Vish Wind Infrastrukture Llp vs Shailen Shah Resolution Professional ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No.241 of 2023 (Arising out of Order dated 24.01.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Court-I in IA No.525 of 2022 in CP (IB) No.14/7/NCLT/AHM/2018)

IN THE MATTER OF: Vish Wind Infrastructure LLP Through Mr. Naveen Thakur Authorised Representative 1102(2), 11th Floor, Fortune Terrace New Link Road, Andheri (West) Mumbai-400053. ... Appellant

Vs

Mr. Shailen Shah, Resolution Professional of Wind World (India) Ltd. 2nd Floor, Lodha Excelus, Apollo Mills Compound, N M Joshi Marg, Mahalaxmi, Mumbai, Maharashtra-400011. ... Respondent

Present:

For Appellant: Mr. Abhijeet Sinha, Ms. Varsha Banerjee, Ms. Mahima Ahuja, Advocates.

For Respondent: Mr. Sumant Batra, Ms. Ruchi Goyal, Ms. Diya Dutta, Advocates for RP.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal has been filed against the order dated 24.01.2023

passed by the National Company Law Tribunal, Ahmedabad Division

Bench, Court-1, by which order IA No.525 of 2022 filed by the Appellant

was rejected.

Company Appeal (AT) (Insolvency) No.241 of 2023 1

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

are:

(i) The Appellant entered into an Agreement with Wind world

India Limited (Earlier known as Enercon (India) Limited) for

supply of material. The Agreement between the parties were

for supply of Wind Turbine Generators ("WTG"). In pursuance

of the Agreement, Wind Turbine Generators were supplied by

the Corporate Debtor for which payments were made by the

Appellant.

(ii) On Section 7 Application of the Insolvency and Bankruptcy

Code, 2016 (hereinafter referred to as the "Code") Corporate

Insolvency Resolution Process ("CIRP") was initiated against

the Corporate Debtor - Wind World (India) Ltd. by order dated

20.02.2018.

(iii) In the CIRP of the Corporate Debtor, the Appellant filed its

claim of Rs.132,70,44,653/- claiming to be advance payment

made to the Corporate Debtor for supply of 26 WTGs. The

claim of the Appellant-Operational Creditor was admitted in

toto by the Resolution Professional ("RP") and the CIRP

proceeded against the Corporate Debtor.

(iv) The RP was running the Corporate Debtor as a going concern.

The Appellant by letter dated 13.06.2022 made a request to

Company Appeal (AT) (Insolvency) No.241 of 2023 2 the RP of the Corporate Debtor to supply WTGs in terms of the

Agreement dated 03.03.2010 as against advance of

Rs.132,70,44,653/-. The RP vide letter dated 17.06.2022,

replied to the Appellant that request made by the Appellant

cannot be accepted since the Appellant owes an amount of

Rs.74,94,60,745/- along with interest and further the claim of

the Appellant has already been admitted in the CIRP. It was

further communicated that RP is running the Corporate

Debtor as a going concern. The proposition as placed by the

Appellant was rejected, since as per RP that shall not maximise

the assets of the Corporate Debtor.

(v) The Appellant thereof filed an IA being IA No.525 of 2022 before

the Adjudicating Authority, paying for following reliefs:

"a. Allot the instant application;

b. Direct the Respondent to adhere to the terms of Agreement dated 03.03.2010 and supply immediately the 26 WTGs lying with the Corporate Debtor against the advance payment already made by the Applicant; c. Pass any other order/ directions as this Hon'ble Tribunal may deem fit in the interest of justice in the facts and circumstances of the instant case."

The RP filed affidavit in reply to the IA, refuting the claim of

the Appellant.

Company Appeal (AT) (Insolvency) No.241 of 2023 3

(vi) The Adjudicating Authority after hearing the parties, by the

impugned order, rejected the IA No.525 of 2022. Aggrieved by

which order, this Appeal has been filed.

3. We have heard Shri Abhijeet Sinha, learned Counsel appearing for

the Appellant and shri Sumant Batra, learned Counsel appearing for RP.

4. The learned Counsel for the Appellant challenging the order of the

Adjudicating Authority submits that there was already a contract with the

Corporate Debtor under which the Corporate Debtor was to supply the

WTGs, for which an advance payment of Rs.132 crores were paid by the

Appellant, which is lying with the Corporate Debtor. It is submitted that

26 WTGs were lying with the Corporate Debtor, which could have been

supplied against the advance payment made by the Appellant and the

amount could have been adjusted from the claimed amount admitted in

the CIRP of the Corporate Debtor. It is submitted that the RP is under

obligation to run the Corporate Debtor as a going concern and business of

the Corporate Debtor cannot be stopped merely on the ground that CIRP

has been initiated. Admission of the claim in the CIRP can in no manner

to avoid the due implementation of the obligation arising under the

contract. The RP is under obligation to implement the earlier contract

entered by the Corporate Debtor. The Adjudicating Authority committed

error in rejecting the application. Proceedings under the Code were to

continue the business operations of the Corporate Debtor as a going

Company Appeal (AT) (Insolvency) No.241 of 2023 4 concern. The Adjudicating Authority erred in coming to the conclusion that

there cannot be any set off of the amount admitted in the CIRP.

5. Shri Sumant Batra, learned Counsel appearing for the RP refuting

the submissions of the learned Counsel for the Appellant submits that the

Appellant is a 'related party' to the Corporate Debtor and the entire claim

submitted by the Appellant in the CIRP of the Corporate Debtor has been

admitted and the Appellant is entitled to receive his dues in the CIRP as

per provisions of the Code. The 26 WTGs, which are lying at Yermala are

not the WTGs, which were in pursuance of the contract between the

parties. It is submitted that Agreement between the parties dated

03.03.2010 was to supply WTGs upto financial year 2014-15, that

Agreement cannot be enforced by the Appellant by means of IA, filed in the

CIRP. It is submitted that the Appellant had earlier filed an Application for

set off its admitted operational claim, which Application has now been

rejected. Further, the Application filed in the year 2022, after four years of

the initiation of CIRP, is with the object to create hurdles in CIRP of the

Appellant and the same is nothing but to get a preferential treatment,

which is prohibited. It is submitted that the RP is running the Corporate

Debtor as a going concern and RP in its wisdom has taken a decision, not

to supply 26 WTGs to the Appellant. The Adjudicating Authority has rightly

rejected the Application filed by the Appellant.

6. We have considered the submissions of learned Counsel for the

parties and have perused the record.

Company Appeal (AT) (Insolvency) No.241 of 2023 5

7. The CIRP against the Corporate Debtor commenced on 20.02.2018.

It was after four years of commencement of CIRP that for the first time, the

Appellant wrote letter dated 13.06.2022 for supply of WTGs. The letter was

replied by the RP by letter dated 17.06.2022. In paragraph 3 of the letter,

the reasons were communicated by the RP for not acceding the request of

the Appellant. Paragraph 3 of the letter dated 17.06.2022 is as follows:

"3. With reference to paragraph 7, 8 and 9 I state that the 26 wind turbine generators (WTGs) lying in the Yermala site cannot be arbitrarily appropriated to Vish Wind as requested. In view of the facts stated in paragraph 2 above, there is no question of WWIL fulfilling obligation under the Agreement, especially in the manner proposed in the letter. Further, with reference to your statement that by supplying the said WTGs to VishWind, WWIL would benefit from the potential income for operation and maintenance (O&M) of the said turbines from Vish Wind, while denying this in toto, I state that the current outstanding dues payable by Vish Wind towards outstanding dues under the currently subsisting agreements are to the tune of Rs.74,94,60,745 (even without considering the interest applicable @ 18% p.a.) for which WWIL has also initiated arbitration proceedings against VishWind. Thus, the proposition of supplying the said WTGs to VishWind and gaining any revenue from VishWind is denied and cannot be perceived as an action that can probably maximise the value of the assets of WWIL at all. Admittedly WWIL is managed as a

Company Appeal (AT) (Insolvency) No.241 of 2023 6 going concern during the CIRP, and the RP has continued to and shall in the future act only in the interest of WWIL with a view to maximise the value of its assets.

In view of this and the statements as mentioned above, I will not be in a position to consider your request under the Letter.

Trust this suffices."

8. Under Section 25, sub-section (1) of the Code, the RP is under

obligation to protect the assets of the Corporate Debtor, including the

continued business operations of the Corporate Debtor. Section 25, sub-

section (1) is as follows:

"25. Duties of resolution professional. - (1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor."

9. It is admitted fact that for entire advance amount of

Rs.132,70,44,653/-, which Appellant has given to the Corporate Debtor as

an Operational Creditor, a claim was filed by the Appellant, which was

admitted in toto by the Corporate Debtor and the said claim is to be

considered in the CIRP. It is true that the Agreement was entered on

03.03.2010 for supply of WTGs. Supplies were made by the Corporate

Debtor from time to time for which payments were also received from the

Operational Creditor. An advance was also made by the Appellant as noted

above, against which no supply was made by the Corporate Debtor. The

Company Appeal (AT) (Insolvency) No.241 of 2023 7 learned Counsel for the RP has submitted that there are huge dues payable

by the Operational Creditor to the Corporate Debtor of about Rs.75 crores,

which the Appellant has not paid to the Corporate Debtor, which was due

for the services rendered by the Corporate Debtor during the CIRP period

towards operation and maintenance of existing WTGs. The Corporate

Debtor has to initiate arbitration proceedings for realization of the aforesaid

dues. On one hand, the Appellant is not paying the dues and on the other,

the Appellant is claiming to supply WTGs, which are lying with the

Corporate Debtor. The learned Counsel for the RP has further contended

that in the Application, which was filed by the Appellant, it is not even

pleaded that 26 WTGs, which are lying at Yermala in Maharashtra, are the

Generators, which are in compliance of the Contract between the parties.

In paragraph 13 of the Application, the Appellant has made the following

pleadings:

"13. It is submitted that the Corporate Debtor has available in its inventory 26 wind turbine generators lying at Yermala in Maharashtra in semi erected conditions. These wind turbine generators can be supplied to the Applicant in terms of the agreement wherein the advance payment has already been made to the Applicant. It is noteworthy that in case if these wind turbines generators are not supplied to the Applicant, it will further erode the asset value of the WTGs. However, in case the same are supplied to the Applicant, the Respondent will not be in contravention of the terms of the agreement and the obligations arising from the same will be fulfilled. It is noteworthy that the agreement is

Company Appeal (AT) (Insolvency) No.241 of 2023 8 still subsisting and neither frustrated nor effected by force majeure or any other legal impediment, preventing the due performance of the said Agreement dated 03.03.2010."

10. The case of the Appellant is that there are 26 WTGs in the inventory

of the Corporate Debtor, which are lying at Yermala and the same can be

supplied to the Appellant or else it will further erode the asset value of the

WTGs. The assets which are in the inventory of the Corporate Debtor are

the assets, which are in possession and control of the RP and has to be

utilized as per the wisdom of the RP. The RP has also pointed out that as

per the Agreement between the parties, the supply was to be made upto

the financial year 2014-15 and after seven years from the said period, the

Appellant cannot pray for specific performance of Contract in the CIRP.

11. From the facts brought on record, it is clear that the RP is claiming

payment of dues of about Rs.75 crores from the Appellant, for which

arbitration proceedings have been initiated. When the Corporate Debtor

has not received the dues from the Appellant for which proceedings are

pending, the decision taken by the RP, not to handover the 26 WTGs is as

per the wisdom of RP, who is to run the Corporate Debtor as a going

concern. The Operational Creditor having filed the claim, which has been

already admitted for an amount of Rs.132 crores and odd, the same has to

be dealt with as per the CIRP and the Appellant has no right to claim that

26 WTGs lying in the inventory of the Corporate Debtor should be handed

over to the Appellant.

Company Appeal (AT) (Insolvency) No.241 of 2023 9

12. We are of the view that decision of the RP refusing to handover 26

WTGs lying with the Corporate Debtor, is a decision which RP is entitled to

take as per the scheme of the Code, which decision cannot be said to be

contrary to any provisions of the Code or in breach of any right of the

Appellant. The Adjudicating Authority has not committed any error in

rejecting the IA filed by the Appellant. We, thus, do not find any error in

the order of the Adjudicating Authority, rejecting the IA filed by the

Appellant. There is no merit in the Appeal, the Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI

9th November, 2023

Ashwani

Company Appeal (AT) (Insolvency) No.241 of 2023 10