Madras High Court
M/S.Hero Exports vs Mr.K.Vasudevan [Cirp on 11 February, 2020
Author: M. Sathyanarayanan
Bench: M. Sathyanarayanan
CRP.No.499/2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 11.02.2020
CORAM
THE HONOURABLE MR. JUSTICE M. SATHYANARAYANAN
AND
THE HONOURABLE MRS. JUSTICE R.HEMALATHA
CRP.No.499/2020 & CMP.No.2663/2020
M/s.Hero Exports
represented by its Authorised Representative
having its office at 50, Okhla Industrial Estate
Phase 3, New Delhi 110 020.
Presently at
No.57, Udhyog Vihar Phase-IV
Section 18, Gurugram, Haryana 122015. .. Petitioner
Versus
1.Mr.K.Vasudevan [CIRP]
Resolution Professional
Tiffins Barytes Asbestos & Paints Ltd.,
17B/7B, Maruthi Nagar, Hasthinapuram
Chrompet, Chennai 600 064.
2.M/s.Tiffins Barytes Asbestos & Paints Ltd
Old No.9, New No.28, Balaji Avenue
1st Street, T.Nagar, Chennai 600 017.
3.M/s.Embassy Property Developments
Private Limited, 1st Floor, Embassy Point
No.150, Infantry Road,
Bangalore 560001. .. Respondents
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CRP.No.499/2020
PRAYER:- Civil Revision Petition filed under Article 227 of the Constitution
of India to set aside the order dated 04.11.2019 passed in
SR.No.1234/2019 in SR.No.811/2019 by the Hon'ble National Company
Law Tribunal, Chennai Bench.
For Petitioner : Mr.S.R.Rajagopal for
Mr.M.Pradeep Shankar
ORDER
[Order of the Court was made by M.SATHYANARAYANAN,J.,] (1)The revision petitioner who claims to be the Operational Creditor filed MA.SR.No.1234/2019 in MA.SR.No.811/2019 in CP/39/[IB]/CB/2-2018 under Section 60[5] of the Insolvency and Bankruptcy Code, 2016 [in short ''IBC''] read with Regulation 13 of IBBI [Insolvency Resolution Process for Corporate Persons] Regulations, 2016 before the National Company Law Tribunal, Chennai Bench [in short ''NCLT, Chennai Bench].
(2)The NCLT – Administrative Appellate Authority, Chennai, vide impugned order dated 04.11.2019, in SR.No.1234/2019 in SR.No.811/2019 in CP/39/[IB]/CB/2-2018, has dismissed the said petition and granted liberty to the petitioner to avail the appellate remedy before the National Company Law Appellate Tribunal [in short ''NCLAT'']. The petitioner, 2/14 http://www.judis.nic.in CRP.No.499/2020 challenging the legality of the said order, has filed the present Civil Revision Petition.
(3)The contents of the applications filed before the NCLT, Chennai Bench would read among other things that the revision petitioner/applicant is a part of famous ''Hero Group of Companies'' and it became aware of the fact that certain criminal acts were committed by the Corporate Debtor, who is arrayed as the 2nd respondent herein, in connivance and collusion with certain employees of the revision petitioner company and in this regard, criminal prosecution was also launched which resulted in the registration of the FIR in Crime No.344 of 2007. Subsequently, a settlement came into being which resulted in a Memorandum of Understanding dated 08.07.2007, wherein it was agreed that the Corporate Debtor / 2nd respondent herein shall pay a sum of Rs.9.50 Crores as against the claim of Rs.14,37,92,697/- and the Corporate Debtor / 2nd respondent herein in pursuant to the said settlement, had issued ten post dated cheques and except one cheque, 9 cheques got dishonoured and a criminal complaint was also lodged under Section 138 of the Negotiable Instrucments Act, and the same is pending on the file of the jurisdictional Metropolitan Magistrate Court at Bangalore. 3/14 http://www.judis.nic.in CRP.No.499/2020 (4)It is further averred that the said Memorandum of Understanding dated 08.07.2007 also contains an arbitration clause and accordingly, Arbitration proceedings were also initiated. The Corporate Debtor / 2nd respondent herein also made a challenge to the criminal prosecution in FIR No.344 of 2007, wherein this Court directed the 2nd respondent/Corporate Debtor to cooperate with the investigation. However, he did not cooperate with the same.
(5)According to the petitioner, the 2nd respondent/Corporate Debtor is due and payable a sum of Rs.50,08,53,301/- as on 3.05.2018 and therefore, had filed a Claim in Form – B before the 1st respondent – Resolution Professional. The petitioner also became aware of the fact that the proceedings under the IBC against the 2nd respondent / Corporate Debtor was initiated by M/s.Udhayaman Investments Private Limited and vide order dated 12.03.2018, NCLT, Chennai, had appointed the 1st respondent as the Insolvency Resolution Professional [IRP] and during the first Committee of Creditors Meeting, the 1st respondent was appointed as IRP with effect from 17.04.2018. However, the petitioner was not put on notice.
(6)The NCLT, Chennai, had approved the Resolution Plan filed by the 3rd respondent on 12.06.2019 and it was not communicated to the revision 4/14 http://www.judis.nic.in CRP.No.499/2020 petitioner and it was also not forwarded by IRP to anyone of the creditors.
(7)It is also the specific case of the petitioner that IRP did not comply with the relevant Regulations and also stated that in the Arbitration proceedings, the High Court of Delhi had appointed the Hon'ble Mr.Justice P.K.Balasubramanyam, a retired Judge of the High Court of Delhi as the Sole Arbitrator and it was put to challenge by the 2nd respondent/Corporate Creditor by filing SLP [C] No.24580 of 2008 and it was dismissed by the Hon'ble Supreme Court of India on 17.12.2008 and pendency of the proceedings, an application for interim measures, was also filed in OMP.No.369 of 2008 before the High Court of Delhi, wherein, Seizure Order also came to be passed.
(8)The revision petitioner sent a E-Mail communication dated 12.04.2019 to the 1st respondent / IRP requesting him to produce proof of delivery of the rejection of the claim submitted by them and reasons for such rejection. IRP, in response to the said E-mail communication, sent an E- mail communication on the same day, i.e., 12.04.2019, stating among other things, that the claim of Rs.50,08,53,301/- made by them was verified with the documents submitted by them along with the claim and it was found that it could not be related to any entries in the Books of 5/14 http://www.judis.nic.in CRP.No.499/2020 Accounts and relevant documents were also looked for in the records available with the 2nd respondent/Corporate Debtor. Even the entire office premises of the 2nd respondent/Corporate Debtor was also searched and some related files were found only during January 2019 and on verification of the same, that the revision petitioner, who claims to be the Operational Creditor was due and owes a sum of Rs.2,20,99,178/- to the 2nd respondent/Corporate Debtor and no amount is payable to them in terms of the claim and the transaction for the supply of iron ore and its payments, are also duly reflected in the Books and records. The 1st respondent/IRP, citing the above said reasons and also referring to other legal proceedings, held that the claim made by the revision petitioner is not tenable and rather, the 2nd respondent/Corporate Debtor has to recover a huge amount from the revision petitioner and the said communication also reads that the claim cannot be collated and included in the list of creditors even as a rejected claim since the criminal investigation is pending and the Accounts of the 2nd respondent/Corporate Debtor discloses the amount to be recovered, the claim was treated as abandoned.
(9)The revision petitioner, challenging the said communication, has filed miscellaneous applications before the NCLT and the NCLT/Tribunal, 6/14 http://www.judis.nic.in CRP.No.499/2020 vide impugned order dated 04.11.2019, had dealt with its powers under Rule 11 of the National Company Law Tribunal Rules, [NCLT Rules] and found that the petitioner, under the garb of the application, wants to recall the Resolution Plan already approved in accordance with law and in the absence of any such provision for recalling and in exercise of the inherent power under Rule 11, the Authority cannot assume powers derived under the Companies Act. In paragraph No.7 of the impugned order, the Tribunal has observed that if at all any party feels aggrieved of the Plan approved, it is always open to such person to assail the order by filing an appeal, but not to appeal for reversal of the Resolution process by asking for recalling of the Resolution Plan. (10)The NCLT/ Tribunal, in paragraph No.9 further observed that assuming recall power is inbuilt in the Code, hen also the concept of recall is exercisable only in the cases where order is passed without jurisdiction or fraudulently obtained and the same is not the case here. The NCLT/Tribunal further observed that it also lacks review jurisdiction and citing the said reasons, has dismissed the miscellaneous application. (11)Mr.S.R.Rajagopal, learned counsel assisted by Mr.M.Pradeep Shankar, learned counsel for the petitioner would submit that despite availability of the voluminous records to substantiate the claim, the 7/14 http://www.judis.nic.in CRP.No.499/2020 IRP/1st respondent herein has failed to exercise his jurisdiction vested in him and without looking into the relevant records, has erroneously rejected the claim of the revision petitioner vide E-mail communication dated 12.04.2019 and the only remedy available to the revision petitioner/applicant is to go before NCLT and the NCLT, without understanding the scope and purport of its inherent power and the contents of the applications, has simply rejected the same and he would further add that in the light of the reasons assigned by the 1 st respondent / IRP, the appeal itself is not maintainable before NCLAT and also drawn the attention of this Court to the relevant provisions of IBC as well as NCLT Rules.
(12)The learned counsel also placed reliance upon the judgment reported in 2019 [17] SCALE 37 [M/s.Embassy Property Developments Private Limited Vs. State of Karnataka and Others].
(13)This Court has carefully considered the arguments advanced by the learned counsel for the petitioner and also perused the materials placed before it.
(14)It is relevant to extract Rule 11 of the NCLT Rules, 2016:-
Rule 11:INHERENT POWERS:- Nothing in these Rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such 8/14 http://www.judis.nic.in CRP.No.499/2020 orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal.'' (15)The 1st respondent/IRP, in the E-mail communication dated 12.04.2019, had given reasons and the revision petitioner/applicant filed two miscellaneous applications with the following prayer:-
''In the light of the above and in the interest of justice and in furtherance of the object of the Code, it is therefore, prayed that this Hon'ble Tribunal may be pleased to set aside the order in IND/811/2019 dated 30.08.2019 of the learned Assistant Registrar of National Company Law Tribunal, Chennai and direct the Registry to number the Miscellaneous Application and pass such further or other orders as this Hon'ble Tribunal may deem fit and proper in the circumstances of the case and thus render justice.'' (16)The NCLT/Tribunal, in the impugned order held that the said prayer virtually amounts to reversal/recall of the Resolution Plan and the same cause could be taken as a ground for filing an appeal under Section 32 of IBC and not by way of this application which is impermissible in law.
As regards exercise of inherent power, the Tribunal has observed that assuming the power of recall is inbuilt in IBC and it can be exercised only in cases where the order is passed without jurisdiction or fraudulently 9/14 http://www.judis.nic.in CRP.No.499/2020 obtained and that is not the case here and the Tribunal, further observed that in the absence of specific conferment of review jurisdiction, it cannot exercise the power to review.
(17)In the decision of M/s.Embassy Property Developments Private Limited Vs. State of Karnataka and Others reported in 2019 [17] SCALE 37 [cited supra], the Hon'ble Supreme Court of India has considered the interplay between IBC, certain provisions of the Companies Act and Mines and Minerals [Development and Regulation] Act and Mines and Mineral Concession Rules and other related Rules as well as the power of the High Court under Articles 226 and 227 of the Constitution of India.
(18)The Hon'ble Apex Court, in paragraph No.24 has observed that '' the distinction between lack of jurisdiction and wrongful exercise of available jurisdiction should certainly be taken into account by High Courts, when Article 226 is sought to be invoked bypassing a statutory alternative remedy provided by a special statute.'' In paragraph No.30 of the said judgment, the Hon'ble Apex Court of India had dealt with the jurisdiction and the powers of NCLT. There cannot be any difficulty in accepting the proposition laid down by the Apex Court in the above cited decision for the reason that it is also a well settled position of law. 10/14 http://www.judis.nic.in CRP.No.499/2020 (19)The revision petitioner, under the guise of filing a revision, under Article 227 of the Constitution of India, wants this Court to issue a positive direction to NCLT, Chennai Bench, to exercise its inherent power in a particular manner. In the considered opinion of the Court, it cannot issue a positive direction to NCLT, Chennai Bench, as to how it should exercise its inherent power. The NCLT/Tribunal also found that in real sense, the revision petitioner wants to recall of the Resolution Plan and the said cause could be taken as a ground for filing an appeal under Section 32 of IBC. Thus, there is an effective alternate remedy provided to the revision petitioner who also claimed to be an Operational Creditor. (20)If this Court starts entertaining revision petitions like this, there is a likelihood of opening of flood gates where the alleged aggrieved person, without resorting to the alternate remedy of appeal, would often approach this Court and that is not the object of IBC. (21)This Court, on an independent appraisal of the entire materials as well as the contents of the impugned order passed by NCLT, Chennai Bench, is of the considered view that there is no error apparent or infirmity in the reasons assigned and finds no merit in this Civil Revision Petition. (22)At this juncture, the learned counsel for the petitioner would submit that the revision petition was filed on 06.12.2019 and it was returned for 11/14 http://www.judis.nic.in CRP.No.499/2020 production of the approval of the Resolution Plan and vide endorsement dated 22.01.2020, the papers were represented and the revision itself came to be numbered on 05.02.2020. The learned counsel has also drawn the attention of this Court to the proviso to Section 61[2] of IBC and would submit that since the period of limitation is self contained one and that the impugned order came to be passed as early as on 04.11.2019, the petitioner may not be in a position to avail the appeal remedy.
(23)This Court has considered the said submission. From the perusal of the papers, it is prima facie disclosed that the petitioner was diligently prosecuting the proceedings by filing Civil Revision Petition and though it was presented on 06.12.2019, it came to be numbered on 05.02.2020 after compliance of certain returns. Therefore, it is for the revision petition to convince the NCLAT as to how the appeal petition is within the limitation period.
(24)In the result, the Civil Revision Petition stands dismissed. No costs. Consequently, the connected miscellaneous petition is closed.
[M.S.N.,J] [R.H., J]
11.02.2020
AP
Internet : Yes
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CRP.No.499/2020
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CRP.No.499/2020
M.SATHYANARAYANAN, J.,
AND
R.HEMALATHA, J.,
AP
To
1.Mr.K.Vasudevan [CIRP]
Resolution Professional
Tiffins Barytes Asbestos & Paints Ltd.,
17B/7B, Maruthi Nagar, Hasthinapuram
Chrompet, Chennai 600 064.
2.M/s.Tiffins Barytes Asbestos & Paints Ltd
Old No.9, New No.28, Balaji Avenue
1st Street, T.Nagar, Chennai 600 017.
3.M/s.Embassy Property Developments
Private Limited, 1st Floor, Embassy Point
No.150, Infantry Road,
Bangalore 560001.
CRP.No.499/2020
11.02.2020
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