.) No.1510/2019 as per order dated 03.02.2020 this

Tribunal had directed the erstwhile 'Resolution Professional' to keep this Tribunal

informed about the implementation of the 'Resolution Plan'.

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

39

70. Continuing further, it is the submission of Learned Counsel for the Respondent

that as per 'Resolution Plan' of the 'Successful Resolution Applicant' / RPIFL (the

Appellant) was required to pay upfront consideration of Rs. 420/- Crores to the

'Financial Creditor' within 30 Business Days of the effective date viz. the date of

approval of the Plan by the Adjudicating Authority. In fact, the said 30 Business

Days expired on 10.01.2020 considering that the effective date commenced from

25.11.2019 i.e. the date of approval order. Only on account of violation of the

'Resolution Plan' the Monitoring Agency / Respondent was forced to file MA No.

249/2020 before the Adjudicating Authority.

71. The Learned Counsel for the Respondent contends that the order in MA No.

249/2020 to implement the 'Resolution Plan' within 07 days was passed on

18.02.2020 and that the order dated 29.08.2019 passed in Company Appeal

(AT)(Ins.)No. 524/2019 passed by this Tribunal, relied on by the Appellant in no

manner can be relied upon by the 'Successful Resolution Applicant' /Appellant for

not implementing its 'Resolution Plan' in terms thereof.

72. The Learned Counsel for the Respondent submits that the Adjudicating

Authority at paragraph 5.2 of the impugned order in MA No. 249/2020 had dealt

with the aspect of 'Locus-Standi' of the 'Monitoring Agency' and further it is clearly

held by the Adjudicating Authority that the 'Monitoring Agency' as well as the

'Resolution Professional' who are part of the said agency are duty bound to do all

that is required to see the successful implementation of the 'Resolution Plan' and

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

40 can file any application before the Adjudicating Authority for ensuring the

successful implementation of the 'Plan'.

73. The Learned Counsel for the Respondent points out that the Adjudicating

Authority in its approval order dated 25.11.2019 had specifically permitted the filing

of miscellaneous application if required in connection with implementation of this

'Resolution Plan' and also that in addition to the liberty granted by the Adjudicating

Authority in the approval order, the 'Resolution Plan' itself had provided the

authority to the 'Monitoring Agency' to supervise the implementation of the

'Resolution Plan' and owing to the failure of the 'Resolution Applicant' in

implementing the 'Resolution Plan' the 'Monitoring Agency' had filed the MA No.

249/2020.

74. The Learned Counsel for the Respondent contends that the Adjudicating

Authority in the impugned order in MA No. 249/2020 dated 18.02.2020 had clearly

observed that the contention of the 'Resolution Applicant' that he has not received

detailed information of the 'Corporate Debtor' Company is not borne out by facts.

75. Apart from this, the stand of the Respondent is that the receipt of data or

documents sought for by the 'Successful Resolution Applicant'/ Appellant is not a

condition precedent to the implementation of the approved 'Resolution Plan' and

that the approved 'Resolution Plan' is to be duly implemented by the Appellant

within the time mentioned in the 'Resolution Plan'.

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

41

76. The Learned Counsel for the Respondent points out to the Letter of Intent

(LOI) signed by the 'Successful Resolution Applicant' on 10.01.2019 wherein it was

specifically mentioned at paragraph 9 that there is no condition precedent to

implement the 'Resolution Plan' other than the approval from the Adjudicating

Authority and the CCI (both of which approvals were granted) (vide para 9 reply

affidavit of the Respondent / 'Monitoring Agency' of 'Corporate Debtor').

77. The Learned Counsel for the Respondent points out that the Tribunal's order

dated 25.11.2019 requires the 'Resolution Professional' to hand over all records,

premises, factories, documents to the Appellant 'to finalize the further line of action

required for the starting of the operation' and this part of the order is not a condition

precedent or in parallel to the implementation of the 'Resolution Plan' as was

wrongly suggested by 'Successful Resolution Applicant'.

78. The Learned Counsel for the Respondent contends that the 'Monitoring Agency'

in response to the e-mail dated 15.12.2019 from the 'Successful Resolution

Applicant' had specified to it, that it had already shared the entire back-up of

documents made available on the virtual data room as part of the 'Resolution Plan

Process' through a flash drive on 29.11.2019 and the remaining information was

shared on 24.12.2019, 26.12.2019 and in the 'Steering Committee' that took place

on 07.01.2020. Besides this, the 'Monitoring Agency' together with the 'Corporate

Debtor's team also made presentation to the 'Successful Resolution Applicant' on

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

42 24.12.2019 to provide an update on the status of completed and ongoing EPC

projects.

79. The Learned Counsel for the Respondent submits that the 'Monitoring Agency'

in good faith, without prejudice to the fact that supplying of information is not a

condition to the implementation of Plan, again furnished all the information to the

'Successful Resolution Applicant' that were sought vide e-mail dated 16.03.2020.

Inspite of all the information being furnished to the 'Successful Resolution

Applicant', it has not taken any steps to implement the 'Resolution Plan' and

according to the Respondent the 'Successful Resolution Applicant' is deliberately

delaying the implementation of the 'Resolution Plan' on this pretext.

80. The Learned Counsel for the Respondent contends that in the matter of 'Ingen

Capital Group LLC' Vs. 'V.Ramkumar' (Company Appeal(AT)(Ins.)

No.795/2018), this Tribunal had initiated suitable actions under the provisions of

the Code for non-implementation of the 'Resolution Plan' by the 'Resolution

Applicant' who had not given effect to the 'Resolution Plan' and lay down conditions

for its implementation when no such condition existed in the 'Resolution Plan'.

81. The Learned Counsel for the Respondent submits that the 'Resolution Plan'

is an unambiguous one and further clear on 'treatment of the cash balances' and

a reference is made to the 'process document' dated 04.10.2018 (as amended from

time to time) in and by which the 'Resolution Plan' was required to provide 'that the

available cash balances in the books of 'Corporate Debtor' upto the implementation Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

43 of resolution plan shall accrue to the 'Financial Creditors' and will not form part of

the offering by 'Resolution Applicants'.

82. The Learned Counsel for the Respondent submits that the 'Resolution Plan'

as modified by the 'Letter of Intent' dated 10.01.2019 as approved by the 'Committee

of Creditors' and by the Adjudicating Authority contained in the order dated

25.11.2019 clearly provides that 6(4) the Resolution Applicant shall be vested with

complete control and ownership of all that cash flows / receivables including cash

accruals (arising after the date of payment of upfront consideration), bank accounts

of the Corporate Debtor as soon as the 'Financial Creditors' are paid the upfront

consideration.

83. The Learned Counsel for the Respondent adverts to the 'Letter of Intent' dated

10.1.19 which was unconditionally accepted and acknowledged by the 'Successful

Resolution Applicant' provides the following: -

"9. ...Notwithstanding anything contained in the

Resolution Plan it is clarified that despite any

assumption made in the 'Resolution Plan' not being

fulfilled satisfied or granted by the Adjudicating

Authority, the Resolution Applicant hereby confirms

that it shall still discharge the total consideration (as

defined in the 'Resolution Plan and the cash

balances of the 'Corporate Debtor' as contemplated Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

44 in the 'Resolution Plan' to the Financial Creditors

without limitation.

84. The Learned Counsel for the Respondent contends that the contents of the

approved 'Resolution Plan', as modified by the 'Letter of Intent' was

unconditionally accepted by the Appellant / 'Successful Resolution Applicant' and

no other interpretation would come to the rescue of the Appellant because of the

reason that the approved 'Resolution Plan' is a clear and un-ambiguous one.

85. The Learned Counsel for the Respondent refers to the judgment of this

Tribunal 'JSW Steel Ltd.' Vs. 'Mahender Kumar Khandelwal & Ors.'

(Company Appeal (AT)(Ins.) No. 957/2019') wherein after relying upon the

judgement of the Hon'ble Supreme Court in 'Committee of Creditors' of 'Essar

Steel India Ltd.' Vs. 'Satish Kumar Gupta & Ors.' reported in 2019 SCC

online SC 4178 held that : "126. The aforesaid decision having been reversed by

the Hon'ble Supreme Court we hold that the distribution on the profit made during

the 'Corporate Insolvency Resolution Process' should be made in terms of addendum

to the RFP as held by the 'Hon'ble Supreme Court."

86. The Learned Counsel for the Respondent contends that in the present case

on hand, not only the 'Process Documents' as well as the 'Resolution Plan' and the

'LOI' specifically mentioned that 'the cash balances of the 'Corporate Debtor' will

approve and be paid to the 'Financial Creditors' (less any balance CIRP costs) till

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

45 the date of implementation of the plan i.e. till the date of payment of the upfront

consideration'.

87. Lastly, it is the submission of the Learned Counsel for the Respondent that

the Appellant / 'Successful Resolution Applicant' is to implement the 'Resolution

Plan' forthwith and takes over the 'Corporate Debtor' so that the 'Corporate Debtor'

is relieved of from the purview of 'Corporate Insolvency', because of the reason the

Company and its Creditors are suffering an irreparable loss as the 'Resolution

Plan' is in Limbo owing to the present lockdown scenario and the future of the

employees of 'Corporate Debtor' remains an uncertainty.

Intervenor's Pleas

88. At the outset, the Learned Counsel for the Intervenor (IDBI Bank - lead Bank)

of the erstwhile of 'Committee of Creditors informs this Tribunal that the

'Intervenor' adopts the stand and arguments advanced on behalf of the 'Monitoring

Agency'.

89. Continuing further, the Learned Counsel for the Intervenor points out that

substantial time had already expired since the last date for implementing the

'Resolution Plan'. In fact, more than six months had elapsed, yet the Appellant /

'Successful Resolution Applicant' had not taken even the primary steps in

implementing the 'Resolution Plan' (including the payment of upfront sum of Rs.

420 crores).

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

46

90. The Learned Counsel for the Intervenor contends that the 'commercial

wisdom' of the creditors assumes pivotal significance and when the 'Resolution

Plan' was approved by the 'Adjudicating Authority' the same is sufficient for

refraining from interfering with the contents and provisions thereof. Apart from

that, it is the plea of the Intervenor that non-implementation of the 'Resolution

Plan' by the 'Successful Resolution Applicant' is disapproved by the 'Tribunals'

and it is unexpectable if the 'Resolution Applicant' seeks to wriggle out of its

obligations.

An Appraisal

91. It transpires that the Respondent / 'Monitoring Agency of 'Corporate Debtor'

filed MA No. 249/2020 against the Appellant / 'Successful Resolution Applicant'/

RPIFL praying interalia and issuance of direction to the 'Resolution Applicant'

forthwith implement the 'Resolution Plan' as approved by the Adjudicating

Authority on 25.11.2019 without prejudice to the right of 'Committee of Creditors'

to invoke and forfeit the 'Performance Guarantee'. The Appellant / 'Successful

Resolution Applicant' (as Respondent) filed a preliminary reply before the

Adjudicating Authority contending that (i) MA No. 249/2020 was not filed with

the approval of the 'Steering Committee' and that the powers and functions of the

'Monitoring Agency' is limited to the conduct of day-today affairs of the 'Corporate

Debtor' etc.

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

47

92. The Appellant /'Successful Resolution Applicant' had averred in its reply in

MA No.249/2020 before the Adjudicating Authority that it is committed to

implement the approved 'Resolution Plan' in its entirety but the 'Secured Financial

Creditors' as well as the 'Monitoring Agency' (Applicant) and the 'Steering

Committee' had failed to adhere to its binding terms. Also, that the Appellant/

'Successful Resolution Applicant' before the Adjudicating Authority in MA No.

249/2020 had taken a stand that the payment of cash balances proposed to be

made to 'Financial Creditors' forms a part of the aggregate payment obligation and

not in addition to the aggregate payment obligation.

93. A perusal of the 'Preliminary Reply Affidavit' filed by the Appellant(Royale

Partners Investment Pvt. Ltd.)/ Respondent in MA No.249/2020 before the

'Adjudicating Authority' shows that an averment was made that, by way of the

approved 'Resolution Plan', the Appellant shall be taking over the 'Corporate

Debtor' as it existed as on the date of its approval and further that the 'Financial

Creditors' do not have any rights over the assets of the 'Corporate Debtor' and,

therefore, they cannot attempt to appropriate any part thereof, which would be an

unlawful and illegal one but also contrary to the spirit and intent of the 'I&B' Code.

94. It is to be borne in mind that the 'I&B' Code defines 'Resolution Plan' as a plan

for 'Insolvency Resolution' of the 'Corporate Debtor' as a going concern. It cannot

be gainsaid that the 'Resolution Plan' is not a 'Sale'/'Recovery'/'Liquidation'/an

'Auction'. It is to be pointed out that the purpose of 'Resolution' is for

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

48 maximisation of value of assets of 'Corporate Debtor' and thereby for all creditors.

It is to be remembered that it is not the maximisation of value of assets of value

for a 'stakeholder' or 'set of stakeholders' such as 'creditors' and to promote

entrepreneurship, availability of credit and balance the interests and this principle

is too important. It cannot be denied that under a 'Resolution Plan' certain rights

in 'Corporate Debtor' or assets and liabilities of the 'Corporate Debtor' will be

exchanged and that is an 'ancillary one' in the considered opinion of this

Tribunal.

95. As a matter of fact, once approved by the 'Committee of Creditors', the

'Resolution Plan' is to be submitted to the Adjudicating Authority Under Section

31 of the 'I&B' Code. An Adjudicating Authority, at this juncture, is to apply his

judicial mind to the 'Resolution Plan' so submitted and if the said Plan fulfills the

requirement of Section 30 of the 'I&B' Code, he may either approve or reject such

plan. Indeed, the 'Adjudicating Authority' is required to take a decision as per

Section 31 of the 'I&B' Code, can peruse the reasoning to accept or reject one or

other objection or suggestion and may express its own decision/opinion as per

decision 'Rajputtanna Properties(P)Ltd. V. Ultratech Cements Ltd.' reported

in (2018) 144 CLA page 490(NCLAT). In fact, in the absence of any

discrimination or perverse decision it is not open to 'Adjudicating Authority' or the

Appellate Tribunal to modify a 'Resolution Plan' approved by the 'Committee of

Creditors'.

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

49

96. To put it succinctly, Section 31 of the Code enjoins that once the 'Resolution

Plan' is approved by an 'Adjudicating Authority' it binding on all interested parties.

Of course, a threadbare scrutiny of a 'Resolution Plan' with great care, caution

and utmost circumspection is very much required before recording a satisfaction

in writing by an 'Adjudicating Authority'. 'Satisfaction' is a condition precedent

for approval of a 'Resolution Plan'. Undoubtedly, the 'Resolution Plan' must

resolve 'Insolvency'. It cannot be forgotten that 'I&B' Code permits liquidation

only on failure of 'Corporate Insolvency Resolution Process'.

97. If all the requirements as mentioned in Section 30(2) are satisfied an

'Adjudicating Authority' has to pass an order of approval of 'Resolution Plan'. After

the 'Resolution Plan' is approved by an Adjudicating Authority, an application may

be made to the said Authority by a person in-charge of the Management or control

of the business and operations of the 'Corporate Debtor' for an order praying of an

assistance from the Local District Administration in implementing the terms of the

'Resolution Plan'.

98. The Appellant / 'Resolution Applicant' (stepped into the shoes of 'Corporate

Debtor') before the Adjudicating Authority had taken a plea that it had not received

the detailed information of the Debtor Company. However, the 'Adjudicating

Authority' at para 5(1) of the impugned order had clearly mentioned that the

Chairman of the 'Monitoring Agency' in its Minutes of the Meeting dated

07.01.2020 had mentioned that the data was furnished to the Appellant. But in Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

50 regard to the request of the Appellant for supply of the 'Multiple Data' the same

was in the process of being gathered and it was taking time on account of less

number of employees.

99. In regard to the request of the Appellant / 'Resolution Applicant' that

provisional March, 2019 financial statement, the Appellant was informed that the

said statements were not audited and was not approved by the Board and hence

the same could not be parted with. Before this Tribunal, on behalf of the

Respondent / 'Monitoring Agency' in the present Company Appeal it is submitted

that the 'Monitoring Agency', in good faith, without prejudice to the fact that

supplying of information is not a condition to the implementation of a plan, once

again furnished all the information sought for by the Appellant / 'Successful

Resolution Applicant' vide e-mail dated 16.03.2020. In this connection, it may not

be out of place for this Tribunal to make a pertinent mention that the 'Steering

Committee' in terms of the 'Minutes of the Meeting' had clearly informed the

Appellant that it is not a condition precedent to share the data for implementing

the approved 'Resolution Plan' and the same was to be implemented within the

time specified. Also, that the Respondent / 'Monitoring Agency' of the 'Corporate

Debtor' comes out with a plea that the Appellant was informed (for its e-mail dated

15.12.2019) that the entire back-up of documents was shared and made available

on the virtual data room as part of the 'Resolution Plan Process' through a flash

drive on 29.11.2019 and the remaining information was shared on 24.12.19,

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

51 26.12.19 and in the 'Steering Committee Meeting' that took place on 7.1.20 etc.

Therefore, the plea of the Appellant that it was not supplied with detailed

information of 'Corporate Debtor' is not accepted by this Tribunal.

100. Dealing with the aspect that the 'Monitoring Agency' has no 'Locus-Standi'

to file MA No. 249/2020 before the Adjudicating Authority, and further it can file

the same only there being specific authorization from the 'Steering Committee',

this Tribunal opines that the approval order of the Adjudicating Authority dated

25.11.2019 pin pointedly granted liberty if deem fit and legally permissible to move

miscellaneous application if required in connection with the implementation of

this 'Resolution Plan' and as such the counter plea taken on behalf of the

Appellant is negatived by this Tribunal especially considering the fact that for

ensuring successful implementation of 'Resolution Plan' the 'Monitoring Agency'

and the 'Resolution Professional' are to take a lead role in this regard.

101. As regards the plea that MA No. 249/2020 was filed by the Respondent

before the Adjudicating Authority in a premature fashion and that the 'Monitoring

Agency' without any powers / responsibility is claiming payment of total

consideration from 10.01.2020 and without any approval filed MA No. 249/20,

this Tribunal points out that as against the dismissal order in MA No. 344/2019

passed by the Adjudicating Authority, 'ARCELOR Mittal India Pvt.

Ltd.'('Unsuccessful Resolution Applicant') filed Company Appeal (AT)(Ins.) No.

524/2019 before this Tribunal and this Tribunal on 29.08.2019 had categorically

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

52 observed that the 'pendency of the appeal will not come in the way of Adjudicating

Authority to pass appropriate order u/s 31 of the Code which if approved shall be

subject to the decision of this Appeal' and in fact the final order in MA No. 249/20

was passed on 18.02.2020 by the 'Adjudicating Authority'. Therefore, placing of

reliance upon the order dated 29.08.2019 in Company Appeal (AT)(Ins.) No.

524/2019 by the Appellant / 'Successful Resolution Applicant' for non-

implementation of its Resolution will be an 'otiose' one.

102. It is evident that as per 'Resolution Plan' of the Appellant, it was required to

pay 'upfront consideration' of Rs. 420/- Crores to the 'Financial Creditors' within

30 Business Days of the 'Effective Date' viz. the date of approval of plan by the

Adjudicating Authority dated 25.11.2019. If calculated, from the approval order

date 25.11.2019, the 30 Business Days came to an end on 10.01.2020.

Resultantly, on account of violation of the 'Resolution Plan', the Respondent /

'Monitoring Agency' had filed MA No. 249/2020 before the Adjudicating Authority,

which is perfectly maintainable in the 'eye of Law', as opined by this Tribunal.

103. The other argument projected on the side of the Appellant / 'Resolution

Applicant' that subsequent to the approval of 'Resolution Plan' by the 'Committee

of Creditors' on 10.01.2019, all the cash balances and accrual should be adjusted

against the upfront payment of Rs. 420/- Crores, it is brought to the notice of this

Tribunal that the 'Resolution Professional' on several occasions had without any

simmering doubt made it clear that any amendment to the provision to the

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

53 'Resolution Plan', as approved by the 'Committee of Creditors' in its meeting dated

10.01.2019 and subsequently submitted before the Adjudicating Authority by

means of an application as per Section 30 of the 'I&B' Code is an impermissible

one. As such, the contra stand taken by the Appellant is not accepted by this

Tribunal.

104. A cursory perusal of the ingredients of para 3.2 (viii) and 6(iv) of the

'Resolution Plan' dated 25.11.2019 unerringly points out that till the date of

implementation of the plan viz. till the date of payment of upfront consideration

any cash which accrues to the 'Corporate Debtor's Company will only be paid to

the 'Financial Creditors' (less any balance CIRP costs) and not to the Appellant.

Hence, the contra plea of the Appellant is legally untenable.

105. It is candidly clear from the 'Letter of Intent', (signed by the Appellant on

20.01.2019) that there was no condition imposed to implement the 'Resolution

Plan' other than the approval to be obtained from the 'Adjudicating Authority' and

the 'CCI', which were secured.

106. Moreover, the 'Resolution Plan' is free from any doubt and quite clear on

treatment of the cash balances, especially in the teeth of 'process document' dated

4.10.2018 which clearly mentioned that the 'Resolution Plan' was required to

provide 'that the available cash balances in the books of the 'Corporate Debtor'

upto the implementation of 'Resolution Plan' shall accrue to the 'Financial

Creditors' and will not form part of the offering by 'Resolution Applicants'. Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

54

107. 'Speed' is the gist for an effective and efficacious functioning of 'I&B' Code.

The longer the delay, it may induce 'Liquidation' and 'Value,

Deterioration/Destruction'.

108. In the instant case, it cannot be brushed aside that nearly six months have

gone by, from the order of approving the 'Resolution Plan' dated 25.11.2019 of the

Appellant and the same is yet to be implemented by the Appellant till date. In the

'Preliminary Reply Affidavit', the Appellant / Respondent at paragraph 6 had

stated that it had always shown its willingness and ability to execute the approved

'Resolution Plan' etc. As such, this Tribunal is of the earnest opinion that the

Appellant / Respondent cannot avoid/evade/ or circumvent its 'solemn

responsibility' to implement the 'Resolution Plan' unconditionally in stricto sense

of the term, without any further procrastination.

109. Be that as it may, in view of the upshot, this Tribunal taking note of the facts

and circumstances of the present case which float on the surface in a conspectus

fashion and also keeping in mind that the 'upfront payment' was not made by the

Appellant as well as the 'Non-Convertible Debentures' of Rs. 480/- Crores in

favour of 'Financial Creditors' was not issued; comes to an inevitable and

irresistible conclusion that the 'Adjudicating Authority' had rightly directed the

Appellant / 'Resolution Applicant' to make: (a) payment of upfront amount of Rs.

420/- Crores which was already due consequent to the completion of 30 'Business

Days' from the date of approval of the 'Resolution Plan' by it; (b) the issuance of

Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

55 'Non-Convertible Debentures' of Rs. 480/- Crores in favour of the 'Financial

Creditors'; (c) to deposit the balance performance guarantee of Rs. 48/- Crores

within 90 days of the approval of the 'Resolution Plan' by granting a week's time

and resultantly allowed the miscellaneous application No. 249/2020 on

18.02.2020 which in the considered opinion, of this Tribunal is free from any legal

flaws. Resultantly, the present Appeal sans merits.

Conclusion

In fine, the instant Appeal is dismissed, but without costs. I.A. No.

860/2020(stay application) and I.A. No. 861/2020(praying for an exemption to file

certified copy of the impugned order) are closed.

[Justice Venugopal. M] Member (Judicial)

[V.P. Singh] Member (Technical)

NEW DELHI

25th June, 2020

ss

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56 Company Appeal (AT) (Insolvency) No. 287 of 2020 Company Appeal (AT) (Insolvency) No. 327 of 2020

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