Jinan K.R., Member (J)
1. Mr. Yogesh Gupta, Liquidator of Kohinoor Power Private Limited has filed this unnumbered interlocutory application under Section 60(5) of the
Insolvency and Bankruptcy Code, 2016 being I.A.(IB) No. ...../KB/2020 in CP(IB) No. 602/KB/2018 for early hearing of the IA praying for issuance
of necessary directions upon the respondents to pay a sum of Rs. 30,75,108.00, as detailed in Annexure-'D' to this IA, on account of CIRP expenses
and the contribution towards the liquidation cost of Rs. 24,17,745.00 for the period from 04/10/2019 to 02/03/2020, which is outstanding since
04/10/2019 as submitted through Supplementary Affidavit.
2. The lockdown was declared due to pandemic COVID-19 situation and is still continuing, the normal operation of NCLT Kolkata Bench is yet to be
resumed. This unnumbered application was listed on today for hearing through video conferencing (VC) since the urgency set out in the application
being found satisfactory. Notice from the Registry to the Liquidator as well as to the respondents directing them to submit their written notes of
defence, if any has been given in advance.
3. Heard both sides. Perused the documents and the written notes of defence submitted on the side of R1, 3 and 5.
4. This is a unique application filed by a liquidator appointed at the choice of the CoC as against the CoC claiming that despite repeated demand the
CIRP cost and liquidation cost, inclusive of his fees has not been paid and hence come before the Adjudication Authority (AA) to issue directions to
the members of the CoC to pay their respective shares immediately.
5. Vide order dated 04/10/2019 passed in CA(IB) No. 1033/KB/2019, an Order of Liquidation was passed appointing Mr. Yogesh Gupta as the
Liquidator. The said order dated 04/10/2019 was amended vide Corrigendum Order dated 18/10/2019. While continuing the liquidation process the
liquidator allegedly encountered shortage of funds, for satisfying his own cost and the cost for engagement of security professionals for safeguarding
the assets of the CD undergoing liquidation.
6. The Ld. Counsel Mr. Rahul Auddy, for the applicant submitted that in the 4th CoC meeting, the CoC had in fact agreed to open a bank account
with Bank of Baroda, one of the CoC members and that the CoC members would reimburse the CIRP expenses in accordance with their voting share
in the CoC (Annexure - 'A). Till 04/10/2019, i.e., the date of the order of liquidation, the total CIRP cost has been Rs. 90,79,394.00 and the members
of the CoC, who are respondents herein, have reimbursed a sum of Rs. 58,87,769.00 (Annexure -'B'). After adjusting the CIRP costs contributions
received by the Resolution Professional, a sum of Rs. 30,75,108.00 is still due and outstanding from the CoC members on account of CIRP costs
contribution (Annexure -C), which would be borne by the CoC members in accordance with their voting share and details of the same are provided in
a chart annexed as Annexure - 'D' to the application. Both the Resolution Professional as well as the Applicant (Liquidator) have in fact vide e-mails
demanding the outstanding dues from the CoC members, the respondents herein. In spite of receipt of the said emails (Annexure - 'E') and also the
undertaking of the CoC members to bear all CIRP expenses in proportionate to their voting share, they have failed to pay substantial amount of Rs.
30,75,108.00 as stated above towards CIRP costs. As such payments are due to the valuers, the Interim Resolution Professional, the Resolution
Professional and all of them are pressing hard for payments and issuing reminders after reminders. Even one of the party has also indicated that he
would lodge a necessary complaint with the IBBI against the RP and the Liquidator for illegally withholding their payments (Annexure - 'F'). Stressing
the above said dues due to him and to the outgoing insolvency professionals, valuer etc, he prays for issuing directions as prayed for in the application.
7. The Ld. Counsel Mr. Abhisek Guha, for R1,3 and 5 submitted that by E-mail dated 19th May, 2019, the IRP submitted the estimated cost of CIRP
of Rs. 69.27 lacs for 270 days up to 12-07-2019. In terms of the voting share, three of the Respondents have duly cleared more than their shares.
Subsequently they filed Application under Section 33 before NCLT for liquidation. Now this liquidation order was passed on 4th October, 2019.
Dispute is for the interim period from 13th June, 2019 to 3rd October, 2019. The IRP has not got the payment. For this interim period IRP has not
submitted any budget or statement of account. So the question of payment does not come up for consideration before the CoC. On 2nd March, 2020,
the Resolution Professional, now Liquidator, stated that the cost of CIRP stands at Rs. 37,69,000/- and a difference of Rs. 3 lacs was there between
the past estimate and the estimate of Rs. 37,69,000/-. Once the Liquidator clarifies this difference, the Respondents will pay the amount. It is to be
mutually settled.
8. The Ld. Counsel Ms. Anindita Das, IFCI/R4 submitted that the CIRP has commenced on 03-08-2018. Thereafter, on formation of Committee of
Creditors, there was a dispute arisen by the other Financial Creditors of the Committee regarding inclusion of IFCI in the Committee. Bank of Baroda
has also filed an application to that effect before this Adjudicating Authority seeking direction from the Adjudicating Authority for exclusion of IFCI
from the Committee of Creditors. IFCI has also filed an application seeking direction for inclusion or exclusion of IFCI from the COC. Bank of
Baroda has annexed the minutes of the 4th meeting of Committee of Creditors on M/s. Kohinoor Power Pvt. Ltd. In Item 5 of the Minutes, 8th line
from bottom, the IRP submitted that in view of the opinion of the Chairperson to seek direction from the Adjudicating Authority to arrive at a decision
as to whether to include or exclude IFCI, looking to the complexity of the matter, the Adjudicating Authority to approach immediately. The
Chairperson further directed that the CIRP proceed in the meantime. IFCI is not a Financial Creditor and is not bound to contribute the cost of CIRP.
Thereafter also on 12-06-2019, IFCI has paid Rs. 3,46,000/- (Rupees Three lacs forty six thousand only) towards payment of IRP fees and meeting
cost of valuers etc.
9. Having heard the submissions on both sides it is made clear that the liquidator rushed to this Tribunal without exhausting his remedy to get the fund
from the CoC by way of calling for the Stakeholders Constitution Committee (SCC). He would have called for the meeting of the stakeholders and
would have placed all his requirements, budgets etc, in advance before the SCC. The Ld. Counsel for the R1,3, and 5 submitted that the Liquidator has
not called for the meeting of the SCC and straight away approached the AA. According to him the liquidator should act in consonance with COC
members. Stakeholders meeting would have called for and to be convened to sort out the problem without approaching the AA. He argued. However,
he did not dispute the obligation on the part of the respondents to meet the requirement of the liquidator in order to have a smooth continuation of the
liquidation process and to liquidate the assets of the CD at the earliest. Upon satisfying the balance amount payable by the respondents 1, 2 and 5, by
the liquidator, it will be paid to him within 15 15 days of the submission of records by the liquidator. He asserted before me. The said submission is
recorded.
10. So the only question left is whether any direction is to be issued to R4 as the R4 disputes its liability to pay its part of share of the cost of CIRP
and liquidation. According to the Ld. Counsel for R4 it is the CoC members objected to the inclusion of R4 in the CoC even if it is an unsecured
creditor. However, dispute as to whether the R4 is a financial creditor or not has not been settled by the CoC and the said dispute is now referred to
the AA and two IAs in that regard are pending. According to her without settling the said dispute, R4 may not be compelled to pay its part of share
towards the Cost of CIRP and liquidation. I found some merit in her submission upon a reference to the copy of minutes she brought to my notice.
Item No. 5 in the minutes of the 4th CoC meeting is reproduced here under; It add strength to the submission on the side of R4.
Item No. 5:
... ... ... ... ... ...
The Chairperson expressed that following is the concluding opinion of M/s. Khaitan & Co.
Although the instrument subscribed by IFCI Ltd. is convertible debentures, which not a debt instrument, considering the aforesaid, it is not free from
doubt as to whether IFCI Ltd. will be regarded a financial creditor or not within the meaning of Section 5(7) of IBC. It may be advisable to seek
suitable clarification from NCLT in this regard."" In view of the said opinion the chairperson suggested that it will be appropriate to seek direction of
the Hon'ble NCLT to arrive at a conclusive decision on ""Whether IFCI Ltd. shall be considered as a Financial Creditor or not"". She further added that
looking into the complexity of the matter, application be moved to the NCLT for direction immediately.
... ... ... ... ... ...
The representative of Bank of Baroda clarified that as agreed by the majority of members as per the First CoC meeting held on 1st September, 2018,
Bank of Baroda in consultation with its legal counsel moved an application in NCLT for Change of Resolution Professional and regarding the IFCI Ltd
it was decided that necessary directions will be sought from NCLT on this issue upon appointment of new Resolution Professional did not take place
till the second COC meeting held on 26th September, 2018, the CoC members requested the Chairperson to take a legal opinion on the issue from a
reputed solicitor firm.
As the matter could not be concluded hence the members of COC came to a conclusion that now the chairperson should seek NCLT direction on the
same.
The COC members (majority) other than IFCI Ltd. proposed that till the time the NCLT gives its direction, IFCI may not be allowed to attend the
COC meeting as certain confidential discussions take place. The chairperson stated that the COC constitution would remain unchanged till the
NCLT's direction on the matter is obtained. She further added that IFCI Ltd. has also given their Confidentiality undertaking; hence they need to abide
by that.
The above said minutes make it clear that the CoC itself doubted the inclusion of R4 in the CoC and has taken a decision to move an application for
clarification as to whether convertible debenture is a debt instrument or not?. The CoC on the other hand observed that convertible debenture is not a
debt instrument and hence R4 cannot be allowed to participate in the CoC meeting. In view of the said decision an application was admittedly filed by
the liquidator and it is pending. Ld. Counsel for R4 submitted that IFCI also has filed an application seeking direction for inclusion or exclusion of IFCI
from the COC and it is also pending.
11. The above said discussion leads to a conclusion that IFCI has already been included as one of the Financial Creditors at the instances of IRP after
verifying its claim. According to the liquidator IFCI is a financial creditor since the debenture holder is a creditor or a lender of the CD company.
Though it is certain that convertible debentures are long term debt instruments issued by a company that can be converted into equity shares of the
company on a future date, since the dispute as to whether it is a debt instrument or not is pending for consideration before the AA, I am not deciding
the said dispute here in this application. However being satisfied that IFCI's inclusion as a member in the CoC is disputed by the remaining financial
creditors, it appears to me that IFCI cannot be compelled to contribute its part of share towards the CIRP and Liquidation cost. Part payment
voluntarily made by the IFCI does not bar it from disputing its liability to pay the amount as demanded by the liquidator. However, to have a fare and
just consideration of the objections now raised by the IFCI it appears to me that, that part of the amount to be contributed by the IFCI in accordance
of the voting share already determined, by the RP is to be deposited in an interest bearing account of the CD in the name of the liquidator so as to
realise the amount by him in case the inclusion of the R4 is found legal and proper. If found it is to be excluded, the amount in deposit is to be refunded
to it. If this IA is disposed of with such a direction it would meet ends of justice in the peculiar nature and circumstances of the case in hand.
12. In view of the matter though the liquidator approached before me without calling SCC meeting and attempted to resolve the issues which would
have been harmoniously resolved in between him and the CoC, as submitted by the Ld. Counsel for the CoC, I am not dismissing the application, but
disposing it upon the following directions:
DIRECTIONS
i). The submission of Ld. Counsel for R1,3 and 5 that upon satisfying the balance amount payable by the respondents 1,3 and 5, by the liquidator, it will
be paid to him with in 15 days of verification of the records to be submitted to the CoC, is recorded;
ii). IFCI/R4 is directed to deposit that part of the amount to be contributed by it in accordance of the voting share already determined, by the RP in an
interest bearing account of the CD in the name of the liquidator with in 15 days from the receipt of the e copy of the order:
iii). This amount is to be kept in the said account until the disposal of interim applications filed by the Liquidator/IFCI disputing the inclusion of IFCI in
the CoC of the CD;
iv). In case the IFCI is found was rightly included in the CoC as a financial creditor, the amount in deposit with interest can be utilised by the liquidator
towards the CIRP/Liquidation cost. Or else the amount is refundable to the IFCI with the accrued interest.
Unnumbered IA(IB) No. /KB/2020 in CP(IB) No. 602/KB/2018 is disposed of accordingly.
The Registry is directed to send e-mail copies of the order forthwith to all the parties.
Certified copy of the order may be issued to all the concerned parties, if applied for, upon compliance with all requisite formalities.
