TaxTMI 
TaxTMI 
2021 (2) TMI 839
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....09/KOB/2019 in the matter of Palm Lagoon Backwater Resorts Private Limited seeking the following reliefs: - i) That this Hon'ble Adjudicating Authority may be pleased to pass an order to liquidate the Corporate Debtor or such other order as may be desired in view of the fact that RA is not willing to implement the approved resolution plan. ii) That in the event of this Hon'ble Adjudicating Authority deciding to liquidate the company, to pass an order appointing Mr. R. Velu, Resolution Professional, to act as liquidator of the company on remuneration of Rs. 2,00,000/-plus GST plus actual expenses. iii) To pass an order directing the Resolution Applicant (Respondent 1) to pay Rs,1,00,000/- as remuneration to Chairman (Applicant/Petitioner), Monitoring Committee, as per the agreed terms. 3. The brief facts leading to this MA are as under: The Assets Reconstruction Company (India) Limited filed an application under Section 7 of the IBC before the NCLT, Chennai Bench where the same was numbered as C.P. (1B) 1312 of 2018. After the constitution of the NCLT, Kochi Bench, the said case was transferred to this Bench and renumbered as TIBA/9/KOB/2019. This Bench admitted the ....
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...., but the Resolution Applicant did not revert. Again on 21.10.2020 the Chairman sent an e-mail to Financial Creditor and Resolution Applicant to arrive at a conclusion on payment terms of the approved plan. 6. However, the Resolution Applicant sent an e-mail on 23.10.2020 seeking withdrawal of the Resolution Plan approved by this Tribunal stating that the Reserve Bank of India denied permission for the Resolution Plan as the Resolution Applicant did not conform to the guidelines laid down for Asset Reconstruction Companies. They demanded the refund of performance guarantee of Rs. 25,00,000/- paid by them. 7. The Monitoring Committee held its 2nd meeting on 30.10.2020 through video conference, and after detailed discussions and deliberations the Monitoring Committee resolved as under: - a). In view of non-payment of plan value, there is default in complying with the approved Resolution Plan. Financial Creditor said that as per the provisions of RFRP performance guarantee of 25,00,000/- (Twenty-Five Lakhs Only) to be forfeited. Financial Creditor also pointed out that the RA has never indicated that they were not inclined to implement the plan since the same was approved. Even in....
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....or is violative of a recent RBI order disallowing equity infusion by an Asset Reconstruction Company. 11. The Applicant further stated that it did not submit a Performance Security under Regulation 36A(4A) of the 1BBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. However, the COC in its 1st meeting held on 19.08.2020, unilaterally converted the Process Participation Deposit submitted by the Applicant along with the Eol into a performance guarantee by passing the following resolution: - "5. Discussion on Performance Guarantee As per Clause 1.20.1 of RFRP the COC has got power to treat EOI deposit as Performance Guarantee. The RA has already EOI deposit of. Rs. 25,00,000/- by transferring to the bank account maintained by the CD. It was decided by the COC to treat this amount as Performance Guarantee instead of asking for fresh deposits/guarantee" The CoC passed the above resolution on a completely false understanding of its powers and that the CoC did not have the power to convert an "EoI deposit" into a "Performance Guarantee" under clause 1.20.1 of the Request for the Resolution plan, which is as under: - "1.20.1 Performance Guarantee The....
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....h 100% equity infusion. It is necessary that a complete equity restructuring of the Corporate Debtor was essential to enable the effective enforcement of the Resolution Plan. However, post the submission of the Resolution Plan by Applicant, the Reserve Bank of India (RBI) has rejected a Resolution Plan submitted by UV Asset Reconstruction Company Limited (UVARC) in the matter of Aircel Limited. The Resolution Applicant is a similarly situated Asset Reconstruction Company and it understands that the Resolution Plan of UVARC also involved equity infusion in Aircel Limited and the same was rejected by the RBI on the ground that equity infusion by an Asset Reconstruction Company is not allowed by the SARFAESI Act, 2002 as the guidelines of SARFAESI Act is the governing law of such entities. It is further stated that the Applicant also understands from industry sources that the RBI has even threatened to cancel the registration of UVARC on account of the same. It is also stated that the Applicant was not aware of the proceedings pending before the RBI against UVARC at the time of approval of the Resolution Plan by the COC. 14. On coming to know of the above case, the Resolution Applica....
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....iction prescribed under the I&B Code, 2016. There is no specific provision in the I&B Code,2016 which permits the withdrawal from the Resolution Application. In fact, the National Company Law Appellate Tribunal, in the case of Committee of Creditors of Educomp Solutions Ltd. v. Ebix Singapore Pte Lid. and Anr (Company Appeal(AT)(Insolvency) No. 203 of 2020, has specifically observed that, when the Resolution Applicant had accepted the conditions of the Resolution Plan especially keeping in mind the ingredients of Section 25(2) (h) of the Code to the effect that no change or supplementary information to the Resolution Plan shall be accepted after the submission date of Resolution Plan, then it is not open to the Resolution Applicant to lake a topsy turvy stance and is not to be allowed to withdraw the approved Resolution Plan. 19. It is further stated that as per Section 74 of I&B Code 2016, the Resolution Applicant is liable to be punished on contravention of any of the terms in the Resolution Plan or one who abets such contravention. FINDINGS 20. Heard the learned counsel for the parties and considered their verbal and written submissions in the backdrop of facts and circumstan....
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....Section 31 of the I&B Code by the Resolution Professional, the Adjudicating Authority approved the Resolution Plan of M/s. Invent Asset Securitisation & Construction Private Limited. Therefore, upon the approval of the Adjudicating Authority, the 'Resolution Plan' of the Resolution Applicant would be binding on all the parties and that the application for withdrawal filed by the 'Resolution Applicant' at this late stage stating that the Reserve Bank of India denied permission for the Resolution Plan as the Resolution Applicant did not conform to the guidelines laid down for Asset Reconstruction Companies and the Resolution Plan is in direct contravention of the law laid down by the RBI in UVARC-Aircel matter respectively, cannot be accepted. 24. Section 29-A of the I&B Code clearly states that who are the Persons not eligible to be a Resolution Applicant: - 1[29A. Person not eligible to be resolution applicant. --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....
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....ed that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from imprisonment: Provided further that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;] (e) is disqualified to act as a director under the Companies Act, 2013; 6[Provided that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;] (f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets; (g) has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code; 7[Provided that this clause shall not apply if a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a resolution plan appro....
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.... the Financial Action Task Force Standards and is a signatory to the International Organisation of Securities Commissions Multilateral Memorandum of Understanding; (c) any investment vehicle, registered foreign institutional investor, registered foreign portfolio investor or a foreign venture capital investor, where the terms shall have the meaning assigned to them in regulation 2 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 made under the Foreign Exchange Management Act, 1999 (42 of 1999); (d) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (e) an Alternate Investment Fund registered with the Securities and Exchange Board of India; (f) such categories of persons as may be notified by the Central Government.].] 25. Here the only question to be answered is whether a Resolution Plan approved by the Adjudicating Authority can be recalled and an order of Liquidation be passed? 26. In the matter "Committee of Creditors of Educomp Solutions Lt....