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Judgment
O R D E R
[Per : Justice Rakesh Kumar Jain (Oral)]
23.02.2023 This appeal is directed against the order dated 25.08.2022 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal, Indore Bench) by which an IA/12(MP)2022 filed in CP (IB) 6 of 2020 by the ‘Resolution Professional’ under Section 30(6) read with Section 31 of the Insolvency & Bankruptcy Code, 2016 (the ‘Code’) for approval of the Resolution Plan submitted by the Resolution Applicant, namely, Aggarwal Real City Private Limited, has been allowed.
Shorn of unnecessary details, the facts given to us in court are that M/s Chandraudai Automobiles Private Limited filed an application under Section 9 of the Code as an Operational Creditor against Rajpal Abhikaran Private Limited (Corporate Debtor) for resolution of an amount of Rs. 69 lakhs. The said application was admitted by the ‘Adjudicating Authority’ on 26.03.2021.
The Appellant herein is the Suspended Director of the Corporate Debtor. It is submitted that the Appellant had also submitted an application under Section 12A of the Code to the Committee of Creditors which was rejected on 07.12.2021.
The present appeal has been filed to raise an issue that the Resolution Professional as well as the Appellate Authority has not made any provision for the payment of VAT Dues of the Department of VAT of the State of Madhya Pradesh. He has elaborately referred to the decision of the Hon’ble Supreme Court rendered in the case of State Tax Officer vs. Rainbow Papers Ltd. MANU/SC/1109/2020 to contend that the controversy involved in this case is squarely covered by the aforesaid decision.
During the course of hearing he has also referred to Summary of the Resolution Plan and particularly referred to the table depicting the dues of the Operational Creditor (Unsecured). The said table is reproduced herein for a ready reference :-
| Financial Claims and Discharge Creditors | ||||
|---|---|---|---|---|
| S.No. | Name of Creditor | Amount Claimed (Rs.) | Claim Admitted by RP (Rs.) | RPlan Proposal |
| Total Secured FC (A) | ||||
| 1. | State bank of India | 23,02,07,114 | 23,02,07,114 | 19,11,00,000 |
| 23,02,07,114 | 23,02,07,114 | 19,11,00,000 | ||
| Unsecured Financial Creditors (B) | ||||
| 2 | Shri Ram City Union Finance Limited | 7,90,51,925 | 7,90,51,925 | 33,27,869 |
| 3 | Toyota Financial Services India Limited | 11,12,96,691 | 11,01,55,835 | 46,37,258 |
| 4 | Volark Auto Pvt. Ltd. | 1,59,96,000 | 1,59,68,482 | 6,72,229 |
| 5 | Suraksha Assets Reconstruction Limited | 41,94,66,519 | 41,94,66,519 | 1,76,58,388 |
| 6 | PPG Asian Paints Private Limited | 59,75,957 | 59,75,957 | 2,51,571 |
| 7 | AU Small Finance bank Limited | 13,66,01,607 | 12,32,75,186 | 51,89,547 |
| 8 | Sundaram Finance Limited | 1,04,75,594 | 62,50,699 | 2,63,137 |
| Total Unsecured FC (B) | 77,88,64,293 | 76,01,44,603 | 3,20,00,000 | |
| TOTAL FC (A+B) | 1,00,90,71,407 | 99,03,51,717 | 22,31,00,000 | |
| Operational Creditors (UNSECURED) | ||||
| Received within 90 days | ||||
| 1 | Chandraudai Automative Private Limited | 69,34,699 | 69,34,699 | 0 |
| 2 | ESIC (Regional Office) | 11,10,587 | 11,10,587 | 0 |
| 3 | Rajpal Abhikaran (Bhopal) Private Limited | 1,49,26,343 | 1,49,26,343 | 0 |
| 2,29,71,629 | 2,29,71,629 | |||
| Received after 90 days | ||||
| 4 | Commercial Tax Department MP O/o Assistant Commissioner, Circle 11 Indore (M.P.) | 12,61,84,867 | 12,61,47,345 | |
| TOTAL OC | 14,91,56,496 | 14,91,18,974 | ||
Counsel for the Appellant has submitted that nothing has been kept in the proposed plan to discharge the debts of the Department of VAT of the State of Madhya Pradesh. He has further submitted that in the case of Rainbow Papers Ltd. (Supra) the Hon’ble Supreme Court has held that :-
“52.If the Resolution Plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the Adjudicating Authority is bound to reject the Resolution Plan.”
On this premise, it is submitted that the Resolution Plan deserves to be rejected even if the decision of the Hon’ble Supreme Court has been rendered after the ‘impugned order’ has been passed.
Mr. Sumesh Dhawan, appearing on behalf of the Successful Resolution Applicant- Respondent No. 2, has submitted that the Appellant does not have the locus standi to maintain the present appeal because of the reason that the issue raised by him in regard to the government dues is being pursued by the government itself in their own appeal i.e Company Appeal (AT) (Ins.) No. 1265 of 2022 – Commercial Tax Department vs. Mrs. Teena Saraswat Pandey & Anr. . It is also submitted by him that had it been a case where the appeal is not being pursued by the department itself, then the matter would have been altogether different, but in the presence of the person aggrieved in regard to the outstanding dues of the Government, the Appellant does not have the locus standi to maintain this appeal.
Counsel for the Appellant, faced with this argument, has then referred to Section 61 of the Code to contend that the appeal can be preferred by an aggrieved person and has also submitted that as per Section 61(3)(i) the appeal can be filed if the “the approved resolution plan is in contravention of the provisions of any law for the time being in force;”.
It is submitted that the contravention of the law is writ large because of the reason that nothing has been reserved for the payment of the dues of the VAT Department of the Government of Madhya Pradesh and therefore the Resolution Plan is not in accordance with law and deserves to be set aside.
We have heard Learned Counsel for the Parties in respect of the submissions made herein above.
The issue involved in this case about the locus standi of the Appellant to maintain the present appeal.
Section 61 of the Code deals with the remedy of appeal before the Appellate Authority. Section 61 is reproduced as under :-
“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.
(2)Every appeal under sub-section (1) shall be filed within thirty days before the National Company Law Appellate Tribunal: Provided that the National Company Law Appellate Tribunal may allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days.
(3)An appeal against an order approving a resolution plan under section 31 may be filed on the following grounds, namely: –
(i)the approved resolution plan is in contravention of the provisions of any law for the time being in force;
(ii)there has been material irregularity in exercise of the powers by the resolution professional during the corporate insolvency resolution period;
(iii)the debts owed to operational creditors of the corporate debtor have not been provided for in the resolution plan in the manner specified by the Board; (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other debts; or
(v)the resolution plan does not comply with any other criteria specified by the Board.
(4)An appeal against a liquidation order passed under section 33, or sub-section (4) of section 54L, or sub-section (4) of section 54N, may be filed on grounds of material irregularity or fraud committed in relation to such a liquidation order.
(5)An appeal against an order for initiation of corporate insolvency resolution process passed under sub-section (2) of section 54-O, may be filed on grounds of material irregularity or fraud committed in relation to such an order.”
An appeal under Section 61 can be maintained by a person aggrieved.
The person aggrieved is not defined in the Code. In the present case the person aggrieved, in so far as, the amount which has not been reserved for the purpose of payment to the State Government towards the tax dues would be the Department of Tax only and per chance the said department has already preferred their Appeal bearing Company Appeal (AT) (Ins.) No. 1265 of 2022 which is pending before this Court for adjudication.
In so far as Section 61(3)(i) is concerned, it pertains to the grounds which can be raised in appeal for the purpose of challenging the Resolution Plan but the question is at whose instance the said ground can be raised.
After taking into consideration the aforesaid facts and circumstances, we are of the considered opinion that in the presence of the Tax Department, having filed their own appeal, bearing Company Appeal (AT) (Ins.) No. 1265 of 2022 titled as Commercial Tax Department vs. Mrs. Teena Saraswat Pandey & Anr., challenging the same ‘impugned order’ pertaining to the approval of the Resolution Plan, appeal at the instance of the present Appellant i.e. Ex- Director of the Board of Directors is not maintainable for espousing the cause of the Tax Department. The Appellant has not raised any other issue nor we have touched the merit of the case.
As a consequence, thereof, the present appeal is hereby dismissed on the ground being not maintainable for lack of locus-standi.