Sks Power Generation Chhattisgarh ... vs Mr. V Nagarajan Resolution ...

(Arising out of Order dated 24th April, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Single Bench, Chennai, in MA/25/IB/2018 in CA/38/IB/2018 in CP/511(IB)/2017)

IN THE MATTER OF:

SKS Power Generation Chattisgarh Limited ...Appellant

Vs

Mr. V Nagarajan, Resolution Professional in respect of M/s. Cethar Limited & Ors. ....Respondents

Present:

For Appellant: Mr. Arun Kathpalia, Senior Advocate with Mr. Atul Shanker Mathur, Ms. Priya Singh, Mr. Samaksh Goyal and Ms. Sweta Singh, Advocates.

For Respondents: Mr. Arnav Dash, Ms. Mehak Huria, Mr. V. Nagarajan, Mr. Arnav Behera and Mr. J.P. Patri, Advocates for R-1.

Ms. Pooja M. Saigal, Mr. Akshay Gupta and Ms. Pooja Mehra, Mr. Jai Endlaw, Mr. Sunny Kadiyan, Advocates for R-2.

Mr. V. Nagarajan, R.P.

J U D G M E N T

SUDHANSU JYOTI MUKHOPADHAYA, J.

In the 'Corporate Insolvency Resolution Process' initiated against

'M/s. Cethar Limited' ('Corporate Debtor'), the 1st Respondent- ('Resolution

Professional') filed application being CA 38/IB/2018 in CP/511/(IB)/2017

Company Appeal (AT) (Insolvency) No. 206 of 2018 2

under Sections 43, 45, 180 and 186 of the Insolvency and Bankruptcy

Code, 2016 ('I&B Code' for short) with following prayers: -

"(a)(i) That the transactions of investment set out

as made by the 'Corporate Debtor' pursuant to the

agreement dated 15.03.2011 amended by

agreement dated 06.04.2016 and read with

resolution of CD's Board of Directors dated

17.06.2016 in shares of the 1st and the 4th

Respondent together with the sale thereof to 5 th

Respondent and payments there from to 6th to 9th

Respondents be declared as null and ab-initio

void and consequently set aside.

(ii) That 1st - 4th Respondents be directed to make

repayment to the CD of the sum of Rs. 228.60

Crores with interest at 12% p.a from date of

receipt of the funds from the CD and its

subsidiary.

(a) That pending the hearing and final disposal of

this application.

(i) The 1st -4th Respondents be restrained from

dealing with or disposing off or parting with

or alienating their assets, including by way

of hypothecation, mortgage or of any kind,

in any manner.

Company Appeal (AT) (Insolvency) No. 206 of 2018 3

(ii) That 1st -4th Respondents be directed to

place before this Hon'ble Tribunal all

records of movement of funds between

themselves from 1.04.2010 onwards till

date including funds received by them from

CD and its subsidiary to the extent of Rs.

228.60 crores.

(iii) That the 1st-4th Respondents be directed to

place adequate security by way of bank

guarantee in respect of the amount due to

the CD.

(iv) That the affairs of the 1st-4th Respondents

be directed to be investigated by the

Serious Fraud Investigation Office (SFIO) or

any other investigation agency that the

Hon'ble Tribunal may deem fit and

appropriate in this regard."

2. The 'Resolution Professional' thereafter filed Miscellaneous

Application being MA No. 25/IB/2018 with following prayer:

(a) An order permitting the Applicant to amend

CA/38/IB/2018 and thereby add the following as

Company Appeal (AT) (Insolvency) No. 206 of 2018 4

final relief a(i)(a), after Relief presently set out as a(i)

as under:-

"a(i)(a) Direct R10 to repay to the Applicant a

sum of Rs. 158.00 crores being the amount

received by it from R1 whether as equity or

loans or advances or whatever else limited to

the maximum extent of funds provided by

Applicant to R1."

(b) An order restraining and injuncting Respondent No.

2 from in any manner realizing or seeking to realize

the Bank Guarantee issued on behalf of the

Corporate Debtor pending the final disposal of

CA/38/IB/2018"

3. The Adjudicating Authority (National Company Law Tribunal), Single

Bench, Chennai, on hearing the parties directed them to file reply to the

application seeking amendment as sought for in MA 25/IB/2018.

4. The 1st Respondent- 'Resolution Professional' then forwarded an e-mail

to the Appellant intimating that the matter relating to the amendment was

listed on 24th April, 2018. Thereafter, the Adjudicating Authority, Single

Bench, Chennai, by impugned order dated 24th April, 2018, passed following

interim order and directions:

Company Appeal (AT) (Insolvency) No. 206 of 2018 5

"RP along with his Counsel present. Counsel for R1,

R2, R10 and R11 present.

Heard both the sides. The Counsel for the RP has

pressed hard for grant of interim prayers, citing the

reasons that in case the interim prayer is not granted,

there will be irreparable loss to the assets of the

Corporate Debtor.

Therefore, R10 is directed to repay to the

Appellant a sum of Rs. 158 crores, being the amount

received by him from R1, whether as an equity or loan

or advance or whatever as limited to the maximum

extent of funds provided by the Applicant to the R1. R2

is restrained from seeking to release the bank

guarantee issued on behalf of the Corporate Debtor,

pending the final disposal of CA/38/IB/2018 filed in

CP/511/IB/2017.

The Counsel for the Applicant is directed to obtain

a copy of this order and serve it on the Respondents

with immediate effect. However, the Counsel for the

Respondents is also directed to instruct the

Respondents/clients to make compliance with this

order in letter and spirit.

The Counsel for the Respondent is directed to file

reply. Put up on 26.04.2018 at 10.30 A.M."

Company Appeal (AT) (Insolvency) No. 206 of 2018 6

5. The aforesaid order in under challenge in this appeal.

6. Learned Senior Counsel appearing on behalf of the Appellant

submitted that the Adjudicating Authority in effect has allowed the main

prayer as sought for in MA 25/IB/2018, though the main CA/38/IB/2018 is

still pending.

7. It was submitted that the impugned order amounts to final order

purported to have been passed under Section 43 read with Section 45 of the

'I&B Code'.

8. On 11th May, 2018, when we issued notice, raised the question of

jurisdiction of the Adjudicating Authority to direct one or other third party by

an interim order without impleading and hearing the third party. We stayed

the operation of the impugned order dated 24th April, 2018 but allowed the

'Corporate Insolvency Resolution Process' to continue.

9. The Respondent- 'Resolution Professional' has appeared and filed reply

affidavit and taken plea that the Appellant was the 10th Respondent who has

been directed to repay a sum of Rs. 158 Crores as the amount was paid to it

by the 'Corporate Debtor'. However, it is accepted that the impugned order

was passed by way of an interim order without deciding the question of

maintainability of application under Sections 43 and 45 of the 'I&B Code'.

10. As we find that the impugned order dated 24th April, 2018 was passed

by the Adjudicating Authority without deciding question as to whether the

Company Appeal (AT) (Insolvency) No. 206 of 2018 7

application under Sections 43 and 45 of the 'I&B Code' is maintainable or

not and as impugned order is not a speaking/reasoned order, we set aside

the impugned order and remit the matter to the Adjudicating Authority to

decide the application on merit if not yet decided. The Appeal is allowed with

aforesaid observations and directions. No cost.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

NEW DELHI

14th December, 2018

AR

Company Appeal (AT) (Insolvency) No. 206 of 2018