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Judgment
Justice M. Venugopal, Member (Judicial)
Background:
The ‘Appellant’ / ‘Applicant’ has focused the instant Comp. App. (AT)(CH)(Ins) No.360/2022 as an ‘Aggrieved Person’ on being dissatisfied with the ‘Impugned Order’ dated 01.07.2022 in IA(IBC)/477(CHE)/2021 in IBA/1099/2019 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) in disposing the ‘said Application’ as an ‘infructuous one’.
The ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai), while passing the ‘Impugned Order’ dated 01.07.2022 in IA(IBC)/477(CHE)/2021 in IBA/1099/2019 at ‘Paragraphs 2 and 3 had observed the following: -
“2.Similarly, IA(IBC)/477(CHE)/2021 is also filed by the Applicant Viz., Wind Construction Limited under Section 60 (5) of IBC, 2016 seeking relief as follows: -
(iii)Restrain the Respondent from including the one 1500 KW WEC which belongs to the Applicant while valuing the assets of the Corporate Debtor in the matter of Regen Powertech Private Limited.
(iv)To pass such further and other orders as this Hon’ble Tribunal may deed fit and proper in the facts and circumstances of the case.
3.In so far as IA(IBC)/477(CHE)/2021 is concerned, it could be seen that the prayer as sought by the Applicant has become infructuous since the Resolution Plan in respect of the Corporate Debtor was approved by this Tribunal as early as on 01.02.2022 and hence the said Application stands dismissed as infructuous.’
Appellant’s submissions:
According to the Learned Counsel for the ‘Appellant’ / ‘Applicant’, the ‘Impugned Order’ passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) on 01.07.2022 in IA(IBC)/477(CHE)/2021 in IBA/1099/2019 is clearly an ‘unsustainable one’ in the ‘eye of Law’.
It is the ‘Plea’ of the ‘Appellant’ that the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) had committed an ‘error’ in disposing the IA(IBC)/477(CHE)/2021 in IBA/1099/2019 as an ‘infructuous one’, because of the ‘approval’ of the ‘Resolution Plan’ on 01.02.2022. Furthermore, it is the stand of the ‘Appellant’ that the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) had failed to ‘Note’ that in the ‘Counter’ filed by the ‘Respondent’ to IA(IBC)/477(CHE)/2021 in IBA/1099/2019, the ‘Respondent’ had not stated that one Wind Mill is the asset of the ‘Corporate Debtor’ and the same was included, while valuing the ‘Assets’ of the ‘Corporate Debtor’.
On behalf of the ‘Appellant’, the contention is raised that the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) had failed to appreciate that the ‘Respondent’ could not have included ‘One WEC’, while valuing the ‘Assets’ of the ‘Corporate Debtor’ as the same belongs to the ‘Appellant’.
The other ‘Plea’ projected on the side of the ‘Appellant’ is that the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) had not taken into account that in ‘Paragraph 4 (vi) of the ‘Counter’ filed by the ‘Respondent’ in IA/1147/IB/2020 in IBA/1099/2019, the ‘Respondent’ had stated that due to non-payment of Rs.4.81 Crore, one WEC was not handed over to the ‘Appellant’.
The clear cut stand of the ‘Appellant’ is that the ‘Respondent’ could not have included one WEC, while valuing the ‘Assets’ of the ‘Corporate Debtor’, as the same belongs to the ‘Appellant’.
The Learned Counsel for the Appellant points out that the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) had failed to note that the ‘Annual Report’ filed by the ‘Respondent’ as on 31.03.2019 would show that the ‘Corporate Debtor’ had sold 33 WEC to the ‘Appellant’.
The Learned Counsel for the ‘Appellant’ comes out with a stand that the ‘Total Cost’ of 33 Winds Mills, in ‘Terms of the Contract’ was Rs.267,30,00,000/- and the ‘Total Sum’ payable by the ‘Appellant’ to the ‘Corporate Debtor’, including GST was Rs.286,19,78,856/-.
The Learned Counsel for the ‘Appellant’ points out that the ‘Letter of Credit’, if opened for Rs.100 Crore value, in the name of the ‘Corporate Debtor’s vendors, approximately, 25 ‘Letter of Creditors’ immediately for supply of ‘material’ or ‘raw material’, as per Appendix 7 of ‘Agreement’ by 29.01.2018, subject to the ‘Corporate Debtor’, providing well in advance all details / documentation required by the 1st Respondent’s Bank. Moreover, the ‘Corporate Debtor’ will provide ‘recommendation letter’ for release of ‘each payment’ to the ‘vendor’ of the ‘Corporate Debtor’.
Apart from the above, the Learned Counsel for the ‘Appellant’ / ‘Applicant’ brings it to the ‘Notice’ of this ‘Tribunal’ that the balance payment is Rs.4.81 Crore. Also, that all payments made directly to the ‘Corporate Debtor’s vendor, at the request of the ‘Corporate Debtor’, shall be adjusted against the ‘Project Cost’.
The Learned Counsel for the ‘Appellant’ proceeds to point out that, in terms of the ‘Agreement’, Rs.200 Crore was to be paid by means of ‘Letter of Credit’. Further the ‘Appellant’, based on the request of the ‘Corporate Creditor’, had opened a ‘Letter of Credit’, for Rs.267,68,91,817/- and that a sum of Rs.70,82,13,052/-, being the overpayment, the same was repaid by the ‘Corporate Debtor’. Indeed, the ‘Letter of Credit’ was opened for a further sum of Rs.71,297,645/-.
The Learned Counsel for the ‘Appellant’ relies on the Hon’ble High Court of Delhi ‘Order’ dated 26.11.2020 in W.P. (C) 8705/2019 & CM APPL. 36026/2019 between the ‘Venus Recruiters Private Limited Vs. Union of India and others wherein at Paragraph Nos.77 to 80, it is observed as under: -
“77.There is a START line and FINISH line for the Resolution process. Section 23 clearly stipulates that the role of the RP is to ‘manage’ the affairs of the Corporate Debtor ‘during’ the resolution process and NOT thereafter. In fact, until the enactment of the proviso to Section 23, which was introduced with effect from 28th December, 2019, the RP’s mandate concluded with the CIRP. The proviso introduced, firstly in 2018 and thereafter in 2020, merely extended the mandate of the RP till the approval of the Resolution Plan under Section 31(1) or appointment of liquidator under Section 34. This itself makes it amply clear that the RP’s authority is limited in nature and in any event, cannot extend beyond the order passed under Section 31. Thus, there is an outer limit for the functioning of the RP under the proviso to Section 23 (1). The continuation of a RP or filing of an application for the purpose of prosecuting an avoidance application as a ‘Former RP’ is beyond the contemplation of the IBC. The RP ceases to be one after an order under Section 31 is passed. The RP does not have any connection whatsoever with the new Management which takes over the erstwhile Corporate Debtor, after the approval of the Resolution Plan. Any other interpretation could lead to a situation where an RP could be a ‘Former RP’ for years together without any definite end date. Under Section 23, the CIRP period is a specific period and cannot be read as a perpetual period or an indefinite period. The wording of the proviso in fact makes it further clear that the CIRP process in fact comes to an end immediately upon the RP submitting the Plan itself.
78.The IBC was meant to cure the fallacies and shortcomings in the previous legislations wherein winding-up of companies consumed years together leading to erosion of their assets and businesses. The wording of Section 23 clearly lays down the mandate for the RP. The same cannot be extended beyond the contemplation in the statute. After the Resolution Plan is approved and the new management takes over, the manner in which the affairs of the company are to be run is the sole prerogative of the new management. In the statutory scheme, the RP cannot continue to act on behalf of the company under the title of ‘Former RP’. That would be violative of the legislative intention and the statutory prescription.
79.A perusal of Section 30(4) also makes it adequately clear that the CIRP period has to be completed within the time period specified under Section 12(3). Thus, the IBC does not contemplate the continuation of the RP beyond the CIRP period.
80.The above interpretation is also in line with the overall object and purpose of the IBC. The IRP/RP are persons, who are assigned specific roles under the IBC. They are meant to provide a smooth transition for the Corporate Debtor during an insolvency period till the resolution process is over. Their continuation beyond the closure of the resolution process would in effect mean an interference in the conduct and management of the company, which is now having its own independent Board, managerial personnel, etc. The RP’s role cannot continue once the Resolution Plan is approved and the successful Resolution Applicant takes charge of the Corporate Debtor.”
While summing up, the Learned Counsel emphatically comes out with an ‘Argument’ that even till now, it is not clear whether ‘one WEC’ has been kept separately or included in the ‘Assets’ of the ‘Corporate Debtor’ and that the ‘Respondent’ has deliberately not clarified this aspect, in any of the ‘Pleadings’ and, therefore, prays for ‘Allowing’ the present ‘Appeal’ (Comp. App. (AT)(CH)(Ins) No.360/2022), in furtherance of substantial cause of ‘Justice’.
This ‘Tribunal’ has ‘Heard’ the Learned Counsel appearing for the ‘Appellant’ at the stage of ‘Admission’ of the instant Comp. App. (AT)(CH)(Ins) No.360/2022.
At the outset, this ‘Tribunal’ relevantly points out that the Insolvency & Bankruptcy Code, 2016 grants ‘Authority’ to the ‘Resolution Professional’ to file ‘Proceedings’ before the ‘Competent Forum’. Also, that Section 60 (5) of the Insolvency & Bankruptcy Code, 2016 is not all ‘pervasive Section’, conferring ‘Jurisdiction’ to an ‘Appellate Authority’ to ‘determine’, any question / issue relating to the ‘Corporate Debtor’.
It transpires that IA(IBC)/477(CHE)/2021 in IBA/1099/2019 is filed by the ‘Appellant’ / ‘Applicant’ before the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai), wherein the ‘Appellant’ / ‘Applicant’ had averred that a ‘Contract’ dated 24.01.2018 was executed between the ‘Appellant’ / ‘Applicant’ and the ‘Corporate Debtor’, wherein the ‘Corporate Debtor’ undertook to develop a 49.5 MW ‘wind power project’, comprising of 33 Wind Energy Converter (WEC) that apart the ‘consideration’ of one WEC was fixed at Rs.8.10 Crore and the total consideration for 33 WECs are Rs.267,30,00,000/- + GST, as applicable. The ‘Appellant’ / ‘Applicant’ had paid the ‘full payment’ for the ‘whole Project’ and in reality, the ‘Appellant’ / ‘Applicant’ is to recover Rs.24,89,18,879/-from the ‘Corporate Debtor’.
It is represented on behalf of the ‘Appellant’ / ‘Applicant’ that in ‘Terms of the Agreement’, the ‘Corporate Debtor’ had constructed / developed 32 WECs and handed over the same to the ‘Appellant’ / ‘Applicant’, from time to time and further that the ‘Corporate Debtor’ is yet to hand over one WEC is that out of 33 WECs (for which the ‘Appellant’ / ‘Applicant’ had paid the ‘entire consideration’ for all 33 WECs to the ‘Corporate Debtor’, as an upfront payment) and that the ‘Corporate Debtor’ had delivered 32 WECs and handing over of ‘one WEC’ is pending on the part of the ‘Corporate Debtor’. The ‘Appellant’ / ‘Applicant’ takes a stand that it is the ‘absolute owner’ of ‘one WEC’, which is lying with the ‘Corporate Debtor’ for the purpose of delivering the same to the ‘Appellant’ / ‘Applicant’. Besides this, one WEC is not an ‘Asset’ of the ‘Corporate Debtor’, but it is the ‘Asset’ of the ‘Appellant’ / ‘Applicant’, who had paid the ‘whole sale consideration’ to the ‘Corporate Debtor’.
On behalf of the ‘Appellant’ / ‘Applicant’, a forceful contention is projected to the effect that the ‘Appellant’ / ‘Applicant’ had addressed a letter dated 28.07.2020 to the ‘Respondent’, requesting him to deliver one WEC, but, despite the request so made, the ‘Respondent. had not chosen to hand over the one WEC, and hence the ‘Appellant’ / ‘Applicant’ was constrained to file IA/1147/IB/2020 in IBA/1099/2019. In as much as, the ‘Appellant’ / ‘Applicant’ has paid the ‘whole consideration’ for the WEC, the ‘Appellant’ / ‘Applicant’ has filed IA(IBC)/477(CHE)/2021 in IBA/1099/2019 before the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) praying for passing of an ‘order’ of ‘restraining the Respondent’ from including the one 1500KW WEC belonging to the ‘Appellant’ / ‘Applicant’, while valuing the ‘Assets’ of the ‘Corporate Debtor’ in the matter of M/s. Regen Powertech Private Limited.
Before the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) the Respondent (Resolution Professional of M/s. Regen Powertech Private Limited) had filed a ‘Counter’ stating that the ‘Corporate Debtor’ had exercised ‘unpaid vendor’s Lien’ and had withheld the subject WEC of the instant Application and IA/1147/IB/2020 in IBA/1099/2019.
The ‘Respondent’ in its ‘Reply’ / ‘Response’ before the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) to IA(IBC)/477(CHE)/2021 in IBA/1099/2019 had averred that the ‘Resolution Plan’ provides for continuation of the ‘Application’ filed by the ‘Resolution Professional’, while the ‘Relief’ in the instant IA(IBC)/477(CHE)/2021 in IBA/1099/2019 is not to include one 1500KW WEC while valuing the ‘Assets’ of the ‘Corporate Debtor’. However, by virtue of the ‘unpaid vendor’s Lien’ and sanction of the ‘Resolution Plan’, that right for the ‘Corporate Debtor’ to continue IA(IBC)/489(CHE)/2021, the ‘instant relief’ is unsustainable.
In this connection, it is not out of place for this ‘Tribunal’ to make a pertinent mention that the ‘Respondent’ (Resolution Professional of M/s. Regen Powertech Private Limited) at ‘Paragraph 6’ had among other things averred that the ‘Appellant’ / ‘Applicant’ had played a ‘calculated fraud’ along with the erstwhile Directors, which was set-forth in detail in IA(IBC)/489(CHE)/2021 and that the ‘Corporate Debtor’ had raised ‘Invoices’ on the ‘Appellant’ / ‘Applicant’ to the tune of Rs.286,19,78,856/-. Furthermore, it was mentioned that the ‘Appellant’ / ‘Applicant’ had reportedly paid a sum of Rs.206,90,45,531.50 to the ‘Corporate Debtor’. Strangely, a sum of Rs.70,82,13,056/- purported to have been paid to the ‘Corporate Debtor’ by the ‘Appellant’ / ‘Applicant was remitted back to the ‘Appellant’ / ‘Applicant’.
Apart from the above, the ‘Respondent’ in its ‘Reply’ to IA(IBC)/477(CHE)/2021 in IBA/1099/2019 before the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) had also proceeded to make a mention that the ‘Appellant’ / ‘Applicant’s ‘claim for Damages’, could not be adjusted against the ‘Debt’, and hence, as per the ‘payment’ of the ‘Appellant’ / ‘Applicant’ a sum of Rs.43,33,35,810/-is payable to the ‘Corporate Debtor’, etc. and viewed in that perspective, IA(IBC)/477(CHE)/2021 in IBA/1099/2019 filed by the ‘Appellant’ / ‘Applicant’ is not maintainable and the same is liable to be dismissed.
There is no second opinion of a ‘prime fact’ that in the instant case, the ‘Resolution Plan’ was approved on 01.02.2022. Further, Section 23 of the Insolvency & Bankruptcy Code, 2016, concerns with the ‘role’ of the ‘Resolution Professional’ to conduct the ‘Corporate Insolvency Resolution Process’ (CIRP), in managing the affairs of the ‘Corporate Debtor’, during the ‘Resolution Process Period’, and not at ‘subsequent point of time’.
Considering the ‘Relief’ prayed for by the ‘Appellant’ / ‘Applicant’ in IA(IBC)/477(CHE)/2021 in IBA/1099/2019 before the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai), an order to restrain the Respondents from including ‘one 1500KW WEC, which belongs to the ‘Appellant’ / ‘Applicant’, while valuing the ‘Assets’ of the ‘Corporate Debtor’ in the matter of M/s. Regen Powertech Private Limited, it must be borne in mind, that because of the ‘unpaid vendor’s Lien and over the ‘Assets’ to the proportionate to the ‘Balance Sum’ payable by the ‘Appellant’ / ‘Applicant’, and in the light of the stand taken by the ‘Respondent’, before the ‘Adjudicating Authority’ (National Company Law Tribunal, Division Bench – II, Chennai) that the ‘Appellant’ / ‘Applicant’ had not made ‘Full Payment’ of ‘Contractual Amount’ and added further, due to non-payment of the ‘Contractual Sum’, the WEC was not handed over to the ‘Appellant’ / ‘Applicant’ and in the event of ‘Payment of Full Dues’, the WEC will be handed over to the ‘Appellant’ / ‘Applicant’, the instant ‘Relief’ sought for by the ‘Appellant’ / ‘Applicant’ to restrain the ‘Respondent’ from including 1500KW WEC, while valuing the ‘Assets’ of the ‘Corporate Debtor’ in the matter of M/s. Regen Powertech Private Limited, based on the footing, that it belongs to the ‘Appellant’ / ‘Applicant’ is, ‘per se’, not maintainable in the considered opinion of this ‘Tribunal’.
Disposition
Looking at from the above perspective, the IA(IBC)/477(CHE)/2021 in IBA/1099/2019 filed by the ‘Appellant’ / ‘Applicant’ sans merits. Consequently, the instant Comp. App. (AT)(CH)(Ins) No.360/2022 filed by the ‘Appellant’ / ‘Applicant’ is ‘Dismissed’, but, without Costs. The connected IA No.825/2022 (For Exemption) and IA No.826/2022 (For Direction) are Closed.