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2021 (6) TMI 647

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....r of Phoenix ARC Private Limited vis. Sarbat Cotfab Pvt. Ltd. qua which Resolution Plan submitted by the Resolution Applicant (Respondent No. 2 in this appeal) was approved by the Adjudicating Authority. 2. During the consideration of this appeal, M/s Phoenix ARC Private Limited filed application IA No.1661/2020 for joining in this appeal as an intervener. This application was permitted by this tribunal and Phoenix ARC Private Limited was allowed to join this appeal as Respondent No.4 vide order dated 24.7.2020. 3. The brief facts of the case as presented and argued by the parties is that the Resolution Applicant Tejinder Singh Kocher (Respondent No.2) and Bhupinder Singh Mann, suspended Director of the Corporate Debtor Sarbat Cotfab Pvt. Ltd. (Respondent No.3) were partners in two firms, viz. M/s Prabh Films and M/s Prabh International. It is claimed by the Appellant that during the Corporate Insolvency Resolution Process of the Corporate Debtor, Respondent No.2 (who is allegedly a related party of Respondent No. 3 as per Section 29A of the IBC) filed a resolution plan. The Appellant has claimed that being a related party of an erstwhile Director of the Corporate Debtor, Respond....

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....ments showing the fraudulent activities of Respondent No. 3 in disposing off assets of the Corporate Debtor. When the Resolution Professional did not act on this information, the Appellant filed CA No. 787 of 2019 and CA No.788 of 2019 before the Adjudicating Authority on 24.9.2019 placing on record additional facts and information in the form of GST and Income Tax returns of two firms, M/s. Prabh Films and M/s. Prabh International, to show that Respondent No.2 and Respondent No.3 were still partners in the two aforementioned firms. The Adjudicating Authority dismissed both these applications (CA no. 787/2019 and CA no. 788/2019) with liberty given to the Applicant (Appellant) to file appeal in case he is unable to get favourable order in CA No. 492 of 2019. Upon being unsuccessful, the Appellant filed CA No. 850/2019 on 4.10.2019 before the Adjudicating Authority with additional information about the connection between Respondent No.2 and Respondent No. 3. In the meanwhile, as mentioned earlier, the Resolution Professional also filed CA No. 852/2019 placing before the Adjudicating Authority the record of retirement deeds to show that Respondent No.3 Bhupinder Singh Mann had retire....

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....he Resolution Applicant Tejinder Singh Kochar. Therefore, he has not infringed on Section 29A of the IBC while submitting the resolution plan. 12. The Learned Counsel for Respondent No 2 objected to the Appellant filing latest Income Tax returns when the arguments were at final stage on 09.04.2021. We ignore this document of Income Tax Return for the Assessment Year 2020-21, which the Appellant proposed to file. 13. Presenting his arguments, the Learned Counsel for Respondent No. 2 has urged that the Appellant has raised question about the authenticity of the retirement deeds, thereby seeking an enquiry about their correctness, which is not in the purview of Section 29A IBC. He has stated that the Impugned Order dated 8.6.2020 in CA No. 492/2019 approving the Resolution Plan is appealable under Section 61(3) and the Appellant has not made out any case under this provision of the IBC. According to him, the question of eligibility of the Resolution Applicant was raised at an earlier date which was adjudicated upon by the Adjudicating Authority, and since no appeal was preferred against this order, it has achieved finality. Therefore, the issue of eligibility of the Resolution Appli....

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....e been successfully implemented with regard to payment to stakeholders, shareholders, government departments and CIRP cost have been settled. 18. We have considered averments made in the Appeal, replies of the Respondents and the rejoinders of Appellant thereon, written submissions and the oral arguments advanced by the parties. 19. The main issue on which this Appeal rests is whether Respondent No.2 and Respondent No. 3 are related parties as defined under Section 29A of the IBC, and if that were so, was Respondent No.2 eligible to submit a Resolution Plan for the resolution of with regard to the Corporate Debtor? 20. It is noted that while the Resolution Plan was approved by the Committee of Creditors in its meeting held on 14.12.2019 and submitted for approval to the Adjudicating Authority, the Appellant sent communication to the Resolution Professional raising the issue of ineligibility of Respondent No. 2 to submit a Resolution Plan as he was related party to Respondent No.3, the suspended Director of Corporate Debtor. This CA No. 850/2019 was dismissed by the Adjudicating Authority vide order dated 25.02.2020, whereupon the Appellant preferred appeal No. CA(AT)(Ins)1168/20....

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....olution of Corporate Debtor. He has contended that the Respondents have relied upon the Retirement Deeds presented by Respondent No. 2 to show that Respondent No.3 had retired from two aforesaid firms w.e.f. 31.10.2017. 24. Respondent No. 1's claim that the retirement deeds should be accepted as Section 29A of IBC does not envisage any inquiry in the authenticity of retirement deeds is not sustainable because the retirement deeds have been, at the first instance, being disputed by the Appellant and the Appellant has placed documents in the form of GST and Income Tax returns which point towards the discrepancy in the retirement deeds. Moreover, none of the Respondents have disputed the GST and Income Tax returns, which are matters of public record. In the face of these documents the alleged retirement deeds appear suspect. 25. Now coming to the contents of the Income Tax Returns, it is seen that the Income Tax return for the Assessment Year 2018-19 filed by Tejinder Singh Kocher on behalf of M/s Prabh Films (attached at page 136 of the Appeal) include the name of Bhupinder Singh Mann as a partner of Prabh Films (pg. 139 of the Appeal). It is filed on 13.8.2018, much after 31.10.20....

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....so make the authenticity of the two retirement deeds suspect. 30. The judgment of Hon'ble Supreme Court in Arcelormittal India Private Limited V. Satish Kumar Gupta &Ors (2019) 2 SCC I, which has been cited by the Respondent No. 2 does not help Respondent No. 2 in his case since the two retirement deeds are not found authentic and reliable. 31. In the light of the aforesaid discussion, we are convinced by the contention of the Appellant that Tejinder Singh Kocher (Respondent No. 2) and Bhupinder Singh Mann (Respondent No. 3) were connected parties as per Section 29A of IBC at the time the Resolution Plan was submitted by the Respondent No. 2. This leads to the obvious and inevitable conclusion that Tejinder Singh Kocher was not eligible to submit the Resolution Plan and hence the Resolution Plan so submitted and approved by the Adjudicating Authority was bad in law. 32. We pass the following Orders:- (A) The Impugned Order dated 08.06.2020 in CA No.354/2018 in CP(IB) No. 123/Chd/CHD/2017 approving the Resolution Plan is, therefore, set aside. The Resolution Plan is rejected as it was submitted by a person hit by Section 29A of IBC. All actions taken in implementation of the Re....