TMI Blog2023 (3) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not a case where it can be said that any principles of natural justice have been violated since the Appellant has raised its objection in the meeting of the Creditors Committee and also voted against the resolution. The filing of the application for approval before the Adjudicating Authority was as per the steps provided in the Revised Resolution Framework - the order of the Adjudicating Authority dated 23.09.2022 cannot be set aside on the ground of violation of any principles of natural justice. The stay of an order means that the order which has been stayed would not be operative from the date of the passing of the stay order but it does not mean that the said order has been wiped out from existence. The distribution of the consideration received by the applicant (IL FS) from the transaction which have been proposed or withdrawal of any other amounts from the designated bank account shall be subject to further orders of the Adjudicating Authority. In event, order is passed by Hon ble Supreme Court in the pending Appeal, the same is also to be given effect in the proceedings before the Adjudicating Authority - Appeal dismissed. - Company Appeal (AT) No. 177 of 2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit the amount back into the account of the Borrower. (v) Similar letters were sent by the Borrower to the Lender to reverse the amount which was debited in alleged breach of the interim order dated 15.10.2018. (vi) Borrower sent letter to Hon ble Justice (Retd.) D. K. Jain to pass appropriate orders regarding reversing amount by the lenders. (vii) Hon ble Justice (Retd.) D. K. Jain issued an order on 12.05.2020 recommending the Escrow Bank to maintain status quo until a final view is taken in the same. On 03.07.2020, Hon ble Justice (Retd.) D. K. Jain passed an order holding that the Escrow Bank and the Lenders in debiting the amount from escrow account has violated orders passed by this Tribunal. Lenders and Escrow Bank were directed to purge themselves within two weeks. (viii) I.A. No. 2262-2263/2020 was filed by the Lender (HDFC Bank) praying for setting aside the order of Hon ble Justice (Retd.) D. K. Jain dated 12.05.2020. Another I.A. No. 2264-2266/2020 was filed by the HDFC Bank praying for setting aside order dated 03.07.2020. (ix) IL FS filed I.A. No. 2196/2020 seeking direction to Escrow Bank and Lenders to reverse the amount debited till date i.e. Rs.112 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid meeting and prayed that the agenda item by not considered since the matter is pending before this Tribunal. (xiv) The resolution was put to vote and by vote of 73.57% was approved accepting the bid proposal of Rs.1080 Crore. Board of Directors of the IL FS also passed resolution on 27.01.2022 approving proposal of H-1 bidder and it was decided to seek approval of Hon ble Justice (Retd.) D. K. Jain alongwith proposal regarding sale/assignment of commercial premises in pursuance of the resolution passed in the meeting of Board of Directors dated 29.01.2022. (xv) The proposal was placed before Hon ble Justice (Retd.) D. K. Jain, who by letter dated 08.03.2022 granted approval for sale of TIFC property subject to the final decision of this Triunal in I.A. No. 2966 of 2020. (xvi) On 13.05.2022, this Tribunal disposed of the applications 2196/2020, 2262-2263/2020, 2264-2266/2020, 2330- 2331/2020 and 2332-2333/2020. This Tribunal disposed of the applications with following direction: 46. In view of the foregoing discussions, we dispose of all the above Applications with following directions:- (i) The prayer of Applicant- IL FS seeking direction to lender to reverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court appointed by the Hon'ble NCLAT to oversee the resolution process of the Applicant Group and to enable a resolution of the Applicant Group in line with the Resolution Framework; and the mandate given by this Tribunal to the New Board. Thus, we approve the Proposed Transaction in the interest of justice. 11. It is directed that the amounts received by the Applicant pursuant to the Proposed Transaction be paid into a designated bank account and the same be intimated by the Applicant. 12. It is also directed that the Resolution Process Costs and goods and service tax incurred /to be incurred be permitted to be paid in the manner set out in the Application. Whereas, the remaining amount of consideration be remitted into the designated escrow account as intimated by the Applicant and the same be held in trust for the relevant stakeholders of the Applicant. 13. Further, the distribution of the consideration received by the Applicant from the Proposed Transaction or withdrawal of any other amounts from the designated bank account be subject to further orders of this Tribunal. 14. With the aforesaid observation present CA No. 248 of 2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Creditors Committee but inspite of objection and dissent by the Appellant the Creditors Committee by majority vote share of 73.57% has approved the sale of TIFC, as per the Revised Resolution Framework. Hence, present cannot be said to be any case of violation of principles of natural justice. The Appellant being member of the Creditors Committee was well aware of all proceedings including highest bid received, approval of the highest bid by Creditors Committee and committee appointed by the Hon ble Supreme Court of Hon ble Justice (Retd.) D. K. Jain, who has also approved the sale by his order dated 08.03.2022. In view of the order dated 15.10.2018 passed in Company Appeal (AT) No. 346 of 2018, the Appellant could not have enforced its security given for securing repayment of the financial facility of Rs.400 Crores. The said issue is already engaging attention of Hon ble Supreme Court which have vide its order dated 29.07.2022 has stayed the judgment of this Tribunal dated 13.05.2022. Hence, the Appellant could not place any reliance on judgment of this Tribunal dated 13.05.2022. The assignment of rent receivables does not create any right in favour of the Appellant over an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained pending and no interim order was passed. Pursuant to the advertisement, although Expression of Interest was received from 16 applicants, only one bid was received which after negotiation was treated to be final bid of Rs.1080 Crores. In the Creditors Committee meeting held on 17.01.2021, final bid was approved. In the said meeting, the Appellant being the member of the Creditors Committee objected to very holding of the meeting to consider the proposal of sale but Appellant being only having voting share of 1.89% the resolution was passed with majority of 73.57%, the final approved bid after approval of the Board of Directors of the IL FS was placed before the Hon ble Justice (Retd.) D. K. Jain, who after hearing both the parties, on 08.03.2022 approved the sale/assignment of TIFC property with the rider that sale shall be subject to decision in application I.A. No. 2966 of 2020. 6. The submission of learned counsel for the Appellant which is much emphasized is that the order dated 23.09.2022 passed by the Adjudicating Authority approving the final bid is in violation of principles of natural justice. Learned counsel for the Appellant in support of his submission has relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein. 11. The long established English practice, which the High Courts in our country have adopted all along, accepts the said distinction between the necessary and the proper party in a writ of certiorari. The English practice is recorded in Halsbury's Laws of England, Vol. 11, 3rd Edn. (Lord Simonds') thus in paragraph 136 : The notice of motion or summons must be served on all persons directly affected, and where it relates to any proceedings in or before a court, and the object is either to compel the court or an officer thereof to do any act in relation to the proceedings or to quash them or any order made therein, the notice of motion or summons must be served on the clerk or registrar of the court, the other parties to the proceedings, and (where any objection to the conduct of the judge is to be made) on the judge..... . In paragraph 140 it is stated : On the hearing of the summons or motion for an order of mandamus, prohibition or certiorari, counsel in support begins and has a right of reply. Any person who desires to be heard in opposition, and appears to the Court or judge to be a proper per-son to be heard, is to be heard not wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceeding. A division Bench of the Bombay High Court in Ahmedalli v. M. D. Lalkaka3 laid down the procedure thus : I think we should lay down the rule of prac- tice that whenever a writ is sought challenging the order of a Tribunal, the Tribunal must always be a necessary party to the petition. It is difficult to understand how under any circumstances the Tribunal would not be a necessary party when the petitioner wants the order of the Tribunal to be quashed or to be called in question. It is equally clear that all parties affected by that order should also be necessary parties to the petition. A Full Bench of the Nagpur High Court in Kanglu Baula v. Chief Executive Officer4 held that though the elections to various electoral divisions were void the petition would have to be dismissed on the short ground that per-sons who were declared elected from the various constituencies were not joined as parties to the petition arid had not been given an opportunity to be heard before the order adverse to them was passed. The said decisions also support the view we have expressed. 12. To summarize: in a writ of certiorari not only the tribunal or authority whose order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as approved by the NCLAT vide the order dated March 12, 2020. Further, he explained that even though the aforesaid order has been challenged in Hon'ble Supreme Court, no stay has been granted against the said order by the Hon'ble Supreme Court. He highlighted that the issue that is being raised by HDFC Limited does not impact the process that is being followed by IL FS, given that there are already multiple challenges against the said order of the NCLAT as well. Hence, he requested the representative of HDFC Limited to allow the meeting of the COC to proceed and suggested that HDFC Limited may abstain from the proceedings/ voting if it so desires. There were no objections raised by any other COC Members. 10. The minutes further indicate that in the meeting of the Creditors Committee the representatives of the Appellant were present. As per the minutes of the Creditors Committee meeting dated 17.12.2021 following resolution was placed for voting: RESOLVED THAT the bid price/consideration of INR 1080,00,00,000 offered by Project Holding Seven (DIFC) Limited (which is an affiliate of Brookfield Private Capital (DIFC) Limited) for the proposed acquisition of all r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mumbai, along with certain assets situated therein (together Commercial Premises ) subject to satisfaction/obtainment of any and all compliances and approvals required under applicable laws. RESOLVED FURTHER THAT the Board hereby authorizes and approves the submission of the H1 Bid, to Hon'ble Justice D.K. Jain (Retd.) along with proposal regarding the sale/assignment of the Commercial Premises, as may be required for his consideration and evaluation. RESOLVED FURTHER THAT, without affecting the generality of and in addition to the authorities given by the Board to the Asset Sale Committee previously, the Asset Sale Committee of the Company be and are hereby authorized, jointly and/or severally, on behalf of the Company, to do all acts, deeds and things as may be necessary to give effect to the foregoing resolution, including but not limited to, undertake requisite disclosures or related compliances to inform the relevant regulators, stock exchanges, stakeholders as may be required, engage with the respective board of directors of relevant group companies, as may be required, to seek requisite authority and other relevant approvals, including approval from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor gap of four percent from the general standards, the ASC decided to submit the bid of 1080 Crores, which is approximately 86% of the Average Fair Market Value, to the Board for its approval. It is also highlighted that while recommending the acceptance of the Bid, the real estate deals in the vicinity in the recent past were also taken into account. 18. I have examined the Proposal in the light of the afore-stated facts and clarifications. Bearing in mind the factors, which have weighed with the ASC and the Board, for coming to the conclusion that the proposed transaction shall be in the interest of the stakeholders of the IL FS, coupled with the time constraints for achieving the overall resolution of the IL PS Group, I am inclined to agree with the decision of the Board that the Bid deserves to be accepted. 19. Nevertheless, without commenting on the merits of the Application filed by HDFC before the Hon'ble NCLAT, in which notice has been accepted on behalf of IL FS, and time has been sought to file Reply thereto, I am of the view that notwithstanding the fact that the Hon'ble NCLAT has not passed any interim order relating to the sale of the Commercial Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been laid down: While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence. 16. The law has been clearly laid down in the above judgment that distinction has to be made in stay of operation of an order and quashing of an order. The stay of an order means that the order which has been stayed would not be operative from the date of the passing of the stay order but it does not mean that the said order has been wiped out from existence. There can be no quarrel to the preposition laid down by the Hon ble Supreme Court in the above judgment. The above preposition is well settled. 17. We have noticed that this Tribunal vide order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble Supreme Court. We are of the view that outcome of the appeal before the Hon ble Supreme Court has to be implemented by all concerned. The adjudication of the said issue cannot operate as any fetter to the Adjudicating Authority to proceed with the approval of proposal submitted for sale of the TIFC property as per the Revised Resolution Framework approved by this Tribunal on 12.03.2020. The approval has been granted by the Adjudicating Authority for sale of assets in question. It is noted that although the facility agreement dated 25.06.2018 contemplated creation of mortgage of property in favour of the Appellant but in fact no mortgage was ever created. The adjudication which is pending before the Hon ble Supreme Court in the Civil Appeal No. 4708/2022 has to be implemented and approval of the sale of the assets for which highest bid of Rs.1080 Crores has been received cannot be faulted on the ground that adjudication is pending on the issue as to whether lender are required to reverse the amount debited or not, which according to the borrow were debited in violation of interim order dated 15.10.2018. 20. We may further notice that in view of the fact that judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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