NCLT Kolkata (17.05.2021) in Tantia-MPPL (WILO) JV & Anr. Vs. Kshitiz Chhawchharia, RP [IA No. 1840/KB/2019 & IA No.497/KB/2020 in CP (IB) No.148/KB/2018] agreed to consider the application of creditors, filed before the approval of Resolution Plan.
Lord Halsbury in the celebrated case of Quinn v Leathem, observed that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found.
Technicalities should not come in the way of correcting an injustice. The maxim Actus Curiae Neminem Gravabit (an act of the court shall prejudice no man) – founded upon justice and good sense – should be a good guide. Further, in Kalabharati Advertising Vs Hemant Vimalnath Narichania and others, the Hon’ble Supreme Court held that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the Court must be neutralised, as the institution of litigation cannot be permitted to confer any advantage on a party by the delayed action of the Court.
In this view of the matter, the answering Respondent’s objections on the maintainability of the applications on the sole ground that such applications cannot survive after the Resolution Plan has been approved, is hereby overruled. We hold that the present applications are maintainable and are required to be answered on merits judicially.
Excerpts of the Order;
1.1. IA No.1840/KB/2019 is an application filed by Tantia-MPPL (WILO) JV through WILO Mather and Platt Pumps Private Limited, against the Resolution Professional (RP) of Tantia Constructions Limited (the corporate debtor), seeking a direction upon the RP to include its claim of ₹9.02 crore, and, pending disposal of the application, direct that no Resolution Plan be considered or approved.
1.2. IA No.497/KB/2020 is an application filed by Krishna Hi-Tech Infrastructure Private Limited, against the RP of Tantia Constructions Limited (the corporate debtor), seeking a direction upon the RP to reconsider and reverify the claim submitted by the applicant on 24.04.2019 before approval of the Resolution Plan.
2. The circumstances
2.1. Both these applications were taken up for final arguments after completion of pleadings on 16.03.2021. After hearing the learned counsel appearing for the applicants respectively in the two IAs and of the answering Respondent in both IAs, it was decided by consensus that a preliminary ruling would be necessary as to the maintainability of the present applications in view of the fact that the Resolution Plan of the corporate debtor was approved by this Adjudicating Authority; before going into the merits of the matter.
2.2. Hence, both applications were reserved for orders on maintainability vide order dated 16.03.2021.
3. The case of the Applicant in IA No.1840/KB/2019
3.1. The Applicant’s case in IA No.1840/KB/2019 is as follows: -
(a) The Applicant and the corporate debtor entered into a Joint Venture Agreement (JVA) dated 03.02.2014 for completing construction of pumping stations in Begore Khal and Joka Tram Depot and construction of sewerage and drainage network within Diamond Harbour Road Catchment. In terms thereof, the corporate debtor was to complete the entire civil work, while the applicant was required to complete the entire electro-mechanical work. The tender was awarded by the Kolkata Municipal Corporation (KMC) vide Contract Agreement dated 15.10.2014.
(b) The 54th Annual Report of the corporate debtor for the year 2018-19 acknowledges the debt owed by the corporate debtor to the joint venture company, as ₹9.07 crore. The name of Tantia MPPL (WILO), the Applicant herein, appears under the heading “Note 42-Related Party Disclosures” in the Standalone Financial Statements for the year ended 31.03.2019 under the sub-heading, “Outstanding balance payable.”
(c) The Applicant filed proof of claim with the RP in Form B on 04.10.2019.1 After much correspondence, the RP communicated his non-acceptance vide email dated 07.12.2019.
(d) The present application was filed on 13.12.2019 immediately after the rejection of the claim by the RP.
4. The case of the Applicant in IA No.497/KB/2020
4.1. The Applicant’s case in IA No.497/KB/2020 is as follows: -
(a) On 24.04.2019, the applicant filed its claim with the RP for a sum of ₹1,81,00,496/-. The RP vide his email dated 15.05.2019, requested evidence that – (i) the corporate debtor has accepted the goods supplied by the applicant, (ii) the ledger statement; (iii) details of cost of material; and (iv) interest calculation sheet. The applicant supplied all the information vide email dated 31.05.2019.
(b) Thereafter, the RP, vide email dated 28.06.2019, the RP requested for further documents and information to substantiate the claim, such as – (i) GSTR-1 to validate GST input given to the corporate debtor; (ii) cost of material supplied has been claimed for which there is no specific clause in the agreement; (iii) agreement validity was only till 31.12.2017. The applicant replied vide email dated 02.07.2019, submitting all clarifications.
(c) Thereafter, there was no communication from the RP without conveying either acceptance or rejection of the claim of the Applicant.The RP, however, uploaded the list of operational creditors (other than workmen or employees) on the website. From this, the Applicant came to know that the claim was “pending for information.”
(d) The Applicant, vide email dated 30.01.2020, requested the RP to reverify the claim of the applicant. But there was no response.
(e) The present application has been filed on 03.02.2020 requesting for a direction to the RP to consider the claim of the Applicant.
5. The reply of the answering respondent in IA No.1840/KB/2019
5.1. The answering respondent has filed his reply to IA No.1840/KB/2019 on 10.01.2020.
5.2. Since this reply is on the merits of the application itself and both sides have pressed for a ruling on maintainability of the present application after the Resolution Plan has been approved by this Adjudicating Authority on 24.02.2020, we are not at this moment going into the reply. We are confining ourselves to the arguments advanced at the bar regarding maintainability.
6. The reply of the answering respondent in IA No.497/KB/2020
6.1. The answering respondent has filed his reply dated 13.01.2021 to the application, wherein he has stated the reply is being filed in the capacity as Chairman of the Monitoring Committee, since the RP is no longer in office following the approval of the Resolution Plan by this Adjudicating Authority. The answering respondent submits that –
(a) that the RP has accepted the claim of the Applicant to the tune of ₹3,26,538/- against the claim of ₹1,81,00,496. He further states that the Resolution Plan of the corporate debtor has been approved by this Adjudicating Authority vide order dated 24.02.2020. The reply was being filed in the capacity as Chairman of the Monitoring Committee.
(b) The RP has submitted that the present application needs to be rejected as infructuous since the Resolution Plan has already been approved. Any acceptance at this stage will be completely prejudicial to the other stakeholders.
7. Analysis
7.1. Mr Deep Roy, learned counsel appearing for the answering Respondent in both the applications has laid much store by the decision of the Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited v Satish Kumar Gupta & others, (“Essar judgment”) wherein the Hon'ble Supreme Court held that a successful resolution applicant cannot suddenly be faced with “undecided” claims after the resolution plan submitted by him has been accepted, as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully takes over the business of the corporate debtor.
7.2. With the greatest respect, the Hon'ble Supreme Court in Essar judgment (supra) generally deals with a situation where the creditor in question approaches the erstwhile RP or the corporate debtor or the successful resolution applicant after the resolution plan has been approved by the Adjudicating Authority.
7.3. Lord Halsbury in the celebrated case of Quinn v Leathem, observed that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found.
7.4. In IA No.1840/KB/2020, the applicant has approached the court immediately after the rejection of the claim by the RP on 13.12.2019, i.e., within a week of the rejection of the claim on 07.12.2019.
7.5. In IA No.497/KB/2020, the Applicants have diligently pursued his claim with the RP. The RP has not fully factored in the clarifications submitted by the Applicant on the queries raised, and proceeded to include a very miniscule part of the claim. Irrespective of the language employed by the applicant in the email dated 02.07.2019, the RP failed in his duty to communicate the rejection of the claim to the Applicant. There is no communication from the RP to the Applicant rejecting the claim. It is no defence to argue that the list of creditors was uploaded on the website of the corporate debtor, and therefore, there is constructive notice to the world at large. Be that as it may, as soon the Applicant came to know of it, he filed an application under section 60(5) of the Code on 03.02.2020, seeking judicial intervention in the matter. It cannot be the fault of the applicant that the application which was filed on 03.02.2020, could not come up for hearing before the application for approval of the Resolution Plan came up on 04.02.2020.
7.6. Technicalities should not come in the way of correcting an injustice. The maxim Actus Curiae Neminem Gravabit (an act of the court shall prejudice no man) – founded upon justice and good sense – should be a good guide. Further, in Kalabharati Advertising Vs Hemant Vimalnath Narichania and others, the Hon’ble Supreme Court held that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the Court must be neutralised, as the institution of litigation cannot be permitted to confer any advantage on a party by the delayed action of the Court.
7.7. Therefore, the fact that –
(a) IA No.497/KB/2020 filed on 03.02.2020 could not be taken up for hearing by the court on 04.02.2020 when the application for approval of the Resolution Plan came up for hearing; and
(b) IA No.497/KB/2020 filed on 13.12.2019 was heard along with IA No.1819/KB/2020 and reserved for orders on the same day on 04.02.2020;
should not result in a situation where grave injustice is caused to the Applicants and each of them is left remediless. The erstwhile RP, now the chairman of the Monitoring Committee, should not be allowed to take advantage of judicial vacillation in not deciding one application while deciding the other.
7.8. In the facts and circumstances of the applications, it cannot now be contended that the Adjudicating Authority denuded of jurisdiction to deal with the present application only because the Resolution Plan has been approved.
7.9. In this view of the matter, the answering Respondent’s objections on the maintainability of the applications on the sole ground that such applications cannot survive after the Resolution Plan has been approved, is hereby overruled. We hold that the present applications are maintainable and are required to be answered on merits judicially.
7.10. Since we have answered the preliminary issue of maintainability in the affirmative, we hereby direct that both applications be listed for arguments on merits on 09.06.2021, since the Resolution Plan is currently being implemented and any delay will defeat the ends of justice.
7.11. Certified Copy of this order may be issued, if applied for, upon compliance of all requisite formalities.
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