Vitol Sa vs Asian Natural Resources (India) ...

VITOL S.A. Registered Office at: Boulevard Du Point D' Arve 28, CH 1205 Geneva, Switzerland ...Appellant

Versus

1. ASIAN NATURAL RESOURCES (INDIA) LIMITED, (Formerly Bhatia International Limited) Through Its Liquidator - Mr. Abhishek Nagori, Reg. No. IBBI/IPA- 001/IP-P0020/2016-17/10044, C/o JLN US & Company, Charters Accountants 330/348, Third floor, Tower A, Atlantis - K10, Opp. Vadodara Central, Sarabhai Main Road, Vadodara 390007 2. SURINDER SINGH BHATIA, S/o Mr. Kripal Singh Bhatia, Residing at Flat No. 801, 08th Floor, Le Orchid, 15th Road, Khar (West), Mumbai - 400052. And Plot No. 13&14, Aditya Nagar, Indore - 452001 3. GURVINDER SINGH BHATIA, S/o Mr. Kripal Singh Bhatia, Residing at Plot 1,2,3,4, Aditya Nagar, Vishnupuri Colony, Indore - 452001 4. MANJEET SINGH BHATIA, S/o Mr. Kripal Singh Bhatia, 53, Gajanand Mandir Colony, Chandrapur, Maharashtra - 442401 5. AMARDEEP SINGH BHATIA S/o Mr. Kripal Singh Bhatia, Residing at Plot 1,2,3,4, Aditya Nagar, Vishnupuri Colony, Indore - 452001 6. BANK OF INDIA Through its Indore Mid Corporate Branch, -2-

Ground Floor, Airen Heights, Plot No. 14, PU3, Scheme No. 54, Opp. Orbit Mall, AB Road, Indore - 452010 7. STATE BANK OF INDIA Through its Indore Commercial Branch, Near GPO AB Road, Indore 452001 8. UCO BANK Through its Indore Sanyogitaganj Branch 20, Sharadhanand Marg, Indore 452001 9. UNION BANK OF INDIA Through its Indore Mid Corporate Branch, Satguru Parinaya, Pu-3, Plot No. 5, Near Pariza Plaza, Indore 452010 10. STANDARD CHARTERED BANK, Group Special Assets Management, Cresenzo, 7th Floor, C 38/39, G Block, Behind MCA Club, Bandra Kurla Complex, Bandra (Ease), Mumbai 400051 ...Respondents

For Appellant: Mr. Saurabh Kirpal, Sr. Advocate, Mr. Arvind Kumar Gupta, Mr. Aditya Krishnamurthy, Mr. Ashutosh Tiwari and Mr. Shaurya Dogra, Advocates. For Respondent: Mr. Mukund P. Unny, Advocates for R-1. Ms. Eshna Kumar and Ms. Prachi Bhatia, Advocates for R2-R5 Ms. Ekta Choudhary, Mr. Divyank Dutt Dwivedi, Advocates for R-9

JUDGMENT

ASHOK BHUSHAN, J:

1. This Appeal has been filed challenging the Order dated 05.05.2022

passed by the National Company Law Tribunal, Indore Bench (hereinafter

referred to as "The Adjudicating Authority") dismissing I.A. No. 156 of 2019

filed by the Appellant.

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

are:-

Company Appeal (AT) (Insolvency) No. 759 of 2022 -3-

(i) The Corporate Debtor-Asian Natural Resources (India) Limited

(formerly Bhatia International Limited) is undergoing Liquidation

pursuant to the Order passed by the Adjudicating Authority dated

06.11.2017.

(ii) The Appellant herein is an Operational Creditor in the Insolvency

Proceedings against the Corporate Debtor.

(iii)The Adjudicating Authority in I.A. No. 230 of 2017 vide Order dated

06.11.2017 filed by the Appellant issued various directions including

holding that Appellant has right to participate in the proceedings. It

was further held that Appellant is entitled to place the relevant

materials in respect of allegations made by it against the Corporate

Debtor before the Interim Resolution Professional and Resolution

Professional. Liberty was also given to the Appellant to approach the

Adjudicating Authority. In pursuance of the Order dated 06.11.2017

passed in I.A. No. 230 of 2017, Appellant made several request to the

Liquidator to take appropriate action. The Appellant hereinafter filed

I.A. No. 287 of 2018 under Section 66 of the Insolvency and

Bankruptcy Code, 2016 (IBC in short). It was pleaded that in spite of

the Order dated 06.11.2017 by the Adjudicating Authority, no

Application has been filed, allegations were made against the Ex-

Promoters of the Corporate Debtor. Several prayers have been made in

the Application and various reliefs were asked for including an Order

under Section 66(2) of the IBC. Inherent power of the Tribunal was

also invoked under Rule 11 of NCLT Rules, 2016. The prayer was also

Company Appeal (AT) (Insolvency) No. 759 of 2022 -4-

made to summon and enforce the attendance of Mr. Surinder Singh

Bhatia to examine them on oath.

(iv) In the said Application (I.A. No. 287 of 2018), an Order was passed by

the Adjudicating Authority on 09.08.2018 directing that the

Respondent No. 2 to 5 are not allowed to leave the country without

prior permission of the Bench till the next date of hearing.

(v) I.A. No. 85 of 2019 was filed by Mr. Surinder Singh Bhatia one of the

directors praying that Applicant-Sureinder Singh Bhatia be permitted

to travel to Abu Dhabi, UAE from 19th to 24th February, 2019.

(vi) I.A. No. 386 of 2018 was also filed by the Surinder Singh Bhatia

praying that I.A. No. 287 of 2018 filed by the Appellant be dismissed

and Interim Order be vacated.

(vii) The Application I.A. No. 85 of 2019 came for consideration

before the Adjudicating Authority on 12.02.2019. In the cause list of

the Adjudicating Authority, I.A. No. 85 of 2019 was only listed before

the Adjudicating Authority, Adjudicating Authority heard I.A. No. 85 of

2019 and by order dated 14.02.2019 allowed the Application. I.A. No.

85 of 2019 was filed in I.A. No. 287 of 2018 since the Interim Order

was passed in I.A. No. 287 of 2018. The operative portion of the Order

dated 14.02.2019 is as follows:

"19. Under the facts and circumstances and the discussions in sequel, we do not find any reason for not granting permission to the present applicant (respondent no. 2 in I.A. No. 287 of 2018) to attend the wedding ceremony of his friend's son for a limited period.

Company Appeal (AT) (Insolvency) No. 759 of 2022 -5-

However, with abundant caution, we hereby direct the present applicant to furnish Indemnity Bond of Rs. 5.00 Lakhs and the surety of a like amount with the Registry of this Tribunal.

The present applicant is also directed to inform this Bench immediately through his authorized counsel, after return from his overseas trip to Abu Dhabi, UAE.

It is further directed that the applicant shall produce order of this Bench at the Indian Embassy at Abu Dhabi, UAE.

20. Accordingly, the application is allowed with the above directions."

(viii) The Appellant after passing of the Order dated 14.02.2019 filed

I.A. No. 156 of 2019 under Section 66(5)(c), Rule 11 of NCLT Rules,

2016 and Section 422 and 424 of the Companies Act praying for

clarifications. Prayers made in the Application (I.A. No. 156 of 2019)

are as follows:

"a) Pending the final haring and disposal of IA 386 of 2018 (challenging the locus of the Application to file IA 287 OF 2018) that this Hon'ble Tribunal be pleased to pass an order of clarifying that its observations in paragraphs 14,17 and 18 its order dated 14 th February, 2019 in IA 85 of 2019 are only prima facie observations and can be revisited whilst IA 386 OF 2018 (challenging the locus of the Application to file IA 287 of 2018) is being considered;

Company Appeal (AT) (Insolvency) No. 759 of 2022 -6-

b) Pending the final hearing and disposal of IA 386 of 2018 (challenging the locus of the Application to file IA 287 of 2018) that this Hon'ble Tribunal be pleased to expunge its obserbations in paragraphs 14,17 and 18 its order dated 14th February, 2019 in IA 85 of 2019;

c) Any other reliefs this Hon'ble Tribunal deems fit in the interest of justice, equity and good conscience;

d) Provide for the costs of making this application;"

(ix) I.A. No. 156 of 2019 has been rejected by the Impugned Order dated

05.05.2022. Challenging the said order, this Appeal has been filed.

3. We have heard Learned Counsel for the Appellant, Learned Counsel for

the Respondent Nos. 2 - 5 and Learned Counsel for the Liquidator.

4. Learned Counsel for the Appellant challenging the order impugned

contends that the adjudicating authority while passing the order dated

14.02.2019 has made observations giving conclusive finding which may

adversely affect the I.A. No. 287 of 2018 which was pending. It is submitted

that by virtue of the Order dated 14.02.2019, I.A. No. 287 of 2018 of the

Appellant has been virtually dismissed. It is submitted that the Adjudicating

Authority while deciding I.A. No. 85 of 2019 was only concerned with the

prayer of the Respondent-Surinder Singh Bhatia who asked for travel to Abu

Dhabi and allowing application, no observations were required to be made by

the Adjudicating Authority which may adversely affect I.A. No. 287 of 2018.

It is submitted that Application 156 of 2019 was only filed to clarify that

Company Appeal (AT) (Insolvency) No. 759 of 2022 -7-

those observations may not come in the way while deciding I.A. No. 287 of

2018 which order could have been passed by the Adjudicating Authority and

Adjudicating Authority erred in rejecting I.A. No. 156 of 2019. It is further

submitted that the Adjudicating Authority has wrongly observed that I.A. No.

287 of 2018 was dismissed vide Order dated 14.02.2019 which observations

is wholly incorrect since I.A. No. 287 of 2018 is still pending. It is submitted

that the Adjudicating Authority in the Impugned Order has again sought to

justify observations made in paragraph 4 which observations were both

premature and incorrect. The observations made in Paragraph 4 as well as

in the Impugned Order that Appellant cannot file I.A. No. 287 of 2018 were

not called for since I.A. No. 287 of 2018 was not up for consideration.

5. Learned Counsel for the Liquidator submits that Liquidator has taken

necessary steps in the liquidation proceedings which was required to be

done by the Liquidator. The Learned Counsel for the Liquidator has also

supported the Impugned Order.

6. Learned Counsel for the Respondent Nos. 2 to 5 opposing the prayer of

the Appellant submits that I.A. No. 156 of 2019 was in fact for review of

Order dated 14.02.2019 which jurisdiction is not vested with the

Adjudicating Authority. The Adjudicating Authority has rightly held that IA

for clarification is not maintainable. The Adjudicating Authority does not

have power to review and Appellant cannot be allowed to do something

indirectly which is prohibited in law. It is further submitted that Appellant

has no any right or any locus to file I.A. No. 287 of 2018.

7. We have heard Learned Counsel for the parties and have perused the

record.

Company Appeal (AT) (Insolvency) No. 759 of 2022 -8-

8. The order impugned in this Appeal is passed in I.A. No. 156 of 2019

filed by the Appellant by which Application certain clarifications and

directions were sought in reference to Order dated 14.02.2019 passed in I.A.

No. 85 of 2019 as noted above. In I.A. No. 287 of 2018 filed by the Appellant,

the Adjudicating Authority passed an Interim Order which is to the following

effect:

"On perusal of the prayer in the application, it is seen that there is no such prayer for seeking restrain order against respondent no. 2 to 5 except seeking direction to deposit their passport with the Registry of this Tribunal, during the pendency of the case. However, for the sake of brevity, this bench is of the view that to protect the interest of all the stack holders and also to facilitated the liquidation proceeding undertaken by the liquidator, the respondent no. 2 to 5, are not allowed to leave the country without prior permission of this bench till next date of hearing i.e. 06.09.2018.

9. The Respondent-Surinder Singh Bhatia having not allowed to leave the

country without prior permission, I.A. No. 85 of 2019 came to be filed by

Surinder Singh Bhatia. In the I.A. No. 85 of 2019, following prayers were

made in paragraph 17:

"17. a. pass order permitting the Applicant to travel to Abu Dhabi UAE from 19.02.2019 to 24.02.2019; and b. pass any other order(s) that this Hon'ble Adjudicating Authority deems fit.

10. The Order dated 14.02.2019 was an Order passed allowing I.A. No. 85

of 2019. The Operative portion of the Order dated 14.02.2019 is as follows:

Company Appeal (AT) (Insolvency) No. 759 of 2022 -9-

"19. Under the facts and circumstances and the discussions in sequel, we do not find any reason for not granting permission to the present applicant (respondent no. 2 in I.A. No. 287 of 2018) to attend the wedding ceremony of his friend's son for a limited period.

However, with abundant caution, we hereby direct the present applicant to furnish Indemnity Bond of Rs. 5.00 Lakhs and the surety of a like amount with the Registry of this Tribunal.

The present applicant is also directed to inform this Bench immediately through his authorized counsel, after return from his overseas trip to Abu Dhabi, UAE.

It is further directed that the applicant shall produce order of this Bench at the Indian Embassy at Abu Dhabi, UAE.

20. Accordingly, the application is allowed with the above directions."

11. It is to be noted that I.A. No. 156 of 2019 was filed by the Appellant

where prayers were made as noted above. The grievance of the Appellant

raised in I.A. No. 156 of 2019 was with regard to paragraph 14,17 and 18 in

the Order dated 14.02.2019. We may notice the relevant paragraphs 14, 17

and 18 which are as follows:

"14. It is an admitted position that Company BIL is under liquidation and under the control and charge of Liquidator. The Liquidator has not approached this Bench for seeking any relief against the present applicant. The respondent (applicant of IA 287) is the operational creditor and if at all, he has any claim

Company Appeal (AT) (Insolvency) No. 759 of 2022 -10-

against the suspended management of the Company BIL which is under liquidation, the respondent is supposed to put his claim/grievances before the Liquidator.

Before proceeding further, it is expedient to go through the section 60(5)(c), 66 and 67 of the IBC under which IA 287 of 2018 is filed. Section 60(6)(c), 66 and 67 of IBC is reproduced hereunder:

Section 60(5)(c):

(5) "Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of--

(a) xxxxxxxxxxxxxxxxxxxxxxxx

(b) xxxxxxxxxxxxxxxxxxxxxxxx

(c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code."

"Section 66: Fraudulent trading or wrongful trading.

66. (1) If during the corporate insolvency resolution process or a liquidation process, it is found that any business of the corporate debtor has been carried on with intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authority may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as it may deem fit.

Company Appeal (AT) (Insolvency) No. 759 of 2022 -11-

(2) On an application made by a resolution professional during the corporate insolvency resolution process.........."

Section 67: Proceedings under section 66.

67. (1) Where the Adjudicating Authority has passed an order under sub-section (1) or sub-section (2) of section 66, as the case may be, it may give such further directions as it may deem appropriate for giving effect to the order, and in particular, the Adjudicating Authority may ......."

(2) Where the Adjudicating Authority has passed an order under sub-section (1) or sub-section (2) ........" Section 3(7)-Definition of Corporate Person (7) "corporate person" means a company as defined in clause (2) of section 2 of the Companies Act, 2013, a limited liability partnership, as defined in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008, or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider;

Section 3(8)-Definition of Corporate Debtor

(8) "corporate debtor" means a corporate person who owes a debt to any person;

Thus, on plain reading of the above provisions, it is clear that either the corporate debtor or the corporate person can only file the application under section 60(5)(c), 66 and 67 of the IBC.

Admittedly, the respondent (applicant of IA 287 of 2018) is neither a "corporate debtor" nor a "corporate person". Hence under such a situation, the application so filed by the respondent i.e. applicant of

Company Appeal (AT) (Insolvency) No. 759 of 2022 -12-

IA 287, is not maintainable, being the Operational Creditor.

17. The respondent (applicant of IA 287 of 2018) has also failed to produce any evidence of the recent past about the conduct of the present applicant (respondent no. 2 of IA 287 of 2018). Moreover, it is the domain of the liquidator to raise objection, if any, when the company is already under liquidation.

18. It is pertinent to mention herein that as per Section 35 of the IBC, the moment, the order of liquidation is passed, the liquidator takes into his custody or control, all the assets, properties, effects and the actionable claims of the corporate debtor. For the sake of brevity, Section 35 is reproduced below:

"Section 35: Powers and duties of liquidator.

35. (1) Subject to the directions of the Adjudicating Authority, the liquidator shall have the following powers and duties, namely:--

(a) to verify claims of all the creditors;

(b) to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor;

(c) to evaluate the assets and property of the corporate debtor in the manner as may be specified by the Board and prepare a report;

(d) to take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary;

(e) to carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary;

(f) subject to section 52, to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or

Company Appeal (AT) (Insolvency) No. 759 of 2022 -13-

private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels in such manner as may be specified;

(g) to draw, accept, make and endorse any negotiable instruments including bill of exchange, hundi or promissory note in the name and on behalf of the corporate debtor, with the same effect with respect to the liability as if such instruments were drawn, accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary course of its business;

(h) to take out, in his official name, letter of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due and payable from a contributory or his estate which cannot be ordinarily done in the name of the corporate debtor, and in all such cases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or recover the money, be deemed to be due to the liquidator himself;

(i) to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities;

(j) to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code;

(k) to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the corporate debtor;

(l) xxxxxxxxx

(m) xxxxxxx

(n) xxxxxxxx

Company Appeal (AT) (Insolvency) No. 759 of 2022 -14-

(o) xxxxxxxxx (2) The liquidator shall have the power to consult any of the stakeholders entitled to a distribution of proceeds under section 53:

Provided that any such consultation shall not be binding on the liquidator:

Provided further that the records of any such consultation shall be made available to all other stakeholders not so consulted, in a manner specified by the Board.

Thus, it is only the Resolution Professional and/or Liquidator as the case may be, is/are competent to file an application before the Adjudicating Authority under Section 60(5)(c), 66 and 67 of IBC."

12. When we look into the observations made in the above paragraphs it is

clear that the Adjudicating Authority has observed that Application filed by

the Applicant i.e. I.A. No. 287 of 2018 is not maintainable he being the

Operational Creditor. I.A. No. 287 of 2018 was not listed for consideration

and which Application is still pending and was not disposed of. In I.A. No.

287 of 2018, the Appellant has raised various issues and has prayed for

several reliefs and without adverting to the said application and without

giving opportunity to the Appellant on the said application it was not open

for the Adjudicating Authority to make observations as noted above. When

an Application is not listed before the Court nor the Adjudicating Authority

heard the parties on the said application, any observations made in

reference to the said application is bound to prejudice the rights of the

Applicant.

Company Appeal (AT) (Insolvency) No. 759 of 2022 -15-

13. As noted above, I.A. No. 85 of 2019 was decided on 14.02.2019 where

Respondent-Surinder Singh Bhaita was seeking leave of the Court to travel

Abu Dhabi, which was allowed. The observations made in the Impugned

Order by the Adjudicating Authority that Appellant was not entitled to pray

for review or clarification, also does not merit acceptance. The Appellant was

not seeking review of the Order dated 14.02.2019 since the operative portion

of the order allowing I.A. No. 85 of 2019 was not even questioned or

challenged, what was sought to be clarified was the adverse observations

made with regard to the locus of the Appellant in I.A. No. 278 of 2018.

14. The question as to whether the Appellant has locus to file I.A. No. 287

of 2019 and whether the objection filed in I.A. No. 386 of 2018 were valid are

the questions to be considered while deciding I.A. No. 287 and 386 of 2018

and no observations could have been made while deciding I.A. No. 85 of

2019 which was only for limited purpose. The Adjudicating Authority

travelled beyond I.A. No. 85 of 2019 while giving observations in Paragraphs

14, 17 and 18. The Adjudicating Authority has also committed error in

observing in paragraph 10 that I.A. No. 287 of 2018 was dismissed vide

Order dated 14.02.2019. Following were observed in paragraph 10 of the

Impugned Order:

"10. Moreover, IA 287 of 2018 was dismissed vide order dated 14.02.2019, if the applicant had any grievance or was not satisfied with the order of the adjudicating authority, the applicant would be preferred an appeal to the Appellate Tribunal."

15. The Order impugned dated 05.05.2022 thus proceeded on

misconception that I.A. No. 287 of 2018 was dismissed vide Order dated

Company Appeal (AT) (Insolvency) No. 759 of 2022 -16-

14.02.2019 whereas on 14.02.2019 neither the I.A. No. 287 of 2018 was

listed nor heard and nor decided.

16. Copy of 'Case Status' dated 3rd June, 2022 has been brought on

record which clearly indicates that both the applications (I.A. No. 287 of

2018 and 386 of 2018) are pending.

17. We thus are of the view that Adjudicating Authority committed error in

rejecting I.A. No. 156 of 2019. In result of the foregoing discussions, we allow

this Appeal, set aside the Order dated 05.05.2022 passed by the

Adjudicating Authority. We further allow I.A. No. 156 of 2019 by expunging

paragraphs 14, 17 and 18 from the Order dated 14.02.2019 as prayed in the

I.A. No. 156 of 2019. The Appeal is allowed accordingly. No order as to cost.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical)

27th January, 2023 New Delhi

Basant

Company Appeal (AT) (Insolvency) No. 759 of 2022