National Company Law Appellate Tribunal
Lanco Kondapalli Power Limited vs Mcm Pacific Pte Ltd on 16 December, 2024
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
Company Appeal (AT) (CH) (Ins) No. 410 / 2024
(IA No. 1123 / 2024)
In the matter of :
\
Lanco Kondapalli Power Limited
Through its Director Mr. Sunil Kumar Saraf
4th Floor, Mahaveer Radiance,
Opp : Kavuri Hills Water Tank,
Pillar No. 1708, Madhapur,
Hyderabad, Telangana - 500081 ... Appellant
V
M/s. MCM Pacific PTE Limited
Having its Office at
911 Lorong 1 Toa Payoh,
#25-01-Oleandder Towers,
Singapore ... Respondent No.1
Mr. Pankaj Dhanuka
Liquidator of
M/s. Lanco Kondapalli Power Limited
Having its registered office at
PE 328, Sector-3, Salt Lake City,
Kolkatta, West Bengal - 700106 ... Respondent No.2
Present:
For Appellant : Mr. Avinash Desai, Senior Advocate
For Mr. Puneet Yadav, Advocate
For Respondents : Mr. Jay Savla, Senior Advocate
For Mr. Sameer Kumar, Advocate for R1
Mr. Ashim Sood, Advocate for R2 / Liquidator
Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024
Page 1 of 16
With
Company Appeal (AT) (CH) (Ins) No. 411 / 2024
(IA No. 1124 / 2024)
In the matter of :
Lanco Kondapalli Power Limited
Through its Director Mr. Sunil Kumar Saraf
4th Floor, Mahaveer Radiance,
Opp : Kavuri Hills Water Tank,
Pillar No. 1708, Madhapur,
Hyderabad, Telangana - 500081 ... Appellant
V
M/s. MCM Pacific PTE Limited
Having its Office at
911 Lorong 1 Toa Payoh,
#25-01-Oleandder Towers,
Singapore ... Respondent
Present:
For Appellant : Mr. Ashim Sood, Mr. Anupm Prakash, Mr. Vasu
Manchanda and Mr. Ekansh Gupta, Advocates
For Respondent : Mr. Jay Savla, Senior Advocate
For Mr. Sameer Kumar, Advocate for Respondent
JUDGMENT
(Hybrid Mode) Per : Justice Sharad Kumar Sharma, Member (Judicial):
1. These are two connected Company Appeals. In Company Appeal (AT) (CH) (INS) No. 410 of 2024, the Appellant seeks to challenge the Impugned Order of learned NCLT, Hyderabad dated 04.10.2024 in IA No. 64 / 2024 in CP Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 2 of 16 (IB) No. 678 / 7 / HDB / 2018, by virtue of which the Appellant's claim of rent was rejected, directing instead that the rent is to be determined by way of negotiations.
In the other Company Appeal being Company Appeal (AT) (CH) (INS) No. 411 / 2024, the Appellant puts a challenge to the order passed in Contempt Petition No. 02/7/HDB/2024 in CP (IB ) No.678/7/HDB/2018, filed under Section 60(5) of I & B Code, 2016, to be read with Section 425 of the Companies Act, 2013, by virtue of which the said Petition was dismissed by the learned NCLT, Hyderabad.
2. The facts which engage consideration in the instant Company Appeals are that, it has got an elaborative background, but, looking at the limited controversy and the nature of orders which has been subject to challenge before this Tribunal, there would be very narrow confines, which we are required to venture into, to decide the Appeals.
3(a). Factually, it chanced so, that the Financial Creditor M/s. Axis Bank Limited, had preferred a Petition for initiation of the CIRP proceedings, under Section 7 of I & B Code, 2016, which was numbered as CP(IB)/678/7/HDB/2018, praying for initiation of the CIRP proceedings against the present Appellant i.e. M/s. Lanco Kondapalli Private Limited, the alleged `Corporate Debtor' (`CD').
Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 3 of 16
(b). On account of the fact that, since the CIRP proceedings stood initiated on 23.09.2019 and as there was no viable Resolution Plan, which was made available to be submitted to the learned Adjudicating Authority under Section 30(6) of the I & B Code, 2016, the Resolution Professional is said to have filed an application under Section 33 of the Code for initiation of the liquidation proceedings of the Appellant i.e. the Corporate Debtor.
(c). The learned Adjudicating Authority on 16.04.2021, had allowed the application thereby directing for initiation of Liquidation proceedings and accordingly, the Liquidator took a decision to categorize the assets of the Corporate Debtor (CD) into two categories as Category A and Category B for the purposes of facilitating the sale of the Corporate Debtor, as a going concern.
(d). Sale of the CD as a going concern was put under Category A - Parcel 1. The other parcels of property containing plant, machinery and other assets were divided into further six different parcels and were kept in Category B. Since, the Liquidation commencement date, the Liquidator has conducted about six rounds of e-auction process. In the first 5 rounds of e-auction, the Liquidator offered for sale, those parcels of assets of the Corporate Debtor kept in Category B on piecemeal basis and was able to sell a part of them.
(e). On 12.01.2023, the Liquidator issued the public announcement announcing the 6th round of e-auction and therein, offered sale of the Corporate Debtor i.e. Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 4 of 16 the Appellant herein, as a going concern and / or as various sets of assets. During this process, the said Applicant `Radha Vasavi Assets LLP', submitted a business plan on 13.02.2023, stating that it will bid for acquisition of the CD as a going concern, and submitted the bid for acquisition of the Corporate Debtor as a going concern, at the price of Rs.1,05,94,93,074/-, during the said 6th round of e-auction on 15.02.2023.
(f). Subsequent to the conclusion of bid, the aforesaid Radha Vasavi Assets LLP, made the complete payment of the Price offered for acquisition of the CD. Consequently, on application by the Liquidator, learned NCLT, approved the sale of the Appellant / Corporate Debtor as a going concern in favour of Radha Vasavi Assets LLP, by an order of 23.06.2023, passed in IA No. 830 / 2023 and IA No. 839 / 2023, as preferred in CP (IB) No. 678/7/HDB/2018.
The Liquidator, subsequently issued a sale certificate on 30.06.2023, thereby confirming the sale made in favour of Radha Vasavi Assets LLP and also issued an addendum to the sale certificate on 10.11.2023.
(g). On 18.07.2023, the Liquidator sent an email to Respondent No. 1 stating therein that, the sale of the CD has been successfully completed, as a going concern including the transfer of plant, machinery, land and ongoing operations to the Appellant, that payment for Phase III assets and the dis-mantling of assets have not commenced yet and that, the Appellant herein, being the owner of the Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 5 of 16 land where Phase III assets are located, has expressed a request for remittance of rent for the land area occupied by such Phase III assets. The learned counsel for the Respondent No. 1 / MCM, in their email communication of 19.07.2023, acknowledged the receipt of the email and requested the Liquidator / Respondent No. 2 to ascertain from the Appellant herein, the amount of rent expected and the extent of land which is occupied by the assets of Phase III, while acknowledging the Appellant herein as the landowner.
(h). The Liquidator / Respondent No. 2, vide his communication of 19.07.2023 has informed that, there is totally 40 acres of land, which is occupied by the Phase III assets. On being asked about the suggested rent and the duration of the rental period, the Liquidator on 22.07.2023, informed Respondent No. 1, that the Appellant is demanding an amount of Rs.1.50 Crores per month, for 12 months with effect from 01.07.2023, towards the use and occupation charges for storing the Phase III Assets on the said land. Subsequent to this, communications in the said subject, continued on 27.07.2023, 31.08.2023 and 05.09.2023.
(i). Meanwhile, on 11.08.2023, GAIL (India) Limited, took on lease one Acre of land of the Appellant in their possession and agreed to pay the rent of Rs.6,00,000/- per month towards the license fee for the use of the land for a period of one year from 01.07.2023. Owing to the aforesaid event, the Liquidator once again sent an email to the Respondent No. 1 on 12.09.2023, for Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 6 of 16 the rent payable to the Appellant, making reference to earlier email communications in this regard.
(j). The Liquidator also, brought to the attention of Respondent No. 1, the Order dated 02.08.2023 of the learned NCLT and asked Respondent No. 1 to co-ordinate with the Appellant for discussion on terms of rent for the said land.
(k). After this, several rounds of communications were exchanged between the Appellant and Respondent No. 1, but the rent issue was not resolved.
(l). Having failed to collect the rent for usage of land, the Appellant finally filed an Application in IA No. 64 / 2024, in CP (IB) No. 678 / 7 / HDB / 2018, seeking directions against the Respondent No. 1.
(m). The learned NCLT, after hearing both the parties, passed the Impugned Order on 10.04.2024, against which the instant Appeal has been filed.
4. The Appellant contends that, the Respondent No. 1 chose not to contact him or his person, despite the email of the Liquidator dated 12.09.2023, that on 11.11.2023, he sent another email to the Respondent No. 1, referring to the email of the Liquidator dated 18.07.2023, informing that Respondent No. 1 is occupying 40 Acres of land and that he is to pay a rent of Rs.1.50 Crores per month from 01.07.2023, and that he has followed it up with subsequent mails without any response from Respondent No.1.
Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 7 of 16
5. The 1st Respondent's counsel submits that, he had asked the Liquidator / 2nd Respondent on the status of the said Phase III Assets as the sale has not been confirmed, but, the Respondent No. 2, had not responded to the same as to who the owner of the Phase III assets is, that as per their view, the Liquidator still remains the owner of the Phase III assets and accordingly, requested the Appellant to withdraw the email sent, failing which, they will have to approach the Competent Court of Law.
6. The Respondent No. 2 / Liquidator contends that, he sent the email on 27.11.2023 to the Appellant, acknowledging the issuance of the sale certificate dated 30.06.2023 and an addendum to the sale certificate dated 10.11.2023 issued in favour of the Appellant and the fact of appointment of Mr. Sunil Kumar Saraf and Mr. Yerram Vijay Kumar as directors on the board of the Appellant and that any further correspondences, in respect of the preservation and maintenance of the assets with regard to the maintenance of the assets, should be done with `Radha Smelters Pvt. Ltd.'.
7. Owing to the aforesaid situation, the Respondent No. 1 moved IA (IB) No. 1585 / HDB / 2023, as preferred in CP(IB) No. 678 / 7 / HDB / 2023, before the learned NCLT, Hyderabad, which granted the prayer as sought for, on 22.12.2023, subject to the condition that the Respondent No. 1 furnishes within two weeks a valid irrevocable Bank Guarantee of the amount representing the GST component of the Reserve Price and the interest thereon, till the issue of Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 8 of 16 the GST is finally resolved, and permitted Respondent No. 1 to start dismantling the assets on furnishing the said Bank Guarantee.
8. Further to this, the Appellant submits that on 30.12.2023, he has written a letter to Respondent No. 1, referring to the email dated 26.12.2023, with regards to the proposed cost to be paid by the Respondent towards the preservation cost with effect from 01.01.2024, pertaining to Phase III assets, which were lying in the premises of the Appellant.
9. Finally, having failed to get response on the aspect of payment of the rent for the use and occupation of 40 acres of land, belonging to him, the Appellant, filed an application being IA No. 64 / 2024 in CP (IB) No. 678 / 7 / HDB / 2018, as preferred under Section 7 of the I & B Code, 2016, seeking directions against M/s. MCM Pacific PTE Limited, to pay the use and occupation charges, amounting to Rs.2.40 Crore per month, for the use of its land measuring 40 acres with effect from 01.07.2023, till the vacation of the land by dismantling phase III assets. Both the Respondents 1 and 2 filed their Counter Affidavits. After hearing both sides, the learned NCLT proceeded to pass the Impugned Order of 04.10.2024, which is sought to be challenged by the Appellant herein, on the grounds that the learned NCLT, did not consider merits of the case and failed to appreciate the substantive and procedural rights of the Appellant. Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 9 of 16
10. In an event, if the simpliciter order of 04.10.2024 as passed on the application preferred under Section 60(5) of I & B Code, 2016, is taken into consideration, it rather reflects that the foundation of the said order happens to be the earlier order which had been passed by the learned NCLT on 02.08.2023 on Application IA (IBC) / 1221 / 2023, as preferred in the aforesaid Company Petition. The said application was preferred, by the Respondent No. 1, seeking the relief by way of an extension of time and to permit the Applicant to deposit the balance amount till 30.09.2023. The necessary relief as sought for in the aforesaid IA No. 1221 / 2023 is extracted hereunder:
``IA (IBC) / 1221 / 2023:
1. The Auction Purchaser in Liquidation proceedings, in relation to movables, has filed the present application for seeking the following prayer:
``a) Grant Extension of Time and permit the Applicant to deposit the balance amount till 30.09.2023; and / or
b) Pass such further or other order or orders as this Hon'ble Tribunal may deem fit and proper.'' This Application came up for consideration before the learned Adjudicating Authority and the learned Adjudicating Authority after considering the rival contentions, on the main relief as well as on the issue of occupation of the said land, passed an order on 02.08.2023. The observations made with respect to the dispute concerning use of land in question is contained in Para 9 of the said Order, which is extracted hereunder:
Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 10 of 16 ``9. One another issue that arises in the course of this proceedings is the payment of rent for use and occupation of the land on which the present goods are lying. The Land has been sold to a third party by the liquidator and third party claims rent for use and occupation. While it appears that the demand by land owners is around Rs.1.5 Crore (Rupees One Crore Fifty Lakhs only) approx. per month the Successful Auction Purchaser / Applicant herein states that they have negotiated with the land owner / purchasers. It is open to the Successful Auction Purchaser to get the assistance of the liquidator to work out the terms of the rent for use and occupation of the land by way of a separate agreement.''
11. The learned Adjudicating Authority has observed in the Impugned Order, that though, it is an admitted fact that, the land which is under occupation has been sold to a third party by the Liquidator, the third party's claims for rent for the use and occupation of the land at the rate of Rs.1.50 crore per month, is still the subject matter, which has been left to be negotiated with the landowner, subject to the directions which has been given in the order dated 02.08.2023 as extracted above (Para 9). If the aforesaid Para 9 of the order dated 02.08.2023 is taken into consideration, it can be seen that in respect of all issues pertaining to the implications of the claim of rent, for use and occupation of land to house the Phase III assets, it has been left open for the Successful Auction Purchaser to get the assistance of the Liquidator, so as to resolve the dispute and to finalize the terms of rent to be charged for the use and occupation of the land by way of a separate document. It is pertinent to mention that this order of 02.08.2023 has attained finality and has not been put to challenge. As a consequence to it, the Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 11 of 16 matter pertaining to the payability of rent is yet to be negotiated by the Landowner / Appellant, with the Respondent No. 1 / Successful Auction Purchaser, with the intervention of the Liquidator.
12. The matter did not proceed further. Rather, the Appellant filed the IA No. 64 / 2024, which was preferred, in which the Impugned Order has been passed by the learned Adjudicating Authority. In the above order, after considering the rival contentions, the learned Adjudicating Authority has observed that the consequential decision in pursuance to the order passed on 02.08.2023 in IA (IBC) No. 1221 / 2023, is yet to be arrived at and the rent is yet to be determined by way of negotiation, and the same may be done and that, while doing so, the parties are also to take into consideration the factors already discussed, for the covenants which are to be contained in the Settlement and further directed that, the Liquidator will play a role of an umpire, instead of changing the goalpost to resolve the issue. It is this order which is put to challenge.
In fact, if both the orders, i.e. the order of 02.08.2023 as passed in IA(IBC) No. 1221 / 2023, and the Impugned Order of 04.10.2024 are taken into account nothing material is yet left open to be decided by the learned Adjudicating Authority, particularly when the Order dated 02.08.2023 was yet to be implemented and the negotiations for fixing the rent in pursuance to the said order is yet to commence.
Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 12 of 16
13. The argument of the learned counsel for the Appellant is that, some of the findings which have been recorded therein are adverse to his interest, which requires an interference by this Tribunal under its Appellate Jurisdiction under Section 61 of I & B Code, 2016.
But, after having heard the learned counsels for the parties and taking into consideration, the directions given in Para 38 of the Impugned Order which is extracted hereunder:
``38. Accordingly, the order in IA(IBC)/1221/2023 is to be interpreted that rent is to be determined by way of negotiations and while doing so, the parties are to take into consideration factors already discussed in arriving at the settlement. It is expected that the Liquidator will play the role of umpire instead of changing the goalpost to resolve the issue. Therefore, there is no merit in the application.'' We find that the determination of rent by way of negotiation is yet to be initiated, and the Liquidator is yet to play the role of an umpire so as to resolve the controversy. In other words, it could be said that no concrete positive action has been taken which may amount to be taken as deciding the right of the Appellant, which could have granted liberty to the Appellant to file an Appeal under Section 61 of the I & B Code, 2016, particularly when all the issues pertaining to the determination of rent by way of negotiation, between the parties were yet a factor open to be considered by the Liquidator. If the observation in Para 38 is read with the observations made in the preceding Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 13 of 16 paragraphs of the Impugned Order of 04.10.2024, it is nothing but a direction issued in continuation to the unchallenged order of 02.08.2023, where the direction to arrive at a negotiated agreement is yet to be implemented, if both the orders are taken into consideration, we are of the view that, since the Impugned Order is not deciding the right, which was yet left open to be considered on merits by the Liquidator, it may not be made appealable under Section 61 of I & B Code, 2016, as all contentions are still left open to be considered by the learned Adjudicating Authority.
Besides this, in the above conditions, where the lis has not been decided, a proceeding has been drawn by way of Contempt Petition No. 2 / 7 / HDB / 2024 in IA (IBC) No. 64 / 2024, in the aforesaid Company Petition, where the Appellant is attempting to draw a contempt proceedings for alleged non- compliance of the Order dated 02.08.2023 as it was passed in IA No. 1221 / 2023.
The learned Adjudicating Authority while considering the Contempt Petition No. 2 / 7 / HDB / 2024, dismissed the Contempt Petition, holding thereof that the Respondent had not violated the directions contained in the order of 02.08.2023 and since the option was given to the Respondent for seeking an adjudication, by the Liquidator, to work out the terms and conditions of the usage of the land and payability of rent in terms of the supporting agreement, there would be no contempt at all, owing to the fact that, in Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 14 of 16 furtherance of the order of 02.08.2023, the order dated 04.10.2024 has already been rendered. Thus, the said Contempt Petition dismissed by the Order of 04.10.2024, suffers from no error.
This order of dismissal of the Contempt Petition is under challenge, in the connected Appeal i.e. Company Appeal (AT) (CH) (INS) No. 411 / 2024. We feel it pertinent to observe that Section 425 of the Companies Act, 2013, which contemplates drawing of a contempt proceedings observes that the proceedings and powers of contempt would be akin to the powers as it has been granted to the Hon'ble High Court for drawing a contempt proceedings under Section 12 / 14 of the Contempt of Courts Act.
If that be the situation, the Appeal would only lie for any act of commission of a contempt, when there happens to be a determination by an order of punishment. Since, in both the orders, i.e., the order dated 02.08.2023 and 04.10.2024 impugned herein, there is no positive action, which has been directed to be made, the learned Adjudicating Authority found that there is no apparent contempt and has rejected the application.
Since, the Contempt Petition has been rejected, in view of Section 19 of the Contempt of Courts Act, no Appeal would lie as against the dismissal of the Contempt Petition, as under law. The Appeal in such cases is maintainable only, when in a contempt proceedings, there is an order of punishment which is not a Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 15 of 16 factor available for the Appellant to sustain Company Appeal (AT) (CH) (INS) No. 411 / 2024. Thus, the Appeal lacks merit and being not maintainable, the same would stand dismissed. Owing to dismissal of Company Appeal (AT) (CH) (INS) No. 411 / 2024, for the reasons already dealt hereinabove, the connected Company Appeal (AT) (CH) (INS) No. 410 / 2024, would too stand dismissed. The connected pending Interlocutory Applications, if any, would stand closed.
[Justice Sharad Kumar Sharma] Member (Judicial) [Jatindranath Swain] Member (Technical) 16/12/2024 SR / TM / MS Comp. App (AT) (CH) (INS) Nos. 410 & 411 / 2024 Page 16 of 16