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Judgment
ORDER
20.09.2022: The Appellant / Applicant has preferred the instant Comp App (AT) (CH) (INS) No.347/2022, being dissatisfied with the ‘impugned order’ dated 01.07.2022 in IA(IBC)/491(CHE)/2021 in IBA/1099/2019 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai).
Earlier, the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai), while passing the ‘impugned order’ dated 01.07.2022 in IA(IBC)/491(CHE)/2021 in IBA/1099/2019 (filed by the Applicant / Appellant / Represented by Erstwhile Resolution Professional under Section 66 (1) of the Insolvency and Bankruptcy Code, 2016), at Paragraph Nos.17 and 18 had observed the following: -
“Heard the submissions made by the Learned Counsel for both the parties. It could be seen that the Learned Counsel for the 1st Respondent has submitted that the present Application is not maintainable in view of the fact that the Resolution Plan in respect of the Corporate Debtor has been approved by this Tribunal and that the Applicant herein can no more contest the present application since he becomes functus officio. It was also submitted that as per the Resolution Plan, the CoC is required to take the present Application to its logical end in their name and the Applicant in the present case has no locus to maintain the present Application.
Admittedly in the present case, it could be seen that the cause title of the Application has not been changed or amended. It is also seen that after the approval of the Resolution Plan, the RP will become functus officio and hence he cannot prosecute the present Application under Section 66 of IBC, 2016”. and ultimately came to conclusion that the Application ‘sans merits’ and dismissed the same without Costs.
Assailing the ‘Order’ of ‘dismissal’ of IA(IBC)/491(CHE)/2021 in IBA/1099/2019 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) (filed under Section 66 (1) of the Insolvency & Bankruptcy Code, 2016), the Learned Counsel for the Appellant / Applicant submits that the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) had committed an ‘error’ in the relevant clause in the ‘Resolution Plan’, approved on 01.02.2022, while upholding untenable objection of the third party, defrauding vendor.
The Learned Counsel for the Appellant adverts to the ‘Rejoinder’ filed by the Applicant / Monitoring Professional, wherein at Paragraph ‘C’, it is mentioned as under: -
“The Applicant is entitled to maintain Section 66 applications filed during CIRP period, even after the approval of the resolution plan, as envisaged in Clause 5.2.10 of the resolution plan, which was approved by this Hon’ble Tribunal vide order dated 01.02.2022. Therefore, by no stretch of imagination it can be stated that the Applicant cannot maintain the present application.” and submits that, when the aforesaid clause in the ‘Resolution Plan’ envisages that even after the ‘Approval’ of the ‘Resolution Plan’, as specified in Clause 5.2.10 of the ‘Resolution Plan’, the Applicant is entitled to maintain the ‘Application’ filed under Section 66 of the Insolvency & Bankruptcy Code, 2016 (Fraudulent Trading / Wrongful Trading).
At this juncture, this ‘Tribunal’ aptly refers to Clause 2.4 of the Chapter III of the ‘Insolvency Law Committee’ Report, dated 20th February, 2020 and, in fact, the Clause 2.4 is reproduced as under: -
“2.4.The Committee also considered if the successful resolution applicant should be permitted to file such applications. However, it was agreed that this would possibly result in the resolution applicant being entitled to a return that was not factored in at the time of submitting their bid. Therefore, the Committee decided that the resolution applicant should not be permitted to file applications against improper trading or applications to avoid transactions”.
In this connection, this ‘Tribunal’ adverts to ‘Regulation 38’ of the ‘Mandatory contents of the resolution plan’ of the ‘Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 which reads as under: -
(2)A resolution plan shall provide: -
(a)the term of the plan and its implementation schedule:
(b)the management and control of the business of the corporate debtor during its term; and
(c ) adequate means for supervising its implementation.
[(d) provides for the manner in which proceedings in respect of avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, will be pursued after the approval of the resolution plan and the manner in which the proceeds, if any, from such proceedings shall be distributed.
Provided that this clause shall not apply to any resolution plan that has been submitted to the Adjudicating Authority under sub-section (6) of section 30 on or before the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022.] (Inserted by Notification No.IBBI/2022-23/GN/REG084, dated 14th June, 2022 (w.e.f. 14-06-2022).
It must be borne in mind that CIRP in the instant case had attained finality and that the ‘Resolution Professional’ became ‘functus officio’ and he cannot file / prefer / pursue any ‘Application’ on behalf of the ‘Company’. It is only be to the new ‘Management of the Corporate Debtor’, which is responsible to file such an ‘Application’.
It cannot be brushed aside that Section 23 of the Insolvency & Bankruptcy Code, 2016 clearly envisages the ‘Role’ of a ‘Resolution Professional’ in managing the affairs of the ‘Corporate Debtor’, during the ‘Resolution Process’ and not, thereafter.
A mere running of the eye of the ‘Resolution Plan’, as approved by the ‘Adjudicating Authority’ indicates under the caption 5.2.10 litigations, enquiries, investigations, etc. as under: -
“For avoidance of doubt, it is clarified that, during the CIRP Period, the Resolution Professional will be entitled to file or initiate applications or transactions, extortionate credit transactions and transactions involving fraudulent trading or wrongful trading under Section 43 to 51 and Section 66 of the IBC (“RP Applications”). Post the Approval Date, any cost or expenses incurred in continuing the RP Applications (including in connection with any appeal or recovery thereof) shall be borne by the CoC / Secured Financial Creditors and the CoC / Financial Creditors shall endeavour to take the said applications to their logical end in their name”.
In terms of the ‘Resolution Plan’ furnished from the ‘Approval Date’, the ‘Committee of Creditors’ / ‘Financial Creditors’ to take the ‘Application’ to its ‘logical conclusion’ and viewed in that perspective, the Applicant / Resolution Professional has no ‘Locus standi’ in the subject matter, in issue.
It is an established fact that the Interim Resolution Professionals / Resolution Professionals are required to play their part, as per the ingredients of the Insolvency & Bankruptcy Code, 2016. They are to provide for a ‘mechanism’ in aid to benefit of the ‘Corporate Debtor’ not only during the ‘interregnum period’ of ‘Insolvency’ but also till the ‘Resolution Process’ is completed. Suffice it for this ‘Tribunal’ to make a pertinent mention that the ‘Role’ of a ‘Resolution Professional’, much less of the ‘Erstwhile Resolution Professional’ is that he cannot proceed any further, after the ‘Resolution Plan’ is approved by the ‘Adjudicating Authority’.
Be that as it may, in the light of foregoing discussions and also this ‘Tribunal’ on going through the ‘impugned order’ dated 01.07.2022 in IA(IBC)/491(CHE)/2021 in IBA/1099/2019, passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai), this ‘Tribunal’ comes to an ‘inevitable’, ‘inescapable’, and ‘irresistible’ conclusion that the view arrived at by the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) in dismissing the IA(IBC)/491(CHE)/2021 in IBA/1099/2019 on the basis of the Appellant / Applicant lacking ‘locus standi’ to prefer the said ‘Interlocutory Application’, does not suffer from material irregularity or patent illegality in the eye of ‘Law’.
Viewed in that perspective, the Comp App (AT) (CH) (INS) No.347/2022 filed by the Appellant / Applicant, fails.
In fine, the Comp App (AT) (CH) (INS) No.347/2022 is ‘dismissed’, of course, in the reasons ascribed by this ‘Tribunal’, in this Appeal. No Costs.