TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1366
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.... resolution plan of the Corporate Debtor/Earth Infrastructure Ltd., has admitted that the account of Zillion Infra Project Pvt. Ltd. (in short 'Zillion Infra') was declared as Non-Performing Asset (in short 'NPA') on 31.01.2018 and that a director of Zillion Infra who was also a director of Roma Unicon Designex Consortium, was ineligible to submit the resolution plan of the Corporate Debtor's Corporate Insolvency Resolution Process (in short 'CIRP'). He has claimed that CIRP were initiated against the Zillion Infra, which is currently pending before the Adjudicating Authority. Therefore, according to the Appellant, the Adjudicating Authority has taken an erroneous decision while holding that the Resolution Applicant is not debarred under Section 29-A of the IBC as one year had not elapsed from the date of declaration of NPA of Zilliion Infra account till the date of commencement of the CIRP of the Corporate Debtor. The Appellant has stated that the CIRP of the Corporate Debtor was initiated on 06.06.2018 and therefore, it was within the one-year period after declaration of NPA of Zillion Infra on 31.01.2018 and therefore, the condition under Section 29A sub-clause (j) r/w Explanati....
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....e account of Zillion Infra was declared NPA on 31.01.2018 and the CIRP of the Corporate Debtor started on 06.06.2018 the Resolution Plan was submitted by the Successful Resolution Applicant on 31.07.2019. He has therefore, claimed that the Successful Resolution Applicant who was ineligible under Section 29-A (j) r/w Explanation-I has submitted the Successful Resolution Plan and therefore, Successful Resolution Plan being defective in this way, should be quashed and set aside. 6. Ld. Counsel for the Appellant further claimed that Mrs. Rashmi Saxena and Mrs. Shila Saxena were directors of the Roma Unicon Designex Consortium who resigned as directors of the consortium w.e.f 01.04.2019 and the Resolution Professional (in short 'RP') invited Expression of Interest (in short 'EOI') of the Corporate Debtor on 19.04.2019. Mrs. Rashmi Saxena and Mrs. Shila Saxena were reappointed directors of the Roma Unicon Designex Consortium on 10.05.2019 and the Roma Unicon Designex Consortium filed its resolution plan on 31.07.2019. He has further claimed that by Board Resolution Dated 27.07.2019 of the Roma Unicon Designex Consortium Mrs. Rashmi Saxena was authorised to take all steps for filing the ....
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....). He has further urged that the CoC has approved the resolution plan in its commercial wisdom and therefore such a resolution plan cannot be assailed by way of judicial intervention. He has relied in support on the Judgments of Hon'ble Supreme Court in the matter of Maharasthra Seamless Limited Versus Padmanabhan Venkatesh & Ors. [(2020) 11 SCC 467] and Kalpraj Dharamshi & Anr. Versus Kotak Investment Advisors Ltd. & Anr., (2021 SCC Online SC 2040) to claim that the business decision based on commercial wisdom of CoC cannot be called in question through judicial review. 8. The Ld. Counsel for the Respondent No. 2/ Roma Unicon Designex Consortium has argued that the provision of Section 29-A (c) have to be satisfied in full and interpreted strictly to arrive at ineligibility of any Resolution Applicant. He has further argued that the Adjudicating Authority has rightly held that the statutory requirements for prohibition under section 29-A (c) to operate against the Respondent No. 2 had not been fulfilled since one-year period as prescribed under Section 29-A (c) had not elapsed, and therefore, the Successful Resolution Applicant was fully eligible to submit a resolution plan. 9. ....
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....uired right under Section 60(5) to raise the issue before the Adjudicating Authority and also the right to file this Appeal as he found a material irregularity in exercise of the powers by the RP during the CIRP. He has further claimed that since there was a material irregularity in arriving at the eligibility of the Successful Resolution Applicant, it vitiated the resolution plan so submitted by this Resolution Applicant. Being aggrieved by this action of the RP, and thereafter approval of resolution plan by the CoC and the Adjudicating Authority submitted by the said RP, he derived the right to file Appeal under Section 61(3)(2) to prefer this appeal. Hence, we are of the view that the Appellant 'Bipin Sharma' has the right and entitlement to file this Appeal. 11. The Appellant has raised the issue of ineligibility of the Successful Resolution Applicant Roma Unicon Designex Consortium who submit the resolution plan as the director Mrs. Rashmi Saxena is ineligible under Section 29-A (c) and explanation - 1 provided therein to submit a resolution plan. The relevant provision under section 29-A (c) and Explanation-1 are reproduced as under:- "Section 29-A (c): Persons not eligibl....
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....iated with Zillion Infra is a sufficient ground to make her ineligible to file the resolution plan. 13. We note that the account of Zillion Infra was declared NPA on 31.01.2018. (referred to Pg. 53 of the Appeal Paper Book) Mrs. Rashmi Saxena, who was one of the directors of Zillion Infra resigned as director on 01.04.2019. (referred to Pg. 60 of the Appeal Paper Book) This is clear from the record of Ministry of Corporate Affairs wherein the director Mrs. Rashmi Saxena of the company Zillion Infra is shown as between 01.04.1997 till 02.12.2009. 14. Regarding the fact that at the time of declaration of account of the Zillion Infra as NPA, the Respondent No. 2/ Roma Unicon Designex Consortium was under the management and control of Mrs. Rashmi Saxena, the record of MCA (Attached at Pg. 60 of Appeal Paper Book), we find that Mrs. Rashmi Saxena ceased to be a director of Zillion Infra on 02.12.2009 whereas, NPA of Zillion Infra account was declared on 31.01.2018. Moreover, the CIRP of the Corporate Debtor/Earth Infrastructure Ltd. was initiated on 06.06.2018 over four months after the declaration of Zillion Infra account as NPA. Also, the resolution plan for the Corporate Debtor was....
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....t is declared NPA. As a matter of legislative policy therefore, quite apart from malfeasance, if a person is unable to repay a loan taken, in whole or in part, within this period of one year and three months (which, in any case, is after an earlier period where the corporate debtor and its financial creditors sit together to resolve defaults that continue), it is stated to be ineligible to become a resolution applicant. The reason is not far to see. A person who cannot service a debt for the aforesaid period is obviously a person who is ailing itself. The saying of Jesus comes to mind - - if the blind lead the blind, both shall fall into the ditch. The legislative policy, therefore, is that a person who is unable to service its own debt beyond the grace period referred to above, is unfit to be eligible to become a resolution applicant. This policy cannot be found fault with. Neither can the period of one year be found fault with, as this is a policy matter decided by the RBI and which emerges from its Master Circular, as during this period, an NPA is classified as a substandard asset. The ineligibility attaches only after this one year period is over as the NPA now gets classified ....
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....cision is taken, either to reject or to approve a particular plan, by a vote of more than 50% of the voting share of the financial creditors within a class, the minority of those who vote, as also all others within that class, are bound by that decision. There is absolutely no scope for any particular person standing within that class to suggest any dissention as regards the vote over the resolution plan. It is obvious that if this finality and binding force is not provided to the vote cast by the authorised representative over the resolution plan in accordance with the majority decision of the class he is authorised to represent, a plan of resolution involving large number of parties (like an excessively large number of homebuyers herein) may never fructify and the only result would be liquidation, which is not the prime target of the Code. In the larger benefit and for common good, the democratic principles of the determinative role of the opinion of majority have been duly incorporated in the scheme of the Code, particularly in the provisions relating to voting on the resolution plan and binding nature of the vote of authorised representative on the entire class of the financial....