TaxTMI 
TaxTMI 
2022 (11) TMI 1193
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....018, by the 'Adjudicating Authority' ('National Company Law Tribunal', Hyderabad Bench-II), whereby, the 'Adjudicating Authority', dismissed the Petition filed under the Insolvency & Bankruptcy Code, 2016 (in short 'I & B Code', 2016). Brief Facts: 2. M/s Earthin Projects Ltd. is the 'Appellant' in present 'Appeal', before this 'Appellate Tribunal' is the 'Successful Resolution Applicant'. Mr. Anup Kumar Singh is a 'Resolution Professional' of 'Indu Projects Ltd.', is the 1st Respondent herein. 'Indu Projects Ltd.', is the 'Corporate Debtor' under 'Corporate Insolvency Resolution Process', is the 2nd Respondent herein. 3. On an application filed by the Bank of India as Financial Creditor of the Corporate Debtor (Indu Projects Ltd.), the 'Adjudicating Authority' admitted 'Corporate Insolvency Resolution Process' on 25.02.2019 and Mr. Gopi Krishna Byadigera was appointed as 'Interim Resolution Professional' on 05.03.2019. However, on the recommendation of the 'Committee of Creditors', Mr. Anup Kumar Singh was appointed as 'Resolution Professional' by the 'Adjudicating Authority', on 04.06.2019. 4. The 1st Respondent invited 'Expression of Interest' in Form-G on 16.0....
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....ayments made till that date shall be liable for forfeiture. The RA confirms that in case the RA fails to pay the balance instalments as mentioned in the Resolution Plan, and there is subsisting default beyond 7 days from schedule date, such default amount shall be liable for simple interest @ 8% per annum". 7. In terms of the approved 'Resolution Plan' a monitoring committee was formed on 28.10.2021 consisting of three representative one each from 'Resolution Professional', 'Financial Creditor' and 'Successful Resolution Applicant' (the 'Appellant' herein). 8. The 'Appellant' has brought out that he was under honest belief that effective date being 25.10.2021 i.e. date when approved 'Resolution Plan' was uploaded (in contrast to the provisions made in the 'Resolution Plan' which defines effective date as date of order of approved by the 'Adjudicating Authority' which was 01.10.2021). Be that as it may, the 'Appellant' failed to make payment of Rs. 501 crores within 90 days of the effective date. The 'Appellant' has brought out that this was due to post COVID-19 uncertainly, delayed disbursement of fund by global investors etc. The 'Appellant' approached the 'Adjudicating ....
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....Paragraph No.8, wherein the amount paid as 'Earnest Money Deposit' by the 'Applicant' shall have to be forfeited and proceedings under Section 74 (3) of the I&B Code, 2016 have to be initiated as per Law shall not hold good. In so far as the observations made by the 'Adjudicating Authority', ("National Company Law Tribunal", Hyderabad Bench) in the impugned order in IA No.77 of 2022 in IA No.861 of 2020 in CP(IB)-372/7/HDB/2018 are to the fact that "we are very upset with the manner in which the 'Monitoring Committee' has given a very very long rope to the Applicant in making the payment. We get a doubt on the fairness of the 'Monitoring Committee' with regard to implementation of the Resolution Plan" to that extent is expunged by this Tribunal in furtherance of 'substantial cause of justice'. Accordingly, the instant Company Appeal (AT)(CH)(Ins) No.86/2022 stands disposed of. No costs. The pending connected I.A. Nos.183 & 184/2022 are closed." [emphasis supplied] 11. This 'Appellate Tribunal' note that in the meantime one 'Operational Creditor' M/s Vishal Nirmiti Pvt. Ltd. approached Hon'ble Supreme Court of India vide Civil Appeal No. 3660 of 2022 un....
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....2022 allowed this I.A No. 283 of 2022 and directed the 1st Respondent to complete the 'Corporate Insolvency Resolution Process' a fresh within 60 days from the date of order dated 05.09.2022 and also made clear that no further extension would be given. The relevant portion of the judgment of the 'Adjudicating Authority' dated 05.09.2022 is also been quoted as under :- "This IA is filed by the Resolution Professional seeking extension of 60 days time to conduct the CIRP afresh in the light of the failure of the successful bidder in honouring the commitments made in the Resolution Plan. The IA is allowed and the Resolution Professional is directed to complete the Corporate Insolvency Resolution Process afresh, within 60 days from today and no further extensions, whatsoever, will be granted in the matter. Accordingly, prayer in Item No. C in IA(IBC)/283/2022 is allowed. Prayers in Item Nos. A, B are not pursued by the Resolution Professional. In view of passing of the order in this IA and taking into consideration the earlier orders of this Bench on 01.03.2022 rejecting granting of extension of time to the Successful Resolution Applicant f(SRA) and also the ....
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....90 days within which payments have to settled as indicated in the Resolution Plan. 15. The Learned Counsel for the Appellant emphasised that due to post COVID-19 circumstances including uncertain economic environment, procedural delays and delayed disbursement of fund by global investors the 'Appellant' could not meet the time line for settling claims as given in the 'Resolution Plan' and accordingly the 'Appellant' approached the 'Adjudicating Authority' by way of I.A. No. 77 of 2022 (Extension Application) for seeking extension of timelines, however the 'Adjudicating Authority' dismissed the extension application ignoring the prevailing circumstances and genuine ground for seeking extension. 16. The Learned Counsel for the Appellant pointed out that despite his best intension to resolve the matter and bring back the 'Corporate Debtor' from liquidation stage, the 1st Respondent approached the 'Adjudicating Authority' vide I.A 283 of 2022 with several prayer, inter-alia, invoking EMD bank guarantee of the 'Appellant' and initiating fresh 'Corporate Insolvency Resolution Process'. 17. The Learned Counsel for the Appellant mentioned that aggrieved by this he approached this ....
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....ion of principal of natural justice and "Audi Alteram Partem". The Learned Counsel for the Appellant also assailed the 'Adjudicating Authority' failed to give proper speaking order. 21. The Learned Counsel for the Appellant stated that they had already made part payment of around Rs. 60 crores under the 'Resolution Plan' and if the 'impugned order' is not set aside, the investment made by the 'Appellant' will go down the drain. The Learned Counsel for the Appellant also stated that the very purpose of the I & B Code, 2016 is to bring back the 'Corporate Debtor' from the brink of the Insolvency and put it back as a going concern. The Learned Counsel for the Appellant also mentioned that since then they have tied up the funds with foreign entities and are ready to settle the 'Resolution Plans'. The Learned Counsel for the Appellant further stated that the 'Resolution Plan' itself had foreseen the circumstances of delay and provided for delayed payment @ 8% which they are willing to pay. 22. The Learned Counsel for the Appellant stated that the 'Adjudicating Authority' failed to exercise inherent powers granted to it under Section 60(5) of the I & B Code, 2016 to meet ends of ju....
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....ant' and the content of the appeal. The Learned Counsel for the Respondent brought to the notice of this 'Appellate Tribunal' that I.A No. 654 of 2022 filed by the 'Appellant' for seeking urgent and immediate relief against ex-promoters/ directors of the 'Corporate Debtor' including request of forensic audit did not have any substance on merit and was initiated only to delay the whole proceedings and making the payments as per 'Resolution Plans'. The Learned Counsel for the Respondent also assailed the contention of the 'Appellant' that he was not given an opportunity of being heard and his rights of natural justice were breached were simply misconstrued as the 'Adjudicating Authority' considered all the relevant factors into consideration before disposing I.A. No. 654 & 655 of 2022. The Learned Counsel for the Respondent also mentioned that the 'Resolution Plan ' was supposed to be prepared with due diligence and the 'Appellant' cannot be allowed to raise boggy issues to circumvent the settlement payments. 28. The Learned Counsel for the Respondent also denied averments made by the 'Appellant' that he was not given hearing in I.A. No. 655 of 2022 ('Impleadment Applications'). T....
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....itted that the Hon'ble Supreme Court of India in the matter of K. Shashidhar vs. Indian Overseas Bank and Others (2019) 12 SCC 150; Committee of Creditors, Essar Steel India Limited vs. Satish Kumar Gupta and Ors. (2020) 8 SCC 531; Maharashtra Seamless Limited vs. Padmanabhan Venkatesh and Others (2020) 11 SCC 467 gave very clear verdict that commercial wisdom of CoC is supreme and neither the 'Adjudicating Authority' not the 'Appellate Authority' can trespass the commercial wisdom of the 'Committee of Creditors'. 32. The Learned Counsel for the Respondent mentioned that the pursuant to the 'Adjudicating Authority' order dated 05.09.2022, the 1st Respondent has already issued fresh 'Form G' inviting 'Expression of Interest' from perspective Resolution Applicants on 19.09.2022 in order to revive the 'Corporate Debtor' and any intervention at this stage will only frustrate the whole process and reduce the economic value of the 'Corporate Debtor'. 33. The Learned Counsel for the Respondent concluded his arguments with the strong plea to dismiss the Appeal. Findings 34. Heard the Learned Counsel for the Appellant and the Respondents and also perused record made available to....
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....ional creditors in the event of a liquidation of the corporate debtor under section 53; (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. [Explanation.-For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law]; (3) 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). [(4) The committee of creditors may approve a resolution plan by a vote of not less than 5 [sixty-six] per cent. of voting share of the financial creditors, after considering its feasibility and viability, and suc....
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....udicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.] (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject 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. [(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 wh....
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.... "The RA confirms that in case the RA fails to pay the balance instalments as mentioned in the Resolution Plan, and there is default beyond 60 days from schedule date, all the payments made till that date shall be liable for forfeiture. The RA confirms that in case the RA fails to pay the balance instalments as mentioned in the Resolution Plan, and there is subsisting default beyond 7 days from schedule date, such default amount shall be liable for simple interest @ 8% per annum". * Taking 01.10.2021 as effective dated 90 days period and additional 60 days with interest of 8 % per annum would be over quite sometime back. * Admittedly, the 'Appellant' till date, even after substantial period is over has paid around Rs. 60 crores as against required to be Rs. 501 crores as per 'Resolution Plan' in addition to Rs. 40 crores as working capital (total Rs. 541 crores). Thus, broadly 90% of Resolution Plan settlement amount is yet to be brought in by the 'Appellant'. * It is noted that this 'Appellate Tribunal' has granted additional three months period vide its earlier order dated 13.04.2022 which has also been noted by the Hon'ble Supreme Court of India while disposing the....
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....ng Authority' ought to have decided 'Impleadment Application' being necessary an important party in I.A No. 283 of 2022 and the 'Adjudicating Authority' erred in disposing I.A. No. 283 of 2022 without disposing First Appellant's Interlocutory Application. It is a case of the 'Appellant' that the 'Adjudicating Authority' erred in summarily dismissing the direction and 'Impleadment Application' without appreciating the merit for non-speaking 'impugned order'. * This 'Appellate Tribunal' has already noted and brought in preceding paragraphs averments made by the 'Respondent' on above contentions of the 'Appellant'. * It has been observed from the order of the 'Adjudicating Authority' while disposing I. A 283 of 2022 vide order dated 05.092022 that the 'Adjudicating Authority' has factored into I.A. No. 654 of 2022 and has recorded that this has become infructuous due to non - payment by the 'Appellant' and failure to comply with the orders dated 13.04.2022 passed by this 'Appellate Tribunal'. The 'Adjudicating Authority' has also taken a view that once the extended time lines of stipulated by this 'Appellate Tribunal' is over the 'Adjudicating Authority' do not have any further ....
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.... factored into the fact that despite this 'Appellate Tribunal' extension of three months to make all payments, the 'Appellant' failed to satisfy the terms of the Resolution Plans. The 'Appellant' while submitting the 'Resolution Plan' was supposed to know all the circumstances including economic uncertainties, if any, and requirement for generation of funds. It can not be the case of the 'Appellant' to invoke such pleas subsequent to approval of 'Resolution Plan'. This 'Appellate Tribunal' also note that despite substantial period of the approval of the 'Resolution Plan', the 'Appellant' is yet to settle around 90% of its liabilities towards the 'Resolution Plan'. * It is a fact that the timely resolution is very important in case the value of the 'Corporate Debtor' is required to be preserved and in order to ensure maximisation of value of assets of the 'Corporate Debtor'. This 'Appellate Tribunal' has also noted that pursuant to the 'Adjudicating Authority' order for fresh 'Corporate Insolvency Resolution Process', the 1st Respondent has already issued fresh 'Form-G' on 19.09.2022 inviting fresh "Expression of Interest" from prospective Resolution Applicants and any interferen....