AI Structured Summary
Not yet generated for this judgment
Judgment
Ashok Bhushan, J:
These two Appeals by the same Appellant challenges two different Orders passed by the National Company Law Tribunal, Principal Bench, New Delhi (hereinafter referred to as “The Adjudicating Authority”). Company Appeal (AT) Ins. No. 14 of 2022 has been filed against the Order dated 01.11.2021 passed in C.A. No. 1090 (PB)/2020 filed by the Monitoring Professional by which approval given to the Successful Resolution Applicant of the Resolution Plan vide Order dated 04.01.2020 has been cancelled and the amount of Rs. 20 Crore deposited by the Resolution Applicant has been forfeited and the matter was referred to the IBBI for taking appropriate action under Section 74(3) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “The Code”). Company Appeal (AT) Ins. No. 15 of 2022 has been filed against the Order of the same date 01.11.2021 in C.A. No. 719 (PB) 2020 and C.A. No. 1247 (PB)/2019. C.A. No. 719 (PB)/2020 was filed by the Successful Resolution Applicant (Appellant herein) praying certain directions with regard to the Order dated 04th January, 2020 approving the Resolution Plan. C.A. No. 1247 (PB)/2019 was also filed by the Successful Resolution Applicant (Appellant herein) seeking certain directions from the Adjudicating Authority. Both the above Applications have been rejected by the Order dated 01.11.2021.
Brief facts giving rise to these Appeals need to be noted.
‘Corporate Insolvency Resolution Process’ was initiated against the Corporate Debtor –Tirupati Infraprojects Pvt. Ltd. by Order dated 03rd July, 2017 of the Adjudicating Authority. Information Memorandum of the Corporate Debtor was issued as well as Invitation for ‘Expression of Interest’ for Resolution Plan. Resolution Plan was submitted by the Appellant on 12th March, 2018. In the CoC Meeting dated 14th March, 2018, the Appellant was held to be H1; Appellant submitted Addendum-1 to the Resolution Plan on 16th March, 2018. Appellant thereafter submitted Addendum-2 dated 19th March, 2018 and Addendum-3 dated 23rd March, 2018 and Additional Addendum on 26th March, 2018. In 12th CoC Meeting held on 16th March, 2018, discussion was held in the CoC with the representative of the Appellant, certain additional documents were asked from the Appellant. CoC on 23rd March, 2018 decided to take on record the plan of the Appellant. The Resolution Plan of the Appellant along with Addendum was forwarded by the Resolution Professional along with its Report in the Meeting dated 26th March, 2018 of the CoC where the Plan of the Appellant was discussed. Resolution Plan was approved with 100% votes. As per the plan, the Financial Proposal in the Plan was 252 Crores with upfront payment of Rs. 20 Crores. Application was submitted by the Resolution Professional before the Adjudicating Authority being C.A. No. 275(PB)/2018 for Approval. The Adjudicating Authority on 09th July, 2018 after hearing the Application filed by the RP directed the Appellant to file affidavit clarifying that Addendum dated 19th March, 2018 and 23rd March, 2018 would not constitute a condition precedent for the acceptance of Resolution Plan. C.A. No. 275(PB)/2018 again came for hearing on 08th August, 2019 when Adjudicating Authority directed the Appellant to file an Affidavit to the effect that Resolution Plan is not subject to any condition in respect of 05th Floor and the site has been offered to the Resolution Plan Applicant as is wherever is whatever is basis. Affidavit was filed by the Appellant on 22nd August, 2019. Further Affidavit was asked by the Adjudicating Authority by Order dated 03.09.2019 in compliance of which Affidavit in the form of an undertaking was filed on 18.09.2019. The Adjudicating Authority after completion of the hearing, reserved the Order on 25th September, 2019 and pronounced the Order on 04th January, 2020 approving the Resolution Plan. The Adjudicating Authority directed that Resolution Plan shall become effective from the date of the passing of the Order. Before inviting ‘Expression of Interest’, the Resolution Professional has filed an Application bearing C.A. No. 01/2018 under Section 66 of the Code seeking declaration that MoU dated 15.10.2018 be declared as fraudulent and possession of 05th Floor be restored. HBN Group (Respondent No. 3 in C.A. (AT) Ins. No. 15/2022) who is owning fifty percent shareholding of the Corporate Debtor has been claiming ownership of the fifth floor of the Hotel pursuant to MoU dated 15.10.2018. In view of the Resolution Plan, Appellant was required to make entire payment of Rs. 252 Crores within 30 days i.e. by 03rd February, 2020. The Appellant made the upfront payment of Rs. 20 Crores however failed to make payment of Rs. 232 Crores in terms of the approved plan. The Resolution Professional asked the Appellant to confirm payment of balance approved Resolution Plan vide Email dated 04th February, 2020. Appellant vide email dated 04th February, 2020 stated that Appellant is not in default on the ground of pendency of C.A. No. 371(PB) of 2020. C.A. No. 371 of 2020 was filed by the Appellant on 22nd January, 2020 where following prayers were made:
“In view of the facts mentioned hereinabove, the Successful Resolution Applicant pray for the following reliefs:-
i. To clarify in terms of the Order dated January 4, 2020 passed by this Hon’ble Tribunal by declaring the ownership pertaining to the fifth floor of the Hotel of the Corporate Debtor running under the name of ‘Radisson Blue Hotel’ shall be of the Successful Resolution Applicant in terms of the Resolution Plan approved under Section 31 of the Code;
ii. To direct the Respondent No. 4 to remove the attachment on the 50% shares in the Radisson Blue and to declare the shares of the Corporate Debtor stands cancelled in terms of the Order dated February 1, 2019;
iii. To adjudicate and allow the Application C.A. 1247(PB)/2019 filed by the Successful Resolution Applicant, for the reasons mentioned in C.A. 1247(PB)/2019;
iv. To direct the Respondents No. 1 and No. 2 to grant 30 days time period to the Successful Resolution Applicant for implementation of the Resolution Plan upon the adjudication of the above-mentioned omissions, which were inadvertently omitted in Order dated January 4, 2020 and constitute part of the Approved Resolution Plan; and
v. Pass any such other order(s) as may be deemed fit and proper by this Hon’ble Tribunal in the facts and circumstances of the case.”
Another Application C.A. No. 1247(PB)/2019 had been filed by the Appellant where following prayers were made:
“i. To direct the Respondents for appropriation of the Bank Balance/accruals during Corporate Insolvency Resolution Process by the Corporate Debtor to the benefit of the Successful Resolution Applicant/the Monitoring Committee keeping in view facts and circumstances as mentioned in paragraph no. 4 of the present application.
ii. To direct the Respondents to pay all the current liabilities till the final approval of the Resolution Plan and place before the Hon’ble Tribunal the itemized assets and liability statement reflecting change in each item commencing from the date of modified Information Memorandum till June 30, 2019.
iii. Pass any such other Order (s) as may be deem fit and proper by this Hon’ble Tribunal in the facts and circumstances of the case.
C.A. No. 1090 (PB)/2020 was filed by the Monitoring Professional-Respondent No. 1 where following prayers have been made:
“a. Allow the present application and
b. Issue appropriate directions against the Respondent GP Global Energy Pvt. Ltd. for knowingly and willfully contravening the terms of the resolution plan for the corporate debtor as approved by this Hon’ble Adjudicating Authority vide Order dated 04.10.2020 and appropriate order be passed under Section 74(3) read with Section 235 (a) of the Code against the Respondent and
c. Extend the period of the Corporate Insolvency Resolution Process by 60 days in terms of second proviso to Section 12(3) so that efforts could be made either for seeking resolution of the Corporate Debtor instead of putting the Corporate Debtor to liquidation and Committee of Creditors be reinstated to make another attempt for a fresh process for Resolution Plan for the Corporate Debtor.
d. Pass such other or further order/Order(s) as may be deemed fit and proper in the facts and circumstances of the instance case.”
The Adjudicating Authority heard the parties and vide Order dated 01.11.2021 allowed C.A. No. 1090(PB)/2020 by following Order:
“I. We hereby cancel the approval given to the Successful Resolution Applicant for the approval of the Resolution Plan vide Order dated 04.01.2020 and we hereby direct the CoC to be reconstituted and the matter be considered a fresh in its own wisdom.
II. The amount of Rs. 20 crore deposited by the Respondent stands forfeited.
III. This matter is hereby referred to the IBBI for taking appropriate action in accordance with Section 74(3) of IBC.
By the Order of the same date 01.11.2021, the Adjudicating Authority dismissed C.A. No. 719(PB)/2020 and C.A. No. 1247(PB)/2019.
Aggrieved by the Aforesaid Order dated 01.11.2022, these Appeals have been filed.
We have heard Mr. Virender Ganda, Sr. Advocate appearing for the Appellant, Mr. Gopal Jain, Sr. Advocate appearing for the Respondent No. 1, Learned Counsel appearing for the Committee of Creditors as well as Learned Counsel appearing for Respondent No. 3 in Company Appeal (AT) Ins. No. 15 of 2022.
Learned Sr. Counsel-Mr. Virender Ganda for the Appellant in support of the Appeals contends that the Adjudicating Authority committed error in cancelling the approval of the Resolution Plan. The Appellant in the Resolution Plan along with First Addendum dated 16th March, 2018 has categorically stated that title of 05th Floor of the Hotel should be made available to the Appellant. It is submitted that C.A. No. 01 of 2018 filed by the RP under Section 66 with regard to 05th Floor is still pending for consideration and there cannot be any breach of Resolution Plan by the Appellant till C.A. No. 01 of 2018 filed under Section 66 of the Code is decided by the Adjudicating Authority. It is submitted that no decision has been taken by the Adjudicating Authority on C.A. No. 01 of 2018. It is further submitted that the Resolution Professional had never taken serious steps to get the C.A. No. 01 of 2018 decided and after the submission of Resolution Plan, Appellant had come to know that there have been various transactions with regard to the 05th floor which was never communicated to the Appellant by the Resolution Professional. Appellant has further come to know that there are disputes with regard to second floor of the hotel. Resolution Professional having never mentioned about the transaction regarding the second floor in Information Memorandum, no breach of the Resolution Plan can be imputed to the Resolution Applicant. The prayers made in the C.A. No. 719(PB) of 2020 and C.A. No. 1247 (PB) of 2019 were necessary to be granted for implementation of the plan. The amount which was accrued during the running of the hotel was required to be appropriated for the benefit of Successful Resolution Applicant/Monitoring Committee.
Learned Sr. Counsel-Mr. Gopal Jain appearing for the Respondent submits that Successful Resolution Applicant-the Appellant herein has submitted the Resolution Plan after fully knowing well the dispute pertaining to 05th Floor which were clearly mentioned in the Information Memorandum also. The Adjudicating Authority while considering the Application filed by the Resolution Professional for approval of the Plan categorically asked the Successful Resolution Applicant to file an Affidavit that the Plan is not subject to any dispute pertaining to 05th Floor which Affidavit was duly filed by the Appellant before the Adjudicating Authority dated 22nd August, 2019. The Resolution Plan submitted by the Appellant cannot be held to be any conditional plan. Successful Resolution Applicant has further filed an Additional Affidavit dated 18th September, 2019 clearly stating that the Resolution Plan along with the Addendum dated 16th March, 2018, the Appellant shall make remaining payment of Rs. 232 crores within 30 days. It is submitted that Appellant has not made the payment as was required to be paid under the Resolution Plan. Appellant having breached the Resolution Plan cannot be heard in taking excuses regarding the pendency of C.A. No. 01 of 2018 filed under Section 66 relating to 05th Floor. It is submitted that Information Memorandum contained all details pertaining to the property and the litigations therein. Addendum dated 16th March, 2018 filed by the Appellant itself contemplated both the situation that when the C.A. No. 01/2018 is rejected and when C.A. No. 01 of 2018 is allowed, plan shall not depend on C.A. No. 01 of 2018 hence the Appellant cannot contend that till C.A. No. 01 of 2018 is decided he shall not implement the Resolution Plan.
Plan was approved on 04th January, 2020 and more than two years have been elapsed and after cancellation of the approval, CoC has initiated fresh process and thereafter proposals have been received but CoC has not been able to finalize in view of the Orders passed in this Appeal. It is submitted that Appellant who has failed to honor his commitment to pay the balance amount in 30 days of the Resolution Plan cannot hold up the Resolution of the Corporate Debtor. IBC is a statute which mandates timely resolution of the Corporate Debtor. Appellant has been withholding the resolution of the Corporate Debtor hence no error has been committed in cancelling the Resolution Plan and rejecting the C. As filed by the Appellant.
Learned Counsel appearing for the CoC has submitted that the Resolution Plan along with Addendum-1 was put for e-voting and approved on 27th March, 2018. Letter of Intent was issued on 27th March, 2018 which was unconditionally accepted by the Appellant with certain hand written conditions. When the approval of the Resolution Plan was put before the Adjudicating Authority, the Adjudicating Authority itself passed an order directing the Appellant to file Affidavits undertaking to abide by the plan which affidavits were filed. In spite of repeated communication from the RP seeking compliance of the plan and when plan was not complied, on 05th February, 2020, Resolution Professional filed C.A. No. 1090(PB)/2020. Appellant had delayed and derailed the CIRP. The Adjudicating Authority could not have reviewed or modified the plan hence the Applications filed by the Appellant were rightly rejected. It was in the knowledge of the Appellant that Application filed by the RP with regard to 05th Floor is pending consideration before the Adjudicating Authority. After receipt of the letter from the Axis Bank dated 30th November, 2018, clarification was sought from the Ex-Management by the RP.
Learned Counsel appearing for the Respondent No. 3 in Company Appeal (AT) Ins. No. 15 of 2022 has referred to Order passed by SEBI by which it is claimed that properties of the Respondent No. 3-HBN Diaries and Allied Ltd. including the 05th Floor of DMall has been attached. It is submitted that the Adjudicating Authority had directed the SEBI to detach the property by Order dated 30thApril, 2019 against which Order SEBI has filed Civil Appeal No. 5089 of 2019 which is pending consideration.
We have considered the submissions of Learned Counsel for the parties and have perused the record.
Before we consider the submissions of Learned Counsel for the parties, it is relevant to notice the details which are mentioned in the Information Memorandum regarding the 05th Floor which dispute is being claimed to be foundation of submissions of Learned Counsel for the Appellant. In the Information Memorandum of the Corporate Debtor, details pertaining to Application under Section 60/66 of the Code for 05th Floor of the Hotel Property were mentioned. Details of Application under Section 60/66 are to the following effect:
“5. An Application u/s 60/66 of the Code for the fifth floor of the hotel property.
As apprised earlier, the fifth floor of the hotel property is not at present a part of the management contract for hotel with M/s. Carlson Reizdor, under Brand Radisson Blu. However, HBN Group, owing 50% of shareholding of corporate debtor, has been claiming ownership/possession of the same, which has allegedly been handed over to them by the other group of promoters, i.e., Mr. Jagmohan Garg & his family/associate, owning remaining 50% of shareholding of corporate debtor, in lieu of the unsecured loan infused by them in the corportatedebror for completion of the project. At present two rooms on this floor are being occupied by some tenants, besides the space (a part of the floor) being occupied by HBN Group, while major chunk of the space on this floor is lying unoccupied in the form of unfurnished rooms. Upon our consistent perusal/follow up for vacation of this floor, both the promoter groups have submitted some documents to establish the bonafide of the transaction, though the contents thereof are conflicting ones. On perusal thereof, the documents appeared to be fabricated ones, the explanations offered an afterthought and the entire bunch of transactions an attempt to defraud the creditors of the corporate debtor in consonance with Sec 66(1) of the Code. After seeking the legal opinion on same, the undersigned has filed an application u/s 60(5) of the Code, before Hon’ble NCLT, praying
a) To pass an order declaring the alleged memorandum of understanding dated 15.10.2008, purportedly forming basis of the transaction, as fraud in terms of sec 66(1) of the Code.
b) Pass an order u/s 66(1) to the effect of restoring the possession of the 5th floor to corporate debtor.
c) Direct the promoters and HBN Group to make good the revenue loss which has been quantified at Rs. 188.42 Cr along with interest.
d) Pass an order to repudiate any third party rights in above part of the property, created by the parties above and transfer all benefits taken on account of such transfer by them, to corporate debtor.”
With regard to certain transactions in respect to 2nd Floor which is also sought to be raised before us, certain updates were given in Information Memorandum which are to the following effect:
“An update on Poker Lounge & Fun Pub.
Poker lounge
Some portion near the tea lounge was leased to M/s IQ Sports Management Pvt. Ltd. who are in the business of providing the sports and coaching facilities, on 10th April, 2017, for opening the Poker Lounge, for a period of 2 years at a monthly rental of Rs. 5 Lacs and an interest free deposits of Rs. 20 Lacs. The company paid the lease rental for month of May 2017 along with the security deposit. The Company could not, however, obtain the necessary licenses and approvals and since then their setup & fixtures are lying locked. The company has not been responding to the requests of the corporate debtor. We are in the process of getting the same evacuated though legal means, if not vacated by them at their own.
Fun Pub.
The corporate debtor had entered into an agreement with one M/s. HMS Relations Management Pvt. Ltd. on 18.05.2017 for leasing out a space to the extent of 8000 sq feet at a monthly rental of Rs. 11 lacs a month for the purpose of a bar & lounge for 15 years with rent escalation clause after every three years. M/s. HMS Relations Management Pvt. Ltd. had further entered into an agreement dated 05.08.2017 with M/s. L&L Hospitality and Aviation Pvt. Ltd., to operate the bar & lounge for three years at a monthly rental of Rs. 11 lacs for first year, Rs. 15 Lacs for second year and Rs. 18 Lacs for third year. The fixtures are in place and the pub has been named “The Theatre Club & Lounge”, a unit of M/s. L&L Hospitality and Aviation Pvt. Ltd. The Club has arranged almost all the required licenses now and will start functioning soon after all statutory licenses have been obtained.”
Learned Counsel for the Appellant has also placed reliance on Addendum 16th March, 2018 which Addendum is to the following effect:
“Sh. Anil Kohli
Resolution Professional
Tirupati Infraprojects Pvt. Ltd.
409, 4th Floor, Ansal Bhawan,
16, K.G. Marg
Connaught Place
New Delhi 110001
Dear Sir,
Reg: Addendum -1 to Resolution Plan of M/s. Tirupati Infraprojects Pvt. Ltd.
We take this opportunity to thank the Resolution Professional and the Committee of Creditors for their hospitality and precision shown today in resolving the above matter.
During the course of the meeting it was affirmed that the Bid is “As is where is and as is What is” basis as to assets and documents of Corporate Debtor and we are to now confirm the same.
Post our verification of documents with Resolution Professional and confirming to our satisfaction the Marketable Title of the Property we hereby confirm:
A. The Bid Presented is on As is Where is Basis
B. The Bid Presented is on As is What is Basis
The CoC confirmed vide IM the following:
The 5th Floor (as stated in the Point 6 of Part A has been illegally occupied by the defaulting party, defrauding the Creditors and the Creditors are in court for the same.
a. The illegal occupants would be asked by the court to vacate and all breakages and maintenance of this floor would be billed by Successful Resolution Applicant to the illegal occupants. The court may ask the illegal occupants to pay old compensation for loss of revenue to the creditors-in such case the monies would be handed over to the creditors and we as the Successful Resolution Applicant would not be liable for any such costs. However, the fifth floor will become part of hotel and will be under our possession.
b. The court does not allow the application of creditors, then fifth floor remains with occupants. In that case the users would have to pay us Common Area Maintenance and other charges leviable as per understanding between us and the occupants.
In either case the floor remains a part of the Hotel and will remain in the ownership of successful resolution applicant.
That we as the successful applicant are free to approach the NCLT for any such waivers that we find would come as a stumble block in the turning around of this asset into a profitable venture. The outcome of our request will not in any ways effect the execution of Resolution Plan from our end.
Thanking you,
For GP Global Energy Pvt. Ltd.
BarunBhanot
Executive Director – Assets”
When we look into the details of Section 66 Application as contained in Information Memorandum extracted above as well as the Addendum-1 dated 16th March, 2018, it is clear that Appellant was well aware about the dispute pertaining to 05th Floor which was illegally occupied by the defaulting parties adversely affecting the creditors. In the Addendum-1, the Appellant has recorded his confirmation and satisfaction to the marketable title of the property. The Appellant further confirmed the bid presented “As is Where is Basis” and “As is What is Basis”. Addendum-1 dated 16th March, 2018 which has been treated to be part of plan, does not in any manner support the contention of the Appellant that unless ownership of 05th Floor is declared in favour of the Appellant, he shall not implement the plan. The content of Addendum is to the otherwise. The Appellant was also well aware of the C.A. No. 01/2018 filed by the Resolution Professional under Section 66 of the Code with regard to the 5th Floor which was pending consideration at the time of submission of Resolution Plan. The Resolution Plan was also in no manner depending with the outcome of the C.A. No. 01 of 2018. The Addendum-1 dated 16th March, 2018 clearly indicates that Appellant was fully agreeable in both the situations that is when the C.A. No. 01 of 2018 is allowed or rejected hence the implementation of the plan could not have been stopped on mere pendency of the C.A. No. 01 of 2018.
Learned Counsel for the Respondent has also referred to the Order dated 08.08.2019 which was passed by the Adjudicating Authority while hearing C.A. No. 275(PB)/2018. The Adjudicating Authority on 08th August, 2019 passed following Order:
“The H-1 resolution applicant shall file an affidavit to the effect that his resolution plan is not subject to any condition in respect of 5th Floor and the site has been offered to the resolution plan applicant ‘as is wherever is whatever is basis’. The needful shall be done within a week with a copy in advance to the counsel for the RP.
List on 26.08.2019.”
In response to the Order dated 08.08.2019, affidavit was filed by the Appellant on 22nd August, 2019 where in paragraph 8, following was stated:
“8. That, I state that with regard to 5th Floor of the Corporate Debtor the Resolution Professional has already moved an application bearing C.A.01(PB) of 2018 seeking declaration of the Memorandum of Understanding dated Octover 15, 2008 (“MoU”) as fraudulent truncation in terms of Section 66(1) of the Code. I state that in the said Application the Order has been reserved by this Hon’ble Tribunal on December 13, 2018.
I state that there can only be two situations upon pronouncement of the Order C.A. 01(PB) of 2018: (a) The avoidance application may be allowed. (b) The avoidance application is dismissed. In both the situations the Successful Resolution Applicant is ready to proceed with the Resolution Plan as approved by the COC. In case the avoidance application is accepted, which is most likely, the Successful Resolution Applicant will get not only the ownership but also the possession of the 5th floor from HBN Diaries & Allied Limited in due course.
I state that in case the avoidance application is dismissed the unauthorized occupant would continue to be in possession of 5th Floor. However, the ownership of the same would best in the Successful Resolution Applicant upon the implementation of the Resolution Plan. The Successful Resolution Applicant will be having right to take recourse under the common law to seek eviction and also damages, common area maintenance and other charges, which unauthorized occupant would become liable.”
Further on 03.09.2019, the Adjudicating passed an order directing the Appellant to file an Affidavit that he shall make the payment of Rs. 232 Crores within 30 days of approval of the plan. In response to the Order dated 03.09.2019, the Appellant filed an Affidavit dated 18.09.2019 wherein paragraph 5 following was clearly stated:
“5. I hereby further undertake to abide by the Resolution Plan of making payment of remaining amount of 232 Crores within 30 days after the Order approving the Resolution Plan along with the addendum dated March 16, 2018 submitted by the Successful Resolution Applicant is approved by the Hon’ble Adjudicating Authority/the Hon’ble Appellate Tribunal.”
The Orders of the Adjudicating Authority as referred above as well as the Affidavit filed in compliance of the said Order clearly indicates that plan was not dependent on any issue pertaining to 05th Floor and further the Appellant undertook to pay amount of Rs. 252 Crores within 30 days from the date of the approval of the plan. Neither any condition in the plan with Addendum dated 16th March, 2018 envisage that the Appellant after the approval of the plan could have avoided the implementation on the pretext of C.A. No. 1 of 2018 or on the pretext that ownership of 5th floor has not been declared in favour of the Appellant. We are thus of the clear view that the Adjudicating Authority did not commit any error in returning the finding in the Order dated 01.11.2021 that Successful Resolution Applicant/Appellant was not interested in implementing the plan. In paragraph 21, the Adjudicating Authority has recorded following:
“21. As it can be understood from the conduct of the Company i.e., the Successful Resolution Applicant in both the cases, the only conclusion that can be deduced is that the party is not interested in implementing the plan nor it is capable of implementing the Resolution Plan for the reason that the Company has poor financial condition. The contentions with regard to the litigation of the fifth floor etc. are only aimed at gaining time, it is not worthy of being considered favourably.”
Learned Sr. Counsel-Mr. Virender Ganda for the Appellant has also raised the issue of sale deed executed by the Corporate Debtor in the year 2016 in favour of the Company-K Sera Sera Digital Cinema Pvt. Ltd. Learned Counsel has also referred to Letter of Axis Bank dated 30th November, 2018 which was sent to Resolution Professional for extension of lien on units in the 5th floor of building. Learned Counsel for the Appellant submitted that there was no mention of the Sale Deed in the Information Memorandum nor the Appellant was made aware of the Sale Deed. We have looked into the photo copy of the Sale Deed and other materials which have been brought on record by the Appellant as Annexure 30 to the Appeal (C.A. (AT) Ins. No. 14 of 2022). The Resolution Professional after receiving the Letter dated 30th November, 2018, has sent Email on 15th December, 2018 to the Bank. The Resolution Professional has asked for clarification from the promoters and directors of the Corporate Debtor to enable the Resolution Professional to take appropriate steps as per the provision of the Code regarding the lien if any accrued on any assets of the Corporate Debtor. The above correspondence admittedly took place much after the plan was submitted by the Appellant. The Resolution Professional prepared Information Memorandum on the basis of materials available on record of the Corporate Debtor as well as the claims received in pursuance of the publication. There is no material on record to indicate that any claim was filed by the Company- K Sera Sera Digital Cinema Pvt. Ltd. claiming any rights on any part of the property of the Corporate Debtor. Letter was sent by the Axis Bank on 30th November, 2018 that is much after the approval of the plan by the CoC. There being no material with the Resolution Professional at the time of publication of the plan regarding the above transaction, Resolution Professional cannot be faulted in not mentioning of the sale deed in the Information Memorandum. As noted above, Resolution Professional has already filed an Application C.A. No. 01/2018 for avoiding transactions taken by the promoters and directors of the corporate debtor. The copy of the Application No. 01 of 2018 has already been brought on record where certain facts pertaining to 5th floor were given in details. The prayers made in the Application No. 01 of 2018 are as follows:
“a. Pass an order declaring the alleged MOU dated 15.10.2008 has been carried on with the intent to defraud creditors of the corporate debtor and for fraudulent purpose, in terms of Section 66(1) of the Code;
b. Pass order under Section 66(1) directing the Respondent Nos. 1 and 2 to hand over the possession of the 5th floor of the Hotel to the Corporate Debtor;
c. Direct the Respondent No. 1 and 2 to pay to the Corporate Debtor a sum of Rs. 188.42 crores (one hundred eighty eight crores and forty two lacs only) for the revenue loss as calculated in Para XXXI above and punitive interest thereon @18% per annum from financial year 2011-12 to till date;
d. Pass an appropriate order to repudiate any third party right created by the Respondent No. 1 and order to transfer all the benefits taken on account of such transfer by the Respondent No. 1, to be credited to the account of the corporate debtor;
e. Pass such other further order/order(s) as may be deemed fit and proper in the facts and circumstances of the case.”
The C.A. No. 01 of 2018 is dated 18th December, 2017 which was filed to protect the interest of the Corporate Debtor by avoiding transactions creating third party rights on the assets of the corporate debtor. We thus are of the view that on the basis of above submissions of Learned Counsel for the Appellant that sale deed executed in the year 2016 which was forwarded by Axis Bank on 30th November, 2018 to Resolution Professional, cannot furnish any ground to the Successful Resolution Applicant/Appellant to refuse to implement the plan approved on 04.01.2020.
Learned Counsel for the Appellant has also referred to certain dispute pertaining to 2nd floor of the Hotel. We have already noted, details pertaining to Poker Lounge were already mentioned in the Information Memorandum. Lease of some portion of Tea Lounge to M/s. IQ Sports Management Limited was mentioned further reference of agreement with one M/s. HMS Relations Management Pvt. Ltd. for leasing out space to the extent of 8000 sq feet at a monthly rental of Rs. 11 lacs a month was mentioned. Subsequent proceeding in relation to aforesaid space shall have no bearing nor can be ground to refuse to implement the plan. The Adjudicating Authority being conscious of the fact that no Resolution Applicant can submit a conditional plan has directed by filing Affidavit by Resolution Applicant that plan is not conditional and further as noted above 1st Addendum dated 16th March, 2018 to the Resolution Plan clearly mentioned that the plan is not a conditional plan.
Hon’ble Supreme Court in [(2022) 2 SCC 401] “Ebix Singapore (P) Ltd. Vs. Educomp Solutions Ltd. (CoC)” laid down that Resolution Plan which has been approved, cannot be withdrawn by the Successful Resolution Applicant nor the plan can be modified. In paragraph 159 of the Judgement, following was laid down by the Apex Court:
“159. The IBC is silent on whether a successful Resolution Applicant can withdraw its Resolution Plan. However, the statutory framework laid down under the IBC and the CIRP Regulations provide a step-by-step procedure which is to be followed from the initiation of CIRP to the approval by the Adjudicating Authority. Regulation 40A describes a model-timeline for the CIRP that accounts for every eventuality that may arise between the commencement of the CIRP and approval of the Resolution Plan by the Adjudicating Authority, including the different stages for pressing a withdrawal of the CIRP under Section 12A. Even a modification to the RFRP is envisaged by the CIRP Rules and is subject to a timeline. The absence of any exit routes being stipulated under the statute for a successful Resolution Applicant is indicative of the IBC’s proscription of any attempts at withdrawal at its behest. The rule of casus omissus is an established rule of interpretation, which provides that an omission in a statute cannot be supplied by judicial construction.”
The Hon’ble Supreme Court has further categorically held that Resolution Applicant is responsible for conducting its own due diligence. In this context, Paragraph 198 of the Judgement in the matter of “Ebix Singapore (P) Ltd.” is as follows:
“198. Ebix has also tried to argue that its position has changed manifestly because of new allegations which have come up in relation to the financial conduct of Educomp. However, in this regard, it is pertinent to note Clause 1.3.2 of the RFRP which directs prospective Resolution Applicants to conduct their own due diligence. In so far as is relevant, it reads:
“1.3.2 The Resolution Applicant(s) shall be provided access to the electronic as well as physical data room ("Data Room") established and maintained by the Company acting through the Resolution Professional and coordinated by PwC in order to conduct a due diligence of the business and operations of the Company”
Similarly, Clause 1.13.6 also requires prospective Resolution Applicants to conduct independent investigations:
“1.13.6 This RFRP does not purport to contain all the information required by the Resolution Applicant. The Resolution Applicant should conduct independent investigations and analysis and should check the accuracy, reliability and completeness of the information in this RFRP and obtain independent advice from appropriate sources, prior to making an assessment of the Company.”
It was further laid down by the Hon’ble Supreme Court that Resolution Applicant is deemed to be aware of the code and its mechanism before he submits a Resolution Plan and consent to be bound by its underlying objective. In this context, reference to paragraph 156.5 of the above judgement is extracted as below:
“156.5. This Court, in Maharashtra Seamless had denied relief to a resolution applicant who had sought to invoke Section 12-A to resile from its resolution plan. The nature of the statute indicates the clarity of its purpose –primacy of the interests of the creditors who are seeking to cut their losses through a CIRP. Traditional models sand understandings of equity or fairness that seek reliefs which are misaligned with the goals of the statute and upset the economic coordination envisaged between the parties, cannot be read into the statute through judicial interpretation. While parties have the freedom to negotiate certain commercial terms of the resolution plan to gain wide support, their ability to negotiate is circumscribed by the governing statute. A court cannot interpret the negotiated arrangements that are represented in the resolution plan in a manner that hampers the objectives of IBC which is a speedy, predictable and timely resolution. The resolution applicant is deemed to be aware of IBC and its mechanisms before it steps into the fray and consents to be bound by its underlying objectives. A resolution applicant, after obtaining the financial information of the corporate debtor through the informational utilities and perusing the IM, is assumed to have analysed the risks in the business of the corporate debtor and submitted a considered proposal. It can not demand vesting of certain powers and rights which have been conspicuously omitted by the legislature under the statute, in furtherance of the policy objectives of IBC. A court may not be able to lay down such detailed guidance on how a mechanism for withdrawal, if any, may be provided to a successful resolution applicant without disturbing the statutory timelines and adequately evaluating the interests of creditors and other stakeholders, which is ultimately a matter of legislative policy.”
Hon’ble Supreme Court in the above judgement has categorically held that there is no exit route for Successful Resolution Applicant to withdraw from the plan which has been duly approved.
Learned Counsel for the Appellant has submitted that without declaration of title of 5th floor, the Resolution Plan is incapable of implementation. The Appellant had submitted the Resolution Plan with the condition that ownership of 5th floor further be declared in favour of the appellant. When we look to the Resolution Plan and addendum-1, it is clear that there is no such pre-condition in the Resolution Plan nor Resolution Applicant can submit a conditional resolution plan.
Learned Counsel for the Appellant has placed reliance on the judgement of the Utrakhand High Court in Writ Petition No. 1651 of 2008 “M/s. Gurpreet Singh Ahluwalia Vs. District Magistrate” [2015 SCC OnLine Utt 37: (2015) 2 BC 675] where Hon’ble High Court has made following observation:
“In my considered opinion, the condition “as is whereas basis” does not mean that property may not be in existence at all. It only means whatever the condition of the property on the spot is same shall be sold in the same condition. However, if property is not at all in existence on the spot or is not identifiable / can be located on the spot, then neither sale deed can be executed of the non existing property nor purchaser can be handed over possession thereof. Not only this, Bank itself has made several requests to the Collector to demarcate the property auctioned, therefore, Bank ought to have persuaded the Collector to undertake the demarcation proceedings at the earliest. Petitioner should not be allowed to suffer adversely for the lapses on the part of the Revenue Authorities or the Bank. On the other hand, Bank should also not loose interest on the outstanding amount to be paid by the petitioner.”
In the above case, what the High Court has observed that condition as is where basis does not mean that property may not be in existence at all. Present is not a case where property is not in existence at all. The above judgement in no manner helps the Appellant.
Another Judgement relied by Learned Counsel for the Appellant is “Llovegeet Dhuria Vs. State Bank of India and Ors.” [2022 SCC OnLine P&H 2363] where the question which arose for consideration was as to whether secured creditor like SBI can suppress from persons intending to participate in E-Auction factum of the pendency of the litigation in respect of secured assets. The Court ultimately held that it was not proper for the bank to suppress the factum of pendency of litigation in respect of secured assets being put to sale. In paragraph 87 to 88, following has been laid down:
“87. Since, the petitioner is also placed in a similar situation, on parity, the Bank ought to have granted the refund of the earnest money deposited by the petitioner and ought not to have forfeited it. By doing so, it has discriminated against the petitioner and has acted arbitrarily in violation of Articles 14 and 300A of the Constitution of India.
So we hold that it was not proper for a secured creditor like SBI to suppress from persons intending to participate in the e-auction being conducted by it under the SARFAESI Act, 2002, the factum of the pendency of litigation in respect of the secured asset being put to sale by it; and that it ought to have refunded the amount deposited by petitioner, instead of forfeiting it.”
The present is not a case where issues pertaining to fifth floor have not been mentioned in the Information Memorandum.
Learned Sr. Counsel for the Appellant has further placed reliance on the Judgement of the Hon’ble Supreme Court in “Haryana Financial Corporation and Anr. Vs. Rajesh Gupta” [(2010) 1 SCC 655] which was also relied by Panjub and Haryana High Court in “Llovegeet Dhuria Vs. State Bank of India” (Supra). The judgement of the Supreme Court in “Haryana Financial Corporation and Anr.” was a case before the Hon’ble Supreme Court regarding an issue with regard to forfeiture of amount of 2.5 lakhs deposited by the Respondent by way of Earnest Money. The Respondent questioning the forfeiture of the Earnest Money, has approached the High Court by filing writ petition. Writ Petition was allowed by the High Court against which Haryana Financial Corporation filed the Appeal. Hon’ble Supreme Court in paragraph 21 and 22 laid down following:
“21. Taking into consideration the aforesaid facts the Division Bench concluded as follows:
"Taking the totality of circumstances into consideration, we are satisfied that the petitioner was not at fault. He was entitled to withhold the money as the respondents had failed to provide a proper passage. Still further, the factual position having been admitted in the letter dated April 30, 1998, a copy of which is at Annexure P6, and nothing to the contrary having been produced on the file, we find that the action of the respondent/Corporation in forfeiting the amount deposited by the petitioner was wholly arbitrary and unfair."
We see no reason to take any different view. We are also of the opinion that the Division Bench was justified in further concluding that in law the appellants/Corporation undoubtedly has the power to forfeit the earnest money provided there was a failure on the part of the respondent to make the deposit. The Division Bench, however, observed that the respondent was dealing with an instrumentality of state. He was entitled to legitimately proceed on the assumption that the appellants, a Statutory Corporation, an instrumentality of the State, shall act fairly. The respondent could not have suspected that he would be called upon to pay the amount of Rs.50 lakhs without being given even a proper passage to the Unit that he was buying. We are of considered opinion that the respondent had deposited the sum of Rs.2.5 lakhs on the clear understanding that there would be an independent approach road to the Unit. This is understandable. Without any independent passage the plot of land would be not more than an agricultural plot, not suitable for development as a manufacturing unit. We therefore don't find any substance in the submission made by the learned counsel for the appellants/Corporation.”
The present is not a case where the Resolution Plan is denying giving all the assets as described in the Information Memorandum to the Successful Resolution Applicant. Both the Judgements of the Hon’ble Supreme Court in “Haryana Financial Corporation” as well as Paujab and Haryana High Court in “Llovegeet Dhuria” does not render any assistance to the Appellant in the facts of the present case in refusing to implement the Resolution Plan.
We may also notice one Judgement of the Hon’ble Supreme Court in this regard which is “United Bank of India Vs. Official Liquidator &Ors.” [(1994) 1 SCC 575]. In the above case, Official Liquidator has sold the assets of a Company in Liquidation. Hon’ble Supreme Court laid down that with regard to the sale of the assets by Official Liquidator which is for intending purchaser to satisfy himself in all respects as to the title, encumbrances of the immovable property. In paragraph 14, following has been laid down:
“14. When the Official Liquidator sells the property and assets of a company in liquidation under the orders of the Court he cannot and does not hold out any guarantee or warranty in respect thereof. This is because he must proceed upon the basis of what the records of the company in liquidator show. It is for the intending purchaser to satisfy himself in all respects as to the title, encumbrances and so forth of the immovable property that he proposes to purchase. He cannot after having purchased the property on such terms then claim diminution in the price on the ground of defect in title or description of the property. The case of the Official Liquidator selling the property of a company in liquidation under the orders of the Court is altogether different from the case of an individual selling immovable property belonging to himself. There is, therefore, no merit in the application made on behalf of Triputi that there should be a diminution in price or that it should not be made liable to pay interest on the sum of Rs. 1 Crore 98 Lakhs.”
Present case is also a case where proceeding for insolvency has commenced against the Corporate Debtor in which proceeding Information Memorandum was issued, publication inviting Expression of Interest where details of the property were all mentioned with all details as required by the Code and the Regulation framed thereunder. The Resolution Professional has brought on record the entire information memorandum running into 111 pages which contains all details regarding the assets, financial information, details of liabilities, details of certain litigation and ongoing investigations or proceedings were also mentioned in the Information Memorandum including provisional attachment order passed in the Enforcement Directorate. Information Memorandum is a comprehensive document containing all details and in view of the detailed information memorandum which is part of the record, it is not open for the Appellant to contend that certain information was not shared with the Appellant by the Resolution Professional which furnishes the basis for the Appellant not to implement the Resolution Plan.
Learned Counsel for Respondent in his submissions has time and again contended that there is no statement on behalf of the Appellant even as on date that Appellant is ready to deposit the balance amount up to Rs. 232 crores. Appellant as on date is not ready and willing to deposit the balance amount, he cannot be heard in assailing the Impugned Order of the Adjudicating Authority dated 01.11.2021 cancelling the approval of the Resolution Plan. The Hon’ble Supreme Court in “Ebix Singapore” (supra) has also laid much emphasis on the timelines and on timely resolution of the Corporate Debtor. In paragraph 152 of the Judgement, following has been laid down:
“152. The statutory framework governing the CIRP seeks to create a mechanism for resolving insolvency in an efficient, comprehensive and timely manner. The IBC provides a detailed linear process for undertaking CIRP of the Corporate Debtor to minimize any delays, uncertainty in procedure and disputes. The roles and responsibilities of the important actors in the CIRP are clearly defined under the IBC and its regulations. In Innoventive Industries Ltd v. ICICI Bank a three judge Bench of this Court observed that: (SCC P.422, Para 13)
“13. One of the important objectives of the Code is to bring the insolvency law in India under a single unified umbrella with the object of speeding up of the insolvency process”.
Recently, in Gujarat Urja (supra) a three judge Bench of this Court observed that: (SCC P. 262, para 69)
“69…A delay in completion of the insolvency proceedings would diminish the value of the debtor’s assets and hamper the prospects of a successful reorganization or liquidation. For the success of an insolvency regime, it is necessary that insolvency proceedings are dealt with in a timely, effective and efficient manner.”
The stipulation of timelines and a detailed procedure under the IBC ensures a timely completion of CIRP and introduces transparency, certainty and predictability in the insolvency resolution process.”
In the present case, the CIRP initiated on July 3, 2017, the Resolution Plan was approved by the CoC on 27th March, 2018 which plan was approved by the Adjudicating Authority on 04th January, 2020. Under the Resolution Plan, the amount was to be paid by the Appellant/SRA within 30 days from approval of the Order. The total plan valued was Rs. 252 Crores out of which only Rs. 20 crores as upfront payment was made by the Appellant and amount of Rs. 232 Crores have not been paid so far. The Adjudicating Authority after taking into consideration all relevant facts, has rightly recorded a finding that Appellant is not interested in implementing the plan hence no error has been committed by the Adjudicating Authority in cancelling the approval of the Resolution Plan dated 04.01.2020. We thus do not find any error in the Order dated 01st November, 2021 allowing the C.A. No. 1090(PB)/2020 filed by the Monitoring Professional. After Order dated 01.11.2021, fresh Expression of Interest was issued in response to which the Resolution Plans were submitted. CoC noticed vide its meeting dated 04.01.2022 that highest offer now has come is of Rs. 142 Crores and major players in hotel industry are reluctant to submit Resolution Plan in view of the fact the dispute pertaining to fifth floor is sub-judice before the Adjudicating Authority. The CoC in its 19th CoC Meeting held on 04th January, 2022 noted the value which is offered by three Resolution Applicants consequent to fresh invitation for expression of interest. In the minutes, under the heading of “matters of discussion” following was noticed:
“A. Matters of Discussion:
1) Noting of the minutes of 18th meeting of Committee of Creditors held on 30.12.2021.
The Resolution Professional stated that the previous meeting of Committee of Creditors was held on 30.12.2021 and the minutes of the same were circulated to members of committee of creditors within stipulated time period. RP briefed the outcome of the said meeting and enquired any observation/comment on the same, whereby it was suggested by CoC members to incorporate the reasons due to which major players such as Taj Group, Eros Group and Hyatt Group did not participate in the resolution process of the CD, who had shown interest earlier, whereby, the following is noted to be part of discussions held in the 18th CoC meeting:
“During the discussions with major players of the industry such as Taj Group, Eros Group and Hyatt Group who had submitted their EOIs with the undersigned, it was stated that they might not be interested in submitting resolution plan for Corporate Debtor due to the ongoing litigations in the matter particularly 5th floor matter, till its resolution from appropriate authority.””
Further the CoC opened the three Resolution Plans received from proposed Resolution Applicants and while discussing the three plans, it was noted that maximum value proposed was Rs. 145 Crores. After noticing the gist of these plans, following observations has been made by the CoC:
“Considering the aforementioned gist of all three resolution plans, the members of the CoC stated that the financial considerations being offered had also been discussed with their appropriate authorities and it was found that such lower value is totally unacceptable to them as it is much lower to the earlier approved resolution plan of Rs. 252 Crs and hence efforts are required in order to receive substantial improved offer. The members of the CoC proposed for negotiations to be undertaken with all the three RAs and they may consider for change of RP looking to the present status of the resolution process of CD.
Thereafter, detailed discussions were held, whereupon the undersigned apprised the CoC that post discussions with PRAs, it was observed that PRAs were apprehensive of the overall present status affected by the pending litigations of CD such as 5th Floor matter, for which order was reserved by the Hon’ble NCLT but wasnot pronounced for long, which is out of the control of RP. RP had done sincere efforts which resulted in landmark judgment for removal of attachments by ATPMLA and even quashing of attachment notification issued by MPID by Hon’ble NCLT. Further the pandemic situation due to which the industry has been affected upon badly and again there is a grim situation worst than earlier waves. It was also stated that as per PRAs any property with a 3rd party occupant, fetches a diminished value due to the prospective litigations on the title or possession. The RP also explained the present market conditions and operational efficiencies during management of RP in pre-covid times wherein Highest Gross Operating Profit achieved during IRP period in 2019-20 @30.8% resulting in a cash surplus of around Rs. 20 Crs approx. from the revenues generated out of the operations of the CD in initial 1-2 years of his management in pre pandemic and during the pandemic situation whereupon the RP has managed to restrict the deficit to a great extent by various cost cutting measures.
Post various discussions, the CoC members advised RP to again approach the major players of industry such Taj/Eros/Hyatt Group for seeking their inputs/offer/interest in submitting their resolution plan, in case the ongoing litigations of the CD are decided by the judiciary. Further the CoC advised the undersigned to immediately file early hearing application before Hon’ble NCLT regarding pending litigations, which is urgently required for fetching the higher value through resolution plan for maximization of value of CD.”
In Company Appeal (AT) Ins. No. 14 of 2022, we have passed following Order on 12.01.2022:
“12.01.2022: Issue Notice. Shri Abhishek Anand, Learned Counsel appears and accepts notice on behalf of Respondent No.1. Shri Ankur Mittal, Learned Counsel appears and accepts notice on behalf of Respondent No.2. They are allowed two weeks’ time to file Reply-Affidavit. Rejoinder, if any, may be filed before the next date.
It has been submitted by Shri Virendra Ganda, Learned Senior Counsel for the Appellant that Committee of Creditors (“CoC” for short) itself has now taken Resolution on 04.01.2022 to file an urgent Application for hearing CA No. 1 of 2018.
Shri Abhishek Anand, Learned Counsel for Respondent No. 1 submits that Application has been allowed and 04.02.2022 has already been fixed before the Adjudicating Authority for hearing of CA No. 1 of 2018.
Shri Ankur Mittal, Learned Counsel for the CoC submits that Expression of Interest has been invited and certain interests has been shown.
We hope and trust that Adjudicating Authority shall decide the Application which is fixed on 04.02.2022 expeditiously. We are of the view that till the decision is taken on CA No. 1 of 2018, CoC may not take any final decision.
List the Appeals on 14.02.2022.”
In view of the Interim Order dated 12.01.2022 passed by us, the CoC could not proceed further with the finalization of the Resolution Plan but the minutes of the CoC dated 04.01.2022 makes it clear that CoC itself was not satisfied with the value now offered by three prospective Resolution Applicants which was said to be unacceptable. CoC categorically noticed that due to non-disposal of C.A. No. 01 of 2018, no major player is showing interest.
We may at this stage notice few facts pertaining to C.A. No. 01 of 2018. We have already noticed the prayers made in C.A. No. 01 of 2018. C.A. No. 01 of 2018 was twice reserved for Orders on 13.12.2018 and 25.11.2019 but orders were not delivered. Again on 09.01.2020, NCLT listed the C.A. No. 01 of 2018 for rehearing. Subsequently, Interim Order was passed in Company Appeal (AT) Ins. No. 14 of 2022. We have noticed that C.A. No. 01 of 2018 was listed for 04.02.2022. Learned Counsel for the Appellant has submitted that C.A. No. 01 of 2018 has not yet been decided as noted above due to non-decision of C.A. No. 01 of 2018, no major players are offering satisfactory valuation for the Corporate Debtor for resolving it. We are of the view that decision of C.A. No. 01 of 2018 is must before Corporate Debtor is finally resolved. We thus are of the view that National Company Law Tribunal, Principal Bench, New Delhi be requested to decide C.A. No. 01 of 2018 preferably within three months from the date copy of this judgement is produced, since non-decision of C.A. No. 01 of 2018 is creating hurdle in resolution of the Corporate Debtor. The object of IBC is to maximize the value of the Corporate Debtor but hurdle is being created in such objective due to non-decision of C.A. No. 01 of 2018.
One of the directions issued by the Adjudicating Authority in the Impugned Order dated 01.11.2021 allowing C.A. No. 1090(PB)/2020, was direction No. III which is to the following effect:
“III. This matter is hereby referred to the IBBI for taking appropriate action in accordance with Section 74(3) of IBC.”
We have carefully looked into the Order passed by the Adjudicating Authority. Findings of the Adjudicating Authority are in paragraph 21, directions have been issued by the Adjudicating Authority referring the matter to IBBI for taking appropriate action in accordance with Section 74(3) of the Code. Section 74(3) of the Code is as follows:
“74(3) Where the corporate debtor, any of its officers or creditors or any person on whom the approved resolution plan is binding under section 31, knowingly and wilfully contravenes any of the terms of such resolution plan or abets such contravention, such corporate debtor, officer, creditor or person shall be punishable with imprisonment of not less than one year, but may extend to five years, or with fine which shall not be less than one lakh rupees, but may extend to one crore rupees, or with both.”
We are of the view that there has to be a consideration by the Adjudicating Authority as to whether facts of the particular case require any reference under Section 74(3). There is no observation in the Order that Appellant has knowingly and willfully contravened any of the terms of the Resolution Plan. Without there being any observation even in prima facie basis that the Resolution Applicant has knowingly and willfully contravened any of the terms of the Resolution Plan, reference under Section 74(3) was not called for, in the facts of the present case.
We thus are satisfied that direction no. III issued in the Order dated 01.11.2021 deserved to be set aside.
Now coming to the Company Appeal (AT) Ins. No. 15 of 2022. We having held that the Order of the Adjudicating Authority cancelling the Resolution Plan does not warrant any interference, the rejection of C.A. No. 719(PB)/2020 and C.A. No. 1247(PB)/2019 seeking clarification and directions has also to be upheld. We thus do not find any infirmity in Order dated 01.11.2021 rejecting C.A. No. 719(PB)/2020 and C.A. No. 1247(PB)/2019 filed by the Appellant. Company Appeal (AT) Ins. No. 15 of 2022 also deserves to be dismissed.
In view of the fore-going discussions, Company Appeal (AT) Ins. No. 14 of 2022 is disposed of in following manner:
i. The Order dated 01.11.2021 passed in C.A. No. 1090(PB)/2020 in so far as it canceled the approval given to the Resolution Plan by Order dated 04.01.2022 as well as forfeiting Rs. 20 Crores deposited by the Resolution Applicant is affirmed.
ii. The Order dated 01st November, 2021 in so far as direction No. III is concerned, is set aside.
iii. National Company Law Tribunal, Principal Bench, New Delhi is requested to dispose of C.A. No. 01 of 2018 within a period of three months from the date when copy of this Judgement is produced for the reasons as noted above.
iv. The Resolution Professional after decision of C.A. No. 01 of 2018 may invite fresh ‘Expression of Interest’ and complete the process within two months thereafter. The period of CIRP shall be treated to have been extended till then.
v. Company Appeal (AT) Ins. No. 15 of 2022 is dismissed. No order as to costs.