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Judgment
ORDER
Per: Justice Rakesh Kumar Jain: (Oral)
11.01.2024: This appeal is directed against the order dated 24.02.2021 by which an application filed by the appellant under section 60(5) of the Insolvency & Bankruptcy Code, 2016 (in short ‘Code’) seeking direction to release payment of Rs. 42,41,995 as an Operational Creditor, for the services rendered during the CIRP period, has been dismissed.
In brief, an application filed under section 9 of the Code, by an Operational Creditor, for resolution of its debt, against M/s Orchid Pharma Ltd. (‘Corporate Debtor’) was admitted on 17.08.2017 and the Resolution Professional was appointed on 27.10.2017.
The Appellant filed the claim in form B of an amount of Rs. 69,55,770 on 23.3.2018. The RP admitted the claim only to extent of Rs. 18,89,848/-. It is an admitted fact that the Resolution plan submitted by SRA was approved by the Adjudicating authority on 27.06.2019. However, the said order was reversed in appeal on 13.11.2019 but it was restored by the Hon'ble Supreme Court vide its order dated 28.02.2020.
Case of the Appellant is that the appellant had filed an application under section 60 (5) on 01.06.2019 which has been decided on 24.02.2021. It is submitted that the Tribunal has committed an error in not taking into account the invoices raised by the Appellant in the name of Orchid Health Care which is the other arm of M/s Orchid Pharma Ltd. because both the companies has the same GST number and the Appellant had been asked by the Corporate Debtor to raise its invoices on it.
On the other hand, Counsel appearing for the RP, at the very outset, has submitted that the application filed by the Appellant under section 60 (5) was not maintainable as the appellant has the statutory right to challenge the order dated 27.7. 2019 by way of an appeal provided under section 61(3) of the Code. It is submitted that as per section 61(3) an appeal against an order approving a resolution plan under section 31 May be filed on the following grounds, namely, (iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board; (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts;
Faced with this argument, Counsel for the Appellant has argued that the application filed under Section 60 of the Code lays down the power of the Adjudicating Authority and Section 60(5) is an omnibus provision as per which any application or proceedings may be disposed of by the Tribunal filed by or against the Corporate Debtor or Corporate Persons. In this regard, Counsel for the Resolution Professional has submitted that no doubt that the application is prior in time to the passing of the order by the Adjudicating Authority approving the Resolution Plan on 27.06.2019 but once the Resolution Plan has been approved and on the application filed under Section 60(5) no stay was granted by the Tribunal for not approving the Resolution Plan till the application is decided, the said application had become redundant as the approval of the Resolution Plan gave right to the Appellant to challenge the order of approval by way of a statutory appeal. It is also submitted that the Resolution Plan was approved on 27.06.2019 and has further been approved by the Hon'ble Supreme Court on 28.02.2020 and thereafter the same has also been implemented and three years have almost been passed, therefore, the application filed by the Appellant is without any purpose.
We have heard Counsel for the Parties and perused the records.
In order to appreciate the contention of the RP that the Appellant has the right to appeal in terms of Section 61(3) of the Code, it would be relevant to refer to Section 61 of the Code which read as under:-
“Section 61. Appeals and Appellate Authority.
(1)Notwithstanding anything to the contrary contained under the Companies Act 2013 (18 of 2013), any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal.
(2)Every appeal under sub-section (1) shall be filed within thirty days before the National Company Law Appellate Tribunal:
Provided that the National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days.
(3)An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely:
(i)the approved resolution plan is in contravention of the provisions of any law for the time being in force;
(ii)there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;
(iii)the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board;
(iv)the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or
(v)the resolution plan does not comply with any other criteria specified by the Board.
1[(4) An appeal against a liquidation order passed under section 33, or sub-section (4) of section 54L, or sub-section (4) of section 54N, may be filed on grounds of material irregularity or fraud committed in relation to such a liquidation order.
(5)An appeal against an order for initiation of corporate insolvency resolution process passed under sub-section (2) of section 54-O, may be filed on grounds of material irregularity or fraud committed in relation to such an order.]”
It is also relevant to refer to Section 60 of the Code much less Section 60(5) which has been invoked by the Appellant for the purpose of filing the application on which the Impugned Order has been passed, which is reproduced as under:-
1 Subs. by Act 26 of 2021, s. 9, for sub-section (4) (w.e.f. 4-4-2021).
“Section 60. Adjudicating Authority for corporate persons.
(1)The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located.
(2)Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or [liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor] shall be filed before such National Company Law Tribunal.
(3)An insolvency resolution process or 2 [liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor] pending in any court or tribunal shall stand transferred to the Adjudicating Authority dealing with insolvency resolution process or liquidation proceeding of such corporate debtor.
(4)The National Company Law Tribunal shall be vested with all the powers of the Debt Recovery Tribunal as contemplated under Part III of this Code for the purpose of sub-section (2).
(5)Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of—
(a)any application or proceeding by or against the corporate debtor or corporate person;
(b)any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and
(c)any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code.
(6)Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963) or in any other law for the time being in force, in computing the period of limitation specified for any suit or application by or against a corporate debtor for which an order of moratorium has been made under this Part, the period during which such moratorium is in place shall be excluded.”
It is not disputed before us that the application filed under Section 60(5) was filed by the Appellant on 01.06.2019. At that time the proceedings in regard to approval of the Resolution Plan was not over. The Appellant did not file any application for staying the approval of the Resolution Plan till the disposal of his application. The Resolution Plan was approved on 27.06.2019 itself and the same has ultimately been approved by the Hon'ble Supreme Court on 28.02.2020. It is also a matter of fact that the Plan has also been implemented. In such circumstances, the application filed under Section 60(5) had lost its sheen as a new right of appeal become available to the Appellant to pursue its remedies in terms of Section 61(3)(iii) and (iv) of the Code before the Appellate Authority. The said procedure was not followed by the Appellant and therefore, in our considered opinion, the application filed under Section 60(5) was not maintainable.
In view of the aforesaid discussion and the fact that Resolution plan was approved way back on 28.02.2020 by the Hon’ble Supreme Court and has been implemented, we do not find any merit in the present appeal and the same is hereby dismissed. No cost.