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2023 (12) TMI 1219
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.... 2. There are 12 Respondents including the Resolution Professional of the Corporate Debtor under CIRP and other financial creditors Bank of India, State Bank of India, Karur Vysya Bank Limited, HDFC Bank Limited, Bank of Baroda, and so on. 3. The appeal has been filed to set aside the Impugned Order 02.02.2023 dated in IA 1899 of 2021 in CP (IB)- 1852/(MB)/2019 passed by the National Company Law Tribunal, Mumbai Bench, Court - III (in short 'Adjudicating Authority') filed under Section 61 of the Insolvency & Bankruptcy Code, 2016 (in short 'Code'). 4. From the Impugned Order, we find that the Appellant herein, filed an IA 1899 of 2021 in CP (IB)- 1852/(MB)/2019 before the Adjudicating Authority with prayer for following reliefs :- "1. The present Applicant Mr. Satish Dhondiram Chavan who is the member of the suspended board of the Corporate Debtor filed the above application praying the following reliefs: i. Direct the CoC of the Corporate Debtor to condone the delay of 3 (three) days by the Applicant in submitting a bank guarantee in respect of the Resolution Plan; ii. Direct the Respondent No. 1 and the CoC to consider the Resolution Plan of the....
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....nder the interim order of the Hon'ble High Court. 8. It is also appropriate to mention here that the Resolution Professional has already filed an application bearing I.A. 1984/2021 for liquidation of the Corporate Debtor which was backed by 96.18 % voting of the COC by exercising their commercial wisdom and this Tribunal has no power to interfere with such commercial wisdom of the COC. 9. Therefore, for the aforesaid reasons this Bench is of the considered opinion that the above application is devoid of merits and is liable to be rejected. 10. Accordingly, the above Interlocutory Application is rejected." (Emphasis Supplied) 7. Shorn of unnecessary details and without going in the chequered history of the Corporate debtor of non payments, default, alleged frauds, alleged wilful defaulters declaration by the Financial Creditors, we would like to restrict ourselves to the averments made before us by both the parties. 8. It is the case of the Appellant that the Resolution Plan was rejected primarily on three factors a. The bank guarantee was furnished on 5th March 2021 with delay of 3 days as the last date of submission of bank gu....
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....tion Act and in case the application is submitted after the limitation period has expired including discretionary period available to the concerned legal authority, then in such eventuality, the application cannot be considered. 14. It is the case of the Appellant that there was the delay of only 3 days and so called wisdom of the CoC in rejecting the Resolution Plan was in effect non exercise of commercial wisdom by the CoC. 15. The Appellant referred to us few documents including the minutes of few CoC Meetings. 16. The Appellant submitted that as per the 9th CoC Meeting held on 05.11.2020. there were only 4 Prospective Resolution Applicants, namely, SIPUL Enterprises, Disha Milk and Milk Products Private Limited, Panchtawta Milk Industries Private Limited & Satish D Chavan. 17. As per the minutes of 10th CoC Meeting held on 22.12.2020 only two Resolution Plan were available from Satish Dhondiram Chavan the Appellant herein and Disha Milk and Milk Products Private Limited. 18. The Appellant emphasized that from the minutes of the 10th CoC Meeting, it is evident that his Resolution Plan was of Rs. 144.45 Crores with upfront payment of Rs. 11.80 Crores which was far ....
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....09.03.2021 and the relevant para is 12, is reproduced as under :- "12. To update on the rejection of the requisite Bank Guarantee received from a Resolution Applicant after the extended date; The RP informed that post the last meeting, while talking to Disha Milk Product, the intimation from them was that they may not be submitting bank guarantee as required. The reason cited was that as per their analysis there may be political influence in that area which is not congenial for business. The RP also informed that on similar grounds, other PRAs have also backed out at the last moment. Thus, the only plan received so far is from Mr. Satish Chavan. The RP also informed that as per the last meeting held on the 25th February 2021, bank guarantee was to be made available latest by 1st March 2021, however, bank guarantee was received only on 5th March 2021 which cannot be accepted. Hence, the RP informed that as of now there is no binding resolution plan available with him. The RP also informed that as per the order of the Hon'ble NCLT, the extended period of CIRP, excluding the period for Covid 19, has ended on the 26th February 2021. Therefore, going forward there are ....
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....2021 in its 11th meeting of the CoC held on 25th February 2021. However, the Bank Guarantee was not received from a Nationalized Bank but from ICICI Bank and that too on 5th March, 2021 sighting some technical glitch from the issuing bank which is in contravention of the terms of clause no. 1.8.1. of the approved RFRP...." ( Emphasis Supplied ) 24. In the 13th meeting a resolution was put for voting regarding condonation of delay in submission the requisite bank guarantee by the Appellant, which was rejected by CoC with 94.16%. 25. The Appellant finally referred to meeting of 14th meeting of CoC held on 09.07.2021 where the CoC passed a resolution for liquidation of the Corporate Debtors which reads as under : - 26. It is the case of the Appellant that the CoC has not acted in the interest of the stakeholders and rather resorted to irrational decision which cannot be justified in commercial sense. The Appellant, therefore, submitted that there is no commercial wisdom in the decision of the Committee of Creditors in rejecting the Resolution Plan of the Appellant which was more than three times than the value of next Resolution Applicant. 27. The Appellant also a....
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...., fairness and keeping in view the principles of natural justice. In this respect, the Answering Respondents referred to Clause 1.8.1 of RFRP, whereby it was clearly mentioned that the bank guarantee should be executed only through nationalised bank located in India. The Answering Respondents stated that the bank guarantee submitted by the Appellant has been issued by the ICICI Bank which is a non-nationalised bank and hence could not have been accepted. 36. The Answering Respondent emphatically reiterated that terms of RFRP is the bid document governing the entire Resolution Plan submission process and any departure to comply with the terms stipulated in RFRP including timelines to submit the bank guarantee obligates the CoC to reject such Resolution Plan. 37. The Answering Respondents submitted that in the present case, the CoC gave multiple opportunities to the Appellant to submit the bank guarantee and only on failure on the last occasion when the last date was 01.03.2021, the CoC decided not to consider the Resolution Plan purely because of failure of the Appellant to comply with the timelines as well as due to submission of bank guarantee in non-compliance mode. 38. ....
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....ilure on the part of the Appellant, if any, to meet with the requirements of Clause 1.8.1 of RFRP, which is basic threshold for eligibility to submit the Resolution Plan and we should examine the issue of ineligibility under Section 29A of the Code only if find merit for the Appellant on issue of Clause 1.8.1. of RFRP. 46. We note from RFRP, where it was clearly mentioned that the bank guarantee need to executed by any nationalised bank located in India. 47. Similarly, the original date of submission of bank guarantee was 15.11.2020 which was extended to 15.12.2020 and finally extended up to 01.03.2021. We observe that these facts were admitted by the Appellant who also admitted that he furnished the bank guarantee only on 05.03.2021, i.e., after delay of 3 days. 48. The Appellant also fairly conceded to the fact that the bank guarantee was executed by the bank other then the nationalised bank. 49. The Appellant however, challenged non suiting him on such technicalities which is non exercise of commercial wisdom by the CoC and it was within the preview of the Answering Respondents to consider the Resolution Plan of the Appellant. 50. This Appellate Tribunal is of con....
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....plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject matter expressed by them after due deliberations in the CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the "commercial wisdom" of the individual financial creditors or their collective decision before the adjudicating authority. That is made nonjusticiable". (Emphasis Supplied) 52. Based on the above judgement of the Hon'ble Supreme Court of India and after analysing the facts in the appeal in details in provisions paragraphs, we hold that the Appellant failed to comply with the conditions as stipulated in RFRP. We do not find any reason to interfere with the Impugned Order dated 02.02.2023 passed by the Adjudicating Authority since, we do not find any error in the Impugned Order. 53. The Appeal, devoid of any merit, stand dismissed. No Costs. Interlocutory Applications, if any, are Closed. In Company Appeal (AT) (Ins.) No. 219 of 2023: 54. The Appellant has filed the Appeal i.e, Company Appeal (AT)....