TaxTMI 
TaxTMI 
2019 (2) TMI 1819
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....ainst Tirupati Jute Industries Limited- the Corporate Debtor to start Corporate Insolvency Resolution Process (in short, "CIRP") of the Corporate Debtor as the Corporate Debtor committed default of financial debt Rs. 7,18,21,128/-. By order dated 12.01.2018, this authority admitted the corporate debtor in CIRP. One Mr. Pinaki Sircar is appointed as the I.R.P. 2. I.R.P. called for the claim from the creditors of the corporate debtor by making public announcement of CIRP. In pursuant thereto, number of Creditors (financial as well as operational including the workmen) filed their claims. Upon their scrutiny, IRP formed Committee of Creditors (CoC for short) consisting of the following financial creditors having voting percentage of each of them.- (i) Federal Bank Ltd. (75.18%) (ii) Small Industries Development Bank of India (22.51%) (iii) Abhinandan Holdings Private Ltd. (2.31%) 3. First meeting of CoC was held on 02.03.2018. In that meeting, the appointment of IRP was confirmed as the RP. In that meeting itself, the RP brought to the noitice of the CoC that the corporate debtor had executed agreement of lease of Jute Mill with Daaksh Jute LLP (for sh....
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....on 30(2) read with section 31 of l&B Code for approval of this plan by this authority. 7. CIRP period of 270 days completed on 09.10.2018. This authority took up the plan of K.L.Jute for consideration. By that time, other two unsuccessful resolution applicants, i.e. Madan Mohan Mal and Prashant Damani filed their objections in writing by way of application bearing Nos. CA(IB) 974/KB/2018 and CA(IB) 1013/KB/18. So also some of the workers of corporate debtor also filed their objection by application No. CA(IB) 08/KB/2019. 8. I have gone through the entire record and proceeding. I heard the ld. Advocate, Mr. Thakkar for the RP, ld. Advocate for the CoC, ld. Advocates for the Applicant, Mr. Abhrajit Mitra, the Successful Resolution Applicant, i.e. K.L. Jute. Ld. Sr. Counsel, Mr. Joy Saha, the Objector No.1, ld. Sr. Counsel, Mr. Ratnanko Banerjee for Objector No.2, Lr. Sr. Counsel Mr. S. Mitra for the workmen at length. 9. Ld. Counsel, Mr. Thakkar for the RP submitted that the corporate debtor is a going concern and it is being run by M/s. Daaksh Jute LLP on the basis of lease agreement dated 1.1.16. The RP had received three resolution plans. He submitted all the plans for co....
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....he corporate debtor would be inevitable. To avoid that and keeping in mind the spirit of the Code, i.e.the Resolution first liquidation rather this authority may approve the plan. 11. Ld. Sr. Counsel for the Successful Resolution applicant (M/s. K.L. Jute Product Private Ltd.) supported the submission of ld. Counsel, Mr. Thakkar for the RP. He further brought to my notice that the objectors to the plan, Mr. Madan Mohan Mal and Prashant Damani are in fact the close relatives of the directors of the Corporate Debtor. Their plan cannot be considered as both of them are disqualified under section 29A of l&B Code. He further submitted that M/s. Daaksh Jute LLP who is now running the jute mill of the corporate debtor is a limited liability partnership firm of brother of one of the objectors, Mr. Madan Mohan Mal. In fact, lease deed in-between the Corporate Debtor and Daaksh Jute LLP dated 01.08.2016, is the transaction in-between the related parties and it is void. He submitted that Daaksh Jute LLP required to be evicted therefrom by the order of this authority. The plan of K.L. Jute is the plan approved by the CoC. This authority may approve the same. He further submitted that lease ....
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.... in case of Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd. [2014] 45 taxmann.com 88/125 SCL 378 (SC) 15. Ld. Sr. Counsel Mr. Joy Saha for Madan Mohan Mal, the Objector No.1 took me through the plan approved by CoC. He pointed out that plan submitted for approval of this authority is per say illegal. Although it was a condition of invitation of Eol/Plan as published, stating that corporate debtor is being run by Daaksh LLP on the basis of lease deed. Hence, K.L.Jute required to submit the plan taken into consideration the status of the corporate debtor "AS IS WHERE IS and AS IS WHAT IS BASIS". According to the ld. Sr. Counsel, his client has submitted the plan accepting the above condition. Still the CoC did not consider the same but gave precedence to the plan submitted by M/s. K.L. Jute only because lead financial creditor, i.e. Federal Bank Ltd. having 75.18% voting share was to get extra amount as upfront payment. Ld. Sr. Counsel submitted that in fact K.L. Jute had showed readiness to pay sum of Rs. 23 crores as upfront payment but later on the figure was reduced just to Rs. 50 lakh, still the plan was approved by the CoC. 16. Ld. Sr. Counsel t....
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.... Code. In order to evict Daaksh Jute LLP from the corporate debtor, one has to approach proper forum. This authority cannot have that jurisdiction. He relied on rulings in case of Macquarie Bank Ltd. v. Shilpi Cable Technologies Ltd. [2018] 2 SCC 674 and K. Kishan v. Vijay Nirman Co. (P.) Ltd. [2018] SCC OnLine SC 1013. 19. I have gone through the resolution plan submitted for my approval. I have considered the submissions of all the ld. Counsels appearing for the parties as above. 20. At the outset, I make it clear that I am only considering resolution plan of M/s. K.L. Jute Products Pvt. Ltd. because that is the plan submitted for my approval. The CoC has approved that plan by 97.05% votes. As rightly submitted by ld. Advocate, Mr. Thakkar for the R.P, I cannot sit in appeal against the action of CoC approving the plan in their commercial wisdom. Even the Apex Court very recently in the case of K. Sashidharan v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312 (SC) held that, "the Legislature has not endured the Adjudicating Authority (NCLT) with the jurisdiction or authority to analyse or evaluate commercial decision of CoC much less to enquire into the justness....
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...." 23. Keeping before my sight the above provisions of law, I now proceed to examine the resolution plan of M/s. K.L. Jute Products Private ld. submitted for my approval. 24. By inviting public advertisement on 06.05.2018, RP called upon the prospective applicant to submit Eol/Resolution Plan by 23.05.2018. It was made clear that such applicants to submit Eol/Plans AS IS WHERE IS AND AS IS WHAT IS basis as regards to the status of the corporate debtor. It is not in dispute that on 01.08.2016 i.e. almost one year prior to filing of application under section 7 of I&B Code by the financial creditor, the corporate debtor executed lease deed in favour of one M/s. Daaksh Jute LLP and handed over the jute mill for running. It is also not in dispute that lease agreement in-between the corporate debtor and Daaksh Jute LLP is still subsisting. It is submitted by the ld. Counsel for the RP that lease deed is void as it was executed by the corporate debtor after the receipt of notice under section 13(2) of SARFAESI Act. He pointed out that Resolution Professional has filed application under section 45 of l&B Code bearing No. CA(IB) No.36/KB/2019, for cancellation of that lease deed. I fai....
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....ing approved subject to modifications, which is not acceptable to the resolution applicant, in that case the resolution applicant will have absolute right to make withdrawal of bid without any notice to CoC as well as Resolution Professional". This mail was sent by them almost on the last date when the CoC was to hold its meeting to approve the plan. Despite this CoC approved K.L.Jute's plan. In my considered opinion, such plan which was subject to so many conditions and the conditions which cannot be complied within reasonable period of time, ought not to have approved by the CoC. 26. This takes me to consider one more crucial aspect due to which I feel that the resolution plan submitted for my approval, cannot be approved. Section 30(2)(e) of l&B Code states that the resolution plan should not contravene any provisions of law by the time being in force. Successful Resolution Applicant, M/s. K.L.Jute clearly stated in their plan that this authority while approving their plan has to pass the order cancelling the lease deed dated 01.08.2016, executed in-between the corporate debtor and Daaksh Jute LLP. To my mind, this condition in the plan is contrary to the established proc....
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....ity. I reject the resolution plan of M/s. K.L.Jute Products Private Ltd. for the above reasons. 28. CIRP period of 270 days already expired two months ago. Hence, it is of no use to refer other two plans- one by Mr. Madan Mohan Mal and the other by Mr. Prashant Damani back to CoC's consideration. It cannot be done now. I am not entering into controversy whether both of them are related party of the corporate debtor or not and whether the provisions of section 29A are not applicable to the corporate debtor, in view of section 240A of I&B Code. Such questions are irrelevant. CoC has approved the only one plan i.e. M/s.K.L.Jute Private Ltd. However, in my considered opinion that plan does not comply all provisions stated in section 30(2) of I&B Code. I have to reject that plan. Now alternative left for me to pass the order of liquidation of the Corporate Debtor. Ld. Sr. Counsel while arguing for the workmen submitted that if such occasion arises, the corporate debtor maybe liquidated as a going concern. I accept the request. It is seen from the record that RP did not give correct advise when he submitted K.L. Jute's plan for approval of CoC. In my considered opinion, in suc....