Arun Kumar vs Ms. Sripriya Kumar
COMPANY APPEAL (AT) (CH) (INS.) NO. 431/2022 (IA Nos. 1088, 1089, 1090/2022 & 322, 323/2023)
Facts:
1.Appeal is filed against the Order dated 04/11/2022 passed in IA No. 252/2021 in C.P.(IB) 305/BB/2019, whereby and whereunder the ‘Adjudicating Authority’ has allowed the Application filed by the ‘Resolution Professional’ under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘the Code’), seeking approval of the ‘Resolution Plan’ submitted by the Consortium of Mr. S.M. Kamal Pasha and Mr. Syed Fahad, (hereinafter referred to as the ‘SRA’).
2.The main issues raised by the Appellant / Promotor of the Corporate Debtor is that the ‘Adjudicating Authority’ had wrongly directed for project wise CIRP; that the CoC was improperly constituted and that the amount in the Resolution Plan entitled for Kotak Mahindra Bank Limited (hereinafter referred to as ‘the Kotak Bank’) is much more than the actual Claim admitted by the Resolution Professional (hereinafter referred to as ‘the RP’).
Issue: Whether the order dated 04.11.2022 is liable to be set aside?
Arguments:
Appellant:
1.Counsel for the Appellant is that the IRP had wrongly constituted the CoC to consist of only the Financial Creditors pertaining to the project ‘Arun Auroville. In the 3rd Meeting of the CoC, the RP recommended for reconstitution of the CoC to consist of all Financial Creditors of both the projects. Aggrieved by the decision of the RP to reconstitute the CoC, Kotak Bank / Financial Creditor preferred IA Nos. 187 & 195/2020, seeking to set aside the decision of the RP in reconstituting the CoC and for restoration of the CoC as constituted in the 1st Meeting. The ‘Adjudicating Authority’, vide a Common Order, dated 29/06/2020 allowed the said IAs and set aside the RP’s decision of reconstituting the CoC. It is submitted that the RP thereafter conducted the 5th Meeting on 11/08/2020, consisting of only the Financial Creditors of Arun Auroville Project.
2.Counsel submitted that The Consortium of Resolution Applicants is disqualified under Section 29A of the Code and therefore, ineligible to submit a Resolution Plan. It is submitted by the Learned Counsel for the Appellant that the Minutes of the 10th CoC Meeting held on 07/12/2020 discloses a false statement reflecting that the SRA was disqualified for the period from 01/11/2015 to 31/10/2020 and that there is no record reflecting that they were requalified. The Common Writ Order dated 12/06/2019 of the Hon’ble High Court of Karnataka discloses their disqualification for the period 01/11/2016 to 31/10/2021.
3.In the final Direction given by the Hon’ble High Court of Karnataka, the Writ Petitions filed on behalf of the struck off Companies were dismissed with a liberty to approach the NCLT under Section 252 of the Companies Act, 2013. It is the case of the Appellant that it is not clear as to whether the issue in the two Writ Petitions of the SRA were considered by the Hon’ble High Court because they were dismissed with a liberty to approach the NCLT.
4.It is also the case of the Appellant that Kotak Bank cannot use IBC as the recovery proceeding and if such high interest rates and penal interest was to be recovered, Kotak Bank could have initiated Suit Proceedings or Proceedings under the DRT or under the SARFAESI ACT, 2002 which are meant for recovery. The scope and objective of the IBC is revival and not recovery. It is submitted that CIRP was initiated on 31/01/2020, Kotak Bank submitted its Claim for Rs. 36,27,27,729/- and since the Appellant had already paid Rs. 2,00,00,000/- while the Petition was pending, the IRP had admitted the Claim for Rs. 34,27,27,729/-. But the SRA and the CoC had settled Kotak Bank’s Claim for Rs. 46,00,00,000/- by showing the due and outstanding amount as Rs. 53,51,00,000/- as on 30/04/2021.
5.Counsel for the Appellant vehemently contended that after the RP admits the Claim, no further interest can be claimed. In the instant case, penal interest alone accrued to Rs. 13,65,00,000/- from 31/01/2020 to 30/04/2021 and the contractual rate of interest was Rs. 3,26,63,897/-. It is further submitted that Kotak Bank had recovered Rs. 9,30,00,000/- by initiating SARFAESI proceedings and invoking personal guarantee given by the Promotors. The Claim of Kotak Bank was settled for Rs. 43,00,00,000/- and is in excess of the admitted Claim. It is submitted that the recovery made from the guarantees and from the assets of the Corporate Debtor together shall not be more than the Claim admitted against the Principal Borrower.
Decision: NCLAT dismissed the appeal.
Rationale:
1.Counsel for appellant find force in the contention of the Learned Counsel for the RP that the Claim is determined as of the CIRP commencement date so that the RP can state the value of the amount due to the Creditors in the Information Memorandum and invite Expression of Interest from Prospective Resolution Applicant.
2.NCLAT rejected the contention of the Learned Counsel for the Appellant that no interest could be charged subsequent to the admission of the Claim by the RP as untenable, specifically keeping in view the Agreement, the Provisions of Section 14 of the Code. As regarding the argument of the Appellant that the RP ought not to have added the interest of the Claim amount after admission of the Claim, we hold that the role of the RP under IBC, 2016 is only to collate the Claims and that he does not have any adjudicatory powers.
3.The right which vested with the Kotak Bank / The Financial Creditor by virtue of the Loan Agreement / Settlement Agreement cannot be interfered by the Code. It is mainly for this reason that the non obstante clause, in the widest terms possible is contained in Section 238 of the Code, so that any vested right of either the Corporate Debtor or the Creditor, under any other law for the time being in force, cannot come in the way of the Code.
4.There is no provision in the Code that enables the Corporate Debtor or a Guarantor to seek remission in the interest claims from the Financial Creditors solely on the basis that there is a Resolution Plan. This Tribunal keeping view the provisions of the Code, the terms of the Agreement, the commercial wisdom of the CoC, is of the considered view that interest continues to accumulate as per law until the amount is repaid and we do not see any illegality in the act of the CoC in collecting the amount of penal interest by Kotak Bank.
Order Copy:
