TaxTMI 
TaxTMI 
2022 (12) TMI 145
X X X X Extracts X X X X
X X X X Extracts X X X X
....n filed under the Insolvency & Bankruptcy Code, 2016 (in short 'I & B Code 2016'). Heard the Learned Counsel for both the `Parties' and also perused the record made available to us. 2. The 'Trivandrum International Health Services Ltd.' who was a 'Corporate Debtor' was admitted into the 'Corporate Insolvency Resolution Process' vide 'Impugned Order' dated 07.02.2020 under Section 7 of the I & B Code, 2016, passed by the 'Adjudicating Authority'. Dr. C. Bharath Chandran is the 'Appellant' and was the 'Promoter' and 'Erstwhile Director' of the 'Corporate Debtor', who along with two other co-applicants, had submitted a 'Resolution Plan' for revival of the 'Corporate Debtor' which could not be proceeded since, the 'Appellant' failed to furnish the 'Performance Bank Guarantee', which was a pre-requisite. 3. Ms. Sabine Hospital and Research Centre Pvt. Ltd. is the 1st Respondent, who made an application to the 'Adjudicating Authority' for being permitted to submit a 'Resolution Plan' after the due date to submit an `Expression of Interest' (`Eol'), within the time specified by the 'Committee of Creditors' i.e., on or before 14.11.2020. The 1st Respondent name was not included in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Applicants refused to revise their Resolution Plans, but requested to consider the Resolution Plan they have already submitted. The 14th meeting of the CoC held on 07.10.2021 considered all the four Resolution Plans submitted by Dr. C Bharath Chandran along with Dr. Pradeep Mahajan and Mr. Ramu Tatini with 100% voting rights accepted the Resolution Plan of Dr. C Bharath Chandran and rejected all the other Resolution Plans. Further, in the same meeting of the CoC, it was resolved to liquidate the Corporate Debtor in case of failure of Resolution Plan or non-approval of Resolution Plan by the Adjudicating Authority and approved the appointment of Liquidator and the other terms and conditions to be adopted in case of Liquidation of the Company. Thereafter, the Resolution Professional issued a Letter of Intent (LOI) to Dr. C Bharath Chandran conveying the approval of the Resolution Plan on 12.10.2021and the same was unconditionally accepted by Dr. C Bharath Charndran successful Resolution Applicant, on 13.07.2021 on behalf of the consortium applicants. As per the conditions stipulated in the LoI & RFRP, the successful Resolution Applicant was to furnish a Performance Guarantee for Rs 5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the existing co-applicants with newco-applicants. (III) I.A. (IBC)/166/KOB/2021 filed by the Ms. Sabine Hospital and Research Centre Pvt. Ltd. who is the 1st Respondent praying that the 1st Respondent be permitted to file an "EoI" and to submit a 'Resolution Plan' for the 'Corporate Debtor'. 12(B). The Learned Counsel for the Appellant also briefed this `Appellate Tribunal' that all the aforesaid `Interlocutory Applications' were heard together by the 'Adjudicating Authority' and the Order was passed, whereby it was held that the time for 'Corporate Insolvency Resolution Process' was to come to an end on 25.02.2022 by excluding the period of time taken in deciding the Interlocutory Application Nos. (IBC)/177/KOB/2021, I.A. (IBC)/166/KOB/2021 and I.A. (IBC/180/KOB/2021. It was pointed out that considering the `Suo moto Order' of the Hon'ble Supreme Court of India, time was available till 01.01.2022, which time was insufficient to call for a fresh "EoI" in terms of Regulation 36A of the 'Corporate Insolvency Resolution Process' Regulation. Further, the `Appellant' along with the new co-applicants as well as Rs. 1st Respondent' were directed to submit their "EoI" to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Appellant herein, the 'Adjudicating Authority' gave the 'Appellant' one last chance to submit his resolution plan in cooperation with 1st Respondent in order to save the 'Corporate Debtor' from `Liquidation', but due to failure of negotiation, no joint 'Resolution Plan' could be submitted by the 'Appellant' and 1st Respondent. The 'Adjudicating Authority' disposed of the matter by admitting the 'Corporate Debtor' into Liquidation. 18. It is a case of the 'Appellant' that the 'Adjudicating Authority' gave permission to 1st Respondent wrongly to submit "EoI" after due date. It is further a case of the 'Appellant' that if he would have been allowed to replace original two co-applicants with new two co-applicants rather than allowing 1st Respondent also to submit a 'Resolution Plan', the matter would have been resolved long back. The 'Appellant' has also made a case that provisions of Regulations 39 of 'Insolvency & Bankruptcy Board of India (Corporate Insolvency Resolution Process)' Regulations, 2016, have not been complied with fully and the initial decision/commercial wisdom of 'Committee of Creditors' was by-passed by the 'Adjudicating Authority'. 19. This `Appellate Tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). (4) On receipt of an application under sub-section (3), if the Adjudicating Authority determines that the corporate debtor has contravened the provisions of the resolution plan, it shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1). (5) Subject to section 52, when a liquidation order has been passed, no suitor other legal proceeding shall be instituted by or against the corporate debtor: Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority. (6) The provisions of sub-section (5) shall not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (7) The order for liquidation under this section shall be deemed to be a notice of discharge to the officers, employees and workmen of the corporate debtor, except when the business of the corporate debtor is continue....
X X X X Extracts X X X X
X X X X Extracts X X X X
....solution plan;] (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 Actor 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, 6[the manner of distribution proposed, which may take into account the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rofessional electronically within the time given in the request for resolution plans under regulation 36B along with (a) an affidavit stating that it is eligible under section 29A to submit resolution plans; (c) an undertaking by the prospective resolution applicant that every information and records provided in connection with or in the resolution plan is true and correct and discovery of false information and record at any time will render the applicant ineligible to continue in the corporate insolvency resolution process, forfeit any refundable deposit, and attract penal action under the Code. (1A) The resolution professional may, if envisaged in the request for resolution plan- (a) allow modification of the resolution plan received under sub-regulation (1), but not more than once; or (b) use a challenge mechanism to enable resolution applicants to improve their plans. (1B) The committee shall not consider any resolution plan- (a) received after the time as specified by the committee under regulation 36B; or (b) received from a person who does not appear in the final list of prospective resolution applicants; or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lan A or Plan B, as per the tie-breaker formula announced before voting.] [(4) The resolution professional shall endeavour to submit the resolution plan approved by the committee to the Adjudicating Authority at least fifteen days before the maximum period for completion of corporate insolvency resolution process under section 12, along with a compliance certificate in 121[Form H of the 122[Schedule-I] and the evidence of receipt of performance security required under sub-regulation (4A) of regulation 36B.]] (5)The resolution professional shall forthwith send a copy of the order of the Adjudicating Authority approving or rejecting a resolution plan to the participants and the resolution applicant. [(5A) The resolution professional shall, within fifteen days of the order of the Adjudicating Authority approving a resolution plan, intimate each claimant, the principle or formulae, as the case may be, for payment of debts under such resolution plan: Provided that this sub-regulation shall apply to every corporate insolvency resolution process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (h) information memorandum; (i) all filings with the Adjudicating Authority, Appellate Authority and their orders; (j) invitation, consideration and approval of the resolution plan; (k) statutory filings with Board and insolvency professional agencies; (l) correspondence during the corporate insolvency resolution process; (m)insolvency resolution process cost; and (n) preferential, undervalued, extortionate credit transactions or fraudulent or wrongful trading. (3) The interim resolution professional or the resolution professional shall preserve : (a) electronic copy of all records (physical and electronic) for a minimum period of eight years; and (b) a physical copy of records for a minimum period of three years; from the date of completion of the corporate insolvency resolution process or the conclusion of any proceeding relating to the corporate insolvency resolution process, before the Board, the Adjudicating Authority, Appellate Authority or any Court, whichever is later. (4) The interim resolution professional or the resolution professional shall preserve the records at a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(1), the resolution professional and the committee shall keep exploring the possibility of compromise or arrangement during the period the application to liquidate the corporate debtor is pending before the Adjudicating Authority.] 39C. Assessment of sale as a going concern. (1) While approving a resolution plan under section 30 or deciding to liquidate the corporate debtor under section 33, the committee may recommend that the liquidator may first explore sale of the corporate debtor as a going concern under clause (e) of regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 or sale of the business of the corporate debtor as a going concern under clause (f) thereof, if an order for liquidation is passed under section 33. (2) Where the committee recommends sale as a going concern, it shall identify and group the assets and liabilities, which according to its commercial considerations, ought to be sold as a going concern under clause (e) or clause (f) of regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. (3) The resolution professional shall submit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave been given the opportunity to submit a Joint Resolution Plan by the Committee of Creditors, as the resolution of M/s Trivandrum International Health Services Limited ('Corporate Debtor') is of the utmost importance to me. To this end, and to ensure that there is, in fact, a resolution of the Corporate Debtor, and that the Corporate Debtor is not liquidated, I had reached out to M/s Sabine Hospital and Research Centre Pvt Ltd ("Sabine'), the only other Resolution Applicant, in order for both parties to come together and submit a Joint Resolution Plan that would be acceptable to the Committee of Creditors of the Corporate Debtor. With the impending pendency of adjudication of the Interlocutory Application filed by yourself before the Hon'ble National Company Law Tribunal, Kochi Bench, I endeavoured to time and again to discuss with and give in to the demands of Sabine with the singular goal of resolution in mind. I bring to your notice, however, that there are irreconcilable differences between the two resolution applicants and that, therefore, I will not be able to submit a Joint Resolution Plan for resolution of the Corporate Debtor. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the 'Committee of Creditors'. This `Appellate Tribunal' has also noted that there was clear divergent view among the members of the 'Committee of Creditors' and on last two occasions the 'Committee of Creditors' Member could not muster minimum stipulated 66% of voting right to approve the 'Resolution Plan'. However, the 'Committee of Creditors' unanimously with 100% `Voting Rights' recommended for 'Liquidation' of the 'Corporate Debtor'. This Appellate Tribunal is conscious of catena of Judgment of Hon'ble Supreme Court of India including K. Sashidhar Vs. Indian Overseas Bank, Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. and Vallal RCK Vs. Siva Industries & Holding Ltd. where, the Apex Court has given clear verdict that `commercial wisdom' of the 'Committee of Creditors' is supreme and there should be minimum judicial intervention by NCLAT/NCLT. 24. Not only the legislature has been clear with primacy of creditors over the 'Adjudicating Authority' for `Approval' of `Plan', but even the Judiciary through several Judgments has stated that no 'Adjudicating Authority' or `Appellant Authority' i.e. `National Company Law Appellate Tribunal' (&#....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting Authority' is concerned and section 32 read with section 61(3)of the Code insofar as the `Appellate Tribunal' is concerned and under no circumstances the 'Adjudicating Authority' or the Appellate Tribunal can trespass upon the commercial decision of the 'Committee of Creditors'. This concept was looked broadly in one of the judgments of Apex Court i.e. in the matter of Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors, wherein it was held that "73.There is no doubt whatsoever that the ultimate discretion of what to pay and how much to pay each class or subclass of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of ....