Sandeep Reddy & Anr vs Jaycon Infrastructure Ltd

Sandeep Reddy & Anr. .Appellants

Vs.

Jaycon Infrastructure Ltd. .Respondent

Present: For Appellants: - Mr. Arun Kathpalia, Senior Advocate with Mr. Swapnil Gupta, Mr. Angad Mehta and Ms. Ankita Mrs. Shivambika Sinha, Advocates.

For Respondent: - Mr. R.K.Gupta and Mr. Achin Goel, Advocates.

ORDER

26.10.2017- An Interlocutory Application has been filed in this appeal

for praying to pass such interim order. However, as Respondent-

'Operational Creditor' has appeared through learned counsel, on the

suggestion of learned counsel for both the parties, the appeal is taken

up for hearing and final disposal at this stage.

2. This appeal has been preferred by the appellants against order

dated 10th October, 2017 passed by Adjudicating Authority (National

Company Law Tribunal) Hyderabad Bench, Hyderabad, whereby and

whereunder, the application preferred by Respondent-'Operational

Creditor' under Section 9 of the Insolvency and Bankruptcy Code, 2016

(hereinafter referred to as "I&B Code") has been admitted, order for -2-

public announcement of initiation of 'Corporate Insolvency Resolution

Process' has been ordered, 'Interim Resolution Professional' has been

appointed who has been directed to constitute a Committee of Creditors,

after collection of all claims received against the 'Corporate Debtor' and

passed other orders in terms of 'I&B Code'.

3. On 18th October 2017, it was argued by learned senior counsel for

the appellant that there is a dispute in existence prior to issuance of

notice of demand under sub-section (1) of Section 8 of the 'I&B Code'. It

was further submitted that the Adjudicating Authority without calling

for name of any 'Interim Resolution Professional' from the Insolvency

and Bankruptcy Board of India (hereinafter referred to as "Board")

appointed one Dr. K. Lakshmi Narasimha, Ph.D as 'Interim Resolution

Professional', without any such suggestion from the 'Operational

Creditor' or the Board. Taking into consideration the aforesaid

submissions, notices were issued on the respondent, particularly to

decide whether the Adjudicating Authority of his own has jurisdiction to

appoint an 'Interim Resolution Professional'! 'Resolution Professional',

if no such powers is specifically vested under the 'I&B Code'.

4. On notice, the respondent has appeared and accepted that the

'Interim Resolution Professional' was not appointed on the suggestion

made by the 'Operational Creditor'. He further submits that parties have

reached the settlement in writing which is binding on the parties. 14 -3-

5. From the record we find that a sub-contract works agreement was

reached between the parties. The scheduled completion date in relation

to works of agreement dated 19th April, 2011 was 31St December, 2012.

According to appellant, the respondent/ applicant failed and ignored to

complete the agreement works by that date. The respondent/ applicant

continued the works till May, 2014 and executed only 78% of the

agreement value of works and had wilfully abandoned the works w.e.f

May, 2014.

6. From the aforesaid fact not disputed by respondent, it is clear that

there was a dispute in existence prior to issuance of demand notice

under sib-section (1) of Section 8 of the 'I&B Code' and for that the

application under Section 9 of the 'I&B Code' was not maintainable.

7. Prima facie, we are of the opinion that as the 'I&B Code' do not

empower the Adjudicating Authority to suggest any name or appoint any

'Interim Resolution Professional'/ Resolution Professional of its own

choice. However, as we find that the parties have settled the dispute and

initiation of Resolution process under section 9 of the 'I&B Code' was

not maintainable, in view of existence of dispute, we leave the question

open as to whether the Adjudicating Authority has power to appoint any

person of its own choice or not which will be decided in an appropriate

case.

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8. We have already held that application under Section 9 was not

maintainable, in view of existence of dispute and that parties have

already reached the settlement, for the reasons aforesaid, we set aside

the impugned order dated 10th October, 2017 passed by Adjudicating

Authority, Hyderabad Bench in Company Petition (TB)

No/45/09/HDB/2017.

9. In effect, order (s), passed by Ld. Adjudicating Authority

appointing 'Interim Resolution Professional', declaring moratorium,

freezing of account, and all other order (s) passed by Adjudicating

Authority pursuant to impugned order and action, if any, including the

advertisement, if any, published in the newspaper calling for

applications and all such orders and actions are declared illegal and are

set aside. The application preferred by Respondent under Section 9 of

the MB Code, 2016 is dismissed. Learned Adjudicating Authority will

now close the proceeding. The appellant company is released from all

the rigour of law and is allowed to function independently through its

Board of Directors from immediate effect.

10. As Dr. K Lakshmi Narasimha, Ph.D was appointed as 'Interim

Resolution Professional could not function in view of the interim order

of stay passed by this Appellate Tribunal on 18th October, 2017,

therefore, the question of payment to the 'Interim Resolution

Professional' does not arise. The appeal is allowed and LA also stands

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disposed of with aforesaid observation and direction. However, in the

facts and circumstances of the case, there shall be no order as to cost.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial) Ar/uk