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Judgment
Justice M. Venugopal, Member (Judicial):
Prologue:
Company Appeal (AT) (CH) (INS.) No. 442 of 2022:
The `Appellant’ / `Suspended Member’ of the `Board of Directors’ of the `Respondent / Corporate Debtor’ of `M/s. Kamachi Industries Limited’, has preferred the instant Comp. App (AT) (CH) (INS.) No. 442 of 2022, before this `Tribunal’, as an `Aggrieved Person’, on being dissatisfied with the `impugned order’ dated 09.12.2022, in Ivn.P(IBC)/1(CHE)/2022 (`Intervening Application’), filed by the `Appellant’/`Petitioner’ in IA/(IBC)/1213/CHE/2021, preferred by the `Resolution Professional’, under Section 60 (5) of the I & B Code, 2016, read with Rule 11 of NCLT Rules, 2016, seeking, `Liquidation’ of the `Corporate Debtor / Company’, in IA/(IBC)/1213/CHE/2021 in IBA/883/2019, passed by the `Adjudicating Authority’, (`National Company Law Tribunal’, Division Bench – I, Chennai), in dismissing the `Application’.
The `Adjudicating Authority’, (`National Company Law Tribunal’, Division Bench – I, Chennai). while passing the `impugned order’ dated 09.12.2022 in IVN.P(IBC)/1(CHE)/2022 in IA/ (IBC)/1213/CHE/2021 in IBA/883/2019, wherein, inter alia at Paragraphs 12.1 to 12.5, had observed the following:
12.1.The main contention of the applicant is that if the liquidation of the Corporate Debtor is ordered, severe hardship and prejudice would be caused to the Applicant and the other members of the Suspended Board of Directors of the Corporate Debtor.
12.2.Further, it has been submitted by the applicant that as per Section 230(12) of the Companies Act, 2013, the Applicant is an aggrieved party and is entitled to file an application before this Tribunal in the event of any grievance with respect to the takeover offer of the Company. Though, there is no takeover offer yet on the table and even assuming liquidation takes place, it will be an ineffective remedy as the liquidation will be done on a piece meal basis and there will be no effective solution to a going concern.
12.3.It was further submitted by the Applicant that an appeal has been preferred by the applicant in Company Appeal (AT) (INS)/328/2020 and the same is pending for adjudication before the Hon’ble NCLAT.
12.4.Heard the submissions made by the Learned Counsel for the Intervenor. Further, the CoC in its commercial wisdom, after examining the viability and feasibility of two Resolution Plan, has rejected both the Resolution Plans unanimously and decided to liquidate the Corporate Debtor. Thus, it is a settled law that the decision of the CoC cannot be called into question by this Adjudicating Authority. Further, the Hon’ble NCLAT in the matter of Rakshit Dhirajlal Doshi vs IDBI Bank Limited in Company Appeal (AT) (Insolvency) No. 296 of 2022, wherein it was held in para 10 and 11 of the judgement as follows:
``10. It is further submitted that the Committee of Creditors in its meeting have resolved to initiate liquidation of Corporate Debtor and accordingly Resolution Professional had filed the IA bearing No. 769 / 2021 under Section 31 of the IBC and the same is pending for consideration. As the CoC by applying its commercial wisdom, had already proposed liquidation of the Appellant Company, therefore, the present appeal has become infructuous. Based on these submissions, the Adjudicating Authority has rightly passed the impugned order, therefore, there is no merit in the present Appeal, the Appeal is fit to be dismissed as the recommendation of the CoC to liquidate the Company is pending for consideration before the Adjudicating Authority.
11.After hearing the parties and going through the pleadings made on behalf of the parties, we agree with the reasons given by the Adjudicating Authority while passing the impugned order and as the CoC has recommended for liquidation of the Company for which I.A. is pending before the Adjudicating Authority, hence this Appeal has become infructuous. The Impugned Order dated 31.08.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench ) in C.P. (IB) No. 59/7/NCLT/AHM/2019 is hereby affirmed. The instant Appeal is hereby dismissed.
12.5.Taking in to consideration above Judgement and since the CoC has unanimously passed a Resolution for Liquidation of the Corporate Debtor, we are left with no other option than to liquidate the Corporate Debtor in terms of Section 33 of IBC, 2016 and accordingly IVN.P(IBC)/1(CHE)/2022 stands dismissed.’’
Appellant’s Contentions:
Challenging the `impugned order’ dated 09.12.2022 in Ivn.P(IBC)/1(CHE)/2022 in IA/(IBC)/1213/CHE/2021 in IBA/883/2019, passed by the `Adjudicating Authority’, (`National Company Law Tribunal’, Division Bench – I, Chennai, in `dismissing’, the `Interlocutory Application’, filed by the `Appellant’/`Petitioner’/`Proposed Respondent’, the Learned Senior Counsel for the `Appellant’, submits that the `Appellant’, was a `Promoter / Shareholder’ of the `Respondent / Corporate Debtor’, is a `Member’ of the `Suspended Board of Directors’, of the `Corporate Debtor’ / `M/s. Kamachi Industries Limited’ (`Respondent’), and further that the `Appellant’ held 413840 `Equity Shares’ of Rs.10/- each per `Equity Share’ of the `Corporate Debtor’.
According to the Appellant, the `Corporate Debtor / Company’, is primarily engaged in the business of manufacturing sponge iron, billets, PMT Bars and generation of Power at Village Pappan Kuppam in Gummidipoondi, located in the State of Tamilnadu. Further, the `Corporate Debtor’ / `Respondent’ / `Company’, had sought for `Term Loans’ and other `Facilities’, from Banks to a tune of Rs.1489,54,11,615/-for the `Development and Expansion of Business’.
It is represented on behalf of the Appellant / Petitioner that the `Shareholders’ of the `Corporate Debtor’ (including the `Appellant /Applicant), had infused a Capital of Rs.99.41 Crores into the `Corporate Debtor’s Corpus, as opposed to the Capital Requirement of Rs.98.79 Crores, laid down in the `CDR Package’. Also that, due to market turmoil and high interest rates, the `Corporate Debtor’, could not pay the `Dues’ and that, as agreed to the `Consortium of Banks’, `tagging sum’, was paid by the `Corporate Debtor’, without any `Default’, from 05.03.2018, the `Consortium of Bankers’, had agreed to a `Holding-on Operations’’ arrangement, whereby, the `Corporate Debtor’, was required to `pay’ only a `tagging sum’, on the `Net Sale Proceeds’.
According to the Appellant / Petitioner, the State Bank of India, had preferred an `Application’, under Section 7 of the I & B Code, 2016, before the `Adjudicating Authority’, (`National Company Law Tribunal’, Division Bench – I, Chennai). in Ivn.P(IBC)/1(CHE)/2022 in IA/(IBC)/1213/CHE/2021 in IBA/883/2019, and the same was `Admitted’ on 19.02.2020, thereby the `Corporate Insolvency Resolution Process’, in respect of the `Corporate Debtor’, was initiated, against which, the Comp. App (AT) (INS.) No. 328 of 2020, was preferred before this `Tribunal’.
The Learned Counsel for the Appellant / Petitioner submits that the `Appellant / Petitioner’ and the other `Members of the suspended Board of Directors’, are the most affected party and the severe hardship and prejudice, will be caused to them, in case of `Liquidation’ of the `Corporate Debtor’.
The Plea of the Appellant / Petitioner is that, he is an `Aggrieved Person’, as per Section 230 (12) of the Companies Act, 2013, and hence, he is entitled to file an `Application’, before the `Adjudicating Authority’ (`Tribunal’), in the event of any grievance, in regard to the `take over of the company’.
It is the version of the Appellant / Petitioner, although, there is an `Express Prohibition’, as per Section 29A of the I & B Code, 2016, for him, to be `ineligible’ to act as a `Resolution Applicant’, it is pointed out that none other than the `Promoter’, has a direct interest in the welfare and the development of the `Corporate Debtor’. Moreover, the `Appellant / Petitioner’, can always submit a `Scheme of Arrangement’ / `Settlement’.
Therefore, it is contended on behalf of the Appellant / Petitioner that Ivn.P(IBC)/1(CHE)/2022 (Intervening Application in IA/(IBC)/1213/CHE/2021 in IBA/883/2019), is to be `allowed’, so as to permit him to `intervene’ and to put forward his submissions in IA/(IBC)/1213/CHE/2021, filed by the `Resolution Professional’, praying for `Liquidation’ of the `Corporate Debtor’ / `Company’, and to reimburse the costs to him.
The Learned Counsel for the Appellant / Petitioner submits that on 09.12.2022, the impugned order came to be passed by the `Adjudicating Authority’, in and by which, the `Application’, to initiate `Liquidation’ of the `Corporate Debtor’, was `admitted’, without appreciating that an `Appeal’ in Comp App (AT) (INS.) No. 328 of 2020, assailing the initiation of `Corporate Insolvency Resolution Process’, is pending, before the `Appellate Tribunal’, the `Committee of Creditors’, had misused the provisions of the Code, by projecting an `Application’, to initiate `Liquidation’ of the `Corporate Debtor’, while an `Appeal’, is pending before this `Tribunal’, and that the `Committee of Creditors’, took the decision, to `Liquidate’, arbitrarily, without considering the three `Plans’ submitted and rejected the same, on the ground of `Value’.
At this juncture, on behalf of the Appellant it is brought to the notice of this `Tribunal’, that when `Form I’, of the Application under Section 7 of the Code, proceeds on the basis that the `Default’ occurred, when the `Account of the Corporate Debtor’, was declared as `Non Performing Asset’ on 02.01.2013, the `Application’ itself will be `barred’ on this reason alone.
Continuing further, on behalf of the Appellant, the Learned Counsel for the Appellant proceeds to point out that one month before the filing of Section 7 Application, by the `State Bank of India / Financial Creditor’, the `Thermal Plant’ of the Corporate Debtor’, had started functioning. Over the year before, the `Bank’, had falsely induced the `Corporate Debtor’, and the `Appellant’, to take pains to, `invest’, `repair’ and `recommence’ the `Operations’, only to, `invoke’ the `Corporate Insolvency Resolution Process’, just as the `Plant’, was recommissioned, despite an `Agreement’ dated 15.05.2019.
Apart from the above, it is the stand of the Appellant that the `Adjudicating Authority’, had failed to consider that an `Appeal’, assailing the initiation of `CIRP’ is pending, before this `Appellate Tribunal’, and hence, the `Application / Petition’, to initiate the `Liquidation’ of the `Corporate Debtor’, is not maintainable. Moreover, the Respondent by restoring to a wrongful initiation of the `Liquidation’ of the `Corporate Debtor’, has put a `peril’, the employment of over 2500 individuals.
Hon’ble Supreme Court’s Decisions:
At this juncture, this `Tribunal’, cites the decision of Hon’ble Supreme Court of India, in Vijaykumar Jain v. Standard Chartered Bank & Ors., (vide Civil Appeal No. 8430 of 2018 with Writ Petition (C) No. 1266 of 2018 dated 31.01.2019), reported in (2019) 20 SCC at Page 455, at Spl Pg.: 460, 473 and 474, wherein, at Paragraph 11, 12, 15, 16 and 17, whereby and whereunder it is observed as under:
11.`The Learned Counsel for the Committee of Creditors also stated that the confidentiality requirement would be breached if a copy of the resolution plan were to be given to the members of the suspended Board of Directors and added that it would be in the interest of some members of the suspended Board who may attempt to sabotage the corporate insolvency resolution process, for which reason also, resolution plans should be kept hidden from them. They argued that the “persons aggrieved” in Section 61 would necessarily refer to persons aggrieved for the purpose of Section 60(5) also, and as members of the ex-Board of Directors cannot be said to be persons aggrieved, they cannot possibly approach the Adjudicating Authority under Section 60(5) or the Appellate Tribunal under Section 61.
12.Having heard the learned counsel for all parties, it is important to first advert to the relevant provisions of the Code and the Regulations made thereunder. The relevant provisions of the Code are hereinbelow:
“5.Definitions.—In this Part, unless the context otherwise requires,— (1)-(9)
(10)“information memorandum” means a memorandum prepared by resolution professional under sub-section (1) of Section 29;
(26)“resolution plan” means a plan proposed by resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II;
21.Committee of creditors.—(1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor, constitute a committee of creditors.
(2)The committee of creditors shall comprise all financial creditors of the corporate debtor:
Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6-A) or sub-section (5) of Section 24, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors:
Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date.
(3)Subject to sub-sections (6) and (6-A), where the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them.
(4)Where any person is a financial creditor as well as an operational creditor,—
(a)such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor;
(b)such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor.
(5)Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer.
(6)Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility provide for a single trustee or agent to act for all financial creditors, each financial creditor may—
(a)authorise the trustee or agent to act on his behalf in the Committee of Creditors to the extent of his voting share;
(b)represent himself in the Committee of Creditors to the extent of his voting share;
(c)appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the Committee of Creditors to the extent of his voting share; or
(d)exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally.
(6-A) Where a financial debt—
(a)is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors;
(b)is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or subsection (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the Committee of Creditors;
(c)is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the Committee of Creditors, and vote on behalf of each financial creditor to the extent of his voting share.
(6-B) The remuneration payable to the authorised representative—
(i)under clauses (a) and (c) of sub-section (6- A), if any, shall be as per the terms of the financial debt or the relevant documentation; and
(ii)under clause (b) of sub-section (6-A) shall be as specified which shall form part of the insolvency resolution process costs.
(7)The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6-A).
(8)Save as otherwise provided in this Code, all decisions of the Committee of Creditors shall be taken by a vote of not less than fifty-one per cent of voting share of the financial creditors:
Provided that where a corporate debtor does not have any financial creditors, the Committee of Creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified.
(9)The Committee of Creditors shall have the right to require the resolution professional to furnish any financial information in relation to the corporate debtor at any time during the corporate insolvency resolution process.
(10)The resolution professional shall make available any financial information so required by the Committee of Creditors under sub-section (9) within a period of seven days of such requisition.
24.Meeting of Committee of Creditors.—(1) The members of the Committee of Creditors may meet in person or by such electronic means as may be specified.
(2)All meetings of the Committee of Creditors shall be conducted by the resolution professional.
(3)The resolution professional shall give notice of each meeting of the Committee of Creditors to—
(a)members of Committee of Creditors, including the authorised representatives referred to in sub-sections (6) and (6-A) of Section 21 and sub-section (5);
(b)members of the suspended Board of Directors or the partners of the corporate persons, as the case may be;
(c)operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent of the debt.
(4)The Directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of Committee of Creditors, but shall not have any right to vote in such meetings:
Provided that the absence of any such Director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting.
(5)Subject to sub-sections (6), (6-A) and (6-B) of Section 21, any creditor who is a member of the Committee of Creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the Committee of Creditors:
Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor.
(6)Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor.
(7)The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.
(8)The meetings of the Committee of Creditors shall be conducted in such manner as may be specified.
25.Duties of resolution professional.—(1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor.
(2)For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely—
(a)take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor;
(b)represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings;
(c)raise interim finances subject to the approval of the Committee of Creditors under Section 28;
(d)appoint accountants, legal or other professionals in the manner as specified by Board;
(e)maintain an updated list of claims;
(f)convene and attend all meetings of the Committee of Creditors;
(g)prepare the information memorandum in accordance with Section 29;
(h)invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of Committee of Creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans;
(i)present all resolution plans at the meetings of the Committee of creditors;
(j)file application for avoidance of transactions in accordance with Chapter III, if any; and
(k)such other actions as may be specified by the Board.
29.Preparation of information memorandum.—(1) The resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan.
(2)The resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes—
(a)to comply with provisions of law for the time being in force relating to confidentiality and insider trading;
(b)to protect any intellectual property of the corporate debtor it may have access to; and
(c)not to share relevant information with third parties unless clauses (a) and (b) of this sub- section are complied with.
Explanation.—For the purposes of this section, “relevant information” means the information required by the resolution applicant to make the resolution plan for the corporate debtor, which shall include the financial position of the corporate debtor, all information related to disputes by or against the corporate debtor and any other matter pertaining to the corporate debtor as may be specified.
30.Submission of resolution plan.—(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under Section 29-A to the resolution professional prepared on the basis of the information memorandum.
(2)The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan—
(a)provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor;
(b)provides for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under Section 53;
(c)provides for the management of the affairs of the corporate debtor after approval of the resolution plan;
(d)the implementation and supervision of the resolution plan;
(e)does not contravene any of the provisions of the law for the time being in force;
(f)conforms to such other requirements as may be specified by the Board.
Explanation.— For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law.
(3)The resolution professional shall present to the Committee of Creditors for its approval such resolution plans which confirm the conditions referred to in sub- section (2).
(4)The Committee of Creditors may approve a resolution plan by a vote of not less than sixty-six per cent of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board:
Provided that the Committee of Creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under Section 29-A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it:
Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of Section 29-A, the resolution applicant shall be allowed by the Committee of Creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of Section 29-A:
Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of Section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section.
Provided also that the eligibility criteria in Section 29-A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (6 of 2018) shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.
(5)The resolution applicant may attend the meeting of the Committee of Creditors in which the resolution plan of the applicant is considered:
Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor.
(6)The resolution professional shall submit the resolution plan as approved by the Committee of Creditors to the Adjudicating Authority.
31.Approval of resolution plan.— (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the Committee of Creditors under subsection (4) of Section 30 meets the requirements as referred to in sub-section (2) of Section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan:
Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.
(2)Where the Adjudicating Authority is satisfied that the resolution plan does not [conform] to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan.
(3)After the order of approval under sub-section (1)—
(a)the moratorium order passed by the Adjudicating Authority under Section 14 shall cease to have effect; and
(b)the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database.
(4)The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later:
Provided that where the resolution plan contains a provision for combination, as referred to in Section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.
60. Adjudicating Authority for corporate persons.—
(1)-(4)
(5)Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of—
(a)any application or proceeding by or against the corporate debtor or corporate person;
(b)any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and
(c)any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code.
“61.Appeals and Appellate Authority.—(1) Notwithstanding anything to the contrary contained under the Companies Act, 2013 (18 of 2013), any person aggrieved by the order of the Adjudicating Authority under this part may prefer an appeal to the National Company Law Appellate Tribunal…..
“62.Appeal to Supreme Court.—(1) Any person aggrieved by an order of the National Company Law Appellate Tribunal may file an appeal to the Supreme Court on a question of law arising out of such order under this Code within forty-five days from the date of receipt of such order.
[emphasis supplied]
15.The statutory scheme of the Code, insofar as the former members of the Board of Directors are concerned, is as follows: A Committee of Creditors is first constituted under Section 21 consisting only of all the financial creditors of the corporate debtor. Under Section 24, all meetings of this committee are to be conducted by the resolution professional who, however, does not happen to be part of this committee. Section 24(3)(b) is important in that, the resolution professional has to give notice of each and every meeting of the Committee of Creditors, inter alia, to members of the suspended Board of Directors. Like operational creditors who may attend and participate in such meetings, provided the aggregate dues owing to them are not less than ten per cent of the total debt, both such operational creditors and erstwhile members of the Board of Directors have no vote. Section 25(2)(f) and (i) are also important in that, once the resolution professional convenes meetings of the Committee of Creditors, he is to present all resolution plans at these meetings. Under Section 30, the resolution professional shall examine each resolution plan received by him in which he must confirm, inter alia, that such plan provides for the repayment of the debts of operational creditors which shall not be less than the amount to be paid to them in the event of liquidation of the corporate debtor. This plan is then submitted to the Adjudicating Authority if it is approved by the requisite majority of the Committee of Creditors. The Adjudicating Authority under Section 31(1), if satisfied that the plan passes muster, shall then, by order, approve such plan, which shall be binding on all stakeholders involved in the resolution plan, including guarantors.
16.This statutory scheme, therefore, makes it clear that though the erstwhile Board of Directors are not members of the Committee of Creditors, yet, they have a right to participate in each and every meeting held by the Committee of Creditors, and also have a right to discuss along with members of the Committee of Creditors all resolution plans that are presented at such meetings under Section 25(2)(i). It cannot be gainsaid that operational creditors, who may participate in such meetings but have no right to vote, are vitally interested in such resolution plans, and must be furnished copies of such plans beforehand if they are to participate effectively in the meeting of the Committee of Creditors. This is for the reason that under Section 30(2)(b), repayment of their debts is an important part of the resolution plan qua them on which they must comment. So the first important thing to notice is that even though persons such as operational creditors have no right to vote but are only participants in meetings of the Committee of Creditors, yet, they would certainly have a right to be given a copy of the resolution plans before such meetings are held so that they may effectively comment on the same to safeguard their interest.
17.However, it was argued before us that the Notes on Clauses to Section 24 make it clear that the erstwhile members of the Board of Directors are participants in these meetings only so that the Committee of Creditors and the resolution professional may seek information from them. The Notes on Clauses, heavily relied upon by the learned counsel for the respondents, read as follows:
“Clause 24 prescribes the modalities for the meeting of the Committee of Creditors. The meetings are conducted by the resolution professional and may be attended by the members of the Board of Directors or partners of the corporate debtor. This gives an opportunity for the Committee of Creditors and the resolution professional to seek information that they may require to assess the financial position of the corporate debtor and prepare a resolution plan.”
(emphasis supplied)
This `Tribunal’, points out the Judgment of the Hon’ble Supreme Court of India, in Arun Kumar Jagatramka v. Jindal Steel and Power Limited & Anr., (vide Civil Appeal No. 9664 of 2019 with Writ Petition (C) No. 269 of 2020 and Civil Appeal No. 2719 of 2020 dated 15.03.2021), reported in SCC (2021) 7 SCC 474, at Spl. Pg.: 533, wherein, at Paragraph 95, it is observed as under:
95.``At this juncture, it is important to remember that the explicit recognition of the schemes under Section 230 into the liquidation process under the IBC was through the judicial intervention of NCLAT in Y Shivram Prasad [Y. Shivram Prasad v. S. Dhanapal, 2019 SCC OnLine NCLAT 172]. Since the efficacy of this arrangement is not challenged before us in this case, we cannot comment on its merits. However, we do take this opportunity to offer a note of caution for the NCLT and NCLAT, functioning as the Adjudicatory Authority and Appellate Authority under the IBC respectively, from judicially interfering in the framework envisaged under the IBC. As we have noted earlier in the judgment, the IBC was introduced in order to overhaul the insolvency and bankruptcy regime in India. As such, it is a carefully considered and well thought out piece of legislation which sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC. This conscious shift in their role has been noted in the report of the Bankruptcy Law Reforms Committee (2015) in the following terms:
“An adjudicating authority ensures adherence to the process At all points, the adherence to the process and compliance with all applicable laws is controlled by the adjudicating authority. The adjudicating authority gives powers to the insolvency professional to take appropriate action against the Directors and management of the entity, with recommendations from the creditors committee. All material actions and events during the process are recorded at the adjudicating authority. The adjudicating authority can assess and penalise frivolous applications. The adjudicator hears allegations of violations and fraud while the process is on. The adjudicating authority will adjudicate on fraud, particularly during the process resolving bankruptcy. Appeals/actions against the behaviour of the insolvency professional are directed to the Regulator/Adjudicator.’’
Further, in the aforesaid decision of the Hon’ble Supreme Court of India, in Arun Kumar Jagatramka case (2021) 7 SCC at Page 474, wherein it is observed and held, as under:
``- Held . 29-A IBC is a crucial link is ensuring that the objects of the IBC are not defeated by allowing `ineligible persons’, including but not confined to those in the management who have run the company aground, to return in the new avatar or resolution applicants and S. 35(1) (f) IBC is placed in the same continuum – Further, the purpose of the ineligibility under S. 29-A IBC is to achieve a sustainable revival and to ensure that a person who is the cause of the problem either by a design or a default cannot be a part of the process of solution – Thus, it would lead to a manifest absurdity if the very persons who are ineligible for submitting a resolution plan, participating in the sale of assets of the company in liquidation or participating in the sale of the corporate debtor as a `going concern’, are somehow permitted to propose a compromise or arrangement under S. 230 of the Companies Act, 2013 – Hence, in the context of the statutory linkage provided by the provisions of S. 230 of the Companies Act, 2013 with Ch. III IBC, where a scheme is proposed of a company which is in liquidation under the IBC, it would be far-fetched to hold that the ineligibilities which attach under S. 35(1) (f) r/w S. 29-A IBC would not apply when S. 230 of the Companies Act, 2013 is sought to be invoked – Such an interpretation would result in defeating the provisions of the IBC and must be eschewed – Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 – Regn. 2-B – Companies Act, 2013, Ss, 230 to 232.’’ (Paras 53 to 71)
Also in the decision of the Hon’ble Supreme Court of India in Committee of Creditors of Amtek Auto Limited through Corporation Bank v. Dinkar T. Venkatasubramanian & Ors., (vide IA No.58156 of 2020 in Civil Appeal No. 6707 of 2019 with Contempt Petition (C) 524 of 2020 in Civil Appeal No. 6707 of 2019 dated 23.02.2021), reported in (2021) 4 SCC at Page 457 at Spl pg.: 475, wherein, at Paragraphs 29 and 30, it is observed as under:
29.``Secondly, Section 31 of the IBC provides the requirements to be observed, before the adjudicating authority approves the resolution plan. Sub-Sections (1) and (2) of Section 31 are in the following terms:
``31. Approval of resolution plan – (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the Committee of Creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan:
Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub- section, satisfy that the resolution plan has provisions for its effective implementation.
(2)Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order reject the resolution plan.”
30.The role of the adjudicating authority under sub-section (1) of Section 31 comes into being upon the approval of the resolution plan by the CoC under sub-section (4) of Section 30. The function which is assigned by the statute to the adjudicating authority is to determine whether the resolution plan which has been approved by the CoC meets the requirements of sub-section (2) of Section 30. Upon being satisfied that the resolution plan meets those requirements, the adjudicating authority “shall by order approve the resolution plan”. Before passing an order of approval the adjudicating authority has to satisfy itself that the resolution plan has provisions for its effective implementation. In the backdrop of the above provisions, the order of this Court dated 8-6-202020 required the adjudicating authority to perform the functions which are entrusted to it under Section 31 of the IBC. To suggest that the purpose of the order dated 8 June 2020 [Amtek Auto Ltd. Committee of Creditors v. Dinkar T. Venkatsubramanian, 2020 SCC Online SC 1131] was to enable DVI to re-negotiate the resolution plan after assessing the impact of the Pandemic is thus fundamentally flawed. It is flawed because this assertion is contrary to the plain terms of the record. It is flawed also because the submission is contrary to the nature of the function which is expected to be exercised by the adjudicating authority by the plain terms engrafted into the provisions of Section 31. When DVI moved its application on 12-6-2020, it asserted that the timeline of 15 days has “resulted in practical difficulties for parties to enter into any meaningful discussions and negotiations”. To assert that there was any scope for negotiations and discussions after the approval of the resolution plan by the CoC would be plainly contrary to the terms of the IBC.’’
Ministry of Corporate Affairs Circular:
At this stage, this `Tribunal’, worth recalls and recollects the `General Circular No. IBC / 01 / 2017, Bearing No. 30 / 14 / 2017 – Insolvency, Government of India, Ministry of Corporate Affairs, New Delhi dated 25.10.2017’, issued by the `Director’ on the subject `Clarification regarding approval of Resolution Plans, under section 30 & 31 of Insolvency and Bankruptcy Code, 2016’, wherein, at Paragraphs 3 to 6, it is observed as under:
3.``It is understood that the requirement of section 30(2)(e) of the Code is to ensure that the resolution plan(s) considered and approved by the Committee of Creditors and the Adjudicating Authority is compliant with the provisions of the applicable laws and therefore is legally implementable. For example, a resolution plan must not contemplate 100% foreign investment in a corporate debtor if the FDI policy / relevant foreign exchange laws permit foreign investment only up to 75% in the relevant sector of the industry; it should be compliant with requirements such as restrictions on an Indian entity to issue securities to a person resident outside India under Foreign Exchange Management Act, 1999, etc. The purpose is to prevent approval of resolution plans, which are not legally implementable.
4.Section 31(1) of the Code further provides that a resolution plan approved by the Adjudicating Authority shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. The notes to clauses appended to the Insolvency and Bankruptcy Code, 2015 (Bill) in respect of such clause explains: ``Therefore, if a plan requires stakeholders to do or not do certain actions for the successful implementation of a plan, it shall be binding on all the affected parties who shall be bound to undertake the actions set out in the plan’’.
5.In view of above, it is also clarified that the approval of shareholders/members of the corporate debtor/company for a particular action required in the resolution plan for its implementation, which would have been required under the Companies Act, 2013, or any other law if the resolution plan of the company was not being considered under the Code, is deemed to have been given on its approval by the Adjudicating Authority.
6.The issues with the approval of competent authority.’’
Appellate Tribunal’s Decisions:
Further, this `Tribunal’ aptly points out the `Order’ of this `Tribunal’ dated 30.11.2017, in the matter of Amod Amladi v. M/s. Sayali Rane & Anr., in Comp. App (AT) (INS.) No. 295 of 2017, reported in (2017) SCC Online NCLAT 430, wherein, at Paragraphs 4 to 7, it is observed as under:
4.``Heard learned counsel for the Appellant. Admittedly, the Appellant is an Investor therefore, the Appellant cannot claim to be an ‘aggrieved person’ for preferring appeal against the order dated 2nd May, 2017 passed by Adjudicating Authority whereby the application under Section 9 of the ‘I&B Code’ was admitted. In fact, the Appellant being an investor is entitled to file its claim before the ‘Insolvency Resolution Professional’.
5.Further, as the order dated 2nd May, 2017 is not under challenge in this appeal this Appellate Tribunal cannot express any opinion with regard to the order of admission dated 2nd May, 2017. If the said order dated 2nd May, 2017 is allowed to be challenged, the appeal will be barred by limitation under sub-section (2) of Section 61 of the ‘I&B Code’.
6.In absence of any power of review or recall vested with the Adjudicating Authority, we hold that the Adjudicating Authority rightly refused to recall the order of admission dated 2nd May, 2017.
7.For the reasons aforesaid, no relief can be granted. In absence of any merit the appeal is dismissed. However, the impugned order dated 3rd October, 2017 passed by the Adjudicating Authority, Mumbai and the order of this Adjudicating Authority will not come in the way of Appellant Investor to file its claim before the ‘Insolvency Resolution Professional’.’’
Assessment:
Before the `Adjudicating Authority’ in Ivn.P(IBC)/1(CHE)/2022 in IA/(IBC)/1213/CHE/2021 in IBA/883/2019, the `Appellant / Petitioner / Proposed Respondent’, had averred that the `Claim’, of the `State Bank of India’, was assigned in favour of an `Asset Reconstruction Company’ Viz. Prudent ARC Limited, for a sum of Rs.154.30 Crores, by virtue of an `Assignment Agreement’ dated 30.09.2021, and hence, there is a scope of `Restructuring and Revival’. Also, the `Appellant / Petitioner’, had averred that he can always submit a `Scheme of Arrangement / Settlement’, despite, the fact that there is a `prohibition’ for him to be `ineligible’ to act as a `Resolution Professional’, as per Section 29A of the I & B Code, 2016.
It is not out of place for this `Tribunal’, to significantly points out the decision of the Hon’ble Supreme Court of India in Swiss Ribbons Pvt Limited and Anr. v. Union of India & Ors. (vide Writ Petition (C) No. 99 of 2018, reported in (2019) SCC Online SC 73, wherein at Paragraph 52, it is observed as under:
52.``It is clear that once the Code gets triggered by admission of a creditor's petition under Sections 7 to 9, the proceeding that is before the Adjudicating Authority, being a collective proceeding, is a proceeding in rem. Being a proceeding in rem, it is necessary that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. A question arises as to what is to happen before a committee of creditors is constituted (as per the timelines that are specified, a committee of creditors can be appointed at any time within 30 days from the date of appointment of the interim resolution professional). We make it clear that at any stage where the committee of creditors is not yet constituted, a party can approach the NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule11 of the NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the concerned parties and considering all relevant factors on the facts of each case."
Also that, in the decision of the Hon’ble Supreme Court of India in Meghal Homes Pvt. Ltd. v. Shree Niwas Girni K.K. Samiti & Ors., reported in (2007) 7 SCC at Page 753, wherein, it is observed and held as under:
33.``The argument that Section 391 would not apply to a company which has already been ordered to be wound up, cannot be accepted in view of the language of Section 391(1) of the Act, which speaks of a company which is being wound up. If we substitute the definition in Section 390(a) of the Act, this would mean a company liable to be wound up and which is being wound up. It also does not appear to be necessary to restrict the scope of that provision considering the purpose for which it is enacted, namely, the revival of a company including a company that is liable to be wound up or is being wound up and normally, the attempt must be to ensure that rather than dissolving a company it is allowed to revive. Moreover, Section 391(1)(b) gives a right to the liquidator in the case of a company which is being wound up, to propose a compromise or arrangement with creditors and members indicating that the provision would apply even in a case where an order of winding up has been made and a liquidator had been appointed. Equally, it does not appear to be necessary to go elaborately into the question whether in the case of a company in liquidation, only the Official Liquidator could propose a compromise or arrangement with the creditors and members as contemplated by Section 391 of the Act or any of the contributories or creditors also can come forward with such an application."
IBBI (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016:
Regulation 38:
Regulation 38 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, `Mandatory Contents of the Resolution Plan’, reads as under:
``(1) A resolution plan shall identify specific sources of funds that will be used to pay the-
(a)insolvency resolution process costs and provide that the insolvency resolution process costs will be paid in priority to any other creditor;
(b)liquidation value due to operational creditors and provide for such payment in priority to any financial creditor which shall in any event be made before the expiry of thirty days after the approval of a resolution plan by the Adjudicating Authority; and
(c)liquidation value due to dissenting financial creditors and provide that such payment is made before any recoveries are made by the financial creditors who voted in favour of the resolution plan.
20[(1A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor.]
(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.
(3)21[A resolution plan shall contain details of the resolution applicant and other connected persons to enable the committee to assess the credibility of such applicant and other connected persons to take a prudent decision while considering the resolution plan for its approval.
Explanation : For the purposes of this sub-regulation,-
(i)‘details’ shall include the following in respect of the resolution applicant and other connected person, namely:-
(a)identity;
(b)conviction for any offence , if any, during the preceding five years;
(c)criminal proceedings pending, if any;
(d)disqualification, if any, under Companies Act, 2013, to act as a director;
(e)identification as a willful defaulter, if any, by any bank or financial institution or consortium thereof in accordance with the guidelines of the Reserve Bank of India;
(f)debarment, if any, from accessing to, or trading in, securities markets under any order or directions of the Securities and Exchange Board of India,; and
(g)transactions, if any, with the corporate debtor in the preceding two years.
(ii)the expression ‘connected persons’ means-
(a)persons who are promoters or in the management or control of the resolution applicant;
(b)persons who will be promoters or in management or control of the business the corporate debtor during the implementation of the resolution plan;
(c)holding company, subsidiary company, associate company and related party of the persons referred to in items (a) and (b).]’’
Glimpse of the Regulation of IBBI (Liquidation Process) Regulations, 2016:
It must be borne in mind by this `Tribunal’, that Regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, enjoins that the `Liquidator’, may sell the `Assets’, of the `Corporate Debtor’, etc., as a going concern. Section 32-A of the said Regulations, deals with `Sale as a going concern’.
Regulation 38:
The Regulation 38 of the IBBI (Liquidation Process) Regulations, 2016, provides for `distribution of unsold assets’, by the `Liquidator’, with the permission of the `Adjudicating Authority’, among the `Stakeholders’, an `Asset’ (could not be sold, assigned or transferred), due to its peculiar nature or other special circumstances).
Regulation 39:
The Regulation 39 of the IBBI (Liquidation Process) Regulations, 2016, deals with `recovery of monies due’, and that the `Liquidator’, shall endeavour to `recover or realise’ of all `assets’, and `dues’ of the `Corporate Debtor’, in a time-bound manner for `maximisation of value’, for the `stakeholders’.
Section 60 (5) of the I & B Code, 2016:
The ingredients of Section 60 (5) of the I & B Code, 2016, are not all pervasive one, showering jurisdiction, upon an `Adjudicating Authority’, to decide any question, pertaining to a `Corporate Debtor. Besides this, an `Appellant’, before the `National Company Law Appellate Tribunal’, under Section 61 of the Code is not to fall back upon the ingredients of Section 421 of the Companies Act, 2013, in the considered opinion of this `Tribunal’.
Section 53 of I & B Code:
In a `Liquidation’ of a `Company’, and in an `Administration’, where there is no issue of endeavouring to save the Company or its Business. The effect of the `Insolvency Legislation’, as interpreted by the `Law Courts’, is that, the `Order of Priority’, for payment of Company’s assets.
Any `Dividend’, declared by a `Corporate Debtor’, but not `paid’, to the `shareholders’, such be `payable’ to them, in order of their priority, under Section 53 of the ingredients of I & B Code, 2016. In case of surplus, if any, is distributed to the `Shareholders’ or `Partners’ of the `Corporate Debtor’, as the case may be.
Section 230 of the Companies Act, 2013:
Section 230 of the Companies Act, 2013, is wide enough to include any reasonable `Compromise’ / `Arrangement’, and in many cases, advantage was taken of this provision, to carry through the Schemes of most varied character, in the considered opinion of this `Tribunal’.
Agreement:
An `Agreement’, means that it is between a `Debtor’ and its `Creditors’, to arrange the Debtor’s affairs, to satisfy the `Creditors’.
If a `Transaction’, is entered into with a view to circumvent the `Laws’, in `evading’ the `Tax’, a `Tribunal’ / `Court of Law’, will not approve such transaction. To put it precisely, if the arrangement is unfair and inequitable, the `Scheme’, cannot be sanctioned.
Alternate Mode of Liquidation:
According to Buckley J, on Companies Act 11th Edition (vide Page No. 321), `A Scheme of Compromise Arrangements & Amalgamations’, is an `alternative mode of Liquidation’, which by `Operational of Law’, release the `Company’, and its `Contributories’, that which is contemplated or impose Scheme from `Liability’, further therein.
`Adjudicating Authority’ (`Tribunal’) and the `Appellate Tribunal’ position, under the I & B Code, 2016:
The well accepted principle is that, an `Adjudicating Authority’ (`Tribunal’) and the `Appellate Tribunal’ are not to `displace the cementing principles of the I & B Code, 2016. The inbuilt framework, provided under I & B Code, 2016, is not to be tinkered and tampered with, either by the `Adjudicating Authority’ or by an `Appellate Tribunal’. No wonder, all, the basic tenets of the ingredients and the aim and objective of the `Code’, are to be `preserved and maintained’, by an `Adjudicating Authority’, as well as by the `National Company Law Tribunal’.
Considering the fact that the Appellant / Petitioner who was a `Promoter’ / `Shareholder’, invested in the `Equity Shares’ at Rs.10/- each of the `Corporate Debtor’ / `Company’ (431840 Equity Shares), he is not an `Aggrieved Person’, in stricto sensu under Section 61 of the I & B Code, 2016, especially, in the light of `Committee of Creditors’, having passed a `Resolution’ for `Liquidation’ of the `Corporate Debtor’, and keeping in mind that the `Adjudicating Authority’, had ordered for `Liquidation’ of the `Corporate Debtor’, in Ivn.P(IBC)/1(CHE)/2022 in IA/(IBC)/1213/CHE/2021 in IBA/883/2019 on 09.12.2022, he is not entitled to get himself `impleaded’ in IA/(IBC)/1213/CHE/2021 in IBA/883/2019, in a `Creditor’s Regime’, under the `Code’, as held by this `Tribunal’ (not withstanding the fact that although the `Appellant’, is not a `Member’ of Committee of Creditors’, and no `Right’, to `Vote’, yet, he is entitled to take part in each and every meeting, held by the `Committee of Creditors’, and to discuss with the other `Members’ of the `Committee of Creditors’, in respect of the `Resolutions’ projected, in terms of the ingredients of Section 25 (2) (i) of the Code).
Further, in terms of Section 230 (12) of the Companies Act, 2013, he may seek appropriate `Relief’, before the `Tribunal’ (`National Company Law Tribunal’), for `redressal of his grievances’, in accordance with `Law’, if he so desires / advised. Therefore, the filing of Ivn.P(IBC)/1(CHE)/2022 (Intervening Application) in IA/(IBC)/1213/ CHE/2021 in IBA/883/2019, before the `Adjudicating Authority’ (`Tribunal’), by the `Appellant / Petitioner’, is `prima facie’, and not `maintainable’ in the `eye of Law’. In any event, the ultimate conclusion arrived at, by the `Adjudicating Authority’, in dismissing the Ivn.P(IBC)/1(CHE)/2022 in IA/(IBC)/1213/CHE/2021 in IBA/883/2019 on 09.12.2022, through an `impugned order’, is not interfered with, by this `Tribunal’, sitting in an `Appellate Jurisdiction’, based on the `integral facts and circumstances of the instant case’, in an `encircling manner’. Accordingly, the instant `Appeal’ sans merits and it fails.
Result:
In fine, the instant Comp. App (AT) (CH) (INS.) No. 442 of 2022 is dismissed. No costs. The IA No. 1117 of 2022 (`For Stay’) is closed.