Viva Highways Ltd vs Lic Housing Finance Ltd

Disha Naresh Karda Suspended Director of Shree ...Appellant(s) Sainath Land & Development India Ltd.

Versus

LIC Hosing Finance Ltd. &Ors. ...Respondent(s)

Present: For Appellant : Mr. Vivek Punjabi, Mr. Jasmeet Singh, Mr. Pushpendra S. Bhadoriya, Adv. For Respondents : Mr. Gautam Narayan, with Ms. Asmita Singh, Mr. Harshit Goel, Mr. K.V. Vipu Pd., Adv. for R1 Ms. Anannya Ghosh, Adv. for RP

With Comp. App. (AT) (Ins) No. 1471 of 2023 IN THE MATTER OF:

Viva Highway Ltd. ...Appellant(s)

Versus

LIC Housing Finance Ltd. & Anr. ...Respondent(s)

Present: For Appellant : Mr. Hrishikesh Chitaley, Adv. For Respondents : Mr. Gautam Narayan, with Ms. Asmita Singh, Mr. Harshit Goel, Mr. K.V. Vipu Pd., Adv. for R1 Ms. Anannya Ghosh, Ms. M. Mishra, Adv.

ORDER

(Hybrid Mode) Per: Justice Rakesh Kumar Jain: (Oral) 26.04.2024: Comp. App. (AT) (Ins) No. 1681 of 2023

This appeal is directed against the order dated 20.10.2023 passed by

the Adjudicating Authority (National Company Law Tribunal, Mumbai

Bench, Court No. IV) by which an application filed under Section 7 of the

Insolvency and Bankruptcy Code, 2016 (In short 'Code') by LIC Housing

Finance Ltd. (Financial Creditor) against Shree Sainath Land and Development India Ltd. (Corporate Debtor) to initiate the Corporate

Insolvency Resolution Process (in short 'CIRP') has been admitted.

Moratorium was imposed and Manish Motilal Jaju was appointed as the

Interim Resolution Professional (in short 'IRP').

2. Aggrieved against the said order, the present appeal has been filed.

3. During the pendency of this appeal, the Appellant tried to convince

the Court that it is in the process of making an arrangement of some of

debt. In this regard an order was passed on 02.04.2024 which is reproduced

as under: -

"Learned Counsel for the Appellant submits that now the Appellant has a global finance institution who has agreed to finance the entire debt and the Appellant is now submitting a proposal today during course of the day to the Financial Creditor to consider the same. It is submitted that in the event the matter is listed after two weeks to enable the Respondent to consider the proposal and there is no settlement, the Appeal may be heard on the next date. List on 22nd April, 2024."

4. Thereafter, on the next date of hearing i.e on 22.04.2024 the following

order was passed:-

"Counsel for the Appellant seeks adjournment which is opposed by Counsel appearing on behalf of the Respondent. As a last opportunity, list this Appeal on 26th April, 2024. It is made clear that no further adjournment shall be granted on the next date."

5. Today also, Counsel for the Appellant earnestly requested for an

adjournment on the ground that they are in the process of making

arrangements for the funds and he did not deny during the course of

hearing that there is a debt of Rs. 111,68,55,172.35/- as claimed by the

Financial Creditor and a default on their part in not making the payment on

account of which the application has been admitted.

6. Since, the order dated 22.04.2024 was peremptory in nature because

it was made clear that no further adjournment shall be granted on the next

date of hearing, therefore, we have asked counsel for the parties to argue the

matter.

7. Counsel for the Appellant has submitted that during the pendency of

the main petition before the Adjudicating Authority, an order was passed on

07.08.2023. The said order is reproduced as under:-

"1. Mr. Akhil Sarathy, Ld. Counsel for the Petitioner present. Mr. AkshayPetkar, Ld. Counsel for the Respondent present.

2. Ld. Counsel for the Respondent submits that the default is arising because of non-execution of sale deed by one of the Board Member, who is the cosignatory for exercising the power on behalf of the company in terms of arrangement. In the absence of the signatures, the sale deeds could not be executed by the other co- signatory directors. Accordingly, the other cosignatory directors of the Respondent have filed a petition u/s 241-242 bearing CP.191/2023 seeking appointment of administrator or authority in his favour for execution of sale deed so as to avoid the default and pay the financial creditor out of those proceeds. The Ld. Counsel submitted that the prayer in the CP. 191/2023 is allowed, the debt in default claimed by the Applicant can be substantially paid and the default can be cured. In view ofthis, the Ld. Counsel requested this bench to post this matter after two weeks.

3. List this matter for hearing on 21.08.2023."

8. It is submitted that there was a dispute between the two directors of

the Company (CD), as a result of which, the sale deed of the property could

not be executed and in this regard a petition under Section 241 and 242 of

the Companies Act, 2013 (in short 'Act') has been filed which should have

been taken into consideration by the Adjudicating Authority alongwith the

application decided under Section 7 of the code.

9. On the other hand, Counsel for Respondent (Financial Creditor) has

submitted that except for sending the terms sheet no proposal much less

concrete has been given by the Appellant so far even till the last night, therefore, it is only a play to seek adjournment though this appeal is

pending since December, 2023. It is further submitted that in case the

petition proceeds and the Appellant makes the arrangement for discharging

its liability, it can file an application under Section 12A of the Code for

withdrawal of the petition.

10. We have heard Counsel for the parties and after examining the record,

are of the considered opinion, that for the purpose of deciding the

application under Section 7 of the Code, the Court has to see as to whether

there is a debt and default on the part of the CD as it has been laid down by

the Hon'ble Supreme Court in the case of M/s. Innoventive Industries Ltd.

Vs. ICICI Bank & Anr., Civil Appeal No. 8337 - 8338 of 2017.

11. Since, Counsel for the Appellant has categorically, before us, during

the course of hearing, admitted that there is a debt and default on their

part, therefore, there is hardly any reason to interfere in the present appeal

for the purpose of setting aside the well-considered order.

12. Thus, the appeal is hereby dismissed though without any order as to

costs.

Comp. App. (AT) (Ins) No. 1471 of 2023

This appeal arises from the order dated 20.10.2023 by which an

application bearing I.A. No. 48 of 2023 filed by the present Appellant in the

main petition i.e. CP (IB) No. 312 /MB-IV/2023 came to be dismissed on the

ground that the Applicant has no locus standi to intervene in the

proceedings arising out of the application filed under Section 7 of the Code

which is being contested by the Company (CD).

2. Counsel for the Appellant has drawn our attention to the shareholders

agreement and contended that the Company has committed a default

because the Company is being run by the minority shareholders.

3. On the other hand, Counsel for Respondent, while referring to Clause

4.1 of the same agreement, has submitted that the power has been

conferred to Naresh Karda who is one of the directors of the minority group,

therefore, it does not lie in the mouth of the Appellant to raise this issue.

4. We have heard Counsel for the parties and after examining the record

are of the considered opinion that there is no error in the impugned order

which has been assailed in this appeal because for the purpose of deciding

the application filed under Section 7, the Court has to see as to whether the

Company is in debt and has committed default and not beyond especially

regarding the dispute between minority and majority shareholders.

5. Thus, in our view, there is hardly any merit in this appeal and the

same is hereby dismissed. No costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Barun Mitra] Member (Technical)

[Naresh Salecha] Member (Technical)

Sheetal/R.R.