TMI Blog2022 (5) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Plan and only then they can do undertake the necessary visit - It is also relevant to notice that the Appellant made request to the Monitoring Committee to permit the Appellant to make payment in a revised time schedule. The Monitoring Committee held its meeting on 29.08.2019, in which revised schedule for payment of the amount was decided and the lenders recorded their no objection. The Adjudicating Authority passed an order dated 03.09.2019 which order records the decision of the Monitoring Committee taken on 29.08.2019. After approval of the Resolution Plan, Monitoring Committee under the statutory scheme is to function for process of implementation of Resolution Plan and has not to act as any adversary body to the Resolution Applicant. If there were any genuine roadblocks found in the implementation of the plan, Monitoring Committee as well as Monitoring Professional is to use their good offices to sort out the difficulties and not to create roadblocks themselves in successful resolution of the Corporate Debtor. First prayer in the application is direction is sought against the Appellant under Section 74(3) read with Section 235A of the Code. In the entire ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Resolution Plan on 19.10.2018. The Resolution Plan of the Appellant offering total financial plan of INR 233.71 Crores was approved by the Committee of Creditors (CoC) on 27.12.2018. By order dated 30.05.2019, application filed under Section 31 of the IBC by the Resolution Professionals for approving Resolution Plan, was allowed. Plan of INR 235.86 Crores was approved. The first meeting of the Monitoring Committee was held on 06.06.2019 where it was noticed that the amount of INR 5 Crore has been credited in the account of the Corporate Debtor. The Successful Resolution Applicant also informed the Monitoring Professional that an amount of INR 3.55 Crores payable to Operational Creditors in terms of the approved plan shall be paid by 09.06.2019. By 10.06.2019 an amount of INR 10.55 Crores was credited in the account of the Corporate Debtor. In the Monitoring Committee meeting dated 06.06.2019 request was made on behalf of the representative of Successful Resolution Applicant to undertake detailed analysis and assessment of the plant for four days with their technical team which was declined by the Monitoring Committee observing that first the SRA should deposit the substantial am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On 29.10.2019, the Appellant filed C.A. 2357/2019 praying for extension of time period for implementation of the Resolution Plan. On 08.11.2019, the Appellant further paid an amount of INR 8.25 Crores to prove its bonafide. Total payment by the Appellant as on 08.11.2019 was INR 70.25 Crores. On 03.12.2019, the Adjudicating Authority directed the Appellant to file an affidavit undertaking to deposit the balance amount by specifying the last date by which balance payments can be deposited. In pursuance of order dated 03.12.2019, an affidavit was filed on 06.12.2019 by the Successful Resolution Applicant. In 6th Monitoring Committee meeting dated 07.12.2019, the Respondent No. 1 assured the Appellant to provide support for demarcation and fencing of property of the Corporate Debtor. On 30.12.2019, Monitoring Professional wrote a letter to the Sub-Divisional Magistrate Bhadurgarh, District Jhajjar, Haryana, where Sub-Divisional Magistrate informing that few local adjoining farmers have destroyed the demarcation and also created hindrances in the fencing work, therefore, assistance was sought for in completing the fencing work. Sub-Divisional Magistrate, on 07.02.2020, wrote to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate as intimated by the Appellant to assist the Appellant to see the status of the encroachment, if any and to do the needful. Learned Counsel for Respondent No. 2 Shri Dinkar Singh submits that the interest be also allowed, which submission we are not considering as on date. Learned Counsel for the Appellant has refuted the submission of Shri Dinkar Singh, he submits that the Appellant is not liable to pay any interest. Learned Counsel for the Appellant made a statement that on or before 27.12.2021 the Appellant shall deposit the amount of Rs. 165.31 crores in the registry of this Tribunal. List the matter on 03.01.2022. In the meantime, the impugned orders dated 01.11.2021 shall be kept in abeyance. 4. I.A. No. 2941 of 2021 was filed by the Appellant in Company Appeal (AT) (Insolvency) Nos. 954 of 2021 on 23.12.2021 bringing on record copy of the Report of the Sub-Divisional Officer (Civil) dated 21.12.2021 addressed to the Principal Bench, NCLT in compliance of order dated 07.12.2021 issued by this Tribunal as noticed above. The Sub-Divisional Officer in the Report noticed that in area of several Khasra Nos. there is encroachment for cultivation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was denied to the Appellant on 06.06.2019 i.e. within six days from approval of the Resolution Plan and Appellant had to file I.A. 1170/PB/2019 seeking direction to allow the Successful Resolution Applicant to have physical inspection of the plant and machinery of the Corporate Debtor, which Adjudicating Authority by order dated 03.09.2019 accepted and permitted visit to the plant to the officials and authorized representatives of the lending bank for processing the sanction of funds to the SRA. The Bank of Baroda who had agreed in principle to advance the amount to make the balance payment cannot be given necessary deeds and documents for financial sanction which was one of the reasons for Appellant not been able to make payment. In the Monitoring Committee meeting dated 07.10.2019, the Monitoring Committee itself opined that the Monitoring Professional may consider to move application before the Adjudicating Authority for seeking additional time for implementation of the plan. The Monitoring Committee was satisfied that additional time is required for implementation due to various issues which are to be sorted out. Unfortunately, the Monitoring Professional did not file any appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Adjudicating Authority as to why directions for initiation of prosecution has been issued. Neither there is any consideration in the order nor is any finding that present a case for initiation of any prosecution. In view of the order dated 03.09.2019 passed by the Adjudicating Authority and substantial payments made, very basis of the application filed by the Monitoring Professionals being C.A. 1246/2019 had become non-existent and the Adjudicating Authority committed error in allowing C.A. 1246/2019. The Respondent No. 1 has failed to protect the assets of the Corporate Debtor, it has failed to protect the immovable property and occupation of land and it has also failed to maintain plant and machinery of the Corporate Debtor. Learned counsel lastly submitted that the Appellant had always been ready and willing to make balance payment and is still ready to make balance payment. 10. Shri Arun Kathpalia, learned counsel appearing for the Respondent No. 1 submits that total area of agricultural land is 45 Acres and as per Report of 21.12.2021 of the Sub-Divisional Officer encroachment at best is of 5 Acres. It is submitted that it was not encroachment even on 5 Acr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer Report dated 21.12.2021, which was submitted to this Tribunal in pursuance to order dated 07.12.2021. The claim of the Respondent No.1 as made on 04.12.2021 that there is no encroachment has been proved to be false. Respondent No. 1 never filed any reply to C.A. No. 2357/2019 before the Adjudicating Authority nor at any point of time submitted any affidavit that there is no encroachment on the land. Shri Ganda further submitted that in the facts of the present case, the Appellant cannot be saddled with any liability of interest. It is submitted that Appellant s INR 70.25 Crores which were paid in the year 2019 itself already lying with Respondent No. 1 and being utilized by Respondent No.1. It is the Appellant who is suffering due to not having received the assets and having paid huge amount. Respondent No. 1 has not suffered any prejudice. CIRP cost, as stated in the plan, has already been paid to the Respondent No.1. The Respondent No. 1 instead of cooperating in removing the difficulties in implementation of the plan has adopted obstructive attitude. Filing of application under 74(3) in C.A. 1246/2019 was nothing but arm-twisting tactics by the Respondent No.1. Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equest to the Monitoring Committee to permit the Appellant to make payment in a revised time schedule. The Monitoring Committee held its meeting on 29.08.2019, in which revised schedule for payment of the amount was decided and the lenders recorded their no objection. The Adjudicating Authority passed an order dated 03.09.2019 which order records the decision of the Monitoring Committee taken on 29.08.2019. It is useful to extract the entire order dated 03.09.2019 which is to the following effect: ORDER CA-1170(PB)/2019 CA-1246(PB)/2019 In the aforesaid application arguments were heard on 26.08.2019. However, before the order could be pronounced. CA-1676(PB)/2019 has been filed under Rule 11 of the NCLT Rules with a prayer that order dated 08.08.2019 passed has been substantially complied with and permission has been sought for the Implementation Committee to accept the payment schedule as mentioned at paragraph 13. Accordingly the proposal for rescheduling the payment time line made in paragraph 13 by the successful resolution applicant was considered. The Monitoring Committee in its meeting dated on 29.08.2019 after consulting lenders has rescheduled the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not allowed/ approved by the Hon ble NCLT. 7. In case of any default on the part of SRA in remitting the amount payable as approved by the Hon ble NCLT through this revised payment plan, the amount deposited till the date of default shall stand forfeited and he distributed amongst the lenders in their respective proportion of voting shares held in the Committee of Creditors after adjusting the cost as mentioned here-above. Concluding on the above revisions in the payment plan of SRA, there were discussions on the mechanism of consideration of the revised payment plan, whereby the lenders agreed that the counsel for CoC/ lenders be instructed to submit the no objection on behalf of lenders before Hon ble NCLT as per the above decisions. The same was taken note by the participants. It is appropriate to mention that there was miniscule minority of 0.16% represented by Siemens. Even that has been clarified by accepting the aforesaid terms by the Siemens Financial Services Private Limited and with the aforesaid acceptance of the proposal for rescheduling payment has now been supported by 100% voting share. It is appropriate to mention that amount of Rs. 28.50 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution to Petrol Pump owner, the said person expressed their intention to meet the SRA. The SRA agreed to meet and requested to share the contact details of him. Thereafter, various discussions were held and it was decided that MP and SRA may depute their personnel to start the inventorisation (itemized) of the Fixed assets, other than Immoveable Property, owned and possessed by CD. SRA also requested the MP to prepare a handover report in order to facilitate the handover. Further it was also discussed and agreed that considering the various processes and compliances to be made, MP may consider to move an application before AA for seeking additional time for implementation of Resolution Plan. 2. Demarcation of land owned by Allied Strips Limited; Inventorisation of legal documents pertaining to such land; and Bringing the land in a position so that peaceful enjoyment of total land, free from encumbrances(s) other than disclosed in IM, is vested in SRA upon take-over. As discussed in point x in above paras, the demarcation process was noted to be initiated, further the MP stated that if SRA found that it is warranted to file application with Tehsildar, they can move a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it filed by the Appellant has been noticed. Under heading C.A. 1170/2019 para 1 to 7 are the pleadings of the applicant. Para 8 deals with reply of the Respondent. In Para 9 of the judgment, the Adjudicating Authority has referred to its order dated 23.01.2019 passed in C.A. No. 114(PB) of 2019 which was filed by the Appellant to forgo/dispense with the condition of the submission of Bank Guarantee till adjudication of the plan by the Tribunal. Resolution Plan was approved on 27.12.2018 by the Committee of Creditors. Letter of intent was issued on 03.01.2019 to the Appellant. The CoC asked the Appellant for Bank Guarantee of 25% of the amount. The Adjudicating Authority has noticed that by order dated 23.01.2019 application of the Appellant was dismissed with cost of Rs.50,000/- but failed to notice that said order was challenged before this Tribunal by filing an Appeal being Company Appeal (AT) (Ins.) No. 231 of 2019, in which this Appellate Tribunal on 12.03.2019 passed following order: 5. The Respondents may file reply within a week as to why the impugned order dated 23rd January, 2019 be not set aside and the Adjudicating Authority be not directed to consider the Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution Applicant for successful implementation of the Resolution Plan is as under: S.N Date of the Payment Amount 1. June 10, 2019 10.50 Crores 2. August 29, 2019 28.50 Crores 3. September 7, 2019 23.00 Crores 4. November 8, 2019 8.25 Crores AMOUNT PAID BY THE SRA 70.25 Crores BALANCE AMOUNT AS PER THE RESOLUTION PLAN 165.61 Crores GRANT TOTAL 235.86 Crores 4. I state that that approximately 7.5 Acres out of total acres of 45.56 Acres land of the Corporate Debtor, has been illegally encroached and is under the illegal possession of third party(ies). This fact was neither disclosed in the Information Memorandum of the Corporate Debtor nor was informed to the Successful Resolution Applicant any time before the Approval of the Resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.09.219, as quoted above, has already approved the revised timelines to make payments. When the Adjudicating Authority has itself granted revised timelines, the observation that Tribunal that it has no powers to amend the approved resolution plan is not justified and uncalled for. In this context we refer to a recent judgment of this Appellate Tribunal dated 20.01.2022 in Company Appeal (AT) (Ins.) No. 1038 of 2021, Tricounty Premier Hearing Service Inc vs. State Bank of India others , which was filed against the order in which the application of the Successful Resolution Applicant for extension of time for making deposit was rejected by the Adjudicating Authority which came to be questioned before this Appellate Tribunal. One of the arguments raised before this Tribunal was that in view of the judgment of Hon ble Supreme Court in Ebix Singapore Private Limited vs. CoC Educomp , the Adjudicating Authority cannot even extend the time for making payment. This Tribunal in Para 22, 23 and 24 laid down following: 22. We may also refer to the judgment of the Hon ble Supreme Court in Ebix Singapore Private Limited (supra) relied by learned Senior Counsel for the State Bank of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and threshold for approval by the CoC (as the case may be). They must also contemplate at which stage the Corporate Debtor may be sent into liquidation by the Adjudicating Authority or otherwise, in the event of a failed negotiation for modification and/or withdrawal. These are matters for legislative policy. 204 In the present framework, even if an impermissible understanding of equity is imported through the route of residual powers or the terms of the Resolution Plan are interpreted in a manner that enables the appellants desired course of action, it is wholly unclear on whether a withdrawal of a CoC-approved Resolution Plan at a later stage of the process would result in the Adjudicating Authority directing mandatory liquidation of the Corporate Debtor. Pertinently, this direction has been otherwise provided in Section 33(1)(b) of the IBC when an Adjudicating Authority rejects a Resolution Plan under Section 31. In this context, we hold that the existing Company Appeal (AT) (Insolvency) No. 1038 of 2021 29 insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC approved Resolution Plans, at the behest of the successful Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al that whether Adjudicating Authority erred in exercising its jurisdiction in refusing to grant extension by 30 days as prayed by Resolution Applicant or not? The judgment of the Hon ble Supreme Court in the Ebix Singapore Private Limited (supra) thus, does not support the submission of learned Counsel for the State Bank of India that Adjudicating Authority has no jurisdiction to extend the time for complying the financial obligations in the Resolution Plan. 26. This Tribunal rejected the submission that the Adjudicating Authority has no jurisdiction to extend the time for complying the financial obligations in the Resolution Plan. This Tribunal ultimately after considering all facts and circumstances allowed the Appeal and granted 30 days time to the Appellant to make the payment of the balance amount. 27. The observations in Para 13 about behaviour as demonstrated by SRA so far that of non-seriousness towards the laws and that it defaulted on its obligations is also made without considering all facts and circumstances. The Adjudicating Authority not even was aware of the payments of INR 70.25 crores which have been made till 08.11.2019, when the application was rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selves having undertaken to make payment of interest @11% p.a., they cannot now deny. However, there is one fact which needs to be noticed. We have noticed that after order dated 03.09.2019 in the Minutes of Monitoring Committee dated 07.10.2019 certain issues concerning SRA were discussed and substance having been found in the issues raised, the Monitoring Committee decided that Respondent No. 1 Monitoring Professional may consider to file an application for extension of time before the Adjudicating Authority but Respondent No. 1 did not file any application and application for extension of time was filed by the Appellant on 29.10.2021. The Application, C.A. No. 2357/2019 in which the Appellant has prayed for extension of time remained pending from 29.10.2019 to till passing of order dated 01.11.2021. The fact that application could not be decided by the Adjudicating Authority for a long period of two years, the Appellant cannot be saddled with interest liability of the aforesaid period. We, thus are of the view that the Appellant shall be liable to pay interest @11% p.a. on the balance amount from 30.05.2019 i.e. the date on which plan was approved by the Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 74 is any such officer who knowingly or willfully committed or authorised or permitted such contravention shall be punishable .. . Section 74 sub-section (3) is as follows: 74(3) Where the corporate debtor, any of its officers or creditors or any person on whom the approved resolution plan is binding under section 31, knowingly and wilfully contravenes any of the terms of such resolution plan or abets such contravention, such corporate debtor, officer, creditor or person shall be punishable with imprisonment of not less than one year, but may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both. 33. For offence under Section 74(3), there is to be pleading that SRA or any person knowingly or willfully contravened any of the terms of the Resolution Plan. In entire application neither any pleadings nor averments have been made that SRA has willfully and knowingly contravened the terms of Resolution Plan. 34. The Adjudicating Authority in its order dated 01.11.2019 has not even recorded a prima-facie satisfaction that there is any material to prove any willful contravention of the plan b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.2021 is set aside and C.A. No. 1246/2019 is dismissed. (b) Company Appeal (AT) (Ins.) No. 954/2021 is allowed. The impugned order dated 01.11.2021 is set aside. C.A. No. 2357/2019 is allowed. The Appellant is allowed time till 30.05.2021 to deposit the balance amount of Rs.165.31 Crores in the account of the Corporate Debtor. (c) Alongwith the deposit of aforesaid amount of Rs.165.31 Crores, the Appellant shall also deposit the interest on the balance amount w.e.f. 30.05.2019 till 28.10.2019 and interest from 02.11.2021 till the date of payment @ 11% p.a. simple interest. (d) Monitoring Committee and the Respondent No. 1 shall handover the physical possession of all movable properties and vacant possession of all immovable properties property including land, within two weeks from the date of payment. (e) The Monitoring Committee and Respondent No. 1 shall also handover all deeds and title of all movable and immovable assets of the Corporate Debtor within the same period of two weeks. (f) Financial Creditors shall grant no dues certificate and release all clearances with regard to existing default after receiving the payment as permitted above within the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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