Vistra Itcl India Ltd & Ors vs Dinkar Venkatasubramanian & Ors

M/s. Vistara ITCL (India) Ltd. &Ors. ...Appellants

Versus

Mr. DinkarVenkatasubramanian&Ors. ...Respondents

Present: For Appellants : Mr. Gopal Jain, Senior Advocate with Mr. V.P. Singh, Ms. Vatsala Rai and Mr. Raghav Chadha, Advocates

For Respondents : Mr. SumantBatra and Ms. Niharika Sharma, Advocates for IRP and Mr. DinkarVenkatasubramanian, IRP (R-1) Mr. Tushar Mehta, Solicitor General of India Mr. AbhinavVasisht, Senior Advocate with Ms. Misha, Ms. Priya Singh, Mr. Siddhant Kant, Ms. Charu Bansal, Advocates for Respondent No. 2 Mr. SumeshDhawan and Ms. VatsalaKak, Advocates for suspended Board of Directors

ORDER

(Through Virtual Mode)

24.08.2020 Appellants - 'M/s. Vistara (ITCL) Ltd. and

Ors.'are aggrieved of dismissal of their I.A. 62 of 2020 in CP (IB) No.

42/Chd./Hry./2017 at the hands of Adjudicating Authority (National

Company Law Tribunal), Chandigarh Bench, Chandigarh. The

application in question had been filed against the Resolution

Professional and the Committee of Creditors of the Corporate Debtor -

'M/s. Amtek Auto Limited' under Section 60(5) of the I&B Code on 11 th

February, 2020 praying for a direction in the name of Resolution 2

Professional to include the Appellant No. 1 in the Committee of

Creditors as a secured financial creditor and extend all benefits of a

secured financial creditor to it. On consideration of the matter, the

Adjudicating Authority, while approving the resolution plan of

resolution applicant - 'Duccan Value Investor' (DVI), dismissed I.A. No.

62 of 2020 in terms of the same order which has been impugned in this

appeal.

2. A glance at the impugned order would bring it to for that I.A. No.

62 of 2020 came to be dismissed as the Adjudicating Authority was of

the opinion that the Appellants have not lent any money to the

Corporate Debtor and they cannot be treated as the Financial Creditor

of the Corporate Debtor. The Adjudicating Authority noted that the

claim of the Appellants as secured financial creditor was rejected by the

Resolution Professional in 2017 which had not been challenged. It also

noticed the Appellants contention that the decision in regard to

rejection of Appellant's claim as Financial Creditor had not been

challenged by the Appellants under the conception that their interests

would be protected under LHG resolution plan. Such contention, being

repugnant to reason, has been overruled.

3. Appellants feel aggrieved, as according to them, they had

represented to the Resolution Professional to preserve the pledge of

shares in favour of Appellant No. 1. It is submitted that the resolution

plan submitted by 'Liberty House Group' (LHGfor short) in the year

2017 protected and preserved the pledge created in favour of Appellant

Company Appeal (AT) (Insolvency) No. 703 of 2020 3

No. 1 by the Corporate Debtor. Subsequently, the resolution plan

recognizing Appellant No.1's security came to be approved by the

Committee of Creditors with overwhelming majority and the Committee

of Creditors acknowledged the pledge in favour of the Appellant No. 1

while voting in favour of LHG's resolution plan. However, LHG did not

fulfil its commitme nt. Committee of Creditors came to be reconstituted

under orders of Adjudicating Authority, for consideration of the DVI's

plan. Subsequently, Committee of Creditors filed an appeal before this

Appellate Tribunal assailing the order of the Adjudicating Authority

rejecting prayer of Resolution Professional to issue fresh invitation for

resolution plans. Liquidation order came to be passed by this

Appellate Tribunal which was assailed before the Hon'ble Apex Court.

On 2nd December, 2019 Hon'ble Apex Court directed the Resolution

Professional to invite fresh bids within 30 days. According to the

Appellants, the Appellant No. 1 made the representation to Resolution

Professional to preserve the pledge which was reiterated on 10th

January, 2020. Since the pledge in favour Appellant No. 1 was not

mentioned in the information-memorandum as conveyed by the

Resolution Professional, Appellants filed I.A. No. 62 of 2020 which came

to be rejected along with approval of the resolution plan of DVI in terms

of the common order impugned in this appeal to the extent of rejection

of I.A. No. 62 of 2020.

4. After hearing learned counsel for the parties, we find that Appellant

No. 1's claim in purported capacity of 'Secured Financial Credi tor' has

Company Appeal (AT) (Insolvency) No. 703 of 2020 4

been rejected way back in the year 2017 and decision in this regard has

not been called in question. It is not open to Appellants to raise the

same issue in 2020 by filing I.A. No. 62 of 2020. The queer explanation

emanating from the Appellants that rejection of its claim as Financial

Creditor went un-assailed under the bona fide belief that the interest of

Appellant's would be taken care of under the 'Liberty House Group'

Resolution Plan is repugnant to reason and cannot provide a lawful

excuse for filing of I.A. No. 62 of 2020 under Section 60(5) of the 'I&B

Code' after a lapse of about three years. Such explanation deserves to be

noticed only for being rejecting. This is apart from the fact that the

Appellants have not lent any money directly to the Corporate Debtor and

the Corporate Debtor did not owe any financial debt to the Appellants

except that the pledge of shares was to be executed. There can be no

dispute with the preposition of law that creation of pledge of shares by

the Corporate Debtor does not tantamount to a guarantee or indemnity.

The creation of pledge of shares by the Corporate Debtor is said to be in

regard to the money lent to WLD and BRASSCO. The Appellants not

having advanced any money to the Corporate Debtor as a financial debt

would not be coming within the purview of financial creditor of the

Corporate Debtor. The debt along with interest disbursed against time

value of money constitute the basic ingredients of the financial debt as

defined in I&B Code and since the same is lacking as regards any

transaction between the Appellant and the Corporate Debtor, pledge of

Company Appeal (AT) (Insolvency) No. 703 of 2020 5

shares would not fall within the concept of guarantee and indemnity so

as to bring it within the meaning of financial debt.

We find no merit in this appeal which is dismissed at the very

threshold stage.

[ JusticeBansi Lal Bhat ] Acting Chairperson

[Justice Jarat Kumar Jain] Member (Judicial)

[ Dr. Ashok Kumar Mishra ] Member (Technical) /ns/gc/

Company Appeal (AT) (Insolvency) No. 703 of 2020