National Company Law Appellate Tribunal
M/S. Asset Reconstruction Company ... vs Ebenezar Inbaraj on 27 April, 2023
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
IA No. 696 of 2022
in
Company Appeal (AT) (CH) (INS.) No. 325 of 2022
In the matter of :
Asset Reconstruction Company
(India) Limited,
Rep. by its Authorized Representative
and Chief Manager, Mr. V. Ragothaman,
The Ruby, 10th Floor, 20 Senapati Bapat
Marg, Dadar (West), Mumbai - 400028 ... Petitioner / Appellant
v.
Mr. Ebenezar Inbaraj,
Resolution Professional of
M/s. Regen Powertech Private Limited,
Sivanandam, 1st Floor, New No. 1,
Pulla Avenue, Shenoy Nagar,
Chennai - 600030 ... 1st Respondent / Respondent
Mr. Madhusudhan Khemka,
Suspended Board of Directors
of M/s. Regen Powertech Pvt. Ltd.
and Regen Infrastructure and
Services Pvt. Ltd.,
Y-202, Anna Nagar, Chennai-600040 ... 2nd Respondent / 1st Respondent
Mr. Sundaresh Ramanathan,
Suspended Board of Directors
of Regen Powertech Pvt. Ltd.
and Regen Infrastructure and
Services Pvt. Ltd.,
No.3, A & B, Sarangapani Street,
T. Nagar, Chennai - 600017 ... 3rd Respondent / 2nd Respondent
IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022
Page 1 of 15
M/s. Regen Infrastructure and
Services Pvt. Ltd.,
Represented by its Resolution Professional
Ms. Renuka Devi Rangaswamy,
Sivanandam, 1st Floor, New No.1,
Pulla Avenue, Shenoy Nagar,
Chennai - 600030 ... 4th Respondent / 3rd Respondent
Present:
For Petitioner / : Mr. E. Om Prakash, Senior Advocate
Appellant For Mr. V.V. Sivakumar & Mr. Chetan Sagar,
Advocates
For Respondent No.1 : Mr. P.H. Arvindh Pandian, Senior Advocate
For Mr. A.G. Sathyanarayana, Advocate
ORDER
(Virtual Mode) Justice M. Venugopal, Member (Judicial):
IA No. 696 of 2022 in Comp. App (AT) (CH) (INS.) No. 325 of 2022:
'Heard', the Learned Counsel for the 'Petitioner' / 'Appellant' and the Learned Counsel for the '1st Respondent'.
Petitioner / Appellant's pleas:
2. According to the Learned Counsel for the 'Petitioner'/ 'Appellant', the 'Petitioner'/ 'Appellant', is a `recognised Financial Institution', within the meaning of Section 2(h) (ia) of the 'Recovery of Debts and IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 2 of 15 Bankruptcy Act, 1993', as well as, a 'Secured Creditor', coming within the meaning of Section 2 (1) (zd) (iii) of the 'SARFAESI Act, 2002'.
3. The Learned Counsel for the 'Petitioner'/ 'Appellant', points out that the `L & T Investments Limited' ("the Original Lender"), along with `L & T Infra Investment Partners', had provided the `Financial Assistance' (Facility) to M/s Regen Infrastructure and Services Private Limited ('RISPL'/ '4th Respondent), by subscribing to `Optionally Convertible Debentures' (`OCDs'), issued by the '4th Respondent' / 'RISPL', amounting to Rs.349.40 Crores. In fact, the `Original Lender', had subscribed to `OCDs', amounting to Rs.269.40 Crores and `L & T Infra Investment Partners', had subscribed to `OCDs', amounting to Rs. 80 Crores.
4. The Learned Counsel for the 'Petitioner'/ 'Appellant', brings it to the 'Notice' of this 'Tribunal', that, the 'Facility'/ 'OCDs', are secured, inter alia, by 'Mortgage', over the `4th Respondent's 'Leasehold Rights', of the `Five Immovable Properties', along with the 'Plant and Machineries', owned by the `4th Respondent' and the 'Corporate Guarantee', excluded by the 1st Respondent. Indeed, the aforesaid 'Debt' and `Security', were assigned by the `Original Lender', to the 'Petitioner'/ 'Appellant', through a `Registered Deed of Assignment', dated IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 3 of 15 12.03.2021 and as visualised, under `Section 5 (1) (b) of the SARFAESI ACT, 2002'.
5. Advancing his 'Argument', the Learned Counsel for the 'Petitioner'/ 'Appellant', points out that the '1st Respondent'/ 'Petitioner', had projected an IA(IBC)/400(CHE)/2021, in IBA/1099/2019, before the 'Adjudicating Authority'/ 'National Company Law Tribunal, Division Bench - II, Chennai' (under Section 49 r/w Section 45(2) of the 'Insolvency and Bankruptcy Code, 2016'), seeking to, nullify the aforesaid `Security Interest', created to and in favour of the 'Petitioner'/ 'Appellant' and 'L & T Infra Investment'.
6. The grievance of the 'Petitioner'/ 'Appellant', is that the 'Adjudicating Authority' (`National Company Law Tribunal, Division Bench - II, Chennai'), without considering the 'Concept of Relief Period', mentioned under Section 46 (1) (i) and /or Section 46 (1) (ii) and without considering the 'Contentions'/ 'Objections', raised by the 'Suspended Directors' (`2nd and 3rd Respondents), in regard to the 'Authenticity' of Transaction', entered into among the 1st and 4th Respondents, and without looking into the `Ingredients of Section 49', in proper and real perspective, had proceeded, to allow the IA/400(CHE)/2021 in IBA/1099/2019, on 30/05/2022.
IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 4 of 15
7. Expatiating his submission, the Learned Counsel for the `Petitioner' / 'Appellant', forcefully comes out with a plea that the 'Petitioner'/ 'Appellant', being a 'Secured Financial Creditor' of the '1st and 4th Respondents' / 'Corporate Debtors', although, not arrayed as `Parties', in the 'Impugned Application', is 'Affected' and 'Aggrieved', by the 'Impugned Order', dated 30/05/2022.
8. The Learned Counsel for the 'Petitioner'/ 'Appellant', proceeds to take a stand, that the 'Impugned Order', made in IA(IBC)/400(CHE)/2021 in IBA/1099/2019, is 'detrimental', to the 'Lenders' of the 4th Respondent, given that a valid `Hypothecation' / `Mortgage', was created, in favour of the 'Petitioner'/ 'Appellant', and the 'Other Lenders', and are entitled to, enforce the 'Security Interest', created, in its favour.
9. The Learned Counsel for the 'Petitioner'/ 'Appellant', contends that the effect of the 'Impugned Order', passed by the 'Adjudicating Authority' / 'National Company Law Tribunal, Division Bench - II, Chennai', in IA(IBC)/400(CHE)/2021 in IBA/1099/2019, dated 30/05/2020, is that the 'Lenders' of the `1st Respondent', will hold the charge to the exclusion of the `Lenders' of the `4th Respondent', and in fact, the 'Petitioner'/ 'Appellant', had lost the means, to enforce its IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 5 of 15 `Security Interest', for recovery of its `Outstanding Dues', aggregating in all, a sum of Rs.238,17,94,723/-, as of 27/12/2019.
10. The Learned Counsel for the 'Petitioner'/ 'Appellant', therefore, prays for 'Granting of Leave', to the 'Petitioner' / 'Appellant', to prefer the instant Company Appeal (AT) (CH) (Ins) No. 325 of 2022, before this 'Tribunal', in furtherance `Substantial Cause of Justice'.
11. The Learned Counsel for the 'Petitioner' / 'Appellant', relies on the decision of the Hon'ble Supreme Court in `Adi Pherozshah Gandhi v. H.M. Seervai, Advocate General of Maharashtra, Bombay', reported in 1970 (2) SCC Page 484 at Spl Page 489, wherein, at Paragraphs 6 and 7, it is observed as under:
6. ``The expression `person aggrieved' is not new, nor has it occurred for the first time in the Advocates Act. In fact it occurs in several Indian Acts and in British Statutes for more than a hundred years. In the latter a right of appeal to a `person aggrieved' is conferred in diverse contexts. It occurs in the Ale House Act, the Bankruptcy Acts, Copyright Act, Highway Act, Licensing Acts, Milk and Dairies (Amendment) Act, Rating and Valuation Act, Summary Jurisdiction Act, Union Committee Act, Local Acts, in certiorari proceedings and the Defence of Realm Regulations to mention only a few. The list of Indian Acts is equally long.
7. As a result of the frequent use of this rather vague phrase, which practice, as Lord Parker pointed out in Ealing Corporation v.
Jones1, has not been avoided, in spite of the confusion it causes, selections from the observations of judges expounding the phrase in the context of these varied statutes were cited before us for our IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 6 of 15 acceptance. The observations often conflict since they were made in different contexts and involved the special standing of the party claiming the right of appeal. Yet these definitions are not entirely without value for they disclose a certain unanimity on the essential features of this phrase, even in the diversity of the contexts. The font and origo of the discussion is the well-known definition of the phrase by James L.J. In Re Sidebotham Ex p. Sidebotham2. It was observed that the words `person aggrieved' in Section 71 of the Bankruptcy Act of 1869 meant: "
``not really a person who is disappointed of a benefit which he might have received, if some order had been made. A `person aggrieved', must be a man who had suffered a legal grievance, a man against whom a decision has been pronounced which had wrongfully deprived him of something, or wrongfully refused him something or wrongfully affected his title to something."
12. The Learned Counsel for the 'Petitioner' / 'Appellant' , cites the decision of the Hon'ble Supreme Court in `Babua Ram & Ors. v. State of U.P. & Another', reported in 1995 2 SCC, Page No. 689 at Spl Pg: 692, wherein, at Paragraph 18, it is observed as under:
18. ``The person aggrieved must, therefore, be one who has suffered a legal grievance because of a decision pronounced by Civil Court giving higher compensation for the acquired lands similar to his own while he is denied of such higher compensation for his land because of operation of Section 18 read with Section 31 of the Act resulting in affectation of his pecuniary interest in his acquired land directly and adversely by that award of the Collector made under section 11. As such he becomes an aggrieved person entitled to avail of the right and remedy conferred upon him under Section 28-A(1) to make good his denied right to receive IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 7 of 15 compensation in excess of the amount awarded by the Collector / LAO.
Any interested person in the land acquired under the same notification published under Section 4(1) who failed to avail the right and remedy under Section 18(1) read with second proviso to Section 31(2), becomes a person aggrieved under Section 28-A(1) of the Act, when the owner of the another land covered by the same notification is awarded higher compensation by the Civil Court on a reference got made by him under Section 18.''
13. The Learned Counsel for the 'Petitioner' / 'Appellant' , refers to the decision of the Hon'ble Supreme Court in `Shobha Suresh Jumani v. Appellate Tribunal, Forfeited Property & Anr.', reported in (2001) 5 SCC 755 at Spl Pg: 756, wherein, at Paragraphs 5 and 9, it is observed as under:
5. ``The words `any aggrieved person', are found in several statutes. However, the meaning of the expression `aggrieved' may vary according to the context of the enactment in which it appears and all the circumstances.
9. From the scheme of the Act, it is clear that `any person aggrieved', by an order of the competent authority would mean a person whose property is held to be illegally acquired under the Act and which is to be forfeited or whose legal rights qua the said property are adversely affected. A relative or associate who has no interest or right in such property cannot be held to be a person aggrieved. It is true that the wife may be aggrieved because her husband's properties are forfeited. But that would not confer a right to file an appeal against such order. There is no infringement of her legal right. For the purposes of the Act husband and wife are different entities. If the properties standing in the name of a relative IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 8 of 15 or associate are forfeited on the ground that smugglers or foreign exchange manipulators were holding the said properties in their names or that such properties are legally acquired, then to that extent, for challenging the said finding, the relative or associate can be held to be person aggrieved by the order of the competent authority. But, a relative or associate cannot be considered to be aggrieved if the properties belonging to the smuggler or foreign exchange manipulator are forfeited under the Act.'' 1st Respondent's Stance:
14. In response, the Learned Counsel for the '1st Respondent'/ Petitioner', submits that the 'Petitioner'/ 'Appellant', was not a `Party', to the 'Petition', in IA(IBC)/400(CHE)/2021, before the `Adjudicating Authority', as `no relief', was claimed against it, in the said 'Proceedings', which were directed only against the '2nd to 4th Respondents', in the instant 'Appeal'.
15. According to the '1st Respondent'/ 'Petitioner', the 'Petitioner' / 'Appellant', despite being aware of IA(IBC)/400(CHE)/2021 (on the File of the `Adjudicating Authority' / `Tribunal'), had not intervened, in the said 'Proceedings', and further, that the instant 'Appeal', is `not maintainable', because of the simple fact, that the 'Petitioner'/ 'Appellant', is 'Not a Party Aggrieved', at any circumstance, and therefore, cannot take umbrage of the `Ingredients of Section 61(1) of the Insolvency and Bankruptcy Code, 2016', which in no manner, entitles the IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 9 of 15 `Petitioner / Appellant', to prefer the instant 'Appeal', before this `Tribunal'.
16. The Learned Counsel for the '1st Respondent', points out that there can be `no Claim', that 'Fraudulent Transactions', ought to be excused, contrary to the explicit Provisions of the 'Insolvency and Bankruptcy Code, 2016', on the basis of the mandate to balance the `interest of Stakeholders'.
17. The Learned Counsel for the '1st Respondent', brings it to the 7'Notice' of this 'Tribunal', that when 'RISPL', had already preferred an 'Appeal', the Company Appeal (AT) (CH) (Ins) No. 325 of 2022, filed by the 'Petitioner'/ 'Appellant' (the `Controlling Stakeholder'), in the `Committee of Creditors' of `RISPL', is a gross abuse of the process of `Law', as it cannot be the case of the 'Petitioner'/ 'Appellant', that it is canvassing any case, different from that of 'RISPL', in its 'Appeal'.
18. The Learned Counsel for the '1st Respondent'/ 'Petitioner', takes a prime plea that the instant Company Appeal (AT) (CH) (Ins.) No. 325 of 2022, is filed by the 'Petitioner'/ 'Appellant', with an intent to indulge in 'Plurality of Proceedings', and thus `bog down' 'RPPL', to try and somehow, stall its progress, post `Successful Resolution'.
IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 10 of 15
19. At this Juncture, the Learned Counsel for the '1st Respondent'/ 'Petitioner', projects an argument, that the 'Transactions', set out in the IA(IBC)/400(CHE)/2021, had defrauded the `Financial Creditors', whose `Security', was destroyed.
20. The Learned Counsel for the 1st Respondent, contends that the 'Resolution Application' of `RPPL', had taken over the 'Corporate Debtor', with a clean slate, after approval of their 'Resolution Plan', by the 'Adjudicating Authority', and therefore the 'Petitioner'/ 'Appellant', has 'No Locus', to assail the said 'Plan', of the 'Corporate Insolvency Resolution Process', of the 'Corporate Debtor', and cannot raise any `Claim', at this distant point of time.
21. The Learned Counsel for the '1st Respondent'/ 'Petitioner' points out, that as the 'Transaction of Sale of Assets', which was covered by the `earlier charge', cannot but be 'Fraudulent', and be meant to 'deprive' the 'Creditors', even apart from the fact, that the `present Transactions', are also `Undervalued'.
Assessment:
22. In the instant case, the 'Petitioner'/ 'Appellant', although, being a 'Secured Financial Creditor' of the 'Respondent Nos. 1 & 4'/ 'Corporate Debtors', and not `arrayed as Party', in the 'Petition', in IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 11 of 15 IA(IBC)/400(CHE)/2021 and that the 'Petitioner'/ 'Appellant', has filed the instant 'Comp. App (AT) (CH) (INS.) No. 325 of 2022', as an 'Aggrieved Person', yet this 'Tribunal', is of the earnest opinion that the 'Resolution Applicant' of `RPPL', had taken over the 'Corporate Debtor' (ofcourse with a clean slate), after `Approval', of its 'Resolution Plan', by the 'Adjudicating Authority' / `Tribunal', and in that perspective, the 'Petitioner'/ 'Appellant', has 'No Locus Standi', to challenge the said 'Plan', or 'Corporate Insolvency and Resolution Process Proceedings' of the 'Corporate Debtor'. As such, the filing of an 'IA No.696 of 2022 in Comp. App (AT) (CH) (INS.) No. 325 of 2022', seeking 'Leave', to prefer the instant 'Appeal', before this 'Tribunal', cannot be sought for, with an inordinate and inexplicable delay, in the considered opinion of this `Tribunal'.`
23. Most importantly, one cannot remain in oblivion to the candid fact, that 'RISPL', had preferred an 'Appeal', before this 'Tribunal', and hence, the 'Petitioner'/ 'Appellant', in the instant Company Appeal (AT) (CH) (Ins) No. 325 of 2022, as 'Controlling Stakeholder', is not entitled to put forward any case, other than that of 'RISPL', in the instant 'Appeal'.
IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 12 of 15
24. It must be borne in mind, that when 'RISPL', itself, had no 'Rights', in the 'Properties', the aspect of any 'Rights', having been vested on the same, to and in favour of the 'Petitioner'/ 'Appellant', by the 'Security', created by 'RISPL', will not arise. In any event, the 'Impugned Order', dated 30/05/2022 in IA(IBC)/400(CHE)/2021 in IBA/1099/2019, passed by the 'Adjudicating Authority' / 'National Company Law Tribunal, Division Bench - II, Chennai', does not take away the 'Rights' of 'Petitioner'/ 'Appellant', in any manner.
25. In the light of foregoing upshot, this `Tribunal', on a careful consideration of the divergent contentions advanced on either side, all the more, when 'RISPL', itself , had no rights in the 'Properties' in question, any 'Rights', having been vested on the same, to and in favour of the 'Petitioner' / 'Appellant', by 'Security', created by 'RISPL', does not arise, bearing in mind, a crystalline fact that the 'Rights' of the 'Petitioner' / 'Appellant', are not taken away, by means of the 'Impugned Order', dated 30/05/2022, in IA(IBC)/400(CHE)/2021 in IBA/1099/2019 (on the File of the 'Adjudicating Authority' / 'National Company Law Tribunal', Division Bench - II, Chennai), comes to a consequent conclusion, that the IA No. 696 of 2022 in Comp. App (AT) (CH) (INS.) No. 325 of 2022, preferred by the `Petitioner / Appellant', (seeking IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 13 of 15 `Leave' to prefer the instant `Appeal'), is `Ex facie', not `maintainable', and it fails.
Conclusion:
In fine, the IA No. 696 of 2022 (`Praying for Leave', to prefer the instant Comp. App (AT) (CH) (Ins.) No. 325 of 2022), filed by the `Petitioner / Appellant', is 'Dismissed'. 'No Costs'. I.A. No. 1107 / 2022 in Comp. App (AT) (CH) (Ins.) No. 325 of 2022:
The `Petitioner / Proposed 3rd Party' (`L & T Infra Investments Partner'), Represented by its Authorised Signatory Mr. Vijayaraj, has preferred I.A. No. 1107 / 2022 in Comp. App (AT) (CH) (Ins.) No. 325 of 2022 (under Rule 11 of NCLAT Rules, 2016), seeking to `Implead' itself as `5th Respondent' in the instant `Company Appeal', on the footing that its position, is like that of the position of the `1st Respondent / Appellant', and therefore, filing of a `Fresh Appeal', is an `Otiose' one, and in that perspective, prays for passing of an `Order', by this `Tribunal', to get itself `Impleaded', in the present Comp. App (AT) (CH) (Ins.) No. 325 of 2022, before this `Tribunal'.
In lieu of the fact, that this `Tribunal', has dismissed the IA No. 696 of 2022 in Comp. App (AT) (CH) (Ins.) No. 325 of 2022, preferred IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 14 of 15 by the `Asset Reconstruction Company (India) Limited, Mumbai (by passing a detailed order), and hence, the I.A. No. 1107 / 2022 in Comp.
App (AT) (CH) (Ins.) No. 325 of 2022 (filed by the `Proposed Party' / `L & T Infra Investments Partners', Mumbai), represented by its Authorised Signatory Mr. Vijayaraj, is not `entertained', and the same is `Dismissed', as `not maintainable'.
Comp. App (AT) (CH) (Ins.) No. 325 of 2022:
In view of the fact that IA No. 696 of 2022 in Comp. App (AT) (CH) (Ins) No. 325 of 2022 (seeking `Leave', to prefer an 'Appeal'), filed by the 'Petitioner'/ 'Appellant', is 'Dismissed', the main Comp. App (AT) (CH) (Ins.) No. 325 of 2022, is not `entertained', and the same is `rejected', by this 'Tribunal'. The connected pending Interlocutory Application Nos. 697 to 699 of 2022 are `Closed'.
[Justice M. Venugopal] Member (Judicial) [Shreesha Merla] Member (Technical) 27/04/2023 SR / TM IA No. 696 of 2022 in Comp. App (AT) (CH) (INS) No. 325 of 2022 Page 15 of 15