2020 (9) TMI 1082 - Tri - Insolvency and Bankruptcy

Tribunal upholds CoC's rejection of resolution plan challenge under Insolvency Code

The Tribunal dismissed the applicant's challenge to the rejection of its resolution plan by the CoC under section 29A of the Insolvency and Bankruptcy ... Rejection of the resolution plan - CIRP process - section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 - HELD THAT:- A reading of the mail issued by the RP and the copy of minutes produced before us prima facie satisfied that RP placed the documents submitted by the applicant and the Plan before the CoC and from the available document as on 18.06.2020, the applicant was found ineligible as one of the directors of the applicant who is also a director of ISL was in the list of defaulter, fall under section 29-A(b) of the Code. Even according to the applicant he was unable to place all the documents relating to disqualification as the bank has not given proof proving that the bank has removed the Ind Synergy Ltd. (ISL) from the RBI defaulters list and an email dated 22.06.2020, issued by Indian Overseas Bank, placed before us at the time of hearing that the bank has removed the said company from the list of defaulters. So as on 18.6.2020 the applicant was a defaulter as per the list. In view of the above said circumstances we do not find any merit in the application. Application dismissed. Issues:Challenge to rejection of resolution plan by CoC under section 29A of I&B Code.Analysis:1. The applicant challenged the rejection of its resolution plan by the Committee of Creditors (CoC) under section 29A of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor, undergoing Corporate Insolvency Resolution Process (CIRP), had rejected the plan citing the applicant's ineligibility under section 29A.2. The urgency of the matter was acknowledged due to the COVID-19 pandemic, leading to the application being heard through video conferencing. The applicant's resolution plan was initially rejected by the Resolution Professional (RP) based on alleged loan defaults by a related company, ISL, where a director of the applicant also served. The applicant clarified the situation, highlighting that the defaults had been taken over by an asset reconstruction company and the concerned bank confirmed the absence of any outstanding loans from ISL.3. The applicant contended that the RP overstepped its authority by rejecting the plan without CoC approval, submitting revised plans within the deadline. However, the RP maintained that all plans were presented to the CoC, which deliberated on the applicant's disqualification under section 29A and subsequently rejected the plan.4. The RP's decision was challenged by the applicant, citing precedents that RP's role is to present plans to the CoC for approval. The RP defended its actions, stating that the applicant's director was listed as a defaulter as per RBI guidelines, rendering the applicant ineligible under section 29A. Despite the applicant's claims of the director's removal from the defaulters list, the RP maintained the rejection based on the available information.5. The Tribunal found no merit in the applicant's challenge, noting that as of the decision date, the applicant was considered a defaulter as per available records. The Tribunal dismissed the application, leaving open the possibility for the applicant to challenge the CoC's decision during the approval of the resolution plan. The judgment highlighted the RP's duty to present plans to the CoC for approval, emphasizing the CoC's authority in determining plan eligibility under section 29A.6. The application challenging the rejection of the resolution plan was dismissed, with no order as to costs. The Registry was directed to promptly share the order with all parties involved, concluding the Tribunal's decision on the matter.