TaxTMI 
TaxTMI 
2020 (10) TMI 739
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....filed under Section 60(5) of the IB Code, 2016 by the Unsuccessful Resolution Applicant, inter-alia, praying as under: a. To direct the Resolution Professional to call for a meeting of the COC and to further direct the COC to invite the Applicant to the said meeting to discuss, negotiate and finalise the last revised bid submitted by the Applicant for the purpose of deciding the successful resolution applicant keeping in view the object and the provisions of the Code. b. No order approving any resolution plan approved by COC at its meeting held on 21.02.2019 may be passed by this Hon'ble Adjudicating Authority till the disposal of the instant application filed by the Applicant herein. 3. The Application bearing IA No. 759/2019 in IA No.166/2019 is filed under Section 60(5) of the IB Code, 2016 by the same Applicant i.e., M/s. Amaravathi Textiles Private Limited, inter-alia, praying as under: a) To direct the Respondent No. 2 to provide the source from which it got the information regarding the additional property / assets being available, the manner in which information was received by Respondent No.2, basis on which the offer made by Respondent No....
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.... suggested that the Applicant may submit its Revised Resolution Plan if deemed fit. f. Based on the deliberations that took place on 23.01.2019 the Applicant herein/Resolution Applicant revised the Resolution Plan and the same was submitted to the Resolution Professional on 04.02.2019. g. Later, on coming to know that, the COC is likely to evaluate the Resolution Plans at the meeting which was scheduled to be held on 11.02.2019, the Applicant herein on the same day addressed an E-mail to the Resolution Professional which reads as under: "Dear Sir, We understand that you along with COC members and Corporate Debtor are evaluating the Revised Resolution Plan to finalise the Bid. We once again express our sincere thanks for the kind cooperation extended to enable us to submit Revised Resolution Plan. In this regard, on finalization of Evolution Matrix, please provide us an opportunity for negotiation and also to improve our bid offer in comparison with that of other Bids received. Thanking You, For Amaravathi Textiles Private Ltd.," h. That the Applicant herein was not invited to the COC meeting 11.02.2019....
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....Resolution Professional informed the Applicant herein that M/s. Kamini Metalliks Private Limited has been declared as the successful resolution Applicant as they have revised their bid of Rs. 57.15 Crores to the Financial Creditors. n. From the above sequence of the events it is absolutely surprising as to when the Applicant herein has submitted the revised bid on 19.02.2019 for Rs. 52.68 Crores to the Financial Creditors which was circulated by the RP immediately for their consideration, how M/s. Kamini Metalliks Private Limited being the other resolution applicant submitted a revised bid for Rs. 57.15 Crores when its earlier bid was for Rs. 49.50 Crores by making enhancement of a sum of Rs. 7.65 Crores. o. It is pertinent to note that prior to the submissions of the revised bid by the Applicant for Rs. 52.68 Crores to the Financial Creditors there was a difference of Rs. 9 Crores between H1 i.e. KMPL and H2 i.e. ATPL/ Applicant. p. The original bid of the Applicant was for Rs. 40.40 Crores and that of KMPL for Rs. 49.50 Crores. q. It defies any logic as to why a bidder who emerged as H1 with a difference of Rs. 9 Crores over H2 would all of a s....
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....tted that no applicant either the successful applicant or unsuccessful applicant were invited for CoC meeting on 11.02.2019 during which H1 bidder was declared. e. That M/s. Amaravathi Textiles initially gave a proposal offering Rs. 60 Crores as plan value while offering Rs. 40.40 Crores for the asset. Having come to know that he is not in the race any further, applicant went on enhancing his offer suo motu. f. That on 21.02.2019 at 8 pm. M/s. Amaravathi Textiles once again sent one more mail proposing to enhance their offer for the assets to Rs. 60.5 Crores while the plan value was for Rs. 92.61. But by the time the last CoC meeting was over. On 22.02.2019, the H1 bidder paid Rs. 2 Crores by way of DD and after receipt of the said DD, the RP filed IA No. 173 of 2019 for approval of Resolution Plan by the Hon'ble Adjudicating Authority. g. That the applicant having lost in the competition, as an afterthought started levelling allegations against the RP and the CoC on the premise that the entire CIRP process is lacking transparency. h. That the representative of M/s. Amaravathi Textiles while sending mail to the RP also marked copy of the same....
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....as misplaced its reliance on the observations of Hon'ble NCLAT in the case of Rajputana Properties Put. Ltd. V. Ultra Tech Cement Ltd. & Ors., (LA No. 594 of 2018 in Company Appeal No. 188 of 2018) dated 15.05.2018 to contend that every Resolution Applicant has the right to attend the meeting. vi. That the CoC has considered the plan of the Applicant and thereafter, as per evaluation matrix, it's plan was declared as H2 and hence non-attendance to the meeting where the Resolution Plans were discussed and outcome of evaluation matrix was declared is not significant or in violation of any provisions of law when CoC has considered the plan submitted by the Applicant as a Resolution Applicant. It is further clear from the minutes of CoC meeting dated 11.02.2019 that even the representative of Successful Resolution Applicant was invited / called to the meeting only after declaring it as the H1 and not before that. vii. That nothing in law prevents the H1 bidder to improvise its Plan Value till the last minute / time it was accorded final approval by CoC: viii. That on 17.02.2019, the RP vide e-mail circulated the Agenda for the 15th CoC meeting to be h....
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....the Tribunal once it is rejected by CoC and also upholding the principle of commercial wisdom of CoC in doing so. b. In the case of Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors., AIR 2018 SC 5646, the Hon'ble Supreme Court while holding that given the timelines and given the fact that a Resolution Applicant has no vested right that his Resolution Plan be considered, also held that no challenge can be preferred to the Adjudicating Authority once CoC does not consider any Resolution Plan due to its feasibility and calls for fresh proposals. xiii. That in view of the above discussion, the following points emerge: a. After detailed evaluation and examination of Plans submitted by two Resolution Plans, the CoC has declared KMPL as H1 bidder and thereafter continued to engage in discussions with KMPL alone for improvisation and modifications in its Plan under Regulations 39(2) of CIRP Regulations: b. Non-participation in the 13th CoC meeting dated 11.02.2019 by the Applicant is not a violation of any of the provisions of law since the meeting was not to determine the eligibility of Resolution Applicants but to consider their plans and....
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....ry, 2019 it was only at the 13th COC meeting that the discussions on the final short listed plans of the Applicant and Respondent No. 2 took place and Respondent No. 2 was declared as the H1 bidder. c) That since there was no official communication by the Resolution Professional regarding the fate of the Resolution Plan submitted by the Resolution Applicants, the Applicant herein submitted its revised Resolution Plan dated 18.02.2019 vie email dated 19.02.2019 at 12.56 p.m. The Meeting of the COC was proposed to be held on 21.02.2019 having agenda of discussing and approving the Resolution Plan. On becoming aware of the revised offer of the Applicant herein, the Resolution Professional and the members ofCOC informed Respondent No. 2 about the revised plan value due to which Respondent No. 2 also revised its Resolution Plan by increasing the bid from Rs. 85.29 Crores to Rs. 98.15 Crores and submitted the same on the eleventh hour i.e. on the date of the meeting of the COC i.e. on 21.02.2019 morning. The Applicant herein submitted its final bid on 21.02.2019 which was not considered by the Resolution Professional and the members of COC inspite of the value being offered to t....
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....cluding the Applicant herein. This has obviously put the other Resolution Applicants in the disadvantageous position. Had this information been available to the other Resolution Applicants, they would have also given the Resolution Plans based on the complete information. It clearly indicates the non-compliance of the code by the Resolution Professional. g) That Respondent No. 2 was able to secure information relating to the additional properties on its own while such information was not provided by the Resolution Professional. The RP is required to collate and collect all the information bearing an effect in the Resolution Plan and include the same in the Information Memorandum and deliver the same to the Applicants who have submitted its expression of interest. As per the arguments on 23.08.2019, it appears that it isRespondent No. 2 which secured such valuable information on its own. h) That the Respondent No. 2 has improved its bid at the eleventh hour based on the information that there will be additional assets leading to enhanced valuation means that the valuation that is conducted by the Resolution Professional earlier is wrong and incorrect. Though the in....
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....00% majority approved the Plan of R2 and advised the RP to file petition for approval of the same. The petitioner is taking different stands on different occasions for same facts. The petitioner alleges that the RP & COC leaked and informed R2 about its revised plan due to which R2 enhanced his offer. The petitioner alleges leakage of information by the RP and COC whereas the Petitioner themselves have sent a mail to RP seeking details of the R2's plan and asking for split of the amounts offered by R2. The Resolution Professional replied stating that he is a third party to the transaction and information cannot be revealed. d) That the RP declared all the assets owned by the Corporate Debtor in the Information Memorandum which was made available to all the resolution applicants. That the applicant never sought any clarification on any of the assets mentioned in the Information Memorandum,however the RP while clarifying to the R2 on the issues connected with Bhubaneswar property, shared the same contents to the petitioner too vide mail dated 28.12.2018. e) The petitioner who tried to grab the properties for a song, one who quoted Rs. 156 crore as the plan value....
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....provisions of the code but also failed to communicate to the Applicant about the declaration of Respondent No. 2 as the H1 bidder and that the COC shall be negotiating with H1 bidder viz. Respondent No. 2 only for finalization of Resolution Plan and that the Resolution Plan submitted by the Applicant stands rejected. b. That the Resolution Professional in the instant counter has stated that the entire CIRP has been conducted in fair and transparent manner but from the abovementioned facts it is evident that the Resolution Professional has failed to comply with the provisions of the Code in inviting the Resolution Applicants in the Meeting of the COC wherein the Resolution Plans submitted by them were proposed to be discussed. The fraudulent intention of the Resolution Professional is clearly evident by not giving an opportunity to the Applicant herein to put forth, negotiate and discuss its Resolution Plan with the members of COC and give a chance to improve the offer. The Resolution Professional and the Respondent No. 2 were hand in glove and the Resolution Professional was so adamant that he neither communicatedto the Applicant herein about declaration of Respondent No. ....
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....the admitted fact that a revised Resolution Plan was submitted suo motu by the applicant herein to RP, after the RP had already submitted IA No. 173/2019, inter-alia, seeking approval of this Adjudicating Authority to the Resolution Plan approved by the CoC in terms of section 30(4) of the Code. 16. Be that as it may, as per the provisions of IBC, 2016 once a CIRP application is admitted, it is the duty of RP to constitute CoC and thereafter publish EoI, Information Memorandum and Evaluation Matrix on the basis of decisions taken in CoC meetings. Thereafter, upon receipt of EoI by potential Resolution Applicants, various Resolution plans are examined by the RP and all the compliant Resolution Plans are put up before the CoC for deliberations about each of those plans for considering their feasibility and viability. In this regard, it is pertinent to note here that under the provisions of the Code, the commercial wisdom of the CoC has been given paramount status without any judicial intervention. As has een categorically held by Hon'ble Apex Court in K.Shashidhar vs. Indian Overseas Bank & Ors. (2019)..... "There is an intrinsic assumption in the framework of the Code that th....