TMI Blog2023 (11) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... , fraudulent or wrongful trading under the provision of the Code? - HELD THAT:- Taking into consideration the entire facts and circumstances prevailing at the time when the application was filed and at the time the order was passed that when the application was filed a serious question was raised about the legality and validity of BSA and the Adjudicating Authority was of the view that RP has already initiated transaction review audit of various transactions, therefore, the application was premature at that stage but the apprehension of the applicant therein was found legitimate and necessary directions were given to the RP. Since, the order dated 31.05.2023 by which the interim protection was granted to KCPL (Appellant) has been upheld by the Hon ble Supreme Court because the civil appeal filed against the order dated 31.05.2023 has been dismissed, therefore, it is directed that this order of stay dated 31.05.2023 shall continue till the decision of the applications filed under Section 45 and 66 of the Code by the RP. The Adjudicating Authority is further directed to make all efforts to decide as early as possible the applications filed under Section 45 and 66 of the Code by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP of Future Retail Limited Ors. (First Appeal), CA (AT) (Ins) No. 660 of 2023 titled as TNSI Retail Pvt. Ltd. Vs. Koinonia Coffee Pvt. Ltd. Anr. (Second Appeal), CA (AT) (Ins) No. 674 of 2023 titled as Vijay Kumar V. Iyer Vs. Koinonia Coffee Pvt. Ltd. Ors. (Third Appeal), one Intervention Application i.e. I.A. No. 2718 of 2023 and a Contempt Petition (AT) No. 27 of 2023 in CA (AT) (Ins) No. 572 of 2023 filed for the alleged violation of the order dated 31.05.2023 passed by this Tribunal in CA (AT) (Ins) No. 572 of 2023. 2. Bank of India filed an application i.e. C.P. (IB) No. 572/(MB)/2022 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short Code ) against the Future Retail Ltd. (in short FRL ) (Corporate Debtor). FRL was admitted into Corporate Insolvency Resolution Process (in short CIRP ) vide order dated 20.07.2022, moratorium was declared and Vijay Kumar V Iyer was appointed as Resolution Professional (in short RP ). 3. FRL established a High-End Supermarket in the name of Foodhall and has seven stores of Foodhall across Mumbai, Delhi and Bangalore. Koinonia Coffee Pvt. Ltd. (in short KCPL ) has been operating coffee shops in five of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Code. 11. With the above observations, I.A. No. 3439 of 2022 is disposed of in the above terms. 5. Aggrieved against the impugned order dated 28.04.2023, the first appeal has been filed in which the Appellant (KCPL) filed an I.A. No. 2284 of 2023 for an interim order which was allowed by this Tribunal vide order dated 31.05.2023 in which the facts of this case have been given in detail, therefore, the said order is reproduced as under:- 1. This Appeal is directed against the order dated 28.04.2023 passed by the National Company Law Tribunal, Mumbai Bench (hereinafter referred as to The Adjudicating Authority ) by which an application bearing IA No. 3439 of 2022 filed by the Appellant in which following prayers were made, namely, (i) take custody of the Foodhall business of the Corporate Debtor and to operate the same as a going concern; (ii) initiate investigation into the affairs of Foodhall and submit a report with respect to the legality of the affairs of Foodhall; (iii) Restrain the employees of the Corporate Debtor and the Respondent No.2 from interfering in or dealing with the property of the Corporate Debtor and for direction against the RP for a paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26; and 3.Foodhall@Palladium- Level 3, Palladium Mall, High Street Phoenix, S B Marg, Lower Parel (W) Mumbai 400 013 2. New Delhi 1.Foodhall@MKT- Lower Ground Floor, The Chanakya Intersection of Satya Marg African Avenue, Chankyapuri, New Delhi 110021 2.Foodhall@Two Horizon 1C 1D Ground Floor, Two Horizon Center, Sector 43, Gold Course Road, DLF Phase 5, Gurugram Haryana 122 002 5. During the concurrency of the First Agreement, the Appellant entered into an another Agreement on 19.03.2022 (for short The Second Agreement ) with FRL in which it was stipulated that the agreement would be effective from the date of execution and shall continue for a period of 55 months unless terminated earlier under the agreement. It was also agreed between the parties that they shall not have the right to terminate the Agreement before a period of 31 months from the date of execution (lock-in period). According to the Appellant the Lock-in period is to expire on 19.10.2024, counted from the date of execution of Second Agreement dated 19.03.2022. Clause 15 of the Agreement further provides that Neither this A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso but ultimately when he did not receive any reply from the RP, filed an application bearing IA No. 3439 of 2022 for the prayers which have already been mentioned in the beginning of this order. 9. While the said application was pending, the Appellant filed a Commercial Suit bearing Commercial Suit (L) No. 33922 of 2022 and also filed an application bearing Interim Application (L) No. 33926 of 2022 dated 21.10.2022 before the Hon ble High Court of Bombay against TNSI for injunction to restrain it from interfering in its possession as well as in operation of the business. In the said case, the Hon ble Bombay High Court, after taking the replies and hearing the parties, passed a detailed order on 07.12.2022. The operative part of the said order read as under : 12. I have heard Mr. Kamat, learned Advocate appearing on behalf of Applicant/Plaintiff and Mr. Sharma, the learned Advocate appearing on behalf of the Respondent/Defendant. I have also perused the papers and proceedings. The entire dispute revolves around the SIS Agreement entered into between the Plaintiff and FRL. At the outset, I must clarify that the Plaintiff has not accepted that by virtue of the BSA [ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make little difference. Admittedly there is an Agreement between FRL and the Plaintiff which cannot be terminated by FRL for the first 3 years (the Lock-in Period). Once this is the contractual arrangement arrived at between the parties, it makes little difference to the status to the Plaintiff. 14. The argument of Mr. Sharma that the Defendant is not answerable to the Plaintiff because the Plaintiff has not migrated as mentioned above, also holds no substance. Prima facie, the Defendant cannot claim any higher rights than those of FRL under the SIS Agreement. This is more so when takes into consideration that admittedly the Defendant is a 100% subsidiary of FRL. Even the contention of the Defendant that it is a direct lessee/licensee of the premises [in which the FOODHALLs are situated], would make no difference for granting adinterim relief. The Defendant may be the lessee/licensee, but that does not give a right to the Defendant to give a complete go-bye to the SIS Agreement entered into by the Plaintiff with FRL, and by ignoring the terms thereof. 15. For the aforesaid reasons, I am of the view that a strong prima facie a case is made out for grant of adinterim rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority, therefore, the Appellant filed an appeal bearing CA(AT) (Ins) No. 495 of 2023 before this Tribunal for a direction to the Adjudicating Authority to at least pronounce the order. The said appeal was dismissed on 21.04.2023. However, direction was issued to the Adjudicating Authority to pronounce the order at an early date. It is needless to mention that in the said appeal, there was also a prayer for grant of stay till order is pronounced by the Adjudicating Authority but the said prayer was not acceded to. 12. Be that as it may, after the order was passed on 21.04.2023, the Adjudicating Authority decided the application and passed the impugned order on 28.04.2023 which led to the filing of the present Appeal and while the present appeal was pending and ordered to be heard along with two other appeals which have been filed both by the RP and Respondent No.2, the Appellant received a threat again for the closure of operation in other two stores located in NCR, details of which have already been mentioned in the 4th Paragraph of this order. As a result, the Appellant has prayed in this appeal that before hearing the main appeal and decided the same on merits in one way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed an email to the Appellant dated 26.04.2022 conveying that the Vendor Codes would be migrated. 18. It is further submitted that the CEO of the Corporate Debtor addressed another email dated 04.07.2022 to the Appellant revising the revenue model of the Appellant up to 90%. It is further argued by Counsel for Respondent No.2 that the Appellant had the knowledge of BSA and was not taken by surprise because he was asked that there would be an exchange of draft of the proposed Agreement with the Appellant. It is submitted that the contention of the Appellant that the BSA is only an eyewash and has been created between the FRL and its 100% subsidiary is not correct. He has then submitted that the Appellant had earlier tried to obtain injunction from the Hon ble Bombay High Court but it was not given injunction insofar as possession is concerned. Thereafter, he tried to obtain injunction in the appeal bearing CA(AT) (Ins) No. 495 of 2023 filed before this Tribunal but no injunction was granted. It is thus submitted that the Appellant has tried it again for the purpose of obtaining injunction. In this regard, he has relied upon a decision of the Hon ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t's rights, the balance of convenience tilting in favour of plaintiff; and (iii) clear possibility of irreparable injury being caused to plaintiff if the temporary injunction is not granted. In addition, temporary injunction being an equitable relief, the discretion to grant such relief will be exercised only when the plaintiff's conduct is free from blame and he approaches the court with clean hands. 20. Counsel for Respondent No.2 has then argued that if the main contract breaks down due to any reasons then the secondary contract would follow. This argument has been raised on the ground that once the Lessor has terminated the lease, there is no question of Appellant being retained as a Vendor in the Foodhall. In this regard, he has relied upon a decision of the Hon ble Delhi High in Smt. Sharda majahan Vs. Maple Leaf Trading International P. Ltd. (2007) 139 Comp Cas 718 and has referred to para 30 which is reproduced as under: 30. The facts of the present case show that Section 56 of the Contract Act is applicable. The petitioner had entered into contract in 1999 with the respondent. Immediately, thereafter in 1999 itself after raids by the Enforcement Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alued transaction. The said applications are pending before the Adjudicating Authority. 22. It is further submitted that he has also received second report from the Financial Auditor on 22.05.2023 and after the queries raised by him, the transaction auditor has submitted the revised report on 29.05.2023 which includes the report regarding the genuineness of BSA as well. He has submitted that at present the RP is examining the said report because as per the provisions of the Code, RP has to first form an opinion himself to find out as to whether there exist material for avoidance transaction etc., and once he forms an opinion then he would bring it to the notice of the Adjudicating Authority by way of an appropriate application which shall take some time. 23. We have heard counsel for parties and perused the record with their able assistance. 24. From the facts of the case narrated hereinabove, one thing is clear that the Appellant has two subsisting Agreements in his favour i.e. first Agreement and Second Agreement on the basis of which he has been occupying the space in Foodhall as a Vendor. It appears that the problem started in this case, when the Bank of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Foodhall@Two Horizon. 28. With these observations and directions, the present application is hereby disposed of. No order as to costs. 6. The aforesaid order dated 31.05.2023 was challenged in appeal before the Hon ble Apex Court by TNSI Retail Pvt. Ltd. (Appellant in second appeal). Civil Appeal No. 4874 of 2023 was dismissed by the Hon ble Supreme Court vide its order dated 11.08.2023 and the said order read as under:- Learned Senior Advocate appearing on behalf of the appellant TNSI Retail Private Limited seeks permission to withdraw the present appeal and states that the appellant TNSI Retail Private Limited will raise all pleas and contentions as available in law before the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, as the matter is listed before the NCLAT on 16.08.2023. Recording the aforesaid, the present appeal is dismissed. Pending application(s), if any, shall stand disposed of. 7. Second appeal has been filed by TNSI Retail Pvt. Ltd. against KCPL the RP of the Corporate Debtor against the same impugned order dated 28.04.2023 alleging that it is aggrieved against the observation of the Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that In case the RP finds any transaction falling under the ambit of preferential, undervalued, extortionate, fraudulent or wrongful trading after perusal of the final Transaction Audit Report, the RP is duty bound to file an appropriate application before this Tribunal under relevant provisions of the Code. After obtaining the transaction audit report, the RP has filed I.A. No. 3457 of 2023 under Section 45 of the Code for avoidance of undervalued transaction in which notice has been issued and date has been fixed and also an application under Section 66 of the Code on 14.08.2023 for fraudulent or wrongful trading which has not been assigned any application number so far and notice has also not been issued. It is submitted that it would be just and expedient to dispose of all the matters pending before this Tribunal with an appropriate direction to the Adjudicating Authority seisen of matter to decide the applications filed by the RP both under Section 45 and 66 of the Code within a time prescribed by this Appellate Tribunal because the application filed by KCPL which is the root cause of the aforesaid litigation pending in this Tribunal was disposed of only on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, nothing survives in this appeal. 16. We have heard Counsel for the parties in respect of the first appeal and take into consideration the entire facts and circumstances prevailing at the time when the application was filed and at the time the order was passed that when the application was filed a serious question was raised about the legality and validity of BSA and the Adjudicating Authority was of the view that RP has already initiated transaction review audit of various transactions, therefore, the application was premature at that stage but the apprehension of the applicant therein was found legitimate and necessary directions were given to the RP in Para 10 of the impugned order. 17. In view of the aforesaid facts and circumstances, the present appeal is therefore disposed of. Since, the order dated 31.05.2023 by which the interim protection was granted to KCPL (Appellant) has been upheld by the Hon ble Supreme Court because the civil appeal filed against the order dated 31.05.2023 has been dismissed, therefore, it is directed that this order of stay dated 31.05.2023 shall continue till the decision of the applications filed under Section 45 and 66 of the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shwant Place Community Centre, Chanakyapuri, New Delhi. The Appellant executed the agreement with Future Retial Ltd. The Applicant is the developer of the entire multiplex under the concession agreement executed with New Delhi Municipal Council (NDMC) and for the purpose of its operation and management. The Applicant had to pay a huge monthly concession fee of Rs. 1,46,06,748/- to the NDMC. This concession agreement of the Applicant with the NDMC is on PPP basis, the essence thereof is that the Applicant will pay the said concession fee upon earning/operating from the said multiplex. It is further submitted that though the Respondent No. 2/other vendors, who were operating from the said shop no. LG-01, Basement-01, the Chanakya, Yashwant Place Community Centre, Chanakyapuri, New Delhi have removed their stocks, articles, belongings, personnel therefrom but it is only the Appellant herein whose goods are laying in the said space as a result of which the Applicant is not in a position to lease out the entire area admeasuring 14140 sq. ft. to any other party. It is also submitted that out of the area admeasuring 14140 sq. ft., the Applicant is generating revenue almost 50 % of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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