TaxTMI 
TaxTMI 
2025 (11) TMI 384
X X X X Extracts X X X X
X X X X Extracts X X X X
....te with Ms. Ruby Singh Ahuja, Ms. Aakriti Vohra, Ms. Roopali Gupta, Ms. Varsha Himatsingka and Ms. Diksha, Advocates for R-6. Mr. Rajat Juneja, Mr. Anmol Kumar, Advocates for R-8 & 9. JUDGMENT ASHOK BHUSHAN, J. This appeal by an Unsuccessful Resolution Applicant has been filed challenging the order dated 07.01.2025 passed in I.A. (IB) No. 2409/KB/2024 filed by the Appellant questioning the Letter of Intent issued in favour of Respondent No.6 - Manglam Multiplex Private Ltd. whose Resolution Plan was approved in the CIRP of the Corporate Debtor. Applicant also sought declaration that Respondent No.6 is ineligible under Section 29A of the I&B Code. The application filed by the Appellant was considered and rejected by the Adjudicating Authority (National Company Law Tribunal), Division Bench, Court No. II, Kolkata by the impugned order. Aggrieved by which order this appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding this appeal are: (i) The Corporate Debtor - Varutha Developers Private Ltd. was declared successful Auction Purchaser of land measuring 9.2625 acres situate in Sector 62, Gurgaon and a Sale Certificate dated 09.08....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Resolution Professional vide email dated 07.11.2024 informed all Resolution Applicants that negotiation process shall be now on 11.11.2024 and all Resolution Applicants should submit financial proposal having minimum value of Rs. 250 Crore on or before 10:00 AM on 11.11.2024. Despite having submitted Resolution Plan, the Appellant did not submit the financial bid. (viii) Appellant was informed by the Resolution Professional vide email dated 11.11.2024 that Appellant has been eliminated from the challenge process and he should submit final Resolution Plan within 7 days. Appellant sent an email dated 14.11.2024 requesting the Resolution Professional and the CoC to undertake further due diligence and provide further information regarding the Corporate Debtor to the Appellant. The Appellant did not submit any Resolution Plan. (ix) The Resolution Plans submitted by the Resolution Applicants including Respondent No.6 were deliberated in the 16th CoC meeting held on 16.11.2024. The CoC by 100% vote share approved the Resolution Plan submitted by the Manglam Multiplex who was declared as Successful Resolution Applicant. The Letter of Intent was issued by the Resolution....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pproved. 3. We have heard Shri Mohit Chaudhary and Shri Prakhar Mittal, learned counsels for the Appellant. Shri Abhijeet Sinha, learned senior counsel has appeared for the Resolution Professional. Shri Krishnendu Datta, learned senior counsel has appeared for Respondent No.2 and 3 (CoC). Shri Arun Kathpalia, learned senior counsel has appeared for Successful Resolution Applicant - Respondent No.6 and Mr. Rajat Juneja, learned counsel has appeared for Respondent No. 8 and 9. 4. Learned counsel for the Appellant challenging the impugned order passed by the Adjudicating Authority submits that the entire CIRP process has been engineered by the Respondent No.7 with its group companies to take over the asset of the Corporate Debtor. It is submitted that the Respondent No.7 through its group companies Respondent No. 8 and 9 entered into a Share Purchase Agreement dated 17.05.2024 to purchase 100% shareholding of the Corporate Debtor. Due to shareholding Agreement, the M3M company has devised a plan to take over the assets of the Corporate Debtor. It is submitted that the CIRP was conducted by the Resolution Professional and CoC in collusion with M3M (Respondent No.7) and its group ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ady filed proceeding for execution of the Arbitral Award, which itself indicates that the Share Purchase Agreement was never honoured. The shares having never transferred to New Era and Swastik, the control of Corporate Debtor never came to Respondent No. 8 and 9 or Respondent No.7. The Respondent No. 8 and 9 themselves have filed an appeal challenging the order passed by NCLT admitting the CIRP against the Corporate Debtor which Appeal came to be dismissed by this Tribunal in Company Appeal (AT) (Ins.) No.246 of 2024 by order dated 16.04.2024, It is submitted that another PRA - Consortium of Sakshi Chandana filed Company Appeal (AT) (Ins.) No.107 of 2025 and Company Appeal (AT) (Ins.) No.181 of 2025 challenging the order passed by the Adjudicating Authority rejecting their application and approving the Resolution Plan, which Appeals were dismissed by this Tribunal on 11.02.2025 upholding the entire CIRP process leading to approval of Resolution Plan, which order was not challenged any further. It is submitted that SRA is not disqualified under Section 29A. No control through SRA was ever acquired by Respondent No.8 and 9 or Respondent No.7. Share Purchase Agreement having never gi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e a Resolution Plan, Appellant neither participated in the Challenge Mechanism nor has submitted a Resolution Plan. Appellant relies on email by which he communicated that he is ready to increase his financial bid as Rs. 250 Crores. It is further relevant to notice that the entire CIRP process leading to approval of Resolution Plan was challenged in this Tribunal in Company Appeal (AT) (Ins.) No.107 of 2025 and Company Appeal (AT) (Ins.) No.181 of 2025 filed by Consortium of Sakshi Chandana where one of the order under challenge was order approving the Resolution Plan. This Tribunal after considering entire process found that the CIRP process carried out by the Resolution Professional leading to approval of Resolution Plan is in accordance with the Code and the Regulations. This Tribunal noticed that only two bidders were left in the fray i.e. Consortium of Sakshi Chandana and the SRA. On the basis of Challenge Mechanism, the SRA's offer was declared as highest and the Resolution Plan was approved of the SRA. In the context of the challenge by Consortium of Sakshi Chandana, the entire process was examined and it was held that process leading to approval of Resolution Plan of the SR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....approved Resolution Plan submitted by SRA it being found compliant with provisions, Adjudicating Authority has also relied and referred to the Judgement of the Hon'ble Supreme Court in the matter of 'K. Sashidhar' Vs. 'Indian Overseas Bank & Ors.' reported in (2019) 12 SCC 150. Hon'ble Supreme Court in Paragraph 35 has made following observations: "35. The stage at which the dispute concerning the respective corporate debtors (KS&PIPL and IIL) had reached the adjudicating authority (NCLT) is ascribable to Section 30(4) of the I&B Code, which, at the relevant time in October 2017, read thus: "30. (4) The Committee of Creditors may approve a resolution plan by a vote of not less than seventy-five per cent of voting share of the financial creditors." If CoC had approved the resolution plan by requisite per cent of voting share, then as per Section 30(6) of the I&B Code, it is imperative for the resolution professional to submit the same to the adjudicating authority (NCLT). On receipt of such a proposal, the adjudicating authority (NCLT) is required to satisfy itself that the resolution plan as approved by CoC meets the requirements specified in Section 30(2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny violation of the Negotiation Process done by the RP, second round of Negotiation Process was done in accordance with the process negotiation document. The Committee of Creditors had evaluated all Resolution Plan including the Appellant and having approved the Resolution Plan of the Mangalam Multiplex Private Limited with 100% vote shares. We do not find any error in the Order of the Adjudicating Authority approving the Resolution Plan on the submissions which has been advanced by the Appellant." 11. As noted above, the Appellant did not submit final Resolution Plan nor participated in the Challenge Mechanism and in the negotiation process only two Resolution Applicants participated. We are of the view that any submission of the Appellant regarding process of CIRP not having conducted in accordance with CIRP Regulations cannot be entertained. 12. The main submission which has been advanced by the learned counsel for the Appellant is ineligibility of SRA to submit a Resolution Plan within the meaning of Section 29A (c), (i), (j) and (h). The submission of the Appellant is based on Share Purchase Agreement dated 17.05.2019 by which the Respondent No. 8 and 9 who were group co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s towards repayment of loan sanctioned to Varutha within 360 days of vacation of attachment by ED; (iii) Shares of Varutha to be transferred in favour of purchasers. Based on the settlement, an arbitral award was passed on 19.04.2021. For execution of said award, proceeding has already been initiated by New Era Propcon and Swastik, which are pending consideration. 14. We have noticed above that challenging the initiation of CIRP against the Corporate Debtor by order dated 20.12.2023, a Company appeal was filed by New Era Propcon and Swastik being Company Appeal (AT) (Ins.) No.246 of 2024. In the said appeal, New Era Propcon and Swastik has referred to Share Purchase Agreement dated 17.05.2019 and all other subsequent events and it was pleaded that the Administrator of the SEFL has already filed an application under Section 66 of the Code for avoiding the loan transaction of Rs. 300 crores in favour of the Corporate Debtor, which application is pending. This Tribunal while dismissing the appeal noticed that the Share Purchase Agreement could not be given effect to in view of attachment of land. In Para 5 of the judgment following has been held: "5. We need to first exami....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, the present appeal is dismissed. Pending application(s), if any, shall stand disposed of." 16. The above indicate that the order of this Tribunal holding that the Share Purchase Agreement in favour of New Era Propcon and Swastika was never given effect to has also been affirmed by the Hon'ble Supreme Court. 17. Now, we come to the facts which have been relied by the Appellant to support his submission that claim of Share Purchase Agreement has been pleaded before the NCLT by M3M as well as New Era Propcon and Swastik before Delhi High Court. We need to first notice the reply of M3M filed in I.A. No.1765 of 2024 in C.P. (IB) 26/KB/2023, which reply was filed by M3M opposing the application filed by the Resolution Professional seeking possession of the assets of the Corporate Debtor (subject matter of the CIRP). Learned counsel for the Appellant has relied on pleadings in the said reply filed by M3M. He has referred to Para 4(g) of the reply, which Para 4(g) is as follows: "g. The Corporate Debtor was desirous of participating in the said auction process. Accordingly, inter alia, basis the desire of the Corporate Debtor to purchase the Land and as per the u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this (EFA) (COMM.) No. 6 of 2016 in so far as it relates to the immovable assets of M/s. R.S. Infrastructure Private Limited mortgaged and agreed to be transferred to M/s. SREI Infrastructure Finance Limited vide settlement agreement dated 15.03.2018 and subsequently to the Applicants herein; b. Vacate the injunction or stay granted vide order dated 30.10.2018 with regard to the said property in favor of the Applicants herein; c. Pass any such other or further order(s) as this Hon'ble Court may deem fit." 20. Learned counsel for the Appellant has relied on Para 12, 17 and 23 of the application, which are as follows: "12. Thereafter, M/s. New Era Propcon Private Limited (Applicant No.1 herein), M/s. Swastik Infrasolutions Private Limited (Applicant No.2 herein), M/s. Vision India Fund, M/s. Infrastructure Resurrection Fund, M/s. Varutha Developers Private Limited and M/s. SIFL entered into a Share Purchase Agreement dated 17.05.2019 to sell 100% fully paid equity shares of M/s. Varutha Developers Private Limited for a total consideration of INR 1,00,00,000/- (One Crore Only) by Vision India Fund Infrastructure Resurrection Fund to the Applicants herein....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... modification of order of Delhi High Court in an unrelated proceeding. 23. In so far as submission of the Appellant claiming SRA to be ineligible under Section 29A(i), suffice it to say that transfer of shares of the Corporate Debtor to Respondent No. 8 and 9 or 7 never came into effect. Either de facto or de jure the Corporate Debtor was never under the Control of Respondent Nos.6, 7, 8 or 9. 24. The submission of the Appellant that under the Share Purchase Agreement dated 17.05.2019, the Respondent No. 8 and 9 are co-obligors to the lender hence, they having liability of Corporate Debtor with certain condition they are related parties and disqualified under Section 29A(h). Section 29A(h) of the I&B Code provides as follows: (h) has executed [a guarantee] in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code [and such guarantee has been invoked by the creditor and remains unpaid in full or part]; 25. Sub-section (h) comes into play when a person is not eligible to submit a Resolution Plan if such person or any other person has executed a guarantee in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (b) any entity regulated by a foreign central bank or a securities market regulator or other financial sector regulator of a jurisdiction outside India which jurisdiction is compliant with the Financial Action Task Force Standards and is a signatory to the International Organisation of Securities Commissions Multilateral Memorandum of Understanding; (c) any investment vehicle, registered foreign institutional investor, registered foreign portfolio investor or a foreign venture capital investor, where the terms shall have the meaning assigned to them in regulation 2 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 made under the Foreign Exchange Management Act, 1999 (42 of 1999); (d) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (e) an Alternate Investment Fund registered with the Securities and Exchange Board of India; (f) such categories of persons as may be notified by the Central Government.].]" 27. Section....