TaxTMI 
TaxTMI 
2019 (2) TMI 2005
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....or, M/s. Servomax India Pvt. Ltd under Section 60(5)(c) of the I&B Code, 2016 praying the Tribunal to direct the COC members to reconsider the Resolution plan, further to extend the CIRP period and not to consider the request for liquidation filed by Resolution Professional. 2. The Averments in the application in brief: a. M/s. Servomax India Pvt. Ltd, is a leading manufacturer in the field of Power conditioning and power saving systems. b. The main Petition bearing No. CP (IB) No. 265/09/HDB/2017, filed by Murali Krishna Power Controls Pvt Ltd, under Section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted 22.02.2018 and Mr. Pavankankani, was appointed. as IRP. c. It is alleged that IRP conducted the First COC meeting on 28.03.2018 i.e. after 31 days and that IRP did not take any worthwhile steps in respect of CIRP in his tenure and IRP was replaced by Mr. Kondapalli Venkata Srinivas vide Tribunal order dated 03.04.2018. d. It is further averred that Mr. Kondapalli Venkata Srinivas filed application bearing IA No. 165/2018 praying to replace him by appointing Mr. G. Madhududhan Rao as Resolution Professional which was allowed by thi....
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....0.11.2018 he informed the Resolution Professional about the lapse of 122 days and requested Resolution Professional to move an Application to the Adjudicating Authority for extension of CIRP Period for further 122 days and requested the CoC to reconsider his Resolution Plan. m. It is averred on receipt of above letter RP called for 9th CoC Meeting on 13.11.2018 and it is alleged that RP briefly pointed about the contentions of the Applicant and did not mention about the extension of time of CIRP or brought to the notice of CoC members about the detailed submissions and judgements filed by Applicant. Further CoC also informed that they have not voted for any of the Resolution. Plans keeping in view various terms and conditions of the Resolution plans and felt they could get higher realization at lesser time period. n. It is the case of Applicant / Director (Suspended Board) that he is the Promoter of Corporate Debtor company and invested an amount of Rs. 1299,51,930.00 in the form of capital and advances etc. It is his further case that he has given the right to use Servomax Brand, Logos along with special coined name of Servomax through an Agreement dated 20.12.20....
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....initiation of CIRP by the Creditor who proposed the IRP name and then replaced with another Resolution Professional who was channel partner of Director of Corporate Debtor and partner of IRP. d. It is further contented by the Resolution Professional that the two letters received from Applicant were placed before the CoC within 2 hours of receipt of the letters and decision of CoC on the Resolution Plan submitted by Applicant were communicated to the Applicant. Further minutes of CoC was also given to the Applicant. e. It is the case of Resolution Professional that IRP and RP delivered their roles and responsibilities as per IBC, 2016 and CoC justified their performances during the. CIRP. f. The Resolution Professional also denied the allegation regarding non-receipt of amount for the right to use Servomax Brand, Logo's. It is averred that even small petty expenses claimed from Corporate Debtor during CIRP was approved by RP many times and that actually the Brand is registered with the Corporate Debtor name and agreement regarding this is not registered. It is alleged Applicant has given his personal guarantee to the lenders and misusing the. Corporate Debtor's Bran....
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....tter of M/s Rave Scans Private Limited. 7. The Resolution Professional strongly denied the contention of the Applicant that IRP Shri Pavan Kankani and Resolution Professional Shri K.V. Srinivas subsequently appointed could not do worthwhile transactions in the CIRP. period from 22.02.2018 to 25.06.2018. The Resolution Professional also questioned the Locus standi of the Applicant who is Director (Suspended Board) of Corporate Debtor to file Application for exclusion of time. 8. The Resolution Professional has filed along with counter the summary of emails between IRP Shri Pavan Kankani and then Resolution Professional Shri K.V. Srinivas and Corporate Debtor during the period which is sought to be excluded from the CIRP. The summary of emails are shown. at page 57-120 and 46-56. Other supporting documents are also shown at page No. 122-145 of the Counter. I have gone through the emails and other documents filed by the Resolution Professional. The IRP Shri Pavan Kankani and the then Resolution Professional Shri K.V. Srinivas discharged functions during the relevant period. It is not as if no worthwhile transactions were done during the said period as alleged by the Applicant. T....
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.... IA 535/2018 for passing order of liquidation. The Applicant filed detailed counter in IA 535/2018 alleging same grounds as urged in the present Application. This Tribunal passed order in IA 535/2018 rejecting the contention of the Applicant and passed order of Liquidation against Corporate Debtor. Therefore, the Applicant is not entitled for the relief (b). 13. This Tribunal simultaneously considered the prayer made by Applicant that his Resolution Plan again to be considered by the CoC. This question was also answered in IA 535/2018. At the cost of repetition, CoC is the competent Body to decide the feasibility and viability of any Resolution Plan. It is clear from the reply filed by Resolution Professional and the minutes of the meeting that the Resolution Plans filed were considered by the CoC by exercising its commercial wisdom and it had not approved any of the Resolution Plans. This Authority cannot sit in- Appeal over the decision taken by CoC. The CoC has examined the feasibility and viability of the plans including the plan submitted by Applicant herein who is a Member (Suspended Board of Directors) of Corporate Debtor. Therefore, Applicant is not entitled for the reli....
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....s with regard to CIRP and CoC replaced IRP with Shri Kondapalli Venkata Srinivas, Resolution Professional vide this Tribunal order dated 03.04.2018. Subsequently, he was also replaced by Shri G. Madhusudhan Rao as Resolution Professional vide this Tribunal order dated 28.05.2018. (5) It is averred, it was in the 2"d CoC meeting held on 25.06.2018 that CoC was reconstituted and CIRP practically started. Hence, it is prayed the period from admission of the Petition on 22.02.2018 to the date of actual start of CIRP i.e. 25.06.2018 i.e. a lapse of 122 days to be excluded for the purpose of counting the total period of 270 days. (6) It is averred for the purpose of determining the Liquidation value of the assets of the Corporate Debtor, Resolution Professional appointed two valuers, Further in the 3rd CoC Meeting held on 09.07.2018, Resolution Professional informed the CoC that total six Expression of Interest (EOI) were received till 05.07.2018. The Resolution Professional informed the CoC that promoters of the Corporate Debtor also submitted EOI for submission of Resolution Plan and CoC, after due deliberations, extended the date for submission of EOI till 13.07.2018....
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....of the Resolution Plans keeping in view various terms and conditions of the Resolution plans and felt they could get higher realization at lesser time period. (13) Applicant also relied on the Hon'ble NCLAT judgement in the matter of M/s Velamur Varadan Anand Vs UOI, Quantum Limited Vs Indus Finance Corporation Ltd and NCLT Mumbai order dated 23.10.2018 in the matter of M/s Polychroic Petrochemicals Pvt Ltd. 3. Counter is filed by Resolution Professional. Brief averments in the counter are: (1) It is contended, from the date of admission of the Petition filed under Section 9 of IBC by Operational Creditor till the 2" CoC meeting held on 25.06.2018 (total of 122 days) all activities were done as per IBC, 2016 by IRP and that Applicant has not raised this issue until 22.11.2018. It is raised only when CIRP period of 270 days came to an end on 18.11.2018. (2) The Resolution Professional further contended that it is only when CoC did not approve the resolution plan submitted by the Applicant, the Applicant is trying to delay the process. It is also contended that one of the Debtors namely M/s Murali Krishna Power Controls Private Limited was converted ....
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....onal and a resolution was passed by CoC for replacing him and appointing Shri K.V. Srinivas vide order dated 03.04.2018. The contention of the Applicant Shri K.V. Srinivas was also again replaced by Shri G. Madhusudhan Rao Gonugunta as Resolution Professional. The contention of Applicant that actual process in CIRP started from 25.06.2018 when CoC meeting was held after re-constituting CoC by present Resolution Professional. Therefore, the period from the date of order to the date appointment of present Resolution Professional on 25.06.2018 totaling 122 days to be excluded from CIRP as there was no worthwhile progress during the said period. 6. The case of Applicant he has also addressed a letter to the Resolution Professional to seek for exclusion of 122 days vide letter dated 10.11.2018 shown at page Nos. 101 of the Application. However, CoC did not properly deal with the request made by the Applicant and Resolution Professional has also not properly apprised the CoC about the legal position laid down in the matter of M/s Velamur Varadan Anand Vs Union Bank of India & Anr, Quantum Limited (Corporate Debtor) Vs. Indus Finance Corporation Ltd and M/s Polychroic Petrochemicals Pv....
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....ion Professional filed sufficient proof that during entire period of CIRP, the proceedings are conducted in accordance with the provisions of IBC, 2016 and Regulations thereunder. The principle laid down in the decision cited provides for exclusion in certain circumstances but such circumstances pointed out in decision are not found in the present case. Further, the present Application is filed with a view to prolong the CIRP and it is nothing but misuse of the process, Therefore, the present Application deserves to be dismissed. 11. In the result, the Application is dismissed Per: Shri Ratakonda Murali, Member (Judicial) ORDER 1. This Application is filed by Resolution Professional of M/s Servomax India Private Limited (Corporate Debtor) under Section 33 (1) (a) and 34 (1) of Insolvency & Bankruptcy Code, 2016, seeking directions to pass Liquidation Order against Corporate Debtor and further seeking direction to appoint Resolution Professional as Liquidator. 2. Brief averments in the Application are:- (1) The Petition bearing CP (IB) No. 265/9/HDB/2017 filed by Operational Creditor M/s Murali Krishna Power Controls Private Limited was admitted by this Tribu....
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....n for further consideration on or before 4th September 2018. The other Resolution Plans received were also discussed by the COC members. (7) It is the case of Applicant / Resolution Professional that Sri A. Venkateswara Rao (CEO & Director (Suspended Board) and Shri Harish Kumar, Director (Suspended Board) Resolution Applicant were again requested in the 661 CoC meeting held on 10.10.2018 to improve the Resolution Plan and submit within 03 days for consideration. (8) It is the case of Resolution Professional that in the 781 CoC meeting held on 24.10.2018, CoC deliberated upon the three Resolution Plans received which included the revised Resolution Plan received form M/s Jainco Projects (India) Limited. COC also reviewed the evaluation matrix for resolution plans received, NPV calculations and the summary of the Resolution plans. (9) It is the case of Resolution Professional that even in the 8° COC meeting held on 3rd November 2018 no revised Resolution Plans were received from Mr AV Rao and Mr D Harish Kumar/ Resolution Applicants. Further, COC members analyzed and discussed all other resolution plans received, their Evaluation Matrix marks, Resoluti....
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.... (1) He contended that the present Application is not maintainable as the Applicant has filed another IA bearing No. 501/2018 alleging that the Petitioner/ Operational Creditor initiated CIRP fraudulently as an Operational Creditor though the Petitioner was a Debtor of the Corporate Debtor, which is pending adjudication and any order to be passed in this IA is subject to outcome of IA 501/2018. (2) It is alleged even though main petition was admitted on 22.02.2018, IRP commenced CIRP after 31 days and conducted 1st CoC meeting on 28.03.2018 and IRP did not take any worthwhile steps as he was informed by Financial Creditors orally that he would not be confirmed as Resolution Professional. (3) It is also alleged that even Mr. Kondapalli Venkata Srinivass who was appointed as Resolution Professional did not take any effective steps and voluntarily wanted to leave the assignment. (4) It is the case of Respondent No. 3 due to replacement of RPs, CIRP could not be commenced till 25.06.2018 and that there is a lapse of 122 days. (5) It is averred, Respondent no.3 vide letter dated 05.07.2018 submitted EOI but was not eligible in view of disqualific....
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....g for rejection of the Resolution Plan. (11) It is the case of Respondent No.3 that the Resolution Plan submitted by them is eligible to be approved by CoC as it offered Rs. 16405.91 as against Liquidation value of Rs. 5000 lacs. (12) It is further case of Respondent No.3 that he has made detailed submissions and sought for legitimate extension of CIRP by 122 days. 4. I heard the Counsel for Resolution Professional and Counsel for Respondent No.3. The Resolution Professional is Applicant herein. He has filed this Application under Section 33 (1) (a) of IBC, 2016 alleging that CoC has not approved any Resolution Plan to place before Adjudicating Authority under Section 31 of IBC and requested the Tribunal to pass order of liquidation. The case of Applicant, the Resolution Plans submitted by Resolution Applicants were examined by CoC and none of the Plan was approved by CoC. Therefore, the Adjudicating Authority has to pass an order of liquidation under Section 33 (1) (a) since no plan was approved by CoC and placed before Adjudicating Authority within the period of CIRP which - came to an end on 18.11.2018. 5. Respondent No.3 came on record who is Director (S....
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....ep Verma held that "the Resolution Plan of the Appellant having been approved by the Committee of Creditors with 98. 05% voting shares and it having been found viable and feasible and as it meets the requirements as referred to in sub-section (2) of Section 30, Adjudicating Authority is directed to approve the Resolution Plan submitted by the Appellant as approved by the Committee of Creditors and pass appropriate order. For such order no further - hearing is required to be given except the information to the parties as the matter has been finally decided by this Appellate Tribunal". 12. The next contention is that 122 days to be excluded from the CIRP for the reasons stated in the counter. Already Respondent No.3 / Director (Suspended Board) filed separate Application bearing IA No.538 of 2018 for exclusion of 122 days from CIRP and the said Application is also disposed of by dismissing the same. 13. I have gone through the minutes of 8th and 9th CoC meetings filed by the Resolution Professional. The Plans were considered by the members of CoC and did not approve any Resolution Plan. 14. Section 33(1) (a) of the IBC 2016 deals with an order to be passed for liquidation, w....