TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 378
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....33 of the I&B Code read with Rule 11 of the NCLT Rules 2016 for initiating Liquidation Process against the Gourmet Renaissance Private Limited (Corporate Debtor). By which the Adjudicating Authority passed the following orders: "The application be and the same is allowed. Gourmet Renaissances Private limited shall be liquidated in the manner as laid down in Chapter-III of the Code with the following consequential directions: a) Ms. Vaishali Arun Patrikar having Registration No. IBBI/IPA/-002/IP-N00812/2019-2020/12566 to act as Liquidator of the Corporate Debtor. b) She shall issue public announcement stating that Corporate Debtor is in liquidation. c) The Moratorium declared under Section 14 of the IBC 2016 shall cease to operate here from. d) Subject to section 52 of the IBC 2016 no suit or other legal proceedings shall be instituted by or against the Corporate Debtor. This shall however 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. e) All powers of the Board of Directors, Key Managerial Personnel and partners of the Corporate Debtor shall cease to have e....
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....reinafter referred to as "NAMCO") is a Multistate Scheduled Bank that in the usual course of its business, lent certain sums to Corporate Debtor and went to have the largest representation on the Committee of Creditors. On 28.06.2019, the aforementioned IRP, Mr. Alkesh Rawka furnished FORM AA written consent to act as Resolution Professional of Appellant pursuant to which was appointed as the Resolution Professional vide a resolution passed by the CoC on 04.07.2019. The IRP subsequently filed an Application under Section 33 of the IBC code, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016 praying for instituting Liquidation Process against Respondent No. 2 Company. The Impugned order dated 05.08.2021 passed by the Ld. Adjudicating Authority in the said Application, IA. No. 244 of 2021 in C.P. (IB) No. 1661/MB/2018 is being challenged herewith vide the present Appeal before this Tribunal. iii) A Petition under section 9 of the Insolvency and Bankruptcy Code, 20l6 was instituted by Respondent No. l on the alleged failure of Respondent No. 2 Company to pay Respondent No.1 Media Contractor a sum of Rs. 13,91,744/-. The two entities had entered into a contract o....
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....Order of Moratorium would be in effect till culmination of the resolution process, or an Order is passed approving liquidation of Corporate Debtor, Respondent No. 2 under relevant provisions of the IBC. It also proceeded to appoint Mr. Naren Seth as the Interim Resolution Professional to oversee functions delegated under the I&B Code, 2016. Pertinently it failed to notice that Appellant herein could not be excluded from participation the CIRP on account of him being the Chairman and MD of Corporate Respondent, an entity with a MSME certification. Public announcements by the IRP were carried in local newspapers in accordance with the conditions contained in Section 13 and Section 15 of the IBC, 2016. The last date for submissions of claims qua Respondent No. 2 Corporate Debtor to be 24.03.2019. Pursuant to the submission of Claims and verification thereof from Operational and Financial Creditors vide Form B and Form C respectively, a report certifying the constitution of a Committee of Creditors (COC) was filed with the Adjudicating Authority in compliance with Section 2I of the IBC and regulation 17 (1) C of the I&B Regulations, 2016. The Committee of Creditors had their preliminar....
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....days, approval was accorded to Resolution Professional to approach the Adjudicating Authority seeking extension after the 180 days period from the commencement of CIRP (i.e., 07.09.2019) in line with Section 12 of the IBC. Subsequently M.A 3077/2019 was placed for consideration before the Adjudicating Authority, wherein RP of Respondent No.2 sought a further 90 days for closure of the CIRP. In its Order dated 18.09.2019, the Ld. Adjudicating Authority accorded sanction to M.A 2434/2019 wherein the replacement of RP's was prayed for. The Ld. Adjudicating Authority recorded the reasons for replacement as failure of then RP to prepare an Information Memorandum and the contention that there was no substantial work done by him. During the originally envisaged 180 days' time frame provided for Resolution, no concrete measures by the COC were taken to resolve the crisis of Corporate Debtor and substantial time was squandered. On 05.10.2019, the Fifth Meeting purportedly convened to appoint Registered valuers and Forensic Auditors was concluded without carrying out the appointments. The Appellant, debilitated by an illness and recovering in the hospital was not present. The COC app....
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.... No. 2 Company in a weeks' time. On 11.11.2019, Mr. Atul Kumar Gupta provided certain details pertaining to measures adopted and undertaken by Invent ARC in a letter to the Chairman of NAMCO, inter alia highlighting the fact that Invent ARC had already settled liabilities to the tune of Rs.10 Crores. The Resolution Applicant expressed serious concerns over the serious illness of Appellant herein. The Appellant craves leave to refer to and rely upon the same when produced the threat to move an Application under Section 19(2) by majority members of the CoC and RP was made in every subsequent gathering of the CoC and was used as leverage to relegate Appellant herein to the side-lines and as evidenced by subsequent events and records, Appellant was always considered persona non grata, expressly contravening Section 240 (1) (A) of the I&B Code,2016. The COC was informed of the appointment of Statutory Auditors of Respondent Corporate Debtor, The COC further resolved to publish Form G inviting expression of interest from prospective Resolution Applicants, which were subsequently published on 19.11.2019 in two local newspapers. In view of the resolution to publish the expression of in....
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.... 2020 as demanded by Respondent No. 3 NAMCO. He appealed to the fellow members of the COC to consider the changed circumstances on account of the Income Tax Demand Order pertaining to Respondent No. 2, Corporate Debtor and extend the time to the proposed dates. The aforementioned dates proposed by Mr. Atul Kumar Gupta were rejected by the COC who demanded that a Resolution Plan be submitted by 21.01.2020. In light of this unilateral rejection, Mr. Atul Kumar Gupta was constrained to send another appeal to the Chairman of Respondent No.3 NAMCO requesting the lenders to consent to a revised date especially in light of a further Show Cause Notice indicating enhanced penalties on Corporate Debtor. Mr. Gupta further pointed out that the date for submission of the Resolution Plan set unilaterally by the lenders to be 21.01.2020 was not communicated with him and therefore pointed out his inability to adhere to the aforesaid timeline set out by the lenders. He urged caution on account of the intricacies involved and to be considered in the IBC and requested that a mutually agreeable revised date be provided to consider the proposal. x) On 04.02.2020, the Eighth Meeting of the COC was con....
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....ego monies amounting to Rs. 744,150,4031/-. Prior to the scheduled 9th meeting of the CoC, the Prospective Resolution Applicant transmitted the points proposed to be tabled at the meeting of the CoC. Inter alia, it clearly details the proposed terms of payment including redemption of outstanding amount of Rs. 3 Crore in 360 days but payment terms of the Rs. 24 Crore Security Receipts would be redeemed within 24 months after the first year i.e 3 years in total. The communication via WhatsApp dated 18.03.2021 was sent to members of the CoC including the Chairman, CEO, and the legal advisor of NAMCO Mr. Rahul Totala. Meanwhile, in response to sustained and recurrent threats to file an Application under Section l9(2) of the Code, in a detailed, emphatic, and unequivocal letter address to this Chairman, COC dated 18.03.2020, Appellant herein expressed extreme anguish at the prejudicial behaviour and non-cooperation of RP. Pertinently, the Appellant appealed to table and record the letter during the Ninth meeting scheduled to convene on 1 8.03.2020. Inter alia he detailed numerous instances of extremely biased conduct of RP and several shortcomings in the discharge of RP's roles and ....
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....l as a Resolution Applicant, placed emphasis on clearing the liabilities of NAMCO on a priority basis, over and above the Resolution Applicant's own claims. However, the legal advisor viewed this as contradictory to Regulations 30 and 38 (1) (b) of the I&B Code, 2016. The Resolution Plan formulated by M/s ARC Invent unequivocally and unambiguously stated that the term of implementation would be 36 months from the date of acceptance of the Resolution Plan by the Ld. Adjudicating Authority in accordance with the provisions contained in Regulation 38(2)(a) of the IBC. There was no semblance of ambiguity in this elucidation. Pertinently, the response to this as seen in Paragraph 4 of the mail dated 18.09.2020 was marked as 'Complied' by the legal advisor of NAMCO. The Prospective Resolution Applicant also stressed that Respondent No. 2, Corporate Debtor was an MSME and all regulations within and without the IBC Code, 2016 supports the unbiased revival of an MSME. The RA intended to retain the services of Appellant herein, Mr. Suniel Bharwani as an external professional consultant during the term of implementation of the plan. It was pointed out that Appellant and his family....
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....e document addressed other concerns that were raised, and the Resolution Applicant inter alia undertook to ensure compliance with the Regulations of CIRP and the same was accepted by the Legal Advisor in principle. The RA also pointed out that there was unequivocal agreement between him and NAMCO regarding the settlement of Rs.25 crores as outstanding Principal owed to NAMCO and the same had been adequately provisioned by the Auditor of Corporate Debtor. The RA was amenable to suggestions by the COC regarding changes to the proposed terms of provision of Performance Guarantee and pointed out that the plan was accorded in principle verbal acceptance by the Chairman of NAMCO. The Resolution Applicant pointed out that all purported contradictions were actually expounded in detail in the fine print of the Resolution Plan and that the settlement of amounts in accordance with Regulations 38 (1) A & (2) (A) were to be 100% of the outstanding amounts. xv) The Prospective Resolution Applicant also addressed a letter dated 18.09.2020 to Mr. Vijay Sane, the Chairman of the CoC at that point in time inter alia brining to his attention the challenges and the devastation wrought by the prevail....
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....ution Professional beseeched the CoC to refrain from turning a blind eye to multiple instances of wrongdoings on part of the Resolution Professional that would ultimately be detrimental to the wellbeing of all stakeholders including NAMCO. Mr. Gupta again wrote a letter to the Chairman of the CoC on 23.09.2020 and on 29.09.2020 requesting him to treat and discuss the matter threadbare and on its merits with the other members of the CoC inter alia reminding hm that the option of liquidation is not financially viable for all stakeholders. He again pointed out that Resolution Professional had hitherto desisted from making any reference to a business plan but had suddenly sought to treat the non-existent plan as pivotal to the successful implementation of the proposed Resolution Plan. The Resolution Applicant hoped that saner minds would prevail, and a positive outcome could be achieved by cooperation from all concerned personnel. The Resolution Applicant stressed that he had already demonstrated his bonafides and earnestness in resolving issues and anomalies relating to the Corporate Debtor and had invested a substantial sum in the process. xvi) In a mail dated 30.09.2020, the Resol....
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.....2020 and 12.10.2020. A resolution was passed to file an Exclusion Application before the Ld. Adjudicating Authority and the reworked Resolution Application was to be filed after another 8 days. An Application No. IA 2215 of 2020 was subsequently filed before the Ld. Adjudicating Authority seeking exclusion time period of l0 days. The Ld. Adjudicating Authority on 07.01 .2021 heard and passed an Order granting an exclusion of 10 days. The Ld. Adjudicating Authority observed that the CIRP would normally come to an end on 17.0I.2020. In the Tenth Meeting dated 12.01.2021, CoC inter alia decided to extend the final CoC meeting to 16.01.2021. In a letter dated 14.01 .2021 addressed to the Resolution Professional, the Resolution Applicant placed on record a formal protest against the refusal by the Resolution Professional to share details of the valuation details of the Corporate Debtor which was crucial to fine tuning of the Resolution Plan and that was being withheld for malafide reasons. The Resolution Applicant also expressed dismay at the belated announcement by the Resolution Professional of the Order dated 07.01 .2021 passed by the Ld. Adjudicating Authority in IA 2215 of 2020 th....
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....ssion, Mr. Bagul informed that the proposal put forward by Mr. Gupta was not acceptable to the Bank and the Resolution plan stands rejected. It is pertinent to mention that terms elucidated in the Resolution Plan submitted was as per the terms discussed and deliberated with the Chairperson of the CoC a few hours before the last CoC meeting and that the Chairperson had not indicated any disagreement with the Proposal. Had he done So, Resolution Applicant would have revised the terms that attained finality on account of it being the last and final meeting of the CoC to discuss the plan. Furthermore, the Ld. Adjudicating Authority granted time whilst passing the order in IA 2215 of 2020 on 07.01.2021 solely on the ground that the CoC was not in a position to consider the revised plan and hence requested time but rather unsurprisingly, the CoC did not wait to discuss changes with Resolution Applicant when the revised proposal was sent on 15.01.2021 indicating that this was a premeditated tactic to torpedo the CIRP. In view of the rejection of the Proposed Resolution plan, the CoC resolved to proceed with Liquidation of Corporate Debtor pursuant to Section 33 of IBC on going concern bas....
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....ion 240-(A) (l) of the I&B, Code,20I6. The Appellant was erroneously designated as a wilful defaulter by the erstwhile management of NAMCO and the same was brought to the attention of the CoC who chose to ignore the same so as to achieve its objective of liquidation of Corporate Respondent rather than a meaningful resolution. The NAMCO did not revoke the status of Appellant as a wilful defaulter despite an overt and unambiguous request by the Resolution Applicant who felt that it would pave way for his participation in Resolution Process and aid in the infusion of funds to revive Corporate Debtor. The refusal by NAMCO to include Appellant herein in the Resolution process also prevented takeover of the loans owed to NAMCO by competent financial institutions. 5. It is further submitted that the response of Resolution Professional to the clarifications provide by the Resolution Applicant indicate that there was virtually no opposition to the term of the Resolution plan (36 months). The Resolution Professional conveyed that Regulation 38 (2) (A) of the CIRP Regulations, 2016 pertaining to the implementation schedule was complied with in letter and spirit. The proposed plan by the Appe....
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....e fact that there was no objection or alternative put forth by Respondent No.3 NAMCO with regards to the tenure of payment at any point in time until they substantially reduced the term from 36 months to 12 months in the last and final meetings on 16.01.2021. The Prospective Applicant was effectively stonewalled from providing an alternative payment term to the satisfaction of the CoC by members acting in concert to prevent the approval of the Resolution Plan as the CIRP timeline ended on 17.01.2021, a day after the plan was considered for approval of the CoC. There was no inkling of any change with regards to the repayment tenure of 36 months contained in the Proposal despite it being discussed in detail by Resolution Applicant on multiple occasions. The NAMCO did not provide Prospective Resolution Applicant with an opportunity to induct changes in the repayment term by proposing the revised tenure of 12 months in the final hour of the last meeting of the Committee of Creditors. The decisions and the purported wisdom of the CoC were vitiated by its acts of suppression and conflict of interest. Based on these submissions, the impugned order cannot be sustained in the eye of law, th....
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....itted the EOI after a delay of 1 week to the Respondent No. 2. Further, the Respondent No. 2 sent an email to the members of committee of creditors intimating about EOI received and further requested that in the best interest it is necessary to modify the EOI so as to make Prospective Resolution Applicant Eligible Applicant and also intimated CoC and Prospective Resolution Applicant that Seventh Meeting of CoC will be held on 18.12.2019 for discussing the process ahead. * 12.12.2019 The Respondent No. 2 sent an email to Resolution Applicant requesting to submit Resolution Plan and also shared Information Memorandum & RFRP stating all the facts, ongoing litigation of Income Tax Department and Sales Tax Department, informed that Corporate Debtor don't have proper registered office, no books of accounts has been maintained by them and further informed that audit for the Financial Year 2017-18 and 2018-19 has not been caried out and updated that all the documents were prepared as per details available with him and by management and Appellant. * 16.12.2019 Reminder email was sent by Respondent No. 2 to CoC and Prospective Resolution Applicant regarding the Seventh Meeting of CoC whi....
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....solution plan should be submitted and if it is not received then liquidation application will be initiated against the corporate debtor. * 11.02.2020 The First Resolution Plan was submitted by the Resolution Applicant and Respondent No. 2 on 13.02.2020 submitted a reply stating that the Resolution Plan is not compliant with the provisions of the Code and thus required to be complied. * 14.02.2020 The Resolution Applicant through a letter intimated committee of creditors that the revised resolution plan will be submitted by 18.02.2020 and Respondent No. 2 should accept it. And again, another opportunity was provided. Further the resolution plan received on 18.02.2020. * 27.02.2020 The Respondent No. 2 informed the members of committee of creditors that Hon'ble National Company Law Tribunal has provided 10 more days for submission of resolution i.e., until 07.03.2020 and 2 weeks' time to conduct committee of creditors meeting to consider the resolution plan * 07.03.2020 Third revised resolution plan was received and on 09.03.2020, after preliminary analysis it was stated by the Respondent no. 2 through email that certain documents and details were not submitted as par....
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....ance. Further, from the above facts it clearly shows that, the Resolution Applicant had very casual approach toward the CIRP and submission of Resolution Plan. The Appellant regarding letter submitted by Prospective Resolution Applicant alleging that CIRP of the Corporate Debtor was disrupted due to malafide intention of Respondent No. 2 and Respondent No.3 is false and specifically denied. The Respondent No. 2 had within his scope asked for detailed business plan so as to get better picture for the revival of the corporate debtor. Further, it has been alleged that the Respondent No. 2 has not shared signed balance sheet indicating current financial status of the corporate debtor is not true. The Resolution Applicant was well aware in advance that the financial records of the Corporate Debtors were never provided by the Appellant even though regular reminder given and emails were sent. The Respondent No. 2 has timely provided all the required details to the Prospective Resolution Applicant and adequately all the concerns as available with him. And thus, Appellant is resorting to unwarranted allegations devoid of merits. Further, the Respondent No. 2 would like to reiterate the mult....