TMI Blog2018 (10) TMI 1798X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3 by calculating the interest on straight line method i.e. 24% p.a. on the outstanding balance and then assess the voting right of R-3 and its associates. This Application can be disposed off with this direction. Application is disposed off by giving direction to Resolution Professional to revise the claim submitted by R-3/M/s Mahal Hotels Private Limited and its associates by calculating interest on the outstanding balance @ 24% p.a. and then assess the percentage of voting share of Respondent No. 3 and its associate companies. - CA NO. 250 OF 2018, CP (IB) NO. 219/7/HDB/2018 - - - Dated:- 4-10-2018 - Ratakonda Murali, Judicial Member R. Raghunandan Rao, Sr. Adv. and Shabbeer Ahmed, Adv., S. Ravi, Sr. Adv., Chandra Shaker, Adv., Niranjan Reddy, Sr. Adv., Alay Razvi, Adv., Dvas Ravi Prasad and Pavan Kumar, Advs. for the Respondent. ORDER 1. The Applicant Asset Reconstruction Company (India) Limited (ARCIL) has filed this Application under Section 24(3) of IBC, 2016 R/w Rule 11 of the National Company Law Tribunal Rules, 2016, praying to grant stay on the reconstituted CoC as notified by Respondent No. 1/Resolution Professional vide notice dated 11.07.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also alleged that erstwhile Chairman of the Waqf Board wrote a letter to RP on 30.06.2018 asking RP to stall all further proceedings to auction the property in view of an order of DRT passed on 27.07.2017. The letter was subsequently emailed by the Chairman to all the potential RA's (excluding the Applicant and IARC) and warned them not to deal with the subject property being under dispute. (6) The Applicant has made several allegations against the Resolution Professional in managing the day to day affairs of the Company, payment to employees. The Petitioner/Applicant also requested for a Forensic Audit with regard to the dealings of the investment in Viceroy Hotels Bangalore and also with regard to the new disclosures pertaining to the Corporate Guarantee given by the Corporate Debtor. It is also alleged that Resolution Professional has not made available the Special Audit Report as stated by him until 11.07.2018 when Applicant raised an alarm that the CoC to consider changing the RP. (7) It is also averred that Financial Creditors/Joint Lenders of Respondent No. 1 Company convened a Joint Lenders Meeting (JLM) on 05.07.2018 to discuss various issues faced by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecured creditors would go ahead with conducting of 5th CoC meeting on 16.07.2018. (12) It is averred that the Applicant/Petitioners reserves its rights to file an Application if required seeking for replacement of Resolution Professional and there is an apprehension that the claim of Mahal Hotels Private Limited are not valid claims. It is also alleged that the promoters of the Company are trying to influence the RP not to carry out forensic audit. It is also alleged that the conduct of the RP in CIRP could severely impact the value of the assets of Corporate Debtor and will be detrimental to the interest of all stakeholders. Hence, this Application is filed. 3. A counter is filed by the Resolution Professional. The Resolution Professional denied the averments made in the Application. (1) It is contended that the RP has strictly adhered to the provisions of the Code and Regulations. It is contended that the RP has correctly and accurately recorded the minutes which was circulated to all the members including the Applicant. It is stated that to ensure smooth functioning of CIRP, the minutes of the meeting was revised on the objections raised by the Applicant and the same wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary mandate to proceed further. Hence, the allegation is baseless. It is also contended that when the special audit report has not been received by the RP within the scheduled time, RP could not circulate the same to the members of CoC and only on receipt of the same, it has been circulated. (7) It is further contended that the meeting of JLM held on 05.07.2018 is illegal as under the provisions of IBC, all decisions are required to be taken by the CoC. It is also contended that at the instance of the Applicant only JLM meeting was held and no valid reasons were put forth for change of RP and the meeting was held only to secure a resolution by vote of 66% as per Section 27(2) of IBC, 2016 and in the said meeting Petitioner had withdrawn the particular items. (8) Resolution Professional denied the allegations made by the Applicant that RP has vested interest or intention to dilute the voting strength of Financial Creditors including the Petitioner by admitting the claim of one M/s Mahal Hotel Pvt. Ltd. It is the case of the RP that claim of the Creditor was also scrutinized and processed in the similar manner as the claim of the other creditors. (9) It is the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CoC and after preliminary verification the claim to the extent of ₹ 267.29 crores and after further verification the claim to the extent of ₹ 395.95 crores was admitted. (4) It is averred that R-3 by virtue of being one of the Creditors of CoC, received a notice from the RP on 11.07.2018 with regard to the 5th CoC Meeting to be held on 16.07.2018. Immediately IA No. 250/2018 was moved by ARCIL, Financial Creditor/Petitioner before this Tribunal seeking a relief against inclusion of R-3 in CoC alleging that R-3 filed bogus claim and that R-3 was included in the CoC only to reduce the share of ARCIL from 50.38% to 30% and that it shall be subjected to forensic audit. (5) It is averred that pursuant to the notice dated 11.07.2018, R-3 attended 5th CoC meeting and the Applicant raised objection against voting rights of Respondent No. 3 fearing that inclusion of R-3 would bring down the voting share of the Applicant from 50.8% to 30%. It is averred that Applicant and other creditors sought for forensic audit, though R-3 claim was duly verified by IPE appointed by CoC. It is alleged that the creditors are trying to suppress the claim of R-3 only with an ulterior m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged that the statements made by R-3 is contradictory. On one hand it admits that it had paid to the Corporate Debtor an amount of ₹ 122.22 crores whereas its associate companies, Ganga Industrial Corporation and Bhagyanagar Investment and Trading Pvt. Ltd. paid ₹ 65.00 lakhs and ₹ 11.77 crores respectively which aggregates to ₹ 134.65 crores and on the other hand it states that a total sum of ₹ 350 crores was paid as advance consideration. No explanation to this amount is given by R-3. (c) It is also the case of Applicant that there is no provision in the BTA which requires the Corporate Debtor to refund the advance consideration amount to R-3 in the event of cancellation for no fault of Corporate Debtor. It also alleged that letter dated 22.07.2013 purportedly addressed by R-3 to Corporate Debtor is an afterthought which is created by said two parties in collusion with each other with a pre-dated signature of 22.07.2013 after initiation of CIRP. (d) Applicant stated few facts highlighting the illegal manner in which the Resolution Professional admitted the claim prejudicing the interest of Financial Creditors and other stakeholders. (e) Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture Ltd. 143 SCL 278 (NCL - AT). 8. The written submissions are filed on behalf of Applicant and on behalf of Respondent No. 3. The points urged in the written submissions will be dealt in the course of the order. 9. The Application is filed by Financial Creditor seeking relief to stay the reconstituted CoC as notified by the Resolution Professional in his notice dated 11.07.2018 and further not to take any decision including admitting and entertaining new claims. The main contention of the Applicant, Resolution Professional had wrongly admitted the claim placed by Respondent No. 3 M/s Mahal Hotel Private Limited. The case of Applicant that the claim submitted by Respondent No. 3 is not a real claim. This claim was submitted in collusion with Corporate Debtor. The intention behind submitting this false claim primarily to reduce voting share of the Applicant as there was a move to replace the existing Resolution Professional on the ground he has committed various irregularities in conducting the CIRP. 10. The contention of the Learned Counsel for Applicant (a) the claim is not a real claim and it is a bogus claim (b) the alleged claim, even if it is true is barred by limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Resolution Professional was allegedly not co-operating for the same. 13. It is the case of Applicant that there was Joint Lenders Meeting held on 05.07.2018 by all the Financial Creditors to discuss various issues faced by the CoC due to the conduct of Resolution Professional. They decided to replace Resolution Professional. It is the case of Applicant more than 80% of voting share of creditors have decided to replace Resolution Professional. 14. Further the case of Applicant that Resolution Professional circulated the list of financial creditors after admission of certain claims. As a result, the voting share of Applicant has come down to 49.21%. This was done on 09.07.2018 and email communication is marked as Annexure-9. Before commencement of 5th CoC meeting, the Resolution Professional/Respondent No. l admitted the claim of M/s Mahal Hotel Private Limited in a hasty manner and circulated the revised list of financial creditors on 11.07.2018. The email communication is marked as Annexure-10 and on the very same day he has sent another email convening 5th CoC meeting on 16.07.2018. The voting share of Applicant has come down to 35.24% due to admitting the claims of Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and should have proceeded against the Corporate Debtor for recovery of the advance amount. 20. The next contention of the Learned Counsel that Corporate Debtor again revived this liability in unaudited balance sheet dated 30.09.2017. The Counsel contended the revival of forfeiture amount is irregular and there is no approval by the shareholders. The contention of the Counsel for Applicant the amount if any received towards advance is now time-barred as on the date when the claim was made before the Resolution Professional. On the other hand, Counsel for Respondent No. 3 would contend RP had rightly admitted the claim. There is acknowledgement of the debt by the Company. Time starts from the date of acknowledgement. Counsel would contend by reviving the claim in the accounts of Corporate Debtor which would go to show that Corporate Debtor admitted liability even if the debt is time-barred and it is valid acknowledgement under Section 25 of Indian Contract Act. The Applicant is a third party to the BTA. This document is dated 02.04.2011. It is the case of Respondent No. 3 that it had paid advance amounts to the Corporate Debtor along with its associate Companies in pursuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor. This letter is with reference to repayment of loan of ₹ 134.64 crores with interest. This is said to have been addressed to Corporate Debtor and there is a reply dated 15.12.2015 admitting the liability. Again a letter was issued to the Corporate Debtor by R-3 dated 15.02.2016 regarding payment of debt of ₹ 134.64 crores and receipt of delivery of notice is enclosed. He also filed independent auditor reports of R-3 Company. 23. Counsel for Applicant strongly objected regarding genuineness of these letters on the ground that these are created and fabricated for the purpose of the claims. The contention of the Learned Counsel, there is no supporting evidence that these letters were in fact sent from the concerned parties. Inward and outward registers are not filed. So these documents cannot save the limitation. Even otherwise the claims are admitted by the Corporate Debtor in its unaudited balance sheet. Section 25 of the Indian Contract Act provides for acknowledgements of time-barred debt. When Company is accepting liability beyond limitation by showing the claim in its Books of Account even notwithstanding of the letters, R-3 can recover the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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