AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2022 (4) TMI 207
X X X X Extracts X X X X
X X X X Extracts X X X X
....a, Mr. Siddharth Nigotia, Mr. Aditya Shekhar, Advocates in IA No. 2146/2021 And I.A. No. 2146 of 2021 JUDGEMENT ( Per : Shreesha Merla, Member (T) ) 1. Aggrieved by the Impugned Order dated 04/12/2020 in I.A. No. 397 of 2020 in C.P. (IB) No. 586/NCLT/AHM/2019 passed by the Learned Adjudicating Authority (National Company Law Tribunal, Ahmedabad Bench, Ahmedabad, Court - II), M/s. Pani Logistics/'The Financial Creditor' preferred this Appeal. By the Impugned Order, the Adjudicating Authority has dismissed the Application preferred by the Liquidator seeking the following relief(s): "i. Order and direct the substantive consolidation of the Corporate Debtor and the Respondents Nos. 2-6 into a single proceedings solely for the purpose of CIRP in accordance with the provisions of the Code, including but not limited to the acceptance, confirmation and all other actions with respect to the resolution plan for the Corporate Debtor and the Respondent Nos. 2-6 and any and all amendments or modifications thereto, in such consolidated proceedings; ii. Order and direct that solely for the purpose of the consolidated proceedings, all assets and liabilities of the Corpor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es, hence, the question of any consolidation of the properties does not arise at all. 9. Though, the Respondent No. 2, 3, 5 and 6 hold substantial share in the Corporate Debtor but mere shareholding does not mean that these are group companies. Had it been group company, there would have been a single order for initiation of CIRP. Since, the companies are holding separate entities and there is separate cause of action and date of default on the part of the Corporate Debtor, the CIRP proceeding has been initiated separately. Moreover, the IB Code does not provide for any consolidation of the Company when the Companies are holding substantial shares in each other. It is seen that the Applicant has placed on record number of citations and the case laws. There is no dispute with regard to those case laws, however, it varies from case to case as well as factual parameters. Moreover, the object of IB Code is resolution and not the liquidation, as such. 10. It is pertinent to note that Substantial consolidation as a remedy should always be treated as an exception rather than the rule. Moreover, this remedy can be an option for group companies however, in the instant matt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Associate Company of Respondent No. 3. Forensic Audit Report of Respondent No. 2 states: "It is to be noted that the authorised signatory is the same in case of Neuromed Imaging, Narayani Vyapar, Tulsi Trimpex and Yamuna Advisory. As it was signed by same person, it appears that all these are related parties." 2. Common Assets and Liabilities The Forensic Audit reports of Respondent No. 2 and 3, respectively demonstrate that the transactions between the Respondents are classified as Relate Party Transactions. Respondent No. 2, in its Reply at para 7 of its Affidavit states, "..multiple loan liabilities of Respondent No. 1 were transferred in the books of Respondent No. 2 for a consideration of interest of 9% payable to the creditors. Hence, the Respondents are dependent upon each other for their economic survival and their accounts are interlinked for benefit of each other." The Audit Report of Respondent No. 3 at 4.4.7 records the following: "The 'Corporate Debtor' has provided the Corporate guarantee to SBI Cap. Trustee Co. Ltd. on behalf of M/s. Sona Alloys Private Limited against the loan of Rs. 11,59,97,00,000/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....') one of the Resolution Plans submitted by 'MTC Business Private Limited' was found as most feasible and viable and hence voted in form by the Committee with 99.732% vote share. Learned Counsel further contended that the Resolution Plan provides for treatment of the Claim filed by the Appellant as per the provisions of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'the Code') and need not be interfered with. On 22/03/2021, this Tribunal directed the Adjudicating Authority to pass any Order either Approving/Rejecting the Resolution Plan. On 26/05/2021, disregarding the fact that the proceedings were stalled, the Appellant filed I.A. dated 26/05/2021 for rejection of the Resolution Plan which is contrary to the spirit of the Code. To expedite the disposal of the Application for the avoidance transactions, RP preferred IA 2501/2021 and prayed before this Tribunal for direction that Order dated 22/03/2021 shall not defer the hearing of avoidance Application and all such IAs pending adjudication. The said Application has not been listed before this Tribunal. It is submitted that the Appeal was filed after 300 days in the present CIRP a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Limited'/second Respondent by 'M/s. Pani Logistics' and is currently under Liquidation which was passed vide Order dated 04/03/2020. Liquidation Process was initiated against 'M/s. Neuromed Imaging Centre Private Limited'/ the third Respondent on 07/09/2020 in CP(IB) No. 237/2018. It is evident that there are three distinctly unrelated orders of Admission against three different Companies/'Corporate Debtors' having different identities. The 'date of default' and the stage of the Insolvency Proceedings of the Respondent Companies is at different junctures. A perusal of the business activities and operations carried out by the Respondent Companies show that they can never form a single group identity apart from the fact that the Learned Counsel for the Appellant has not brought to the notice of this Bench under which provisions of the Code such a substantive consolidation is provided for. The Consolidation Application IA No. 397/2020 was filed solely by the Appellant on 21/07/2020 even before the IRP rejected the Claim of the Appellant on 22/07/2020 vide an email. We find force in the contention of the RP that the Appellants' prayer to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his Court, in unequivocal terms, held, that the appeal is a creature of statute and that the statute has not invested jurisdiction and authority either with NCLT or NCLAT, to review the commercial decision exercised by CoC of approving the Resolution Plan or rejecting the same. 151. The position is clarified by the following observations in paragraph 59 of the judgment in the case of K. Sashidhar (supra), which reads thus: "59. In our view, neither the adjudicating authority (NCLT) nor the appellate authority (NCLAT) has been endowed with the jurisdiction to reverse the commercial wisdom of the dissenting financial creditors and that too on the specious ground that it is only an opinion of the minority financial creditors....." 152. This Court in Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra) after reproducing certain paragraphs in K. Sashidhar (supra) observed thus: "Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of Section 30(2) of the Code, insof....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earlier part of this judgment. The case of MSL in their appeal is that they want to run the company and infuse more funds. In such circumstances, we do not think the appellate authority ought to have interfered with the order of the adjudicating authority in directing the successful resolution applicant to enhance their fund inflow upfront." 155. This Court observed, that the Court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. This Court clearly held, that the appellate authority ought not to have interfered with the order of the adjudicating authority by directing the successful resolution applicant to enhance their fund inflow upfront. 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." (Emphasis Supplied) From the aforenoted Judgements, it is clear that unless there is any material irregularity or that the Resolution Plan does not meet the essen....