National Company Law Appellate Tribunal
Bank Of Baroda vs Asahi Industries Limited on 13 January, 2022
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH,
NEW DELHI
Company Appeal (AT) (Ins) No. 322 of 2021
IN THE MATTER OF:
Bank of Baroda ...Appellant
Vs.
Asahi Industries Ltd. & Ors. ...Respondents
Present:
For Appellant: Mr. Ravi Raghunath, Ms. Aakashi Lodha, Ms.
Rathina Maravarman, Advocates
For Respondent: Ms. Bindu Bhatia, Mr. Abhishek Anand, Advocates
for R-2(RP)
Mr. Abhijeet Sinha, Mr. Milan Singh Negi,
Advocates for R-3
Mr. Vaibhav Tyagi, Advocate for R-6,7 & 9
Mr. Lokesh Malik, Advocate for R-8 & 11
Mr. Prateek Gupta, Advocate for R-4, 5 & 10.
With
Contempt Case (AT) No. 13 of 2021 in
Company Appeal (AT) (Ins) No. 322 of 2021
IN THE MATTER OF:
Bank of Baroda ...Appellant
Vs.
Safex Realtors Pvt. Ltd. & Ors. ...Respondents
Present:
For Appellant: Mr. Ravi Raghunath, Ms. Aakashi Lodha, Ms.
Rathina Maravarman, Advocates
For Respondent: Mr. Abhijeet Sinha, Mr. Milan Singh Negi,
Advocates for Contemnor 1 to 4
Ms. Bindu Bhatia, Mr. Abhishek Anand, Advocates
for Contemnor - 5 (RP)
Mr. Vaibhav Tyagi, Advocates for Contemnor 8, 9
and 11
Mr. Lokesh Malik, Advocate for Contemnor 10
and 13
Mr. Prateek Gupta, Advocate for Contemnor - 6,
7 & 12.
Company Appeal (AT) (Ins) No. 322 of 2021
Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021
1
ORDER
(Through Virtual Mode) 13.01.2022: The appeal and contempt application has been heard together since the contempt arises out of the orders passed in the Company Appeal.
2. We may first notice the necessary facts giving rise to Company Appeal (AT) (Ins) No. 322 of 2021. The appeal has been filed against the order dated 22.03.2021 by which order the Adjudicating Authority has vacated the interim order of status quo granted on 06.01.2021. The CIRP process were initiated against the Corporate Debtor Asahi Industries Ltd. by order dated 13.11.2019.
3. The CoC approved the Resolution Plan submitted by M/s Safex Realtors Pvt. Ltd. (R-3 in the appeal) with majority of 82% of voting. The Adjudicating Authority also by order dated 13.11.2020 approved the Resolution Plan.
4. The case of Bank of Baroda is that after approval of Resolution Plan, it came to know that all the members of the CoC being R4-R11 to the appeal who were admitted as members of CoC were all related parties of the Corporate Debtor and they could not Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 2 be lawfully admitted in CoC. The Appellant Bank has also referred to an order dated 11.02.2014 passed by the Ld. Securities Appellate Tribunal ('SAT').
5. In the above context and IA No. 2326 was filed by the Appellant on 11.12.2020 before the Adjudicating Authority praying that the Resolution Plan be sent back to CoC for reconsideration with Appellant as the only Financial Creditor in the said IA on 06.12.2021.
6. In the said IA, notice was issued by the Adjudicating Authority and on 29.12.2020 the matter was directed to be fixed for 04.01.2021. On 06.01.2022, the Adjudicating Authority passed an order directing to maintain the status-quo in relation to RP and not to disburse the amount until any further order. IA was adjourned and on 22.03.2021, the IA came for consideration before the Adjudicating Authority and on this date, request was made on behalf of the Learned Counsel for the Bank of Baroda for adjournment which was not acceded to. The Adjudicating Authority has vacated the status quo order and directed it to be listed on 27.04.2021.
Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 3
7. Aggrieved by the said order, this appeal has been filed by the Bank of Baroda. In the appeal, this Tribunal issued notice on 19.04.2021 and passed the following interim order:-
xx xx xx xx xx "Till next date, Impugned Order dated 22.03.2021 is stayed and in the meanwhile, the Order dated 06th January, 2021 of the Adjudicating Authority directing maintaining of status-quo shall continue."
8. The impugned order dated 22.03.2021 has been stayed and in the meanwhile, the order dated 06.01.2021 of the Adjudicating Authority directing to maintain the status quo shall continue.
9. Reply was called for, from the Respondent. The contempt petition came to be filed by the Bank of Baroda on 25.05.2021 and hard copy filed on 02.07.2021 praying for initiation of contempt against the Respondents mentioned in the contempt application for violation of order dated 19.04.2021.
10. In the contempt case, the Appellant's case was that after the order dated 19.04.2021, the contemnors R1-4 with collusion with R 5-13 to violate the order, by issuing E Demand Draft and Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 4 cheque, withdrawn, several amounts from bank after order dated 19.04.2021 was communicated, details of certain payments received by R6 to R13 has been mentioned by the applicant.
11. This court issued notice on the contempt petition on 11.06.2021. Further, while issuing notice to the Respondents, following was directed in paragraphs 7, 8 and 9:-
"7. Issue Notice to the Respondents/Contemnors in contempt case (AT)(No. 13 of 2021 to say why the Contempt Case should not be accepted and action for contempt as alleged should not be taken against the Respondents- alleged Contemnors.
8. Respondents/Contemnors to file Reply-Affidavits within two weeks. The RP who is Chairperson of the Monitoring Committee has been heard. He is additionally required to collect all the necessary information and put Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 5 up Report before this Tribunal in the Contempt Case, especially the documents with regard to date of encashment of cheques from the records of the concerned banks. If any of the cheques as alleged in Contempt Case have not yet been encashed, the parties/Banks concerned will not encash the same. Applicant Bank and Resolution Professional will inform Banks concerned to keep the cheques etc. in safe custody.
9. We have already directed in our Orders dated 19th April, 2021 in the Company Appeal (AT)(Ins.) No. 322 of 2021 that the earlier Order of the Adjudicating Authority to maintain status quo shall continue. We further direct that Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 6 the execution of the Resolution Plan shall remain stayed till next date".
12. In the contempt application, reply has been filed by the Respondents including the Resolution Professional. Appellant in the contempt application has filed a detailed chart with Dy. No. 45811 on 19.08.2021 which chart has been given in compliance of the order dated 12.08.2021 passed by this Tribunal, giving the details of transactions and documents and details of the payment/ encashment.
13. It is clear that several encashments have been made from the bank account in favour of R6-R13 and there has also been certain payments which have been made even after 19.4.2021 e.g. on 26.04.2021, RTGS payment was made in favour of 'Kausar Textiles Pvt. Ltd.' (R-8) for an amount of Rs. 19,07,561/- which referred to an earlier cheque which was bounced. There has been also encashment of Demand Draft on 18.06.2021.
14. We have heard Learned Counsel for the parties both on the appeal and in the contempt application. We may first consider the submission in the appeal.
Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 7
15. The submission of the Appellant is that in IA filed by the Appellant, the Interim Order was passed on 06.01.2021 directing the parties to maintain the status quo. The said order was passed on the application No. 2366 of 2020, the details of which have been noticed above. The order which was passed on 06.01.2021 is to the following effect:-
"The matter is taken up through virtual hearing(VC).
Counsel for the applicant, Ms. Rathina Maravarman and Counsel for the Respondent, Ms. Bindu Bhatia are present and sought four weeks' time for filing reply.
Counsel for the applicant is directed to serve one more notice to all the respondents clearly indicating the next date of hearing.
Parties are directed to maintain status quo in relation to the Resolution Plan and not to disburse any amount until further orders.
Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 8 List this matter on 08.02.2021."
16. On 22.03.2021, when the appeal was taken, request was made by the Learned Counsel for Bank of Baroda i.e. Applicant for some time due to personal difficulties.
17. The Adjudicating Authority observed that status quo is stopping the implementation of plan. The order is vacated.
18. Learned Counsel for the Appellant submits that the adjournment was sought due to illness of the Learned Counsel for the Appellant, in the appeal, details of several medical test conducted on 22.03.2021 have been given. Thus, the Learned Counsel for the Appellant submits that there was no occasion to refuse the adjournment made on the request of personal ground of the Appellant.
19. Learned Counsel for R1-4 Shri Abhijeet Sinha candidly submits that the Respondent have no objection if the matter goes back and the application No. 2366/2020 is heard again.
20. We have considered the submissions of the parties and perused the records. Any request made on behalf of the personal ground of appearing Advocate has to be considered by the court and unless there are reasons, such requests are not to be declined. Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 9
21. We may refer in this context judgement of Hon'ble Supreme Court in Rais Ahmad Vs. State of UP & Ors. in C.A. No. 4446 of 1999 decided on 13.08.1999 in paragraph 10, the following observation has been made.
10. "Traditions" of a Court are built upon the edifice of cooperation between Judges and lawyers over a period of years. "Traditions", are doctrines, customs, practices, beliefs and usages which are handed down from generation to generation. As pointed out earlier, one of the traditions of the Allahabad High Court, which is now more than 130 years old and has seen many generations of lawyers, is that a case would be adjourned on the "Illness Slip" of a counsel. This and other traditions of the Court bind the lawyers and Judges in a sacred relationship of mutual trust and understanding. The adjournment of a case on the "Illness Slip" reflects the Court's respect for the counsel and its consciousness that a lawyer or counsel, though an officer of the Court, is Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 10 nevertheless a human being who can fall ill. It also reflects the faith and trust the lawyer has in the Court that the Court would, on his "illness slip", adjourn the case".
22. We are of the view that the Adjudicating Authority has committed error in vacating the interim order on 22.03.2021, when the Learned Counsel for the Appellant was not present and request for adjournment was made. There was no difficulty in adjourning the matter for one or two days.
23. We are of the view that the order dated 22.03.2021 is unsustainable and deserves to be set aside.
24. The Appellant raised another submission in reference to application 2366 of 2020. Learned Counsel for the Appellant submit that in view of notice issued against the contemnors and they having withdrawn the huge amounts in violation of this court dated 19.04.2021, they need not to be allowed to participate in hearing of the IA No. 2366/2020 unless they purged their contempt.
25. We examined the contempt application filed by the Appellant against the Respondents.
Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 11
26. In so far as the contempt application with respect to Respondent No. 5, we are of the view that RP after completion of the CIRP proceedings does not have much role with regard to disbursement of amount to Creditors under the Resolution Plan. The Contempt is sought to be made on the ground of disbursement of amount in violation of the order.
27. We are of the view that contempt proceedings need to be discharged as far as Respondent No. 5 is concerned.
28. Learned Counsel for the Appellant has submitted that not only the Respondent violated this Court on 19.04.2021 rather they have filed wrong affidavits justifying their action which is nothing but a perjury.
29. As noticed above, Learned Counsel for the Appellant has filed a chart in pursuant of the order dated 12.08.2021 giving the details of transactions which according to the Appellant has violated the interim order dated 19.04.2021. Bank Statement from where the charts have been made have also brought on record.
30. Respondent No. 1 to Respondent No. 4 have filed the affidavit. In the reply affidavit, it is admitted that the order dated 19.04.2021 was received at 2.32 in the afternoon of 19.04.2021. Thus R1- R4 were well aware of the order passed by this court. Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 12
31. Shri Abhijeet Sinha, Learned Counsel for R1-R4 sought to justify the action of R1-4 by submitting before 19.04.2021, letters and cheques were issued in favour of other members of the CoC for their payment as was entitled under the Resolution Plan and there is no wilful disobedience on the part of R1-4. It is submitted that payment sought to be made on 19.04.2021 and reflected in Bank statement were payment on the expense of Demand Draft.
32. Learned Counsel for other Respondent Nos. 6-13 have submitted that they tender unconditional apology to this Court and they are ready to refund the amounts which have been received on 19.04.2021 or thereafter by any of R1-13.
33. Learned Counsel for R1-4 also submit that R1-4 also requested the other members of CoC who have received the payment and they are agreed to refund the amount received. R1- R4 also submitted that this Court may order that the amount even received prior to 19.04.2021 should be refunded to R1-4. There is no occasion to issue any order to be refunding the amount which was received prior to 19.04.2021. Although submissions have been made making allegations and counter allegations by the Appellant and Respondents and various materials and documents have been referred to, but in view of the fact that the Respondents Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 13 have tendered the unconditional apology and they are ready to refund the entire amount to Respondent No. 1 the SRA. We see no justification in continuing this contempt proceeding any further.
34. We thus, as prayed by Learned Counsel for R 6-13, direct that the amounts, which were received by any of them on 19.04.2021 or thereafter pursuant to the Resolution Plan of the Respondent No. 1 shall be returned by a Bank Draft or the Bankers' Cheques in favour of R-1 within 15 days from today.
35. In view of the foregoing discussion, we allow the appeal and set aside the impugned order and request the Adjudicating Authority to proceed and decide the application 2366/2020 in accordance with law. The Adjudicating Authority shall give liberty of hearing to Respondents and other members of CoC only being satisfied that they have returned the amount taken by them on 19.04.2021 or thereafter to Respondent No. 1.
The Contempt Application is disposed of accordingly.
36. The order dated 22.03.2021 is set aside and the order dated 06.01.2021 passed by the Adjudicating Authority is revived. Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 14
37. Learned Counsel for Respondent No. 6 submitted that they have not encashed the Demand Draft, it will be open for them to refund the demand drafts to the Respondent No. 1.
The appeal is allowed. The Contempt application is disposed of as above.
[Justice Ashok Bhushan] Chairperson [Dr. Ashok Kumar Mishra] Member (Technical) ss/nn Company Appeal (AT) (Ins) No. 322 of 2021 Contempt Case (AT) No. 13 of 2021 in Company Appeal (AT) (Ins) No. 322 of 2021 15