TaxTMI 
TaxTMI 
2020 (8) TMI 297
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.... Debtor is MSME and the Appeal has been filed against Impugned Order dated 1st August, 2019 passed by the National Company Law Tribunal, Mumbai Bench (NCLT - Adjudicating Authority). By the said Order, the Adjudicating Authority has approved Resolution Plan of M/s. Sai Agro (India) Chemicals (Respondent No.2 - SRA [Successful Resolution Applicant]). This Appeal on 12.09.2019 was admitted to limited extent of examining viability and feasibility of the "Plan". 2. The Application - CP No.1368/IBC/MB/MEH/2017 under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC - in short) was filed initially by Financial Creditor - The Karad Urban Co-operative Bank Ltd. against the Respondent No.1 (Corporate Debtor - Company). The Application came to be admitted and the Company went through the Corporate Insolvency Resolution Process (CIRP) which has culminated into the Resolution Plan of Respondent No.2 being accepted. 3. The Corporate Debtor has authorized capital of Rs. 14 Crores and paid up capital of Rs. 9.82 Crores. It had taken licence for production of ethanol from rectified spirit. The loan taken from the Financial Creditors became NPA and the Application under Section 7 came to be ....
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....A and under Section 36(2), it is material irregularity. For such reasons, the Appellant wants the Resolution Plan approved to be set aside. 6. The Respondent No.2 - SRA has argued that the Resolution Plan was prepared on the basis of Information Memorandum provided by Resolution Professional to the Resolution Applicant and that the Information Memorandum nowhere mentioned about the ethanol plant and machinery. It is stated that the Janata Sahakari Bank Limited has taken possession of the Plant and is in the process of conducting sale of the plant by way of auction. The SRA claims that the RP had sent an email on 7th February, 2019 to SRA about inclusion of liquidation value in the Resolution Plan and SRA had claimed that it was on the basis of independent valuation. 7. The Respondent No.3 has submitted that the Resolution Plan is based upon takeover of the Corporate Debtor and it continuing as going concern in its normal course of business. The entire business plan attached is based upon operation of the ethanol plant. Respondent No.3 refers to the Order of this Tribunal in Appeal No.897 of 2019 that the Respondent No.3 can take over the possession of the ethanol plant machinery.....
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.... by RP after taking Report of two Valuers which is Rs. 13.53 Crores which has been mentioned by the SRA, is mere coincidence. The RP is thus defending the process. 9. We have heard Counsel for both sides and gone through the record. 10. Under Section 61(3)(ii) of IBC, in Appeal against approval of Resolution Plan, one of the grounds for this Appellate Tribunal to see is, if there has been material irregularity in the exercise of powers by the Resolution Professional during the Corporate Insolvency Resolution period. In this regard, Regulation 36(2) of IBC (which is also part of the law required to be followed) provides as to the information which should be there in the Information Memorandum. Initially Regulation 30(2)(j) required the RP to mention the liquidation value. But this Clause (j) was subsequently omitted with effect from 31st December, 2017. Clearly, such information could not be mentioned to the prospective Resolution Applicants. Regulation 35(2) attracts requirement of maintaining confidentiality with regard to the "fair value" and the "liquidation value" of the Corporate Debtor and the Regulation 35(2) controls the manner in which such information can be shared. In ....
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....the same being the only Plan, was rushed through the COC meeting and in two - three hours, it was approved without duly examining the Resolution Plan by the Resolution Professional and without the COC being satisfied as required under Section 30(4) of IBC that the Plan is feasible and viable. 11. There is no dispute now, that the Resolution Plan does not in any manner consider as to what happens if the ethanol plant machinery, which belongs to Respondent No.3, is taken away by the Respondent No.3 who is the real owner and had given the plant machinery to the Corporate Debtor on heavy rent. The Plan proceeds on the basis as if the ethanol plant and machinery belongs to the Corporate Debtor. The Appellant is pointing out that business plans are contemplated in the Resolution Plan on the basis that once approved, the SRA will continue the business. We are not interfering with the commercial wisdom of the COC but what appears to us from the record is that the COC did not consider feasibility and viability of the Resolution Plan in case the plant and machinery are taken away by the Respondent No.3. The Respondent No.3 is still insisting on taking away the plant and machinery and there ....