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TMI Blog2022 (3) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 2. Issue an appropriate Writ, Order or Direction more particularly in the nature of WRIT OF CERTIORARI or any other appropriate writ declaring that claims filed under a CIRP by "decree holder" under Regulation 9(a) of the CIRP Regulations, be considered at par with claims filed by ''financial creditors" and be amenable to all consequential rights available to financial creditors; and/or ..." [2] The counsel for the petitioner states that the petitioner is a shareholder of public listed companies, who are either creditors and/or corporate debtors in terms Insolvency and Bankruptcy Code, 2016 ("IBC"). He is therefore interested in the issues raised in the present petition, which deal with the manner in which claims under corporate insolvency resolution process are to be treated. He states that the issues raised, also effect the general public, as they would be germane to almost all corporate insolvency resolutions under the IBC. It is further stated that there is no authoritative pronouncement of the Hon'ble Supreme Court or Hon'ble High Court on the questions raised. [3] Principally, the issues raised in the present petition deal with the treatment of "decre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor itself becomes a beneficiary of the resolution scheme-workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximise their investment. Timely resolution of a corporate debtor who is in the red, by an effective legal frame work, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern.(See Arcelor Mittal [Arcelor Mittal (India)(P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] at para 83, fn 3). 28. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts of a decree holder per se, i.e. dehors the contours of IBC. The right of a decree holder, in the context of a decree, is at best a right to execute the decree in accordance with law. Even in a case where the decree passed in a suit is subject to the appellate process and attains finality, the only recourse available to the decree-holder is to execute the decree in accordance with the relevant provisions of the Civil Procedure Code, 1908. Suffice it to say, that the provisions contained in Order 21 provides for the manner of execution of decrees in various situations. The said provisions also provide for the rights available to judgement debtors, claimant objectors, third parties etc., to ensure that all stake holders are protected. The provisions of the CPC, therefore subjects the rights of a decree-holder to checks and balances that an executing court must follow before the fruits of such decree can be exercised. Given the same, the rights of a decree-holder, subject to execution in accordance with law, remain inchoate in the context of the IBC. This is principally because, the IBC, by express mandate of the moratorium envisaged by Section 14(1), puts a fetter on the executio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(b) and Section 28 of the IBC. Section 14(1)(b) provides, inter alia, that the NCLT, on the insolvency commencement date shall declare a moratorium on "transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;" In the context of an unexecuted decree, the subject matter of the decree, be it money, moveable property, immoveable property, or of any other nature, remains on the books of the corporate debtor. The moratorium envisaged by Section l4(1)(b) therefore, expressly bars transfer, encumbering, alienation or disposal of such assets. Seen in the context of the Statement of Objects and Reasons and the Preamble of the IBC, this provision ensures that its stated purpose of achieving preservation and maximization of the assets of a corporate debtor is not defeated. In fact, to ensure that such assets remain protected, even whilst in the hands of an Interim Resolution Professional or a Resolution Professional, as the case may be, Section 28(1)(d), creates a further fetter and provides that a resolution professional, during the corporate insolvency process, shall not "record any change in ownership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and maximise the assets of a corporate debtor. The resolution professional cannot look behind the decree. In the resolution process, he must acknowledge and admit the decree as an admitted claim, unless such decree has been set aside. [13] It was contended that all decrees may not be amenable to precise valuation. For instance, decrees for specific performance or decrees for completing sale of property where part payments have been made. In our opinion, this situation has been provided for by the IBC. Where the decree is not amenable to precise valuation, the resolution professional must follow the procedure for estimation of its value provided in the Regulation 14 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, ("CIRP Regulations"). For instance, in cases involving part payments for sale of property, the payments already made by the decree holder creditor would be a reasonable guide for estimation of the claims of a decree holder. Where specific performance is of a contract, the resolution professional may estimate on the basis of past business records of the corporate debtor to estimate its claims. The effort of the resolution profe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected. The role of the Committee of Creditors, was discussed by the Hon'ble Supreme Court in the case of Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd., (2022) 1 SCC 401, in the following manner : "98. For what has been noticed hereinabove, it would not be an exaggeration in terms that, in corporate insolvency resolution process, the role of Committee of Creditors is akin to that of a protagonist, giving finality to the process (subject, of course, to approval by the adjudicating authority), who takes the key decisions in its commercial wisdom and also takes the consequences thereof. As noticed, the process is aimed at bringing the corporate debtor back on its feet and it is acknowledged that appropriate disposition of a defaulting corporate debtor and the choice of solution, to keep the corporate debtor as a going concern or to liquidate it, is to be made by the financial creditors, who could assess the viability and may take decisions in modification of the terms of the existing liabilities. In other words, the decision as to whether the corporate debtor be resurrected or not, by acceptance of a particular resolution plan, is essentially a bus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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