TaxTMI 
TaxTMI 
2023 (7) TMI 587
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....021 (b) direct the Resolution Professional to supply a copy of IA No. 655 (ND) /2021, has been declined. 2. In brief, the facts of this case are that the Appellant entered into an Agreement to sell dated 08.10.2018 with the Corporate Debtor, in order to purchase the entire shareholding of Challengerz Websolutions Pvt. Ltd. (Challengerz) and Hacienda Infosoftech Pvt. Ltd. (Hacienda). According to the Appellant, the Corporate Debtor was to obtain requisite permission and approvals within a period of 11 months and after procuring the approval, the Appellant was to pay the balance consideration. However, the Corporate Debtor initiated proceedings against the Appellant under Section 241-242 of the Companies Act, 2013 (for short 'The Act') in which the Adjudicating Authority passed an interim order dated 05.04.2019 and granted 'status quo' on shareholding. However, the Corporate Debtor went into 'Insolvency' on 17.12.2019 and the Resolution Professional filed an application bearing IA No. 655/2021, seeking approval of the Resolution Plan of M/s. Ace Infracity Developers Pvt. Ltd. In the said application, the present Appellant filed the application in question, bearing INVP-05/2021, in....
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....ed upon a decision of the Hon'ble Supreme Court in the case of 'Vijay Kumar Jain Vs. Standard Chartered Bank & Ors. in Civil Appeal No. 8430 of 2018 decided on 31.01.2019'. In this case para 12 has been referred to which read as under : "12. There is no doubt whatsoever that Notes on Clauses are an important aid to the construction of Sections of the Code as they show what the Drafting Committee had in mind when such provisions were drafted. However, a closer look at the Notes on Clause 24 makes it clear that the third sentence of the Notes on Clause 24 is itself problematic. First and foremost, it speaks of the resolution professional seeking information. The resolution professional does not seek information at a meeting of the committee of creditors, which is what Section 24 is all about. The resolution professional only seeks information from the erstwhile Board of Directors under Section 29 before preparing an information memorandum, which then includes the financial position of the corporate debtor and information relating to disputes by or against the corporate debtor etc. All this has nothing to do with Section 24 of the Code which deals with meetings of the committ....
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....uarantee; xxx xxx xxx" This would certainly include a guarantor who may be a member of the erstwhile Board of Directors. Further, under Regulation 37(1)(f), a resolution plan may provide for reduction in the amount payable to the creditors, which again vitally impacts the rights of a guarantor. Last but not least, a resolution plan which has been approved or rejected by an order of the Adjudicating Authority, has to be sent to "participants" which would include members of the erstwhile Board of Directors - vide Regulation 39(5) of the CIRP Regulations. Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan, and may, as persons aggrieved, file an appeal from the Adjudicating Authority's order to the Appellate Tribunal under Section 61 of the Code. Quite apart from this, Section 60(5)(c) is also very wide, and a member of the erstwhile Board of Directors also has an independent right to approach the Adjudicating Authority, which must then hear such person before it is satisfied that such resolution plan can pass muster under Section 31 of the Code." 5. However, during the course of hearing,....
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....ution professional to represent such creditor in a meeting of the committee of creditors: Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor. (6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor. (7) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board. (8) The meetings of the committee of creditors shall be conducted in such manner as may be specified. Section 30(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). Regulation 2(1) (L) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 :- "participant" means a person entitled to attend a meeting of the committee under section 24 or any other person authorised by the committee to attend the meeting; Regulation 39(2) - The resolution professional shall submit to the committee all resolution plans wh....
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....at such meetings, and the erstwhile Board of Directors are "participants" who will discuss these issues. The expression "documents" is a wide expression which would certainly include resolution plans. 15. As a result of the aforesaid discussion, the arguments of the respondents that "committee" and "participant" are used differently, which would lead to the result that resolution plans need not be furnished to the erstwhile members of the Board of Directors, must be rejected. Equally, the Regulations, far from going beyond the Code, flesh out the true intention of the Code that is achieved by reading the plain language of the Sections that have already been adverted to. So far as confidential information is concerned, it is clear that the resolution professional can take an undertaking from members of the erstwhile Board of Directors, as has been taken in the facts of the present case, to maintain confidentiality. The source of this power is Regulation 7(2)(h) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, read with paragraph 21 of the First Schedule thereto. This can be in the form of a non-disclosure agreement in which the r....
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.... authority, can be given to the Appellant who is neither a Claimant, nor a Creditor or a participant? The other question also arises in this case as to whether there is any provision in the Code for the purpose of giving a copy of the Resolution Plan to the Appellant who is neither a Claimant, nor a Creditor or a participant, even before the approval of Resolution Plan by the Adjudicating Authority? 12. The answer to this question is no more res integra as it has already been answered by this Tribunal in Association Jet Airways (Supra) and by the Hon'ble Supreme Court in the case of Vijay Kumar Jain (Supra). In the case of Association of Jet Airways (Supra), this court categorically observed in para 25 that "The above scheme of the Code also indicates that after Resolution Plan is submitted to the Adjudicating Authority and it is approved by the Adjudicating Authority, it no longer remains a confidential document, so as to preclude Regulator and other persons from access the said document." It further said that "We thus do not accept the submission of learned Counsel for Respondent No.4 that Resolution Plan even after approval, is a confidential document and cannot be disclosed ....