TaxTMI 
TaxTMI 
2021 (1) TMI 977
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.... b. To direct that Mr. B.C. Ganesh (RIO), who is common witness in all agreements should submit all Bank Statements and Income Tax Returns for last five Financial Years and disclose true identity. c. To direct Axis Bank Limited (R9) to submit notarized stamped affidavit disclosing the relationship between the Axis Bank Limited (R9) and Mr. B.C. Ganesh (R10). d. To direct the Resolution Professional to provide the details of Resolution Plan consideration submitted by each of the Resolution Applicants from first time and every time revised Resolution Plan considerations by all the RAs till the finalization of the successful Resolution Applicant. This may be useful to understand how the successful resolution applicant has changed the consideration by using inside information from the Prudent ARC. e. To direct to all CoC members to submit notarized stamped affidavit declaring that either directly or indirectly during the period of CIRP or three years prior to the CIRP commencement date has no connection with either the MPL or MPL's Directors or MPL Group i.e., any subsidiary or holding or associated company of the MPR or MPL's directors or MPL Group ....
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....nt it is presumed that applicant was H1 bidder. j. To pass such other order(s) as this Adjudicating Authority may deem fit and proper in the facts and circumstance of the case. 2. Brief facts of the present case as stated by the Applicant are as under:- a. That the Applicant has submitted its Resolution Plan as per the Eol and RFRP on 08.04.2019. That RP sent an e-mail dated 03.05.2019 and pursuant to that mail, Applicant had submitted revised Resolution Plan before 5:00 P.M of 07.05.2019. That the RP has sent an e-mail dated 09.05.2019 and Applicant was called for negotiation with CoC. The applicant attended the CoC meeting and clarified all the points raised by CoC. Accordingly, Applicant presumed that it was the H1 Bidder. b. It was found that CoC negotiated with other Resolution Applicants as well contradicting their own e-mail dated 03.05.2019. c. That with reference to e-mails dated 04.06.2019 and 10.06.2019 from RP, the Applicant has revised its Resolution plan and submitted its offer in a sealed envelope on 15.06.2019. That Applicant has further submitted its revised Resolution Plan in a Sealed Cover before 5:00 P.M on 25.06.2019. ....
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....nal decision should be taken." h. That the Rl, was pre-determined to declare H2 as the successful Resolution Applicant due to the following reasons: i. That there are common Directors and Group Companies of the Successful Resolution Applicant: Details of Directors between the M/s. Mahalakshmi Profiles Private Limited, Successful Resolution Applicant, (R7) and MPL Steel Industries Private Limited are as under: S. No. Names of the Directors on M/s.MAHALAKSHMI PROFILES PRIVATE LIMITED Names of the Directors on M/s.MPL STEEL INDUSTRIES PRIVATE LIMITED 1 VINOD KUMAR AGARWAL VINOD KUMAR AGARWAL 2 RAMNIRANJAN AGARWAL RAMNIRANJAN AGARWAL 3 LAX MI LAVANYA KORINI In view of the above, both the companies i.e., M/s. Mahalakshmi Profiles Private Limited and M/s. MPL Steel Industries Private Limited are group companies under the same management. ii. Common witness between the MPL steel Industries Ltd, Axis Bank Ltd, IFCI Ltd, Prudent ARC Ltd and ARCIL: a. That the Memorandum of Deposit of Title Deeds executed between the MPL Steel Industries Private Limited and Axis Bank Ltd on 25.01.2019....
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....he Applicant was informed regarding the inter-se bidding process for the purpose of price discovery and maximisation of value of assets of the Corporate Debtor. The minutes of the 8th CoC meeting dated 26.06.2019, clearly establishes that the Applicant herein had participated in the inter-se bidding process proposed by the members of CoC. The Applicant herein had backed out/withdrawn after the bid of Rs. 42.96 Crores made by R7, the successful Resolution Applicant. Therefore, the CoC members have in due compliance with the process of inter-se bidding shortlisted the R7 as the successful Resolution Applicant. c. The contention of the Applicant that the R1 is in collusion with R7 since one of the employees of R7 i.e., the R10 has signed as a witness to the Assignment Agreements entered between the R1, R2 and R3 is totally misconceived. The R10 has signed the Assignment Agreements as a witness and not as an authorised representative of any party. The mere act of signing as witness by R10 in no way can determine or establish collusion between two different entities. d. In Smt. Chandrakantaben Etc vs. Vadilal Bapalal Modi & Others, the Hon'ble Supreme Court held th....
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....ions of the Applicant. c. That the Successful Resolution Applicant is not a related party to Corporate Debtor. The Applicant has not proved or averred that the successful Resolution Applicant is a related party as per provisions of Section 29(A). Since the Applicant is not a related party to the Corporate Debtor as provided under section 29(A), acceptance of its highest bid by CoC is in accordance with the law. Thus the contention of the Applicant is not tenable. d. That the Applicant has been given an opportunity to participate in the inter se bid and the inter se bid is valid for maximising the asset value of Corporate Debtor under CIRP. Applicant has not made out any case nor submitted the proof of violation of the provisions contained in Section 30(2). e. That the Applicant cannot compel the CoC to accept its bid only, when its bid is lesser than the competitive bid offered by the Successful Resolution Applicant. f. That the Committee of Creditors approved the Resolution Plan as per Section 30(4) of IBC Code, 2016 and as such the Resolution Plan is validly approved by the CoC within the parameters of IBC Code. Thus the contention of Applicant....
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.... 37.71 37.71+0.25 37.96 37.96+0.25 38.21 38.21+0.25 38.46 38.46+0.25 38.71 38.71+0.25 38.96 38.96+0.25 39.21 39.21+0.25 39.46 39.46+0.25 39.71 39.71+0.25 40.21 40.21+0.25 40.71 40.71+0.25 40.96 40.96+0.25 41.21 41.21+0.25 41.46 41.46+0.25 41.71 41.71+0.25 41.96 41.96+0.25 42.21 42.21+0.25 42.46 42.46+0.25 42.71 42.71+0.25 42.96 Backed out/withdrawn e. That from the above table, it is clear that the Applicant and R7 both have participated in the inter-se bidding. Once the bidding was over, 100% CoC members voted in favour of the highest bidder i.e., R7. f. That Mr. B.C. Ganesh was just a part-time employee as on 13.12.2019. He had joined MPPL on 01.03.2008 and had retired as full-time employee on 01.03.2018. Till he was a full-time employee of MPPL, PF contributions w....
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....licant. d. That the Resolution Professional along with CoC members have met with Mahalakshmi Profiles Limited, another PRA, to understand the background and credentials of the Resolution Applicant, as to how the Resolution Plan is going to help the Company, improvement on the Resolution amount and on the availability of the funds, which was accordingly conducted. e. That at the 6th Meeting of CoC held on 16.05.2019 and 7th Meeting of COC held on 21.06.2019, the COC members inter-alia, took note of the discussions on the Resolution Plan submitted by Vinayak Steels Limited, wherein the amounts proposed in the Resolution Plans as submitted by the three PRAs were compared.lt was seen that Vinayak Steels Limited, had submitted a bid of Rs. 30.20 Croes, Somani Ispat Pvt Ltd. had submitted a bid of Rs. 21.50 crores and Mahalakshmi Profiles Pvt Ltd had submitted a bid of Rs. 28.11 Crores and that the evaluation matrix scores obtained were 89, 57 and 87 points, respectively. Further, the Resolution Professional placed a cover before CoC received from Mahalakshmi Profiles Pvt Ltd., just before the commencement of the meeting, which was opened in front of the CoC and the bid....
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....had sought declaration to disclose interest, if any with respect to prospective Resolution Applicant, to which a member of the CoC, Prudent ARC Limited had objected stating that the disclosure is bad in Law and also noted that the CoC and RP is running the CIRP process in a highly transparent process and also that the Resolution Applicant could approach this Adjudicating Authority in case of any such grievance. h. It was also discussed that the Resolution professional has received one sealed cover each from two Resolution Applicants and that the Resolution Professional offered opening of the sealed covers in the CoC meeting. That the CoC's opinion was also sought, to which the Prudent ARC Ltd has expressed to seek consent of both the Resolution Applicants to participate in inter-se bidding and that the bids shall be opened only after taking the declarations from both the Applicants agreeing for inter-se bidding. That the bid covers shall be opened in front of the Applicants and the bid amount shall be increased by a minimum slab of Rs. 10 Lakhs each time by each Resolution Applicant. i. The Resolution Professional called the representatives of both the Applica....
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....m the Legal Advice / opinions as sought from the Advocates, including the statutory compliances under the Code. p. That there was no aspect of pre-determination of any Resolution Applicant as Successful Resolution Applicant at any point of time and only upon the last inter-se bidding, the HI Bidder was declared as Successful Resolution Applicant and it is also submitted that, Vinayak Steels Limited did not submit the final bid amount after the inter-se bidding and did not participate in the CoC meeting pursuant to it. q. Reiterating above, Ld. Counsel for the RP prayed to dismiss the Application. 7. Counsel for R9 filed counter inter-alia stating as under: a. That the instant Application before this Adjudicating Authority is between the other parties and the Axis Bank is not a necessary party in relation to the disputes. b. That the R9 Axis Bank has no knowledge and is not aware of the various averments made by the Applicant. The only averment pertaining to the Respondent No. 9 is that memorandum of deposit of title deeds executed between MPL Steel Industries Pvt. Ltd and Axis Bank Ltd on 25th January 2019, contains the signature of Mr. B.C. G....
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.... R7 Company in May 2018 while the subject documents of the above Company Application were executed and registered in the year 2019. 10. Counsel for the Applicant filed written submissions, inter-cilia, stating as under:- a. That the R7 has not mentioned any specific reason in the first for increase of Resolution Plan consideration from Rs. 9.95 Cr to Rs. 24.11 Cr. immediately without any open bidding process which has been an increase in price by 142.31% i.e., Rs. 14.16 Crores making the offer 242.31% of the initial Resolution Plan consideration offered by them. b. That the R7's have given an explanation that subsequent to identification of a Railway track available to Corporate Debtor, which was seen on factory visit and nowhere mentioned in the information Memorandum, they revised the Resolution amount to Rs. 28.11 Cr on 27.05.2019. However, the explanation given by the Resolution Applicant is completely wrong. The reasons are as under: i. The R7 has not mentioned any reasons for increase of the Resolution Plan consideration. ii. The Respondent7 has submitted two more times revised Resolution plans without the consent of Resolution Profe....
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....ofessional (R8), the following are the details of date wise Resolution Plan consideration: Sl. No. Date of Resolution Plan Vinayak Steels Limited Somani Ispats Pvt Ltd Mahalakshmi Profiles Pvt Ltd 1 8th April 2019 22.40 15.21 9.95 2 7th May 2019 27.00 18.18 24.11 3 27th May 2019 28.11 4 15th June 2019 30.20 21.51 28.11 g. That from the above the following points are veiy clear which deviated the total CIRP process by RP & CoC members: i. That the Applicant is H1 for four (4) times. The successful bidder has failed for four (4) times to became H1. That it is clear that they had the information about the H1 bidder and before or during the CoC meeting they have revised their bid more than H1 bidder to become H1. They have got the information about the H1 bid price through someone who knows the Resolution Plan Consideration i.e., either RP or any of the CoC members. Subsequently Applicant have understood that this is the ....
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.... the sealed covers submitted by Vinayak Steel Limited and Mahalaxmi Profiles Pvt. Ltd were opened by CoC on 26.06.2019 and the Applicant was H1 at 37.21 Cr and the Mahalaxmi Profiles Pvt Ltd had placed a bid of Rs. 34.11 Cr. n. That it is evident that Prudent ARC was interested in voting in favour of Mahalaxmi Profiles even if it had submitted conditional Plan and had not submitted any proof of availability of the funds/ source of funds. All actions of Prudent ARC at various stages of the Resolution process clearly indicate its interest in the Resolution Applicant i.e., Mahalaxmi Profiles Pvt Ltd. & Reiterating above, Applicant prayed to allow the Application as prayed for. 11. Heard both the sides and perused the record. 12. The instant application has been filed by one of the Resolution Applicants, who was H1 when the bids were opened, but for maximisation of value, the CoC wanted inter se bidding between H1 and H2 bidder M/s. Mahalakshmi Profiles Pvt. Ltd. On the inter se bidding, however, the Applicant backed out and withdrew at a point when it was at H2 position and the other Resolution Applicant namely M/s. Mahalakshmi Profiles Pvt. Ltd. was at H1 position. Con....
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.... 15. It is further pertinent to note here that according to the provisions of S. 5(25) of the Code, a resolution applicant has been defined as under: "(25) "resolution applicant" means a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of section 25". 16. Thus any person, either singly or jointly with any other person, may submit a resolution plan pursuant to an invitation published by the resolution professional. However Section 29A of the Code excludes certain persons from being eligible to be a Resolution Applicant: "29A. A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person- (a) is an undischarged insolvent; (b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949; (c) has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing ass....
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....terest Act, 2002; or (C) an Alternate Investment Fund registered with the Securities and Exchange Board of India." 17. Since the Applicant has not brought on record any fact or evidence to show that the successful Resolution Applicant falls within any of the categories of the ineligibile persons under Section 29A of the Code, the prayer made for declaring the successful Resolution Applicant as ineligible cannot be acceded to and is therefore negated. 18. The Applicant's prayer for passing an order to consider its Resolution Plan with the consideration for Rs. 27.00 Crores when it was the H1, is against the one of the prembled objectives of the IBC 2016, namely "maximisation of value" of stressed assets for resolving insolvency. In fact, the Applicant itself has been submitting revised Resolution Plans for Rs. 30.20 Cr. on 15.06.2019 and for Rs. 37.21 Cr. on 25.06.2019 respectively. Further, the Applicant also participated in inter se bidding with the successful Resolution Applicant wherein the Applicant itself made a bid for Rs. 42.71 Cr. It withdrew only after the successful Resolution Applicant made a bid for Rs. 42.96Cr. Therefore, seeking a direction to consider it....
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....f a question of law arises out of such order. In para 79 of the order, Hon'ble Supreme Court held as under: "79. Given the timeline referred to above, and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudicating Authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution Professional may only invite fresh resolution plans if no other resolution plan has passed muster." In JMF ARC vs. Welldo Holdings and Export Pvt Ltd (Company Appeal (AT) No. 134/2019) Hon'ble NCLAT made it clear that no Interlocutoiy Applications before the Adjudicating Authority would be maintainable during the period of submissions of a CoC approved Resolution Plan by the RP before the Adjudicating Authority for final determination of that proposed CoC approved Resolution Plan. Even after determination of the Resolution Plan by the Adjudicating Authority, no IAs w....