TaxTMI 
TaxTMI 
2022 (12) TMI 725
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....ber (Judicial) And (Dr. Ashok Kumar Mishra) Member (Technical) For the Appellant: Mr. Abhijeet Sinha, Mr. Ravi Pahwa and Ms Aastha Mehta, Mr. Aditya Shukla, Ms Prerana Mahapatra, Advocates For the Respondent: Mr. Karan Valecha, Mr. Jaimin R. Dave, Advocates for R1. Mr PBA Srinivasan and Mr Parth Tandon, Advocates for R2/CoC. Mr. Abhishek Sharma, Advocate for Yes Bank JUDGEMENT JUSTICE RAKESH KUMAR, MEMBER (JUDICIAL) As per order dated 01.04.2021 passed in Company Appeal (AT)(Insolvency) No.266/2021, both the appeals were directed to be listed together. Accordingly, both the appeals were heard together on number of dates and finally after conclusion of hearing on 01.09.2022 Judgement was reserved in both the appeals. Learned counsel for the parties were granted liberty to file Notes of Written Submissions within 10 days. 2. Both the appeals have been preferred under Section 61 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as the IBC) against an order dated 28.01.2021 passed in IA No.846/2020 in CP (IB) No.404/2019. By the said order learned Adjudicating Authority, National Company Law Tribunal, Ahmedabad Bench, Ahmedabad (hereinafter referred a....
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.... the capacity of operational creditor filed the application under Section 9 of the IBC Code which was admitted in the month of August, 20196 and Interim Resolution Professional namely Mr. Parthiv Parikh (Hereinafter referred to as IRP) was appointed as IRP. The present Respondent No.1, Mr. Parthiv Parikh was appointed as Resolution Professional by the Adjudicating Authority on 20.01.2020. After number of meetings of Committee of Creditors (hereinafter referred to as CoC) on 7.9.2020 in 14th CoC Meeting Resolution Plan was discussed with clarificatory addendum dated 01.09.2020 which was submitted by the appellant Mr Mathura Prasad Pandey and others, Resolution Plan as per evaluation matrix. Thereafter the appellant M/s Mathuraprasad and another communicated revised resolution plan which was put on e-voting before the CoC on 19.11.2020 and e-voting concluded on 21.11.2020. In the said e-voting the plan submitted by the appellant M/s Mathura Prasad was approved by 97.79% of CoC. Whereas about 99% voting was made against liquidation of the Corporate Debtor. 8. After approval of the Resolution Plan which was approved by majority of 97.79% on 23.11.2020, RP filed an application und....
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.... 11. Mr. Abhijeet Sinha, learned counsel has referred to judgement of Hon'ble Supreme Court reported in 2019 (12) SCC 150 K Sashidhar Vs IOB and others. He has particularly referred to para 62 of the judgement which has been quoted in the Memo of Appeal and is reproduced below: 62. The argument, though attractive at the first blush, but if accepted, would require us to rewrite the provisions of the I&B Code. It would also result in doing violence to the legislative intent of having consciously not stipulated that as a ground to challenge the commercial wisdom of the minority (dissenting) financial creditors. Concededly, the process of resolution plan is necessitated in respect of corporate debtors in whom their financial creditors have lost hope of recovery and who have turned into nonperformer or a chronic defaulter. The fact that the concerned corporate debtor was still able to carry on its business activities does not obligate the financial creditors to postpone the recovery of the debt due or to prolong their losses indefinitely. Be that as it may, the scope of enquiry and the grounds on which the decision of "approval" of the resolution plan by the CoC can be inter....
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....s', was approved vide impugned order dated 28.01.2021 in IA 846 of 2020 in C.P.(LB.) No. 404 of 2019, which enabled illegal back-door entry of the Promoter Directors who were ineligible persons with non-credible background. It is submitted that the "Resolution Plan' got approved by playing fraud, suppression of material facts and corporate debtor is not 'MSME'. Aggrieved by the same, the Appellant herein, who is the original applicant of the C.P. (1.B.) No, 404 of 2019 under which the CIRP was conducted, has filed this first statutory appeal to set-aside the impugned order approving the Resolution Plan. 2. WHAT WAS THE FRAUD PLAYED' AND MATERIAL FACTS SUPPRESSED'? A) The Promoter Directors made fraudulent misrepresentation that the Corporate Debtor (CD) was 'MSME' by submitting an online generated 'Udyog Aadhar Acknowledgement' dated 30.11.2017 with UAM No. GJ01FO086283 (Page-455 of Appeal Memo). EVIDENCE The summary of investment in Plant & Machinery as derived from the Balance Sheets of CD, shows that the CD was never a 'MSME' beyond 31.03.2008 (Page-50 of Appeal Memo). ....
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....n self certification basis and generated instantly through online auto: computer process. It further clarifies that there is no monítoring of the registration process and the enterprise filing the UAN online s liable to provide documentary proof of the information provided (Page-769 of Appeal Memo). It is therefore not a conclusive proof of MSME. The certificate from the 'MSME commissionerate shows that the investment details, submitted in online system by the CD to generate the 'Udyog Aadhar Acknowledgement' (GJOIF0086283) on 30.11.2017 was Ns. 4.50 Crores and it further states that the CD has not submitted any document in support of the information (Page-34 of Rejoinder to R 2-4), Investment in Plant & Machinery Amount as on 30.11.2017 Reference As submitted on MSME Portal by CD to generate UAM No.GJ01F0086283 Rs.4.50 crores Page 34 of Rejoinder to R 2-4 As per Balance Sheets More than Rs.31.27 crores Page 50 of the Appeal Memo Criteria as per MSMED Act, 2006 (Type "service", category 'F" >Rs.2.00 crores and <= Rs.5.00 crores Page 756 of Appeal Memo This proves that the said Udyog Aadhar Acknowledgement'....
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....e Bank Account was withheld from the Hon'ble NCLT. (Bank Statement is placed at Page 256-263 of Appeal Memo). Operating such account by Promoter Directors Was in contravention to the terms of Bank lending arrangement (Page-993 of Appeal Memo) It shows that at a reasonable proximate point of time before the submission of resolution plan, the affairs of the Promoter Director were so arranged, so as to avoid paying off the debts of the CD. Such a person fell afoul behind the intent of Section 29A. It is submitted that the abovementioned facts primarily demonstrate that the Promoter Directors intentionally with mala fide intent of playing fraud arranged their affairs designedly so as to wriggle out of the provisions of the I&B Code and suppressed the material fact which if disclosed, would have prevented them from submitting the 'Resolution Plan' and their Resolution Plan would not have been approved by CoC and ultimately Hon'ble NCLT. Reliance is placed on the following judgements of the Hon'ble Supreme Court of India: On the subiect of Suppression ol Facts in the Court Proceedings K. D. Sharma Vs. Steel. Authority of Indio ....
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....ansactions defrauding the creditors amounting to Rs. 240.04 Crores. Exclusive enjoyment of Rs. 22 Crores from the GSRTC which rightfully belonged to CIRP. Wrenching back the Corporate Debtor with clean slate Seeking exoneration of guarantees under Company Appeal (AT)(Ins.) No. 201 of 2021 for self and entire group of guarantors Premium on Fraud. 4. CONCLUSION The wrong doer Promoter Directors with non-credible background have gained back-door entry in CD by playing fraud. Resolution Plan in Impugned Order dated 28.01.2021 in IA 846 of 2020 is therefore liable to be set aside 15. Learned counsel for the Respondent in Company appeal (AT)(Ins No.266/2021 have argued that the appeal is fit to be rejected primarily on the ground of maintainability. It was argued that appellant himself was employee of the Corporate Debtor and holding high post. In the capacity of Chief Financial Officer of the corporate debtor, even he made correspondence to SBI, one of the major financial creditors and apprised SBI as if the CD was MSME. It has also been argued that even if for the time being it is assumed that earlier the CD was not MSME, however, it is d....
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....ged as a mere afterthought, with the sole intention of frustrating the Resolution Plan. a. Kindly refer to Para 4.8 of IA/846/2020 (Pg. 138 of Appeal) where Appellant stated that during the 4th CoC meeting held on 16.12.2019 the then IRP, Mr. Manish Kumar Bhagat appraised the CoC that promoters are eligible to submit resolution plan in view of the fact that Corporate Debtor is a registered MSME, howeve, Appellant never raised an objection to the same. b. Subsequently, Appellant filed IA/44/2019 praying 1or investigation into alleged fraudulent activities of the Corporate Debtor (Please see prayer Para 17.1.1 at Pg 887 Vol 2 of Appeal), however, here also there was no grievance raised regarding the MSME certificate. C. Kindly note that IA/44/2019 was disposed off vide order dated 06.09.21(At Pg. 27 of Appellant's Supplementary Affidavit), however the same was never challenged. The present appeal is only an attempt to reagitate the allegation of fraud and the same amounts to forum shopping. d. The MSME certificate was obtained on 30.11.2017 when the Appellant was the CO0 and CFO of the Corporate Debtor and was in charge of the Corporate Debtor&....
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....Application and referred to in Para 9 of admission order dated 29.08.2019 at Pg 121), suggested disposing the Corporate's Debtor's assets and further to "devise strategies" for alienating assets "against which loans have been defaulted", which patently proves that the intention of the Appellant behind triggering CIRP was not for resolution of the Corporate Debtor, but instead, to liquidate assets of the Corporate Debtor for personal gains. The aforesaid communication shows that even the present Appeal is nothing but an attempt at sabotaging the resolution of the Corporate Debtor and drive it into liquidation. The Respondent herein humbly craves leave to place on record the aforesaid communication dated 27.01.2019, annexed herewith as Annexure R/2. 6. It is vehemently submitted that the present Appeal reeks of mala fides and is in teeth with the spirit and objective of the Insolvency & Bankruptcy Code, 2016 as the intention of the Appellant is to drive the CD into liquidation and consequently, the Appeal ought to be dismissed with exemplary costs." 17. Of course written submissions have been filed by other Respondent also but in view of peculiar facts and circumstances w....
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....appellant was to approach the same Court for rectification of the order if in the allegation of the appellant there was some substance, since all the materials were available before the Adjudicating Authority to examine the same. Even though his IA was dismissed by the Adjudicating Authority wherein he had raised the issue of MSME, the said order has never been challenged by the appellant and as such at belated stage and that too before the Appellate Tribunal he is not entitled to raise an issue as if fraud was committed before the Adjudicating Authority. On this score alone we are of the opinion that the appeal is fit to be rejected. Accordingly the Company Appeal (AT)(Ins) No.266/2021 is hereby dismissed without cost. 21. So far as appeal filed by M/s Mathuraprasad and others i.e. Company Appeal (AT)(Ins) No.201/2021 is concerned before going into the merit it would be appropriate to reproduce Section 31 of the IBC which is as follows: "31. (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall ....