Item No.16
THE HON'BLE THE CHIEF JUSTICE HIMA KOHLI
AND
THE HON'BLE SRI JUSTICE B. VIJAYSEN REDDY
WRIT APPEAL No.149 OF 2020
JUDGMENT: (Per the Hon'ble the Chief Justice Hima Kohli)
1. The present appeal has been filed by the appellant
(respondent No.3 in W.P.No.19924 of 2019), who is a Resolution
Professional (for short 'RP') appointed by the NCLT in respect of C&C Constructions Limited, praying inter alia for quashing and setting aside the order dated 08.01.2020 passed by the learned Single Judge in IA.No.1 of 2019, filed by the respondent No.1/writ petitioner praying inter alia for issuing directions to the respondent No.3/Axis Bank to restore the operations of the bank account of the Joint Venture between it and C&C Constructions Limited pending disposal of the writ petition.
2. In the impugned order, the learned Single Judge has observed that the respondent No.1/writ petitioner is one of the partners of the Joint Venture and is only seeking to restrain the appellant/RP from violating the terms and conditions of the Joint Venture Agreement dated 17.09.2010 on the ground that appointment of the RP in respect of the Corporate debtor vide order dated 14.02.2019 passed by the NCLT, cannot be a ground for him to obstruct the affairs of the Joint Venture by calling upon the respondent No.3/Axis Bank to freeze the accounts of Joint Venture, thereby jeopardising the W.P.No.149 OF 2020 Page 1 of 4 interest of the Joint Venture. The learned Single Judge has further observed that at best, the RP would be entitled to take necessary steps in terms of Sections 17 and 18 of the Insolvency and Bankruptcy Code, 2016 (for short 'IBC') in relation to the company in respect whereof he has been appointed, but not in respect of the Joint Venture. We may note that Section 17 of the IBC sets out the manner in which the IRP has to manage the affairs of the corporate debtor and Section 18 elaborates the duties of the IRP.
3. Expressing a prima facie view that the terms and conditions of the Joint Venture Agreement dated 17.09.2010 governing the respondent No.1/writ petitioner and the corporate debtor particularly, clause 4.1 thereof requires that the affairs of the Joint Venture would be carried out by a Steering Committee to be constituted in terms of clause 4 of Article IV under the title 'Management of the JV', the learned Single Judge has observed that the said clause takes adequate care to ensure that one of the partners of the Joint Venture does not take over the affairs of the Joint Venture. In other words, the appellant/RP can only step into the shoes of the Board of Directors of the corporate debtor before the NCLT in the pending IBC proceedings, but he cannot obstruct the affairs of the Joint Venture Company, which is a separate entity and includes a third party, namely the respondent No.1/writ petitioner. As a result, the respondent No.1/writ petitioner was W.P.No.149 OF 2020 Page 2 of 4 directed to file an undertaking before the court to the following effect:
" a) The petitioner undertakes that the funds in all the Bank Accounts of the BSC - C & C Joint Venture (JV) would only be used for the projects / works being undertaken by the JV and would not be used for any other purpose.
b) The petitioner undertakes that the Resolution Professional would be given full access to the books of accounts as well as the statements of the JV, including all the expense statements and documents pertaining to the use of funds from the accounts of the JV.
c) The petitioner further undertakes that the petitioner will abide by the terms and conditions of the Joint Venture Agreement dated 17.09.2010 and ensure that no steps will be taken in breach of the said Agreement."
4. Mr. S.Niranjan Reddy, learned Senior Advocate appearing for the respondent No.1/writ petitioner states that an undertaking has already been filed by the respondent No.1 and further that the respondent No.1 has been giving a two day's advance notice to the appellant/RP representing the corporate debtor in the Joint Venture before releasing any payments excluding those payments made in usual course thus, giving adequate opportunity to the RP to raise any objections.
5. In view of the fact that the impugned order has only worked out an interim arrangement and the interim application moved by the respondent No.1/writ petitioner has yet to be heard and decided, which fact has also been noticed by the learned Single Judge while W.P.No.149 OF 2020 Page 3 of 4 passing the impugned order dated 08.01.2020, we do not see any reason to entertain the present appeal. Mr. Salloori Ramesh, learned Senior Advocate appearing for the appellant has argued that no part of the cause of action has arisen in Hyderabad and the respondent No.1/writ petitioner could not have filed the writ petition in this court. If that is so, then it is for the appellant/RP to move an appropriate application in the pending writ proceedings raising an objection regarding the maintainability of writ petition on the ground of lack of territorial jurisdiction. But that cannot be a ground to file the present appeal.
6. We decline to go into the said aspect on the ground that the interim application is still pending adjudication before the learned Single Judge. The other pleas taken on behalf of the appellant/RP to assail the impugned order are kept open for being adjudicated upon when the interim application and/or the writ petition is decided.
7. In view of the observations made hereinabove, the appeal is dismissed along with the pending applications, if any.
_________________ HIMA KOHLI, CJ ______________________ B. VIJAYSEN REDDY, J 26.04.2021 Lur W.P.No.149 OF 2020 Page 4 of 4