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TMI Blog2021 (8) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... ish Dholakia, Senior Advocates with Mr. Ashish Bhan, Mr. Ketan Gaur, Ms. Chitra Rentala, Mr. Aayush Mitruka, Ms. Samriddhi Shukla, Mr. Dhritiman Roy, Mr. Avishkar Singhvi, Advocates for R-2. Mr. Ramji Srinivasan, Sr. Advocate with Mr. Raunak Dhillon, Mr. Animesh Bisht, Ms. Saloni Kapadia, Ms. Madhavi Khanna, Mr. Subhankar Jain, Ms. Rajshree Chaudhary and Ms. Fatema Kachwalla, Advocates for R-3 (CoC). JUDGMENT A.I.S. Cheema, J. 1. Company Appeal (AT) (Insolvency) No.454 of 2021 has been filed against impugned order dated 7th June, 2021 passed in IA 623/2021 in IA 449/MB/C-II/2021 in CP (IB) 4258/MB/C-II/2019. By the impugned order, the Interlocutory Application of the Appellant seeking dismissal of I.A. 449/2021 filed in the Company Petition; and seeking rejection of the Resolution Plan of Respondent No.2 was dismissed. The Appellant had also prayed in the alternative before the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court-II) that any term in the Resolution Plan expressly or impliedly providing that the benefit of any orders passed in the avoidance application filed or to be filed by the Respondent No.1- Administrator under Sections 43 to 51 or und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel that future recoveries for avoidance applications which have challenged the fraudulent transactions cannot enure to the benefit of DHFL in its new Avatar i.e. the Respondent No.2- 'Piramal Capital & Housing Finance Limited' (Successful Resolution Applicant). The Question raised is whether such stipulation in the Resolution Plan amounted to an illegality or whether the same could be said to be in the commercial domain of the Committee of Creditors. It is stated, if it was an illegality, it could not be saved by any strength of majority or voting of the Committee of Creditors. The Learned Senior Counsel submitted that before the Adjudicating Authority, the matter was argued for eight days in which several judgments were cited and detailed written submissions were filed. The impugned order however, did not deal with the same and simply recorded reasons that the Adjudicating Authority could not substitute its own wisdom with the commercial wisdom of Committee of Creditors. The Learned Counsel insisted that the Adjudicating Authority was bound to deal with all the issues which were raised and then decide the same. It is argued that the Adjudicating Authority abdicated its powers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using Finance Limited' (Successful Resolution Applicant) has been approved by the majority of Committee of Creditors to the extent of 93.65% and that Reserve Bank of India as well as Competition Commission of India have also approved the plan. It was argued that the Appeal is not maintainable. The Appellant is a Financial Creditor of DHFL holding Non-convertible Debentures (NCD) worth Rs. 200 Crores (which is 0.2% on Committee of Creditors) and that the Appellant was a part of class of NCD holders. In terms of Section 21(6A) of the 'I&B Code', the Appellant was represented in the Committee of Creditors by its debenture trustee, 'Catalyst Trusteeship Ltd.'. Knowing fully well the provisions of the Resolution Plan, the Appellant voted in favour of the Resolution Plan within its class of NCD, which was approved by 98.94% votes. Subsequently, catalyst voted in favour of the Resolution Plan before Committee of Creditors where the Resolution Plan has been approved by majority of 93.65% votes of the Committee of Creditors. The argument is that the Appellant who voted in favour of the Resolution Plan cannot maintain the Appeal against the approved Resolution Plan. Learned Senior Counsel re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as proposed by Respondent No.2 and which has been accepted by the Committee of Creditors. 12. Learned Senior Counsel for Respondent No.2 submitted that when the Appellant has voted in favour of the Resolution Plan, the Appellant cannot turn around and question the Resolution Plan. Reliance has been placed on "Indian Renewable Energy Development Agency Ltd. v. Bhuvesh Maheshwari & Ors." [Company Appeal (AT) (Insolvency) No. 971 of 2020 dated 12.02.2021] of this Tribunal. When the NCD holders as a class approved the Resolution Plan, the Appellant as an individual NCD holder cannot challenge the Resolution Plan and deserves to be estopped in view of the observations in "Jaypee Kensington Boulevard Apartments Welfare Association & Ors." (Supra). It is argued that the Resolution Plan is compliant with law and the Request for Resolution Plan (RFRP). It has been submitted that Section 66 of the 'I&B Code' or any other provisions of Code do not create any bar or impediment on the Resolution Applicant availing the proceeds, if any, from the avoidance applications. There is no provisions in the 'I&B Code' for the treatment of such proceeds and if the Committee of Creditors in its commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the matter of "M/s. Venus Recruiters Pvt. Ltd." (Supra), the case was different as in that matter the Resolution Plan did not provide any provision to deal with the treatment of recoveries arising from Resolution Plan. It was argued that orders if stayed the whole process of Resolution would get seriously affected. 13. The Learned Senior Counsel for the Committee of Creditors submitted that the Resolution Plan has been duly approved and it has been approved by the Adjudicating Authority and thus in both the Appeals, no prima facie case has been made out to stay the impugned orders. The Learned Senior Counsel also stated that the Appellant voted in favour of the Resolution Plan and thus deserves to be estopped from challenging the same. It is argued that the treatment of recoveries arising from avoidance applications fall within the domain of the commercial wisdom of Committee of Creditors and 'I&B Code' does not prevent the Committee of Creditors from dealing with such recoveries. The Resolution Plan is in the line with the RFRP and was finalized and was submitted by the Resolution Applicant (Respondent No.2) after negotiations. 14. The Adjudicating Authority in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a bird in hand is better than few in bush, risk of recovery is transferred to the Successful Resolution Applicant etc and ascribed an amount of Rs. 1 for this Section 66 Fraudulent Transactions." 15. The Adjudicating Authority then referred to judgment in the matter of "M/s. Venus Recruiters Pvt. Ltd." (Supra) which has been heavily relied by the Learned Counsel for the Appellant and referring to Judgment in the matter of "Interups Inc. vs. Kuldeep Kumar Bassi & Ors." (Supra) passed by this Tribunal observed that the judgment in the matter of "M/s. Venus Recruiters Pvt. Ltd." is misplaced. The Learned Senior Counsel for the Appellant heavily objected to such observations. It would be appropriate to reproduce the portion concerned from Judgment in the matter of "Interups Inc. vs. Kuldeep Kumar Bassi & Ors." wherein Para 9, the observations of this Tribunal were:- "9. ........................Interups reliance on Delhi High Court's Judgment dated 26.11.2020 in Venus Recruiters Private Limited Vs. Union of India 7 Ors. (W.P. No. 8705 of 2019) ("Delhi High Court Judgment") is misplaced, as it has not held that a resolution plan approved by an Adjudicating Authority will be viti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the erstwhile Corporate Debtor- M/s. Bhushan Steel Ltd. (BSL). The said agreement was entered into on 3rd October, 2009. The application for initiation of CIRP was admitted by the NCLT on 26th July, 2017. The IRP was also appointed and a call for submissions was made. On 20th March, 2018, the CoC approved the Resolution Plan, proposed by Tata Steel Ltd. The approved Resolution Plan was filed by the RP under Section 31 before the NCLT on 28th March, 2018. 59. A Forensic Audit Report of the Forensic Consultant (Deloitte Touche Tohmatsu India LLP) was submitted to the RP on 3rd April, 2018 i.e. after the Resolution Plan was approved by the CoC. In the said report, an allegation was made that 10% service charge paid to the petitioner in lieu of the manpower supplied "could have been preferential in nature". On the strength of this report, the RP filed an application under Sections 25(2) (j), 43 to 51 and 66 of the IBC for avoidance of this, as well as, other suspect transactions on 9th April, 2018 before the NCLT. 60. The submissions before the NCLT on the Resolution Plan commenced on 5th April, 2018 and judgment was reserved by the NCLT on 11th April, 2018. Thus, it was only two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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