National Company Law Appellate Tribunal
Axis Trustee Services Limited vs Daiichi Sankyo Company Limited on 21 February, 2024
Author: Ashok Bhushan
Bench: Ashok Bhushan
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Ins.) No.208 of 2024
IN THE MATTER OF:
Axis Trustee Services Ltd. ...Appellant
Versus
Daiichi Sankyo Company Ltd. & Ors. ...Respondents
Present:
For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Mr.
Nikhil Mehndiratta, Mr. Toyesh Tewari,
Advocates.
For Respondents: Ms. Astha Ahuja, Ms. Shyla Hoon, Mr. Tanmay
Arora, Advocates for R-1.
Mr. Rachit Mittal, Mr. Parish Mishra, Ms. Ritika
Dawali, Mr. Adarsh Srivastava, Advocates for RP.
Mr. Rajiv Dewan and Mr. Manoj Kumar, Advocates
for R-4.
ORDER
(Hybrid Mode) 21.02.2024: This appeal has been filed against the order dated 24.04.2023 passed by the Adjudicating Authority by which order the Adjudicating Authority has allowed the application I.A. No.5662 of 2023 filed by Daiichi Sankyo Company Ltd. and the order admitting CIRP was set aside.
2. The CIRP commenced against the Corporate Debtor by order dated 16.12.2022. The order admitting CIRP was challenged by M/s Daiichi Sankyo Company Ltd. in Company Appeal (AT) (Ins.) No. 279 of 2023, which was entertained and interim order was passed that in the CIRP no final decision Cont'd.../ -2- shall be taken with regard to resolution plan. The application filed by the M/s Daiichi Sankyo Company Ltd. was on the ground that the Corporate Debtor is a NBFC and no CIRP can be commenced under Section 7 by a Financial Creditor against a NBFC. The Adjudicating Authority noticed that in the RBI portal the status of the Corporate Debtor was always shown as NBFC, however, despite the fact the Corporate Debtor was NBFC CIRP proceeded by the impugned order. The Adjudicating Authority allowed the application and set aside the CIRP.
3. Appellant who was Applicant in Section 7 application has filed this appeal only on limited ground i.e. observation made in the last line of Para 13 and direction issued in Para 16 in so far as direction that entire cost be paid by the Applicant/Appellant.
4. Learned counsel for the Appellant submits that in so far as last line of Para 13, when application under Section 65 was dismissed, there was no occasion to observe that order dated 16.12.2023 was obtained by parties by concealment of material fact or playing fraud on the Court.
5. We accept the above submission that when Section 65 application has been dismissed, there was no necessity for making such observation, hence, observation made in last line of Para 13 of the order is deleted.
6. Now we come to direction issued in Para 16 of the impugned order, which is as follows:
Company Appeal (AT) (Insolvency) No.208 of 2024 -3- "16. Nevertheless, since the CIRP in IB-605/2022 got initiated due to sheer negligence of the Financial Creditor M/S Axis Trustee Ltd., we order (a) imposition of cost of Rs. 50,000/- (Fifty Thousand) only to be paid by the Petitioner M/s Axis Trustee Ltd. to the Prime Minister's Relief Fund within 15 days of this order; and (b) direct that the entire CIRP cost and legitimate expenses of IRP/RP (who, in IB-605/2022, being the Section 7 petition, was appointed on the recommendation of the Financial Creditor) shall be borne by the Petitioner M/s Axis Trustee Ltd."
7. In so far as imposition of cost of Rs.50,000 is concerned, the Appellant has already deposited the said amount. The said direction is maintained.
8. Coming to the second part of the direction, it is submitted that the Resolution Professional has claimed total cost of Rs.67,89,245/- out of which an amount of Rs.37,04,401 has already been discharged and the balance amount is Rs.30,84,844. Learned counsel for the Appellant submits that the Appellant has only 2% share in the CoC and if the minutes of the CoC are looked into, the decision to continue the proceeding was by majority of CoC and Appellant could not have stopped the CoC to proceed and further after Resolution Professional having coming to know that status of Corporate Debtor as NBFC is still shown in the portal of RBI, appropriate steps ought to have been taken. It is submitted that the application was filed by the Resolution Professional, which was withdrawn. Company Appeal (AT) (Insolvency) No.208 of 2024 -4-
9. In a situation where CIRP has been admitted and there is interim order passed by the Appellate Authority to the effect that in the CIRP no final decision shall be taken with regard to resolution plan since the order was challenged on the ground that CIRP cannot proceed against a NBFC, we are of the view that the CoC and the Resolution professional should have been more cautious in proceeding and incurring costs in the CIRP of the Corporate Debtor.
10. We are of the view that ends of justice be served in giving liberty to the Resolution Professional to file an application before the Adjudicating Authority to take a decision on payment of balance cost, as to whether entire balance cost is fully payable and as to whether entire cost be borne by the Appellant or shared by all the members of CoC and/or Resolution Professional. Taking into consideration the sequence of events and facts which have taken place in the CIRP proceedings of the Corporate Debtor, the Adjudicating Authority shall pass orders in the application as above.
11. The direction issued in Para 16(b) that entire cost be paid by the Applicant is modified as above.
12. In view of the fact that we have already set aside the observation against the Appellant, learned counsel for the Appellant submits that contempt filed by the Resolution Professional cannot proceed.
13. We are of the view that contempt application filed by the Resolution Professional also stands closed.
Company Appeal (AT) (Insolvency) No.208 of 2024 -5-
14. Appeal is disposed of accordingly.
[Justice Ashok Bhushan] Chairperson [Justice Yogesh Khanna] Member (Judicial) [Barun Mitra] Member (Technical) Archana/nn Company Appeal (AT) (Insolvency) No.208 of 2024