TaxTMI 
TaxTMI 
2018 (2) TMI 1222
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.... /Resolution Professional, it is stated that the Resolution Plan given by Respondent No.4/ARC was placed before the Committee of Creditors ["COC" for short] on 4.1.2018 and COC rejected the said Resolution Plan. Thereupon, the Promoter/Director vide IA No. 20 of 2018 requested this Authority to treat the Draft Amendment as integral part of the IA No. 9 of 2018. In the Draft Amendment, it was proposed to amend the Memo of Application by inserting the prayer, i.e., to quash the Minutes of the Meeting of the Board of Directors dated 4.1.2018 and to take on record the Resolution plan submitted by the Respondent No. 4/ARC. 3. The Applicant is referred to as "Promoter/Director" of the Corporate Debtor, the 3rd Respondent is referred to as 'Resolution Professional"; the 4th Respondent is referred to as "Resolution Applicant/ARC"; Respondent No. 1 herein is the "Corporate Debtor"; and Respondent No.2 herein is the "Financial Creditor" who triggered the Corporate Insolvency Resolution Process by filing CP (IB) No. 5 of 2017 under Section 7 of the Code. The said CP (IB) No. 5 of 2017 was admitted by this Adjudicating Authority on 19.4.2017. The chronology of dates and events that are help....
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....f the Resolution Plan on 3.1.2018; and (r) The said Resolution Plan was placed before the COC on 4.1.2018 and the same was rejected by the COC. 4. The initial plea and contention of the Promoter/ Director is that the Resolution Professional did not place the Resolution Plan dated 2/3.1.2018 before the COC on 4.1.2018 but after the amendment of the prayer, the contention of the learned Senior Counsel appearing for the Promoter/ Director is that the Resolution Professional after satisfying that the Resolution Plan is in consonance with the requirements of section 30 sub-section (2) and Regulation 37 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 was placed before the COC and the COC without assigning any reason by simply saying that the Resolution Plan does not meet the criteria of the IB Code rejected the Resolution Plan although it is in the interest of the Corporate Debtor, its Promoters, Members, Financial Creditors and other Stakeholders, During the course of arguments, learned Senior Counsel appearing for the Promoter/Directors referred to Sections 30, 60, 60(5), 37, 38 of the Regulation 37 of ....
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....cy Code, that is referred to by the Hon'ble Supreme Court of India in Innoventive Industries Ltd. v. ICICI Bank and Anr. "49. The Hon'ble Supreme Court of India, in Innoventive Industries Ltd. (supra), has referred to the report of Bankruptcy Law Reforms Committee, 2015 ("Reforms Committee") in order to gain an insight into why IBC was enacted and purpose for which it was enacted. Briefly stated the Reforms Committee examined whether in the case of a company which has committee a default in repaying its debt obligations, whereas secured creditors are able to repossess the fixed assets which are pledged with them, there are several creditors and lenders who are not secured lender and when default takes place lenders are able to recover only 20% of the value of debt on a Net Present Value (NPV) basis. In short, the Reforms Committee came to the conclusion that those industries which do not have a strong asset base are being deprived of credit which makes it difficult for corporates to raise finance by issuance of long dated corporate bonds (unsecured) which are essential for most infrastructure projects. The Reforms Committee found that where a def....
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....r, by the appointment of an IRP and creation of a creditors Committee. These are powers which can be exercised only by NCLT and not by the Company Court. It is for this reason that pending the Insolvency Resolution Process a moratorium is provided for under Section 14 of IBC. Therefore, the most fundamental distinction between the provision of the Companies Act and IBC is, whereas under the Companies Act winding up would be a manner for the Court alone to decide, under IBC, there is a paradigm shift inasmuch as it displaces the management of the Company and an IRP is appointed and the Creditors Committee is left to decide the fate of the company." 7. Therefore, the wisdom of the Parliament is that it is for the COC to take a business decision to reject or accept a Resolution Plan. In case if the COC accepts a Resolution Plan, then it is subject to the authority and jurisdiction of the Adjudicating Authority. As already said, no provision is made in the IB Code or in the Rules or in the Regulations that would enable or enjoin upon the Adjudicating Authority to sit over the Resolution of the COC in rejecting a particular Resolution Plan. 7.1 Therefore, this Adjudicatin....
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....olution Plan does not meet the criteria specified in IBC, 2016. From the reading of the above Minutes, it is clear that the Resolution Professional, instead of himself rejecting the Resolution Plan on 3.1.2018, placed the Resolution Plan before the COC with full information about the Resolution Plan. In fact, the Resolution Applicant could have himself rejected the Resolution Plan because he was of the opinion that the Resolution Plan is not in accordance with the provisions of the IB Code. But, instead of doing so, the Resolution Professional placed the Resolution Plan before the COC. 9. Here, it is pertinent to refer to Section 25 of the Code which deals with duties of Resolution Professional. Section 25(2)(i) reads as follows; Duties of resolution professional 25.(2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely: (a) to (h)..... (i) present all resolution plans at the meetings of the committee of creditors; Therefore, the Resolution Professional is right in his duty in presenting the Resolution Plan dated 3.1.2018 also before the Committee of Creditors for its decision with....
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....randum and basing upon it he has to file the Resolution Plan. But the Resolution Applicant did not choose to ask for Information Memorandum from the Resolution Professional. Therefore, the question of Resolution Professional providing information including the Information Memorandum to the Resolution Applicant did not arise till 20th December, 2017. In fact, on 30th December, 2017 the Resolution Professional informed the Resolution Applicant that the Resolution Plan is not based on Information Memorandum and asked the Resolution Applicant to file a Resolution Plan after obtaining the Information Memorandum and after entering into 'NDA'. Thereafter, the Resolution Applicant entered into NDA and obtained Information Memorandum and filed the signed Resolution Plan on 3.1.2018. Therefore, there is no lapse on the part of the Resolution Professional. More so, it is the Resolution Applicant who failed to act in a diligent manner and file the Resolution Plan well within time, if not within 30 days before the expiry of the Corporate Insolvency Resolution Process period. Moreover, the Resolution Plan filed by the Resolution Applicant contained information other than the information based on....