S. Rajendran, R.P Of Prc International ... vs S. Mukanchand Bothra (Deceased) & Ors

[Arising out of Impugned Order dated 02nd July 2019 passed by the Adjudicating Authority/National Company Law Tribunal, Chennai Bench, Chennai in M.A. No. 518 of 2018 in CP/540/IB/2018 and Order dated 11th October 2019 passed in M.A. No.927 of 2019 in M.A. No.651 of 2019 in CP/540/IB/2018]

IN THE MATTER OF:

S. Rajendran, Resolution Professional In the matter of PRC International Hotels Private Limited 2nd Floor, Evalappan Mansion No.188/87, Habibullah Road (Near Kodambakkam Railway Station) T. Nagar, Chennai - 600 017 ...Appellant

Versus

1. S. Mukanchand Bothra (Deceased) Represented through its legal heirs Respondent Nos.2 to 4 herein ...Respondent No.1

2. M. Karishma Bothra D/o Late Shri S. Mukanchand Bothra ...Respondent No.2

3. M. Gagan Bothra S/o Late Shri S. Mukanchand Bothra ...Respondent No.3

4. M. Sandeep Bothra S/o Late Shri S. Mukanchand Bothra ...Respondent No.4

All Resident of No. 8/48, Vijayaragava Road T. Nagar, Chennai - 600 017

Present:

For Appellant : Mr D. Sreenivasan, Mr Avrojyoti Chatterjee, Mr Rajiv S. Roy, Mr Udayan Agarwal and Ms Jayasree Saha, Advocates

For Respondent : Appearance not marked

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 1 of 12 With Company Appeal (AT) (Ins.) No. 1275 of 2019

IN THE MATTER OF:

1. M. Karishma Bothra D/o Late Shri S. Mukanchand Bothra ...Appellant No.1

2. M. Gagan Bothra S/o Late Shri S. Mukanchand Bothra ...Appellant No.2

3. M. Sandeep Bothra S/o Late Shri S. Mukanchand Bothra ...Appellant No.3

All three at No. 44, Veerappan Street Sowcarpet, Chennai - 79

Versus

1. M/s Sai Baba Business Solutions Pvt. Ltd. Rep. by V. Subramanyam Naidu No.46, Dr B.N. Road 2nd Street, T. Nagar, Chennai - 600 017 ...Respondent No.1

2. S. Rajendran, Resolution Professional In the matter of PRC International Hotels Private Limited 71/1, Mc Nicholas Road, Chetpet Chennai - 600 031 Respondent No.2

Present:

For Appellant : Appearance not marked

For Respondent : D. Sreenivasan and Mr G. Ananda Selvam, Advocates for R-2. Mr G. Suvin Kumaran, Advocate for R-1.

[Per; V. P. Singh, Member (T)]

This Appeal, No 1275 of 2019, emanates from the Order dated 11th

October 2019 passed in M.A. No.927 of 2019 in M.A. No.651 of 2019 in

connection with CP/540/IB/2018 by the Adjudicating Authority/National

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 2 of 12 Company Law Tribunal, Chennai Bench, Chennai whereby the Adjudicating

Authority has issued direction for paper publications in the newspaper as

prescribed in the Order, i.e. Hindu (English newspaper) in All India Edition

and vernacular Dinamalar in Tamilnadu Edition. The Parties are

represented by their original status in the main petition for the sake of

convenience.

2. Brief facts of the case are as follows:

The Appellant contends that their father Late Mr S. Mukanchand

Bothra being a Financial Creditor filed a claim to the tune of Rs.15 Crores

which was challenged before the Adjudicating Authority, Chennai. During

the pendency of this petition, on 17th April 2019, Mr Mukanchand Bothra

expired, and the Appellants were impleaded as their legal heirs vide Order

passed in M.A. No.441/2019.

3. After that a Resolution Plan was approved by NCLT, Chennai Bench

vide Order dated 27th August 2019 in M.A. No.651 of 2019 a sum of

Rs.4,12,95,002/- was allotted to the share of late Mukanchand Bothra, out

of his claim Rs. 15 Crores.

4. The Appellants further contends that after approval of Resolution Plan

when the second applicant had gone to the Resolution Professional office

seeking to know the procedure of receiving the money, then the Resolution

Professional started asking for a copy of the will, probate order, succession

certificate etc. and also asked to get the direction of NCLT to release the

money. Hence the applicant had to rush to the NCLT again. The M.A.

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 3 of 12 No.927 of 2019 was filed by the Appellant, which was decided by an order

on 26th September 2019. Applicant further alleged that the Resolution

Professional submitted a Memo, dated 04th October 2019 before the

Adjudicating Authority with all false information. After the transfer of the

then Judicial Member to Delhi, the new bench of the NCLT/the Adjudicating

Authority modified the earlier Order. In contrast, review or modification is

not permissible under IBC. Therefore, the Appellant has challenged the

Order of the Adjudicating Authority passed in M.A. No.927 of 2019 on 11 th

October 2019.

5. This Appeal has filed mainly on the ground by the Adjudicating

Authority has no power to review its Order. The Adjudicating Authority

cannot review the earlier Order or reopen the case unless it appears that

there is an arithmetical error apparent in the previous Order.

6. During the pendency of the main Application challenging the rejection

of the claim, the Respondent No.2, the Resolution Professional, had filed its

Reply and pending that Mukanchand Bothra died. After that, an application

for substitution of their names was filed by the Appellants, stating that they

are the legal heirs of late Sri Mukanchand Bothra. Based on the substitution

application, the appellants were impleaded as legal heirs of Mukanchand

Bothra.

7. After the approval of Resolution Plan, the second Appellant

approached the Resolution Professional for releasing the amount of his

share, out of the share of Late Mukanchand Bothra. The appellants filed an

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 4 of 12 application M.A. No.927 of 2017 without submitting any proof of succession

i.e. the will, succession certificate and probate and for seeking his one-third

share from the amount due to Late Mukanchand Bothra. It is further

contended by the RP that it has come to his notice that the mother of

appellants was alive, but she did not want a share. After that, the Appellants

filed an affidavit stating that their mother has attained sainthood.

8. It is further contended by the Resolution Professional that publication

was to be made once in Tamil daily, Dinamalar in Tamil Nadu and another

in English Edition of Hindu Newspaper in All India edition. The Appellants

were directed to deposit the cost of publication on the same day. The

Appellants refused to pay the publication cost and sent an email dated on

27.09.2019 stating that the matter was mentioned before the Adjudicating

Authority and direction was given to the second Respondent to make a

publication on behalf of the second Respondent. The alleged order of the

Adjudicating Authority was never submitted by the second Appellant.

9. It is further contended that the Order passed by the Adjudicating

Authority on 11th September 2019 cannot be treated modification, review or

recall of the earlier Order.

10. It is further contended that the Order 27th August 2019 was never

closed. Therefore it cannot be said that earlier Order has been modified.

11. Question of law that arises for our consideration is as under:

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 5 of 12

1. Whether the Adjudicating Authority has reviewed or recalled or

modified its earlier Order without any authority?

2. Whether the Adjudicating Authority was correct in directing the

appellants to cause individual newspaper publications to receive

the claim amount when the appellants were already impleaded in

the case as legal heirs of Late Mukunchand Bothra?

12. We have heard the arguments of the Learned Counsel for the parties

and perused the records.

13. On perusal of the record it is clear that the father of the appellants

Late Mukanchand Bothra filed its claim of Rs. 15 Core, in Form „C‟, as

Financial Creditor before the Resolution Professional. During the pendency

of the petition Mukanchand Bothra expired and, Misc. Application No.

518/2018, was filed on behalf of Appellants as legal heirs of Late

Mukanchand Bothra for substitution of their names, in place of Late

Mukanchand Bothra. This Application was allowed by Order of the

Adjudicating Authority dated 03rd May, 2019.

14. In the said Order, it is stated that "Counsel for RP is present.

Applicant No.3 is present, filed Application for bringing on record the legal

heirs of Mr S. Mukanchand Bothra, who expired during the pendency of

MA/518/2018. The Counsel for RP has no objection to the same.

Therefore, the Application is allowed. The legal heirs of Mr. S.

Mukanchand Bothra, viz., Applicants 2 to 4 are hereby brought on

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 6 of 12 record as Applicants. The cause title of MA/518/2018 shall be amended by

the Applicants. Accordingly, the Application stands disposed of."

15. On perusal of the above Order, it is clear that at the time of

substitution of the names of the legal heirs of Late Mukanchand Bothra,

counsel for the Resolution Professional has given his consent and has

stated that "RP has no objection to the same".

16. It is also on record that the Resolution Plan was finally approved by

the Adjudicating Authority vide its Order dated 27th August 2019.

17. Para 5 of the approved Resolution Plan deals with the distribution of

money to the appellants, which is as follows:

"5. In pursuance of the same, the Resolution Professional has

stated that initially, the Resolution Applicant has proposed to pay a

sum of Rs.7,80,73,544/- towards the claims of the Unsecured

Financial Creditors which constitute 90% payout of the admitted

claims. After the admission of the claim of the Mr Mukanchand

Bothra and Mr Jonathan Muralidharane by this Tribunal, the

Resolution Applicant has proposed to pay the said sum of

Rs.7,80,73,544/- to all the Unsecured Financial Creditor with 27.53%

payout. The details of the same are as follows:

Payout to Unsecured Financial Creditors

Name Amount 90% Payout 27.53% Admitted Payout

4 You Tradex 4,47,11,012 4,02,39,911 1,23,08,942

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 7 of 12 Mr Gagan Bothra 2,33,66,000 2,10,29,400 64,32,660

Viva Entertainment 88,80,603 79,92,543 24,44,830

Switzer Instrument Pvt. Ltd. 69,68,767 62,71,890 19,18,502

Mr KR Jaganathan 28,22,000 25,39,800 7,76,897

Mr. Mukanchnd Bothra 15,00,00,000 - 4,12,95,002

Mr J. Muralidharane 4,68,46,027 - 1,28,96,712

Total 28,35,94,409 7,80,73,544 7,80,73,544"

18. Thus, it is clear that out of the claim of Rs.15 Crores submitted by

Mukanchand Bothra, only claim of Rs.4,12,95,002/- was allowed to his

share. It is undisputed facts after the death of Mukhanchand Bothra his

legal heirs, i.e. Appellants had been substituted in place of Late

Mukhanchand Bothra. As per approved Resolution Plan Rs.4,12,95,002/-

comes to the shares of Late Mukhanchand Bothra. Therefore, all the

appellants are entitled to one-third share, from the amount which was

allotted in favour of Late Mukhanchand Bothra. This resolution plan has

become final, and the adjudicating Authority has substituted the names of

the appellants as legal heirs of late Mukhanchand Bothra. Therefore, any

demand for succession certificate, Probate order at this stage is without any

basis. Since the approved resolution plan is binding on all the stakeholders.

Therefore the resolution professional has no right to again raise the issue of

succession from the appellants at the time of distribution of amount.

19. It is contended that the Appellants have not complied with the Order

of the Adjudicating Authority. Therefore, the Order dated 11th September

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 8 of 12 2019 cannot be treated as recall, review or modification of earlier Order. It is

further said that the adjudicating Authority has exercised its powers under

Rule 11 of the NCLT Rule.

20. It is pertinent to mention that by the impugned Order the

Adjudicating Authority has neither modified or reviewed its earlier Order.

But the Order for publication of notice in the newspaper is without any

justification because legal heirs of Late Sri Mukanchand Bothra was already

on record.

21. The Learned counsel for the Resolution Professional submits that this

fact has come to his knowledge that the mother of the Appellants was alive,

but this was suppressed by the Appellants. When this fact was submitted to

the Adjudicating Authority, then the Adjudicating Authority directed the

Appellants to bring their mother along with an affidavit. But the Appellants

informed that their mother had attained sainthood. The Adjudicating

Authority refused to accept the affidavit filed by them and passed the Order

on 26th September 2019 for publication of notice in a newspaper having All

India Circulation.

22. On perusal of entire record; it remains undisputed that the Resolution

Plan was approved by the Adjudicating Authority and the names of legal

heirs of late Mukanchand Bothra was already substituted by Order of the

Adjudicating Authority, with the consent of the Resolution Professional.

Therefore there was no occasion to demand succession certificate, Probate

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 9 of 12 Order from the Appellants at the time of distribution of money as per

approved Resolution Plan,

23. It is thus clear that the Appellants are entitled to the share allotted to

Late Mukanchand Bothra. No further proof of succession is needed by the

Resolution Professional from the legal heirs, whose names had been

substituted in place of Mukanchand Bothra. Thus, the Appeal deserves to

be allowed.

CA No. 844 of 2019

This Appeal emanates from the Order dated 02nd July, 2019 passed by

the Adjudicating Authority/National Company Law Tribunal, Chennai

Bench, Chennai in M.A. No. 518 of 2018 in CP/540/IB/2018, whereby the

Adjudicating Authority has directed the applicants to treat the applicants at

par with other unsecured financial creditors and make the appropriate

provisions for payment, to which they are entitled, in consultation with the

Committee of Creditors and the Resolution Applicant, and file the

supplementary affidavit to that effect before the Learned Adjudicating

Authority.

In compliance of the above Order, the Adjudicating Authority has

directed the Resolution Professional to withdraw the Resolution Plan and

constitute the CoC afresh to get the Resolution Plan approved with suitable

modifications, as may be required.

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 10 of 12

2. It is pertinent to mention that in compliance of Order dated 2nd July

2019 resolution plan was amended and revised Resolution Plan has been

the approved by the CoC after that by the Adjudicating Authority. The

approved Resolution Plan dated 27th August 2019 is not under challenge.

Therefore this Appeal has become infructuous. Since the approved

Resolution Plan is not challenged and has been implemented. Therefore, this

Appeal deserves to be rejected as infructuous.

3. The Resolution Professional has filed this Appeal against the Order

dated 02nd July, 2019 and the Appeal has been filed by the Resolution

Professional on 13th August, 2019. Section 61 of the Insolvency and

Bankruptcy Code, 2016 provides that any person aggrieved by the Order of

NCLT may prefer and appeal within 30 days. Hence, under Section 61,

limitation cannot be calculated from the date of receipt of the certified copy

of the Order but is calculated from the date of passing of the Order. It is

pertinent to note that no Application for Condonation of Delay was filed

explaining the delay. However, Resolution Professional cannot be termed as

an aggrieved person. This Appellate Tribunal in CA No.1018 of 2018 dated

01st October 2019 has dismissed the Appeal filed by Resolution Professional

as not maintainable because Resolution Professional cannot be treated as

an aggrieved person. It is also important to mention that after approval of

the Resolution Plan by CoC, the Resolution Professional himself filed an

Application for approval of Resolutions Plan, which was allowed by Order of

the Adjudicating Authority dated 27th August 2019. Therefore, on this

ground also Appeal fails.

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 11 of 12 ORDER

Appeal No. 1275 of 2019 is allowed. Resolution Professional is directed to

comply with the conditions of the approved Resolution Plan. It is also to be

clarified there is no need of asking any proof of succession from the legal

heirs of Late Mukanchand Bothra. The Order of the Adjudicating Authority

is modified to this extent.

The Appeal No 844 of 2019 is rejected. No order as to costs.

[Justice Venugopal M.] Member (Judicial)

[V. P. Singh] Member (Technical)

[Alok Srivastava] Member (Technical) NEW DELHI 15th JUNE, 2020

pks/nn

Company Appeal (AT) (Insolvency) No. 844 & 1275 of 2019 12 of 12