Dewa Projects Pvt. Ltd. vs Vinod Pandinhare Veetil & Ors.

[Per : Justice Sharad Kumar Sharma, Member (Judicial)]

The Appellant is the Ex-Managing Director of M/s. Dewa Projects Pvt. Ltd., i.e., the Corporate Debtor. He questions the propriety of the Impugned Order, as it was rendered on 25.11.2021 in IA(IBA)/87/KOB/2021 as preferred in IBA/23/KOB/19, being the proceedings which were held under Section 33(1)(a) of the I & B Code, 2016. By the virtue of the Impugned Order passed, the Corporate Debtor was put into liquidation and Shri. Vinod Padinhare Veetil was appointed as liquidator. This order of appointment of the liquidator to carry out the liquidation process of the Corporate Debtor is subject matter under challenge in this instant Appeal. Primarily, in a nutshell, the basic ground, which has been argued by the Learned Counsel for the Appellant is from the perspective that, the Appellant was in disagreement, to the proposal, qua the settlement, which was agreed to be made to the home buyers. Hence, while preferring the Appeal questions the propriety of the Impugned Order as detailed above.

The Appellant had chosen a very limited ground for the purpose to put a challenge to the Impugned Order, as it has been pleaded in the Memorandum of the Appeal, contending thereof that, the Appellant was not in receipt of any communication from the NCLT regarding the initiation of CIRP of the Corporate Debtor as passed in the order dated 13.09.2019. The Learned Counsel for the Appellant also argues that, whether there can be the initiation of a process of liquidation without providing ample opportunity to the Appellant for settlement of the dues, and whether there could be an initiation of the liquidation process during the pendency of the SARFAESI Proceedings. The Learned Counsel for the Appellant also argues that, the liquidation was ordered, when the Civil Appeal No.4070/2020, was still pending consideration before the Hon’ble Apex Court, preferred being aggrieved as against the order dated 13.09.2019 of placing the Corporate Debtor to face the CIRP Proceedings.

What impact the proceedings of the pendency of the Civil Appeal No.4070/2020, would have on the instant Appeal becomes irrelevant, owing to the fact that, the order passed for proceeding to initiate the CIRP Proceedings has already attained finality with the dismissal of the Civil Appeal by the Hon’ble Apex Court. The Appellant has come up with a case that, the Corporate Debtor, being a private limited company, stood incorporated under the provisions of the Companies Act, 1956, as back as on 12.04.2005, that it had entered into a development agreement with one M/s. Ansu Enterprises Pvt. Ltd. for the purpose of the construction of a residential building and that another structure has been covered by the development agreement dated 31.07.2010. It was submitted by the Appellant that, under the said project, the Corporate Debtor proposed to construct a multi-storage residential complex under the name and style of DEWA PIER 20.

Appellant contends that a per agreement, the home buyers did not make the payment as promised and only 38% of purchase value has been paid by them, as a result of which, the Appellant was not in the position to complete the construction. The said home buyers initiated, proceedings under Section 7 of the I & B Code, 2016, wherein the prayer was made for the initiation of the CIRP Proceedings against the Corporate Debtor Dewa Projects Pvt. Ltd., which was ultimately allowed by the Learned Adjudicating Authority vide its order of 13.09.2019, initiating a Corporate Insolvency Resolution Process against the Corporate Debtor and also appointed one Mr. Vinod Pandinhare Veetil as an IRP. It is contended by the Appellant that, he was not aware of the aforesaid proceedings which were taken upto the stage of the appointment of IRP. The IRP initiated the CIR Process, made public announcements, collated claims and formed CoC. Consequently, the IRP had fixed 29.11.2020 as the last date for the submission of the Resolution Plan to the Resolution Professional, which was later on extended from time to time. The Appellant submitted that, he could not get the knowledge of the CIRP Proceeding as no notice was received by him. However, the said was sent to the official address of Corporate Debtor where possession was said to have been taken on 21.12.2017 by the bank, and e-auction of the property was already conducted on 17.01.2018 under the SARFAESI Act. Thus, the Learned Counsel for the Appellant contends that, he had no knowledge regarding the process till he came to know about it on 23.11.2020 through the Financial Creditor only.

It is the case of the Appellant that, as against the order of 13.09.2019, he had approached before the NCLAT challenging the initiation of the CIRP Process, and appointment of IRP. The Appellate Tribunal dismissed the appeal on the ground of limitation itself vide order dated 07.12.2020, and the said order was affirmed in Civil Appeal No.4070/2020 by the Hon’ble Apex Court. It is rather admitted from the documents which have been placed on record that almost the same grounds, which were taken for the purpose of challenging the CIRP Proceedings which has attained finality by the Judgment of the Hon’ble Apex Court dated 21.01.2022, have been taken by the Appellant for the purposes of putting a challenge for the order of liquidation which is impugned in the instant Company Appeal.

The Appellant has submitted that, he made an attempt to settle the dues by submitting an OTS proposal on 28.12.2020, to the consortium of the 13 banks, of which the Financial Creditor herein is a part, affirming to pay the sum of Rs. 80 Crores for settling the dues, that the said proposal was rejected on 31.12.2020, and consortium of banks asked him to revise the proposal, by improving the offer, that he submitted a revised proposal amounting to Rs.88 Crores which was accepted by the Union Bank of India on the same day.

When all these intervening, processes were going on, two properties of the Corporate Debtor were sold by the Committee of Creditors by auction for an amount of Rs.21.22 Crores payable towards the amount due to the Financial Creditor. Further, the Committee of Creditors (CoC) in its 16^th meeting, which was held on 16.03.2021, rejected the resolution plan with 74.46% majority and in its 18^th meeting held on 27.04.2021 resolved to liquidate the Corporate Debtor by 96.50% majority. Based on the decision of CoC, the RP filed an Application u/s 33(1) of the Code in IA(IBA)/87/KOB/2021 before Learned Adjudicating Authority praying for liquidation of the Corporate Debtor. The Learned Adjudicating Authority, after considering the rival contentions, and perusing the whole case records, ordered the Corporate Debtor i.e., M/s. Dewa Projects Private Limited to be put to liquidation under Section 33(1)(a) of the I & B Code and appointed the RP herein as liquidator vide order dated 25.11.2021.

This Company Appeal is filed against the said order of liquidation. When the Company Appeal was heard and the Respondents were noticed, they have put an appearance. The order sheet reflects that, most of the time hearing on this instant Appeal has been adjourned at the behest of the Appellant and was never argued. The Respondent No.2 have filed a Counter Affidavit dated 31.12.2022 which states that in the absence of there being an Interim Order passed by this Appellate Tribunal, the Resolution process was continued, and since all the Resolution Plans have been rejected, the CoC in its 18^th meeting, decided to liquidate the Corporate Debtor. The Counter affidavit also mentions initially when the Appellant herein, submitted the OTS proposal, the Appellant was called upon to deposit 25% of the OTS amount as an upfront payment in order to establish its bonafides, and that the Appellant failed to remit the upfront payment and therefore the OTS proposal did not ever mature to be considered; and thereafter the Respondent No.2 and other lenders have proceeded to sell the properties of co-borrowers and guarantors as such to realize their dues to which they have a right being the lenders.

The Learned Counsel for the Respondent has submitted that the CoC, in its commercial wisdom, has rejected the Resolution Plan, and has later decided to liquidate the Corporate Debtor, and its wisdom cannot be challenged by the Appellant. Further, the grounds agitated for the purposes of putting a challenge to the Impugned Order allowing liquidation and similar to those raised against CIRP which have been negatived right up to Hon’ble Apex Court. Further, the decision was taken by the CoC on 27.04.2021 for proceeding with the liquidation of the Corporate Debtor, was approved by with a 96.50% majority, which included the representative of the home buyers.

The passing of the order of the liquidation is exclusively based upon the wisdom of the CoC which cannot be faulted. Further, the Appellant himself has failed in his endeavour to substantiate any perversity in the order of liquidation, and that too, right at the stage when it is informed during the course of argument today that as a consequence of the liquidation process being carried, the distribution has already been completed, all the smaller assets of the Corporate Debtor have been taken over, the payments have been made to the home buyers and as on today, and as of today no assets of the Corporate Debtor are left. Owing to the aforesaid as on today, nothing survives much as against the order of 25.11.2021 passed in IA(IBA)/87/KOB/2021 as preferred in IBA/23/KOB/19, directing the Corporate Debtor to be liquidated.

Apart from it, the Appellant has failed to make out any ground as it has been pleaded in the Appeal itself, which could attach any legal vices to the order of liquidation. Thus, the Appeal lacks merit and the same is accordingly dismissed, owing to the subsequent development which has taken place and has already been discussed in the body of the Judgment. All pending Interlocutory Applications would stand closed.