National Company Law Appellate Tribunal
B Nirmal Kumar vs Tharuvai Ramachandran Ravichandran on 20 February, 2024
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
CHENNAI BENCH, CHENNAI
IA No. 58 of 2024
In
Comp. App.(AT)(CH)(Ins.) No. 447 of 2023
(Filed under Rule 11 of NCLAT Rules, 2016 and other
applicable provisions)
In the matter of:
LICHFL Trustee Company Pvt. Ltd.
LICHFL, Asset Management Company Limited
211 & 212, 2nd Floor, the Capital,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400051.
Petitioner/3rd Party/Proposed 3rd Respondent.
V.
1. B. Nirmal Kumar
Erstwhile Director and Shareholder of
JBM Homes Private Limited and JBM
Shelters Pvt. Ltd. No. 47, Bazar Road, Pallavaram
Chennai - 600043.
1st Respondent/Appellant
2. Tharuvai Ramachandran Ravichandran
RP of JBM Homes P.Ltd. & JBM Shelters
P. Ltd., G3, Block 2, Shivani Apartments,
40, East Coast Road, Thiruvanmiyur,
Chennai - 600041.
2nd Respondent/1st Respondent
3. Mr. Venkataraman Subramanian
Flat No. A4, Ramar Kutil, 3/5 Second Main Road,
Gandhi Nagar,
Chennai, Tamilnadu - 600020.
3rd Respondent/2nd Respondent
IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023
1
For Petitioner: Mr. E. Omprakash, Sr. Advocate
For Respondent No.1/appellant: Mr Avinash Krishnan Ravi,
Advocate .
Ms Elamathi, Advocate for Respondent No.2.
O R D E R
JUSTICE M. VENUGOPAL, MEMBER (JUDICIAL) Preamble The Petitioner / Applicant / 3rd Party/Proposed 3rd Respondent has preferred the instant IA 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 before this Appellate Tribunal (under Rule 11 of the NCLAT Rules, 2016 and other applicable provisions).
Petitioner's Submissions
2. According to the Petitioner/Applicant, it being a 'Secured Financial Creditor' and 'Debenture Holder' of JBM Homes Private Limited (Corporate Debtor). In fact, the Petitioner/3rd party is a Financial Creditor in IBA/826/2020, in which an 'order' was passed by the 'Adjudicating Authority'/National Company Law Tribunal on, 07.09.2021 admitting the Corporate Debtor into Corporate Insolvency Resolution Process.
IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 2
3. It is represented on behalf of the Petitioner/proposed 3 rd Respondent that the Liquidation order was passed on 12.09.2023 in IA/IBC/919/CHE/2022 and IA/IBC/972/CHE/2022, based on the action plan submitted by the Petitioner herein. In fact, the Petitioner is a necessary and proper party to the instant Appeal.
4. The Learned Sr. Counsel for the Petitioner/proposed 3 rd Respondent points out that in the CIRP process, the Petitioners' claim was 'admitted' by the 'Resolution Professional' as Secured Financial Creditor with the Petitioner holding 90.05% of the voting share, in the 'Committee of Creditors'. Indeed, the Reliance Home Finance Ltd. had 5.92% voting share, in the Committee of Creditors and the balance 4.03% voting share was held by the Homebuyers' Group.
5. It is the version of the petitioner, in IA 58 of 2024, in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023, that no 'Resolution Plans' were submitted by any independent third party, to take over the 'Corporate Debtor' and that the 'Suspended Directors' viz. the Appellant Mr. Kamlesh Kumar and Mr. Anand Kumar along with 'Related Parties', furnished a 'Resolution Plan', to take over the 'Corporate Debtor' but the said 'Resolution Plan' was rejected, by IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 3 the Committee of Creditors with 95.97% voting against the said Resolution Plan.
6. It comes to be known that the 'Committee of Creditors,' with 95.97% voting also resolved to 'Liquidate the Corporate Debtor' in terms of the I&B Code, 2016. In reality, the second Respondent /Resolution Professional had filed an IA/IBC/919/CHE/2022 and IA/IBC/972/CHE/2022, 0n 21.07.2022, seeking to 'Liquidate' the respective 'Corporate Debtor'.
7. Apart from that, some of the Homebuyers of the units in the project GST Grand (Project) assailed the 'constitution', of the 'Committee of Creditors' and the decision made therein before the 'Adjudicating Authority/Tribunal' through applications viz., IA/IBC/768/CHE/2022 Inv. P.No. 6 of 2022 and Inv.P.No. 8 of 2022, the same were filed in July and August, 2022. Besides this no applications' were filed in the Corporate Insolvency Resolution Process of the 'Corporate Debtor' assailing the constitution of 'Committee of Creditors''.
8. According to the Petitioner in IA 58/2024 in Comp App (AT)(CH)(Ins) No.447/2023 is that both the Corporate Debtor and its affiliates JBM Homes, had interest in the Project and IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 4 receivables and further that the Petitioner had suggested before the Adjudicating Authority/Tribunal that it will propose a Plan to address the concerns of the Homebuyers and other Stakeholders in the Liquidation Process of both the Companies
9. The prime grievance of the Homebuyers who filed the 'Applications', was that the 'interest' was not adequately protected and 'Liquidation' would worsen their position. Hence, the Petitioner had suggested before the 'Adjudicating Authority/Tribunal' that considering the peculiar facts pertaining to the project, it will propose a plan to address the 'concerns' of 'Homebuyers' and other 'Stakeholders' in the 'Liquidation process'.
10. It is pointed out on behalf of the Petitioner in IA 58/2024 that on 2.11.2022, by means of an order passed by the 'Adjudicating Authority/Tribunal' a 'committee' was constituted consisted of the Learned Advocates of the Petitioner/Promoters, Homebuyers and the second Respondent / Resolution Professional to find out and 'amicable resolution', to protect the 'Homebuyers interests' and other stakeholders.
11. The Learned Counsel for the Petitioner / 3rd Party points out that the impugned order of Liquidation dated 12.09.2023 in IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 5 IA/IBC/919/CHE/2022 and IA/IBC/972/CHE/2022 was passed, based on the 'Action Plan' furnished by the Petitioner.
12. Also, that the Petitioner in IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 is not arrayed as a party to the instant Appeal, despite the fact numerous grounds are raised, pertaining to the Petitioner, therefore, according to the Petitioner, he is a 'necessary' and 'proper party' in the instant 'Appeal' and hence, the 'impleadment' is sought for by him, before this Tribunal. Pleas of 1st Respondent / Appellant
13. According to the Learned Counsel for the 1st Respondent/Appellant, that only a person 'Aggrieved', and a person whose right is affected in 'Law', must be made a 'necessary and proper party'. Moreover, an 'order of Liquidation' is assailed, which is against the ''interests', of the 'Corporate Debtor' only is an 'Order' in 'rem' operating against the Corporate Debtor and its interests.
14. The Learned Counsel for the 1st Respondent/Appellant points out that the interests of the 'Creditors' and Stakeholders are at large, duly represented by the Liquidator /2nd Respondent and the IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 6 'Resolution Professional' who had applied for 'Liquidation' is duly arrayed as 1st Respondent in the instant 'Appeal'.
15. According to the Learned Counsel for the 1st Respondent/Appellant, before the 'Adjudicating Authority/Tribunal', the Petitioner / 3rd party / the Creditor viz. 'LICHFL' had not taken steps to 'implead' itself, as a party/Respondent to the 'Liquidation'. As such, it is not open to 'LICHFL' to seek an 'impleadment' in the main 'Appeal' proceedings because of the fact that they had failed to take adequate and appropriate steps, before the 'Adjudicating Authority/Tribunal' in not seeking itself to get impleaded.
16. In regard to the plea of the Petitioner/3rd Party in IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 that the impugned order itself and the same being a court constituted committee to make certain recommendations, is of no consequence to these proceedings. Therefore, the committee itself does not seek to become a party but merely the applicant/creditor hearing and in fact, the aspect of special committee pleas are of no relevance to decide the question as to whether the Petitioner/3rd Party is a necessary or a proper party under Law.
IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 7
17. The Learned Counsel for the 1st Respondent / Appellant submits that in fact, a 'proposal' was made, which came to be rejected by the 'Petitioner/ 'LICHFL' in the concerned 'Committee'. Therefore, 'Aggrieved', by such rejection and legal plan was set out and approved, pursuant to the Adjudicating Authority/Tribunal the instant Appeal is preferred, in which, the 'order of Liquidation', the modus for liquidation suggested therein is under challenge.
18. The Learned Counsel for the 1st Respondent / Appellant points out that the 'Corporate Debtor' may be 'revived' by a Resolution Plan, 'submitted by the 'Promoters,' and as such, it was never the case of 'Promoters', that they would agree to 'Liquidation'. Hence, to take a plea that there is no objection to 'Liquidation', which was stated in the Committee or the action plan as proposed, is an incorrect one and all the more, when a proposal was made, which came to be rejected by the Petitioner/'LICHFL' in the concerned Committee.
19. While, rounding up, the Learned Counsel for the 1 st Respondent / Appellant prays for dismissal of the IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 in limine with exemplary costs.
IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 8 1st Respondent's Decisions
20. The Learned Counsel for the 1st Respondent cites the order of this Tribunal in Chinna Rao v. A.Sivakumar(vide order dated 12.08.2022 in IA 584 and 585 of 2022 in Comp. App. (AT)(CH)(Ins.) No. 269 of 2022) wherein at paragraphs 29 to 31 it is observed as under:-
"29. It must be borne in mind that there is no provision in the I&B Code, 2016, that enables the 'Creditors' other than those who triggered the 'Insolvency Resolution Process', to be impleaded as 'Parties'. In law, the 'Impleadment of Parties', is ultimately, within the ambit of exercise of discretion by a 'Tribunal' / 'Authority', as the case may be. More importantly, no person, can be added, unless he is a necessary party. A necessary party means that a person is very much necessary to the Constitution of Suit/an Appeal in a given Proceeding before a Court of Law / Tribunal / Authority. In fact, whether a person has an enforceable legal right is to be looked into by a Tribunal in regard to the impleadment of parties. To array a person as a prospective / proposed Respondent(s) is not a Substantive Right, but undoubtedly, it is one of the procedure IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 9 and the Tribunal is to exercise its judicial discretion, of course, in a subjective manner, diligently.
30. It cannot be gainsaid that, in Individual will not be added as a Party, just because he will be affected by the Tribunal incidentally, when it passes an Order in a given proceedings, before it.
31. An Appellant/Plaintiff in a given legal proceeding is the dominus litis. He cannot be coerced to include a person as Party whom, he does not want to contest, unless it is a compulsion of Law. It must be borne in mind that a necessary party is one without whom no Order can be passed effectively, in a given case. A proper party is one in whose absence an effective order can be made, but whose presence is necessary for a complete and final decision on the questions, involved in a given Proceeding. Further, a mere interest of a Party in the fruits of a litigation, cannot be a yardstick/test for his being impleaded as a Party."
21. The Learned Counsel for the 1st Respondent/Appellant cites the order dated 22.05.2020 in Union of India, Ministry of Corporate Affairs, New Delhi v. Oriental Bank of Commerce, IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 10 Gurgaon (vide Comp. App. (AT)(Ins.) 1417 of 2019) wherein at paragraph 14 and 15 it is observed as under:-
"14. A necessary party is a person who ought to have been arrayed as a party and in whose absence no effective order can be passed by a Court a Law/Tribunal/Appropriate Authority. A proper party is a party who although not a necessary party is a person whose presence will enable the Authority to effectively, efficaciously, comprehensively and adequately adjudicate upon all the controversies centering around a given case.
15. In fact, impleadment of parties is only a matter of fact and not a matter of Law. Addition of parties/striking out parties of course, is a matter of discretion to be exercised by a Tribunal/Court based on sound judicial principles. The said discretion can be exercised either on the application of a Petitioner/Respondent or suo-motu or on the application of a person who is not a party to any pending proceedings. However, the said discretion cannot be exercised in a cavalier and whimsical fashion."
Adding of Parties IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 11
22. The object of order 1 Rule 10 of CPC is to discourage contest on technical ground and to protect honest, bonafide litigants from being non-suited, in the considered opinion of this Tribunal.
23. The 'addition of parties,' is one of discretion to be exercised by the concerned Tribunal / Court of Law based on the facts and circumstances of the case.
24. The 'power of the Court' to 'add parties' is succinctly pointed out by the Hon'ble Supreme Court in the decision in 'Razia Begum v. Anwar Begum' reported in 1959 SCR 1111 wherein it is observed that the question of addition of parties under Rule 10 of Order 1 of CPC is generally not one of 'initial jurisdiction', of the 'Court' but of a 'judicial discretion', which has to be exercised in view of all facts and circumstances of a particular case; but in some cases it may raise controversies as to the power of the Court in contra distinction to its inherent jurisdiction or in other words of jurisdiction in the limited sense in which it is used in Section 115 of the Civil Procedure Code.
25. In the decision of Hon'ble Supreme Court in Mumbai International Airport Pvt. Ltd. V. Regency Convention Centre & Hotels Pvt. Ltd., reported in AIR 2010 SC 3109 wherein it is IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 12 observed and held that 'a necessary party' is a 'person' who ought to have been joined as a 'party' and in 'whose absence' no effective Decree could be passed at all, by the 'Court'. If a 'necessary party' is not impleaded, the suit itself is liable to be dismissed. A 'proper party' is a party, who though not a necessary party is a person whose presence would enable the Court to completely, effectively and adequately adjudicate upon all matters in dispute in the suit, though he need not a person in favour of or against whom the decree is to be made, as per decision in Mumbai International Airport Pvt Ltd V. Regency Convention Centre and Hotels Pvt Ltd, AIR 2010 SC 3109.
26. At this juncture, a 'person' who is not a 'eo nomine', 'a party' to a reference, to an 'Arbitration,' cannot be impleaded in 'proceedings', to set aside an 'Award', made by the 'Arbitrators', as per decision in Muhamad Kasim Rowther v. Noor Muhamad reported in 1958 1 MLJ at pg. 94.
27. Also, that if a 'person' is not found to be a proper or a necessary party, the 'court', does not have jurisdiction to order his impleadment against the wishes of the 'Plaintiff'. Status Report of 2nd Respondent/Liquidator IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 13
28. The 2nd Respondent/Liquidator of JBM Homes Pvt Ltd and JBM Sheltors Pvt Ltd has pointed out in his 'Status Report' that the Original Deeds/Documents that were executed by the 'Corporate Debtor'', with the land owners, in relation to advances, made as per the Books of Accounts have not been handed over to the Liquidator, by the Resolution Professional/Promoters. As such, the Liquidator is unable to proceed with the 'valuation exercise' even after passage of more than few months from the 'commencement date' of liquidation. In this connection, the Liquidator is proposing to approach the Hon'ble Adjudicating Authority/Tribunal, through a new application for suitable directions.
Discussions
29. The Petitioner / 3rd party /proposed 3rd Respondent in IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 prays for impleading itself as 3rd Respondent in the main Comp. Appeal. In fact, the stand of the Petitioner is that it had led the Committee meetings of stakeholders and the formulation of the action plan after taking into account the Homebuyers interest, based on which IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 14 the 'Liquidation order' was passed and hence, it must be impleaded as a 'party' to the instant 'Appeal'.
30. According to the Petitioner is a major Stakeholder in 'CIRP' and Liquidation process, with 90.05% voting right, in the 'Committee of Creditors' and 95.39% voting right in the 'Stakeholders consultative committee'. Considering the fact, an order of Liquidation was passed based on the 'Action plan', furnished by the Petitioner, it is a necessary and proper party to the instant Appeal and it is the plea of the Petitioner in IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 that it must be heard before the main Appeal is being determined by this Tribunal.
31. Conversly, the clear-cut stand taken by the 1st Respondent /Appellant, is that the Petitioner/proposed 3rd Respondent, is a Creditor to the 'Corporate Debtor' has no 'Locus standi', to assail the order of Liquidation passed by the 'Adjudicating Authority/Tribunal' and cannot be arrayed as one of the 'parties' in the instant Appeal, since the Petitioner, is neither a necessary party nor a proper party.
32. According to the 1st Respondent/Appellant, the Court/Tribunal in exercise of its powers to array a 'party', shall not IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 15 implead 'any person' against the 'principle of Dominus Litus' unless the proceedings cannot proceed any further, in the absence of such person or it is impossible, to do 'complete justice' in the absence of such person.
33. It is to be remembered that only an 'individual' who is 'Aggrieved' and whose Right is affected under Law, must be made necessary and proper party to the proceedings, as opined by this Tribunal.
34. Admittedly, the Petitioner/Proposed 3rd Respondent is just a 'Creditor' and being a part of the 'Stakeholders Consultative Committee'. More importantly, the 'Special Committee' formed by the 'Adjudicating Authority/Tribunal', is to make certain 'Recommendations' and when the fact of the matter is, that the 'Committee' itself has not sought for an 'impleadment' in the instant Appeal as one of the parties, then the 'Petitioner/Creditor' cannot be a 'party' to the 'underlying proceedings'.
35. As far as the present case is concerned, even though the Petitioner/3rd Party/Proposed third Respondent has come out with a categorical plea that it is a 'major stakeholder' in the 'Corporate Insolvency Resolution Process' and 'Liquidation process' with IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 16 90.05% voting right in CoC and 95.39% voting right in 'SCC' and despite the fact that the 'Liquidation order' came to be passed based on the 'Action plan' submitted by it, (Petitioner), this 'Tribunal' is of the considered view that just because the Petitioner being Creditor, it cannot be arrayed as proposed 3rd Respondent in main 'Appeal'.
36. Furthermore, the Adjudicating Authority / Tribunal constituted Committee to make recommendations is of no relevance to the question / issue whether the Petitioner is a necessary party or a proper party in Law.
37. As a matter of fact, the Petitioner in IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 is a 'Creditor' being a part of the 'Stakeholders Consultation Committee' and it cannot be brushed aside, by any means that the interests of Creditors, and Stakeholders at large are represented by the 2nd Respondent / 'Liquidator' and the Resolution Professional who had applied for Liquidation, is the 1st Respondent in the instant Appeal.
38. Apart from the above, one cannot remain oblivion to the primordial fact that the underlying order which is questioned, is an order of Liquidation, being against the 'Corporate Debtor's' IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 17 interest and it is an 'order in rem', operating against the Corporate Debtor and its interests.
39. Be that as it may, on a careful consideration of respective contentions advanced on either side, this Tribunal bearing in mind of a crystalline fact that the Petitioner in IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 is a creditor to the Corporate Debtor is not to be impleaded in the instant Appeal as a third Respondent because of the fact that it is neither a necessary party nor a proper party to the instant Appeal' to be decided by this Tribunal on merits, at the time of 'Final Hearing'.
40. Viewed from the above perspective, and also in the teeth of well settled principle in law that 'to add a person as a prospective
- proposed Respondent' is not a substantive right but undoubtedly, it is one of procedure. As such, this Tribunal unhesitatingly holds that a mere 'interest of a party' in the 'Fruits of Litigation cannot be an 'acid test' for it being, impleaded as a 'party'.
41. Indeed, an 'Appellant/Plaintiff' in an 'Appeal / suit' proceedings cannot be coerced to join a 'person' as 'party' against IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 18 whom, he/it does not desire to contest, unless it is a compulsion of Law, in the considered opinion of this Tribunal.
42. Another an important fact to be taken note of is that a 'person' will not be arrayed as a person / party for the sake that it/he will be affected by the Tribunal incidentally, when an order in a given proceedings is passed before it.
43. In view of the foregoing elaborate discussions, as mentioned supra and this Tribunal bearing in mind of the entire facts and circumstances of the instant case, in an 'encircling manner', comes to a resultant conclusion that the Petitioner/Appellant is not a necessary / proper party, to be arrayed as third Respondent in the main Comp. App. (AT)(CH)(Ins.) No. 447 of 2023.
44. Another relevant fact is that this 'Tribunal' is of the earnest opinion that the instant Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 on the file of this Tribunal can be disposed of, of course on merits based on the available materials on 'Record'. Looking at from that angle and also from any point of view, the instant IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 (seeking for impleadment) by the Petitioner as proposed third Respondent in main Appeal is devoid of any merits.
IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 19 Result In fine, IA 58/2024 in Comp. App. (AT)(CH)(Ins.) No. 447 of 2023 is dismissed. No costs. The connected pending IAs if any, are closed.
(Justice M. Venugopal) Member (Judicial) (Mr. Ajai Das Mehrotra) Member (Technical) Date: 20-02-2024 ss/bm IA No. 58 of 2024 in Comp. App.(AT)(CH)(Ins.) No. 447 of 2023 20