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2022 (4) TMI 1112
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...., Mr. Parish Mishra, Mr. Karan Malhotra, Advocates for R5-7. With JUDGMENT ( VIRTUAL MODE ) DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER The Appeals have been filed under Section 61 of the Insolvency & Bankruptcy Code, 2016 (hereinafter 'Code') against the Impugned Order 26.04.2021 passed by National Company Law Tribunal Ahmedabad Bench, Ahmedabad (henceforth Adjudicating Authority) in I.A. No. 130 of 2021 and I.A. No. 143 of 2021 in CP(IB) No. 197 of 2018. Since both the Appeals have been filed against the same impugned order dated 26.04.2021 passed by the Adjudicating Authority, both the Appeals were heard together and the judgment was reserved on 30.03.2022. 2. Company Appeal(AT)(Insolvency) No. 352 of 2021 A) The Appellants originally filed the claim before the Operational Creditor much prior to the approval of the Resolution Plan i.e., 23.01.2000 and Interim Resolution Professional (in short IRP) Mr. Chandra Prakash Jain informed the Appellants vide his order dated 28.02.2020 appearing at page -86 of the Appeal Paper Book (Annexure- A7) as follows: .... "With reference to the above subject matter we would like to inform you that we have verified the documents and the ....
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....ncement Original CIRP expiry 30.08.2019 25.08.2020 Pg. 73-90 Appeal 5th CoC Meeting dated 19.08.2020 Pg. 131 of Reply by R1 & R2 2. Exclusion of 106 days (20.09.2019-04.01.2020) 13.03.2020 Pg. 52 of Appeal 3. Revised CIRP Expiry (IA 542/2020 seeking extension/ exclusion allowed vice order 03.09.2020) 23.11.2020 Pg. 53 of Appeal 4. Revised CIRP Expiry-270 days (IA 806/2020 Extension/ exclusion of 60 days allowed Order dated 01.12.2020) 01.02.2021 Pg. 53 of Appeal and Pg. 297 of Appeal 5. I.A. No. 71/2021-Extension of 30 days. Filed on 21.01.2021 Page. 297 of Appeal Actions after expiry of CIR Period (01.12.2021) by virtue of order dated 16.03.2021* in IA 71/2021 6. 13th CoC meeting 01.02.21 (adjourned to 02.02.2021) Pg. 136-147 (Reply of RA & R2) 7. E-Voting window 03.02.2021- 12.02.2021 Pg. 145-147 (Reply of R! & R2) 8. I.A. No. 130/2021 by filed Appellant- for implementation of OTS by Appellant/stay on e- voting for resolution plan Filed on 09.02.2021 Pg. 302-310 Appeal of 9. IA No. 71/2020 listed 03.02.2021 adjourned 22.02.2021 on to 03.02.2021 Pg. 297 Appeal of 10. IA No. 143/2021 - for approval of Resolution Plan of R-4 filed o....
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....sion for extension of time. It is further submitted that there is every likelihood that the resolution plan may be approved by the CoC and thereby the Company can be saved from liquidation. Looking to the facts and circumstances of the case. The Applicant is directed to file the resolution plan after making all deliberation on or before 22.02.2021, and at that point of time, this application will be considered. List the matter on 22.02.2021." b. Since CIRP expired on 01.02.2021, the Resolution Professional and CoC became functus officio and they cannot use their powers in terms of the provision of Section 12 of the Code and only option available was Section 33 of the Code. CoC could not have convened 13th CoC meeting on 02.02.2021 when its CIRP expired on 01.02.2021 and the resolutions passed therein are non-est and void. It is unfortunate to point out that the CoC has voted during given window of 3.12.2021 - 12.02.2021 as per the Written Submission of the Appellant in this Appeal appearing at pages 144 & 147 of the Reply of Respondent No. 1 and Respondent No. 2. Resolution Professional has committed professional error by filing I.A. No. 143 of 2021 around Mid. February, 20....
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.... this belated stage jeopardized already implemented plan. Whatever delay is there, it has resulted from frivolous litigations. The Appellants are not entitled to make allegation as to the viability of the credential of the Plan approved by the CoC with 100% majority and challenge the commercial wisdom of the CoC. CoC has complied with the requirements of Section 30(2) of the Code and Regulation 38 of IBBI CIRP Regulation. The learned Counsel also submitted that once the CoC has approved the Resolution Plan in its commercial wisdom, then such decision is unjustifiable and finally pleaded for disposal of the Application. SUBMISSION OF RESPONDENT NOS. 1 & 2 IN APPEAL NO. 424/2021: 4. The learned Counsel for the Respondent Nos. 2 & 3 has submitted that a similar Appeal has been filed by another shareholder of the Corporate Debtor against the same Impugned Order (Ronak Kundanlal Bhagat & Ors. Vs. Parthiv Parikh and Ors.) was dismissed without issuing Notice in Company Appeal (AT)(Ins) No. 364 of 2021. They have also alleged that the approval of the Resolution Plan has violated IBBI CIRP Regulation and the Appeal is severely hit by delay and laches and the Appellants are estopped from....
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....ally held that such acts cause 'commercial uncertainty, degradation in the value of the Corporate Debtor and makes the insolvency process inefficient and expensive." d. The appellant has sat on the fence for an extended period of time, is therefore now estopped from raising any objections at this highly advanced stage when the Plan has been successfully implemented after it was approved by the Tribunal vide the Impugned Order. 5. The Appellants have failed to effectively and timely implementation of the OTS proposal. The Appellants cannot derive a right to interference its OTS and thereby oppose CIRP: ... "a. The Appellant is not entitled to make allegations as to the viability and credentials of the Plan approved by the CoC with 100% majority which has further been approved by NCLT and challenge the commercial wisdom of the CoC.. The Appellant is also not entitled to seek a direction as to the implementation of the OTS which has been rejected by the CoC in the exercise of its commercial wisdom and thereafter, subsequently rejected by the NCLT. Furthermore, there is no provision in the Code or the Regulations whereunder the CoC of a Corporate Debtor can be compelled to co....
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....lowed." e. Further, this Hon'ble Tribunal in its judgment dated November 10,2021 in the matter Ananta Charan Nayak vs. State Bank of India & Ors. Company Appeal (AT)(Ins) No. 870 of 2021 (Para-9) had held that 'The acceptance of the settlement proposal by the financial creditor is a matter entirely in the ambit of the financial creditor (SBI) and we do not think that the proceedings before the Adjudicating Authority should have been held up and delay, waiting for a response by the State Bank of India. IBC does not provide for keeping the proceedings in abeyance and the application for admission has to be decided in a stipulated timeframe'. g. Further, it is a settled principle that even if an improved offer is received subsequently in a bidding process, no consideration ought to be given to such proposals- Navalkha and Sons v. Sri Ramanya Das and Ors. [AIR 1970 SC 2037 (Para-6); Vedica Procon Pvt. Ltd vs. Balleshwar Greens Private Ltd. [(2015) 10 SCC 94 (Para 53)]. SUBMISSION OF RESPONDENT NO. 3 (IN APPEAL No. 424/2021) & RESPONDENT NO. 1 (IN APPEAL NO. 352/2021/RESOLUTION PROFESSIONAL 6. The learned Senior Counsel for the Resolution Professional has submitted that the Ap....
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.... complying with the terms of OTS proposal. Under the circumstances, vide order dated 02.12.2019, this Tribunal granted an opportunity to the Appellant to settle its dues through the OTS on or before 31.12.2019. In the said order, it was also made clear that in case where Appellant - Suspended Management fails to honour terms of OTS proposal then CIRP will be proceeded in accordance with law. It was submitted that despite the order of this Tribunal, Appellant - Suspended Management did not comply with the terms of OTS. Therefore, the Respondent No. 1 and No. 2, vide e-mail dated 02.03.2020, herein informed Appellant -suspended management that OTS proposal has technically failed. But considering discussions with investor and the ongoing pandemic, Appellant - suspended Management was granted repeated opportunity to comply with the OTS terms. It was further submitted that even after that, Appellant -Suspended Management miserably failed to deposit the amount in accordance with OTS proposal. It was further submitted that Appellant- Suspended management was not granted any extension beyond 10.11.2020 and hence OTS proposal is deemed to be terminated on said date. They have also cited ....
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....lan are duly made. Under the circumstances, Appellant - Suspended Management cannot insist upon acceptance of OTS proposal at this stage more particularly in view of the ratio laid down in K. Sashidhar vs. Indian Overseas Bank, reported in (2019) 12 SCC 150. He has also submitted that the representation of the Operational Creditor is not mandatory under Section 24 of the Code and there is no obligation to approve the Resolution Plan higher than liquidation value. It was also stated that by Respondent No. 3/Resolution Professional that he had filed the Resolution Plan before the Adjudicating Authority well in time. Hence the Application is to be dismissed. ANALYSIS AND OBSERVATIONS: 7. We have carefully gone through the submissions made by Appellant/ Respondent/Resolution Professional/Successful Resolution Applicant and the input available on record and have following observations: a. It is unfortunate to record that IRP has responded to the Appellants vide IRP's letter dated 28th February, 2020 (in Appeal No. 352/2021) that the claim of the Appellants is to be made as Financial Creditor as they have given Unsecured Loan and not as Operational Creditor after verifying records b....
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....yond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days: Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once. 2[Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor: Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.] However, the Adjudicating Authority provided a leeway that the Resolution Plan is to be submitted within a specified date and at that time he will appropriately consider the extension application. This is a....
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....t in Kalpraj Dharamshi v. Kotak Investment Advisories Ltd. , [Civil Appeal Nos. 2943-2944 of 2021 (paras 149 & 154-155] noted the following in respect of commercial wisdom of the CoC: 154. 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... 155. 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. iii. In fact, reference may also be made to this Tribunal's recent decision in the matter of Union Bank of India on behalf of the Committee of Creditors of Dewan Housing Finance Corporation Ltd. vs. Kapil Wadhwan & Ors., Company appeal (AT)(Ins) No. 370 of 2021 (Para 13), wherein the Tribunal while upholding the wisdom of the Committee of Creditors in approving a resolution plan, stayed the NCLT's order directing consideration of the promoter's settlement proposal, observing that 'there would be no end if such reversals are allowed." iv. Further, it i....
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....in priority to the 2[payment] of other debts of the corporate debtor; (b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1. - For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2. - For the purpose of this clause, it is hereby declared that on and from the date of commen....
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....eject the resolution plan. (3) After the order of approval under sub-section (1),- (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. 2[(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later. Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.]" SECTION 61(3) OF IBC: .. "(3) An appeal against an order approving a resolution p....