TMI Blog2023 (11) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... be pursued by Successful Auction Purchaser. In the present case, the only issue concerning as to whether Successful Auction Purchaser can pursue the avoidance application. The question as to whether the Successful Resolution Applicant can be allowed to prosecute the application came for consideration before this Tribunal in Kapil Wadhawan Vs. Piramal Capital Housing Finance Ltd. Ors. [ 2023 (5) TMI 663 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ]. In the above case also, Successful Resolution Applicant filed an application for substituting its name in place of Administrator/Resolution Professional which was allowed by the Adjudicating Authority. The Suspended Director of the Corporate Debtor had challenged the Order in this Tribunal. This Tribunal after considering the respective submissions, provisions of the Code as well as Regulations and the Judgment of Delhi High Court in TATA Steel BSL Limited Vs. Venus Recruiter Pvt. Ltd. [ 2023 (1) TMI 644 - DELHI HIGH COURT ] held that Any positive monetary recovery received by the Corporate Debtor as a result of orders passed in relation to the Avoidance Transactions hall be distributed, net of costs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession of Interest. The Appellant as suspended director of the Corporate Debtor also submitted a Resolution Plan. Resolution Professional informed the Appellant that Appellant is ineligible under Section 29A (h) of the Code to submit a Resolution Plan. The Appellant filed an Application being C.A. No. 58(PB)2019 challenging the decision of the Resolution Professional to declare him ineligible which application came to be rejected by the Adjudicating Authority vide Order dated 02nd April 2019. Order of the Adjudicating Authority was challenged by the Appellant before this Tribunal in C.A.(AT) Ins. No. 1498 of 2019 which appeal was also dismissed by this Tribunal vide its order/judgment dated 19.12.2019. 4. On the basis of audit report, the Resolution Professional filed an I.A. No. 1090 of 2018 under Section 43, 45 and 66 of the Code against 28 Respondents in which the Appellant was also Respondent No. 25. No plan having been approved in the CIRP, the Adjudicating Authority passed an order dated 03rd April, 2019 directing for liquidation of the corporate debtor. In the Liquidation, the Liquidator issued public announcement inviting expression of interest for acquisition of the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable to Successful Auction Purchaser. It is submitted that the order passed by the Adjudicating Authority is unreasoned order and deserves to be set aside on this ground alone. It is further submitted that issue which is involved in the present case is pending before the Hon ble Supreme Court in C.A. No. 1632-1634 of 2022, Piramal Capital and Housing Finance Limited Vs. 63 Moons Technologies Limited . 8. Learned Sr. Counsel for the Respondents refuting the submissions of Learned Sr. Counsel for the Appellant submits that Appellant as Suspended Director has no locus to challenge the Impugned Order by which order only permitted the substitution of Respondent No. 1 in place of Resolution Professional who had earlier filed the avoidance application. It is submitted that the Appellant by several proceedings have been challenging every stage of liquidation which challenge were repelled upto the Hon ble Supreme Court and the Appellant cannot be said to be aggrieved by the Order by which Respondent No. 1 has been substituted in place of Resolution Professional to prosecute the avoidance application. It is submitted that acquisition plan itself contemplated that Successful Auction Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Adjudicating Authority, Hon ble NCLAT and Hon ble Supreme Court, wherein it was held that, the ex-promoter has become ineligible in terms of Section 29A(h) of the Code as well as proviso to sub section (f) of Section 35 of the Code. 11. In the Appeal itself, the Appellant has come up with the case that in the acquisition plan, it was successful auction purchaser who was to get the benefit of avoidance application. In the Appeal in paragraph 9.8, following grounds have been urged by the Appellant: 9.8 BECAUSE in the Acquisition Plan, which was approved by the Hon ble NCLT, specific provision was made by the Auction Purchasers to grab the proceeds from pending applications relating to preferential transactions which is in the teeth of the intent and objects of the Code as the benefit ought to go to the CoC. 12. The Appellant s case itself in the Appeal is that Successful Auction Purchaser under the acquisition plan has been provided to take benefit of avoidance application. When the acquisition plan submitted by the Respondent No. 2 to 5 has been approved by the Adjudicating Authority and the Appeal filed by the Appellant before this Tribunal as well as before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2022. Regulation 44A is as follows: 44A Treatment of avoidance of transaction. The liquidator shall, on the advice of the consultation committee, provide in the application along with the final report filed under regulation 45 for the manner in which proceedings in respect of avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, will be pursued after the dissolution or closure of liquidation process and the manner in which the proceeds, if any, from such proceedings shall be distributed. 17. The Regulation 44A deals with treatment of transaction avoidance which itself contemplates that there can be a position regarding prosecution of avoidance application even after resolution or closure of liquidation process and the manner in which the proceeds, if any, from such proceedings shall be distributed. Regulation 44A relied on by Learned Counsel for the Appellant does not support his submission that avoidance application cannot be pursued by Successful Auction Purchaser. 18. Learned counsel for the Appellant has also relied on Insolvency Law Committee Report submitted on 20th February, 2020. Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter this, if the resolution professional or liquidator then fails to file an application, then the creditor or the CoC may file the application itself. 2.4. The Committee also considered if the successful resolution applicant should be permitted to file such applications. However, it was agreed that this would possibly result in the resolution applicant being entitled to a return that was not factored in at the time of submitting their bid. Therefore, the Committee decided that the resolution applicant should not be permitted to file applications against improper trading or applications to avoid transactions. 20. The above report only provides that in event the Resolution Professional or Liquidator fail to file the avoidance application, the application can be filed by the creditors or the CoC. The report further stated that Successful Resolution Applicant cannot be allowed to file avoidance application. There cannot be any quarrel to the recommendations made in the Report. In the present case it is not a case that avoidance application has been filed by the Successful Auction Purchaser. The Applications were filed by the Resolution Professional well within time hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plan, the Successful Resolution Applicant has provided that it intends to pursue, on a best efforts basis, the application(s) filed by the Administrator before this Hon'ble Tribunal in respect of these Avoidance Transactions (as defined in the Resolution Plan). Any positive monetary recovery received by the Corporate Debtor as a result of orders passed in relation to the Avoidance Transactions hall be distributed, net of costs and expenses (including taxes), to the Financial Creditor pro rata to the extent the Financial Debt for Financial Creditors, provided that, the CoC may in its discretion adopt a different manner of distribution (which may take into account the order of priority amongst Financial Creditors as laid down in Section 53(1) of the Code) and such decision of the CoC shall be accepted by the Successful Resolution Applicant, subject to there being no change in the Total Resolution Amount. ii. Under Section 2.13.3 of Part A of the Resolution Plan, the Successful Resolution Applicant ascribes value of INR 1 in respect of any transactions that may be avoided/ set aside by this Hon'ble Tribunal in terms of Section 66 of the Code. Accordingly, any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waives service and accepts notice on behalf of the respondent No.1 Piramal Capital and Housing Finance Limited. Notice will be served by all modes, including dasti, to all unrepresented respondents on steps being taken within a period of ten days from today. Notwithstanding pendency of the present appeal, proceedings under Sections 43 to 66 of the Insolvency and Bankruptcy Code, 2016 can continue. 23. The Judgment of this Tribunal dated 15th May, 2023 thus has not been stayed rather the Hon ble Supreme Court has permitted the Application under Section 43 and 46 to go on. 24. The Judgment of this Tribunal in Kapil Wadhawan has categorically held that Successful Resolution Applicant can be allowed to prosecute the avoidance application, the same analogy shall be applicable with regard to prosecution by the Successful Auction Purchaser in liquidation estate when the asset of the corporate debtor has been sold as a going concern and acquisition plan submitted by Successful Auction Purchaser has been approved by the Adjudicating Authority. We have already noticed that in the acquisition plan it is Successful Auction Purchaser who has been provided to take benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed and adequately sustained. 12. In exercise of the power of judicial review, the concept of reasoned orders/actions has been enforced equally by the foreign courts as by the courts in India. The administrative authority and tribunals are obliged to give reasons, absence whereof could render the order liable to judicial chastise. Thus, it will not be far from absolute principle of law that the Courts should record reasons for its conclusions to enable the appellate or higher Courts to exercise their jurisdiction appropriately and in accordance with law. It is the reasoning alone, that can enable a higher or an appellate court to appreciate the controversy in issue in its correct perspective and to hold whether the reasoning recorded by the Court whose order is impugned, is sustainable in law and whether it has adopted the correct legal approach. To sub-serve the purpose of justice delivery system, therefore, it is essential that the Courts should record reasons for its conclusions, whether disposing of the case at admission stage or after regular hearing. 26. There can be no dispute to the preposition laid down by the Hon ble Supreme Court in the above case. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Nos. 1632-1634/2022, C.A. Nos. 1707-1712/2022, D.NO. 6667/2022 C.A. No. 2567 of 2022 1. Heard learned senior counsel for the parties. 2. The application for permission to file the appeal is allowed. 3. Admit. 4. List these matters on 10.05.2022 for final disposal. 5. In the meantime, operation of the impugned order passed by the National Company Law Appellate Tribunal shall remain stayed. 6. The parties are directed to complete the pleadings and file compilation of relevant documents, in the meanwhile. 28. The issue as to whether the Successful Auction Purchaser can prosecute the avoidance application in place of Resolution Professional by substituting its name was not subject matter of the issue in the aforesaid case of 63 Moons Technologies Ltd. hence we are of the view that on the ground that civil appeal is pending before the Hon ble Supreme Court, hearing of the matter need not be deferred. 29. In view of the fore-going discussions, we are of the view that no grounds have been made out at the instance of the Appellant to interfere with the order impugned. The Appeal is devoid of any merit and the same is dismissed, accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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