TaxTMI 
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2023 (3) TMI 448
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.....1348/ND/2019, whereby the Adjudicating Authority has directed the Resolution Professional ('RP') to exclude 205 Flats from the pool of the Assets of the 'Corporate Debtor'. 2. Facts in brief are that I.A.1606/2021 was preferred by the Applicants namely Nisus Finance and Investment Managers LLP (hereinafter referred to as 'Nisus Finance') and Beacon Trusteeship Limited (hereinafter referred to as 'Beacon') seeking the following reliefs: (a) direct the RP to amend the Information Memorandum so as to exclude 268 Flat Units in the Real Estate Project Casa Royal Sanskriti from the agents of the 'Corporate Debtor'. (b) declare that 268 Units which are Mortgaged in favour of the Appellants are within the exclusive charge of the Applicants, and hence not available to any other Creditor during the CIRP and further direct the RP, not to include these 268 Flats in the pool of the 'Corporate Debtor'. 3. It was averred that Nisus Finance and Beacon are 'Financial Creditors' and claim their rights by virtue of the Debenture Trust Deed ('DTD') dated 13.06.2017, executed between Nisus Finance as facility Agents/Debenture Holders, Beacon as 'Debenture Trustee', M/s. Earthcon Infracon Private....
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....68 Units and transferred all rights, title and interest in relation to the said units to Beacon and further created as an exclusive charge of the Mortgage Properties by way of various Mortgage Deeds in favour of Beacon which was acting for and on behalf of the Debenture Holders. 5. It is stated that the RP in the Information Memorandum included these 268 Flat Units receivables thereof, when Nisus Finance objected to the same vide, email dated 04.02.2021 and the RP in his Reply dated 20.02.2021 sought for the relevant Clause from the Guarantee Deed, creating Mortgage pledge and hypothecation. Nisus Finance responded to the email and provided BBAs and the Power of Attorney and the mentioned the relevant Clauses of 9.1 and 9.6 of the DTD. While so, the RP vide email dated 01.03.2021 denied the transaction between the 'Corporate Debtor' and EIPL as well as the charge in favour of Nisus. The Adjudicating Authority while allowing the Application preferred by Nisus and Beacon framed the following issues and observed as hereunder: "11. The moot questions which emerge from the above pleadings are as under: a) Whether 268 flats can be taken off from the assets of CD in terms of Section ....
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....s of DTD, Mortgage Deed etc. 13. In view of the above findings, this Tribunal hereby allows the IA on following terms: i) Out of 268 flats, 205 flats shall be considered as being under exclusive control and rights of Applicants and the same shall not form part of the Information Memorandum (IM) and rest of 63 flats for which no Mortgage Deed was registered, no charge filed with RoC and not registered with Sub-Registrar, shall continue to remain part of the IM. ii) The voting rights of Applicant No. 1 as secured 'Financial Creditor' herein in the CoC shall be reduced by the amount of the value aforesaid 205 flats. iv) The RP is directed to issue appropriate amendment to the IM immediately for information of all concerned." 6. Submissions of the Learned Sr. Counsel, Mr P. Nagesh appearing on behalf of the Appellants/Resolution Professional of the 'Corporate Debtor': * Learned Sr. Counsel, Mr P. Nagesh submitted that the relationship of the 'Corporate Debtor' and the Issuer Company is disputed and submitted that the Issuer Company gave a loan to the 'Corporate Debtor'; that 'Corporate Debtor' sold Flats worth more than 1115.50Crs./- to the Issuer Company and Rs.5.79Crs./- r....
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....The 'Corporate Debtor' also executed Offer Purchase Agreement that the Issuer Company/EIPL to buyback the Flats sold to the Issuer Company at a price of Rs.1,250 per square foot at a Minimum Guarantee Price of Rs.2,500 per square foot and the buyback period coincides with the redemption schedule of the Debentures. It is submitted that no man of ordinary prudence would enter into a transaction of sale and purchase involving a loss of Rs.69.67Crs./-. * It is argued that a conjoint reading of the Offer Purchase Agreement and the Escrow mechanism, the money is going back from the 'Corporate Debtor' to the Respondent even without any default made by the Issuer Company. Hence the circle of incoming and returning of funds is complete which clearly establishes that the amount received from the Issuer Company is a 'loan' and not a Sale Consideration. * Clauses 4 & 9 of the DTD are contradictory to each other and if two constructions are possible, the one which gives effect to all the Clauses of the document must be preferred to over that which defeats some of its Clauses. The BBAs were not acted upon at the time of sale to the actual end user. * No sale was recorded by the 'Corporate ....
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.... Beacon as a DTD and EIPL, the 'Corporate Debtor', herein in the capacity of the Corporate Guarantor for the purpose of raising funds to the Issuer Company. Learned Counsel placed reliance on the Clauses 9.1, 9.1.1, 9.1.7 of the BBAs, on the details of the Mortgage Premises and '151 Units' as defined in the first DTD. * On 20.12.2018, DTD was amended including 54 Units as additional area of units. On 24.12.2018, in the second amendment to the DTD, 63 Units defined in Clause 2.9 was included. * On 13.06.2017, Offer Purchase Agreement was executed between the Issuer Company, the 'Corporate Debtor', the Promoters of the 'Corporate Debtor' and Earthcon Constructions Private Limited, whereby the 'Corporate Debtor' undertook to buyback the units from the Issuer Company, which reinforces the existence of BBAs entered into between the 'Corporate Debtor' and the Issuer Company. It also establishes that the ownership of the units is vested with the EIPL the 'Corporate Debtor' was appointed as a selling Agent on behalf of EIPL to sell the units to a third party. * On the same date i.e., 13.06.2017, a Deed of Corporate Guarantee was executed by the 'Corporate Debtor' in favour of the Res....
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.... be interfered with by the Adjudicating Authority. The RP ought to have challenged the documents of transferring the 268 Flats to EIPL and cannot simpliciter include the same in the Information Memorandum as inventory of the 'Corporate Debtor'. * The BBAs can be relied upon by the Respondents which prove that these 268 Flats are not the Assets of the 'Corporate Debtor'. Registered Mortgage Deed dated 16.06.2017, 05.12.2017 and December 2018, executed by EIPL and 'Corporate Debtor' as Mortgagor and co-Mortgagor collectively create first and exclusive charge over the said 268 Units in favour of Respondent 2 to secure repayment of entire outstanding amount owed to the Respondents. The sub-Registrar could not have registered the Mortgage Deeds if the title of EIPL/Mortgagor for the Units was not perfect or if EIPL did not have the title. The BBAs entered into between the 'Corporate Debtor' and EIPL are valid, bona fide, and independent sale and purchase transactions. * BBAs entered into with more than 1900 Homebuyers are exactly the same, and none of these BBAs are registered or stamped, yet the claims of all the Homebuyers have been admitted by the RP. * It is submitted by Mr. S....
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....o exclude 205 Flats from the Assets of the 'Corporate Debtor'. B. Submissions of the Learned Counsel appearing on behalf of the Homebuyers in 736/2021: * It is submitted that the Homebuyers constitute 70% of the Voting Rights in the CoC; and Respondents 1 & 2 have connived with the 'Corporate Debtor', the erstwhile Director of the 'Corporate Debtor', the Issuer Company who are signatories to the DTD dated 13.06.2017 and the amendments dated 20.12.2017 and 24.12.2018, diverting the hard earned money of the Homebuyers; that in the garb of Financial Transactions, Rs.52.5Crs./- was routed through the Issuer Company purportedly executing a number of documents including DTD, amendments, BBAs, Mortgage Deeds, Offer to Purchase Agreement, Corporate Guarantee etc., and the Adjudicating Authority did not consider whether these 268 Units had been actually sold by the 'Corporate Debtor' to the Issuer Company or whether the claimed documents were executed merely to secure the Financial Facilities extended by Respondents 1 & 2 to the 'Corporate Debtor' through the Issuer Company. * 'Corporate Debtor' had already availed one Escrow Account with Punjab and Sindh Bank hence second Escrow Accou....
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....bligations of the ElPL as against the ostensible sale price of Rs. 1150 + GST per sq. ft. The properties of more than Rs. 115.50Crs./- were ostensibly sold as ostensible Sale Consideration of Rs. 51.75Crs./- which is equivalent to 44% of total value of property which shows the Margin Money of loan of Respondents. The Respondents were having change over the debtors/receivables of the Corporate Debtor via Escrow Agreement. And as per Escrow Agreement the net receivables of 'Corporate Debtor' were required to be deposited in Escrow Account to repay the secured obligations. The Corporate Debtor directly exposed itself to the liabilities of the EIPL whereas in Sale Consideration from other Homebuyers the 'Corporate Debtor' has not exposed itself to the loan of Homebuyers. As the director, Shareholder of the EIPL are common with the 'Corporate Debtor', there was no reason for 'Corporate Debtor' to sell the flats in EIPL because the director, Shareholder could earn profits by selling of 205 flats in 'Corporate Debtor' itself and that there was no commercial expediency for the 'Corporate Debtor' to give Corporate Guarantee or enter into other documents. Comp. App. (AT) (Ins.) No. ....
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....ction of the units to be purchased by EIPL but the funds have been utilized to the tune of Rs. 23.87 Crores for the repayment of loan from Punjab & Sind Bank. The 205 Units of the Corporate Debtor have been mortgaged in accordance with Debenture Trust Deed to secure the amount paid by EIPL to the Corporate Debtor. However, the amount received from EIPL as per terms of Debenture Trust Deed is not a loan amount but is only an advance for the purchase of units. Since the basic terms and condition for utilization of funds have not been complied with, there should be no amount payable to Respondent No. 1. The transaction of Respondent No. 1 with EIPL and 'Corporate Debtor' is preferential, Undervalued and Fraudulent Transactions under the Code. The Builder Buyer Agreement entered with EIPL for 205 Flats, mortgaged with Respondent No. 2 as one of the obligor to the Debenture Trust Deed were sold at Rs. 49.52 crores which is considerably lower to the prevailing average rate in 2017. The undervalued amount was assessed as Rs. 69.83 crores. It is submitted that Respondent No. 1, Corporate Debtor, EIPL and the Directors of the Corporate Debtors are in connivance with each other to dive....
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....tion Plan was based on the Information Memorandum dated 14.01.2021 prepared by the RP and is therefore binding on all concern. Once having given their consent, Respondents 1 & 2 could not have been allowed to question the Information Memorandum. * Most of the Sanskriti Buyers have paid the amount in full and are in physical possession of the Flats. It is submitted that out of the 57 Flats belonging to Sanskriti Project which purportedly have been mortgaged in favour of Respondents 1 & 2, most of them have been sold to the Members of the first Appellant in a surreptitious manner without even disclosing any of the underlying documents executed between the Members of the first Appellant and the 'Corporate Debtor'. This fact is clearly evidenced from the BBAs executed by the 'Corporate Debtor' with the Appellant and Tripartite Agreement executed between the 'Corporate Debtor', the Appellants and the Lenders who have financed the Homebuyers Loan to the Appellants wherein knowing regarding any NoC issued by Respondents 1 & 2 finds mentioned. Most of the Appellants have made the payments in respect of the Flats allotted to them directly to the 'Corporate Debtor' and or EIPL and the same....
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....orpus of the 'Corporate Debtor' on the ground of Mortgage, during the pendency of the CIRP is against the provisions contained in Section 14 of the Code which prohibits any action to foreclose, recover or enforce in the Security Interest created by the 'Corporate Debtor'. * The BBAs were executed way back in January 2013-2014 with the possession due to be given within 36 months from there. At a time when it was defaulting in handing over the possession, the CIRP of the 'Corporate Debtor' came to be orchestrated by the Respondents in conclusion with the Promoters of the 'Corporate Debtor'. * The Lease Deed dated 01.09.2010 which governs the transfer/sub-Lease of the Units developed by the 'Corporate Debtor' was concealed by the Respondents before the Adjudicating Authority. In terms of the restrictions contained therein the 'Corporate Debtor' could not have been sold, transfer or assign the units in favour of any third Party without making payments to Greater Noida in accordance with the schedule. * It is submitted that neither the Homebuyers nor the SRA made parties to the Application filed before the Adjudicating Authority. Comp. App. (AT) (Ins.) No. 694/2021 A. This Appea....
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....le Consideration. Comp. App. (AT) (Ins.) No. 912/2021 A. This Appeal has been preferred by Homebuyers Mr. Rajesh Kr. Bhandula & Ors., aggrieved by the Impugned Order dated 23.07.2021 passed in I.A. 1606/2021 on the ground that they were not made parties to the Application. B. Submissions of the Learned Counsel appearing on behalf of the Mr. Bhandula & Ors./Homebuyers: * It is submitted that the Adjudicating Authority has not taken into consideration that the Resolution Plan was approved by the CoC; that the Information Memorandum including these 268 Flats and that the CoC's decision is final. * After the execution of the Impugned Order, there shall be no Financial viability for SMA to undertake a Project and sizeable amounts of haricuts would be given and additional contribution would have to be paid by the Homebuyers. * Nisus Finance was the Applicant under Section 7 of the Code which triggered the CIRP and Nisus claiming to be a 'Financial Creditor', preferred the Section 7 Application, which was set aside by this Tribunal vide Order dated 29.05.2020, aggrieved by which Nisus Finance approached the Hon'ble Supreme Court vide Civil Appeal No. 2807/2020 and the Hon'ble Sup....
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....re not within the pool of this 'Corporate Debtor' and directed the RP to exclude the same and hence this Appeal is limited to whether the Adjudicating Authority was justified in not including the Balance 63 Flats and also in reducing the Voting Rights. * Learned Counsel Mr. Shikhil Suri submitted that the security has no co-relation to the Voting Rights and drew our attention to the DTDs and the amended Deeds and submitted that EIPL issued Debentures subscribed by Nisus Finance and the amount was given to Earthcon Infratech which is the 'Corporate Debtor'. Learned Counsel also drew our attention to a Flow Chart depicting the flow of funds. * The DTD dated 13.06.2017 was executed between the Issuing Company Earthcon Infracon Private Limited, Beacon Trusteeship Limited, Earthcon Constructions Private Limited and Earthcon Universal Infratech Private Limited (Obliger 3)/defaulter/co-Mortgagor and Nisus Finance and Investment Manger LLP. Learned Counsel Mr. Suri placed reliance on the following terms of Deed: "A. The Company is engaged in the business builders, developers, real estate consultant, real estate contractor, buying, selling and trading real estate and immovable propert....
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....acility of Rs.100,00,00,000/- (Rupees One Hundred Crore only) from CF lender and has opened the Obligor 3 Escrow Account under the terms of availing such facility. In addition to the Security mentioned above the Parties shall also create a first charge on the Obligor 3 Current Accounts such that 10% (ten per cent) on the amounts transferred to the Obligor 3 Current Accounts from the Obligor 3 Escrow Account shall be swept, in daily/weekly into the Escrow Account subject to a maximum of upto the amount of the next payment milestone including any past dues, default amounts, DSRA, statutory dues and other costs and charges due and payable by the Company under the terms of this Deed, Provided further that upon the occurrence of an Event of Default, 100% (one hundred percent) of the entire amounts transferred to the Obligor 3 Current Accounts from the Obligor 3 Escrow Account shall be swept in daily into the Escrow Account. It shall be the sole responsibility of the Obligor 3 to obtain the 1 requisite no objection certificates from CF Lender in this regard as well as effecting amendments in its Articles of Association as may be required to give effect to the same. The Company and Obligo....
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....ts mortgaged is 151. Second Debenture Deed was executed on 20.12.2017 and the number of Flats Mortgaged is 149. * The third Mortgage Deed for covering Rs.30Crs./- is an unregistered one. * Offer to Purchase Agreement substantiates that it is a Sale Consideration amount and not a Loan Amount. * On 13.06.2017 Form CHG-1 was filed to create charge under Sections 77 & 78 of the Companies Act, 2013. The Evaluated Price shown here is 73.5Crs./- covering 94 Units of Casa Royal, 57 Units of Project Sanskriti covering a total area of 2,40,865 square feet. * Learned Counsel also drew our attention to the Security Interest created for Rs.42Crs./- stating that the total is Rs.115.5Crs./- i.e., Rs.73.5Crs. + Rs.42Crs./- but the amount which has come in is only Rs.59Crs./-. * Learned Sr. Counsel Mr. Datta placed reliance on Clause E from the DTD dated 13.06.2017. At the cost of repetition, the same is being reproduced as hereunder: "E. The Company requires funds for funding of the acquisition of te units from Obligor 3 as well as for other general corporate purposes and has therefore agreed to raise funds up to Rs.30,00,00,000/- (rupees Thirty Crores Only) through the issue and allot....
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....able corporate guarantee from Obligor 1 and Obligor 3 in favour of the Debenture Trustee ('Corporate Guarantee"); 9.1.4 Unconditional and Irrevocable Personal Guarantee from the Personal Guarantors in favour of the Debenture Trustee ('Corporate Guarantee"); 9.1.5 Demand Promissory Note by the Guarantors ("DPNs") along with letter of continuity in relation to the DPNs ("Letter of Continuity"); 9.1.6 A pledge of 100% (Hundred per cent) of the issued, subscribed and paid up equity share capital of the Company held by the Promoters of the Company in favour of the Debenture Trustee vide the Pledge........." Assessment : 8. The brief point which falls for consideration in Comp. Apps. (AT) (Ins.) Nos. 593, 659, 694, 703, 736 & 912/2021 is whether the Adjudicating Authority was justified in excluding 205 Flats from the pool of the Assets of the 'Corporate Debtor'. 9. The issue which arises in Comp. App. (AT) (Ins.) No. 656/2021 filed by Nisus Finance and Beacon Trusteeship Limited is whether the Adjudicating Authority was justified in not including the Balance 68 Units and also in reducing their Voting Rights. 10. For the sake of brevity, the facts with respect to the terms of t....
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....r the terms of the DTD." 13. Section 58 of the Transfer of Property Act 1882 which defines English Mortgage and relied upon by both the Parties is detailed as hereunder: "58. (e)... English mortgage.-Where the mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage." (Emphasis Supplied) 14. It is the case of Nisus Finance and Beacon as per Section 48 of the Transfer of Property Act, 1882, the rights if any of the Homebuyers in their Flats shall be subject to the 'Mortgage' which is created by the Issuer Company/EIPL as Mortgager and 'Corporate Debtor' as Co-Mortgagor in favour of Beacon for the benefit of Debenture Holders. Section 48 of the Transfer of Property Act 1882 reads as follows: "48. Priority of rights created by transfer.-Where a person purports to create by transfer at different times rights in or over the same immoveable property, and such rights cannot all exist or be exercised to their full extent together, each later cr....
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.... the Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates to create, declare, assign, limit or extinguish whether in present or in future "any right, title or interest" whether vested or contingent of the value of Rs 100 and upwards to or in immovable property. 17. Section 49 of the said Act provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction affecting such property, unless it has been registered. Registration of a document gives notice to the world that such a document has been executed. 18. Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property, as to the nature and extent of the rights which persons may have, affecting that property. In other words, it enables people to find out whether any particular property ....
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....to be discouraged and deprecated. The present case is a typical example of the consequences of not obtaining a registered sale deed. There is apparently no reason as to why a company registered under the Companies Act should resort to such a transaction. Execution of a will by an individual bequeathing an immovable property to a company, is also incongruous and absurd. 24. If there was a bar and the process was adopted to overcome such bar regarding sale of lands, then courts should not go to their assistance, as that would amount to perpetuating illegalities. If there was no bar, then the questions that arise are: why should a company hold a property in a state of suspended animation from 1991? How can a company "verbally" agree to sell a property to someone? What is the reason for the delay in lodging the complaints? If the petitioner had purchased the property under a registered sale deed, numerous disputes, litigations and criminal proceedings could have been avoided. The illegal and irregular process of "power of attorney sales" spawns several disputes relating to possession and title, and also results in criminal complaints and cross-complaints and extra-legal enforcement a....
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....to buyback the Flats sold to the Issuer Company at a price of Rs,1,250 per square foot, was now be sold at a Minimum Guarantee Price of Rs.2,500 per square foot + GST of 5%. It is seen from the record that buyback period coincides with the redemption schedule of Debentures. 19. At this juncture, we refer to the Transactional Audit Report dated 12.04.2021 for the period of 08.01.2018 to 08.01.2020 (Annexure 13) in Comp. App. (AT) (Ins.) No. 703/2021, the conclusions of which are reproduced as hereunder: "Conclusion From perusal of above report, few points emerged as under: 1. There are a number of transactions involving huge amounts during the TRA period with related parties and others parties covered under 43 of IBC 2016. Most of debit balances Le amounts recoverable from the related parties have been adjusted by passing Journal entries without receipt of funds. Further flats have been allotted to supplier/vendors during the TRA period which has impact of putting such creditors in a beneficial position. 2. Our sample checking of Home Buyers files with Pinga Software revealed that cash received from Horne Buyers amounting to Rs. 13.65 crores is not accounted for the tally d....
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....am Finance Ltd.' Vs. 'State of Kerala' (1966) 2 SCR 828, has held that a client in view of a Sale Letter is not estopped from proving that a Transaction was a Loan Transaction: "21. The appellants are financiers and their business is to advance loans on favourable terms on the security of vehicles. This is effected by obtaining a promissory-note for repayment of the amount advanced, and a hire-purchase agreement which provides a mechanism for recovery of the amount. It is true that a "sale letter" is obtained from the customer, but the consideration for the sale letter is only the balance remaining payable to the dealer, after giving credit against the price of the vehicle the amount paid by the customer. The application for a loan, and the letter addressed to the appellants undertaking to insure the vehicle expressly mention that a loan is asked for and granted on the security of the motor-vehicle under the hire-purchase agreement. It is the customer who insures the vehicle, and in the books of the Motor Vehicle Authorities he remains, with the consent of the appellants, owner of the vehicle. Undue importance to the acknowledgment of sale in the "sale letter" and the recital of ....
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....ds on the terms and conditions set out in the agreement, and the option to purchase exercisable by the customer on payment of all the instalments of hire arises when the instalments are paid and not before. In such a hire-purchase agreement there is no agreement to buy goods; the hirer being under no legal obligation to buy has an option either to return the goods or to become its owner by payment in full of the stipulated hire and the price for exercising the option. This class of hire-purchase agreements must be distinguished from transactions in which the customer is the owner of the goods and with a view to finance his purchase he enters into an arrangement which is in the form of a hire-purchase agreement with the financier, but in substance evidences a loan transaction, subject to a hiring agreement under which the lender is given the license to seize the goods." (Emphasis Supplied) 22. It is clear from the aforenoted ratio that Homebuyers and the effected parties are not estopped from approving that a Transaction is a 'Loan Transaction'. Contractual interpretation must ascertain the real intention of the parties. The genesis of an Agreement and the context is to be seen a....
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.... to mention that the Information Memorandum dated 14.01.2021 was prepared by the Resolution Professional in terms of Section 29 of the Code. For ready reference, the said Section is reproduced as hereunder: "29. Preparation of information memorandum. - (1) The resolution professional shall prepare an information memorandum in such form and manner containing such relevant information as may be specified by the Board for formulating a resolution plan. (2) The resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form, provided such resolution applicant undertakes- (a) to comply with provisions of law for the time being in force relating to confidentiality and insider trading; (b) to protect any intellectual property of the corporate debtor it may have access to; and (c) not to share relevant information with third parties unless clauses (a) and (b) of this sub-section are complied with. Explanation. - For the purposes of this section, "relevant information" means the information required by the resolution applicant to make the resolution plan for the corporate debtor, which shall include the finan....
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....ry of the resolution scheme-workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximise their investment. Timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. (See ArcelorMittal [ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] at para 83, fn 3). 28. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The ....
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....withdrawals or modifications of the Resolution Plan at the behest of the successful Resolution Applicant, once it has been submitted to the Adjudicating Authority after due compliance with the procedural requirements and timelines, would create another tier of negotiations which will be wholly unregulated by the statute. Since the 330 days outer limit of the CIRP under Section 12(3) of the IBC, including judicial proceedings, can be extended only in exceptional circumstances, this open-ended process for further negotiations or a withdrawal, would have a deleterious impact on the Corporate Debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time. A failed negotiation for modification after submission, or a withdrawal after approval by the CoC and submission to the Adjudicating Authority, irrespective of the content of the terms envisaged by the Resolution Plan, when unregulated by statutory timelines could occur after a lapse of time, as is the case in the present three appeals before us. Permitting such a course of action would either result in a down-graded resolution amount of the Corporate Debtor and/or a delayed liquidation with....
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.... by the ruling of this Court in Gujarat Urja (supra), a one-time relief under Article 142 of the Constitution is provided with the conditions prescribed in Section K.2." (Emphasis Supplied) 29. It is clearly laid down by the Hon'ble Apex Court that a submitted Resolution Plan is binding and irrevocable as between the CoC and SRA in terms of the provisions of the Code. Placing reliance on 'Ebix Singapore Pvt. Ltd.' (Supra), this Tribunal in 'Kalinga Allied Industries India Private Limited' (Supra), has further observed that the Commercial Wisdom of the CoC is not justiciable until and unless any material irregularity, which in the instant case, we are of the considered view that the submissions made by the 'Financial Creditors' do not fall within the provisions of the Section 30(2) of the Code. Having observed so, at the cost of repetition, it is noted that any modification after approval of the CoC and submission to the Adjudicating Authority, irrespective of the 'content' of the terms envisaged by the Resolution Plan, would only lead to further delay and defeat the very scope and objective of the Code. 30. The principle laid down by the Hon'ble Apex Court in 'Ebix Singapore Pvt.....
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....ection 30(2) or Section 61(3) of the IBC. This position of law has been consistently reiterated in a catena of judgments of this Court, including: (i) K. Sashidhar v. Indian Overseas Bank and Others, (2019) 12 SCC 150. (ii) Committee of Creditors of Essar Steel India Limited Through Authorized Signatory v. Satish Kumar Gupta and Others, (2020) 8 SCC 531. (iii) Maharashtra Seamless Limited v. Padmanabhan Venkatesh and others, (2020) 11 SCC 467. (iv) Kalpraj Dharamshi and Another v. Kotak Investment Advisors Limited and Another, (2021) SCC OnLine SC 204. (v) Ghanashyam Mishra and Sons Private Limited Through the Authorized Signatory v. Edelweiss Asset Reconstruction Company Limited Through the Director & Ors., (2021) 9 SCC 657. .............................................................................. "33. We may gainfully refer to the following observations of this Court in the case of Keshardeo Chamria v. Radha Kissen Chamria and others (1953) 4 SCR 136 while considering the scope of the words 'material irregularity', as are found in Section 115 of the Code of Civil Procedure, 1908: "Reference may also be made to the observations of Bose, J. in his order of refe....