TaxTMI 
TaxTMI 
2021 (11) TMI 952
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....ation filed U/S 60(5) of the Insolvency and Bankruptcy Code, 2016 (in short 'I&B Code') seeking direction against the Resolution Professional to receive the Resolution Plan they proposed to submit and to place the same before the Committee of Creditors for their consideration under Section 30 of the Code. 2. The original status of the parties in the company petition represents them in these Appeals for the sake of convenience. 3. The learned Adjudicating Authority had rejected the Application by making an observation that; "both sides present. It is reported by the RP that the resolution plan/EOI received from the applicant is rejected by COC today, i.e. on 21 January 2019 at 2:30 PM. In view of this, this Application is dismissed as infructuous." 4. On the same day, the learned Adjudicating Authority heard the argument on Miscellaneous Application No 1599 of 2019 filed under Section 33 (2) of the Insolvency and Bankruptcy Code, 2016 for the liquidation of the Corporate Debtor and reserved it for Order. This Application has been allowed by separate Order passed on 22 February 2019, and an Order was passed to Liquidate the Corporate Debtor, which is under c....
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....ncy Resolution Process of the Corporate Debtor commenced on 25 July 2018. Thus, the initial 180 days' period under Section 12 of the I&B Code expired on 21 January 2019. However, despite that period not being close to over, the Corporate Debtor Committee of Creditors chose to liquidate it. 5.7 The Appellants submit that the Application filed u/s 33(2) of the Code was filed before the expiry of the Corporate Insolvency Resolution Process period. The Appellants also submit that the Resolution Professional and the Committee of Creditors were acting in haste by choosing to opt for the liquidation of the Corporate Debtor rather than give it a chance for Resolution. 5.8 The Resolution Professional filed an Application being Miscellaneous Application No. 1599 of 2018 before the Adjudicating Authority seeking liquidation of the Corporate Debtor, which was listed on 07 January 2019. 5.9 The Appellants submit that they appeared before the Ld. Adjudicating Authority on 07 January 2019, when the Application filed by the Resolution Professional seeking liquidation of the Corporate Debtor was taken out, the Resolution Professional vehemently opposed the request of the Appellants for....
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....ends that on the date of the hearing on 21 January 2019, Resolution Professional sought to pass over of the matter and, when the matter was again called out, it was informed to the Ld. Adjudicating Authority that the COC, i.e. the Respondent No 2 and 3 had rejected the EOI of the Appellants and produced two e-mails received by the RP from Respondent No 2 and 3. The E-mail received from Respondent No 2 was dated 21 January 2019 and was sent at 01.35 PM. The E-mail received from Respondent No 3 was dated 21 January 2019 and was sent at time 12.48 PM. The Appellants submits that the said E-mails were sent by Respondent No 2 and 3 hurriedly after the matter was passed over. 5.16 Thereafter the Order about the liquidation of the Corporate Debtor was passed by the Ld. Adjudicating Authority on 22 February 2019. 5.17 It is further emphasised that the object of the Insolvency and Bankruptcy Code, 2016, is for the maximisation of the asset value of a Corporate Debtor. This Hon'ble Tribunal has also held that the object of the Corporate Insolvency Resolution Process is to seek a resolution of the Corporate Debtor and not for recovery of money. It is argued that allowing to terminat....
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....ari Bank Limited (Respondent No. 3 hence hereinafter as R3). In the 1st Meeting of the COC, the IRP was appointed as the RP. 6.4 During the 2nd Meeting of the COC held on 26 September 2018, the criteria for the invitation of Expression of Interest (hereinafter referred to as EOI) and eligibility for the prospective Resolution Applicant were finalised by the CoC. Accordingly, the RP had published 'Form G' on 28 September 2018. Therefore, the last date for submission of EOI was fixed as 15 October 2018. 6.5 In response to the same, the RP had received an initial response requesting further details about the Corporate Debtor for submission of their EOI from the following: a) Vyas Advisor through Mr Yogesh Gupta b) Innovative Enterprises and Innovative Construventure Pvt. Ltd. (Appellant) through Mr Balasaheb Shinde c) Innovative Enterprises and Innovative Construventure Pvt. Ltd. (Appellant) through Mr Nandkumar Patil d) M/s Jainco projects through Mr Sumit e) M/s. Ashprit Trading through Mr Ghanshyam Chourasia. f) Vishwa Developers through Mr Chetan Kadam Company Appeal (AT) (Insolvency) No. 470 & 486 of 201....
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....dingly carried out due diligence on the documents submitted by the following persons: i. Consortium I: Innovative Enterprises & Innovative Construventure Pvt. Ltd. ii. Consortium II: Innovativ0065 Trading & Innovative Construventure Pvt Ltd. iii. Jainco Projects India Limited. 6.12 For Consortium I and Consortium II: i) Each evaluation matrix criteria was evaluated in detail in respect of EOI submitted by these two persons. It was observed that these persons did not submit certain documents requested by the RP. Also, in the declaration / Affidavit submitted by these two persons regarding compliance with Section 29A, it was stated that the Corporate Applicant is an MSME; hence, certain clauses of Section 29A are not applicable. ii) Therefore, the RP sent an e-mail to both these persons to submit the supporting documents stating that "the Corporate Applicant is registered under provisions of MSME" and further the pending documents. iii) However, no reply was received till the date of the COC Meeting. The RP also sent an e-mail to the erstwhile Directors of the Corporate Applicant requesting them to confirm the status of the Cor....
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.... an e-mail, to bring supporting documents to verify the availability of committed Funds and reasons for the decline in turnover in last year and the latest audited or unaudited financials up to 31 October 2018. VI. In response to this e-mail, the RP received an e-mail from Jainco requesting an Information Memorandum and details about the company under CIRP. VII. The RP then informed Jainco that the RP had not yet shortlisted the Jainco as a Potential Resolution Applicant. Since Jainco does not meet specific eligibility criteria, the CoC would like to offer an opportunity to Jainco before deciding on shortlisting or otherwise. VIII. The RP further informed Jainco that the (Information Memorandum in short 'IM', etc., will be shared once the Jainco is shortlisted as PRA and requested the representative to remain present accordingly in the next CoC meeting. IX. In response, the RP received an e-mail from Jainco seeking information about the required information/documents. The RP had informed Jainco that support was required to show the availability of committed funds as also reasons for the drastic fall in turnover of Jainco. X. In r....
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....d the complete Expression of Interest as required by the Invitation documents. XIV. Since the RP and the CoC members could not verify all the criteria for Jainco as discussed above, it was decided that Jainco does not meet the eligibility criteria and has not submitted pending documents despite various reminders. Accordingly, Jainco was declared ineligible to be PRA for this process. XV. Since no eligible Potential Resolution Applicant had submitted the EOI, the CoC Members decided that the RP should not issue the provisional list and do other compliances about this process. XVI. In the 6th CoC Meeting held on 06 December 2018, the CoC Members then discussed the further course of action since there was no eligible potential Resolution Applicant. The CoC members observed that a sufficient number of extensions were granted for the submission of documents. However, despite the same, the interested persons have failed to provide a complete set of documents. Further, even Jainco did not avail of the opportunity granted by the CoC to remain present in person. 7 The issues that arise for our consideration in these appeals are as under; a) Can the com....
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....nt had produced two e-mails received by the Resolution Professional from Respondent No. 2 and 3. The e-mail received from Respondent No. 2 was of dated 24 January 2019 and was sent at 1:35 PM. The e-mail received from Respondent No. 3 was dated 24 January 2019 and was sent at 12:48 PM. The Appellant submits that the said e-mails were sent by Respondent No. 2 and 3 hurriedly after the matter was passed over. 8.4 Before proceeding further, it is necessary to go through the statutory provisions about the powers of the Committee of Creditors, which also provides the stage at which the resolution plan may be accepted. 25. Duties of Resolution professional.- (1) It shall be the duty of the Resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. (2) For the purposes of sub-section (1), the Resolution professional shall undertake the following actions, namely- (a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor; (b) represent and act on behalf of the corporate deb....
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....e Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). [Explanation.-For the purposes of this sub-section, it is hereby declared that the committee of creditors may take the decision to liquidate the corporate debtor, any time after its constitution under sub-section (1) of Section 21 and before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum.] 36. Information memorandum.-[(1) Subject to sub-regulation (4), the Resolution professional shall submit the information memorandum in electronic form to each member of the committee within two weeks of his appointment, but not later than fifty-fourth day from the insolvency commencement date, whichever is earlier.] (2) The information memorandum shall contain the following details of the corporate debtor- [(a) assets and liabilities with such description, as on the insolvency commencement date, as are generally necessary for ascertaining their values. Explanation-"Description" includes the details such as date of acquisition, cost of acquisition,....
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....ticulars of the invitation for expression of interest in Form G of the Schedule at the earliest, not later than seventy-fifth day from the insolvency commencement date, from interested and eligible prospective resolution applicants to submit resolution plans. (2) The Resolution professional shall publish Form G- (i) in one English and one regional language newspaper with wide circulation at the location of the registered office and principal office, if any, of the corporate debtor and any other location where in the opinion of the Resolution professional, the corporate debtor conducts material business operations; (ii) on the website, if any, of the corporate debtor; (iii) on the website, if any, designated by the Board for the purpose; and (iv) in any other manner as may be decided by the committee. (3) The Form G in the Schedule shall- (a) state where the detailed invitation for expression of interest can be downloaded or obtained from, as the case may be; and (b) provide the last date for submission of expression of interest which shall not be less than fifteen days from the date of issue of detailed invitation. ....
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....able deposit, and attract penal action under the Code; and (g) an undertaking by the prospective resolution applicant to the effect that it shall maintain confidentiality of the information and shall not use such information to cause an undue gain or undue loss to itself or any other person and comply with the requirements under sub-section (2) of Section 29. (8) The Resolution professional shall conduct due diligence based on the material on record in order to satisfy that the prospective resolution applicant complies with- (a) the provisions of clause (h) of sub-section (2) of Section 25; (b) the applicable provisions of Section 29-A, and (c) other requirements, as specified in the invitation for expression of interest. (9) The Resolution professional may seek any clarification or additional information or document from the prospective resolution applicant for conducting due diligence under sub-regulation (8). (10) The Resolution professional shall issue a provisional list of eligible prospective resolution applicants within ten days of the last date for submission of expression of interest to the committee and to all prospective resol....
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....rd to the nature of resolution plan and business of the corporate debtor. Explanation II.-A performance security may be specified in absolute terms such as guarantee from a bank for Rs X for Y years or in relation to one or more variables such as the term of the resolution plan, amount payable to creditors under the resolution plan, etc.] (5) Any modification in the request for resolution plan or the evaluation matrix issued under sub-regulation (1), shall be deemed to be a fresh issue and shall be subject to timeline under sub-regulation (3): [Provided that such modifications shall not be made more than once.] (6) The Resolution professional may, with the approval of the committee, extend the timeline for submission of resolution plans. (7) The Resolution professional may, with the approval of the committee, re-issue request for resolution plans, if the resolution plans received in response to an earlier request are not satisfactory, subject to the condition that the request is made to all prospective resolution applicants in the final list: Provided that provisions of sub-regulation (3) shall not apply for submission of resolu....
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....all resolution plans at the meetings of the Committee of Creditors. This is followed by Section 30(3), which states that the Resolution Professional shall present to the Committee of Creditors, for its approval, such resolution plans which confirm the conditions referred to in sub-section (2). This provision has to be read in conjunction with Section 25(2)(i), and with the second proviso to Section 30(4), which provides that where a resolution applicant is found to be ineligible under Section 29-A(c), the resolution applicant shall be allowed by the Committee of Creditors such period, not exceeding 30 days, to make payment of overdue amounts in accordance with the proviso to Section 29-A(c). A conspectus of all these provisions would show that the Resolution Professional is required to examine that the resolution plan submitted by various applicants is complete in all respects, before submitting it to the Committee of Creditors. The Resolution Professional is not required to take any decision, but merely to ensure that the resolution plans submitted are complete in all respects before they are placed before the Committee of Creditors, who may or may not approve it. The fact that th....
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....e Resolution Professional is required to examine that the Resolution Plan submitted by the various applicants is complete in all respects before submitting it to the Committee of Creditors. The Resolution Professional is not required to take any decision but merely to ensure that the Resolution Plan submitted is complete in all respects before they are placed before the Committee of Creditors, who may or may not approve it. The Resolution Professional is also to confirm that the Resolution Plan does not contravene any of the provisions of law for the time being in force, including Section 29 A of the Code. It means prima facie opinion is to be given to the Committee of Creditors that the law has not been contravened. 8.10 In the instant case, the Resolution Professional preferred an Application before the Adjudicating Authority under Section 33 (2) of the Code prays for a liquidation order of the Corporate Debtor. The RP had brought to the notice of the Adjudicating Authority that an amount of about Rs. 21 crores is receiveable to the corporate debtor from two partnership/proprietors firms, i.e. M/s Innovative Enterprises and Innovative Trading Company. They were interested pers....