TaxTMI 
TaxTMI 
2020 (8) TMI 494
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....he impugned order dated 21.11.2019 in MA/989/2019 in CP/759/IB/2018 passed by the Adjudicating Authority (National Company Law Tribunal, Chennai). The Adjudicating Authority on 21.11.2019, had passed an order for 'Liquidation of the Corporate Debtor' etc., and appointed Mr. R. Venkatakrishnan, a 'Resolution Professional', as 'Liquidator' for the purpose of 'Liquidation' of the Corporate Debtor, etc. 2. Challenging the impugned order of the Adjudicating Authority whereby a Liquidation Order was passed under Section 33 of the I & B Code in respect of the Corporate Debtor/Company, the Learned Counsel for the Appellant submits that the Adjudicating Authority was not correct in not directing the 'Committee of Creditors' to reconsider the Resolution Plan, especially in the light of the fact that the 'Earnest Money Deposit' was arranged by the Resolution Applicant in the form of 'Bank Transfer' of Rs. 50,00,000/- (Fifty lakhs) and 'Title Deed' of the property for Rs. 6.6 crores. In this connection, it is the plea of the Appellant that the Resolution Plan ought not to have been rejected for failure to pay the 'Earnest Money Deposit'. 3. The Learned Counsel for the Appellant contends ....
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....nd as per third proviso 'all CIRP processes pending on the said date were to be completed within a period of 90 days from the date of commencement of the amended Act, that is from 16.8.2019. Moreover, in the instant case, 'CIRP process' would have been completed on 16.11.2019, whereas the Resolution Professional during the COC meeting on 4.9.2019, represented to the 'Committee of Creditors' that the 'CIRP process' would come to an end on 6.9.2019. Therefore, it is the precise stand of the Appellant that neither 117 days extension of time available nor the amendment granting extension of 90 days was brought to the notice of the 'Committee of Creditors'. Also, it is the plea of the Appellant that even though the 'Committee of Creditors' wanted time to examine the Resolution Plan in detail, the 'Committee of Creditors' was urged to urgently take the decision on the facts and information available by the 'Resolution Professional' and this aspect was not considered either by the Resolution Professional or by the Adjudicating Authority at the time of passing the impugned order. 7. The Learned Counsel for the Appellant points out that the Hon'ble Supreme Court in ESSAR Steel India Ltd ....
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....ration are not required to file UAM (Udyog Aadhar Memorandum) which is also called the MSME Certificate, but may file it, if it so desires. As such, it is the contention of the Appellant that as per the said Note, there was no requirement of the 'Corporate Debtor' to secure MSME Certificate to be provided to Vendors as per MCA requirements. 11. The Learned Counsel for the Appellant also contends that the Resolution Professional by preferring his own opinion during the 10th 'Committee of Creditors', meeting dated 28.8.2019, had planted confusion in the minds of the 'COC members' and added further in the 13th meeting of the 'Committee of Creditors' that took place on 17.9.2019, some of the COC members had expressed their displeasure as regards voting on the eligibility under Section 29A. Moreover, one of the members of the Committee specifically stated that the 'Committee of Creditors' does not have the power to vote on eligibility under Section 29A. At this stage, the Learned Counsel for the Appellant proceeds to point out that the 'Committee of Creditors' in the meeting held on 4.9.2019 voted on the 'Resolution Plan' and in fact, the Appellant's Resolution Plan secured 55.49 per....
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....Deeds' are lying with the 'Resolution Professional' and that the 'Appellant' can deposit Rs. 5.5 crores, within a week of return of 'Original Title Deeds' by monetising/leveraging the property submitted in lieu of Cash/Bank Guarantee being returned. 15. Continuing further, the Learned Counsel for the Appellant submits that during the 'CIRP', the 'Corporate Debtor' was doing business of 'International Logistic and Freight Forwarding', contributing substantial Forex earning to the country and maintaining average turnover of Rs. 20 crores per month from the last one year during the CIRP, with the able assistance/cooperation of the suspended Directors. Apart from that, the 'suspended Directors', in spite of not being paid Salaries/Travel Expenses had extended unstinted support to the Resolution Professional in ensuring that the Corporate Debtor remains an ongoing concern to safeguard the long-term interest of over 300 dedicated clients/1400 committed employees, besides providing indirect employment to over 4000 persons and therefore, in the interest of justice, rather than liquidation of the Company, one may go for a Resolution. 16. In response, it is the submission of the Learne....
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....should reconsider the Appellants Plan and report its decision on 1.10.2019 and that the Appellant submitted a Revised Plan dated 20.9.2019 which was not approved by the 'Committee of Creditors' on 28.9.2019. In reality, only 20.54 per cent of the Committee of Creditors voted in favour of the Revised Plan and 63.02 per cent of the COC voted against it and 12.74 per cent abstained from voting. 11 19. The clear stand of the Respondent is that the Appellant's Resolution Plans (the Plan dated 25.8.2019 and the Revised Plan dated 20.9.2019) were considered and not approved by the 'Committee of Creditors' on 4.9.2019 and 28.9.2019 respectively. According to Section 33(1) of the Code, if an 'Adjudicating Authority' does not receive a Resolution Plan before the expiry of CIRP period, 'an order of Liquidation' can be passed and owing to the expiry of the Respondent's CIRP on 6.9.2019, the Adjudicating Authority had correctly allowed the Resolution Professional's M.A. No.536/2019 in accordance with the mandate and hence the Appeal is liable to be dismissed. 20. The Learned Counsel for the Respondent contends that the Adjudicating Authority had already extended the CIRP by 90 days by vir....
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.... the Trustee of Phoenix Trust FY-16-26), 'Phoenix' preferred a Petition in CP/759(IB)/2018 (under Sec 7 of the I & B Code, 2016) before the Adjudicating Authority(Chennai Bench), under the caption 'Phoenix ARC Private Limited v. St. John Freight System Limited and the said Petition was admitted on 10.12.2018 and that CIRP of 'Corporate Debtors' was initiated. It must be borne in mind that in the present case, the Appellant has not impleaded 'Phoenix' as a necessary and proper party. It transpires that the Appellant earlier filed Company Appeal (AT)(Ins) No.32/2019 dealing with the order dated 10.12.2018 passed by the Adjudicating Authority for initiating CIRP of Corporate Debtors wherein Phoenix was impleaded as the First Respondent and that the said Appeal was dismissed by this Tribunal on 7.5.2019. However, in this Appeal, Company Application No.282/2020 is filed by the Applicant/Phoenix ARC Pvt. Ltd. seeking to implead in the present Company Appeal (AT)(Ins) No.1402/2019 as a necessary and proper party for an adjudication of the issues and because of the reason that the Applicant/Phoenix ARC Pvt. Ltd. figured as petitioner in C.P./759/IB/CB/2019 before the Adjudicating Authority....
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....an of the Appellant was not approved, as per Section 30 of the Code, with the minimum vote of 66% of voting share of the 'Committee of Creditors' and resultantly, the Resolution Plan of the Appellant was rejected as per the I & B Code. 25. The Appellants filed MA No.995/IB/2019 (under Sec 60(5) of the Code), seeking permission of the 'Adjudicating Authority' for reconsideration of the 'Resolution Plan' submitted by it, in the meeting of the 'Committee of Creditors' that took place on 17.9.2019. The Adjudicating Authority, by means of an oral direction dated 17.9.2019, granted opportunity to the Resolution Applicants to present the 'Resolution Plan' before the 'Committee of Creditors' for their reconsideration and on 24.9.2019 (14th meeting of COC of the Corporate Debtor), the 'Committee of Creditors' discussed in regard to the Revised Resolution Plan submitted by the Resolution Applicants whether it conforms with the requirements of the request for the Resolution Plan and that the Committee of Reporters, after deliberations, the Appellant offered some land as 'Security Deposit' and offered to make an additional deposit of Rs.Fifty Lakhs to establish 'Bonafides'. At the end of th....
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....or' can be pushed into 'Liquidation' only if any of the aforesaid circumstances exist and in fact, there is no power available with an 'Adjudicating Authority' to order 'Liquidation' on any other reason. It is to be remembered that under Sec 271(e) of the Companies Act, 2013, power is showered on the 'Tribunal' to order winding up, if in the opinion of the 'Tribunal' it is just and equitable that the 'Company' is to be wound up. But, the I & B Code, 2016 has no such residual ground. Moreover, in a suitable case, an 'Application' can be projected by an 'Applicant' under the relevant provisions of the 'Companies Act, 2013' for a 'just and equitable reason'. 29. It cannot be lost sight of that where no 'Resolution Plan', is approved by the 'Committee of Creditors', an Adjudicating Authority is bound to order 'Liquidation' of a Company. If the time prescribed under Sec 12 of the I & B Code had lapsed, an 'Adjudicating Authority' will pass an 'Order of Liquidation' against 'Corporate Debtor' regardless of whether the management of Corporate Debtor or the Resolution Applicant had enough opportunity to come up with viable/suitable Plan, as the case may be. Notwithstanding the fact that....
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....ral Government to direct by notification in 'Public Interest' that any of the provisions of I & B Code shall not apply to MSMEs or apply to them with such variations as may be mentioned in the notification. 34. It is beyond one's comprehension as to how the Promoters/Employees of the Corporate Debtor without the knowledge of Resolution Professional and that too, after initiation of CIRP coupled with the fact that the management of the affairs of the 'Corporate Debtor' remained in the hands of the Resolution Professional, had secured the Registration Certificate under the Micro, Small and Medium Enterprises Development Act and obviously, the same was obtained only to overcome the ingredients of Sec 29A of the Code. In the instant case, even though one Johnson and Samuel Jefferson (Suspended Directors and ex-promoters of Corporate Debtor) furnished a Resolution Plan before the 'Resolution Professional' claiming to be eligible to submit the said 'Resolution Plan' in lieu of Sec 240A of the I & B Code, in the instant case, the Appellant had failed to deposit a sum of Rs.Five Crores either by 'Demand Draft' or 'Bank Guarantee'. In any event, the Resolution Plan of the Appellant was n....