Vishal Vijay Kalantri vs Dbm Geotechnics & Constructions Pvt. ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Company Appeal (AT) (Insolvency) No. 139 of 2018 [ arising out of Order dated 25th March, 2018 by NCLT, Mumbai Bench, Mumbai in CP(IB) No. 1382/I&BC/2017 ]

IN THE MATTER OF:

Vishal Vijay Kalantri, S/o Mr. Vijay Kalantri, R/o Flat No. 2, Wahedna CHS Ltd., 75, Hill Road, Bandra (W), Mumbai 400 051 .... Appellant

Vs

1. DBM Geotechnics & Construction Pvt. Ltd. B/301, Centaur House, Shantinagar Industrial Estate, Vakola, Santacruz (E), Mumbai - 400 055.

2. Dighi Port Ltd., New Geotechnics & Constructions Pvt. Ltd., New Excelsior Building, 6th Floor, A.K. Nayak Marg, Fort, Mumbai - 400 001. .... Respondents

Present: For Appellant: Mr. Amit S. Chadha, Senior Advocate with Ms. Neeha Nagpal, Ms. Srishti Govil, Mr. Akshay Sharma, Mr. Vishvendra Tomar, Mr. Rohan Jaitley, and Ms. Sanya Ahluwalia, Advocates.

For Respondents: Mr. Gourab Banerji, Senior Advocate with Ms. Aditi Sharma, Mr. Raka Chatterjee, Advocate for Committee of Creditors.

Mr. Kunal Vajani, Mr. Varun Ahuja and Mr. Paras Anand, Advocates for Resolution Professional. Mr. Niraj Kumar, Mr. Satendra K. Rai and Ms. Tejali, Advocates for Resolution Professional.

Mr. Abhishek Puri and Ms. Surbhi Gupta, Advocates for Maharashtra Maritime Board.

With 2

Company Appeal (AT) (Insolvency) No. 697 of 2019

[ arising out of Order dated 8th May, 2019 by NCLT, Mumbai Bench, Mumbai in M.A. No. 529/2019, MA. No. 761/2019 and MA No. 1147/2019 IN CP(IB) No. 1382/I&BC/NCLT/MAH/2017]

IN THE MATTER OF:

Adani Ports and Special Economic Zone Ltd., Adani House, Mithakhali, Six Road, Navrangpura, Ahmedabad, Gujarat .... Appellant

Vs 1. Mr. Shailen Shah, Resolution Professional of Dighi Port Ltd., BBSR & Co., 5th Floor, Lodha Excelus, Apollo Mill Compound, NM Joshi Marg, Mahalaxmi Mumbai - 400 011

2. Committee of Creditors of Dighi Port Limited, Through lead Bank - Bank of India, Oriental Building, Esplanade Road, Mumbai - 400 001.

3. The Board of Trustees of the Jawaharlal Nehru Port Trust, Administration Building, Sheva, Talukauran, Navi Mumbai - 400 707 .... Respondents

Present: For Appellant: Mr. Arun Kathpalia, Senior Advocate with Ms. Diksha Gupta, Mr. Mahesh Agarwal, Mr. M.S. Ananth and Mr. Rajeev Kumar, Advocates

For Respondents: Mr. Gourab Banerji, Senior Advocate with Ms. Aditi Sharma, Advocate for Committee of Creditors.

Mr. Kunal Vajani, Mr. Varun Ahuja and Pranav Vyas, Advocates for Resolution Professional. Mr. Niraj Kumar, Mr. Satendra K. Rai, Mr. Nirav Shah and Ms. Tejali, Advocates for Resolution Professional.

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 3

Mr. Abhishek Puri, Advocate for Maharashtra Maritime Board.

With

Company Appeal (AT) (Insolvency) No. 698 of 2019

[ arising out of Order dated 27th May, 2019 by NCLT, Mumbai Bench, Mumbai in CP(IB) No. 1382/I&BC/2017 ]

IN THE MATTER OF:

Adani Ports and Special Economic Zone Ltd. .... Appellant

Vs

Mr. Shailen Shah, RP of Dighi Port Ltd. & Ors. .... Respondents

Present: For Appellant: Mr. Arun Kathpalia, Senior Advocate with Ms. Diksha Gupta, Mr. Mahesh Agarwal, Mr. M.S. Ananth and Mr. Rajeev Kumar, Advocates

For Respondents: Mr. Gourab Banerji, Senior Advocate with Ms. Aditi Sharma, Advocate for Committee of Creditors.

Mr. Kunal Vajani, Mr. Varun Ahuja Advocates for Resolution Professional. Mr. Niraj Kumar, Mr. Satendra K. Rai and Ms. Tejali, Advocates for Resolution Professional.

Mr. Abhishek Puri, Advocate for Maharashtra Maritime Board.

With Company Appeal (AT) (Insolvency) No. 722 of 2019

[ arising out of Order dated 8th May, 2019 by NCLT, Mumbai Bench, Mumbai in M.A. No. 529/2019, MA. No. 761/2019 and MA No. 1147/2019 IN CP(IB) No. 1382/I&BC/NCLT/MAH/2017 ]

IN THE MATTER OF: Mr. Vishal Vijay Kalantri, Former Director and Shareholder of Dighi Port Limited, R/o Flat No. 2, Wahedna CHS Ltd., 75, Hill Road, Bandra (W), Mumbai - 400 051. .... Appellant

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 4

Vs

1. Dighi Port Ltd., Corporate Debtor, New Excelsior Building, 6th Floor, A.K. Nayak Marg, Fort, Mumbai - 400 001.

2. Jawaharlal Nehru Port Trust, The Resolution Applicant, New Excelsior Building, A.K. Nayak Marg, Fort, Mumbai - 400 001. .... Respondents

Present: For Appellant: Mr. Amit Chadha, Senior Advocate with Ms. Neeha Nagpal, Ms. Srishti Govil and Mr. Vishvendra Tomar and Ms. Sanya Ahluwalia, Advocates.

For Respondents: Mr. Gourab Banerji, Senior Advocate with Ms. Aditi Sharma, Advocate for Committee of Creditors.

Mr. Kunal Vajani, Mr. Varun Ahuja Advocates for Resolution Professional. Mr. Niraj Kumar, Mr. Satendra K. Rai and Ms. Tejali, Advocates for Resolution Professional.

Mr. Abhishek Puri, Advocate for Maharashtra Maritime Board.

JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

'DBM Geotechnics and Constructions Pvt. Ltd.' moved an application

under Section 9 of the 'Insolvency and Bankruptcy Code, 2016 ('I&B Code',

for short) for initiation of the 'Corporate Insolvency Resolution Process'

against 'Dighi Port Limited' (Corporate Debtor). The Adjudicating Authority

by impugned order dated 25th march, 2018 admitted the application.

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 5

2. Mr. Vishal Vijay Kalantri (Director and Shareholder of the Corporate

Debtor) initially challenged the impugned order on one of the ground that

there is an 'existence of dispute'. The notice was issued on Respondents

pursuant to which the Respondent (DBM Geotechnics and Constructions Pvt.

Ltd. - Operational Creditor) appeared. The learned counsel for the Appellant

sought time to settle the dispute, which was agreed upon by the learned

counsel for the Respondent as recorded on 12th July, 2018, which is :

"12.07.2018: The appeal was preferred

against order of initiation of Corporate Insolvency

Resolution Process under Section 9 of the Insolvency

and Bankruptcy Code, 2016. The matter was taken

up and ultimately the senior counsel for the

Appellant sought for time to settle the dispute, which

was agreed by learned senior counsel for the

Respondent (Operational Creditor).

Today, learned senior counsel for the

Appellant again sought for some more time to ensure

settlement. Learned senior counsel appearing on

behalf of Respondent (Operational Creditor) agreed

to negotiate, if the Appellant approach.

In these circumstances, adjourn the case. If no

settlement is made, the court may proceed with the

appeal on merit.

Mr. Gourab Banerji, learned senior counsel

alongwith Mr. I. P. A. Oberoi, Advocate submits that

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 6

he wants to intervene on behalf of the CoC, as the

Resolution Process is on-going.

We allow him to file an Intervention

Application within a week and make it clear that we

have not stayed the Resolution Process, therefore,

the Resolution Professional, Committee of Creditors

and the Adjudicating Authority, in the meantime,

may proceed in accordance with law.

Place the case 'for orders' on 1st August,

2018."

3. However, the matter was not finally settled between the Appellant -

'Vishal Vijay Kalantri' and the Respondent - 'DBM Geotechnics and

Constructions Pvt. Ltd.' (Operational Creditor). The Appellant sought time to

move an application under Section 12A of the 'I&B Code'. Therefore, the

'Company Appeal (AT) (Insolvency) No. 139 of 2018' remained pending and

during the pendency of the Appeal, 'Corporate Insolvency Resolution Process'

continued.

4. 'Resolution Plan' by 'Adani Ports and Special Economic Zone Limited'

('APSEZL', for short) was declared as the highest evaluated compliant

resolution plan and the same was put to the vote of 'Committee of Creditors'

on 31st January, 2019 and was rejected by 99.38% of votes by the 'Committee

of Creditors'. Subsequently, the 'Jawaharlal Nehru Port Trust' ('JNPT' for

short) resolution plan being the second highest resolution plan as per the

scoring was put to the vote on 1st February, 2019 which was approved by

99.38% of the requisite majority of the 'Committee of Creditors'. The

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 7

Adjudicating Authority (National Company Law Tribunal), Mumbai Bench by

impugned order dated 8th May, 2019 approved the resolution plan of 'JNPT',

'Government of India Undertaking' with certain conditions. The said order

has been challenged by 'Adani Ports and Special Economic Zone Limited', one

of the resolution applicant and also by 'Vishal Vijay Kalantri' - a shareholder

of the 'Corporate Debtor' in their respective 'Company Appeal (AT) (Insolvency)

No. 697 of 2019' and 'Company Appeal (AT) (Insolvency) No. 722 of 2019' . At

the relevant point of time, the proposal under Section 12A of the 'I&B Code'

was submitted by 'Vishal Vijay Kalantri' which was rejected by the 'Committee

of Creditors'. Subsequently, the 'Successful Resolution Applicant' (JNPT)

sought additional time of 30 days for filing the affidavit for acceptance or

rejection of the modifications in terms of the order dated 8th May, 2019. In

the said application, it was contended that it was very critical for JNPT to fully

understand and holistically evaluate the impact of modifications directed in

the JNPT's resolution plan before taking any decision in this respect and for

this additional time of at least 30 days was required for filing the affidavit

regarding its acceptance or rejection in terms of order dated 8th May, 2019.

5. It was further stated that 'JNPT' being the Government of India

Undertaking is required to follow certain procedure for obtaining appropriate

internal approvals, including from the Ministry of Shipping before proceeding

further on the 'resolution plan' because it has financial implications, which

may also require consultation with the Ministry of Finance. In this

background the Adjudicating Authority by impugned order dated 27th May,

2019 allowed 30 days' time for filing an additional affidavit, as the last

opportunity. The said order has been challenged by 'Adani Ports and Special

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 8

Economic Zone Limited' as another 'resolution applicant' in 'Company Appeal

(At) (Insolvency) No. 698 of 2019'.

6. When the matter was taken up, the learned counsel appearing on behalf

of the 'Resolution Professional' submitted that in 19th meeting of the

'Committee of Creditors', it was decided that the 'resolution plans' from all the

three 'resolution applicants' and the 'settlement proposal' of 'Vishal Vijay

Kalantri' and other promoters of the 'Corporate Debtor' be called and received

on or before 4th September, 2019. Such meeting was held pursuant to the

direction as was given on 21st August, 2019 by this Appellate Tribunal as

JNPT was not agreed to proceed with the modified resolution plan as was

approved. The 'Committee of Creditors' decided that the 'Resolution

Professional' will write to the existing three resolution applicants i.e. (a)

'Jawaharlal Nehru Port Trust (JNPT); (b) 'Adani Ports and Special Economic

Zone Limited (APSEZL') and (c) 'Veritas India Limited and UV Asset

Reconstruction Company Limited ('Veritas Consortium') calling for the

revised/improved/revalidated resolution plans. The 'Committee of Creditors'

also requested the Appellant to submit the 'Promoters' Settlement Proposal'

under Section 12A within the time limits.

7. On 4th September, 2019 at the 20th Meeting of the 'Committee of

Creditors', the Resolution Professional placed before the 'Committee of

Creditors' [i] the term sheet received from the promoters regarding their

Settlement Proposal, and [ii] the revised/ improved/revalidated Resolution

Plans from APSEZ and Veritas Consortium. At the said meeting, the Appellant

was invited to explain the Promoters Settlement Plan in detail to the

'Committee of Creditors'.

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 9

8. Thereafter, the 21st Meeting of the 'Committee of Creditors' was held

on 9th September, 2019 whereat the 'Committee of Creditors' discussed and

deliberated upon the Resolution Plans submitted by 'APSEZL' and 'Veritas

Consortium' and called upon the Resolution Applicant(s) to give a

presentation on their Resolution Plans. At the said meeting, the Resolution

Professional requested 'APSEZL' and Veritas Consortium to provide certain

clarifications in light of the amendments made in Section 39(2)(b) of the I&B

Code. Accordingly, 'APSEZL' and 'Veritas Consortium' agreed to comply with

the same. Further, the 'Committee of Creditors' fixed the deadline of 12th

September, 2019 for the Promoters of the Corporate Debtor to submit EMD of

20% of the Settlement Proposal along with further

details/clarifications/information as sought by the Forensic Auditor/

Evaluation Advisor.

9. Pursuant to the aforesaid, 'APSEZL' and 'Veritas Consortium' submitted

the addendums inter alia to clarify on compliances with the Amendments

made in Section 30(2)(b) of the I&B Code.

10. Thereafter, on 13th September, 2019, the 22nd Meeting of the

'Committee of Creditors' was held whereat the 'Committee of Creditors'

decided that the Proposal for Settlement received from the Promoters under

Section 12A of the I&B Code also seeking withdrawal of the 'corporate

insolvency resolution process' be put to vote. It is pertinent to record that at

the said Meeting, the 'Committee of Creditors' took note that EMD of 20% of

the Settlement Proposal along with further details/clarifications/information

as were previously sought were not received. The Resolution Professional also

apprised the 'Committee of Creditors' that the relevant form FA and the Bank

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 10

Guarantee as prescribed under Regulation 30A of the Insolvency and

Bankruptcy Board of India (Insolvency Resolution Process for Corporate

Persons) Regulations 2016 [" CIRP Regulations"], had also not been received.

However, on the basis of the directions of this Hon'ble Appellate Tribunal, the

'Committee of Creditors' proposed to put the withdrawal resolution under

Section12A of the I&B Code for voting by the members of the 'Committee of

Creditors'. The 'Committee of Creditors' further decided that, if in case the

withdrawal is not approved by the requisite percentage of votes by the

'Committee of Creditors', then the Resolution Plan received from 'APSEZL' be

put to vote immediately thereafter.

11. The voting on the resolution for approval of Settlement Proposal under

Section 12A of the I&B Code proposed at the 'Committee of Creditors' Meeting

held on 13th September, 2019 was concluded on 17th September, 2019. From

the results of the voting, it was noted that the resolution for withdrawal of

'corporate insolvency resolution process' under Section 12A of the I&B Code

was rejected by the members of the 'Committee of Creditors' by 99.68% voting

shares and 'Committee of Creditors' members having the remaining 0.3%

voting shares abstained from voting. As such, it is unequivocally clear that

the resolution for withdrawal of 'corporate insolvency resolution process'

under Section 12A of the 'I&B Code' came to be rejected by the members of

the 'Committee of Creditors' as the same could not muster the requisite 90%

voting share

12. It is pertinent to mention that the said Resolution Plan of the 'APSEZL'

was found to be in compliance with Section 30(2) of the I&B Code and

Regulation 38 of the CIRP Regulations. Since, the withdrawal resolution

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 11

under Section 12A of the I&B Code stood rejected by the members of the

'Committee of Creditors', as per the instructions of the 'Committee of

Creditors' in its 22nd Meeting, the Resolution Professional put the Resolution

Plan submitted by 'APSEZL' for voting by the members of the 'Committee of

Creditors'. The voting on the same commenced on 17th September, 2019 and

concluded on 19th September, 2019.

13. On 19th September, 2019, the voting results were received which

revealed that the Resolution Plan submitted by APSEZ was approved by the

members of the 'Committee of Creditors' with 99.68% votes.

14. It was submitted that that Hon'ble NCLT vide its Order dated 15th

January, 2020 in the 'Company Petition [C.P.(I.B.) No. 1382 (MB) of 2017]'

has reserved Judgement on the Application filed by the 'Resolution

Professional' under Sections 30 and 31 of the I&B Code, inter alia, seeking

approval of the Resolution Plan of 'APSEZL' which has been approved by

99.68% [voting share] of the 'Committee of Creditors'. Therefore, the

determination/adjudication as to whether the Resolution Plan is in

compliance to the provisions of the I&B Code and Regulations framed

thereunder is sub judice before the NCLT i.e. Adjudicating Authority being

the court of first instance. It is further submitted that the Settlement Proposal

of the Appellant under Section 12A of the I&B Code has been rejected by

99.68% [voting share] of the 'Committee of Creditors'. Furthermore, almost

2[two] years have elapsed since passing of the Admission Order and in the

event this Appellate Tribunal interferes with the Admission Order, this would

result in one of the creditors filing a fresh application before the NCLT and

'corporate insolvency resolution process' of the 'Corporate Debtor' would have

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 12

to be recommenced. It is imperative to record that in the event the 'corporate

insolvency resolution process' of the Corporate Debtor is interfered with, the

same would result in a risk of the Maharashtra Maritime Board cancelling the

Concession Agreement granted to the Corporate Debtor for the purpose of

operating the port. Consequently, none of the lenders/stake holders would

receive their dues from the subsequent 'corporate insolvency resolution

process' of the Corporate Debtor and the Corporate Debtor would eventually

be subjected to nothing but liquidation.

15. From the record, we find that after the 'corporate insolvency resolution

process' was initiated on 25th March, 2018 and number of claims were filed

by different 'financial creditors' and the 'operational creditors', the claims

amounting to Rs.3000 crores. In view of the said position, the Appellant -

'Vishal Vijay Kalantri' on behalf of the 'Promoter' sought time to settle the

claim under Section 12A.

16. Now at the time of hearing, the learned counsel for the Appellant wanted

to highlight the merit to suggest that there is a 'pre-existence of dispute'.

However, as more than one and a half year has passed and as the matter

remains pending since long because of the Appellant - 'Vishal Vijay Kalantri',

the 'Promoter' would have settled the matter with the creditors and also

sought time, we are not inclined to determine the initial issue whether there

was a 'pre-existing dispute' or not. Even if, the proceedings is quashed on the

'pre-existing dispute', as admittedly there is a default of payment and it will

regenerate other proceedings, which is not desirable. Admittedly, the

'Committee of Creditors' now approved the plan as submitted by the APSEZL'

with 99.68% voting share and approved on 19th September, 2019. The matter

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 13

is pending before the Adjudicating Authority for passing the order under

Section 31(1) of the 'I&B Code'. In terms of the 'Committee of Creditors of

Essar Steel India Limited vs. Satish Kumar Gupta & Ors. - (2019) SCC

Online SC 1478', the Adjudicating Authority or the National Company Law

Tribunal or this Appellate Tribunal cannot sit in appeal on commercial

wisdom of the 'Committee of Creditors'.

17. In the circumstances, we are not interfering with the impugned order

dated 25th March, 2018 passed by the Adjudicating Authority (National

Company Law Tribunal), Mumbai Bench and dismiss the appeals preferred

by 'Vishal Vijay Kalantri' and declare both the appeals preferred by 'APSEZL'

as infructuous. The matter stands remitted to the Adjudicating Authority to

pass appropriate order under Section 31 of the I&B Code in accordance with

law.

In the result, the 'Company Appeal (AT) (Insolvency) No. 139 of 2018'

and 'Company Appeal (AT) (Insolvency) No. 722 of 2019' is dismissed and the

'Company Appeal (AT) (Insolvency) Nos. 697 of 2019' and 'Company Appeal

(AT) (Insolvency) No. 698 of 2019' is declared infructuous.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial) New Delhi

12th March, 2020

//ns//

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019 14

12.03.2020:

N.B. After the Judgment was delivered, learned counsel appearing on

behalf of 'Adani Ports and Special Economic Zone Ltd.' and counsel for the

'Resolution Professional' brought on record one order dated 5th March, 2020

by which the Adjudicating Authority (National Company Law Tribunal),

Mumbai Bench, Mumbai, has approved the 'Resolution Plan' submitted by

'Adani Ports and Special Economic Zone Ltd.'.

The order dated 5th March, 2020 be kept on record.

[Justice S. J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

/ns/

Company Appeal (AT) (Insolvency) Nos. 139 of 2018; 697 of 2019; 698 of 2019 and 722 of 2019