National Company Law Appellate Tribunal
Krishna Infosolutions Private Limited vs Mr. Anil Anchalia & Ors on 22 August, 2024
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NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL
BENCH, NEW DELHI
Comp. App. (AT) (Ins) No. 279 of 2024
IN THE MATTER OF:
Krishna Infosolutions Pvt. Ltd ...Appellant
Versus
Anil Anchalia & Ors. ...Respondents
Present:
For Appellants : Mr. Nilesh Sharma, Ms. Aditi Sharma, Advocates
For Respondent : Mr. Siddhartha Sharma, Mr. Arjun Asthana, Mr.
Nachiket Chawala, Advocates for R-2.
Mr. Rajesh Kumar Gautam, Mr. Anant Gautam, Ms.
Kavitoli G. Yeptho, Ms. Likivijakhalu, Mr. Dinesh
Sharma, Kusharga N. Sahay, Advocates for R-3.
ORDER
Per: Justice Rakesh Kumar Jain 22.08.2024: The Appellant filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') bearing I.A. No. 288 of 2022 before the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench - II) in which the following prayers were made:-
"a. Direct the Respondent No. 1/Erstwhile Resolution Professional to hand over the entire business and all assets along with the management and control of the Corporate Debtor to the Successful Resolution Applicant including allowing the Successful Resolution 2 Applicant to operate all the bank accounts of the Corporate Debtor independently;
b. Restrain the Respondents to make such undue alleged demand of Rs. 25.96 Lakh i.e., difference in amount payable and paid to the UCO Bank (dissenting financial creditor) at the time of upfront payment made by the Applicant/ SRA on 15/12/2021;
c. Compensate the Applicant for all legal expenses incurred on account of persuading this present application seeking direction/ intervention from this Adjudicating Authority for the smooth implementation of the approved resolution plan; and d. Any other direction may deem fit and proper."
2. The Appellant is aggrieved against the order dated 20.12.2023 passed by the Adjudicating Authority in respect of prayer (b) which read as under:-
"In regard to the surplus amount of Rs. 25.96 lakh, the CoC of the CD shall address the issue pragmatically before its table and shall take a holistic view in accordance with law."
3. Briefly put, the resolution plan of the Appellant was approved by the CoC on 23.02.2021 with 81.14% voting share and was dissented by UCO Bank with 18.86% voting share.
4. Clause 8.3 of the resolution plan lays down the proposal of the payment to the creditors. Clause 8.3 is reproduced as under:- 3 4 5
5. As per the aforesaid proposal, Indian Bank was to be paid Rs. 20131166/- against the entire admitted dues of Rs. 70,05,23,413/-, PNB was to be paid 15571120/- against the entire admitted dues of Rs. 54,18,43,117/- and UCO Bank was to be paid Rs. 8297714/- against the entire admitted dues of Rs. 28,87,43,488/- in full and final settlement. However, it was clarified in clause 8.3(b)(v) that the dissenting financial creditors shall be paid liquidation value proportionate to their admitted claim in accordance with section 30(2) of the Code.
6. The synopsis of financial proposal made by the Appellant is also reproduced as under:-
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7. The dissenting financial creditor (UCO Bank) was paid 57.02 lakh as against 82.98 Lakh on the basis of the liquidation value in terms of Section 30(2) of the Code. In this regard, UCO Bank filed an application I.A. No. 355 of 2022 alleging that it ought to have received Rs. 82.98 Lakh as entitled under the approved resolution plan whereas it has been paid 57.02 lakh, therefore, it was prayed in the application that 'an order be passed directing the SRA to forthwith pay the applicant its balance share of Rs. 25,95,533/- as provided for in the approved resolution plan'.
8. The application bearing I.A No. 355 of 2022 was dismissed by the AA and hence, the claim made by the UCO Bank was closed, however, in the application filed by the Appellant bearing 288 of 2022, while dealing with prayer (b) of the application, it was held that since the amount of Rs. 25.96 Lakh is surplus in the hands of SRA, therefore, the CoC of the CD shall address the issue pragmatically before its table and shall take a holistic view in accordance with law.
9. Grievance of the Appellant is only in regard to this part of the impugned order about which it is argued that once the plan has been approved, it cannot be changed. In this regard, he has relied upon a decision of this Court rendered in the case of Hem Singh Bharana Vs. M/s Pawan Doot Estate Pvt. Ltd., CA (AT) (Ins) No. 1481 of 2022 decided on 05.01.2023.
10. On the other hand, Counsel appearing on behalf of the Respondent has submitted that the Appellant was to pay Rs. 440 lakh to the assenting financial 7 creditors who have been paid only 201.35 Lakh (Indian Bank) and 155.72 Lakh (PNB), total amounting to Rs. 357.02 Lakh. It is further submitted that the amount in question cannot be retained by the Appellant being SRA as it has to go to the kitty of the financial creditors. In this regard, he has also relied upon a decision of the Hon'ble Delhi High Court in the case of Tata Steel BSL Limited Vs. Venus Recruiter Pvt. Ltd., 2023 SCC OnLine Del 155. He has argued that though this decision is not squarely on the issue involved but in that case the money which became available after the resolution plan, on the adjudication of the avoidance application, will not go to the pocket of the SRA but it shall be distributed amongst the CoC. In this regard, he has pressed para 80 and 90 of the said decision which are reproduced as under:-
"80. The Ld. Single Judge operates on the assumption that the sum or property acquired upon adjudication of the avoidance application will be appropriated by the corporate debtor in its new avatar. As laid down above, the provisions pertaining to avoidable transactions is to primarily benefit creditors. While the Corporate Debtor ceases to exist in its erstwhile avatar, in cases where the Resolution Plan is silent on the treatment of any pending applications because such information could not be made available to the applicant, the creditors of the corporate debtor can still be the beneficiaries of the sum or properties that may be recovered from adjudication of an avoidance application. The same is consistent with the scheme of the Code and in line with object sought to be achieved by it which inter- alia includes, increasing the availability of credit within the economy.8
(d) RP will pursue the avoidance applications since he is only functus officio vis-à-vis CIRP and not avoidance applications.
90. The amount that is available after the transactions are avoided cannot Neutral Citation Number: 2023/DHC/000257 go to the kitty of the resolution applicant, in this case the Appellant in LPA No. 37/2021. For the resolution applicant, it was purely a commercial contract, a commercial decision whereunder the resolution applicant knew the ground reality, the assets and the liabilities. The benefit arising out of the adjudication of avoidance applications is not for the corporate debtor in its new avatar since it does not continue as a debtor and has gone through the process of resolution. The expectation that some more amount could come to the kitty was not present when the commercial decision was taken by the resolution applicant while agreeing to take over the corporate debtor. The purpose of the avoidance application as stated above is to enhance the asset pool available for the decision of creditors who are primarily financial institutions and have taken the haircut in agreeing to accept a much lesser amount than what was due and payable to them. This is public money, and, therefore, the amount that is received if and when transactions are avoided and receive the imprimatur of adjudicating authority must be distributed amongst the committee of creditors in a manner determined by the adjudicating authority.
11. Counsel appearing on behalf of the Indian Bank has also supported the case of the PNB.
12. We have heard Counsel for the parties and perused the record with their able assistance.
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13. In so far as the decision, relied upon by the Appellant, in the case of Hem Singh (Supra) is concerned, it was a case where an appeal was filed by the ex- promoter of the CD who had been unsuccessful before the AA in its application to keep in abeyance of the decision on the application filed by the RP for approval of the resolution plan. There was an issue of revised settlement proposal made under Section 12A and the question was framed that 'whether after approval of the resolution plan by CoC under Section 30, sub-section (4) and filing an application before the AA for its approval, any settlement proposal under Section 12A (filed by ex-promoter) can be entertained deferring consideration of approval of resolution plan by the AA?' This question has been decided against the Appellant in the said appeal, therefore, judgment in the case of Hem Singh (Supra) is not applicable to the facts of the present case. On the contrary, in the case of Tata Steel BSL Limited (Supra), the Hon'ble Delhi High Court has held that the amount accruing on the adjudication of the avoidance application will go to the financial creditors which shall be decided by the CoC. In the present case, the AA has not tinkered with the resolution plan because it has already been decided that the Appellant would pay 440 Lakh to the assenting financial creditors to whom only 351 lakh has been paid, therefore, the amount in question i.e. 25.96 Lakh belongs to the kitty of the assenting financial creditors for which the AA has rightly passed the order that it is for the CoC to address the issue to take a holistic view in accordance with law and in our considered opinion, it does not requires any interference. 10
14. In view of the aforesaid facts and circumstances, we do not find any merit in the present appeal and the same is hereby dismissed. Not costs.
[Justice Rakesh Kumar Jain] Member (Judicial) [Mr. Naresh Salecha] Member (Technical) [Mr. Indevar Pandey] Member (Technical) Sheetal