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Judgment
O R D E R
Per: Justice Rakesh Kumar Jain: (Oral)
This appeal has arisen from an order dated 11.07.2022, passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court No. III) by which an application i.e. I.A. No. 2336 of 2020 filed by the Appellant herein has been dismissed as infructuous.
The brief facts of this case are that the Dena Bank (now merged with Bank of Baroda-Appellant) filed C.P. (IB)-4312(MB) of 2018 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) for a resolution of debt of Rs. 8,19,72,958/-. The said petition was admitted on 21.01.2019 and one Mr. Ankur Kumar was appointed as Interim Resolution Professional who was subsequently appointed as Resolution Professional (in short ‘RP’). The claim of the Appellant i.e. Rs. 8,19,72,958/- was admitted on 04.02.2019 by the RP but in the reconstitution of CoC, in its 5th meeting, the voting right of the Appellant was reduced from 100% to 18% and on 21.12.2019, the CoC approved the resolution plan of the Resolution Applicant/Respondent No. 3 (Safex Realtors Pvt. Ltd.) with 82% vote in favour while the Appellant rejected the plan with 18% vote against it. The said resolution plan was approved by the Adjudicating Authority on 13.11.2020. It is alleged that the Appellant came to know on 15.11.2020 that all the members of the CoC, Respondent No. 4 to 11 herein, were related parties of the Corporate Debtor. Consequently, I.A. No. 2336 of 2020 was filed by the Appellant on 11.12.2020 in which the following prayers were made:-
“a)That it be declared that Respondent Nos. 4 to 11 herein being the members of the CoC constituted during the CIRP period are all related parties to the CD and thus ineligible to be admitted in the CoC.
b)That further operation/implementation of the Resolution Plan of Respondent No. 3 herein approved by this Hon’ble Tribunal vide order dated 13.11.2020 be deferred/stayed.
c)That it be declared that the voting of the Resolution Plan submitted by Resolution Applicant (Respondent No. 3 herein) by CoC members who are all related to CD is unlawful.
d)That a direction be issued to Resolution Applicant (Respondent No. 3 herein) to modify the Resolution Plan within a time period set by this Hon’ble Tribunal to the extent that the plan value meant for Financial Creditors in plan be paid only to the Applicant Bank.
e)That the Resolution Applicant (Respondent No. 3 herein) be directed to modify the resolution plan to the extent that guarantors to the CD will not get discharged.
f)That a direction be issued to reconstitute the CoC with Applicant Bank as the exclusive member of CoC
g)That the reconstituted CoC be directed to vote on the modified Resolution Plan which a time period set by this Hon’ble Tribunal.
h)Any other order as this Hon’ble Tribunal may deem fit and proper.”
Notice in the application was issued. Order of status quo was granted by the Adjudicating Authority on 06.01.2021. The said order was neither challenged nor vacated on an application filed by the Respondents. However, the status quo was vacated on 22.03.2021 because Counsel for the Appellant could not appear as she was suffering from Typhoid. The said order dated 22.03.2021 came to be challenged by way of CA (AT) (Ins) No. 322 of 2021 by the Appellant on 19.04.2021 in which the order of status quo dated 06.01.2021 was restored and ultimately vide order dated 13.01.2022 this Tribunal disposed of CA (AT) (Ins) No. 322 of 2021, restoring status quo order dated 06.01.2021 and disposing of Contempt Case (AT) No. 13 of 2021 in view of an unconditional apology tendered, directing the Respondents to return the money, further directing the Adjudicating Authority to dispose of I.A No. 2336 of 2020 in accordance with law. The SRA (Respondent No. 3) filed an affidavit of compliance giving details of moneys returned by other Respondents on 13.02.2022 and the Adjudicating Authority ultimately disposed of I.A. No. 2366 of 2022 vide impugned order dated 11.07.2022 on the ground that the application is infructuous because the same has been filed after the approval of the resolution plan. Hence, the present appeal has been filed.
We have heard Counsel for the parties at length. During the course of hearing, Counsel for the Appellant has referred to the decisions of the Hon’ble Supreme Court in the case of Meghmala and Ors. Vs. G. Narasimha Reddy & Ors. (2010) 8 SCC 383 and United India Insurance Co. Ltd. Vs. Rajendra Singh and Ors., (2000) 3 SCC 581, to canvass that in case of fraud all acts are vitiated.
Be that as it may, the primary argument of Counsel for the Appellant is that the application in question i.e. I.A. No. 2336 of 2020 which was though entertained by the Adjudicating Authority, having been filed after the approval of the resolution plan on 13.11.2020, has been dismissed after keeping it on record for about two years on the ground that the same has become infructuous because the resolution plan has been approved. It is submitted that the Appellant has made serious allegations in the application about the fraud having been played not only with the Appellant but upon the Tribunal also by the Respondents who have all joined hands for the purposes of defrauding the present Appellant (Nationalised Bank). He has further submitted that even there is a direction issued by this Tribunal, while disposing of the earlier appeal, that the application shall be heard and decided in accordance with law but the allegations made in the application have not at all been looked into.
On the other hand, Mr. Abhijeet Sinha Counsel for SRA has vehemently opposed the appeal, inter alia, on the ground that the reason has been given by the Adjudicating Authority in the impugned order that the application has become infructuous, therefore, it cannot be said that no reason has been given at the time of passing of the impugned order. He has also submitted that this Tribunal, at the time of issuance of direction to the Adjudicating Authority, directed it to decide the application in question in accordance with law, therefore, there is no error in the impugned order. He has also relied upon the Judgments of Hon’ble Supreme Court in the case of Pratap Technocrats (P) Ltd. & Ors. Vs. Monitoring Committee of Reliance Infratel Ltd. & Anr. (2021) 10 SCC 623 and Ebix Singapore Pvt. Ltd. Vs. CoC of Educomp Solutions Ltd. & Anr. (2022) 2 SCC 401.
During the course of hearing, the parties have agreed that the impugned order be set aside and the matter be remanded back to the Adjudicating Authority to decide the application by passing a speaking order after taking into consideration the replies already filed or to be filed by the Respondents and in that process all the issues may be kept open.
Thus, keeping in view of the aforesaid facts and circumstances, the present appeal is thus hereby allowed, the impugned order dated 11.07.2022 is set aside and the matter is remanded back to the Adjudicating Authority to take into consideration the allegations made in the application i.e. I.A. No. 2336 of 2020 and the reply filed to it and pass a speaking order. It is needless to mention that both the parties are free to raise all the issues available to them in regard to the application.
We request the Adjudicating Authority to decide the lis between the parties as early as possible but preferably within a period of six weeks from the date of appearance of the parties before it. We also hasten to add that relief of the Appellant qua disbursement of the amount by the SRA to the other members of CoC shall be dependent upon the final outcome of the application. Since, we have been told by Mr. Abhishek Anand, Advocate that the plan has been implemented and monitoring committee has been dissolved therefore, everything shall be dependent upon the ultimate decision to be rendered by the Adjudicating Authority in the application of the Appellant. It is also made clear that we have not touched the merits of the case. The parties shall appear before the Adjudicating Authority on 16th February, 2023.
The registry is directed to send the copy of this order to the concerned Adjudicating Authority.