TaxTMI 
TaxTMI 
2024 (5) TMI 137
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....vency & Bankruptcy Code, 2016 (in short 'Code') by the Appellant herein i.e., Namdev Hindurao Patil, who is the Suspended Director and one of the Resolution Applicant of the Corporate Debtor i.e., Warana Dairy and Agro Industries Ltd. against the Impugned Order dated 19.04.2023 passed by the National Company Law Tribunal, Mumbai Bench, Court-IV (in short 'Adjudicating Authority') in I.A./2972/2022 in CP (IB) 477/C-IV/MB/2020 . 2. Mr. Virendra Kumar Jain is the Respondent No. 1, who is the Liquidator of the Corporate Debtor and IDBI Bank Limited is the Respondent No. 2, Punjab National Bank (International Limited) London is the Respondent No. 3, Shri Warana Mahila Sahakari Panth Sanstha Limited is the Respondent No. 4 and Amrut Sevak Sah Pat Sanstha Limited is the Respondent No. 5, wherein Respondent No. 2, Respondent No. 3 and Respondent No. 4 are Financial Creditors of the Corporate Debtor. 3. Heard the Counsel for the Parties and perused the records made available including the cited judgements. 4. It has been brought out that in I.A. No. 464 of 2023 filed before the Adjudicating Authority, the Appellant sought direction to the Resolution Professional and the Committee o....
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....the Resolution Plan and accordingly during 21st CoC Meeting was held on 06.10.2022- 07.10.2022 to consider amended plan submitted by the Appellant. The improved offer of the Appellant was considered wherein CoC decided the Appellant to be ineligible to submit the Resolution Plan on account of his willful defaulter declaration and did not consider the Resolution Plan on merits and further resolved to liquidate the Corporate Debtor. Aggrieved by this action of CoC arising out of 21st CoC Meeting held on 06.10.2022 & 07.10.2022, the Appellant filed an I.A. No. 464 of 2023 before the Adjudicating Authority and finally the Impugned Order dated 19.04.2023 was passed discarding the pleadings of the Appellant. 13. It is the case of the Appellant that he always wanted to revive the Corporate Debtor, whereas the Respondent No. 2 and 3 on wants to liquidate to Corporate Debtor. It has been informed that the Corporate Debtor is going concern employing more than 400 employees and procuring milk from more than 4700 farmers and is also in MSME unit. 14. The Appellant submitted that the Adjudicating Authority rejected his I.A. No. 464 of 2023 primarily on account of him being wilful defaulte....
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....inally the Appellant submitted that his Resolution Plan should have been considered and voted upon by the CoC in terms of Regulation 39(3)(c) of CIRP Regulation for either approving his plan or rejecting his plan on merits and also it was duty of the Resolution Professional to do proper due diligence for examination regarding Appellant ineligibility under Section 29(A) of the Code, which he failed to do. 22. Concluding his remarks the Appellant urged this Appellate Tribunal to set aside the Impugned Order and allow his appeal. 23. Per contra, the Respondent No. 2 denied all the averments made by the Appellant treating these to be misleading, mischievous, devoid of any merit and only to derail the process of resolution of the Corporate Debtor. 24. The Respondent No. 2 pleaded that the Appellant was not eligible to submit the Resolution Plan since the Appellant was declared a wilful defaulter and disqualified under Section 29(A) of the Code. In this connection, the Respondent No. 2 stated that ad-interim relief obtained by the Appellant in Civil Suit No. 710 of 2022 on 19.09.2022 was conditional relief i.e., interim relief was granted till the filing of the Reply by the defe....
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....was considered by CoC and he was permitted to submit the Resolution Plan and in this regard drew attention to minutes of 17th CoC Meeting held on 15.09.2022 which took place prior to grant of alleged ad-interim stay order dated 19.09.2022, where it has been clearly recorded that the CoC was unwilful to consider the plan of the Appellant since the Hon'ble High Court of Bombay had refused to interfere with the wilful defaulter stay of the Appellant vide order dated 24.08.2022. 31. During the same meeting, the Erstwhile Resolution Professional informed the CoC that he has received the summon in Civil Suit No. 710 of 2022 filed by the Appellant, CoC decided not to take any final decision regarding Resolution Plan of the Appellant and decided to await the outcome of Civil Suit. 32. Similarly, in the 18th CoC Meeting held on 22.09.2022, after the issuance of ad-interim stay order dated 19.09.2022, the CoC briefly discussed the eligibility of the Appellant as PRA but decided to wait for the copy of judicial order for ad-interim stay order. 33. The Respondent No. 2 submitted that only in the 19th CoC Meeting held on 27.09.2022 after receipt of the copy of the stay order dated 19.0....
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....f the Regulation. The Resolution Professional categorically commented on the eligibility criteria of the Appellant and the status of wilful defaulter proceeded before the Hon'ble High Court of Bombay and placed the matter accordingly before the CoC for decision and therefore it was for CoC to take the decision and to consider the Appellant as eligible Resolution Applicant or other wise and hence, there was no fact of the Resolution Professional in this regard. 39. The Respondent No. 2 submitted that none of the lenders would like to see the Corporate Debtor into liquidation and it is only when all steps for resolution of the Corporate Debtor failed, Financial Creditors were left with no option but to recommend the liquidation of the Corporate Debtor and to precisely the same happened in the present case. 40. The Respondent No. 2 also highlighted that the decision to liquidate a Corporate Debtor also falls within the scope of commercial wisdom of the CoC and not open to any judicial scrutiny which has been confirmed by judgements of various courts including, this Appellate Tribunal and cited judgments of the Hon'ble Supreme Court of India in the matter of Arcelor Mittal India ....
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....t Judge Kolhapur and also Hon'ble Supreme Court of India and did not get any support in judicial fora. In fact all the application and SLP were decided in favour of the Financial Creditors including the Hon'ble Supreme Court of India who did not find any ground against the Order of this Appellate Tribunal and the Appeal of the Appellant was dismissed on 25.08.2023 in Civil Appeal No. 4135 of 2023. 48. The Respondent No. 3 submitted that the Appellant and one consortium, namely - 'RNP Scaffolding & Framework Pvt. Ltd, M/s RNO Infracon Pvt. Ltd. & RN Paints and Engineering Works & M/s Alliance Infra' were the two parties who submitted the Resolution Plans, which were discussed and deliberated by the CoC in its meeting on 26.05.2022. 49. The Respondent No. 3 stated that vide its order dated 19.09.2022 the City Civil Court restrained the Respondents by way of temporary injunction from acting upon the notices dated 19.07.2021 and 04.10.2021 till they file their reply to the application for temporary injunction and the suit was ultimately dismissed by the Civil Judge on 19.12.2022 holding the same to be not maintainable. The Regular First Appeal (being Regular Civil Appeal ....
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....ll as CoC had to conduct and proceed with the CIRP proceedings within the given statutory timelines which could not have been breached. 55. The Respondent No. 3 submitted that the issue of eligibility has been considered and decided by the Adjudicating Authority in the impugned order wherein it has observed that it felt the CoC had discussed both the eligibility and resolution plan of the Appellant and the Appellant was satisfied with CoC recommendation not to consider the Resolution Plan of the Appellant and also found the Corporate Debtor fit for liquidation. 56. Concluding his arguments, the Respondent No. 3 requested this Appellate tribunal to dismiss the appeal with suitable cost. Findings 57. We note that the Impugned Order, in fact, disposed off four I.A.s i.e., 2972 of 2022 filed by the Resolution Professional seeking liquidation of the Corporate Debtor, I.A. No. 872 of 2023 filed by the Respondent No. 2 on appointment of liquidator , I.A. No. 3372 of 2022 filed by the Respondent No. 3 for an order of restrain qua Resolution Plan by the Appellant and I.A. No. 464 of 2023 filed by the Appellant seeking the Appellant to be eligible under provisions of Section 29A ....
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....es of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949);" ( Emphasis Supplied ) 63. Further, it would be desirable to look into Section 240 (A) of the Code i.e., application of the Code to the MSME and the relevant portion reads as under : - "240A. Application of this Code to micro, small and medium enterprises. - (1) Notwithstanding anything to the contrary contained in this Code, the provisions of clauses (c) and (h) of section 29A shall not apply to the resolution applicant in respect of corporate insolvency resolution process (Ins. by Act No. 26 of 2021, sec.17 (w.e.f. 04-04-2021). )[or prepackaged insolvency resolution process] of any micro, small and medium enterprises." (Emphasis Supplied) 64. It will be pertinent to understand that Section 29A of the Code was added by the Amendment Act of 2021 with the intent that any person who by his misconduct contributed to the default of the Corporate Debtor or is otherwise undesirable, should be prevented from gaining or regaining control of the Corporate Debtor. In a way, Section 29A intents to give protection to the genuine creditors of the Corporate Debtor....
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....9 A of the Code as upheld in catena of the judgments passed by the Hon'ble Supreme Court of India as well as by this Appellate Tribunal where it has been made clear that the ineligibility for submission of the Resolution Plan, would be determinate w.r.t date on which the Resolution Applicant submits his Plan. 72. We note that the Appellant submitted the Resolution Plan on 12.05.2022 which was considered in 11th CoC meeting held on 26.05.2022 and in various subsequent CoC meetings up to 21st CoC Meeting of CoC held on 06.10.2022 and 07.10.2022 where the Resolution Plan of the Appellant was not approved by 66.37% of the voting share of the members of the CoC. 73. It is also worth noting again that the Respondent No. 2 having the voting rights of 35.66% objected and abstained from voting on the Resolution Plan of the Appellant on the ground of being contesting party in Civil Suit No. 710 of 2021 in 19th CoC Meeting held on 27.09.2022. 74. We note that the Appellant filed Writ Petition No. 2885 of 2022 before the Hon'ble High Court of Bombay and vide order dated 28.08.2022 the Hon'ble High Court allowed the plea of the Appellant to withdraw the said Writ Petition with a libert....
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.... order was passed by Civil Judge on 19.09.2022 which reads as under : - Note:- From the order dated 19.09.2022 it become clear that the defendants (Financial Creditor) were restrained by way of temporary injunction from any other adverse action based on the order of the Respondent No. 2 dated 19.07.2021 and 04.10.2021 till defendant file their say to the application for temporary injunction. (vi) The Civil Judge order sheet dated 03.10.2022 and dated 21.11.2022 are reproduced as under : - Note : English translation as made available in the Appeal Paper Book Note : English translation as made available in the Appeal Paper Book 78. For sake of clarity regarding eligibility of the Appellant under section 29 A of the Code, we will once again recapitulate relevant dates as under :- (i) The Appellant was declared as wilful defaulter by the Respondent No. 2 on 19.07.2021 and 04.10.2021. (ii) The Appellant submitted the Resolution Plan on 12.05.2022 . (iii) The Appellant challenged the status of wilful defaulter by Writ Petition No. 2885 of 2022 before the Hon'ble High Court of Bombay which was dismissed as withdrawn vide its order d....
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....bmission of resolution plan." ( Emphasis Supply ) 80. From above relevant analysis, it is very clear that relevant date is the date of submission of the Resolution Plan and the Appellant was not eligible to submit the Resolution Plan on 12.05.2022, since he had already been declared as wilful defaulters by the Respondent No. 2 on 17.07.2021 and 04.10.2021. i.e., much prior to his submission of Respondent Plan. It is also fact that no judicial stay existed in favour of the Appellant on 12.05.2022 regarding his status as wilful defaulter. Hence, we hold that the Appellant was not eligible to submit the Resolution Plan and this was rightly adjudicated by the Adjudicating Authority. 81. Thus, we do not find any error in the Impugned Order dated 19.04.2023. The appeal devoid of any merit stand dismissed. No Costs. Interlocutory Application(s), if any, are Closed. ============= Document 1 inally TASSANDAL BASAVRAI QURAPPA GURAPPA i PATIL Ug 102 0.26 100 +3630 ANNEXURE A-6 503288122-wp.docx IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 2881 OF 2032 Shree Warans Sahakari Dudh Utpadak....
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....ution of an amount of US$5,725,994.06 (71 (Rs.40,65,45,578.00) inclusive of applicable interest and other charges. The said application was admitted on 16.09.2021. Rakesh Bothra was appointed as the Interim Resolution Professional (IRF) and moratorium was imposed. 2 Aggrieved against the order dated 16.09.2021, the present Appeal has been preferred by Namdev Hindurao Patil, an ex-director of the Corporate Debtor and challenged the finding of the Adjudicating Authority recorded in Para 10 of the impugned order on the ground that the application was barred by limitation. 3. Counsel for the Appellant has opened his submissions by referring to the sanction letter of term loan facility of USD 5.00 Million dated 30.10.2012 and the agreement dated 14.01.2013 entered into between the Financial TRUE COPY Document 4 546 Creditor and the Corporate Debtor. He has first referred to the definition and interpretation provided in the agreement pertaining to the event of default' which means any of the events or circumstances described in Clause 13.1 (Event of Default) and has then referred to Cluse 13.1 which prescribes that "there shall b....
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....foresaid facts and circumstances, we do not find any merit in the present appeal and the same is hereby dismissed. No costs. SC/TT [Justice Rakesh Kumar Jain] Member (Judicial) [Mr. Naresh Salecha] Member (Technical TRUE COPY Document 6 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4135 OF 2023 NAMDEV HINDURAO PATIL 548 APPELLANT(S) VERSUS PUNJAB NATIONAL BANK (INTERNATIONAL) LIMITED RESPONDENT(S) ORDER We do not find any good ground and reason to interfere with the impugned judgment and hence, the present appeal is dismissed. Pending application(s), if any, shall stand disposed of. NEW DELHI; AUGUST 25, 2023. .J. (SANJIV KHANNA) .....J. (S.V.N. BHATTI) Document 7 * BY NE SUUR 123 INDIA 17922 AS GIVI MAT NO. 213203 PASSED LOW EXHA More 1. add vote of the plat Pete patio and add in support the The hated to the plotted defendant No. 2 beu buat rum defentire which ded so the No.1 becon Wil Date Theatre is ended diver of dedin Sp. The dried in 24/01/202 No dewich Master Or Theme de 19/07/02 and 6/1/01 p the hon....