TaxTMI 
TaxTMI 
2021 (5) TMI 215
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....ssed by the Adjudicating Authority/National Company Law Tribunal, Division Bench, Chennai in IA No. 1001 of 2020 in IBA/1459/2019, whereby the Adjudicating Authority has allowed the Application filed under Section 12 (2) of the Insolvency and Bankruptcy Code, 2016 filed by Radhakrishnan Dharamrajan, the Resolution Professional (RP) and the 1st Respondent herein, excluded the period commencing from 5 May 2020 till 31 October 2020, from the CIRP, to provide the benefit under Regulation 40 C. The original parties status in the Company Petition represents them in this Appeal for the sake of convenience. Brief Facts 2. The Corporate Insolvency Resolution Process was initiated against the Corporate Debtor viz M/S Appu Hotels Limited on 5 May 2020, and Mr Mukesh Kumar Gupta was appointed as Interim Resolution Professional (IRP). After that, IRP made a public announcement on 8 May 2020, and the last date for submission of claims was 21 May 2020. Thereafter, the suspended director of the Corporate Debtor filed a petition before Madras High Court challenging the Order of the Adjudicating Authority/NCLT dated 5 May 2020. By its Order dated 20 May 2020, Hon'ble High Court stayed the ....
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.... (a) The Appellant are equity Shareholders in the 3rd Respondent Company / Corporate Debtor in IBA/1459/2019. By the impugned Order dated 23 December 2020, the Adjudicating Authority (National Company Law Tribunal, Chennai), invoking the power under Regulation 40 C, IBBI (Insolvency Resolution of Corporate Persons) Regulation, 2016, granted a mechanical extension of 179 days from the Corporate Insolvency Resolution Process period without complete exclusion of the timelines and the activities undertaken during the lockdown period to render a considerable benefit to all the Stakeholders. (b) The Petition filed by the Financial Creditor, i.e., the 2nd Respondent herein, was admitted by the Adjudicating Authority on 5 May 2020, i.e. during the lockdown period. Following the same, the Adjudicating Authority appointed the IRP, who invited claims, constituted the Committee of Creditors (CoC); conducted several meetings of the CoC between 22 June 2020 to 12 October 2020, and issued form G on 17 August 2020. After this, the Expression of Interest (EOI) was submitted by the bidders. Despite the Committee of Creditors raising the issue about the value of the Resolution Plan sub....
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.... of the Corporate Debtor including the Appellant herein. The Adjudicating Authority has not applied Regulation 40 C in its true sense while granting time exclusion. It has merely used it as the provision to extend the timeline for the completion of the CIRP. (g) The Appellant contends that the Adjudicating Authority has extended the CIRP timeline under Section 12 (2) of the Code and not by Applications under Regulation 40 C which is fundamentally different from the extension provided under the Code since the former is to protect the interests of all the Stakeholders and hence, it is mandatory to consider the same before granting exclusion. Further section 12(2) of the Code only permits a 90-day extension, whereas Regulation 40 C qualifies for excluding the entire period of inactivity. (h) The Appellant further contends that the Resolution Professional has acted only to recover the bad loans and repay the creditors. The Resolution Professional made no attempts to seek exclusion of the lockdown for re-issuing Form G. Whereas, on the contrary, the resolution applicant proceeded ahead with the entire CIRP Process in full force during the peak of the pandemic where all....
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....e of the 1st Respondent before the Adjudicating Authority that no process could be initiated during the lockdown period. On the other hand, some of the activities could not be completed, which warranted the exclusion. The Adjudicating Authority was satisfied with the material evidence place before it and concluded that such exclusion is required. The grant of time by the Adjudicating Authority cannot be the subject matter of an Appeal. 8. The Appellant has filed the present Appeal, as a minority Shareholder, questioning the impugned Order, which the Adjudicating Authority passed on the Application filed by the 1st Respondent/Resolution Professional, based on the requisite approval of Committee of Creditors to file such an Application. Further, the CoC approved the Resolution Plan with a majority of 87.34%, pending consideration of the Adjudicating Authority. 2nd Respondents Contention 9. Respondent No.2, Tourism Finance Corporation of India, contends that the main contention raised by the Appellant in this Appeal is that by allowing the exclusion of period, the steps taken during that period of Corporate Insolvency Resolution Process should have been excluded, and the enti....
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....n which the Committee of Creditors has approved with a majority of 87.34% which is pending for approval before the Adjudicating Authority. 15. The Appellant's contention about the valuation of the Corporate Debtor of Rs. 1600 crores is unsupported by any evidence. The fact remains that the Resolution Plan amount has arrived after following the procedure prescribed under the Code and the Rules and Regulations made thereunder. 16. It is pertinent to mention that Hon'ble Supreme Court in the case of Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh, (2020) 11 SCC 467: 2020 SCC OnLine SC 67 at page 487 has dealt with the acceptability of Resolution Plan where upfront payment offered under the Resolution Plan was below the liquidation value of the Company. Hon'ble Supreme Court has held that so long the Resolution Plan meets the other requirements and is approved by the Committee of Creditors, judicial review of such decision of CoC is not permitted. Hon'ble Supreme Court has held that though the release of assets of Maharashtra seamless at the value 20% below its liquidation value arrived at by the valuers seems inequitable, the Court ought to cede grounds to the....
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....be published in the Gazette of India, due to the nationwide lockdown declared by the Central Government w.e.f. 25 March, 2020, in the wake of the outbreak of Covid-19. The amendment regulations were, therefore, published on the website of the Board for it to be effective from the 29 March, 2020, with a note that the same shall be published in the Gazette of India as soon as the Government Press accepts the notification for publication. The intention of the Governing Board was to bring into force the amended regulations with effect from the 29 March, 2020. It is certified that, since the amended regulations provide clarity to the stakeholders in regard to the model timeline in the corporate insolvency resolution process, no person is being adversely affected by giving retrospective effect. --- 1 Vide Noti. No. IBBI/2020-21/GN/REG059, Extra., Part III, S. 4, dated 20-4-2020, published in the Gazette of India, No. 156, dated 24-4-2020." 20. Based on the above Regulation, it is clear that the Regulator, the IBBI brought this Regulation to meet the eventualities of the Covid 19 pandemic. It is stated that the period of lockdown imposed by the Central Government in t....
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.... i.e. only to those who have responded to the expression of interest and not to those who have not submitted the EOI. IDBI representative enquired about the timeline available with the exclusion. To this RP replied that if we take the exclusion, the entire 180 days of CIRP is available. He further stated that 330 days is the total timeline but AA needs to be approached after 180 days for extension of CIRP process.--------- With the consensus of COC members, it was decided that no extension of timeline for submission of resolution plan should be done and the RP is directed to expedite the valuation process and check the feasibility and viability of the resolution plan already submitted and present the eligible resolution plans before the COC for consideration." (verbatim copy) 23. On perusal of the minutes of the CoC, it appears that the RP apprised the CoC about the legal options available either to seek an extension of the timeline for submission of Resolution Plan or to make the decision for publication of fresh Form-G. It was the CoC's commercial decision that "no extension of time for submission of Resolution Plan should be done and RP was directed to e....
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....lity and feasibility of the Resolution Plan and had taken such a decision which is pending consideration before the Adjudicating Authority. 28. The allegations that the entire CIRP up to the submission of the Resolution Plan have been completed in undue haste during the complete lockdown when the entire world was suffering from Covid 19 and India had imposed a nationwide lockdown which led to a total shutdown of economic activities throughout the country, cannot be a ground for the Appellant herein to challenge the impugned Order. The fact remains that the Resolution Professional had been conducting the CIRP and has complied with the provision of the Code and the Regulations in this regard. The Appellant cannot be aggrieved by Order of exclusion order passed by the Adjudicating Authority. 29. The mere fact that Regulation 40 C was introduced on 29 March 2020 will not make it imperative for the IRP to invoke Regulation 40 C for extending the timeline as a matter of routine is incorrect. The IRP/RP conducted the CIRP as per the timeline. When required, the Resolution Professional invoked Regulation 40 C and sought exclusion of 179 days while calculating the CIRP period. The all....
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....red to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code(Amendment) Act, 2019.] 31. Hon'ble Supreme Court in case of Kalpraj Dharamshi, Kalpraj Dharamshi v Kotak Investment Advisors Limited 2021 SCC Online SC 204 has clearly held that the commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under section 30 and 31 of the I&B Code. In the above-mentioned case Hon'ble Supreme Court has held; "156. It would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code. 158. It is further to be noted, that after the resolution plan of Kalpraj was approved by NCLT on 28.11.2019, Kalpraj had begun implementing the resolution plan. NCLAT had heard the appeals on 27.2.2020 and reserved the same for orders. It is not in dispute, that there was no stay granted by NCLAT, while reserving the matters for orders. After a gap of....