Srei Equipment Finance Limited vs Harsh Arora & Anr

IN THE MATTER OF: SREI Equipment Finance Ltd. ...Appellant Versus Harsh Arora & Anr. ...Respondents

Present: For Appellant : Mr. Krishnendu Datta, Sr. Advocate with Mr. Shambo Nandy, Ms. Akanksha Kaushik, Ms. Alina Merin Mathew, Mr. Bhaskar Anand and Mr. Arijit Mazumdar, Advocates. For Respondents : Mr. Arvind Nayyar, Sr. Advocate with Ms. Ekta Choudhary, Mr. Divyank Dutt Dwivedi and Ms. Aditi Sharma, Advocates for PNB. Mr. Harsh Kumar Arora and Mr. Rishi Singhal, Advocates for RP. Mr. Rajat Bhardwaj, Advocate.

ORDER

(Hybrid Mode)

14.05.2024 : Heard Counsel for the Appellant, Sh. Arvind Nayyar, Sr.

Advocate appearing for Punjab National Bank and Leaned Counsel appearing

for ex-Directors.

2. This appeal has been filed against the order dated 29.01.2024 passed

by the Learned Adjudicating Authority (National Company Law Tribunal, New

Delhi, Court - V), in I.A. 3151/2022 in C.P. (IB) No. 271/PB/2017, by which

order Adjudicating Authority has issued certain directions and applications

were directed to be listed on 11.03.2024.

3. The application I.A. 3151/2022 was filed by the Punjab National Bank

(PNB), where the following prayers were made:

"a. Pass appropriate directions to the Resolution professional to conduct Transaction Audit of the books of the Corporate Debtor in compliance of the order dated 01.12.2021 & 04.04.2022 appointing Mr Amit Khandelwal as an independent auditor; and/or b. Declare the re-constitution of COC by RP without conducting the transaction audit as illegal; and/or c. Declare as illegal the approval of resolution plan by the illegally constituted COC; and/or d. Set aside the approval of resolution plan by the illegally constituted COC; and/or e. Pass any further or other orders as this Hon'ble Tribunal deems fit and proper in the interest of justice."

4. The application came for hearing on which date the impugned order

was passed.

5. Sh. Krishnendu Datta, Sr. Advocate appearing for the Appellant

challenging the order submits that the Adjudicating Authority has directed

the Resolution Professional (RP) to examine the issue afresh and submit its

view on the next date of hearing which indicates that there was some material

to examine the issue of reconstitution of the Committee of Creditors (CoC),

whereas, there is no material or reason to issue any such direction.

6. It is submitted that Resolution Plan has already been approved by the

CoC in June 2022 and pending before the Adjudicating Authority.

7. Sh. Arvind Nayyar appearing for PNB refuting the submissions of the

Appellant submits that in the present case, earlier RP was replaced and the

new RP was appointed who had appeared before the Adjudicating Authority

on 29.01.2024 whose statement was noted. It is submitted that in the

Comp. App. (AT) (Ins.) No. 721 of 2024 & I.A. No. 2590, 2592 of 2024 2 of 5 application, PNB has been praying for direction for reconstitution of the CoC

and the issue was very much alive.

8. Sh. Arvind Nayyar subsequently on 11.03.2024, order has been passed

on I.A. 3151/2022, where Adjudicating Authority had directed issuance of

Notice to all the Members of the CoC and asked them to file a Reply.

9. It is submitted that in view of the subsequent orders when the

application is yet to be decided, this appeal need not be entertained.

10. Learned Counsel for the ex-Directors submits that the question of

reconstitution of the CoC arises on account of order of IBBI, where

reconstitution of the CoC by the earlier RP was frond of.

11. We have considered the submissions of both the parties and perused

the record.

12. The order impugned in this Appeal is an interlocutory order passed in

I.A. 3151/2022. In view of the subsequent order passed by the Adjudicating

Authority on 11.03.2024 following directions have been issued in I.A.

3151/2022:

"I.A./ 3151 /2022:-

This is an application filed under Section 60(5) of the IBC, seeking certain direction to the Resolution Professional including seeking re-constitution of the CoC. Since the prayer is also relates to re-constitution of the CoC, Applicant is directed to issue notice to all the members of the CoC along with the copy of the application for filing their reply and appearance. Notice be issued by all means and proof of service be filed. List this application on 02.05.2024."

Comp. App. (AT) (Ins.) No. 721 of 2024 & I.A. No. 2590, 2592 of 2024 3 of 5

13. The subsequent order clearly indicates that Applicant was directed to

issue Notice to all Members of the CoC alongwith the copy of the application

for filing the Reply and appearance.

14. The subsequent order indicates that application I.A. 3151/2022 earlier

directions have been followed by fresh direction of issuing Notice and filing

Reply which indicates that all issues in I.A. 3151/2022 was open to be decided

and considered by the Adjudicating Authority after hearing all the parties

including the Appellant, who was Member of the CoC.

15. We, thus are of the view that the impugned order being only

interlocutory order and subsequently another order has been passed on

11.03.2024 all issues pertaining to the application are open and to be

considered and decided by the Adjudicating Authority after hearing both the

parties.

16. We are of the view that since the Adjudicating Authority in subsequent

order makes it clear that the application may be decided afresh after hearing

both the parties and considering the Reply, we see no reason to keep the

appeal pending. We make it clear that all contention of both the parties are

left open on all issues which the Adjudicating Authority may decide in

accordance with law.

17. We have noted that in order dated 29.01.2024, the Adjudicating

Authority had directed the RP to examine the issue afresh and submits its

view on the next date of hearing. Counsel for the RP submits that he has not

received the relevant documents by Appellant and erstwhile RP. In view of the

Comp. App. (AT) (Ins.) No. 721 of 2024 & I.A. No. 2590, 2592 of 2024 4 of 5 aforesaid, we are of the view that Adjudicating Authority shall decide the

application after considering the Reply of the parties in accordance with law.

The Appeal is disposed of.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) himanshu/nn

Comp. App. (AT) (Ins.) No. 721 of 2024 & I.A. No. 2590, 2592 of 2024 5 of 5