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Sarvahitha Educational Society vs Educomp Solutions Limited & Anr on 2 December, 2022

Author: Navin Chawla

Bench: Navin Chawla

                    $~10
                    *    IN THE HIGH COURT OF DELHI AT NEW DELHI
                    +    O.M.P. 5/2018 & I.As. 8783/2018 & 8785/2018
                         SARVAHITHA EDUCATIONAL SOCIETY               ..... Petitioner
                                           Through: Ms.Maninder Acharya, Sr. Adv. with
                                                      Mr.M.Sowri Dev, Mr.Prashant Singh,
                                                      Advs.

                                               versus

                             EDUCOMP SOLUTIONS LIMITED & ANR.       ..... Respondents
                                         Through: Ms.Ranjana Roy Gawai with
                                                  Ms.Aayushi Singh, Advs. for R-1
                                                  along with Mr. Mahender Kumar
                                                  Khandelwal, Resolution Professional
                                                  (present through VC)
                                                  Ms.Prachi Johri, Mr.Hardik Khatri,
                                                  Advs. for R-2.

                             CORAM:
                             HON'BLE MR. JUSTICE NAVIN CHAWLA
                                              ORDER

% 02.12.2022

1. On 10.10.2022, this Court had directed the Resolution Professional appointed for the respondent no.1-company to appear before this Court in person or through some counsel today.

2. Mr. Mahender Kumar Khandelwal, Resolution Professional for the respondent no.1, appears virtually through video conference. He submits that he has authorized Ms.Ranjana Roy Gawai, Advocate, to appear in the present matter for and on behalf of the respondent no.1-company. He further submits that he affirms the affidavit of Mr.Priyadarshan Kumar dated 02.03.2022 filed in the present proceedings pursuant to the order of this Court dated 16.12.2021. He submits that the said affidavit has been filed Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:05.12.2022 17:25:43 on his instructions.

3. The learned senior counsel for the petitioner submits that the Resolution Professional has to file his own affidavit, and, in case, he is to delegate the function of filing of an affidavit to a third person, he must take prior approval from the Committee of Creditors in terms of Section 28(1)(h) read with Section 28(4) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'Code').

4. I am unable to agree with the submission made by the learned senior counsel for the petitioner.

5. Section 25 of the Code states the duties of a Resolution Professional, which is to preserve and protect the assets of the Corporate Debtor, including the continued business operations of the Corporate Debtor. Section 25(2)(b) of the Code states that the Resolution Professional shall inter alia represent and act on behalf of the Corporate Debtor with third parties, exercising the rights for the benefit of the Corporate Debtor in judicial, quasi-judicial or arbitration proceedings. Section 25(2)(b) of the Code states that in such exercise, the Resolution Professional shall appoint inter alia legal or other professionals in the manner as specified by the Board.

6. In the present case, the Resolution Professional is representing the interest of the Corporate Debtor, that is, the respondent no.1, and has appointed a Counsel to represent him. No fault can be found in the same.

7. Sections 28(1)(h) and 28(4) of the Code, on which reliance has been placed by the learned senior counsel for the petitioner, read as under:

"28 Approval of committee of creditors for certain actions.--- (1) Notwithstanding anything contained in any other law for the time being in force, the Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:05.12.2022 17:25:43 resolution professional, during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors namely:--

xxxx

(h) delegate its authority to any other person. xxxxx (4) Where any action under sub-section (1) is taken by the resolution professional without seeking the approval of the committee of creditors in the manner as required in this section, such action shall be void."

8. It is clear from the reading of the above provisions that it is only where the Resolution Professional delegates his authorities to a third party that he must take prior approval thereof from the Committee of Creditors. In the present case, the Resolution Professional has not delegated his authority to Mr.Priyadarshan Kumar. On the other hand, he has merely taken the assistance of Mr.Priyadarshan Kumar, who is alleged to be in the know of the arbitration proceedings, and Mr.Priyadarshan Kumar is acting on his direction in terms of Section 19 of the Code.

9. I therefore, see no merit in the objection raised by the learned senior counsel for the petitioner on this account.

10. The learned counsel for the respondent no.2, placing reliance on the order dated 27.04.2022 passed by the Coordinate Bench of this Court in OMP(COMM) No.261/2021 titled Indian Oil Corporation Ltd. v. Era Infra Engineering Ltd., submits that this Court has observed as under:

"3. The said contention is unmerited. The language of Section 14 of the IBC is unambiguous. As explained by the Supreme Court in P.Mohanraj & Ors. vs. M/s Shah Brothers Ispat Pvt. Ltd. Civil Appeal No. 10355/2018, that a moratorium applies to any proceedings against a corporate debtor.

Indisputably, proceedings under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter the 'A&C Act') are also proceedings contemplated under Section 14 of the IBC.

4. Mr.Dewan further submits that although the petitioner's challenged under Section 34 of the A&C Act to the arbitral award cannot be proceeded with, there is no impediment in ERA proceeding to enforce the said arbitral award. ERA is entitled to recover the amounts as awarded in its favour and therefore, the proceedings in OMP (ENF.) (COMM) 177/2021 should not be deferred.

5. Prima facie, the aforesaid contention is also unmerited. It is difficult to accept that while IOCL's challenge to the arbitral award is subsisting and not concluded, ERA would be entitled to enforce the arbitral award, which in, one sense, has not attained finality."

11. She submits that therefore, the present petition cannot be heard at present.

12. On the other hand, the learned senior counsel for the petitioner submits that in the above order itself, the learned Single Judge had also found the submission of the learned counsel for the respondent therein to the effect that while the proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 cannot proceed, the respondent can proceed with the enforcement of the Award, as unmerited. She submits that in case this Court is to accept the submission of the learned counsel for the respondent no.2, it should also stay the operation of the impugned Award. She submits that in view of the subsequent development, she shall be filing an application seeking stay of the enforcement of the impugned Award.

13. The petitioner shall be at liberty to move such an application, which shall be considered by this Court in accordance with law.

14. The learned counsel for the petitioner shall supply a copy of the paper book of the petition to the learned counsel for the respondent no.2 within a period of two days from today.

15. List on 23rd March, 2023.

NAVIN CHAWLA, J DECEMBER 2, 2022 RN Signature Not Verified Digitally Signed By:RENUKA NEGI Signing Date:05.12.2022 17:25:43