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2022 (7) TMI 205 - AT - Companies LawSeeking approval of restructuring proposal of Respondent No.2 sought to be implemented to restructure the debt of Respondent No.2 - binding of Restructuring Plan on all stakeholders of Respondent No.2 - termination of the Terminated Contracts and direct that any claim, entitlement, or contingent liability - whether objection can be raised to the Restructuring Plan when the Restructuring Plan is in accordance with the Circular dated 07.06.2019, which has support of 100% lenders? - HELD THAT:- The basis given by ILFS to exclude the transactions is the ‘Forensic Audit Report’ through Grant Thornton India LLP and 'Report on Forensic Audit of IL&FS Tamil Nadu Power Company Limited (ITPCL)' on June 30, 2020 (in short ‘Transaction Review Report’) submitted by Transaction Review Auditor. The case of the ILFS is that in the above reports adverse findings have been given with regard to SEPCO and Shandong. It is also on record that in pursuance of the aforesaid reports, the ITPCL has also filed application under Section 66 of the I&B Code before the Adjudicating Authority being CA No. 190 of 2022 dated 06.04.2022. It is for the Adjudicating Authority to consider the Section 66 application and pass appropriate order. However, the fact that Section 66 application is filed and pending consideration, on the basis of certain adverse observations against the Capex Creditors/ Operational Creditors, the outstanding amount which is admitted by the Claim Management Advisor cannot be withheld to be paid relying on any observation in the Forensic Audit Report or Transaction Review Report. Section 17 provides for scheme for search and seizure. Sub-section (4) of Section 17 requires that authority seizing any record or property or freezing any record or property shall, within a period of thirty days from such seizure or freezing, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing, before the Adjudicating Authority. The present is the case where there is no material to indicate that any application under Section 17(4) was filed after the email dated 22.09.2020. In the application which has been filed by ILFS i.e. I.A. No. 59 of 2021 there is no mention of filing of any application under Section 17(4). More so, in the present case, consequent to the investigation Provisional Order has been passed on 05.01.2021 and final confirming order was passed on 24.08.2021, which we have already notice. There is no order of the Adjudicating Authority confirming or continuing the Freezing Order. Thus, directions issued by the Investigating Officer by email dated 22.09.2020 cannot be said to be still continuing so as to inhibit the ITPCL to make payment to Operational Creditors/ Capex Creditors. There being no material on record to indicate that the provisions of Section 17 (1A) have been followed after issuance of email dated 22.09.2020, the Freezing Order issued by the Investigating Officer shall not continue, more so, when Provisional Attachment Order has been passed on 05.01.2021 where there is no reference of the Freezing Order or continuation of the Freezing Order - It is satisfying that the arguments raised by Shri Ramji Srinivasan on the basis of PMLA proceeding cannot be ground for depriving the payments of the dues of SEPCO and Shandong. It is always open for the authority which is making payment to the Operational Creditors to obtain appropriate security before payment, to safeguard the interest on account of any pending proceedings which may have adverse effect on any payments made. When the claims of Capex Creditors/ Operational Creditors has been admitted by the Claim Management Advisor, which is also admitted fact, the prayer of the ILFS for extinguishing the claim of the Capex Creditors and the Operational Creditors, is not acceptable. The admitted claim of Capex Creditors/ Operational Creditors has to be dealt with in the Resolution Plan when it will be drawn. As noted above, the claim of Operational Creditors/ Capex Creditors are sought to be dealt with in a plan of restructuring debt under Reserve Bank of India Circular dated 07.06.2019. For dealing with admitted debts of Operational Creditors/ Capex Creditors, an appropriate Resolution Plan has to be made for addressing the claims. The Restructuring Plan has been arrived between the lenders and the borrower i.e. ITPCL. The ITPCL, who was bound to consider the admitted claim of the Operational Creditors/ Capex Creditors, has to consider the claims appropriately and arrive at a fair and reasonable resolution of the claims. The claim of Operational Creditors/ Capex Creditors has to be appropriately considered in a fair and reasonable Resolution Plan. The effect and consequence of contract entered by it with Operational Creditors/ Capex Creditors cannot be done away with - Application disposed off.
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