2024 (9) TMI 564 - AT - IBC

Resolution plan approval upheld despite claims of undisclosed commercial spaces in asset information

Kanoria Energy & Infrastructure Ltd. Versus Avishek Gupta & Ors. And Kanoria Energy & Infrastructure Ltd. (Erstwhile a Infrastructure Ltd.) Versus Mr. Avishek Gupta, Erstwhile Resolution Professional Sarga Hotel Pvt. Ltd., JC Flowers Asset Reconstruction Pvt. Ltd., Shri Ram Multicom Pvt. Ltd.

The NCLAT dismissed an application challenging the approval of a resolution plan. The appellant claimed the resolution professional failed to disclose ... Approval of Resolution Plan - Applicant submits that RP has not issued clarification with regard to certain commercial spaces in the Corporate Debtor’s asset - It is submitted that the Applicant/ Appellant was not informed about the 4th to 9th floor also belong to the Corporate Debtor - HELD THAT:- The entire submission of the learned Counsel for the Applicant advanced, relates to, not divulging about the inclusion of certain floors with commercial spaces in the Corporate Debtor’s assets. It is to be noted that neither in the Appeal, nor in the Application, the Applicant/ Appellant has brought on record the Information Memorandum. The Information Memorandum and virtual room was shared with the Appellant by the RP, he being a Resolution Applicant. Entire Westin Hotel belong to the Corporate Debtor. With regard to 4th to 9th Floor, it was clearly mentioned in the Information Memorandum that SHPL have assigned it to Savyambhut Marketing Pvt. Ltd. Whatever stated in the Information Memorandum, the conclusion on such assignment was the matter for consideration of the SRA, who had to submit the Resolution Plan. The Resolution Plan for the Corporate Debtor was invited on “as is where is basis” and information was provided to all Resolution Applicants. Learned Counsel for the RP is right in his submission that it was for the Applicant/Appellant to seek any clarification, which it may require regarding the commercial space in the course of its due diligence of the Corporate Debtor. All Resolution Applicants were required to make their own due diligence and submit the Resolution Plan. The submission, which has been raised by the learned Counsel for the Applicant/Appellant that RP failed to divulge about the inclusion of certain floor with commercial spaces is incorrect on the submissions, which have been advanced by the Appellant itself before this Tribunal. There is no substance in the submission advanced by the Applicant in the present Application praying for setting aside the order of the Adjudicating Authority and to remand the Plan back to the CoC for fresh consideration. There is no merit in the Application - Application dismissed. Issues Involved:1. Approval of the Resolution Plan by the Committee of Creditors (CoC).2. Alleged failure of the Resolution Professional (RP) to provide complete information about the Corporate Debtor's assets.3. Procedural lapses and potential unfair advantage to the Successful Resolution Applicant (SRA).4. Request for setting aside the Impugned Order and remanding the Resolution Plan back to the CoC.Detailed Analysis:1. Approval of the Resolution Plan by the Committee of Creditors (CoC):The CoC, in its 14th meeting on 24.05.2023, approved the Resolution Plan of Shriram Multicom Pvt. Ltd. The Appellant's Resolution Plan, although considered, was not approved. The Appellant challenged the approval before the National Company Law Tribunal (NCLT), Kolkata, which was dismissed on 29.02.2024. The Appellant then approached the Supreme Court, which allowed the Appellant to withdraw the appeal with liberty to file appropriate proceedings before the NCLAT.2. Alleged failure of the Resolution Professional (RP) to provide complete information about the Corporate Debtor's assets:The Appellant argued that the RP did not issue clarifications regarding certain commercial spaces, specifically the 4th to 9th floors of the Corporate Debtor's asset, which allegedly prevented the Appellant from enhancing its financial offer. The Respondent countered that all necessary information was included in the Information Memorandum and that it was the Appellant's responsibility to seek clarifications during due diligence. The comparative note provided by the Appellant itself indicated that the Information Memorandum mentioned the commercial spaces from the 4th to 9th floors.3. Procedural lapses and potential unfair advantage to the Successful Resolution Applicant (SRA):The Appellant claimed that the RP's failure to divulge information about the commercial spaces gave an unfair advantage to the SRA. However, the Tribunal found that the Information Memorandum did contain details about the commercial spaces, and it was the Appellant's duty to conduct due diligence. The Tribunal noted that the Resolution Plan was invited on an 'as is where is basis,' and the Appellant did not seek any clarification from the RP regarding the assets.4. Request for setting aside the Impugned Order and remanding the Resolution Plan back to the CoC:The Appellant sought to set aside the Impugned Order dated 04.01.2024 and remand the Resolution Plan back to the CoC for fresh consideration. The Tribunal found no merit in the Appellant's submissions, stating that the Appellant had not brought on record the Information Memorandum or any evidence to support its claims. The Tribunal concluded that the Appellant's arguments were baseless and upheld the approval of the Resolution Plan by the CoC.Conclusion:The Tribunal rejected the Appellant's application, finding no substance in the arguments presented. The Impugned Order dated 04.01.2024 was upheld, and the Resolution Plan approved by the CoC was not remanded for fresh consideration. The application (IA No.5691 of 2024) was dismissed.