TMI Blog2022 (1) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... initiation of CIRP the creditors of the Corporate Debtor and the Corporate Debtor have decided to sale the windmill assets belonging to the Corporate Debtor as contemplated under the MRA dated 18.09.2014 and the supplemental MRA dated 02.03.2015. The same were executed by the Corporate Debtor and the creditors forming part of JLF of the Corporate Debtor constituted in October, 2013. As agreed between the Corporate Debtor and the JLF lenders an asset sale committee was formed and pursuant to a bid process on a private treaty basis commencing in August, 2016 and considering this fact, the Adjudicating Authority vide order dated 22.08.2017 directed that the windmill assets to keep outside the CIRP. Thus, the case comes within the exclusion clause (a) and (e) of sub-Section (4) of Section 36 of IBC. Whether the Adjudicating Authority has exceeded its jurisdiction in passing an order for allowing the liquidator to implead in Civil Suit No. 39 of 2019 pending before the Calcutta High Court? - HELD THAT:- The Adjudicating Authority has only permitted the Liquidator to file an Application before the Hon ble Calcutta High court to get impleaded as party. It cannot hold that the Adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is as under:- The following orders are, therefore, passed:- (a) The Application is allowed and the Liquidator is permitted to keep the windmill assets that are the subject matter ofthe Civil Suit No. 39 of 2019 before the Hon ble Calcutta High Court, outside the sale purview of the Liquidation estate. (b) The Application is not granted, since the question whether the invocation of bank guarantees by the Respondent No. 3/SBI, is correct or not is directly under challenge in Civil Suit No. 39 of 2019 before the Hon ble Calcutta High court, and therefore, at this stage, it is not proper to order distribution of the sale proceeds. (c) The Application is allowed, and the Liquidator is directed to file appropriate Application to intervene in the Civil Suit No. 39 of 2019 before the Hon ble High Court and get himself impleaded as representative of the Corporate Debtor. 4. After passing of the impugned order, Ld. Adjudicating Authority vide order dated 23.03.2021 deleted the word from clause (b) of the aforesaid order. and therefore, at this stage, it is not proper to order distribution of the sale proceeds . The Appellants have challenged the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating Authority did not accord its approval to distribute the sale proceeds at the relevant point of time since the Corporate Debtor was undergoing CIRP. 10. According to the liquidator, on being informed of the approval of sale of the windmill assets by the Adjudicating Authority, the Appellants backed out of the sale transaction. SBI, Representing Monitoring Committee (Respondent No. 2) herein advised the Appellants to perform the sale agreement failing which it would invoke the bank guarantee. 11. The Appellants instituted a Civil Suit 39 of 2019 before the Hon ble High Court of Calcutta inter alia seeking decree for declaration that the Appellants are entitled to and have duly avoided the transaction with the Respondent No. 2 recorded in the LOI dated 07.10.2016 and the same is not binding on the Appellants and seeking refund of the upfront consideration amount and to release of the bank guarantees. 12. In the suit the Appellants have filed an Application for interim relief granting stay on invocation of the bank guarantees. Single Bench of Hon ble High Court of Calcutta allowed the Application. However, on Appeal the Division Bench of the Hon ble High Court of Calcut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... running business of the Corporate Debtor as a going concern since the Corporate Debtor, as a whole, is not operating as a going concern. They were also of the opinion that in case the Liquidator decides to sell the Corporate Debtor as a going concern, he may do so without considering the windmill assets. 17. The Liquidator has therefore, approached the Ld. Adjudicating Authority and filed the Application with the prayer as aforementioned. Ld. Adjudicating Authority after hearing Ld. Counsels for the parties passed the impugned order dated 18.03.2021 and subsequently, a corrigendum order dated 23.03.2021. 18. Ld. Sr. Counsel for the Appellants submitted that the Adjudicating Authority has no jurisdiction to pass an order permitting to the Liquidator to keep windmill asset outside the sale purview of the liquidation estate while doing so the Ld. Adjudicating Authority has not considered the effect of the order of liquidation dated 11.01.2018. This order of liquidation and the directions contend therein supersedes all previous orders of the Adjudicating Authority and transactions, if any, between the parties. The impugned order excluding the windmill asset of the Corporate Debto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or and the beneficiary (SBI) proceeds on fallacious assumption that there is concluded sale in regard to windmill asset of the Corporate Debtor, this assumption is absolutely baseless and is indeed gross misrepresentation of the facts. 22. It is also submitted that the order of the Adjudicating Authority dated 22.08.2017 is illegal and not binding on the Appellant. This order was passed in complete suppression of the facts as well as misrepresentation. A fraud was played by SBI by not brining into notice of the Tribunal that the proposal has already been withdrawn prior to the order being passed. An order obtained by a fraud is nullity it does not bind anyone much less the Appellant. Therefore, it cannot become the basis of passing the impugned order dated 18.03.2017. 23. Ld. Sr. Counsel for the Appellants also submitted that the Adjudicating Authority has wrongly concluded that Civil Suit is for determining rights of parties over the windmill asset. The transaction was terminated on 18.08.2017 and neither SBI nor RP (now Liquidator) took any steps to go ahead with the transaction till liquidation order on 11.01.2019. The Civil Suit was filed by the Appellant subsequent to li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he argument of the Respondent No. 1 that it was passed upon oral mentioning by him and the name of the matter was published in the cause list which amounts to due notice is preposterous. Even the cause list which is being relied upon by the Respondent does not have the name of the Appellants. Rule 11 and Rule 154 of NCLT Rules does not confer power of review but only allow rectification of clerical or arithmetical mistakes. For this purpose, he placed reliance on the Judgment of this Appellate Tribunal in the case of Shri Lalit Aggarwal Vs. Shri Bihari Forgings Pvt. Ltd. Ors. Review Application No. 04 of 2020 in CA (AT) No. 380 of 2018 and Peoples International Services Pvt. Ltd. Vs. Alliance Industries Ltd. CA (AT) No. 107 of 2018. Therefore, the impugned order deserves to be set aside. Submissions of the Respondent No. 1. 26. Per contra, Ld. Counsel appearing on behalf of the Respondent No. 1 (Liquidator) supports the impugned order and submitted that the Appellants have misconstrued statements of Respondent No. 1 in fact the agreement for sale of windmill asset was executed on 01.04.2017 prior to initiation of CIRP. On the Application of the Respondent No. 2 being CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contractual dispute, inter se Appellants and Respondent No. 2 which is prior to initiation of CIRP of the Corporate Debtor. 29. Ld. Counsel for the Respondent No. 1 lastly submitted that the order dated 23.03.2021, only proceeds to delete the embargo created in respect of distribution of sale proceeds in respect of sale, which is outside the purview of IBC and the same is not a matter of interest for the liquidation process of the Corporate Debtor. In light of the aforesaid submissions, the Appeal deserves to be dismissed with costs. Submissions of Respondent No. 2 30. Ld. Sr. Counsel representing the Respondent No. 2 (SBI) submitted that the Ld. Adjudicating Authority has permitted the liquidator to keep the windmill assets outside the liquidation estate as the same sold to the Appellant against consideration as prior to the initiation of CIRP. The Appellants, therefore, is not at all concerned with the process of liquidation of the Corporate Debtor. The Appellants in its Appeal confirmed this position in para 3 of the Synopsis (Pg. 3 of Appeal Paper Book) Though the Appellants have no role or relation with the liquidation proceedings of Gujarat NRE Coke Ltd. (Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party which are in possession of the Corporate Debtor shall not be used for recovery in liquidation and also clause (e) provides that any other assets as may be specified by the board, including assets which could be subject to set-off on account of mutual dealings between the Corporate Debtor and any creditor shall not be used for recovery in liquidation. The windmill assets do not belong to the Corporate Debtor since there was a binding and irrevocable sale in favour of the Appellants against full sale consideration paid and the windmill asset were subject to set off in view of Master Restructuring Agreement and the attempts thereafter made by the consortium of banks led by SBI. Pursuant to which the Appellants have taken commercial decision to purchase the same unconditionally and irrevocably. 34. It is also submitted that admittedly the sale has concluded in favour of the Appellant, was an irrevocable and binding sale, based on an unequivocal acceptance thereof by the Appellants. Ld. Adjudicating Authority has already granted the permission during the CIRP stage approving the sale in favour of the Appellants. Thus, in view of the binding LOI and agreement dated 01.04.2017, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the liquidation process it was obvious that the sale proceeds of such assets would also be outside the liquidation process and would be dealt with as per direction in Civil Suit No 39 of 2019 alone. When such is the position, the lines and therefore, at this stage, it is not possible to order distribution of the sale proceeds is not necessary, rather it was unwarranted. 39. Ld. Sr. Counsel for the Respondent No. 2 also submitted that the Adjudicating Authority has rightly allowed the liquidator to implead himself in the Civil Suit before the Hon ble High Court. The Appellants have a specific case before the High Court that the RP has not transferred the assets despite the order dated 22.08.2017 passed by the Adjudicating Authority. This would obviously require the RP/Liquidator to explain his stand before the High Court. The Liquidator has also been repeatedly calling upon the Appellants to take possession of the assets. The interest of the Corporate Debtor in respect of which proceedings are pending before the High Court ought to be protected by the Liquidator before the Hon ble High Court of Calcutta. It is, therefore, prayed that the Appeal being only an abuse of proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised signatory of the Respondent No. 2, we would like to refer the Para 6 of the affidavit which as under:- 6. With reference to ............................................................... I say that the rights of the respective parties over the windmill asset can only be determined upon adjudicating of Civil Suit No. 39 of 2019 by the Hon ble High Court of Calcutta initiated by the said Respondents (Appellants herein). Accordingly, it is submitted that since the Hon ble High Court of Calcutta is in seisin of the issues of sale of windmill assets and as such making the Respondent Nos. 1 and 2 as parties to the instant proceedings is uncalled for unjustified and their name should be accordingly be deleted from the array of the parties . 44. With the aforesaid admission of the Appellants in reply to the Application, it is clear that they are of the firm view that the issues of sale of windmill assets can only be determined upon adjudication of the Civil Suit which is pending before the HC. 45. The Division Bench of the HC while deciding the Appeal arises from an order passed by Trial Judge restrained the SBI from invoking bank guarantees, observed that:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same. 48. With the aforesaid it is apparent that whether the title of windmill assets has been passed to the Appellants is to be decided in the Civil Suit which is pending before the HC. Thus, we are unable to convince with the argument of Ld. Sr. Counsel that the Adjudicating Authority has wrongly concluded that the Civil Suit is for determining rights of the parties over the windmill assets. Issue No.(ii) Whether the order for keeping the windmill asset out of the liquidation estate is beyond the jurisdiction of Adjudicating Authority? 49. It is an admitted fact that before initiation of CIRP the Master Restructuring Agreement (MRA) dated 02.03.2015 was entered into between the Corporate Debtor and the consortium of lenders/Joint Lenders Forum (JLF) led by SBI whereby SBI granted the right to auction non-core assets i.e. windmill assets by private treaty. The Appellants participated in the bid by submitting their respective offers of ₹ 154 Crores for 52 windmill assets and 26 Crores for 10 windmill assets. 50. Thereafter, as per terms of the bid document 25% of the total bid amount alongwith bank guarantee for the balance amount was to be depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he result, the Application is allowed in part permitting the RP to complete the proposed sale transactions by executing the conveyance under the law in favour of the buyers. 52. According to the Appellants before passing of the aforesaid order they have informed SBI vide email dated 18.08.2017 that the contract already stood terminated prior to passing of the aforesaid order. Thus, the aforesaid order was obtained by concealing the facts that the contract has been terminated. 53. It is disputed fact that whether the contract is legally terminated on 18.08.2017. The effect of this email dated 18.08.2017 is yet to be considered in Civil Suit. But now the order dated 22.08.2017 is in existence. It is also to be noted that this order has not been challenged by the Appellants. By this order, the Adjudicating Authority has directed to keep the windmill assets outside the CIRP. Subsequently, the Corporate Debtor vide order dated 11.01.2018 gone into liquidation and Mr. Sumit Binani was appointed as Liquidator. The Liquidator of the Corporate Debtor filed the present Application I.A. No. 1001/KB/2020 before the Adjudicating Authority and vide order dated 18.03.2021 the Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for recovery in the liquidation:- (a) assets owned by a third party which are in possession of the corporate debtor. 58. In this matter, the question is yet to be decided by the Hon ble High Court of Calcutta whether the title of windmill asset has been passed to the Appellants. At this juncture, it is not clear that windmill assets is owned by the Appellants or the Corporate Debtor. Ld. Sr. Counsel for the Respondent No. 2 drew our attention towards the clause (e) of sub-Section (4) of Section 36 which provides that:- any other assets as may be specified by the board, including assets which could be subject to set-off on account of mutual dealings between the Corporate Debtor and any creditor shall not be included in the liquidation estate. 59. As we have seen that before initiation of CIRP the creditors of the Corporate Debtor and the Corporate Debtor have decided to sale the windmill assets belonging to the Corporate Debtor as contemplated under the MRA dated 18.09.2014 and the supplemental MRA dated 02.03.2015. The same were executed by the Corporate Debtor and the creditors forming part of JLF of the Corporate Debtor constituted in October, 2013. As agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versy arises when the Ld. Adjudicating Authority passed the order on 18.03.2021 and partly allowed the Application filed by the Liquidator. After passing of the order, Ld. Adjudicating Authority on 23.03.2021 deleted the words from the clause (b) of the aforesaid order and therefore, at this stage it is not proper to order distribution of the sale proceeds (Pease See Para 3 of the Judgment). 64. According to the Appellants this is a review of its own order by the Adjudicating Authority which is not permissible in IBC and the Adjudicating Authority while modifying the order has exceeded its jurisdiction. 65. On the other hand, Ld. Sr. Counsel for the Respondent No. 2 submitted that every Court/Tribunal inherently empowered to correct its own error in a Judgment, Decree or Order from any accidental slip or omission. Rule 154 of NCLT Rules, 2016 provides the Tribunal may correct error arising from any accidental slip or omission at any time on its own motion or on Application of any party. It is also pointed out that by the corrigendum Ld. Adjudicating Authority deleted the aforesaid sentence as the Appellants and Respondent No. 2 opposed second prayer which is ultimately not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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