TMI Blog2022 (12) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... panies Act, 2013 - the Adjudicating Authority has not erred in passing the Impugned Order. Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 718 of 2022 - - - Dated:- 6-12-2022 - [Justice Ashok Bhushan] Chairperson , [Dr. Alok Srivastava] Member (Technical) And [Mr. Barun Mitra] Member (Technical) For the Appellant : Mr. Abhijeet Sinha, Mr. Aditya Shukla, Heena Kochar, Mr. Narendra Kumar, Advocates For the Respondent : Mr. Abhishek Anand, Rukbaan Tyagi, Advocates for Liquidator Mr. Alok Kumar Kuchchal, party in person Mr. P. Nagesh, Sr. Advocate with Advocate Akshay Sharma, for R-2 Advocate Srijan Mehrotra, Advocate Anshu Yadav, for Homebuyer JUDGMENT [ Per. Dr. Alok Srivastava , Member ( Technical ) ] The present appeal is filed under section 61 of Insolvency and Bankruptcy Code, 2016 (in short IBC ) by the Appellant aggrieved by the order dated 1.6.2022 (hereinafter called Impugned Order) passed by the Adjudicating Authority (National Company Law Tribunal, Allahabad) in the matter of IA(IB) No. 154/ALD/2022 in CP(IB) No. 45/ALD/2019. 2. In brief, the case of the Appellant is that it is involved in the construction and development of own or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or on 24.5.2022. The Appellant has claimed that the Liquidator continued with the auction process, and hence the Appellant was compelled to file IA No. 154/2022 before the Adjudicating Authority seeking stay of the auction scheduled on 19.5.2022 and also direction to the Liquidator to place the scheme of compromise and arrangement before the Stakeholders Consultation Committee. The Appellant has further stated that IA No. 154/2022 was disposed vide order dated 1.6.2022 whereby the reliefs sought by the Appellant were not granted and directions for the auction process to be reinitiated. 5. We heard the oral arguments advanced by the Learned Counsels for all the parties and perused the record. 6. The Learned Counsel for Appellant has submitted that the Appellant was interested in offering scheme of compromise and arrangement under section 230 of the Companies Act, 2013 to enable the corporate debtor to avoid liquidation, which would have meant definite corporate death of the corporate debtor, and in pursuance of this objective, the Appellant obtained an order on 13.4.2022 from the Adjudicating Authority directing the Liquidator to consider the Appellant s scheme of compromise a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant sent e-mail dated 21.5.2022 to the Liquidator seeking a clear list of claims in view of the repetition of certain claims in the list already sent to him, and upon receiving a final list of creditors from the Liquidator he could finally submit the said scheme through e-mail dated 24.5.2022. He has claimed that in view of the unreasonable functioning of the Liquidator in moving forward with the e-auction process, since the Liquidator had shown his helplessness through e-mail dated 20.4.2022 for providing any extension of time for consideration of the scheme stating that it was beyond his power as a Liquidator the Appellant had to file an application bearing IA No. 154/2022 on 25.5.2022 seeking direction from the Adjudicating Authority for stay of the e-auction process and direction to the Liquidator to consider the scheme that he had submitted. 10. The Learned Counsel for Appellant has further submitted that the lack of seriousness on the part of the Appellant in putting forward a credible and meaningful scheme of compromise and arrangement is clearly displayed by the fact that the said scheme purports to make provision for payment of Rs.12.48 crores to the stakeholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant has raised frivolous and irrelevant issues to only buy time and derail the process of liquidation, but the Liquidator is duty bound to complete the liquidation of the corporate debtor in view of the time-lines prescribed in IBC and Liquidation Process Regulations. 13. The Learned Senior Counsel for Liquidator has cited the judgment of Hon ble Supreme Court in the matter of Arun Kumar Jagatramka vs. Jindal Steel and Power Limited and Anr (2021 7 SCC 474) to highlight that a scheme of compromise and arrangement under section 230 of the Companies Act, 2013 could not have been filed by someone who is trying to takeover the corporate debtor through backdoor . 14. In support of the above, the Learned Counsel for Liquidator has pointed out that in Interlocutory Application No. 177 of 2022 filed by Mr. Prince Jain, a creditor of the corporate debtor whose claim was not admitted during the CIRP, for seeking directions against the Liquidator for staying the auction process, it was found that Mr. Prince Jain is acting in collusion with Mr. Rakesh Kumar Agarwal, a director of the Appellant/Bankey Bihari Infrahomes Pvt. Ltd., an allegation that has not been denied by the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidation process within 90 days from the liquidation commencement date, which time limit was expiring on 31.4.2022 and since there was no order for further extending the e-auction process, the Liquidator has acted in his call of duty in accordance with law to conduct e-auction in which the Respondent No. 2 is the successful bidder. 18. The Learned Senior Counsel for Respondent No. 2 has cited the judgment of Hon ble Supreme Court in the case of Ebix Singapore (P) Ltd. v. Educomp Solutions Ltd. (CoC), (2022 2 SCC 401) to emphasise that IBC provides for completion of CIRP unswayed by abstract conceptions of equity and contractual freedom of the parties with unfettered discretion . He referred to the conduct of the Appellant by stating that the Appellant was allowed by the Adjudicating Authority vide order dated 13.4.2022 in IA No. 115/2022 to submit the scheme of compromise and arrangement, which was not done in time of 3 weeks granted by this order and thus, the Appellant has not been able to establish its bonafide by timely submission of the scheme of compromise and arrangement. He has pointed out such scheme was submitted on 24.5.2022, which is after almost six weeks from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that no useful purpose would be served in considering the request of the Applicant, when the CoC had already resolved to liquidate the corporate debtor. Thereafter, liquidation of the corporate debtor was ordered and it commenced on 31.1.2022. 21. It is further noted that while the liquidation process was on, Mr. Rakesh Kumar Agarwal again filed IA 115/2022 through the company Bankey Bihari Infrahomes Private Limited (Appellant in the present appeal), in which he is a director seeking directions of the Adjudicating Authority for submission of a scheme of compromise and arrangement with respect to the corporate debtor on 7.4.2022. This IA 115/2022 was disposed of vide order dated 13.4.2022 with a direction to the Liquidator to consider the scheme and a time period of three weeks from the date of order was allowed for submission of the scheme and decision thereon. 22. It is further noted that, thereafter, a series of e-mails were exchanged between Mr. Rakesh Kumar Agarwal and the Liquidator, starting with e-mail dated 20.4.2022 whereby Mr. Rakesh Kumar Agarwal requested certain information relating to claims from the Liquidator in order to prepare the scheme of compromise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the given time of three weeks from 19.4.2022, ordered that the e-auction process may be continued. The Adjudicating Authority further ordered that if the Appellant offers a better value for the land of the corporate debtor than what is discovered in the e-auction, the e-auction could be reinitiated. 27. A perusal of the series of events during the liquidation process makes it clear that the Appellant, through Mr. Rakesh Kumar Agarwal, made an attempt through the company AIG Infratech Private Limited to submit a resolution plan much after the CoC had decided to liquidate the corporate debtor and the application for liquidation has been filed by the Resolution Professional before the Adjudicating Authority. This IA 220/2021, was filed in July, 2021 through the company AIG Infratech Private Limited for seeking order to submit a resolution plan, was dismissed by the Adjudicating Authority on the ground that no useful purpose would be served in keeping IA 220/2021, when the COC had already resolved to liquidate the Corporate Debtor. 28. Thereafter, after the commencement of liquidation process vide order dated 31.1.2022, Mr. Rakesh Kumar Agarwal again sent a letter to the Liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n e-mail dated 21.5.2022 seeking more time for submission and finalization of the scheme on which the Liquidator expressed his inability to provide more time vide e-mail dated 24.5.2022. The Appellant, thereafter, submitted the requisite scheme to the Liquidator on the evening of 24.5.2022 and immediately thereafter filed IA 154/2022 before the Adjudicating Authority requesting for stay of the auction process and directions to place the proposed scheme before the Stakeholders Consultation Committee. 32. The above-stated actions of Mr. Rakesh Kumar Agarwal make it absolutely clear that he, through different corporate entities, has attempted to intervene in the process of liquidation by filing the three interlocutory applications viz. IA 220/20221, (which was dismissed by the Adjudicating Authority), IA 115/2022 and IA 154/2022. We also note that Mr. Rakesh Kumar Agarwal in utter disregard to the confidentiality agreement provided to the Liquidator to keep the information supplied to him by the Liquidator confidential, went ahead and shared such information with the counsel of Mr. Prince Jain, a creditor whose claim was not admitted during CIRP of the corporate debtor. 33. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposed to all the stakeholders is provisioned at Rs. 11,48,56,758. This amount includes a figure of Rs. 1.5 crores for payment to the creditors whose claims were not admitted by the RP during CIRP. Another amount of Rs. 1.32 crores has been provisioned for payment to other creditors/stakeholders, unsecured financial creditors who are related parties and other creditors/stakeholders. Thus, an amount of approximately Rs. 2.82 crores is proposed as payment to creditors, who may not be entitled to any payment in the liquidation process of the corporate debtor or would come lower down in waterfall mechanism and may not even get such large payments. Further the very important financial creditors in class, who are 33 homebuyers in number and have filed a total claim of Rs. 2.68 crores during the CIRP of the corporate debtor, are proposed to be paid within 90 days from the date of approval of the scheme whereas other creditors are to be made 100% payments irrespective of whether their claims are admitted or not by the Liquidator. The flats are supposed to be completed in 24 months and provided to the homebuyers against their claims filed with the Liquidator. It is not at all clear as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed parties of the corporate debtor. 41. Both the Learned Counsel for Appellant and the Learned Counsel for Respondent No. 2 have cited the judgment of Hon ble Supreme Court in the matter of Arun Kumar Jagatramka vs. Jindal Steel and Power Limited Anr. [(2021) 7 Supreme Court Cases 474] in support of their rival contentions with regard to any ineligibility that would attach to the Appellant in providing a scheme of compromise and arrangement under section 230 of the Companies Act, 2013 with reference to section 29-A of IBC which pertain to ineligibility of related persons to submit resolution plan and section 35(1)(f) of IBC, which is a provision applicable during liquidation. It is instructive to have a look at the relevant portion of the Arun Kumar Jagatramka judgment (supra), which is as hereunder :- 71 ..In the context of the statutory linkage provided by the provisions of Section 230 of the 2013 Act with Chapter III IBC, where a scheme is proposed of a company which is in liquidation under the IBC, it would be farfetched to hold that the ineligibilities which attach under Section 35(1)(f) read with Section 29-A would not apply when Section 230 is sought to be invoked. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out in the Arun Kumar Jagatramka Judgment (supra) of Hon ble Supreme Court. 43. The Learned Counsel for Appellant has also cited the judgment of this Tribunal in the matter of Punjab National Bank vs. EVA Agro Feeds Pvt. Ltd. Anr. [CA(AT)(INS.) No. 757 of 2021], wherein it is held that the successful bidder in the auction sale does not acquire any vested right in law to enforce the auction. We are conscious of the fact that the issue in this appeal is not about any right of the successful bidder, but where the Adjudicating Authority has considered all the related facts and circumstances concerning the request of the Appellant in proposing a scheme of compromise and arrangement, and thereafter passed an order which balances the liquidation process with the need to avoid liquidation of the corporate debtor. This judgment, therefore, does not support the case of the Appellant. 44. The Senior Learned Counsel for Respondent No. 2 has adverted to the judgment of the Hon ble Supreme Court in the matter of Ebix Singapore (P) Ltd. v. Educomp Solutions Ltd. [(CoC), (2022) 2 SCC 401], wherein it is held that the if the CIRP is not completed within the prescribed timeline, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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