TaxTMI 
TaxTMI 
2021 (1) TMI 446
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....19 passed by National Company Law Tribunal, Bangaluru Bench (hereinafter referred as 'Adjudicating Authority') in Company Petition No. C.P. (IB) No. 17/BB/2019. In the impugned order Adjudicating Authority have passed the order for liquidation of the Corporate Debtor. 2. The Adjudicating Authority while passing the impugned order dated 8th November, 2019 observed in para 7 and as follows: "....In this regard, it is to be mentioned here that the Resolution Plan submitted by Mr. H.S Bedi is dated 16.09.2019, whereas Section 29A of the code was inserted by Insovency and Bankruptcy Code (Amendment) Act, 2018 w.e.f. 23.11.2017, whereas it is inter-alia declared that a person shall not be eligible to submit a resolution plan, if such person acting jointly or in concert with such person is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under Banking Regulation Act, 1949. Therefore, Section 29A will be applicable to the instant case and thus the rejection of the Resolution Plan of Mr. H.S. Bedi by the COC is not in contravention of the provisions of the Code. However, this order will not preclude Mr. H.S. Bedi to approach the H....
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....hat section 29A(b) of I&B Code prima facie appears to be prospective in nature. 6. Thereafter, COC upon perusal of the said order, unanimously agreed to allow the Appellant to submit his resolution plan. After deliberating and discussing the resolution plan, the COC in its meeting rejected the resolution plan of the Appellant on the following grounds: a) The Appellant is declared as a willful defaulter by SBI, State Bank of Travancore and Oriental bank of Commerce and the same is visible in CIBIL database. b) The resolution plan was not in compliance with the IBC. c) The Appellant did not file affidavit under regulation 39 of the code regarding eligibility of the Appellant under section 29A of the IBC. d) Further, the Appellant had also failed to provide undertaking under regulation 38 of the IBC for payment to Operational Creditors. e) Appellant also failed to provide undertaking that all the information which Appellant had provided with his resolution plan are true and accurate. 7. In view of the above, the COC decided to liquidate the Corporate Debtor as per the provisions of Section 33(2) of the IBC, with 92.63% of the COC memb....
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....uired affidavit. It is pertinent to mention that except for the EOI filed by the Appellant, the RP did not receive any other EOIs. 13. It is further stated on behalf of the Appellant that EOI of the Appellant was not considered on the ground that the Appellant was allegedly declared a willful defaulter by SBI, State Bank of Travancore and Oriental Bank of Commerce and his name further continued to show as a willful defaulter in the CIBIL database. Thereafter, vide email dated 12th July, 2019, COC informed Appellant that his EOI was rejected on the ground that the Appellant is a willful defaulter and therefore, the resolution plan of the Appellant cannot be considered as per section 29A(b) of the IBC. 14. It is further stated on behalf of the Appellant that thereafter, in the sixth meeting of the COC held on 30th August, 2019, the Appellant informed the COC of the order passed in the Writ Petition preferred by the Appellant and upon perusal of the said order the COC unanimously agreed to allow Appellant to submit his resolution plan without issuing Request For Resolution Plant (RFRP) to him as per regulation 36B (3) of I&B Code. In the said meeting RP also tabled the proposal ....
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.... to the financial and operational creditors. Also, the Adjudicating Authority has failed to consider that the fair value of the Corporate Debtor is more than the liquidation value. Submissions on behalf of Respondent No. 1/Financial Creditor 20. Per se, the learned counsel for the Respondent No. 1 submitted that the Appellant had been declared as a willful defaulter in terms of Reserve Bank of India both by Respondent No. 1 bank i.e. OBC and SBI. Pursuant to default in repayment the bank dues, the consortium of banks had filed Original Application (O.A.) proceedings in DRT, Bangalore where consent term was filed and in terms thereof recovery certificate was issued by DRT on 30th October, 2014. The Corporate Debtor and the Appellant had made default in compliance and payment of agreed terms of recovery certificate of DRT. As a result of further measure to resolve the bank dues, Respondent No. 1 viz, OBC filed the Company Petition under section 7 of I&B Code seeking initiation of CIRP. 21. It is also submitted on behalf of the Respondent No. 1 that pursuant to the interim order of High Court of Karnataka dated 23rd August, 2019, COC/RP allowed the Appellant to submit his res....
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....equire any interference, as sought by the Appellant. Submissions on behalf of Respondent No. 2/Liquidator 25. The learned counsel for Respondent No. 2 submitted that EOI in Form G was published by RP on 16th June, 2019, in pursuance of which, the Appellant submitted its EOI on 28th June, 2019 claiming exemption of section 29A (c) & (h) read with section 240A declaring that the Corporate Debtor is a registered MSME. Appellant's EOI was rejected by RP on 26th July, 2019 on the ground that the Appellant had been declared as 'willful defaulter' and his name appears as such on the CIBIL's database. Hence, he was not eligible to be a resolution applicant as per section 29A(b) of I&B Code. It was also informed that the registration of the Corporate Debtor as MSME was obtained by the Appellant on 5th June, 2019, i.e. after CIRP admission order dated 29th March, 2019. The application for registration of MSME by the Appellant was without authorization, being subsequent to initiation of CIRP and hence was invalid. The Appellant had no authority to act on behalf of the Corporate Debtor after the initiation of CIRP, as the management & affairs of the Corporate Debtor are in the hands of t....
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....tion plan on limited parameters, and not a 'rejected' resolution plan is not amicable to challenge before the Adjudicating Authority or before this Appellate Tribunal. The commercial wisdom of the COC in accepting or rejecting a resolution plan is "non-justiciable". (K. Sashidhar v. Indian Overseas bank & Ors., (2019) 12 SCC 150 para 52, 55, 56). Reliance Emphasized. 29. The learned counsel for the Respondent No. 2 further contended that COC applied its commercial wisdom and rejected for extension of time for CIRP. In the present case, the COC having declined to extend the statutory period, the only consequence is that the Corporate Debtor must go into liquidation, as provided by the impugned order. Submissions on behalf of Respondent No. 3 viz. State Bank of India 30. It is submitted by the learned counsel for the Respondent No. 3 that the Appellant is ineligible in view of section 29A (b) & (c) of the I&B Code. There is a clear bar under the proviso to section 30(4) of the I&B Code which provides that the COC shall not approve a resolution plan where the resolution applicant is ineligible under section 29A. Therefore, the impugned order passed by the Adjudicating Authori....
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....f Karnataka, which was placed before the COC which was rejected by the COC on the ground that it did not conform to the requirement of the code being Section 29A (b). The order of the Karnataka High Court only permitted the Appellant to submit its resolution plan to the RP. However, it did not in any way takes away the right of COC to reject the resolution plan on the ground that it is in contravention of the various provisions of law. 34. At this point, this tribunal worth recalls and recollects the decision of Hon'ble Supreme Court in the case of K. Sashidhar v. Indian Overseas Bank & Ors, Civil Appeal No. 10673 of 2018 wherein it is observed as under: "33. As aforesaid, upon receipt of a "rejected" resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC muchless to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history....
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....djudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). [Explanation. - For the purpose of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, any time after its constitution under sub-section (1) of section 21 and before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum.] 37. The above provision clarifies that the commercial wisdom of COC shall not be challenged and it shall be the COC who shall decide whether the resolution plan is feasible or not. COC may at any time but before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum, may take the decision to liquidate the Corporate Debtor. 38. The contention of the Appellant that he was declared a willful defaulter by SBI, State Bank of Travancore and Oriental Bank of Commerce without following the guidelines of RBI is outside the jurisdiction of this Tribunal. The Appellant filed the Writ Petition No. 35567/2019 in the High Court of K....