The NCLT, Mumbai Bench reiterated that the liability of the Corporate Debtor before the Corporate Insolvency Resolution Process, approval of Resolution Plan, and transfer of assets of the Corporate Debtor to the Resolution Applicant stands extinguished.
It was opined that the successful Resolution Applicant is eligible to get assets of the Corporate Debtor free of encumbrances after the approval of the Resolution Plan and for the same, the Hon’ble Supreme Court can be approached.
Brief Facts:
The Applicant who is the successful Resolution Applicant has preferred the present application to seek complete control over the Corporate Debtor including the right to operate his Bank Accounts, and a reduction in the professional fee of the Respondent who is the Monitoring Professional.
The case of the Applicant was that vide an Order, the Resolution Plan of the Applicant was approved. However, the Order had a typographical error as the time of payment mentioned was 30 months instead of 3 months. For rectification of this error, an application was filed by the Resolution Professional without making Applicant a party.
Thereafter, the Applicant filed an application to seek an extension for making payment. Further, there were encumbrances on the assets of the Corporate Debtor and another application was filed for permission to pay within 2 months of the lifting of the said encumbrances. The Tribunal directed the Applicant to pay interest from the date the amount became due. Against this order of the Tribunal, an appeal was preferred, and the said appeal is sub judice before NCLAT.
Contentions of the Applicant:
It was submitted by the Applicant that the Respondent himself has agreed that complete payment has been done as per the Resolution Plan. But complete control of the Corporate Debtor has still not been given to the Applicant. The Applicant has also agreed to pay interest as per the order till the Appeal is adjudicated upon by the NCLAT.
The Applicant also contended that assets of the corporate debtor should be given to the Applicant free from encumbrances. It was alleged that the Resolution Professional has not done anything to lift the attachments and has been charging a hefty fee when the meeting is only conducted by him once each year.
Contentions of the Respondent:
The case of the Respondent was that the Applicant has taken undue advantage of the error made in the Order stating 30 months instead of 3 months. It was argued that the Resolution plan was approved by NCLT, and the Applicant was also granted an extension to make the payment, however, paying interest was a prerequisite. The Applicant cannot be granted any relief unless payment is made in terms of the approved Resolution Plan.
It was further contended that NCLT does not have the power to modify and review its Order as once a Resolution Plan is approved, it becomes final. The Applicant has no locus standi to challenge the commercial wisdom of the Committee of Creditors who have approved the Resolution Plan. It was submitted that unless the Applicant complies with the said order, the Financial Creditors have decided to not hand over the possession.
Observations of the Tribunal:
Noting that the Applicant made all the payments as per the Resolution Plan, the Tribunal directed the Respondents to hand over the complete control of the Corporate Debtor to the Applicant subject to the interest that has to be paid from the due date of the remaining amount.
The Tribunal relying on several Supreme Court cases held that the date of making payment can be deferred but the interest accrued cannot be waived even during the Pandemic therefore, the Applicant is liable to pay the interest and the same should be deposited in an Escrow Account.
It was re-iterated by the Tribunal that the liability of the Corporate Debtor before the Corporate Insolvency Resolution Process, approval of the Resolution Plan, and transfer of assets of the Corporate Debtor to the Resolution Applicant stands extinguished. The successful Resolution Applicant is eligible for assets free of encumbrances after the approval of the Resolution Plan. Hence, the Applicant can approach the Hon’ble Supreme Court and get the attachment lifted.
The Bench further reduced the fee of the Monitoring Professional as it observed that there is a substantial reduction in the workload.
The decision of the Tribunal:
Accordingly, the applications were disposed of by the Tribunal.
Case Title: Amit Gupta v. Anil Kohli in the matter of State Bank of India v. Dunar Foods Ltd.
Coram: Justice P.N. Deshmukh (Retd.) (Judicial Member), Mr. Shyam Babu Gautum (Technical Member)
Case No.: IA No. 2847, 2666, 2685 of 2021 in CP/IB/MB/No. 1138 of 2017
Advocates for Applicant: Mr. Kevic Setalwad, Mr. Gyanendra Kumar
Advocates for Respondent: Mr. Abhishek Anand
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