Sh. Gyan Chand Mishra vs Three C Universal Developers Private ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No.1316 of 2023 (Arising out of Order dated 12.09.2023 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Special Bench (Court-II) in IA- 1688/2022 in CP(IB)-2582(ND)2019)

IN THE MATTER OF: Gyan Chandra Misra Resolution Professional for M/s Three C Green Developers Pvt. Ltd. C-23 Greater Kailash Enclave, Part-I, New Delhi - 110048.

Also At: Hall No.2, IInd Floor, Plot No.17, SS Tower, Sector 4, Vaishali Ghaziabad (U.P.) ... Appellant

Vs

1. M/s. Three C Universal Developers Pvt. Ltd. Through its Resolution Professional Sh. Rakesh Kumar Gupta

Office at: C-23 Greater Kailash Enclave, Part-I, New Delhi - 110048.

2. Sh. Rakesh Kumar Gupta, Resolution Professional for M/s. Three C Universal Developers Pvt. Ltd. Registered office at: C-23 Greater Kailash Enclave, Part-I, New Delhi - 110048. Also at - Vikrant Tower-4, Rajendra Place, New Delhi-110008.

3. Sh. Girish Chander Joshi, Ex-Director, M/s. Three C Universal Developers Pvt. Ltd. C-23 Greater Kailash Enclave, Part-I, New Delhi - 110048.

4. Sh. Rajender Kumar Ex-Director, M/s. Three C Universal Developers Pvt. Ltd.

Company Appeal (AT) (Insolvency) No.1316 of 2023 1 C-23 Greater Kailash Enclave, Part-I, New Delhi - 110048.

5. Girish Chander Joshi, Ex-Director, M/s. Three C Universal Developers Pvt. Ltd. C-23 Greater Kailash Enclave, Part-I, New Delhi - 110048.

6. Anand Ram Ex-Director, M/s. Three C Universal Developers Pvt. Ltd. C-23 Greater Kailash Enclave, Part-I, New Delhi - 110048.

7. M/s Ace Infracity Developers Pvt. Ltd. Noida Ace Studio, Plot No.01B, Sector 126, Noida, Uttar Pradesh - 201303. ... Respondents

Present:

For Appellant: Mr. Gaurav Mitra, Roy Choudhary, Ms. Mrinal Harsh Vardhan, Advocates.

For Respondent: Mr. Abhishek Anand, Mr. Mohak Sharma, Mr. Shikhar Tiwari, Mr. Parveen Kaur Kapoor, Mr. Rahul Singhal, Advocates.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal has been filed against the order dated 12.09.2023

passed by National Company Law Tribunal, New Delhi, Special Bench

(Court - II), rejecting IA No.1688 of 2022 filed by the Appellant for admitting

claim of the Applicant on behalf of M/s. Three C Green Developers Pvt. Ltd.

The Adjudicating Authority by the impugned order, dismissed the

Application, aggrieved by which order, the Appellant has come up in this

Appeal.

Company Appeal (AT) (Insolvency) No.1316 of 2023 2

2. Brief facts of the case necessary to be noticed for deciding this Appeal

are:

(i) The Adjudicating Authority vide order dated 17.12.2019

admitted Application under Section 9 filed by one Jackson

Limited against the Corporate Debtor namely - M/s. Three C

Universal Developers Pvt. Ltd.

(ii) The Interim Resolution Professional ("IRP") of the Corporate

Debtor issued public notice and invited claims till 31.12.2019.

(iii) In the Corporate Insolvency Resolution Process ("CIRP") of the

Corporate Debtor, Resolution Plan was received from a

Resolution Applicant, which was approved by the Committee

of Creditors ("CoC") on 16.01.2021.

(iv) The Adjudicating Authority by order dated 23.12.2021

admitted company namely - M/s Three C Green Developers

Pvt. Ltd. in proceedings under Section 7. On 21.02.2022, the

Appellant was appointed as Resolution Professional ("RP") of

M/s Three C Green Developers Pvt. Ltd. The Appellant sent a

letter date 06.04.2022 to the RP of Corporate Debtor along with

claim form. The claim of the Appellant having not been

admitted, IA No.1688 of 2022 was filed by the Appellant before

the Adjudicating Authority, where following prayers were

made:

Company Appeal (AT) (Insolvency) No.1316 of 2023 3 "a) direct respondent no.2 to provide to the applicant all the relevant information with respect to information memorandum and resolution plans received by respondent no.2;

b) direct respondent no.2 to admit the claim of the Applicant on behalf of COC of Three C Green Developers Pvt. Ltd. as per Annexure A-10;

c) declare the non-lodging of claim of M/s Three C Green Developers Pvt. Ltd. with M/s Three C Universal Developers Pvt. Ltd. to be an act defrauding the creditors of M/s Three C Green Developers Pvt. Ltd.;

d) Reverse the effect non-lodging of financial claim/ relinquishment/ giving up of claims/ security interest of M/s Three C Green Developers Pvt. Ltd.

in favour of M/s Three C Universal Developers Pvt. Ltd. while directing respondent no.2 to prepare fresh information memorandum while accepting and considering the financial claims of M/s Three C Green Developers Pvt. Ltd.;

e) Pass necessary order staying and quashing resolution plan proposed by respondent no.7 and in the interim stay approval of resolution plan proposed by respondent no.7.

f) direct respondent no.2 to invite proposals for resolution plans only after accepting claims of applicant or in the alternative initiate process for liquidation.

g) direct enquiry under S. 46(2) of the Insolvency Code by an independent expert to evaluate the entire transaction and the collusion between the management of M/s Three C Green Developers Pvt.

Company Appeal (AT) (Insolvency) No.1316 of 2023 4 Ltd. and M/s Three C Universal Developers Pvt.

Ltd. and other person as may be involved.;

AND

h) pass any such other, further consequential orders that may be deemed fit and proper in the interest of justice."

(v) The Adjudicating Authority initially rejected the Application

vide order dated 18.04.2022 against which Company Appeal

(AT) (Ins.) No.471 of 2022 was filed, which Appeal was decided

vide order dated 28.09.2022. This Tribunal vide its judgment

dated 28.09.2022 allowed the Appeal and set aside the order

dated 18.04.2022 and remanded the matter back to the

Adjudicating Authority to decide again. Taking into

consideration the Application, as it was filed under Section 60,

sub-section (5), this Tribunal further observed "It is needless

to mention that we have not touched any part of the merit of this

case which has been kept open".

(vi) After order of this Tribunal dated 28.09.2022, the Adjudicating

Authority heard the Application afresh and by the order

impugned, rejected the Application. The Adjudicating

Authority while rejecting the Application noticed that the last

date for submission of claim by a creditor in the CIRP of the

Corporate Debtor was 31.12.2019 and the Applicant

submitted its claim only on 06.04.2022. It was further noticed

that Resolution Plan was approved by the CoC on 16.01.2021.

Company Appeal (AT) (Insolvency) No.1316 of 2023 5 The Adjudicating Authority also relied on the judgment of the

Hon'ble Supreme Court in Civil Appeal No.5590/2021 in the

matter of M/s. RPS Infrastructure Ltd. vs. Mukul Kumar &

Anr. decided on 11.09.2023. Following the judgment of the

Hon'ble Supreme Court, the Application filed by the Appellant

being IA No.1688 of 2022 was rejected.

3. Shri Gaurav Mitra, learned Counsel appearing on behalf of the

Appellant, challenging the order passed by the Adjudicating Authority

submits that the claim by the previous management of the Company M/s

Three C Green Developers Pvt. Ltd. was not filed by the Ex-Management

and the Directors of the Company, who have willfully omitted to lodge their

claims with the IRP and the same was purposely omitted and not done. It

is submitted that the Appellant, who was appointed as RP of the Company

was authorised by the CoC to file the claim and hence, the claim was filed

on 06.04.2022. It is submitted that charge created over the assets and

receivables of the Corporate Debtor was registered with ROC and the IRP

of the Corporate Debtor ought to have included the claim in the Information

Memorandum. The Resolution Plan of the Corporate Debtor has been

approved by the CoC in the absence of legitimate claim of the Company.

There has been huge siphoning of funds, which has led to M/s Three C

Universal Developers to insolvency. It is submitted that act of the Ex-

Management was fraudulent and if claim of the Appellant is not considered

it would render approving the Plan by the CoC vitiated and untenable. The

learned Counsel for the Appellant has also submitted that the judgment of

Company Appeal (AT) (Insolvency) No.1316 of 2023 6 the Hon'ble Supreme Court relied by the Adjudicating Authority is

distinguishable. Shri Gaurav Mitra submits that despite there being

charge of Rs.150 crore in favour of 3C Green, the Management and the

Directors of 3C Green purposefully omitted to file their claims in the CIRP

of the Corporate Debtor. The learned Counsel for the Appellant further

submits that the Adjudicating Authority did not consider the plea of fraud,

which has been played upon the creditors of 3C Green, who collectively

lend the money to the Corporate Debtor, which was siphoned away to its

proxy and by not considering the import of Section 17 of the Limitation Act,

1963.

4. The learned Counsel appearing for the Respondent, refuting the

submissions of the learned Counsel for the Appellant submits that claim

filed by the Appellant was highly belated and was filed after the Resolution

Plan of the Corporate Debtor was approved by the CoC. Any claim after

approval of the CoC, cannot be admitted. Learned Counsel further

submitted that Adjudicating Authority has rightly relied on the judgment

of the Hon'ble Supreme Court in RPS Infrastructure Ltd. and there is no

infirmity in the order of the Adjudicating Authority.

5. We have heard learned Counsel for the parties and have perused the

records.

6. The CIRP against the Corporate Debtor commenced on 17.12.2019

and as per notification of the IRP, the last date for submission of claim was

31.12.2019. The Resolution Plan in the CIRP of the Corporate Debtor came

Company Appeal (AT) (Insolvency) No.1316 of 2023 7 to be approved by the CoC on 16.01.2021. In the List of Creditors of the

Corporate Debtor, the name of the Company, i.e., M/s Three C Green

Developers Pvt. Ltd. was not mentioned nor claim was noticed in the

Information Memorandum. The claim for the first time was filed by the

Appellant vide letter dated 06.04.2022, i.e., after more than 14 months of

the approval of the Resolution Plan. In the Application, which was filed by

the Appellant before the Adjudicating Authority, i.e. IA No.1688 of 2022,

the fact was clearly admitted that management of Three C Universal

Developers Pvt. Ltd. and the Company is common. In paragraph 10 of the

Application, it was pleaded "It is pertinent to mention that the management

of M/s. Three C Universal Developers Pvt. Ltd. is common and same as that

of another corporate entity, namely Three C Shelters Pvt. Ltd., which is also

admitted to CIRP by this Hon'ble Tribunal vide order dated 20.07.2020...".

In the Application, allegations have been made against the Ex-Management

and Directors of the Company, who according to the Appellant have

willfully admitted the Corporate Debtor to CIRP and both the Corporate

Debtor and the Company - M/s Three C Green Developers Pvt. Ltd. are

related party.

7. It is not necessary to decide the reason for not filing the claim by the

Company in a timely period. The fact of the matter is that the claim was

filed by the Appellant, who is a RP of the Company and was appointed after

initiation of CIRP process vide order dated 23.12.2021. The CIRP against

the Company was initiated almost two years after claims were invited by

the IRP of the Corporate Debtor. For two years, no claim was filed, nor any

Company Appeal (AT) (Insolvency) No.1316 of 2023 8 Application was filed by the Company in the CIRP of the Corporate Debtor.

The Adjudicating Authority has placed reliance on judgment of Hon'ble

Supreme Court. In the judgment of M/s. RPS Infrastructure Ltd., a claim

was filed after more than 287 days of the approval of the Resolution Plan

by the CoC. The Hon'ble Supreme Court after considering the rival

submissions of the parties, upheld the order of the Appellate Tribunal,

which had set aside the order of the Adjudicating Authority admitting the

belated claim of the Appellant. The Hon'ble Supreme Court in paragraphs

22 and 23 has laid down the following:

"22. The mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon. As described above, in Essar Steel,8 the Court cautioned against allowing claims after the resolution plan has been accepted by the COC.

23. We have thus come to the conclusion that the NCLAT's impugned judgment cannot be faulted to reopen the chapter at the behest of the appellant. We find it difficult to unleash the hydra-headed monster of undecided claims on the resolution applicant."

8. Shri Gaurav Mitra submits that judgment of the Hon'ble Supreme

Court in M/s. RPS Infrastructure Ltd. is distinguishable in the facts of

the present case. He relied on paragraphs 18 and 19 of the judgment of

the Hon'ble Supreme Court where the Hon'ble Supreme Court has noticed

Company Appeal (AT) (Insolvency) No.1316 of 2023 9 that there are circumstances in which time can be increased. It is

submitted that the present case was a case in which time for filing the

claim could have been increased, since the Ex-Management of 3C Green

fraudulently did not file the claim in the CIRP of the Corporate Debtor. We

have also noticed that Management of 3C Green and the Corporate Debtor

was common Management and for non-filing of claim by the Management

of 3C Green, the Resolution Professional of 3C Green is fully entitled to

take appropriate proceedings against the Ex-Management on allegation of

fraud of siphoning of money in the CIRP of the 3C Green. The present is a

case of related party, who deliberately did not file the claim in the CIRP of

the Corporate Debtor. The claim having been lodged after about 430 days

from the date of approval of the Plan and after 750 days from the last date

of the receipt of the claim, the Resolution Applicant cannot be saddled with

the claims, which were not before the Resolution Applicant when the

Resolution Plan was submitted and approved by the CoC.

9. Following the judgment of the Hon'ble Supreme Court in Civil

Appeal No.5590/2021 in the matter of M/s. RPS Infrastructure Ltd. vs.

Mukul Kumar & Anr. - (2023 SCC OnLine SC 1147), this Tribunal in

Millennium Construction Pvt. Ltd. vs. Rakesh Kumar Gupta (IRP) -

Company Appeal (AT) (Insolvency) No.1172 of 2023, upheld the order of

the NCLT where a claim filed after 511 days, after approval of the Plan by

the CoC was rejected. In the facts of the present case, the claim of the

Appellant was filed after 14 months from the date when Resolution Plan in

the CIRP of the Corporate Debtor was approved by the CoC. In the entire

Company Appeal (AT) (Insolvency) No.1316 of 2023 10 process of CIRP, at no point of time any Application was filed by the

Company or any protest was lodged and as noted above, both the Corporate

Debtor and the Company were related parties.

10. The learned Counsel for the Appellant has placed reliance on Section

17 of the Limitation Act and submits that the Adjudicating Authority did

not consider the plea of fraud, which has been played upon the creditors

of 3C Green, who collectively lend the money to Corporate Debtor. Section

17 of the Limitation Act provides as follows:

"17. Effect of fraud or mistake.-- (1) Where, in the case of any suit or application for which a period of limitation is prescribed by this Act,--

(a) the suit or application is based upon the fraud of the defendant or respondent or his agent; or

(b) the knowledge of the right or title on which a suit or application is founded is concealed by the fraud of any such person as aforesaid; or

(c) the suit or application is for relief from the consequences of a mistake; or

(d) where any document necessary to establish the right of the plaintiff or applicant has been fraudulently concealed from him, the period of limitation shall not begin to run until plaintiff or applicant has discovered the fraud or the mistake or could, with reasonable diligence, have discovered it; or in the case of a concealed document, until the plaintiff or the applicant first had the means of producing the concealed document or compelling its production: Provided that nothing in this section shall enable any suit to be instituted or application to be made to recover or

Company Appeal (AT) (Insolvency) No.1316 of 2023 11 enforce any charge against, or set aside any transaction affecting, any property which--

(i) in the case of fraud, has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know, or have reason to believe, that any fraud had been committed, or

(ii) in the case of mistake, has been purchased for valuable consideration subsequently to the transaction in which the mistake was made, by a person who did not know, or have reason to believe, that the mistake had been made, or

(iii) in the case of a concealed document, has been purchased for valuable consideration by a person who was not a party to the concealment and, did not at the time of purchase know, or have reason to believe, that the document had been concealed.

(2) Where a judgment-debtor has, by fraud or force, prevented the execution of a decree or order within the period of limitation, the court may, on the application of the judgment-creditor made after the expiry of the said period extend the period for execution of the decree or order: Provided that such application is made within one year from the date of the discovery of the fraud or the cessation of force, as the case may be.

11. Section 17(1)(a) of the Limitation Act provides that when a suit or

application is based upon the fraud of the defendant or respondent or his

agent, the period of limitation shall not begin to run until the plaintiff or

applicant has discovered the fraud. The present is a case where fraud is

being alleged against the Management of 3C Green itself and in which

Appellant is Resolution Professional. It is not a case of the Appellant that

Company Appeal (AT) (Insolvency) No.1316 of 2023 12 any fraud was played by the Corporate Debtor in whose CIRP belated claim

has been filed by the Appellant, so that claim could not be filed by the

Appellant. No fraud is alleged against the Corporate Debtor. Hence, we

fail to see as to how the benefit of Section 17 of the Limitation Act can be

claimed by the Appellant in the present case. Clear allegation of fraud is

against the Ex-Management of the Company 3C Green itself in which the

Appellant is a Resolution Professional.

12. In the facts of the present case, we thus do not find any error in the

order of the Adjudicating Authority, rejecting IA No.1688 of 2022 filed by

the Appellant. There is no infirmity in the order dated 12.09.2023 passed

by the Adjudicating Authority. There being no merit in the Appeal, the

Appeal is dismissed. No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Mr. Arun Baroka] Member (Technical)

NEW DELHI

17th October, 2023

Ashwani

Company Appeal (AT) (Insolvency) No.1316 of 2023 13