TaxTMI 
TaxTMI 
2021 (6) TMI 989
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....pecial Bench, Mumbai) by the impugned order dated 01.03.2021 allowed the Application of Gangamai Industries and Constructions Ltd. (GIACL) I.A. No. 1029 of 2020 in CP (IB) 2056/MB/2019,whereby the decision of CoC accepting the Expression of Interest (EOI) of Dwarkadhish Sakhar Karkhana Ltd. (DSKL) after due date, was set aside and deprecated the conduct of Resolution Professional (RP) Pankaj Joshi. Therefore, they have filed these Appeals assailing the order. Both the Appeals are disposed of by this common Judgment. 2. Brief facts of the case are that, on 10.10.2019 the Adjudicating Authority passed an order in CP (IB) 2156/MB/2019 filed by Canara Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), thereby initiated CIRP of the Corporate Debtor 'KGS Sugar and Infra Corporation Ltd'. Accordingly, by the admission order, moratorium in terms of Section 14 of the IBC was declared and one Mr. Balady S. Shetty was appointed as the Interim Resolution Professional (IRP). The CoC in its first meeting, appointed Mr. Balady S Shetty as Resolution Professional. Mr. Shetty published the invitation of expression on 18.01.2020, wherein the last date for submission of EOI was 1....
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....nce of Mr. Amit Jaste, Counsel for DSKL and matter was reserved for orders. Ld. Adjudicating Authority, vide impugned order dated 01.03.2021, allowed the Application and resultantly the CoC decision in accepting the EOI of DSKL after due date and including it in the list of Prospective Resolution Applicants is set aside and the list of Prospective Resolution Applicants prepared by Mr. Shetty (RP) on 06.03.2020 is held to be valid. In the impugned order, Ld. Adjudicating Authority has strongly deprecated the conduct of RP 'Mr. Panakj Joshi'. 6. Being aggrieved with this order, DSKL and Mr. Pankaj Joshi have filed these Appeals. 7. Ld. Counsel appearing on behalf of Pankaj Joshi (R-1, in CA (AT) (Ins) No. 233 of 2021 and the Appellant in CA (AT) (Ins) No. 333 of 2021) submitted that Section 60(5) of the IBC is a residuary provision, conferring exclusive jurisdiction upon Adjudicating Authority to entertain or dispose of any Application on proceedings by or against the Corporate Debtor or Corporate persons. It does not invest the Adjudicating Authority with jurisdiction to interfere before the quasi-judicial determination is made, under Section 31 of the IBC. The Supreme Court i....
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....te Tribunal in the case of Arecelor Mittal India Pvt. Ltd. Vs. Abhijit Guhathakurta (2019 SCC Online NCLAT 920 Para 10). He submitted that, I.A. No. 1029 of 2020 was filed without impleading DSKL and without affording an opportunity of being heard, the impugned order has been passed. The Ld. Adjudicating Authority erroneously held that DSKL is not a necessary party to the Application for the reason that, GIACL has not sought any relief against DSKL. However, there is direct impact on DSKL while allowing the relief prayed in the Application. Therefore, a reasonable opportunity of hearing is necessary without giving such opportunity, the impugned order passed, which is bad in law. He submitted that in the 9th meeting of CoC Mr. Pankaj Joshi had tabled the agenda for allowing DSKL to submit its Resolution Plan. In the said meeting, Mr. Pankaj Joshi made full disclosure of facts, as well as the previous Resolution passed by the CoC which rejected the request of DSKL to submit EOI. The CoC after considering all facts and factors unanimously decided in the interest of maximization of asset value. The Ld. Adjudicating Authority erred in holding that the action of Mr. Pankaj Joshi and the ....
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....us, the impugned order is liable to be set aside. 9. Per contra, Ld. Counsel appearing on behalf of GIACL raised a preliminary objection that DSKL has suppressed the material facts that on 09.07.2020 Mr. Amit Jaste Counsel for DSKL was present and heard at length by the Adjudicating Authority, as mentioned in the order sheet dated 09.07.2020. However, DSKL has not challenged that order. Therefore, DSKL now cannot plead that it was not heard and no opportunity had been given, whatever written in the order sheet dated 09.07.2020 cannot be questioned. It is settled principle that the statement of facts transpires at the hearing recorded in the Judgment of the court are conclusive of the fact so stated and no one can contradict such statements. For this proposition, he cited the Judgment of Hon'ble Supreme Court in the case of State of Maharashtra Vs. Ramdas Srinivas Nayak 1982 (2) SCC 463. 10. Ld. Counsel for GIACL submitted that in 7th CoC Meeting held on 03.04.2020 unanimously resolved to reject the request of DSKL for submitting EOI after the expiry of deadline as it is contrary to Regulation 36-A (6) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulatio....
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....ail from the Advocates of DSKL proceeded to give an opportunity that within one hour and twenty minutes. 15. It is also submitted that, DSKL has relied upon the Judgment of Hon'ble Supreme Court in the case of Kalpraj (supra). This Judgment is distinguishable inasmuch as in the present case CoC and RP in its earlier decision rejected the EOI of DSKL in the 7thCoC meeting dated 03.04.2020. Moreover, the commercial wisdom of the CoC is only limited to the decision of selection of Resolution Plan and not the procedural aspect laid down in the Code and Regulations. The CoC and RP cannot, under the blanket of commercial wisdom, ignore Regulation 36-A (6) of Regulations, 2016 which provides that EOI received after time specified in the invitation under clause (b) of sub-regulation (3) shall be rejected. This is a mandatory provision and cannot be ignored. 16. Lastly, it is submitted that the Resolution Plans of two Resolution Applicants have already been open in the 14thCoC Meeting held on 26.03.2021 before the CoC Members and respective Applicant as the Resolution Plans are already open, allowing DSKL's application will reopen whole process of submissions of Resolution Plans and w....
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.... speaks of the NCLT having jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person, does not invest the NCLT with the jurisdiction to interfere at an applicant's behest at a stage before the quasijudicial determination made by the Ad- judicating Authority. The non-obstante clause in Section 60(5) is designed for a different purpose: to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings. 20. In the aforesaid Para, Hon'ble Supreme Court clarified the scope and purpose of Section 60(5)of the IBC and held that the NCLT alone has jurisdiction to entertain or dispose of the Applications and proceedings by or against a Corporate Debtor covered by the IBC. In the present case, Adjudicating Authority, while deciding the Application I.A No. 1029 of 2020, has exercised the jurisdiction under Section 60 (5) (c), which empowers to decide "any question of priorities or any question of law or facts, arising out of or in rel....
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....t of objections, to the Committee." 22. In view of Regulation 36-A (11) of Regulations 2016 GIACL has a vested right to object inclusion of DSKL. Ld. Sr. Counsel cited Para 10 of the Judgment of this Appellate Tribunal in the case of Arecellor Mittal India Pvt. Ltd. Vs. Abhijit Guhathakurta (Supra) in this case Arecellor Mittal (Appellant) was one of the Resolution Applicant whose Resolution Plan was not voted in its favour by the CoC. The CoC, by majority vote, approved the Resolution Plan submitted by third Respondent Royale Partners Investment Fund Ltd. The Appellant preferred Miscellaneous Application challenging the decision of CoC, which has been rejected by Adjudicating Authority. Against that rejection order, Appellant has filed Appeal before this Tribunal. This Tribunal in the light of the proposition laid down by the Hon'ble Supreme Court in the case of Arecellor Mittal India Pvt. Ltd. Vs. Satish Kumar (2019) 2 SCC 1, held that the Appellant has no vested right to challenge the decision of the CoC which rejected its Resolution Plan and approved another Resolution Plan. In the present matter, the facts are quite different as we have already discussed above. Therefore, t....
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....considered whether the CoC can review its own decision at any point of time in contravention of Regulation 36-A (6) of the Regulations 2016. 30. Ld. Sr. Counsel for DSKL submitted that Regulation 36-A cannot override the mandate of Code i.e. maximization of value and commercial wisdom of CoC and for this contention, cited the Judgment of Hon'ble Supreme Court in the Case of Brilliant Alloys Vs. S. Rajagopal 2018 SCC Online SC 3154 in which Hon'ble Supreme Court while dealing with Regulation 30-A has explicitly held that seemingly mandatory language of Regulation has to be read along with provision of the Code. Thus, Hon'ble Supreme Court held that Regulation 30A would be directory. Additionally, Regulation 36 is not mandatory in nature. The word "shall" has to be read as "may" since no consequence of non-compliance are provided. 31. We have considered the argument in the case of Brilliant Alloys, Corporate Debtor as well as Financial Creditor and Operational Creditor were agreed to withdrawal of the Application. However, in view of Regulation 30A, withdrawal was not permitted. In that context, Hon'ble Supreme Court held that this Regulation has to be read along with the main ....
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.... this appeal u/s 61(1) of IBC. The scope of Appeal u/s 61(3) is limited to the grounds as specified in sub section 3. However, there is no such limit for the Appeal u/s 61(1) of IBC. In the case of Kalpraj, Hon'ble Supreme Court held that all the actions of RP, including acceptance of Resolution Plan of Kalpraj after due date, albeit before the expiry of time line specified by the IBC for completion of the process, have been consciously approved by the CoC. In the present case, as we have already discussed, in the 7th CoC meeting with the consultation of Mr.Pankaj Joshi, the request for submitting EOI after due date was rejected. After two months, when Mr Pankaj Joshi appointed RP, he in contravention of Regulation 36A in his own accord overturned the decision of 07th CoC and permitted DSKL to submit EOI. However, DSKL has not requested the CoC to re-visit their earlier decision. Mr Pankaj Joshi by suppressing material facts and misguiding the CoC procured the desired decision and inducted DSKL in the list of prospective Resolution applicant. In the case of Kalpraj, RP's actions are bonafide, impartial and fair and, therefore, the CoC has approved all his actions including the acce....
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.... express permission from the CoC to issue a request for Resolution Plan to an eligible Prospective Resolution Applicant'. This is not the position in this case the request for submission of EOI after due date was rejected by the CoC then there is no question to issue a request for resolution plan to DSKL. 40. Pankaj Joshi in 09th CoC meeting canvassed the case of DSKL and when one of the CoC Members proposed to publish fresh Form 'G' then he suggested that this is impracticable and delayed the CIRP. 41. With the above discussion, we are of the view that the decision taken in 09th Meeting of the CoC was not transparent, fair and was under the influence of Pankaj Joshi. Issue No. (v) Whether the adverse remarks in Para 54 of the impugned order are baseless and uncalled for? 42. Ld. Counsel appearing for Mr. Pankaj Joshi submitted that the adverse remarks in Para 54 of the impugned order are baseless, uncalled for and are factually incorrect. 43. Para 54 of the Impugned order is as under: - "we failed to understand as to why the current RP Mr. Pankaj Joshi had deviated from the earlier procedure of notice for the invitation of the EOI with the approval of th....
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....r to Members of CoC to permit for submitting EOI. 23.03.2020 DSKL sent an email to RP and CoC Members to permit for submitting EOI. 02.04.2020 DSKL sent an email to RP Mr. Shetty to permit for submitting EOI. 03.04.2020 07thCoC meeting rejected the request of DSKL for submitting EOI. 09.04.2020 Mr. Shetty communicated the decision of CoC to DSKL. 27.05.2020 At the recommendation of CoC, Adjudicating Authority appointed Pankaj Joshi as RP in place of Mr. Shetty. 05.06.2020 10:43 AM Advocate of DSKL sent the copy of Application to Mr. Shetty. 05.06.2020 12:20 PM Mr. Shetty inform the Advocate of DSKL that in his Place Mr. Pankaj Joshi has been appointed as RP and copy of this email sent to Pankaj Joshi. 05.06.2020 12:43PM Pankaj Joshi same day sent a detailed email to DSKL that he is inclined to grant an opportunity to resubmit the EOI within 10 days. 05.06.2020 15:13PM Pankaj Joshi again sent a detailed email to DSKL to resubmit EOI within 10 days. 09.06.2020 Pankaj Joshi received EOI to DSKL 13.06.2020 At the instance of Pankaj Joshi 9th CoC meeting permitted DSKL to submit EOI. 46. From the aforesaid da....
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.... the earlier rejection decision. However, surprisingly Mr. Pankaj Joshi, in his own accord, informed DSKL that he is inclined to grant an opportunity to resubmit EOI in the Format as laid down in process flow document and requested to submit the EOI within 10 days. (vi). Mr.Pankaj Joshi, when received the copy of application which DSKL intended to file before the Adjudicating Authority then, instead of taking any decision, he should have waited for the outcome of the application. (vii). Mr. Pankaj Joshi in 9th CoC meeting has not disclosed that he has received a copy of application which DSKL intended to file before Adjudicating Authority against the decision of 7th CoC meeting. (viii). Mr. Pankaj Joshi before the CoC meeting did not disclose the fact that he has on his own accord permitted DSKL to submit EOI. (ix).Mr.Pankaj Joshi in his pleadings and written submissions has not explained as to how he overturned the decision of 7th CoC meeting and directed DSKL to submit its EOI. (x).Mr.Pankaj Joshi in 9th CoC meeting, misguided the CoC that under the law RP is not required to take any express permission from the CoC to issue a request f....