TMI Blog2022 (12) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... ations or proceedings were also mentioned in the Information Memorandum including provisional attachment order passed in the Enforcement Directorate. Information Memorandum is a comprehensive document containing all details and in view of the detailed information memorandum which is part of the record, it is not open for the Appellant to contend that certain information was not shared with the Appellant by the Resolution Professional which furnishes the basis for the Appellant not to implement the Resolution Plan. The Order passed in so far as it canceled the approval given to the Resolution Plan by Order dated 04.01.2022 as well as forfeiting Rs. 20 Crores deposited by the Resolution Applicant is affirmed. Wilful contravention of terms of the Resolution Plan - Referring Matter to IBBI for apapropriate action u/s 74(3) - direction No. III - HELD THAT:- there has to be a consideration by the Adjudicating Authority as to whether facts of the particular case require any reference under Section 74(3). There is no observation in the Order that Appellant has knowingly and willfully contravened any of the terms of the Resolution Plan. Without there being any observation even in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Process was initiated against the Corporate Debtor Tirupati Infraprojects Pvt. Ltd. by Order dated 03rd July, 2017 of the Adjudicating Authority. Information Memorandum of the Corporate Debtor was issued as well as Invitation for Expression of Interest for Resolution Plan. Resolution Plan was submitted by the Appellant on 12th March, 2018. In the CoC Meeting dated 14th March, 2018, the Appellant was held to be H1; Appellant submitted Addendum-1 to the Resolution Plan on 16th March, 2018. Appellant thereafter submitted Addendum-2 dated 19th March, 2018 and Addendum-3 dated 23rd March, 2018 and Additional Addendum on 26th March, 2018. In 12th CoC Meeting held on 16th March, 2018, discussion was held in the CoC with the representative of the Appellant, certain additional documents were asked from the Appellant. CoC on 23rd March, 2018 decided to take on record the plan of the Appellant. The Resolution Plan of the Appellant along with Addendum was forwarded by the Resolution Professional along with its Report in the Meeting dated 26th March, 2018 of the CoC where the Plan of the Appellant was discussed. Resolution Plan was approved with 100% votes. As per the plan, the Financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.A. No. 371 of 2020 was filed by the Appellant on 22nd January, 2020 where following prayers were made: In view of the facts mentioned hereinabove, the Successful Resolution Applicant pray for the following reliefs:- i. To clarify in terms of the Order dated January 4, 2020 passed by this Hon ble Tribunal by declaring the ownership pertaining to the fifth floor of the Hotel of the Corporate Debtor running under the name of Radisson Blue Hotel shall be of the Successful Resolution Applicant in terms of the Resolution Plan approved under Section 31 of the Code; ii. To direct the Respondent No. 4 to remove the attachment on the 50% shares in the Radisson Blue and to declare the shares of the Corporate Debtor stands cancelled in terms of the Order dated February 1, 2019; iii. To adjudicate and allow the Application C.A. 1247(PB)/2019 filed by the Successful Resolution Applicant, for the reasons mentioned in C.A. 1247(PB)/2019; iv. To direct the Respondents No. 1 and No. 2 to grant 30 days time period to the Successful Resolution Applicant for implementation of the Resolution Plan upon the adjudication of the abovementioned omissions, which were inadverte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proval given to the Successful Resolution Applicant for the approval of the Resolution Plan vide Order dated 04.01.2020 and we hereby direct the CoC to be reconstituted and the matter be considered a fresh in its own wisdom. II. The amount of Rs. 20 crore deposited by the Respondent stands forfeited. III. This matter is hereby referred to the IBBI for taking appropriate action in accordance with Section 74(3) of IBC. 7. By the Order of the same date 01.11.2021, the Adjudicating Authority dismissed C.A. No. 719(PB)/2020 and C.A. No. 1247(PB)/2019. 8. Aggrieved by the Aforesaid Order dated 01.11.2022, these Appeals have been filed. 9. We have heard Mr. Virender Ganda, Sr. Advocate appearing for the Appellant, Mr. Gopal Jain, Sr. Advocate appearing for the Respondent No. 1, Learned Counsel appearing for the Committee of Creditors as well as Learned Counsel appearing for Respondent No. 3 in Company Appeal (AT) Ins. No. 15 of 2022. 10. Learned Sr. Counsel-Mr. Virender Ganda for the Appellant in support of the Appeals contends that the Adjudicating Authority committed error in cancelling the approval of the Resolution Plan. The Appellant in the Resolution Plan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Resolution Plan along with the Addendum dated 16th March, 2018, the Appellant shall make remaining payment of Rs. 232 crores within 30 days. It is submitted that Appellant has not made the payment as was required to be paid under the Resolution Plan. Appellant having breached the Resolution Plan cannot be heard in taking excuses regarding the pendency of C.A. No. 01 of 2018 filed under Section 66 relating to 05th Floor. It is submitted that Information Memorandum contained all details pertaining to the property and the litigations therein. Addendum dated 16th March, 2018 filed by the Appellant itself contemplated both the situation that when the C.A. No. 01/2018 is rejected and when C.A. No. 01 of 2018 is allowed, plan shall not depend on C.A. No. 01 of 2018 hence the Appellant cannot contend that till C.A. No. 01 of 2018 is decided he shall not implement the Resolution Plan. 12. Plan was approved on 04th January, 2020 and more than two years have been elapsed and after cancellation of the approval, CoC has initiated fresh process and thereafter proposals have been received but CoC has not been able to finalize in view of the Orders passed in this Appeal. It is submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orandum regarding the 05th Floor which dispute is being claimed to be foundation of submissions of Learned Counsel for the Appellant. In the Information Memorandum of the Corporate Debtor, details pertaining to Application under Section 60/66 of the Code for 05th Floor of the Hotel Property were mentioned. Details of Application under Section 60/66 are to the following effect: 5. An Application u/s 60/66 of the Code for the fifth floor of the hotel property. As apprised earlier, the fifth floor of the hotel property is not at present a part of the management contract for hotel with M/s. Carlson Reizdor, under Brand Radisson Blu. However, HBN Group, owing 50% of shareholding of corporate debtor, has been claiming ownership/possession of the same, which has allegedly been handed over to them by the other group of promoters, i.e., Mr. Jagmohan Garg his family/associate, owning remaining 50% of shareholding of corporate debtor, in lieu of the unsecured loan infused by them in the corportatedebror for completion of the project. At present two rooms on this floor are being occupied by some tenants, besides the space (a part of the floor) being occupied by HBN Group, while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with one M/s. HMS Relations Management Pvt. Ltd. on 18.05.2017 for leasing out a space to the extent of 8000 sq feet at a monthly rental of Rs. 11 lacs a month for the purpose of a bar lounge for 15 years with rent escalation clause after every three years. M/s. HMS Relations Management Pvt. Ltd. had further entered into an agreement dated 05.08.2017 with M/s. L L Hospitality and Aviation Pvt. Ltd., to operate the bar lounge for three years at a monthly rental of Rs. 11 lacs for first year, Rs. 15 Lacs for second year and Rs. 18 Lacs for third year. The fixtures are in place and the pub has been named The Theatre Club Lounge , a unit of M/s. L L Hospitality and Aviation Pvt. Ltd. The Club has arranged almost all the required licenses now and will start functioning soon after all statutory licenses have been obtained. 18. Learned Counsel for the Appellant has also placed reliance on Addendum 16th March, 2018 which Addendum is to the following effect: Sh. Anil Kohli Resolution Professional Tirupati Infraprojects Pvt. Ltd. 409, 4th Floor, Ansal Bhawan, 16, K.G. Marg Connaught Place New Delhi 110001 Dear Sir, Reg: Add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 dated 16th March, 2018, it is clear that Appellant was well aware about the dispute pertaining to 05th Floor which was illegally occupied by the defaulting parties adversely affecting the creditors. In the Addendum-1, the Appellant has recorded his confirmation and satisfaction to the marketable title of the property. The Appellant further confirmed the bid presented As is Where is Basis and As is What is Basis . Addendum-1 dated 16th March, 2018 which has been treated to be part of plan, does not in any manner support the contention of the Appellant that unless ownership of 05th Floor is declared in favour of the Appellant, he shall not implement the plan. The content of Addendum is to the otherwise. The Appellant was also well aware of the C.A. No. 01/2018 filed by the Resolution Professional under Section 66 of the Code with regard to the 5th Floor which was pending consideration at the time of submission of Resolution Plan. The Resolution Plan was also in no manner depending with the outcome of the C.A. No. 01 of 2018. The Addendum-1 dated 16th March, 2018 clearly indicates that Appellant was fully agreeable in both the situations that is when the C.A. No. 01 of 2018 is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Adjudicating passed an order directing the Appellant to file an Affidavit that he shall make the payment of Rs. 232 Crores within 30 days of approval of the plan. In response to the Order dated 03.09.2019, the Appellant filed an Affidavit dated 18.09.2019 wherein paragraph 5 following was clearly stated: 5. I hereby further undertake to abide by the Resolution Plan of making payment of remaining amount of 232 Crores within 30 days after the Order approving the Resolution Plan along with the addendum dated March 16, 2018 submitted by the Successful Resolution Applicant is approved by the Hon ble Adjudicating Authority/the Hon ble Appellate Tribunal. 23. The Orders of the Adjudicating Authority as referred above as well as the Affidavit filed in compliance of the said Order clearly indicates that plan was not dependent on any issue pertaining to 05th Floor and further the Appellant undertook to pay amount of Rs. 252 Crores within 30 days from the date of the approval of the plan. Neither any condition in the plan with Addendum dated 16th March, 2018 envisage that the Appellant after the approval of the plan could have avoided the implementation on the pretext of C.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord to indicate that any claim was filed by the Company- K Sera Sera Digital Cinema Pvt. Ltd. claiming any rights on any part of the property of the Corporate Debtor. Letter was sent by the Axis Bank on 30th November, 2018 that is much after the approval of the plan by the CoC. There being no material with the Resolution Professional at the time of publication of the plan regarding the above transaction, Resolution Professional cannot be faulted in not mentioning of the sale deed in the Information Memorandum. As noted above, Resolution Professional has already filed an Application C.A. No. 01/2018 for avoiding transactions taken by the promoters and directors of the corporate debtor. The copy of the Application No. 01 of 2018 has already been brought on record where certain facts pertaining to 5th floor were given in details. The prayers made in the Application No. 01 of 2018 are as follows: a. Pass an order declaring the alleged MOU dated 15.10.2008 has been carried on with the intent to defraud creditors of the corporate debtor and for fraudulent purpose, in terms of Section 66(1) of the Code; b. Pass order under Section 66(1) directing the Respondent Nos. 1 and 2 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lutions Ltd. (CoC) laid down that Resolution Plan which has been approved, cannot be withdrawn by the Successful Resolution Applicant nor the plan can be modified. In paragraph 159 of the Judgement, following was laid down by the Apex Court: 159. The IBC is silent on whether a successful Resolution Applicant can withdraw its Resolution Plan. However, the statutory framework laid down under the IBC and the CIRP Regulations provide a step-by-step procedure which is to be followed from the initiation of CIRP to the approval by the Adjudicating Authority. Regulation 40A describes a model-timeline for the CIRP that accounts for every eventuality that may arise between the commencement of the CIRP and approval of the Resolution Plan by the Adjudicating Authority, including the different stages for pressing a withdrawal of the CIRP under Section 12A. Even a modification to the RFRP is envisaged by the CIRP Rules and is subject to a timeline. The absence of any exit routes being stipulated under the statute for a successful Resolution Applicant is indicative of the IBC s proscription of any attempts at withdrawal at its behest. The rule of casus omissus is an established rule of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read into the statute through judicial interpretation. While parties have the freedom to negotiate certain commercial terms of the resolution plan to gain wide support, their ability to negotiate is circumscribed by the governing statute. A court cannot interpret the negotiated arrangements that are represented in the resolution plan in a manner that hampers the objectives of IBC which is a speedy, predictable and timely resolution. The resolution applicant is deemed to be aware of IBC and its mechanisms before it steps into the fray and consents to be bound by its underlying objectives. A resolution applicant, after obtaining the financial information of the corporate debtor through the informational utilities and perusing the IM, is assumed to have analysed the risks in the business of the corporate debtor and submitted a considered proposal. It can not demand vesting of certain powers and rights which have been conspicuously omitted by the legislature under the statute, in furtherance of the policy objectives of IBC. A court may not be able to lay down such detailed guidance on how a mechanism for withdrawal, if any, may be provided to a successful resolution applicant without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant is Llovegeet Dhuria Vs. State Bank of India and Ors. [2022 SCC OnLine P H 2363] where the question which arose for consideration was as to whether secured creditor like SBI can suppress from persons intending to participate in E-Auction factum of the pendency of the litigation in respect of secured assets. The Court ultimately held that it was not proper for the bank to suppress the factum of pendency of litigation in respect of secured assets being put to sale. In paragraph 87 to 88, following has been laid down: 87. Since, the petitioner is also placed in a similar situation, on parity, the Bank ought to have granted the refund of the earnest money deposited by the petitioner and ought not to have forfeited it. By doing so, it has discriminated against the petitioner and has acted arbitrarily in violation of Articles 14 and 300A of the Constitution of India. 88. So we hold that it was not proper for a secured creditor like SBI to suppress from persons intending to participate in the e-auction being conducted by it under the SARFAESI Act, 2002, the factum of the pendency of litigation in respect of the secured asset being put to sale by it; and that it ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper passage to the Unit that he was buying. We are of considered opinion that the respondent had deposited the sum of Rs.2.5 lakhs on the clear understanding that there would be an independent approach road to the Unit. This is understandable. Without any independent passage the plot of land would be not more than an agricultural plot, not suitable for development as a manufacturing unit. We therefore don't find any substance in the submission made by the learned counsel for the appellants/Corporation. 37. The present is not a case where the Resolution Plan is denying giving all the assets as described in the Information Memorandum to the Successful Resolution Applicant. Both the Judgements of the Hon ble Supreme Court in Haryana Financial Corporation as well as Paujab and Haryana High Court in Llovegeet Dhuria does not render any assistance to the Appellant in the facts of the present case in refusing to implement the Resolution Plan. 38. We may also notice one Judgement of the Hon ble Supreme Court in this regard which is United Bank of India Vs. Official Liquidator Ors. [(1994) 1 SCC 575]. In the above case, Official Liquidator has sold the assets of a Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis for the Appellant not to implement the Resolution Plan. 40. Learned Counsel for Respondent in his submissions has time and again contended that there is no statement on behalf of the Appellant even as on date that Appellant is ready to deposit the balance amount up to Rs. 232 crores. Appellant as on date is not ready and willing to deposit the balance amount, he cannot be heard in assailing the Impugned Order of the Adjudicating Authority dated 01.11.2021 cancelling the approval of the Resolution Plan. The Hon ble Supreme Court in Ebix Singapore (supra) has also laid much emphasis on the timelines and on timely resolution of the Corporate Debtor. In paragraph 152 of the Judgement, following has been laid down: 152. The statutory framework governing the CIRP seeks to create a mechanism for resolving insolvency in an efficient, comprehensive and timely manner. The IBC provides a detailed linear process for undertaking CIRP of the Corporate Debtor to minimize any delays, uncertainty in procedure and disputes. The roles and responsibilities of the important actors in the CIRP are clearly defined under the IBC and its regulations. In Innoventive Industries Ltd v. ICICI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h invitation for expression of interest. In the minutes, under the heading of matters of discussion following was noticed: A. Matters of Discussion: 1) Noting of the minutes of 18th meeting of Committee of Creditors held on 30.12.2021. The Resolution Professional stated that the previous meeting of Committee of Creditors was held on 30.12.2021 and the minutes of the same were circulated to members of committee of creditors within stipulated time period. RP briefed the outcome of the said meeting and enquired any observation/comment on the same, whereby it was suggested by CoC members to incorporate the reasons due to which major players such as Taj Group, Eros Group and Hyatt Group did not participate in the resolution process of the CD, who had shown interest earlier, whereby, the following is noted to be part of discussions held in the 18th CoC meeting: During the discussions with major players of the industry such as Taj Group, Eros Group and Hyatt Group who had submitted their EOIs with the undersigned, it was stated that they might not be interested in submitting resolution plan for Corporate Debtor due to the ongoing litigations in the matter parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious discussions, the CoC members advised RP to again approach the major players of industry such Taj/Eros/Hyatt Group for seeking their inputs/offer/interest in submitting their resolution plan, in case the ongoing litigations of the CD are decided by the judiciary. Further the CoC advised the undersigned to immediately file early hearing application before Hon ble NCLT regarding pending litigations, which is urgently required for fetching the higher value through resolution plan for maximization of value of CD. 43. In Company Appeal (AT) Ins. No. 14 of 2022, we have passed following Order on 12.01.2022: 12.01.2022: Issue Notice. Shri Abhishek Anand, Learned Counsel appears and accepts notice on behalf of Respondent No.1. Shri Ankur Mittal, Learned Counsel appears and accepts notice on behalf of Respondent No.2. They are allowed two weeks time to file Reply-Affidavit. Rejoinder, if any, may be filed before the next date. 2. It has been submitted by Shri Virendra Ganda, Learned Senior Counsel for the Appellant that Committee of Creditors ( CoC for short) itself has now taken Resolution on 04.01.2022 to file an urgent Application for hearing CA No. 1 of 2018. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46. One of the directions issued by the Adjudicating Authority in the Impugned Order dated 01.11.2021 allowing C.A. No. 1090(PB)/2020, was direction No. III which is to the following effect: III. This matter is hereby referred to the IBBI for taking appropriate action in accordance with Section 74(3) of IBC. 47. We have carefully looked into the Order passed by the Adjudicating Authority. Findings of the Adjudicating Authority are in paragraph 21, directions have been issued by the Adjudicating Authority referring the matter to IBBI for taking appropriate action in accordance with Section 74(3) of the Code. Section 74(3) of the Code 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. 48. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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