TMI Blog2024 (2) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... REME COURT] - HELD THAT:- Hon ble Supreme Court exercised its jurisdiction under Article 142 of the Constitution of India directing that 90 days extended period be reckoned from the date of the Judgment - Another direction issued in the above case was that the IRP to complete the CIRP process within 90 days and it will be open to the IRP to invite revised resolution plan only from Suraksha Realty and NBCC respectively who were finally bidders and had submitted resolution plan on the earlier occasion. Judgment of Hon ble Supreme Court in Jaypee Infratech Limited Vs. Axis Bank Ltd. [ 2020 (2) TMI 1259 - SUPREME COURT] - HELD THAT:- Hon ble Supreme Court held that approval of the Resolution Plan is exclusively in the domain of the commercial wisdom of the CoC, the scope of judicial review is circumscribed. After noticing the Judgments of the Hon ble Supreme Court which was delivered in the CIRP of the Corporate Debtor and certain background facts, now the question which have been framed are now considered. Whether Appellants have locus to challenge the order dated 07.03.2023 passed by the Adjudicating Authority approving the Resolution Plan of Suraksha Realty? - HEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment of claim of YEIDA towards farmers' compensation and other claims of the YEIDA being treated as Operational Creditor and having offered only Rs. 10 lacs towards satisfaction of their dues violates provision of subsection (2) of Section 30 of the Code and the Resolution Plan deserves to be set aside on this ground alone? - Whether YEIDA is a Secured Creditor of the Corporate Debtor? - HELD THAT:- The issues pertaining to the claim of YEIDA and their ground to challenge the impugned order approving Resolution Plan are best suited to be examined and decided in the appeal filed by YEIDA where impugned order is under challenge and grounds have been raised - the issues raised by the Appellant need to be examined and considered in the appeal filed by YEIDA and there is no necessity to consider those issues in this appeal which is filed by the Suspended Promoter and Director of the Corporate Debtor. Answer to both the questions is recorded accordingly. Whether the Resolution Plan violates provision of Section 30(2)(e) of the Code in removing the right of subrogation to the guarantors whereas under Indian Contract Act a surety or guarantor has right to subrogation and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority ought not to have been approved the Resolution Plan and only course available for the Adjudicating Authority was to send the plan back to the CoC for reconsideration? - Whether the Adjudicating Authority in granting various reliefs and concessions has exceeded the jurisdiction vested in the Adjudicating Authority and by issuing various directions, Adjudicating Authority travelled beyond its jurisdiction and further no direction could have been given to statutory authority as has been directed in the impugned order, which is impermissible? - HELD THAT:- The SRA has prayed for issuance of necessary directions to SEBI, relevant stock exchanges and MCA for expediting the delisting of shares and take necessary actions in a time bound manner as applicable under the prevailing laws in order to implement the Resolution Plan. The above direction is only for the purpose of implementing the Resolution Plan and does not violate any statutory provisions. The use of expression as applicable under the prevailing laws clearly indicate that the SRA is not seeking any relief and concession in violation of any applicable law. The objection raised by the Appellant thus has no merit - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oach the SRA/Monitoring and Implementation Committee for their entitlement, for which they are entitled as per the Resolution Plan. There are no ground in these appeals to interfere with the impugned order dated 07.03.2023 passed by the Adjudicating Authority at the instance of the Appellants - appeal dismissed. - [ Justice Ashok Bhushan ] Chairperson And [ Barun Mitra ] Member ( Technical ) For the Appellant : Mr. Krishnan Venugopal, Sr. Advocate with Mr. Anupam Chaudhary, Mr. Sarvesh Mehra, Mr. Krishnan Aggarwal, Mr. Avinash Mathews, Advocates For the Respondents : Mr. Sumant Batra, Mr. Sanjay Bhatt, Mr. Sarthak Bhandari, Ms. Mehreen Garg, Advocates for IMC of JIL/R-1. Mr. Krishnendu Datta, Sr. Advocate with Mr. Mahesh Agarwal, Ms. Geetika Sharma, Ms. Eshna Kumar, Mr. Sagar Bansal, Ms. Varsha Himatsingka, Mr. Rajat Sinha, Advocates for SRA, R- 3 4. Mr. Tushar Jain, Mr. Vaibhav Chowdhary, Mr. Mukesh Kumar, Advocates in IA 2643/2023. Mr. Parth Tandon and Mr. Harsh Sharma, Advocates for Applicant in I.A. 3218/2023. Mr. Amit K. Mishra, Mr. Akshat Hansaria, Advocates for Homebuyers/Intervenors. Mr. Vierat K. Anand, Ms. Srishty Kaul, Mr. Harish Nadda, Advocates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expressway against right to collect toll charges for a period of 36 years and right to develop 6177 acres at actual compensation cost. Jaypee Infratech Ltd. was constituted as SPV for the project and by agreement dated 19.10.2007, all the rights and obligations under the Concession Agreement were assigned to the Corporate Debtor. On 11.07.2008, Taj Expressway renamed as Yamuna Expressway Industrial Development Authority (hereinafter referred to as YEIDA ). Finances were obtained from consortium of banks on mortgage of immovable land and pledge of 51% shareholding of JAL. IDBI Bank which was one of the lenders filed Section 7 application against the Corporate Debtor which was admitted by NCLT, Allahabad Bench by order dated 09.08.2017. Several Writ Petitions were filed before the Hon ble Supreme Court under Article 32 by the Homebuyers for protection of their interest. One of the Writ Petitions was Chitra Sharma Ors. vs. Union Of India Ors.- Writ Petition No.744 of 2017 in which Writ Petition several orders were passed by the Hon ble Supreme Court permitting IRP to take over the management of JIL. Orders were also passed against JAL. Hon ble Supreme Court passed final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Plan was submitted by Suraksha Realty dated 07.06.2021 with addendum dated 09.06.2021. CoC in its meeting dated 23.06.2021 approved the Resolution Plan of Suraksha Realty by 98.66% voting. The IRP filed an IA 2836 of 2021 before the Adjudicating Authority on 07.07.2021 for approval of Suraksha Realty s Resolution Plan. On 30.07.2021, JAL filed objection to Suraksha s Resolution Plan. Shri Manoj Gaur, Promoter/ Director has also filed his objection before the NCLT to the Suraksha Realty s Resolution Plan. IRP filed his rejoinder to the objection to Suraksha Realty s Resolution Plan. IDBI Bank has also filed its reply to the objection submitted by Promoter/Director. IRP filed additional documents and additional affidavit. Compilation of documents was also filed by JAL. Adjudicating Authority heard the parties on several occasions. Adjudicating Authority on 07.03.2023 pronounced the order approving the Resolution Plan of Suraksha Realty. Several other applications filed by homebuyers were decided by the same order. IA No.2836 of 2021 filed by the IRP was allowed and other applications were dismissed. Challenging the order dated 07.03.2023, Company Appeal (AT) (Insolvency) No.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding on all stakeholders including guarantors, the Appellants were also guarantors whose interest being affected by the Resolution Plan and they have every locus to challenge the Resolution Plan. Elucidating his submission, Learned Senior Counsel for the Appellant contends that the duties cast upon the Adjudicating Authority under Section 31(1), that the plan may be approved only when it is satisfied that the Resolution Plan complies with the mandatory requirements of Section 30(2). Appellants are fully entitled to point out that the Resolution Plan does not comply with Section 30(2) and deserves to be interfered by the Adjudicating Authority in exercise of limited power of review considered to it as laid down by the Hon ble Supreme Court in various judgments including the judgment of the Hon ble Supreme Court in Essar Steel India Ltd. Committee of Creditors vs. Satish Kumar Gupta- (2020) 8 SCC 531 . 4.2. It is submitted that the Appellants have raised objection regarding future dues of Income Tax Department. It is submitted that the revenue subsidy on account of the land for development given by YEIDA to JIL could not be written off in the Resolution Plan as these were future ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to the clauses of Concession Agreement under which concession is liable to pay the actual compensation paid to landowners in respect of the land under the Yamuna Expressway and land for development. YEIDA being a Secured Creditor, Suraksha Realty s Resolution Plan could not have treated them as a mere Operational Creditor and allocated only Rs.10 lakhs to it. YEIDA has filed a claim of Rs.6,111.60 Crores which includes an amount of Rs.1689 Crores payable towards AFC. Consent of YEIDA was not obtained and Resolution Plan of Suraksha Realty has unilaterally sought to modify the Concession Agreement which is impermissible. Resolution Plan transferred the land parcels to SPVs which is impermissible. It is submitted that under the provisions of the Indian Contract Act, 1872, a surety or guarantor has a right to subrogation. The liability of a surety is co-extensive with that of the principal debtor and, upon the discharge of principal debtor from its obligation to repay the debt, the liability of surety also gets extinguished. Suraksha Realty is being unjustly enriched by taking over an asset rich company at a hefty haircut while depriving JAL and Shri Manoj Gaur of their statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that suspended board members have locus to challenge the resolution plan. 5.1. Coming to the submission made by Counsel for the Appellant with regard to claim of Income Tax Department, it is submitted that the said issue has already been decided by this Tribunal while deciding Company Appeal (AT) (Insolvency) No.549 of 2023 filed by Deputy Commissioner of Income Tax. Appeal of Income Tax Department having been disposed by order dated 26.09.2023 by which order the plan approval was upheld. It is not open for the Appellant to raise any issue pertaining to the claim of Income Tax Department. Counsel for the Respondent has referred to observations made in paragraphs 29 and 30 of the judgment dated 26.09.2023. It is submitted that although Civil Appeal No.7412 of 2023 has been filed by Suraksha Realty which appeal with respect to liability of Rs.33,000 Crores of Income Tax Authority, the treatment of liability of Rs.33,000 Crores in any view of the matter the judgment of this Tribunal dated 26.09.2023 has not been set aside. It is not open to the Appellant to re-open the issue of liability of the Income Tax Department. Appellant by making submission is seeking review of the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Resolution Plan expressly provides that the liability of guarantors of JIL, both corporate and personal, shall survive while simultaneously extinguishing the right of subrogation of such guarantors. The said clause is in accordance with the provisions of the Code and the law. Personal guarantor has no right of subrogation nor they are entitled to recover its dues from the Corporate Debtor, after approval of the Resolution Plan. 5.5. With regard to submission of 758 acres of land, it is submitted that 758 acres of land was released from encumbrances was fully taken into consideration by the SRA while submitting the Resolution Plan. The Resolution Plan submitted by Suraksha Realty did not contravene Section 30(2) of the Code. The Appellant being ineligible under Section 29A which has already been pronounced by the Hon ble Supreme Court in Jaypee Kensington (supra), they cannot be allowed backdoor entry. It is submitted that the commercial wisdom of the CoC is of paramount importance and cannot be allowed to question by the Appellant in this Appeal. It is submitted that the Adjudicating Authority cannot enter into any quantitative analysis to adjudge whether the prescription of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng capital infusion for the project completion is Rs.20,936.70 Crores. Moreover, there is no provision in the Code to match the liquidation value. The SRA has duly considered Rs.758 acres of land. In the 17th meeting of the CoC held on 12.04.2021, IRP has presented and circulated a detailed chart on findings of Hon ble Supreme Court in the Jaypee Kensington (supra) which clearly mentioned the land of 758 acres. In the 18th CoC meeting, IRP presented the liquidation value calculations, which included 758 acres of land earlier mortgaged to JAL lenders. Counsel for the Appellant submitted that the guarantor s liability does not dissolve more so in the Resolution Plan. It is specifically provided that such liability shall continue. 6.3. Right of subrogation cannot be given to the guarantors of the Corporate Debtor which has already been considered and rejected by the Hon ble Supreme Court in various judgments. 6.4. With regard to reliefs and concessions, SRA has clearly provided in the plan that the Resolution Applicant undertake that they will implement this plan whether or not the reliefs and concessions are granted. Reliefs do not have any bearing on the implementation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir units to be given possession for the last several years and by appeal filed by promoters/directors, process is being delayed. Promoters/ directors have been responsible for miserable conditions of the homebuyers and their appeals require to be dismissed. 9. We have considered the submissions of the Counsel for the parties including the intervenors. 10. From the submissions of the Counsel for the parties and materials on record, following issues arise for consideration in these Appeals:- (i) Whether Appellants have locus to challenge the order dated 07.03.2023 passed by the Adjudicating Authority approving the Resolution Plan of Suraksha Realty? (ii) Whether the treatment of Income Tax dues in the Resolution Plan where they have been treated as Operational Creditor and offered only Rs. 10 Lacs violates the provision of sub-section (2) of Section 30? (iii) Whether the treatment of claim of YEIDA towards farmers' compensation and other claims of the YEIDA being treated as Operational Creditor and having offered only Rs. 10 lacs towards satisfaction of their dues violates provision of subsection (2) of Section 30 of the Code and the Resolution Plan deserves to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited an amount of Rs. 750 Crores in pursuance of the direction of the Hon ble Supreme Court. In the aforesaid writ petition, notices were issued to JAL as well as promoters, directors of the JAL/JIL who appeared before the Hon ble Supreme Court. Hon ble Supreme Court in Chitra Sharma Case, took the view that promoters of JAL/JIL are ineligible to participate in the Resolution Process of the Corporate Debtor. Observations to the above effect were made by the Hon ble Supreme Court in Paragraph 39 of the Judgment: 39. Clauses (c) and (g) of Section 29-A would operate as a bar to the promoters of JAL/JIL participating in the resolution process. Under clause (c), a person who at the time of the submission of the resolution plan has an account which has been classified a non-performing asset under the guidelines of RBI or of a financial regulator is subject to a bar on participation for a stipulated period. Under clause (g), a person who has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50.6. The amount of Rs 750 crores which has been deposited in this Court by JAL/JIL shall together with the interest accrued thereon be transferred to NCLT and continue to remain invested and shall abide by such directions as may be issued by NCLT. Hon ble Supreme Court exercised its jurisdiction under Article 142 in reviving the CIRP of the Corporate Debtor. 15. Next Judgment which need to be noticed in the CIRP of the Corporate Debtor is judgment of the Hon ble Supreme Court in Jayprakash Associates Limited Vs. IDBI Bank, (2023) 2 SCC 328. On an application filed by the IDBI Bank, NCLT has granted exclusion of certain time in the CIRP of the Corporate Debtor. In an appeal filed before the NCLAT, NCLAT directed certain period to be excluded. The Judgment of the NCLAT was challenged in the Hon ble Supreme Court by JAL which Appeal was disposed of by Hon ble Supreme Court vide its judgment and order dated 06.11.2019. Hon ble Supreme Court exercised its jurisdiction under Article 142 of the Constitution of India directing that 90 days extended period be reckoned from the date of the Judgment. In paragraph 19 and 20, following was held: 19. Indeed, the third proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was decided by the Hon ble Supreme Court by the aforesaid judgment dated 26.02.2020. Hon ble Supreme Court in its judgment affirmed the order passed by the NCLT and held that transaction in question are hit by Section 43 of IBC. In paragraph 30 of the Judgement, following was observed: Summation: The transactions in question are hit by Section 43 IBC. 30. For what has been discussed hereinabove, we are clearly of the view that the transactions in question are hit by Section 43 of the Code and the adjudicating authority, having rightly held so, had been justified in issuing necessary directions in terms of Section 44 of the Code in relation to the transactions concerning Properties Nos. 1 to 6. Nclat, in our view, had not been right in interfering with the well-considered and justified order passed by NCLT in this regard. 18. The consequence of judgment of the Hon ble Supreme Court in above case was that 758 acres land became encumbrance free land which came to be vested in the corporate debtor. 19. In consequence to the order passed by the Hon ble Supreme Court in Jayprakash Associates Limited Vs. IDBI Bank Limited dated 06.11.2019 as noted above, the revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the exclusive domain of the CoC. Hon ble Supreme Court noticed judgment of the K Shashidhar Vs. Indian Overseas Bank, (2019) 12 SCC 150, while extracting the relevant paragraphs of the K. Shasidhar Judgment, following was held in paragraph 97.2: 97.2. In K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] , while setting out the relevant extracts from the said Report, this Court exposited on the primacy of the commercial wisdom of the Committee of Creditors in the corporate insolvency resolution process in the following terms : (SCC pp. 183-84, paras 52-53) 52. As aforesaid, upon receipt of a rejected resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I B Code has been ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd making a decision : a creditors committee, where all financial creditors have votes in proportion to the magnitude of debt that they hold. In the past, laws in India have brought arms of the Government (legislature, executive or judiciary) into this question. This has been strictly avoided by the Committee. The appropriate disposition of a defaulting firm is a business decision, and only the creditors should make it. 21. Hon ble Supreme Court further referred to and relied on three judge bench of the Essar Steel India Limited Vs. Satish Kumar Gupta, (2020) 8 SCC 531. Judgment of Essar Steel India Limited was noticed in paragraph 97.3 and 97.4 which is to the following effect: 97.3. In Essar Steel [ Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] , a three-Judge Bench of this Court surveyed almost all the relevant provisions concerning corporate insolvency resolution process; and, as noticed above, explained the assignments of different role players in this process. In that context, this Court again explained the primacy endowed on the commercial wisdom of the Committee of Creditors and reasons therefor, with a further deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Gupta, (2020) 8 SCC 531 : (2021) 2 SCC (Civ) 443] , SCC pp. 577, 580-81 584, paras 54, 59, 60 64) 54. Since it is the commercial wisdom of the Committee of Creditors that is to decide on whether or not to rehabilitate the corporate debtor by means of acceptance of a particular resolution plan, the provisions of the Code and the Regulations outline in detail the importance of setting up of such Committee, and leaving decisions to be made by the requisite majority of the members of the aforesaid Committee in its discretion. *** 59. Even though it is the resolution professional who is to run the business of the corporate debtor as a going concern during the intermediate period, yet, such resolution professional cannot take certain decisions relating to management of the corporate debtor without the prior approval of at least 66% of the votes of the Committee of Creditors. 60. Thus, it is clear that since corporate resolution is ultimately in the hands of the majority vote of the Committee of Creditors, nothing can be done qua the management of the corporate debtor by the resolution professional which impacts major decisions to be made in the interre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 103.8. Having said so, this Court also proceeded to define the strict limits of the jurisdiction of NCLT/Nclat while dealing with the matter relating to approval of resolution plan in the following passages : (K. Sashidhar case [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222] , SCC pp. 185-87, paras 55-58) 55. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan as approved by the requisite per cent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f not approving the resolution plan or rejecting the same, justiciable. This position is reinforced from the limited grounds specified for instituting an appeal that too against an order approving a resolution plan under Section 31. First, that the approved resolution plan is in contravention of the provisions of any law for the time being in force. Second, there has been material irregularity in exercise of powers by the resolution professional during the corporate insolvency resolution period. Third, the debts owed to operational creditors have not been provided for in the resolution plan in the prescribed manner. Fourth, the insolvency resolution plan costs have not been provided for repayment in priority to all other debts. Fifth, the resolution plan does not comply with any other criteria specified by the Board. Significantly, the matters or grounds be it under Section 30(2) or under Section 61(3) of the I B Code are regarding testing the validity of the approved resolution plan by CoC; and not for approving the resolution plan which has been disapproved or deemed to have been rejected by CoC in exercise of its business decision. 58. Indubitably, the inquiry in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion professional during the corporate insolvency resolution period; or the debts owed to the operational creditors have not been provided for; or the insolvency resolution process costs have not been provided for repayment in priority; or the resolution plan does not comply with any other criteria specified by the Board. 24. It may also be noticed that in Jaypee Kensington case under heading Point C Supreme Court considered under the heading matters related with the land providing agency YEIDA while considering the objections raised by YEIDA to the Resolution Plan the Hon ble Supreme Court held that concessionaire agreement could not have been tinkered without approval and consent of the YEIDA. In paragraph 141 of the Judgment, following has been held: 141. The contract in question, the CA, even though not a statutory one, is nevertheless a contract entered into between the concessionaire and statutory authority, that is, Yeida. It is needless to observe that even if in the scheme of IBC, a resolution plan could modify the terms of a contract, any tinkering with the contract in question, that is, the concession agreement, could not have been carried out without the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its propositions/decisions on various stakeholders, including the homebuyers. 26. Ultimately in paragraph 147, Hon ble Supreme Court took the view that correct course for the Adjudicating Authority was to send the plan back to the CoC for reconsideration. In paragraph 147, following has been held: 147. For what has been discussed hereinabove, we are constrained to hold that the stipulations in the resolution plan, as regards dealings with Yeida and with the terms of concession agreement, have rightly not been approved and the stipulations in question, when not being consented to by Yeida, are required to be disapproved. Further, in the cumulative effect of the stipulations which have not been approved, the only correct course for the adjudicating authority was to send the plan back to the Committee of Creditors for reconsideration. 27. Under Point N summation of findings; final order and conclusion Hon ble Supreme Court held that the Adjudicating Authority has limited jurisdiction in the matter of approval of the Resolution Plan which is well defined and circumscribed by Section 30(2) and 31 of the Code. In paragraph 273. 1 and 273.3, following observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while once again exercising our powers under Article 142 of the Constitution of India to do substantial and complete justice to the parties and in the interest of all the stakeholders of JIL, we conclude on these matters with the following order: 282.1. The matter regarding approval of the resolution plan stands remitted to the Committee of Creditors of JIL and the time for completion of the process relating to CIRP of JIL is extended by another period of 45 days from the date of this judgment. 282.2. We direct the IRP to complete the CIRP within the extended time of 45 days from today. For this purpose, it will be open to the IRP to invite modified/fresh resolution plans only from Suraksha Realty and NBCC [ Only these resolution applicants were permitted to submit the revised plans in the judgment dated 6-11-2019 [Jaiprakash Associates Ltd. v. IDBI Bank Ltd., (2020) 3 SCC 328 : (2020) 2 SCC (Civ) 113]] respectively, giving them time to submit the same within 2 weeks from the date of this judgment. 282.3. It is made clear that the IRP shall not entertain any expression of interest by any other person nor shall be required to issue any new information memorandum. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Manoj Gaur erstwhile promoter have locus to challenge the order dated 07th March, 2023 approving the resolution plan of Suraksha Realty. 33. The submission of the Appellant is that objection to locus standi has not been accepted in the previous round of litigation hence it is not open for the Respondent to raise objection regarding locus. It is submitted that arguments and objections raised by the Appellant were noticed and considered by the Hon ble Supreme Court in Jaypee Kensington, Manoj Gaur was also impleaded in the Appeal filed by the NBCC due to which he was one of the Respondent in the NBCC Appeal. It is submitted by the Appellant that objections raised by the Appellant was decided by the Adjudicating Authority in the Impugned Order and it is not open to Respondent to contend that Appellant has no locus to object approval of the Resolution Plan. Learned Counsel for the Appellant has relied on judgment of the Vijay Kumar Jain Vs. Standard Chartered Bank Anr. (2019) 20 SCC 455. The Appeal before the Hon ble Supreme Court was filed by Vijay Kr. Jain, member of suspended board of directors of the Corporate Debtor challenging the Appellate Tribunal s Judgment rejecting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y interest. Security interest is defined by Section 3(31) of the Code as follows: 3. Definitions. In this Code, unless the context otherwise requires *** (31) security interest means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person: Provided that security interest shall not include a performance guarantee; This would certainly include a guarantor who may be a member of the erstwhile Board of Directors. 19.5. Further, under Regulation 37(1)(f), a resolution plan may provide for reduction in the amount payable to the creditors, which again vitally impacts the rights of a guarantor. Last but not the least, a resolution plan which has been approved or rejected by an order of the adjudicating authority, has to be sent to participants which would include members of the erstwhile Board of Directors vide Regulation 39(5) of the CIRP Regulations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not the controversy in the present case. Mr. Sumant Batra had relied on Judgment of this tribunal in Krishan Mohan Mendiratta Vs. State Bank of India and Anr. 2021 SCC OnLine NCLAT 528. The above was a case where application filed by the Appellant to consider the offer of Rs.32 Crores made by Unsuccessful Resolution Applicant was rejected by the Adjudicating Authority which order was under challenge. The Appeal was dismissed observing that Appellant himself being not in fray and all the suspended board of directors were ineligible to submit a plan, he could not be directed to espouse the cause of unsuccessful resolution applicant. The above judgment is clearly distinguishable and does not support the submission made by the Appellant/Respondent. 37. Learned Counsel for the Respondent has also relied on judgment of this Tribunal in Jaidep Ghosh and Anr. Vs Niraj Agarwal and Ors. C.A.(AT) Ins. No. 839 of 2022, (2023) SCC OnLine NCLAT 396. A perusal of the above judgment indicates that this Tribunal has not noticed the judgment of the Hon ble Supreme court in Vijay Kumar Jain. Further judgments which have been relied on by this tribunal from the observation that law is set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of the income tax department is in accordance with Section 30(2)(b) of the Code. This tribunal held that no relief can be granted to the Income Tax Department in the appeal. In paragraph 29 of the judgment dated 26.09.2023, following has been held: 29. Now coming to the question of relief which can be claimed by the Appellant in the present Appeal. Suffice it to say that Appellants claim for the AY 2012-13 cannot be said to be non-existent, as is the stand taken by the IRP. However, after admitting the aforesaid claim for the AY 2012-13 for total amount of Rs.1157.07 Crores, as claimed by the Appellant, Income Tax Department who has filed claim as Operational Creditor was entitle for amount not less than the amount to be paid in the event of liquidation as per Section 53. It is specifically submitted on behalf of Respondent No. 2 and 3 that liquidation value of the Appellant being NIL, the Appellant was not entitled to receive any amount as per Section 30(2)(b). We, thus, are of the view that no effective relief can be granted to the Appellant in the present Appeal. The treatment of the claim of the Appellant in the Resolution Plan cannot be said to be in violation of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed are being decided together. Appellant challenging the approval of the Resolution Plan, order dated 07.03.2023, submits that the Resolution Plan in so far as it deals with the claim of YEIDA violates Section 30 Sub-section (2) of the Code. Submission is that there are various clauses in the Resolution Plan which are violative of Section 30 Sub-section (2)(e). It is submitted that the Hon ble Supreme Court in Jaypee Kensington s case while dealing with the claim of YEIDA in the Resolution Plan of NBCC has already taken the view that the Resolution Plan of NBCC is not in accordance with law, which was sent back to the CoC for reconsideration. It is submitted that the judgment of Hon ble Supreme Court in Jaypee Kensington with regard to claim of YEIDA is a binding precedent which cannot be allowed to be violated by Suraksha Realty in its plan. It is submitted that additional farmers compensation Rs.1,698 Crore has not been paid which was required to be paid asper concession agreement. A Government Agency like YEIDA cannot be made to withdraw pending litigation whereas Clause 34.28 seeks to render infructuous litigation about Additional AFC. Liability of additional farmers compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cus or right to challenge the Resolution Plan on behalf of YEIDA, when YEIDA has already filed its own appeal being Company Appeal (AT) (Ins.) No.493 of 2023 before this Tribunal. YEIDA has submitted a proposal for amicable resolution of issues regarding YEIDA, which is beneficial to all stakeholders including Financial Creditors and homebuyers. Learned counsel for the Respondent No.1 has referred to order dated 05.12.2023 passed by this Tribunal in Company Appeal (AT) (Ins.) No.493 of 2023. 47. We have considered the above submissions raised by the parties with regard to claim of YEIDA under the Resolution Plan. YEIDA has already filed an appeal Company Appeal (AT) (Ins.) No.493 of 2023 challenging the impugned order dated 07.03.2023 in so far as it treats the claim of YEIDA. Challenge to the treatment of claim of YEIDA has been raised on various grounds in Company Appeal (AT) (Ins.) No.493 of 2023. It is relevant to notice that in Company Appeal (AT) (Ins.) No.493 of 2023 this Tribunal has passed following orders on 2.04.2023, 25.08.2023 and 05.12.2023: 20.07.2023: Mr. Ramji Srinivasan, Learned Senior Counsel for the SRA submits that they have given a proposal to the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has a public duty to ensure that the framework under CA is preserved and else, it would be ready to do everything within its power to ensure that the plan is a success. Thus, it would not be out of place to add a sanguine hope that being the owner of the land in question and public authority, YEIDA, which had envisaged and promoted the entire project, would, in future dealing with the matter, act with caution and circumspection, while earnestly reflecting upon the practical impact of its propositions/decisions various stakeholders, including the homebuyers. 49. As noted above with regard to the claim of YEIDA, Successful Resolution Applicant has already submitted a proposal which is under active consideration. In any view of the matter, the issues pertaining to YEIDA cannot be decided in this appeal, where YEIDA is not a party. Appellant has filed this appeal as Suspended Promoter and Director of the Corporate Debtor and the issues pertaining to claim of YEIDA need to be considered in Company Appeal (AT) (Ins.) No.493 of 2023 filed by YEIDA challenging the impugned order. In so far as submission of learned counsel for the Appellant that YEIDA is a Secured Creditor which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor for recovery of any outstanding dues. Further, notwithstanding the treatment of the Claims of the Institutional Financial Creditors under this Resolution Plan (including but not limited to the extinguishment of any such Claims), any personal and corporate guarantors, other than the Corporate Debtor, shall continue to be liable to the Institutional Financial Creditors for any amounts due to them to the fullest extent under the Applicable Laws without any recourse or remedy against the Corporate Debtor. Further, any right or remedy including but not limited to right of subrogation as may be available to such corporate or personal guarantors against the Corporate Debtor in the event of exercise of rights by Institutional Financial Creditors shall stand extinguished. 51. Learned counsel for the Appellant relies on Section 135, 140 and 141 of the Contract Act. Section 135, 140 and 141 of the Indian Contract Act are as follows: 135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor. A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by payment or performance of liability. In the facts of the present case, it is not the case of the Appellant that the Corporate Guarantor and Personal Guarantor have paid the dues of the creditor and thus they are entitled to get in the shoes of the principal creditor. On this single ground claim of Section 140, does not subsist. In the present case, debt of the Principal Borrower is being discharged consequent to the Resolution Plan under the IBC. We have already noticed clause 34.50 which expressly takes away the right of subrogation to the Guarantors. The Hon ble Supreme Court had occasion to consider the right to Guarantors consequent to approval of Resolution Plan in IBC in Lalit Kumar Jain vs. Union of India, (2021) 9 SCC 321 . Submission was advanced before the Hon ble Supreme Court that once a resolution plan is accepted, the corporate debtor is discharged of liability. As a consequence, the guarantor whose liability is co-extensive with the principal debtor i.e. the corporate debtor, too is discharged of all liabilities. Above submission is noted in Para 115 of the judgment, which is as follows: 115. The other question which parties had urged before this Court was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the Company in liquidation before the amount demanded is paid. The Bank cannot raise the plea that it is liable only to the extent of any loss that may have been sustained by the Electricity Board owing to any default on the part of the supplier of goods i.e. the Company in liquidation. The liability is absolute and unconditional. The fact that the Company in liquidation i.e. the principal debtor has gone into liquidation also would not have any effect on the liability of the Bank i.e. the guarantor. Under Section 128 of the Contract Act, 1872, the liability of the surety is coextensive with that of the principal debtor unless it is otherwise provided by the contract. A surety is no doubt discharged under Section 134 of the Contract Act, 1872 by any contract between the creditor and the principal debtor by which the principal debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. But a discharge which the principal debtor may secure by operation of law in bankruptcy (or in liquidation proceedings in the case of a company) does not absolve the surety of his liability. 125. In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch guarantee shall be deemed to have been abated, released, discharged and extinguished . The submission of learned counsel for the Appellant challenging the extinguishment of claim of guarantee on account of subrogation was repelled. We may notice Para 100 to 107 of the judgment, which is as follows: Extinguishment of Personal Guarantees and Undecided Claims 100. Shri Gopal Subramanium and Shri Rakesh Dwivedi have also appealed against the extinguishment of the rights of creditors against guarantees that were extended by the promoters/promoter group of the corporate debtor. According to them, this was done by a side wind by the Appellate Tribunal without any reasons for the same. 101. Shri Prashant Ruia a promoter/director of the corporate debtor in his personal guarantee dated 28-9- 2013, specifically stated as follows: 7. The obligations of the Guarantor under this Guarantee shall not be affected by any act, omission, matter or thing that, but for this Guarantee, would reduce, release or prejudice any of its obligations under this Guarantee (without limitation and whether or not known to it or any Secured Party) including: *** (g) any insolven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness days from the effective date; and Be deemed to have waived all claims and dues (including interest and penalty, if any) from the corporate debtor arising on and from the insolvency commencement date, until the effective date. 103. Shri Rohatgi, learned Senior Advocate appearing on behalf of Shri Prashant Ruia, also pointed out Section XIII(1)(g) of the resolution plan dated 23-10- 2018, in which it is stated as follows: Upon the approval of the resolution plan by the Adjudicating Authority in relation to guarantees provided for and on behalf of, and in order to secure the financial assistance availed by the corporate debtor, which have been invoked prior to the effective date, claims of the guarantor on account of subrogation, if any, under any such guarantee shall be deemed to have been abated, released, discharged and extinguished. It is hereby clarified that, the aforementioned clause shall not apply in any manner which may extinguish/affect the rights of the financial creditors to enforce the corporate guarantees and personal guarantees issued for and on behalf of the corporate debtor by existing promoter group or their respective affiliates, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akrishnan case [SBI v. V. Ramakrishnan, (2018) 17 SCC 394 : (2019) 2 SCC (Civ) 458] , it is difficult to accept Shri Rohatgi's argument that that part of the resolution plan which states that the claims of the guarantor on account of subrogation shall be extinguished, cannot be applied to the guarantees furnished by the erstwhile Directors of the corporate debtor. So far as the present case is concerned, we hasten to add that we are saying nothing which may affect the pending litigation on account of invocation of these guarantees. However, NCLAT judgment being contrary to Section 31(1) of the Code and this Court's judgment in V. Ramakrishnan case [SBI v. V. Ramakrishnan, (2018) 17 SCC 394 : (2019) 2 SCC (Civ) 458] , is set aside. 107. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. vs. State of Karnataka Ors., (2020) 13 SCC 308 . 60. Learned counsel for the Respondent No.1 as well as learned counsel for the Successful Resolution Applicant refuting the submission of the Appellant contends that the Successful Resolution Applicant in its Resolution Plan in Clause 12 has clearly stated that even if, no relief and concession are granted, the plan shall be implemented. It is submitted that the relief and concession which have been granted by the Adjudicating Authority does not violate any provision of law and they are necessary for implementation of Resolution Plan. It is requirement of the law that Resolution Plan shall contain provision for effective implementation of the Resolution Plan. 61. We may first notice the relief and concession which have been granted by the Adjudicating Authority in the impugned order which are sought to be questioned by the Appellant. Learned counsel for the Appellant has challenged the reliefs and concessions granted in Para 157, 158, 160, 161 and 164. We first proceed to notice above reliefs and concessions granted by the Adjudicating Authority and as to whether the said grant was impermissible and violative of Section 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary directions to the local district administration of the respective states where the assets of the Corporate Debtor are situated to give assistance to the Resolution Applicant (s) for the implementation of the Resolution Plan, as and when required by the Resolution Applicants and for completing the Construction of Projects for Home Buyers. Since the relief sought will expedite implementation of the Resolution Plan, the relief is granted. 66. The above direction was only to give assistance to the Resolution Applicant for the implementation of the Resolution Plan, the direction cannot be read as violating any law of the land. 67. In Para 161 following has been directed: 161. The next relief and concession sought is at Serial No. 30 of the Annexure II, which reads as under: 30. To direct the concerned Registrar of Companies to expeditiously associate, as per Applicable Laws, the Directors Identification Numbers (DIN) of the Directors who would be taking charge collectively as Board of Directors of the Corporate Debtor, pursuant to the approval of the Resolution Plan. The aforesaid relief is granted. 68. In the above relief, the applicant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has made following statement: 12. Reliefs and Concessions The reliefs and concessions sought by the Resolution Applicants are more particularly contained in Annexure-II hereto. The Resolution Applicants undertake that they will implement this Resolution Plan, whether or not the reliefs and concessions are granted. 73. The above clause clearly stipulates the statement of the Successful Resolution Applicant that the implementation of Resolution Plan is not subject to grant of all reliefs and concessions, as prayed in the Resolution Plan. It is clear that any reliefs and concessions not been granted thus cannot have any adverse effect nor by non-grant of any relief and concession, for the reasons which are given by the Adjudicating Authority in the impugned order, there can be said to be any violation of law. There is no challenge to the reliefs and concessions not granted by the Adjudicating Authority by the Successful Resolution Applicant. The submission of the Appellant that as several reliefs and concession have not been granted which were part of the Resolution Plan, the Resolution Plan cannot be approved and should be sent back to the CoC also does not comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LFD- 1 (Noida) 25 25 - - Clause 1.12 Page No.45 - - 25 Clause 15.11 Plan LFD- 2 (Jaganpur) 800 158 187 455 - 718 82 LFD- 3 (Mirzapur) 336 - 170 166 - 50 286 LFD- 4 (Tappal) 1,226 418 550 258 100 1,126 - LFD- 5 (Agra) 1,185 257 619 309 - 808 377 Grand Total 3,501 858 1,526 1,188 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in Anuj Jain Vs Axis Bank Ltd. was delivered before approval of the Resolution Plan on 03.03.2020. From judgment of Jaypee Kensington of the Hon ble Supreme Court it is noticeable that even in NBCC s plan relief was sought with regard to 858 acres of land. Both the Resolution Applicants were thus well aware about order of the Hon ble Supreme Court dated 26.02.2020 and there was no occasion for not including the said land which was available for the kitty of the Corporate Debtor after release of encumbrances. We, thus, do not find any substance in submission of the Appellant that 758 acres of land has not been included in the plan submitted by Suraksha Realty. Question No. (ix) : 78. We have noticed above the different I.As. filed by the homebuyers. Applicant homebuyers have prayed for intervention in the appeal. We have already heard the interveners. Learned counsel for the interveners who represent homebuyers of the Corporate debtor have expressed concern for inordinate delay in start of construction and completion of their project. Homebuyer submitted that they are waiting for their units for last several years and Promoter/Director who are respo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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