2022 (3) TMI 636 - Tri - Insolvency and Bankruptcy

Tribunal directs CoC to independently assess Resolution Plan under Section 29A

Venkata Rattaiah Medisetty, RP for Siva Ram Yarns Private Limited Versus Dommeti Surya Rama Krishna Saibaba, RP for Siva Ram Yarns Private Limited

The Tribunal partially allowed the application, directing the Resolution Professional (RP) to present the Resolution Plan before the Committee of ... Validity of rejection of resolution plan - it is alleged that Resolution Plan submitted by the Applicant was not placed before the CoC and the Resolution Professional (RP) unilaterally disqualified the Applicant on the ground that the Applicant is a connected party to an undischarged insolvent. Whether the Resolution Professional (RP) should place the Resolution Plans before the CoC without he himself disqualifying any of the Resolution Applicants unilaterally? - HELD THAT:- After approving the plan by the Committee the Resolution Professional (RP) shall submit to the Adjudicating Authority. It was finally held that the CoC has power to decide and approve the Resolution Plan of the Resolution Applicant's and CoC also can consider the eligibility/ineligibility of the Resolution Applicants under Section 29(A)(e) of the Code. Hence, since the law is made very clear with regard to placing of the Resolution Plan before the CoC before disqualifying any of the Applicants under any of the Provisions of law and under Section 29A of IBC which is the case with the Applicant present before this Tribunal, by answering this point infavour of the Applicant, this Tribunal is inclined to allow the Application partly. Whether the rejection of the Resolution Plan by the Resolution Professional (RP) is valid? - HELD THAT:- This Tribunal is not inclined to make any observation with regard to this point as the same would have the effect of influencing the decision that has to be taken by the CoC after the Resolution Plan of this Applicant is placed before it. The Application is partly allowed. Issues:1. Whether the Resolution Plan of the Applicant has to be placed before the CoC and whether it has been placed.2. Whether the rejection of the Resolution Plan by the Resolution Professional (RP) is valid.3. To what relief.Analysis:Issue 1:The Applicant sought direction for the Resolution Professional (RP) to present the Resolution Plan before the Committee of Creditors (CoC) as it was allegedly not placed before them. The RP unilaterally disqualified the Applicant without CoC's scrutiny. The Respondent argued that the Applicant's disqualification under Section 29A due to association with an undischarged insolvent justified the rejection. However, the CoC did not independently assess the disqualification, as the RP declared the Applicant ineligible without CoC's involvement. The Tribunal referred to a NCLAT judgment emphasizing CoC's authority to evaluate Resolution Plans and consider eligibility under Section 29A before approval. Consequently, the Tribunal partially allowed the application, directing the RP to place the Resolution Plan before the CoC for assessment of eligibility.Issue 2:The Tribunal refrained from making observations on the validity of rejecting the Resolution Plan to avoid influencing the CoC's decision post-assessment. This decision was made to maintain the CoC's independent evaluation after the Plan is presented before them.Issue 3:The Tribunal partially allowed the application, instructing the RP to place the Resolution Plan before the CoC for evaluation of eligibility. The CoC was directed to consider the Plan along with the resources and material provided by the RP, ensuring a prompt and lawful decision-making process.In conclusion, the Tribunal addressed the concerns raised by the Applicant regarding the placement of the Resolution Plan before the CoC and the unilateral disqualification by the RP. By upholding the importance of CoC's role in assessing eligibility under Section 29A, the Tribunal provided a directive for a fair evaluation process, emphasizing adherence to legal procedures and timely resolution.