Disposed

In the matter of Kohinoor Paper and News Print Private Limited [Cont. Petition (Ib) No.9-KB-2022 and I.A (Ib) No. 809-KB-2021 in Company Petition (Ib) No. 1694-KB-2018]

NCLT5 Mar 2024Cont. Petition (IB) No.9-KB-2022 and I.A (IB) No. 809-KB-2021 in Company Petition (IB) No. 1694-KB-2018

Case brief

AI extract

What is this about?

The Tribunal held that an interim order continuing until the next hearing remains in force even if no hearing occurs later, as it does not automatically lapse. Consequently, an insurer cannot repudiate a claim during such a stay. The application was disposed of with a direction to the insurer to recall its repudiation order and notice issued for contempt proceedings.

What did the court decide?

Direction to respondent no. 1 to immediately recall its repudiation order dated 14.07.2022. Notice issued to alleged contemnors to justify why a rule will not be issued.

In the matter of Kohinoor Paper and News Print Private… — Insolvency and Bankruptcy | NCLT (2024)

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022

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And I.A (IB) No. 809/KB/2021

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Company Petition (IB) No. 1694/KB/2018

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An Application under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the National Company Law Tribunal Rules,2016 .

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IN THE MATTER OF:

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M/s. Kohinoor Paper and Newsprint Private Limited (in Liquidation), represented by the Liquidator, Shri Uday Narayan Mitra.

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… Corporate Debtor.

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And

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Uday Narayan Mitra, Liquidator

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… Applicant.

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Verses

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Oriental Insurance Company Ltd

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… Respondent No. 1.

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And

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Mr. Rohit Kumar Singla

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… Respondent No. 2.

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Date of Pronouncement: March 5th, 2024.

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CORAM:

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SMT. BIDISHA BANERJEE, MEMBER (JUDICIAL) SHRI. BALRAJ JOSHI, MEMBER (TECHNICAL)

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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APPEARANCE:

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For the Liquidator in IA (IB) No. 809/KB/2021:

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Mr. Swatarup Banerjee, Adv. Mr. S. K. Tiwari, Adv. Mr. Jayesh Kumar Choradia, Adv.

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For the Contemnor No. 1 in Cont. A. 9 of 2022 and IA 809 of 2021:

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Mr. Rajesh Singh, Adv. Mr. Aniruddha Singh, Adv.

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ORDER

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PER Bidisha Banerjee, Member (Judicial):

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1. This Court is congregated through hybrid mode.

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2. Heard the Learned Counsels for both the parties.

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NATURE AND SCOPE OF THE APPLICATION

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I.A. (IBC)/809/KB/2021:

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3. Uday Narayan Mitra, the liquidator has referred this I.A. (IBC)/809/KB/2021 to seek a direction upon Oriental Insurance not to classify the claims of the Corporate Debtor (In Liquidation) as “No Claim” and/ or further direction upon the respondent no. 1 to settle the claim of the Corporate Debtor (In Liquidation) along with other consequential reliefs.

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Page 2 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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Cont. Petition (IB) No.9/KB/2022:

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4. The Liquidator has also filed Cont. A. (IBC) No. 9/KB/2022 for the alleged contempt of the order dated 27^th October 2021 in the C.P. (IB) No. 1694/KB/2018.

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5. Factual Matrix:

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5.1 It is contended that the company had availed the services of respondent no. 1 by obtaining a policy namely, “Industrial All Risk Policy for fire, machinery breakdown and BI (Flop) for a sum assured of Rs. 4,153,350,000.00; Rs. 3,060,000.00 and Rs. 10,000,000.00 for the location Falta IND GRW CTR – Falta, Ramnagar. The said policy was valid from 20^th October 2019 till midnight of 19^th August 2020.

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5.2 During the policy period, super- cyclone ‘Amphan’ caused damages to the Properties in the various parts of West Bengal and Orissa.

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5.3 The CIRP commenced against the company (In Liquidation under IBC, ON 26^th September 2019, by an order of this tribunal wherein the applicant was appointed as RP and thereafter as liquidator vide order dated 12^th July 2021.

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5.4 An inspection was carried on 28^th May 2020 and spot survey was conducted by one, Mr. Dasgupta to figure out the extent

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Page 3 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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of damages and a preliminary survey report was prepared by him.

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5.5 Mr. Rohit Kumar & Co; the respondent no. 2 was appointed as Surveyor and loss Assessor by the respondent no. 1 as per the provisions of the Insurance Act, 1938.

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5.6 The Surveyor filed the Final Survey and Assessment Report dated 19^th August 2021 and a special note for the respondent no 1’s contemplation as mentioned in clause 14.01 to clause 14.05, having opined that the respondent no .1 should look into the relevant underwriting aspects, facts relating to the claims, terms and conditions and exceptions of the subject policy and decide the claim accordingly.

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5.7 After receiving the Final Survey and Assessment Report the respondent no. 1 sought certain specific opinion and the report dated 19^th August 2021, regarding the compliance of the guarantee and condition and the admission of liability, vide e- mail dated 26^th October 2021.

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5.8 The respondent no. 2, in response vide dated 29^th October 2021 gave an opinion that the company (In Liquidation) represented by the applicant had neither taken any safeguard / safety measures to protect the property in open and potential risk areas inspite of the warning of impeding ‘Amphan’ cyclone

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Page 4 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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which amounted to willful negligence on the part of the insured.

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5.9 As per the “Exclusion -A Excluded Causes no. 2 “of the insurance policy , the subject policy excluded the loss/damage caused by willful negligence as according to the report the insured had neither taken any preventive substantive measures before Amphan Cyclone to restrict the loss/ damage, nor had taken any immediate steps after the Amphan Cyclone to minimize loss/ damage was caused by such negligence which under ‘Excluded Causes no. 2’ was beyond the scope of the subject policy.

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5.10 On the basis of the aforesaid observation, the respondent no. 2 concluded its opinion that the nature of occupation of the affected premises had been altered from manufacturing unit to silent risk with effect from 26^th September 2019 and hence, there was a breach of the general condition of the subject policy.

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5.11 Further that, there was insured’s willful negligence as well as consequential and indirect aggravation damage/loss to the insured’s property. Therefore, such claim against loss/ damage was falling under the ‘Excluded Causes no. 2’ and the insurance cover had ceased with effect from 26^th September 2019.

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Page 5 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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5.12 However, till filling of this application the insurance company being Resolution no. 1 had not taken any decision in regard to the claims of the company (In Liquidation) under the provisions of the Insurance Act, 1938.

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5.13 It is evident that this Tribunal as diverse occasions passed interim orders, details whereof would be thus:

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SN	Date	Interim Order
1	27.10.2021	Till the next day of hearing, insurance company shall not take any final decision in the matter to the detriment of the company (In Liquidation).
2.	29.11.2021	Interim Order, if any; is extended till next date of hearing.
3.	21.12.2021	Interim Order, if any; is continue till next date of hearing.
4.	11.02.2021	Interim order, if any, passed in I.A (IBC)/809/KB/2021 will continue till the next date of hearing.
5.	25.03.2022	No specific Order is recorded.
6.	04.05.2022	No specific Order is recorded.
7.	10.06.2022	No specific Order is recorded.

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6. The interim order dated 27.01.21 was extended formally till 11.02.2021 which was meant to continue till the next date of

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Page 6 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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hearing. On 25.03.22, 04.05.2022, 10.06.2022 no hearing took place, and interim order was not formally extended till the next date.

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7. Taking advantage of the situation, the respondent no. 1 vide its letter of repudiation dated 14^th July 2022 repudiated the claims of the applicant. It is evident that the interim order was not subsisting on 14^th July 2022 when the respondent no. 1 adjudicated and/or settled the claims of the company (in liquidation) represented by the applicant.

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8. The respondent no. 1 claims that with the repudiation of the insurance claim of the company (In Liquidation) represented by the applicant, the applicant being I.A.(I/B)809/KB/2021 has become infructuous.

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9. The applicant on the other hand has filed an application alleging willful and deliberate violation of the order dated 27^th October 2021 which was never vacated.

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10. Applicant’s submission:

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10.1 The applicant would urge that since the interim order extended till 11.02.2022 was meant to continue till the next date of hearing, and no hearing of the matter took place till 10.06.2022, the respondent no. 1 could not have repudiated the claim on while interim order was subsisting, there is a deliberate, in violation of the interim order.

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Page 7 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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10.2 The applicant would rely upon the decision of the Hon’ble Allahabad High Court in the case of Ashiq Ali vs. Mohd. Shakeel & Ors. Reported in (1985) SCC Online All 625 where the Hon’ble Court having noticed that as after passing of an interim order case could not be taken up and the Hon’ble High Court has held that the interim order did not automatically stand vacated.

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10.3 The applicant has relied upon the decision in Centre of Excellence in Disaster Mitigation and Management, IIT, Roorkee, Disaster Haridwar vs. M/s. S. k. Dynamics Pvt. Ltd & Ors, reported in (2016) SCC Online Utt 2234 and Biva Pyne vs. Chunilal Pyne reported in (2008) SCC Online Cal 119 where the Hon’ble Calcutta High Court having considered the decision of the Hon’ble Supreme Court in Dr. Luis Proto Barbosa vs. Union of India & Ors. (1992) Suppl. (2) SCC 644 interpreted the term ‘in the meantime’.

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11. Rival contention of the Respondent:

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11.1 The respondent no. 1 is entitled to adjudicate and or settle the claims of the insured under the provisions of the Insurance Act ,1938 and the Insurance Regulatory and Development authority of India (Protection of policy Holders Interests) Regulation, 2017.

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Page 8 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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11.2 The present dispute is completely within the domain of the civil Court where the disputed question of facts is required to be adjudicated in case the company (In Liquidation) represented by the applicant challenges the letter of repudiation.

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11.3 In Gujarat Urja Vikas Nigan Limited vs. Amit Gupta reported in (2021) 7 SCC 209 , the Hon’ble Supreme Court has held that Section 60(5) of IBC vests NCLT with wide power since it can entertain and dispose of any question of fact or law arising out or in relation to the Insolvency Resolution Process and NCLT cannot do what IBC consciously does not provide.

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11.4 The cited decision in Ashiq Ali supra does not apply to the present case as after passing of an interim order case could not taken up and the HON’BLE High Court has held that the interim order did not automatically stand vacated.

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11.5 On the contrary in Arjan Singh vs. Punit Ahluwalia & Ors. reported in (2008) 8 SCC 348 the Hon’ble Supreme Court has held that if the order of injunction was operative up to a particular date, technically the order of injunction shall not remain operative thereafter.

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11.6 In Iqbal Husain vs. District Judge, Moradabad & Ors. reported in (2002) ILR (3) All 741, the Hon’ble Allahabad High Court held that when a Court passes a time bound

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Page 9 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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interim for a particular period, then such an order cannot be deemed to be extended it was granted or afresh stay order passed.

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Analysis and Findings:

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12. We have considered the rival contentions, perused the material on record and considered the implication of the decisions cited.

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13. It is evident from records that the interim order dated 27.10.21 was formally extended till 11 .02.2022 when the matter was taken up for hearing. On the subsequent dates, i.e. on 25.03.2022, 04.05.2022 and 10.06.2022, the matter was not taken up for hearing and as such no prayer could be made by the respondents to seek vacation or variation of the interim order.

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14. The interim order extended till 11.02.2022 cannot be deemed to have been vacated on the next date i.e. 25.03.2022 for the interim order was meant to continue till the next date of hearing and no “hearing “took place on 25.03.2022, 04.05.2022 etc., as the record of the case is suggestive of.

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15. Further, without hearing the parties, particularly the one who would be prejudiced due to vacation of interim order, the interim order could not have been vacated or treated to be vacated by a deeming fiction.

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Page 10 of 11

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IN THE NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, COURT NO. II KOLKATA

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Cont. Petition (IB) No.9/KB/2022 And I.A (IB) No. 809/KB/2021 In Company Petition CP (IB) No. 1694/KB/2018

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16. Thus, in all fairness, the interim order should be deemed to continue till the date of next hearing.

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17. The act on the part of respondent no. 1, to repudiate the claim on 14.07.2022 is thus in violation of the interim order granted by this Tribunal.

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18. Having observed as above, we are inclined to pass the following order:

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IA (IB) No. 809/22 is disposed of with direction upon the Respondent no. 1 to immediately take steps to recall its order dated 14.07.2022.

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19. Cont. Petition (IB) No. 9/KB/2022: Issue notice to alleged contemnor to justify why a rule will not be issued for deliberate, conscious and contumacious violation of the interim order dated 27.10.21, that continued till 11.02.2022 and even beyond.

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20. Certified copies of this order, if applied for with the Registry of this Adjudicating Authority, be supplied to the parties for compliance with all requisite formalities.

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Balraj Joshi Bidisha Banerjee Member (Technical) Member (Judicial) This order is signed on the 5^th Day of March 2024.

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Tiwari. V. [LRA]

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Page 11 of 11

In the matter of Kohinoor Paper and News Print Private Limited [Cont. Petition (Ib) No.9-KB-2022 and I.A (Ib) No. 809-KB-2021 in Company Petition (Ib) No. 1694-KB-2018]

Case brief

What is this about?

What did the court decide?

In the matter of Kohinoor Paper and News Print Private Limited [Cont. Petition (Ib) No.9-KB-2022 and I.A (Ib) No. 809-KB-2021 in Company Petition (Ib) No. 1694-KB-2018]

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