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Judgment
Per: Justice Rakesh Kumar Jain:
This appeal arises from the order dated 27.06.2022 passed by the Adjudicating Authority (National Company Law Tribunal, Allahabad Bench, Special Bench, Prayagraj) by which CP (IB) No. 512/ALD/2019 filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) by Yes Bank Limited (Financial Creditor) seeking to initiate Corporate Insolvency Resolution Process (in short ‘CIRP’) against Jaypee Healthcare Limited ( in short ‘JHL’) (Corporate Debtor) for the resolution of an amount of Rs. 378.02 Crore as on 31.10.2019 has been ordered to be kept in abeyance.
Shorn of unnecessary details, it transpired that Jaypee Infratech Limited (in short ‘JIL’) as a holding company had 100% shares in Jaiprakash Associates Limited (in short ‘JAL’) (Corporate Debtor), CP (IB) – 77 of 2017 was filed by IDBI Bank under Section 7 of the Code against JIL which was admitted on 09.08.2017. The resolution plan submitted originally by NBCC was approved by the Committee of Creditors (in short ‘CoC’) on 17.12.2019 which was further approved by the Principal Bench vide order dated 03.03.2020. The order dated 03.03.2020 was challenged by way of various appeals including the one filed by the present Appellant but on some application moved to the Hon’ble Supreme Court, all these appeals were transferred to the Hon’ble Supreme Court from this Tribunal and were decided together in the case of Jaypee Kensington Boulevard Apartments Welfare Association & Ors. Vs. NBCC (India) Ltd. & Ors., 2022 (1) SCC 401. In this regard, we may refer to Paragraph 280 to 281 which are reproduced as under:-
“280.Taking all the facts and circumstances into account and in keeping with the spirit and purport of the orders passed in the past, we are inclined to again exercise the powers under Article 142 of the Constitution of India and to enlarge the time for completion of CIRP concerning JIL while extending opportunity to the said resolution applicants Suraksha Realty and NBCC to submit modified/fresh resolution plans, which are compliant with the requirements of the Code and the CIRP Regulations and are in accord with the observations and findings in this judgment.
281.We also deem it appropriate to clarify that the processing of the modified/fresh resolution plans, as permitted and envisaged by this judgment, is required to be completed within the extended time and for that matter, the other aspects like reconciliation of accounts between JAL and JIL or resolution of the issues related with the financial creditor of the subsidiary of the corporate debtor shall be the matters to be dealt with separately and decision on the resolution plan by the Committee of Creditors need not wait the resolution of those issues.”
It is pertinent to mention that the aforesaid Judgment was delivered on 24.03.2021 but in the meantime the present Appellant (Yes Bank) filed the application under Section 7 of the Code on 02.12.2019.
Apropos order of the Hon’ble Supreme Court, the plans of NBCC and Suraksha consortium were submitted to the CoC for consideration and ultimately plan of Suraksha consortium was approved by the Adjudicating Authority on 07.03.2023.
It is also to be noticed that against the order dated 07.03.2023 various appeals were filed, namely, CA (AT) (Ins) No. 548 of 2023 by Jaiprakash Associates Ltd. (JAL), CA (AT) (Ins) No. 559 of 2023 by Manoj Gaur and CA (AT) (Ins) No. 493 of 2023 by Yamuna Expressway Industrial Development Authority. All of these appeals are pending, however, CA (AT) (Ins) No. 549 of 2023 filed by Department of Income Tax has been disposed of.
Counsel appearing on behalf of the Appellant, while referring to the findings recorded in the impugned order has submitted that entire emphasis of the order passed against the Appellant is upon the issue of moratorium which was imposed on account of CIRP proceedings initiated against JIL. It is submitted that with the approval of the resolution plan by the Adjudicating Authority on 07.03.2023 the moratorium is automatically lifted and there is no hindrance to pursue the application filed under Section 7 of the Code against JHL. It is submitted that the Appellant has a right to proceed against the subsidiary company as well even if the holding company is in CIRP. In this regard, he has relied upon an order of this Tribunal in the case of Ashok B. Jiwrajka, Director of Alok Infrastructure Ltd. Vs. Axis Bank Ltd., CA (AT) (Ins) No. 683 of 2018 decided on 16.01.2019. The said order is reproduced as under: -
“1.Having heard learned counsel for the parties, we find that a separate Corporate Insolvency Resolution Process has been initiated against ‘Alok Industries Ltd.' (Holding Company). Subsequently, another Corporate Insolvency Resolution Process has been initiated pursuant to application filed by another financial creditor against 'Alok Infrastructure Ltd.' (Subsidiary of Alok Industries Ltd.). This appeal has been preferred by Mr. Ashok B. Jiwrajka', Director of 'Alok Infrastructure Ltd.' against order dated 24th October, 2018 whereby and whereunder Corporate Insolvency Resolution Process has been initiated against 'Alok Infrastructure Ltd.' (Subsidiary Company).
2.Learned senior counsel appearing on behalf of the Appellant submits that the insolvency resolution process should not continue till the Corporate Insolvency Resolution Process is decided under Section 31 in the case of 'Alok Industries Ltd.' (Holding Company). However, such submission cannot be accepted as a separate Corporate Insolvency Resolution Process has been initiated against another Corporate Debtor which is separate from the Corporate Insolvency Resolution Process initiated against ‘Alok Infrastructure Ltd.', of which the Appellant is the Director.
3.Learned counsel appearing on behalf of the Appellant further submits that a resolution plan has already been approved in the case of 'Alok Industries Ltd." and the matter was placed before the Adjudicating Authority in July, 2018 for its approval under Section 31 of Insolvency and Bankruptcy Code, 2016. However, no decision has been taken by the Adjudicating Authority. If so, we are of the view that the concerned Adjudicating Authority should decide the same immediately. If resolution plan has been filed in the case of 'Alok Industries Ltd.' and Resolution Professional of the said case has placed the approved resolution plan in respect of ‘Alok Industries Ltd.' before the Adjudicating Authority, the concerned Adjudicating Authority is required to decide it preferably within three weeks.
4.We make it clear that we have not stayed the Corporate Insolvency Resolution Process initiated against ‘Alok Infrastructure Ltd.' and the Resolution Professional, the Committee of Creditors and the Adjudicating Authority will continue with the same in accordance with law within the time specified in the law.
5.The appeal stands disposed of with aforesaid observations. No costs.”
On the other hand, Counsel appearing on behalf of the Respondent has vehemently argued that proceeding in regard to CIRP of JIL and JAL are mixed up as a result of which the impugned order has been passed for keeping this matter in abeyance. In this regard, he has referred to Paragraph 185 and 186 of the Judgment rendered by the Hon’ble Supreme Court in the case of Jaypee Kensington Boulevard Apartments Welfare Association & Ors. (Supra) which are reproduced as under:-
“185.We have carefully examined the submissions made by the parties. In the totality of circumstances of the case and the stance of respective parties, when it is noticed that the aforesaid proposal of YES Bank, as stated in sub-paragraphs “ff” and “gg” of paragraph 7 of the memo of appeal, is acceptable to NBCC, subject to approval of the resolution plan, we do not find any reason to say anything further on this score and would leave the parties to work out a viable solution in the best interest of all the stakeholders; and for that purpose, the parties concerned, if necessary, may seek appropriate orders from NCLT, as regards mode and modalities of the process to be carried out.
186.In view of the above, we do not consider it necessary to render any other finding in this point for determination except the observation that the resolution plan essentially deals with the assets of the corporate debtor JIL and not that of its subsidiary JHL. Differently put, what the resolution plan deals with are the shares in JHL, which are regarded as assets of the corporate debtor JIL. As observed, no further comments are required and we leave this aspect of the matter at that only”
Counsel for the Respondent has further referred to Para 25 of the impugned order but Counsel for the Appellant has submitted that it has no relevance.
Senior Counsel for Appellant has brought to our attention paragraph 182.2 of the judgment of Hon’ble Supreme Court in the matter of Jaypee Kensington Boulevard Apartments Welfare Association & Ors. (supra) to point out that the proposition given by Yes Bank noted in sub-paragraph (ff) in para 182.2 was regarding evolving a workable mechanism with regard to the monetization of assets of JHL and that it was with reference to the resolution plan submitted by NBCC. He has clarified that the resolution plan submitted by NBCC was not acted upon and the resolution plan of Suraksha Realty was approved.
Senior Counsel for Appellant has further brought to our notice clause (xi) of para 182.2 of the same judgment to contend that JHL lenders will have all rights to enforce its securities, once the date of 30.6.2020 is over, which also goes to show that the condition in para 182.2 was relevant only in connection with the resolution plan submitted by NBCC. He has further argued that the judgment of this Tribunal in the matter of Alok Industries (supra) also makes it clear that the CIRP of a subsidiary company can be initiated while the CIRP of the holding company is going on.
In the light of the judgments of the Hon’ble Supreme Court in the matter of Jaypee Kensington Boulevard Apartments Welfare Association & Ors. (supra) and this Tribunal in Alok Industries (supra), we are of the clear view that now there is no bar to hear the section 7 application filed by Yes Bank, which is now being pursued by its assignee J.C. Flowers Asset Reconstruction Pvt. Ltd., which can be considered and adjudicated upon.
Be that as it may, the facts remains that the proceedings before the Adjudicating Authority in CP (IB) No. 512/ALD/2019 filed by the Appellant under Section 7 of the Code has restarted.
The present appeal has been filed by the Appellant being aggrieved that his application has kept in abeyance by recording reasons which are not germane to the issue involved but once the proceedings has again been started, we deem it appropriate to dispose of this appeal with the observation that the finding recorded in the impugned order shall not come in way either of the parties for the purpose of decision of Section 7 application and all the issues shall remain open.