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TMI Blog2020 (8) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... P. (IB)- 1832(MB)/2017, the Appellant/'Monitoring Agency' of the 'Corporate Debtor' has focused the instant Appeal before this Tribunal. 2. The Learned Counsel for the Appellant contends that the Adjudicating Authority ('NCLT') Bench No. II, Mumbai while passing the impugned order in M.A. No. 515/2020 dated 12.02.2020 had acted arbitrarily and exceeded its jurisdiction in staying the proceeding in M.A. No. 249 of 2020 which was heard at length and reserved for 'Orders' by an Erstwhile Bench / Co-ordinate Bench of 'NCLT', Mumbai. 3. The Learned Counsel for the Appellant submits that the Respondent herein was provided with an adequate opportunity to file a 'Reply' to the said miscellaneous Application No. 249/2020 and a reply was filed prior to the hearing of the said miscellaneous application by the Adjudicating Authority. 4. The Learned Counsel for the Appellant submits that the 'Successful Resolution Applicant' raised numerous Defenses in reply to MA No. 249/2020 which were raised again in MA No. 515/2020 by it and that too when orders were reserved in MA No. 249/2020. Further, it is the contention of the Appellant, when the erstwhile Bench of 'NCLT', Mumbai had reserved orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not be done indirectly. Otherwise, a party aggrieved by an order passed by one Bench of the High Court would be tempted to attend to get the matter reopened before another Bench and there would not be any end to such attempts. Besides, it was not consistent with the judicial discipline which must be maintained by Courts both in the administration of justice by assuring the binding nature of an order which becomes final and the faith of the people in the judiciary. The impugned order dated 16-7-91 is, therefore, set aside and the order dated 6-7-90 granting bail to the Appellant is restored". 6. The Learned Counsel for the Appellant cites the decision of Hon'ble Supreme Court 'Sant Lal Gupta and Ors. Vs. Modern Co-operative Group Housing Society Ltd. and Ors.' reported in MANU/SC/0859/2010 wherein at paragraph 18 it is observed as follows: - "18. A coordinate bench cannot comment upon the discretion exercised or judgment rendered by another coordinate bench of the same court. The rule of precedent is binding for the reason that there is a desire to secure uniformity and certainty in law. Thus, in judicial administration precedents which enunciate rules of law form the foundati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Successful Resolution Applicant') the re-constituted 'NCLT' Mumbai Bench, Court no. II on 12.2.2020 at paragraph 4 had observed the following: - "4. Learned Senior Counsel for the Applicant pressed for Interim Relief mentioned at Clause (h) on page-24 of the MA. Learned Counsel appearing on behalf of the Monitoring Agency sought some time to file reply in the matter. Considering the submissions made and the nature of the prayers, this Bench deems it necessary that the prayer in Clause(h) on page-24 of MA-515/2020 should be granted at this pint of time. We therefore stay all proceedings in MA 249/2020 until the next date of hearing in the present MA." and the matter was directed to be listed on 28.2.2020. 11. On behalf of the Appellant, it is brought to the fore that on 27.1.2020, the erstwhile 'NCLT' Mumbai Bench in MA No. 249/2020 had interalia directed the Respondent to file its reply in next two days' time i.e. by 29.1.2020, (since it was mentioned from the Respondent side that MA No. 249/2020 was received about five days back and time was sought to file a reply) and it was specifically made mention of that the matter would be heard on 30.01.2020. 12. While rounding up, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'Impugned Order' to promote substantial cost of justice. Respondent's Contentions 17. Conversely, it is the submission of Learned Counsel for the Respondent that in MA No. 249/2020 a reply was filed by the Respondent and the matter was heard extensively (after completion of pleadings) on 30.01.2020 before the Bench II of the 'NCLT', Mumbai and thereafter reserved for orders, which was pronounced on 18.02.2020. 18. Advancing his arguments, the Learned Counsel for the Respondent brings to the notice of this Tribunal that pursuant to the reconstitution of the Benches, the Respondent / Appellant in Company Appeal (AT)(Ins.) 327/2020 sought to mention the said M.A. No. 249/2020 before the reconstituted Bench No. II of 'NCLT' on 04.02.2020 and that the Appellant's / Respondent's (in Company Appeal (AT)(Ins.)No. 287/2020) Advocates were present in court for a different matter were able to oppose the same as a malafide one and as a result thereof, the re-constituted Bench No. II of 'NCLT' Mumbai had not permitted the 'mentioning'. 19. The Learned Counsel for the Respondent submits that there is no judicial indiscipline in pronouncing the order dated 18.2.2020 in MA No. 249/2020 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r would be heard on 30.01.2020. However, MA No. 515/2020 was filed by the 'Successful Resolution Applicant' / Royale Partners Investment Fund Ltd. (Appellant in Company Appeal (AT)(Ins.) No. 327/2020) seeking reliefs (a to j) mentioned therein. More specifically, in MA No. 515/2020 before the newly reconstituted Bench of 'NCLT' Mumbai, Court No. II, the 'Successful Resolution Applicant' in serial No. (h) of the relief portion had sought the following: - "That pending the hearing and final determination of the present application, this Tribunal may be pleased to stay all proceedings in MA No. 249/2020." 25. As a matter of fact, the 'Adjudicating Authority' (erstwhile Mumbai Bench of 'NCLT') when it reserved orders in MA No. 249/2020 on 30.01.2020 comprised of different Members (both Judicial and Technical) than that of the newly reconstituted Bench of 'NCLT' Mumbai Bench, Court No. II which passed the orders on 12.2.2020. In the newly reconstituted Bench in Court No. II of 'NCLT', Mumbai, the Members (both Judicial and Technical) were different, than the former Bench of 'NCLT' and on 12.2.2020 the re-constituted Bench had stayed the proceedings in MA No. 249/2020 until the next ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... President or the Member has previously been called upon in another capacity including as advisor, representative, experts or witness; or (c) if there exist other circumstances such as to make the President or the Member's participation seem inappropriate. (2) The President or any Member recuse himself may record reasons for recusal; Provided that no party to the proceedings or any other person shall have right to know the reasons for recusal by the President or the Member in the case." 30. It comes to be known that the Hon'ble President of 'NCLT', New Delhi, (in exercise of the powers conferred u/s 419 of the Companies Act, 2013) on 29.1.2020 had re-constituted the Benches at 'NCLT' Mumbai for the purpose of exercising and discharging the functions assigned by the statute which was in partial modification of the order dated 25.07.2020. The Benches comprised of the following Members and the order of reconstituted Benches at 'NCLT' Mumbai dated 29.1.2020 was to come into effect from 03.02.2020: - "Bench at NCLT, Mumbai Court No. 1 1. Ms. Suchitra Kanuparthi, Member(Judicial) 2. Shri V.Nallasenapathy, Member (Technical) Bench at NCLT, Mumbai Court No. II 1. Shri Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so very incorrect that in no circumstances can it be followed, the proper course for it to adopt is, to refer the matter before it to a Bench of three Learned judges setting out the reasons why it could not agree with a earlier judgement and then if the Bench of three learned judges also comes to the conclusion that the earlier judgement of a Bench of three learned judges is incorrect, then a reference could be made to a Bench of five learned judges etc." 34. It is to be remembered the principle of "qundo aliquid prohibetur, prohibetur et omne per quod devenitur ad illud" is that an 'Authority is not to be permitted to evade a Law by shift or contrivance'. 35. In a recent judgement of Hon'ble Supreme Court in Criminal Appeal No. 452 of 2020(arising out of SLP(CRL) No. 2433/2020 S.Kasi V. State Through the Inspector Police, Samayanallur Police Station, Madurai dated 19.06.2020 it is held at paragraph 31 that 'a coordinate Bench cannot take contrary view and in event there was any doubt, a coordinate Bench can only refer the matter for consideration by a Larger Bench. The Judicial Discipline ordains so.' 36. It is not out of place for this Tribunal to make a pertinent mention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l proceedings in MA No. 249/2020. 38. To put it precisely, it is neither palatable / desirable nor permissible by the 'Co-ordinate Bench' of a Tribunal to fetter the hands of erstwhile Bench in passing necessary orders in MA 249/2020 which was admittedly heard and reserved for orders on 30.01.2020. In the case on hand, an order passed by a co-ordinate Bench of the same Tribunal in reserving the matter in MA No. 249/2020, on 30.01.2020 must be reverred and the 'judicial precedent' requires that as a 'rule of practice', the same cannot be interfered with by the re-constituted Bench on any score. Only if the Members of the Adjudicating Authority('NCLT') do not brush aside the orders passed by a 'Coordinate Bench' of the same Tribunal, Certainty and uniformity in 'Law' can be achieved and preserved in our administration of justice. 39. In as much as the impugned order dated 12.2.2020 in MA No. 515/2020 staying all proceedings in MA No. 249/2020(which was heard by the erstwhile Bench on 30.01.2020 wherein orders were reserved) until the next date of hearing i.e. on 28.02.2020 is beyond the jurisdiction of the re-constituted Bench of 'NCLT' Court No. II, Mumbai, the said order with a v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a different capacity and not to continue as a 'Resolution Professional'. 43. In this connection, the stand of the Appellant is that as per Section 23 of the 'I&B' Code, the powers of 'Resolution Professional' ceases the moment a 'Resolution Plan' is approved by the Adjudicating Authority and accordingly the former 'Resolution Professional' was deemed to have handed over the charge upon approval of the 'Resolution Plan' by the 'NCLT', Mumbai Bench and now entrusted with the role and responsibility of the 'Monitoring Agency'. 44. The Learned Counsel for the Appellant proceeds to point out that in MA No. 249/2020 (MA1), the 'Monitoring Agency' had claimed that it is seeking implementation of the approved 'Resolution Plan' but neither MA No. 249/2020 (MA 1) deals with all the concerns for implementation of the 'Resolution Plan' nor that filing such an application was within the ambit of the 'Monitoring Agency'. Further, it is the responsibility of the 'Steering Committee' to implement the 'Resolution Plan' and it may file such an application if so required. 45. The grievance of the Appellant is that the 'Monitoring Agency' had not even consulted with the 'Steering Committee' bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed by this Tribunal. 49. The Learned Counsel for the Appellant contends that the period of 30 Business Days should have commenced from 16.12.2019 and accordingly after the 'Resolution Professional' had handed over the charge to the Appellant. However, the erstwhile 'Resolution Professional' had not till date been able to comply with the approval order. This apart, the 'Monitoring Agency' without any powers / responsibilities is claiming the payment of total consideration from 10.01.2020 and without any approval filed MA No.249/20 (MA No.1) on 15.01.2020. Indeed, the 'Monitoring Agency' at paragraph 7 of MA 249/20 had submitted that the total consideration viz. upfront consideration and deferred consideration aggregating to a sum of INR 480 crores paid by way of 'Non- Convertible Debentures' (Deferred Consideration) was required to have been paid on or before 10.01.2020. In fact, MA No. 249/20 was heard by the Adjudicating Authority on 29.01.2020 and the filing of the said miscellaneous application was a premature one and as a matter of fact, the impugned order does not even taken into account the order dated 29.08.2019 and / or rule upon which date be taken as an effective d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 'Resolution Professional' was categorically directed by the Tribunal to 'hand over all records, premises/factories/documents' to the 'Resolution Applicant' to finalize the further line of action required for starting of the operation etc. but the erstwhile 'Resolution Professional' pursuant to approval order or even after its appointment as 'Monitoring Agency' has high handedly been awarding sharing such data / information with the Appellant and only sought recovery of upfront consideration. 54. The Learned Counsel for the Appellant contends that the receivable and assets shown in 'information memorandum' have de-pleaded considerably as (i) the office of the 'Corporate Debtor' has been shut for a long time i.e. at least 6 months; and (ii) there was 25 ongoing projects of the 'Corporate Debtor' at the time of commencement of CIRP but as of February, 2020 there were less than 5 ongoing projects and none of the earlier projects have been completed by the 'Corporate Debtor'. Besides this, the 'Monitoring Agency' is also avoiding finalization of the audited accounts for the financial year 2018-19 and it is important for the Appellant to secure such information / data from the 'Monito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm of unlisted NCDs." 56. The Learned Counsel for the Appellant contends that clause 3.2(vi)(B) of the 'Resolution Plan' sets out that the total consideration is full and final settlement dues of the 'Financial Creditors' and that they have waived off the balance sum of their dues and the same is as follows:- "It is hereby clarified that (ii) notwithstanding anything contained in this 'Resolution Plan', the aggregate of upfront consideration and deferred consideration (total consideration') shall be there full and final discharge provided to the claims of the 'Financial Creditors' upon receipt of which all claims of 'Financial Creditors' in relation to the admitted debt shall stand extinguished." 57. The Learned Counsel for the Appellant contends that if upon payment of INR 900/- Crores all claims and admitted debt of 'Financial Creditors' shall stand extinguished there is no sum against which the cash accruals sought by the 'Financial Creditors' can be adjusted by them. 58. According to the Learned Counsel for the Appellant the Clause no. 3.2(vi)(D) of the 'Resolution Plan', it does not propose to pay any sum over and above the total consideration to the 'Financial Creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now it is a settled rule of interpretation that if there be two admissible constructions of a document, one of which will given effect to all the clauses therein while the other will render one or more of them nugatory, it should be the former that should be adopted on the principle expressed in the maxim "ut res magis valeat quam pereat" ..... "13.............. In fact, there is a conflict between the earlier clause and the later clauses and it is not possible to give effect to all of them, then the rule of construction is well established that it is the earlier clause that must override the later clauses and not vice versa." 62. The Learned Counsel for the Appellant submits that the approved 'Resolution Plan' does not entitle the 'Financial Creditors' any sum over and above the total consideration and the total consideration shall never exceed 900/- crores and, therefore, the cash receivables which are to be accrued to the 'Financial Creditor' are within the purview of total consideration and not in excess thereof. Further, it is the contention of the Appellant that the impugned order fails to comprehend the provisions of the approved 'Resolution Plan' and amends the 'Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t'/the Appellant in the present Appeal, on 06.02.2020 filed MA No. 515/2020 before the re-constituted 'NCLT' Bench No. II illegally seeking among other things a direction from reconstituted Bench No. II to stay the proceedings in MA No. 249/2020 (which was heard at length and reserved orders by the earlier bench of 'NCLT' Mumbai Bench No. II on 30.01.2020). 67. The Learned Counsel for the Respondent submits that by means of the impugned order dated 18.02.2020 in MA No.249/2020, the 'Successful Resolution Applicant'/ the present Appellant was directed to implement the 'Resolution Plan' within seven days from the date of the order and as against the said order dated 18.02.2020 the present Appellant filed Company Appeal (AT)(Ins.)No. 327/20 before this Tribunal on 25.02.2020 and a stay in respect of the impugned order. 68. The Learned Counsel for the Respondent contends that the 'ARCELOR Mittal India Pvt. Ltd.' (AMIPL'), an 'Unsuccessful Resolution Applicant' had (pursuant to the approval by the 'Committee of Creditors' of 'Successful Resolution Applicant's plan) filed an application MA No.344/2019 before the Adjudicating Authority seeking rejection of the 'Resolution Plan' of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, relied on by the Appellant in no manner can be relied upon by the 'Successful Resolution Applicant' /Appellant for not implementing its 'Resolution Plan' in terms thereof. 72. The Learned Counsel for the Respondent submits that the Adjudicating Authority at paragraph 5.2 of the impugned order in MA No. 249/2020 had dealt with the aspect of 'Locus-Standi' of the 'Monitoring Agency' and further it is clearly held by the Adjudicating Authority that the 'Monitoring Agency' as well as the 'Resolution Professional' who are part of the said agency are duty bound to do all that is required to see the successful implementation of the 'Resolution Plan' and can file any application before the Adjudicating Authority for ensuring the successful implementation of the 'Plan'. 73. The Learned Counsel for the Respondent points out that the Adjudicating Authority in its approval order dated 25.11.2019 had specifically permitted the filing of miscellaneous application if required in connection with implementation of this 'Resolution Plan' and also that in addition to the liberty granted by the Adjudicating Authority in the approval order, the 'Resolution Plan' itself had provided the authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agency' together with the 'Corporate Debtor's team also made presentation to the 'Successful Resolution Applicant' on 24.12.2019 to provide an update on the status of completed and ongoing EPC projects. 79. The Learned Counsel for the Respondent submits that the 'Monitoring Agency' in good faith, without prejudice to the fact that supplying of information is not a condition to the implementation of Plan, again furnished all the information to the 'Successful Resolution Applicant' that were sought vide e-mail dated 16.03.2020. Inspite of all the information being furnished to the 'Successful Resolution Applicant', it has not taken any steps to implement the 'Resolution Plan' and according to the Respondent the 'Successful Resolution Applicant' is deliberately delaying the implementation of the 'Resolution Plan' on this pretext. 80. The Learned Counsel for the Respondent contends that in the matter of 'Ingen Capital Group LLC' Vs. 'V.Ramkumar' (Company Appeal(AT)(Ins.) No.795/2018), this Tribunal had initiated suitable actions under the provisions of the Code for non-implementation of the 'Resolution Plan' by the 'Resolution Applicant' who had not given effect to the 'Resolution P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SW Steel Ltd.' Vs. 'Mahender Kumar Khandelwal & Ors.' (Company Appeal (AT)(Ins.) No. 957/2019') wherein after relying upon the judgement of the Hon'ble Supreme Court in 'Committee of Creditors' of 'Essar Steel India Ltd.' Vs. 'Satish Kumar Gupta & Ors.' reported in 2019 SCC online SC 4178 held that : "126. The aforesaid decision having been reversed by the Hon'ble Supreme Court we hold that the distribution on the profit made during the 'Corporate Insolvency Resolution Process' should be made in terms of addendum to the RFP as held by the 'Hon'ble Supreme Court." 86. The Learned Counsel for the Respondent contends that in the present case on hand, not only the 'Process Documents' as well as the 'Resolution Plan' and the 'LOI' specifically mentioned that 'the cash balances of the 'Corporate Debtor' will approve and be paid to the 'Financial Creditors' (less any balance CIRP costs) till the date of implementation of the plan i.e. till the date of payment of the upfront consideration'. 87. Lastly, it is the submission of the Learned Counsel for the Respondent that the Appellant / 'Successful Resolution Applicant' is to implement the 'Resolution Plan' forthwith and takes over the 'Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor' etc. 92. The Appellant /'Successful Resolution Applicant' had averred in its reply in MA No.249/2020 before the Adjudicating Authority that it is committed to implement the approved 'Resolution Plan' in its entirety but the 'Secured Financial Creditors' as well as the 'Monitoring Agency' (Applicant) and the 'Steering Committee' had failed to adhere to its binding terms. Also, that the Appellant/ 'Successful Resolution Applicant' before the Adjudicating Authority in MA No. 249/2020 had taken a stand that the payment of cash balances proposed to be made to 'Financial Creditors' forms a part of the aggregate payment obligation and not in addition to the aggregate payment obligation. 93. A perusal of the 'Preliminary Reply Affidavit' filed by the Appellant(Royale Partners Investment Pvt. Ltd.)/ Respondent in MA No.249/2020 before the 'Adjudicating Authority' shows that an averment was made that, by way of the approved 'Resolution Plan', the Appellant shall be taking over the 'Corporate Debtor' as it existed as on the date of its approval and further that the 'Financial Creditors' do not have any rights over the assets of the 'Corporate Debtor' and, therefore, they canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity'. 'Satisfaction' is a condition precedent for approval of a 'Resolution Plan'. Undoubtedly, the 'Resolution Plan' must resolve 'Insolvency'. It cannot be forgotten that 'I&B' Code permits liquidation only on failure of 'Corporate Insolvency Resolution Process'. 97. If all the requirements as mentioned in Section 30(2) are satisfied an 'Adjudicating Authority' has to pass an order of approval of 'Resolution Plan'. After the 'Resolution Plan' is approved by an Adjudicating Authority, an application may be made to the said Authority by a person in-charge of the Management or control of the business and operations of the 'Corporate Debtor' for an order praying of an assistance from the Local District Administration in implementing the terms of the 'Resolution Plan'. 98. The Appellant / 'Resolution Applicant' (stepped into the shoes of 'Corporate Debtor') before the Adjudicating Authority had taken a plea that it had not received the detailed information of the Debtor Company. However, the 'Adjudicating Authority' at para 5(1) of the impugned order had clearly mentioned that the Chairman of the 'Monitoring Agency' in its Minutes of the Meeting dated 07.01.2020 had mentioned that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such the counter plea taken on behalf of the Appellant is negatived by this Tribunal especially considering the fact that for ensuring successful implementation of 'Resolution Plan' the 'Monitoring Agency' and the 'Resolution Professional' are to take a lead role in this regard. 101. As regards the plea that MA No. 249/2020 was filed by the Respondent before the Adjudicating Authority in a premature fashion and that the 'Monitoring Agency' without any powers / responsibility is claiming payment of total consideration from 10.01.2020 and without any approval filed MA No. 249/20, this Tribunal points out that as against the dismissal order in MA No. 344/2019 passed by the Adjudicating Authority, 'ARCELOR Mittal India Pvt. Ltd.'('Unsuccessful Resolution Applicant') filed Company Appeal (AT)(Ins.) No. 524/2019 before this Tribunal and this Tribunal on 29.08.2019 had categorically observed that the 'pendency of the appeal will not come in the way of Adjudicating Authority to pass appropriate order u/s 31 of the Code which if approved shall be subject to the decision of this Appeal' and in fact the final order in MA No. 249/20 was passed on 18.02.2020 by the 'Adjudicating Authority'. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were secured. 106. Moreover, the 'Resolution Plan' is free from any doubt and quite clear on treatment of the cash balances, especially in the teeth of 'process document' dated 4.10.2018 which clearly mentioned that the 'Resolution Plan' was required to provide 'that the available cash balances in the books of the 'Corporate Debtor' upto the implementation of 'Resolution Plan' shall accrue to the 'Financial Creditors' and will not form part of the offering by 'Resolution Applicants'. 107. 'Speed' is the gist for an effective and efficacious functioning of 'I&B' Code. The longer the delay, it may induce 'Liquidation' and 'Value, Deterioration/Destruction'. 108. In the instant case, it cannot be brushed aside that nearly six months have gone by, from the order of approving the 'Resolution Plan' dated 25.11.2019 of the Appellant and the same is yet to be implemented by the Appellant till date. In the 'Preliminary Reply Affidavit', the Appellant / Respondent at paragraph 6 had stated that it had always shown its willingness and ability to execute the approved 'Resolution Plan' etc. As such, this Tribunal is of the earnest opinion that the Appellant / Respondent cannot avoid/evade ..... X X X X Extracts X X X X X X X X Extracts X X X X
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