TaxTMI 
TaxTMI 
2026 (3) TMI 926
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....ak Maini, Advocate for RP in Person Mr. Sumesh Dhawan, Mr. Ankit Singhal, Mr. Shaurya Shyam, Ms. Kavya Tekriwal, Ms. Prerna Prajapati & Ms. Kirti Bhatia, Advocates for R-4. Mr. Pranav Sachdeva, Mr. Sanyam Jain, Mr. P. Rohit Ram, Ms. Khushboo Singhal & Ms. Mishra Divya Santosh, Advocates for R-1. JUDGMENT [Per: Arun Baroka, Member (Technical)] The present Application I.A. No. 4810 of 2025 in Company Appeal (AT)(Ins.) No. 859 of 2025 has been filed by the applicant- Cosmic CRF Limited under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 seeking recall of the judgment and order dated 25.07.2025 passed by this Hon'ble Tribunal in Company Appeal (AT)(Insolvency) No. 859 of 2025 to the extent that the Applicant has been declared to be ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016 and also to the extent that this Hon'ble Tribunal has directed for continuation of proceedings of Corporate Insolvency Resolution Process of the Corporate Debtor i.e. Amzen Transportation Industries Ltd. from the stage of issuance of a fresh 'Form- G'. Brief facts of the case 2. Amzen Transportation Pvt. Ltd. ("Corporate Debtor") was incorporate....
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....td. ("Myotic") annexing a copy of the complaint letter addressed by Energy Watchdog. The RP upon receipt of the email addressed an email dated August 27, 2024 to Myotic seeking its response on how the complaint of Energy Watchdog against Cosmic came to its knowledge and where did it receive the information that there is another PRA by the name of Cosmic whose plan is being considered by the CoC as the same is confidential in nature. 11. However, instead of addressing the query raised by the RP, Myotic addressed an email dated August 28, 2024 to the RP, whereby the legal opinion dated August 28, 2024 given by Sr. Adv. Gopal Jain was attached. The said legal opinion stated that Cosmic was ineligible to participate under Section 29A(c) and (h) of IBC. 12. The RP addressed an email dated August 31, 2024 to Cosmic seeking its response to the allegations raised by Energy Watchdog. Cosmic vide letter dated September 2, 2024 denied the allegations raised by Energy Watchdog. 13. The RP on September 1, 2024 received an email from Prudent ARC (a member of the CoC) wherein the following documents all dated September 1, 2024 were attached: a) Legal opinion of Sr. Adv. Mr. Amit....
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....ount the resolution plan submission date as the threshold date and the unamended provision of Section 29A(c) was quoted inadvertently. AHSK further stated that the first proviso to sub-clause (c) of Section 29A makes it clear that the ineligibility can only be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the non-performing asset in question before submission of a resolution plan. 20. PSA submitted its report on October 18, 2024 holding Cosmic to be ineligible under Section 29A(a), (c), (h) and (j) of IBC. As per the Report, Cosmic per se was not ineligible under Section 29A, however, its connected persons were undischarged insolvent hence Cosmic became ineligible under Section 29A (a). The report also observes that the Company is ineligible under Section 29A(h) of the IBC as one entity being Archana Impex Private Limited [connected party of Cosmic] had executed a corporate guarantee for the loans of CFAL and CFAL was admitted to CIRP on petition made by Citibank NA and hence the Cosmic was ineligible under Section 29A(h). 21. Both the reports of AHSK dated October 18, 2024 and PSA dated O....
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....s of the order of the NCLT, Cosmic made a detailed written representation to the allegations in the reports of AHSK and PSA by its letter dated January 20, 2025 denying all the allegations. 27. The CoC in its 54th meeting held on January 22, 2025 decided to get Cosmic re-verified by PSA. 28. PSA submitted the final report on February 18, 2025 whereby PSA arrived at the conclusion that Cosmic was ineligible under Section 29A(c), (h) and (j) of IBC. 29. At the 55th meeting of the CoC on 06.03.2025, the Applicant was declared to be eligible to submit a resolution plan under Section 29A of the IBC. 30. Myotic challenged this decision of the CoC on 10.03.2025, taken on March 6, 2025 before the Ld. NCLT by filing an application being IA No. 1240/ND/2025. 31. On 02.04.2025, the Ld. NCLT, heard the parties only on the issue of maintainability of the Application being IA No. 1240/ND/2025 and directed parties to file written submission. 32. In the meanwhile, on 28.05.2025, the Respondent No.1 had also filed an application being I.A. No. 2548 of 2025 seeking replacement of the RP and reconstitution of the CoC. The said application was dismissed by the Ld. NCLT by order dated....
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....and reasons with respect to their conclusions as to how Cosmic CRF Limited - Respondent No.3 was not found eligible under Section 29A. Cosmic CRF Limited approached NCLT on 05.11.2024 and NCLT vide order dated 05.11.2024 remanded the matter back to the CoC for reconsideration on the issue ineligibility of Cosmic CRF Limited under Section 29A after providing it an opportunity of being heard. Later on, RP/CoC called for the response of Cosmic CRF Limited and also asked PSA to give it final 1 report/opinion based on all the previous reports and Cosmic CRF Limited response dated 20.01.2025 and it was also decided to send the final report of PSA to a Senior Advocate for his opinion. The final report dated 18.02.2025 of PSA again declared Cosmic CRF Limited to be in eligible under Section 29A of IBC. But Senior Advocate in his opinion dated 03.03.2025 declared it to be eligible under Section 29A. 106. We have noted various reports of Experts which are placed on record in the pleadings. Without going into the details of these reports, we find that the report of PSA and also the earlier report submitted by AHSK & Co. are detailed reports and are similar and they both had come to t....
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....he issue of maintainability of I.A. No. 1240 of 2025. Applicant further contends that the National Company Law Appellate Tribunal also heard the parties only on the issue of maintainability of I.A. No. 1240 of 2025 on 02.04.2025 and reserved orders on 23.04.2025. 39. It is further contended that National Company Law Tribunal had held that R1-Myotic, acting alone cannot be considered Prospective Resolution Applicant and therefore doesn't have the locus to maintain the I.A. No. 1240 of 2025. The Applicant claims that National Company Law Tribunal never adjudicated on the eligibility of Applicant under Section 29A of Insolvency and Bankruptcy Code, 2016 as the application of R1-Myotic was dismissed on the threshold issue of not having any locus. R1-Myotic filed appeal in CA (AT) (Ins.) No. 859 of 2025 before this Tribunal and had prayed as follows: - "(a) To allow the present appeal; (b) To set aside the impugned final order dated 29.05.2025 passed by the Hon'ble National Company Law Tribunal, New Delhi in IA/1240/ND/2025 in CP(IB)/3/ND/2020; (c) To refer IA/1240/ND/2025 in CP(IB)/3/ND/2020 back to the Hon'ble NCLT in light of the glaring illegalities whi....
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....licant's ineligibility under Section 29A. Applicant contends that the judgment and order dated 25.07.2025, to the extent that it holds the applicant to be ineligible under Section 29A, is in violation of principles of natural justice and there are glaring factual errors in the judgment and order dated 25.07.2025 which have been pointed in the application. Even otherwise, the applicant does not suffer from any of the ineligibility under Section 29A which have been dealt in detail in the present application. 44. The Applicant in this IA 4810 has sought the following reliefs: "a) Recall the judgment and order dated 25.07.2025 passed in Company Appeal (AT) (Ins.) No. 859 of 2025 to the extent it holds the Applicant i.e. Cosmic CRF Ltd. to be ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016, b) Recall the judgment and order dated 25.07.2025 passed in Company Appeal (AT) (Ins.) No. 859 of 2025 to the extent it directs for continuation of proceedings of Corporate Insolvency Resolution Process ("CIRP") of the Corporate Debtor i.e. Amzen Transportation Industries Ltd. from the stage of issuance of a fresh 'Form-G'. c) Recall the ....
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....eed from the stage of issuance of a fresh Form-G are modified / set aside in the present proceedings." Submissions of R5 - UCO Bank 46. Learned Counsel for the R5 - UCO Bank in its written submission dated 03.09.2025 had stated as under: "7. It is submitted that as the main issue in the captioned Appeal as well was never arose for consideration on merits i.e., to consider the issue of eligibility or ineligibility of Cosmic CRF Limited, therefore the matter was never argued on merits by the UCO Bank. Even the word 'merits' mentioned in the order dated 25.06.2025 passed by this Hon'ble Appellate Tribunal is pertaining to the issue whether the consortium exist or not for which consensus arrived between the parties to decide the Appeal so that the orders can be passed on merits on the issue of locus and existence of consortium of M/s. Myotic Trading Private Limited and M/s. Fortune Global Solutions Pte Ltd. and instead for remanding the matter back to the Hon'ble Adjudicating Authority. 12. It is submitted that if the opportunity for defending/justifying the decision taken in the 55th meeting of the Committee of Creditor have granted then the UCO....
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....'ble Adjudicating Authority or this Hon'ble Appellate Tribunal. 13. In view of the above facts and circumstances, the fact remains that this Hon'ble Appellate Authority was only called upon to decide the issue of whether IA 1240 of 2025 was maintainable before the Ld. Adjudicating Authority or not." Final submissions of R4-Prudent ARC 48. After the hearings, in his written submissions placed on record on 27th Jan 2026 R4 - Prudent ARC states as follows: "8. In view of the same, the Respondent has the following concise submissions: 8.1. As far as the eligibility of Cosmic under Section 29A is concerned, the CoC has already confirmed the eligibility in the 55th CoC meeting dated 06.03.2025. The Respondent no. 4 will abide by any decision taken by this Hon'ble Appellate Tribunal on the eligibility of Cosmic under Section 29A. 8.2. The observations in paragraph nos. 112 to 116 with respect to Respondent no. 4 be deleted, as the said observations have come without any opportunity being provided to the Respondent no. 4 to meet them. In any event, the said pleadings were part of IA no. 2548/2025, which were the subject matter of Ap....
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....gement dated 25.07.2025." 50. RP further submits that it has duly complied with direction given vide judgement dated 25.07.2025: "9. It is submitted that the RP has duly complied with the direction given by this Hon'ble Appellate Authority vide Judgement dated 25.07.2025 and further issued fresh Form - G dated 22.08.2025 and corrigendum dated 01.09.2025 (published in newspaper on 02.09.2025) to Form G dated 22.08.2025 outlines: • Date of issuance of provisional list of Prospective Resolution Applicants is: 24.09.2025. • Last date of submissions of objections to the provisional list is: 29.09.2025. • Date of issuance of final list of Prospective Resolution Applicants is: 08.10.2025. • Date of issuance of Information Memorandum, evaluation matrix and request for Resolution Plans to the Prospective Resolution Applicants is: 13.10.2025. • Last date for submission of Resolution Plans: 12.11.2025 (proposed)." Final submissions of RP - R2 51. RP also in his final submissions placed on 29th Jan 2026 states as follows: "5. It is submitted that this Hon'ble Appellate Tribunal ordered that the ....
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....ssion of Resolution Plans: 30.01.2026 (proposed); • Total number of PRA: 11; • Resolution Plans received till date: 4 That vide Order dated 10.10.2025, this Hon'ble Appellate Tribunal, has directed the RP that, "the resolution plan(s), if any, received, shall not be opened and placed before the CoC." 52. RP further contends that once the present application is allowed, certain paragraphs ought to be expunged from the judgement dated 25.07.2025 extracted as below: "10. It is submitted that the CoC of the Corporate Debtor, in its 55th meeting convened on 06.03.2025, unanimously resolved and approved that Cosmic CRF satisfies the eligibility criteria prescribed under Section 29A of the Code. It is further submitted that the RP, whose role under the Code is limited to that of a neutral facilitator and process manager, acted strictly in accordance with and in faithful compliance of the commercial wisdom and collective decision of the CoC. The RP neither exercised any independent discretion nor acted beyond the mandate conferred upon him under the Code, and merely implemented the decision taken by the CoC. 11. It is further subm....
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....e promoter of CFAL. • Aditya Vikram Birla held 53,13,889 shares [51.06%] indirectly in CFAL through corporate entities. • Total shareholding of Birla Family in CFAL as on 31.07.2018 was 67.78%. • Ravi Birla [Father of Aditya Vikram Birla] was the director and promoter of CFAL. • CFAL was classified as NPA on 03.04.2017. • CFAL was admitted into CIRP on 16.01.2018 • Resolution Plan of consortium of United Tradeco FZC and QVC Exports Pvt. Ltd. was approved by NCLT on 11.10.2018. Through the approval of the Resolution Plan the entire financial debt of CFAL of Rs. 178 crores got settled at an amount of Rs. 50 crores. The balance debt still remains outstanding and payable by the erstwhile promoters of CFAL, who were guarantors to the debt raised by CFAL. • Applicant is ineligible as the connected person of Applicant i.e. [Aditya Vikram Birla (being director and 63.99 % shareholder of Applicant) and Ravi Birla (father of Aditya Vikram Birla)] were in control and management of CFAL when CFAL was classified as NPA, hence, they were ineligible under Section 29A(c). 55. Reliance by AHSK on otiose pr....
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.... failed to take into account and appreciate the amendment carried out in Section 29A(c) by Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 with retrospective effect from 06.06.2018. • AHSK failed to appreciate the effect of approval of Resolution Plan of CFAL and made factually incorrect statements. • AHSK failed to appreciate that Ravi Birla is not connected to the Applicant in any manner. 58. Applicant not connected to Ravi Birla: Applicant-Cosmic CRF also contends that Ravi Birla is not connected to the Applicant in any manner. Applicant-Cosmic CRF contends that Aditya Vikram Birla was not the promoter of CFAL as is evident from the Resolution Plan itself that Aditya Vikram Birla was never a director nor a promoter in CFAL and the miniscule shareholding of 0.09% also stood extinguished. Applicant contends that the observation that Aditya Vikram Birla held 53, 13, 889 shares [51.06%] indirectly in CFAL through corporate entities is flawed as Aditya Vikram Birla was not a shareholder in such corporate entities. [Except 0.4% in Cosmic Steels which in turn had only 2.88% in CFAL]. In any event, the entire shareholding in CFAL stood extinguish....
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....s based on conjectures. 63. Thus, the applicant i.e. Cosmic CRF Ltd. is not a NPA and does not hold any NPA as on the date of submission of Resolution Plan i.e. 28.06.2024. Similarly, the connected person to Cosmic CRF Ltd. i.e. Aditya Vikram Birla is not the promoter nor in management or control of any Corporate Debtor which is classified as a NPA as on the date of submission of Resolution Plan i.e. 28.06.2024. Thus, the applicant is eligible under Section 29A(c). 64. Applicant-Cosmic CRF further claims that the legal opinion obtained by the CoC from a Senior Advocate has also after analyzing the provisions of law and facts of the case opined Applicant and its connected persons to be eligible under Section 29A (c). 65. AHSK Report: AHSK report argues that after approval of Resolution Plan of CFAL, Aditya Vikram Birla was working as Marketing Executive of CFAL. Applicant-Cosmic CRF contends that the resolution plan itself states that Aditya Vikram Birla will have no influence in the business, decision making process, management or control of CFAL. In presentai or at the time of submission of Resolution Plan with the CD, Aditya Vikram Birla is not working as Marketing Execu....
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....ted person to Cosmic CRF Ltd. i.e. Aditya Vikram Birla is not the promoter nor in management or control of any Corporate Debtor which is classified as a NPA as on the date of submission of Resolution Plan i.e. 28.06.2024. Hence, it is claimed that the first proviso will not be applicable since there is no NPA and thus there is no occasion for payment of any overdue amounts. 70. PSA Report: PSA report dated 18.10.2020 found applicant to be ineligible u/s 29A(a), (c), (h) and (j). PSA opined that Applicant i.e. Cosmic CRF is eligible under Section 29A of IBC, however, the connected person of the Applicant i.e. Aditya Vikram Birla and Ravi Birla are ineligible under Section 29A(a), (c) and (h). Hence, the applicant i.e. Cosmic CRF Ltd. also becomes ineligible on account of the ineligibility of its connected persons. 71. On PSA's opinion that the applicant to be not ineligible under Section 29A for being undischarged insolvent, the applicant claims that in order for a person to be ineligible under Section 29A(a), there has to be a court order declaring such person to be an undischarged insolvent. Applicant relies on SREI Multiple Asset Investment Trust v. IDBI Bank Ltd. And Ors.,....
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.... remains unpaid in full or part. Applicant claims that even AHSK in its report has opined that the applicant and its connected persons are eligible under Section 29(h). Further, as per PSA themselves Archana Impex Pvt. Ltd. has not defaulted in any loan repayment. 73. Applicant further claims that PSA has opined that Archana Impex Pvt. Ltd. is a connected person of Applicant as Aditya Vikram Birla is a director in certain entities, which are in turn in shareholders of Archana Impex Pvt. Ltd. and those entities are having significant shareholding in CFAL as on 31.03.2018. Applicant-Cosmic CRF contends that Archana Impex Pvt. Ltd. is not a connected person to the applicant. Aditya Vikram Birla is/was not a director in Archana Impex Pvt. Ltd. and relies on the history of Directorship of Aditya Vikram Birla. PSA is factually incorrect in stating that the entities mentioned in Table B at Pg. 343 Vol. 3 are having significant shareholding in CFAL. The Resolution Plan of CFAL was approved by the Ld. NCLT, Kolkata Bench on 11.10.2018 and after approval of the plan since the equity shares were having 'nil' value; thus, the shares were extinguished and the shareholding vested with the new....
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....in relation to Applicant's ineligibility under Section 29A and how their claim that they are eligible under Section 29A can be sustained vide order dated 25.09.2025. 77. During the pendency of above IA 4810 of 2025, the applicant moved another I.A. 5965 of 2025 seeking to set aside the Form G dated 22.08.2025 published in the newspapers on 23.08.2025 and to set aside any step taken in furtherance of Form-G dated 22.08.2025, which CIR process was going on as per the orders of this Tribunal in CA (AT) (Ins.) No. 595 of 2025. In this I.A. No. 5965, we passed the following interim orders on 10.10.2025: "20. In this background, the instant application has been moved by the Applicant requesting at first to set aside the form G (invitation of EOIs), to stay the operation and effect of the form G and further to direct the Respondent No. 2 not to take any further step in pursuance of the Form G. 21. As we have already noticed during the submissions made by Ld. Counsel for the parties, especially Ld. counsel for the IRP that the stage of receiving of EOIs is already over, as according to the IRP, 11 EOIs have already been received and in pursuance of the same, the IRP ha....
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....oceedings of M/s Amzen Transportation Industries Private Limited. This complaint is placed @ 14 to 18 in the affidavit filed by Respondent No.4. Briefly speaking it gives graphic description about the integrity of the CIR Proceedings of CFAL and the eligibility of the promoters of Cosmic CRF Limited under Section 29A of the IBC and the conclusion is as follows: "The current investigation indicates potential violations of the Code and suggests that the entire transaction needs to be investigated by the relevant agencies to uncover such financial crimes that have put not only public funds but also huge amounts of taxpayer money at stake. The stakeholders are cautioned about allowing Cosmic CRF Ltd or its promoters, namely Aditya Vikram Birla, Purvi Birla, and others, to participate in the resolution process of Amzen Transportation Industries Pvt. Limited, given their ineligibility under Section 29A and potential violations of other laws. The copy of this letter is also being sent to other investigating agencies for deeper investigation into the modus operandi and preventing such kind of further financial crimes." "5. It has been informed to me by the queris....
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....fer agreement, taking over the assets of CFAL. vi. Preference Shares Subscription & Mohta: Mr. Anand Mohta and Ms. Raj Laxmi Mohta, who were also erstwhile promoters of CFAL, joined the bandwagon by subscribing to 100% of the preference shares in the company amounting to approximately Rs. 5 Crores through their wholly-owned private limited companies, Anand Raj Developer Pvt Ltd and AV Realestate Pvt Ltd. Cosmic CRF was formed with related parties of Anand Mohta as subscribers to the memorandum; however, their names do not feature in subsequent shareholder lists. vii. Shareholding and Control: Aditya Vikram Birla, apart from being the son of Mr. Ravi Birla, one of the main promoters of CFAL, was also a shareholder in the company and director/shareholder in many of the group companies, having a cumulative shareholding interest in CFAL of more than 45%. Detail of Shareholding attached herewith. viii. Guarantee and Assignment: It is also apparent from the records that the loan by secured lenders prior to the CIRP was secured by guarantees given by the promoters/directors along with corporate guarantees by its group companies, in which Mr. Aditya Vikram Birla ....
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....r Agarwal was always acting on the instructions of the erstwhile promoters, being on the board since the approval of the resolution plan. It is also apparent from the records that, simultaneous with the sale of the unit to Cosmic CRF, another unit of CFAL was sold on 19th January 2022, thereby converting the corporate debtor into a shell company. This is substantiated by the fact that no annual returns have been filed since the financial year 2020-21 by CFAL. The mortgage and acquisition agreement also specifies that the acquirers have paid for the outstandings of Phoenix ARC and that there exists the possibility of some underhand dealings between the SRA, Phoenix ARC, and the erstwhile promoters, even prior to CIRP commencement. xi. Litigation and Disputes: There also appears to be litigation ongoing between CFAL and Cosmic CRF regarding non-payment of Rs. 10 Crores as per the business purchase agreement. The entire litigation further corroborates the underhand dealing between the SRA and the erstwhile promoters. It would have been impossible to execute the addendum agreement, deed of conveyance, mortgage, and transfer of assets of Cosmic CRF without the erstwhil....
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....s, which was scheduled for 20.08.2024. Opinion of another Senior Advocate (Mr Gopal Jain) 28.08.2024 83. Legal opinion dated 28.08.2024 was taken from another Senior Advocate Mr. Gopal Jain by Myotic Trading Private Limited - the Appellant in original Company Appeal (AT) (Insolvency) No. 859 of 2025 which was forwarded by the original Appellant to the RP. This legal opinion is also worth reproducing as follows: The Senior Advocate Mr. Gopal Jain in his opinion states as follows: "7. Section 29A, thus, according to me has three layers of ineligibility: • • Person acting in concert: Persons who have the common objective/purpose of acquisition of shares/ voting rights in/exercising control over a company pursuant to an agreement or understanding, formal or informal, directly or indirectly co-operate for acquisition of shares/voting rights in/exercise of control of the company. • Connected Persons: Any person who is the promoter or in the management or control of the resolution applicant; Any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of ....
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....h guarantee has been invoked by the creditor and remains unpaid in full or part, the said person would also be ineligible under Section 29A. Conclusion: 11. If the allegations in the said complaint against are correct, then it is apparent that Mr. Aditya Vikram Birla & others were the promoters and Directors in many of shareholders Company of Cosmic Ferro Alloys Limited with substantial interest prior to the commencement of CIRP and that entire debt in relation to the said debtor still remains outstanding after its declaration of NPA, with the secured lenders apparently taking huge haircuts in the Resolution Process. Further Mr. Aditya Vikram Birla alongwith other Birla family members were controlling both majority stakes and management control in Cosmic Ferro Alloys Limited as on the CIRP commencement date. In addition to above it is alleged Mr. Aditya Vikram Birla along-with its related parties, was also holding direct controlling interest in the Companies that have extended corporate guarantees towards loan of Cosmic Ferro Alloys Limited and no records of any payments towards such guarantees could be found. 12. It is therefore alleged by the quesrist t....
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....Industries Private Limited which is already under process." 85. Specially speaking, one Insolvency Professional - Mr. Mahender Kr. Khandelwal in its report as follows: "1. As per details on Page 16 of the said report: a. Archana Impex Pvt Limited had given Corporate Guarantee against Loan of Cosmic Ferro Alloys Ltd, in which Aditya Vikram Birla had direct controlling interest through Directorship in the Companies which are its shareholder of 48.49% as under, apart from 100% control & ownership jointly with the related parties. Name Status No. of Shares % Aar Ess Homes Pvt Ltd Company 43,000 13.00 Vista Vision Pvt Ltd Company 41,600 12.58 Cosmic Steels Pvt Ltd Company 19,000 5.74 Topsell Vinimay Pvt Ltd Company 56,800 17.17 TOTAL 48.49 b. Ravi Birla, father of Aditya Birla was a promoter of Cosmic Ferro Alloys Limited and their family hold 13.70% shareholding in Cosmic Ferro Alloys Limited. c. Aditya Vikram Birla is a Promoter of Cosmic CRF Limited and holds 39.82% shareholding in the company. 2. As per details on page 18 of the said report, Cos....
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....lkata Bench initiated insolvency process against the company in 2018. The company defaulted in payment with CITI bank. Further, the company was acquired by the consortium of United Tradeco FZC and QVC Export Ltd. For details refer to exhibit 3.1. 2. Cosmic Ferro Alloys Limited and Ravi Kumar Birla - Subject is identified as a Non-Performing Asset. Name of the subject identified in CIBIL Suit filed on account of default more than INR 100 lakh. The default was related to Cosmic Ferro Alloys Limited. The default was with CITI Bank and amount outstanding was INR 13.06 crore as on 31-12-2018. For details, refer exhibit 3.2. Basis above facts, it is observed that Mr. Aditya Birla (Along with Family Member and Companies in which Mr. Aditya Birla is Director or have shareholding) and Mr. Anand Mohta (Along with Relatives) have substantial interest in both Cosmic Ferro Alloys Limited and Cosmic CRF Limited. Further, CIRP process has been initiated against Cosmic Ferro Alloys Limited in 2018. Cosmic Ferro Alloys Limited and Mr. Ravi Kumar Birla has been identified as Non-Performing Assets on account of default with Citi Bank. The above facts would....
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....election of an ineligible bidder or even its mere participation may vitiate the entire resolution process or make it susceptible to various legal challenges, as held by the NCLAT in its decision cited in the opinion. Therefore, in my opinion, the CIRP in Amzen Transportation Industries Private Limited should not proceed pending the verification of the allegations concerning the ineligibility of the Resolution Applicant M/s Cosmic CRF Ltd by the Resolution Professional and the Committee of Creditors." Replies to the complaints by the Applicant 88. On 02.09.2024 the resolution applicant and the applicant in the present IA 4810 namely M/s Cosmic CRF Ltd. submitted its reply [@ 92 - 93] in connection to the email dated 31.08.2024 sent by RP regarding the complaint by Energy Watchdog and claimed as follows: "We are clarifying our stand on the allegations levelled by Energy Watchdog through the letter dated August 27, 2024 as under: Our Company (Cosmic CRF Limited] has no association or connection of any nature with Cosmic Ferro Alloys Limited (CFAL] and the allegations relating to alleged irregularities by our Company during the CIRP of Cosmic Ferro Allo....
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....ection 29 of the Code. We further note that thereafter the matter was placed before the 55th CoC meeting and it approved that the applicant is not ineligible under Section 29A as noted herein separately. AHSK updated report dated 20.09.2024 90. In the meantime, AHSK also updated its report dated 19.08.2024 and at @119 and 120 concluded as follows: "Based on the search, it is clearly identified that there is no case against the Resolution Applicant or its connected parties declaring them as undischarged insolvent under any law in India or in jurisdiction outside India. This makes the Resolution Applicant not ineligible under Section 29A (a) of IBC. Based on the search, it is clearly identified that there is no case identified against Resolution Applicant and their connected parties declaring them or listing them as wilful defaulter(s) by RBI under Banking Regulation Act, 1949. This makes the Resolution Applicant not ineligible under Section 29A (b) of IBC. Please note that wilful defaulter data is of defaults of more than 25 lakhs INR where a suit is filed as updated on CIBIL. CIBIL publishes its data on the last day of the last quarter as per the RBI mandate....
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....nder Section 29A (h) of IBC. Based on the search conducted and with available information, no case identified except for clause (c) corresponding to Section 29A (a) to (h) of IBC under any law in a jurisdiction outside India." PSA Report dated 18th Oct 2024 91. This report has brought out the following connections between the promoters of the resolution applicant-CRF and Cosmic Ferro Alloys Ltd. (CFAL) - and are noted hereinafter. 20.1 "Connection 1: Mr. Ravi Kumar Birla and Mr. Aditya Vikram Birla Mr. Aditya Vikram Birla, the promoter of the RA is holding substantial interest 'Carro Enterprises Pvt. Ltd.'. Further Mr. Ravi Kumar Birla is holding posting the Board of such company. Hence Mr. Ravi Birla is considered is person acting jointly in concert with Mr. Aditya Vikram Birla as on the date of submission of resolution plan and is a related party in terms of Section 5(24A) of the Code". 20.2 "Connection 2: Mr. Aditya Vikram Birla and Cosmic Ferro Alloys Limited (CFAL): - Shareholder as on 31.03.2018 Company>>> Cosmic Ferro Alloys Limited Comic Steels Pvt. Ltd Aar Ess Homes Pvt Ltd Adarsh Technocom Pvt. Ltd. Archana Impex....
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....• Further while analyzing the directorship of Mr. Aditya Vikram Birla, it was noted that Mr. Aditya Birla was holding and, in some cases, continue to hold directorship in the company which were having shareholding in Cosmic Ferro Alloys Limited as aforementioned." 20.3 "Connection 3: Mr. Aditya Vikram Birla Directorship in companies having significant shareholding in Cosmic Ferro Alloys Limited (CFAL): Sr. No. Company Name Directorship Name From to 1 Cosmic Steel Pvt. Ltd. Aditya Vikram Birla 21-Oct-13 Current Director 2 AAR Ess Homes Pvt. Ltd. Aditya Vikram Birla 29-Sep-17 14-Apr-23 3 Topsell Vinimay Pvt. Ltd. Aditya Vikram Birla 14-Dec-15 23-Jul-24 4 Apollo Vinimay Pvt. Ltd. Aditya Vikram Birla 29-Mar-19 Current Director 5 Pragati Realtors Pvt. Ltd. Aditya Vikram Birla 8-Dec-15 Current Director 6 Adarsh Technocom Pvt.Ltd. Aditya Vikram Birla 21-Oct-13 Current Director Hence, at time of NPA classification, the Birla Family including the current promoter of Resolution Applicant Mr. Aditya Vikram Birla were in the Management (Board of Directors) of companies,....
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.... can only be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the non-performing asset in question before submission of a resolution plan. The position in law is thus clear. Any person who wishes to submit a resolution plan acting jointly or in concert with other persons, any of whom may either manage, control or be a promoter of a corporate debtor classified as a non-performing asset in the period abovementioned, must first pay off the debt of the said corporate debtor classified as a non- performing asset in order to become eligible under Section 29A(c)." Hence the rational given by the Resolution Applicant will not hold good for the following reason: a) First the at time of NPA classification and post such classification the promoters and their connected parties were in the management/ control of Cosmic Ferro Alloys Limited. b) The fact above has not been denied and available on the records as per ROC Fillings. c) The Promoters of Resolution Applicant Mr. Aditya Birla was retained in the operation of assets of Cosmic Ferro Alloys Limited post approval of resol....
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....nts gathered, and data obtained from public sources, Resolution Applicant M/s Cosmic CRF Limited and its connected parties are found to be ineligible under Section 29A of the Insolvency and Bankruptcy Code 2016 as of the date of submission of the resolution plan." 95. The above report finally concludes as extracted below: A. Eligibility Check of RA Under Section 29A of the Code. "As a result of background checks applied, documents gathered, and data obtained from public sources, Resolution Applicant M/s Cosmic CRF Limited and its connected parties are found to be ineligible under Section 29A of the Insolvency and Bankruptcy Code 2016 as of the date of submission of the resolution plan." B. Eligibility Check of Related Parties of RA Under Section 29A of the Code: "As a result of background checks applied, documents gathered, and data obtained from public sources, Related Parties of Resolution Applicant M/s Cosmic CRF Limited, are found to be ineligible under Section 29A of the Insolvency and Bankruptcy Code 2016 as of the date of submission of the resolution plan." C. Eligibility Check of Related Parties of Promoters of RA Under Sectio....
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....order under section 126 has been made against a firm or c. any person adjudged as an "undischarged insolvent". 5. From a perusal of Section 79(3) of IBC it is evident that the term "undischarged insolvent" would be applicable to individuals and partnership firms. Further, as Cosmic is neither an individual nor a partnership firm, it cannot be classified as an "undischarged insolvent" as per IBC. It is further to be noted that, the Hon'ble National Company Law Appellate Tribunal in SREI Multiple Asset Investment Trust -vs- IDBI Bank Ltd. & Ors. [2022 SCC Online NCLAT 304] observed that "an undischarged insolvent means a person declared by the relevant court to be insolvent". 6. I have perused the report of PSA dated February 18, 2025 and have noted that no document has been provided whereby it can be observed that Cosmic or any of its connected persons have been declared as insolvent by a court of law. Hence, Cosmic is eligible under Section 29A(a) of IBC. INELIGIBILITY UNDER SECTION 29A(A) (c) OF IBC: 7. As per Section 29A (c) of IBC, Cosmic shall be rendered to be ineligible if Cosmic or any of its connected person or any person acting ....
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....ards to the equity shareholders (which includes shareholding of Mr. Aditya Vikram Birla) the CFAL Resolution Plan notes as follows: - "As the Value payable to shareholders of the Corporate Debtor are NIL the Equity Shares will be extinguished, and new Shares will be issued to the New Promoters." 11. The CFAL Resolution Plan further notes that: - "Specific Order to the Secured Financial Creditors to "UPGRADE" the Account of Corporate Debtor with Banks/ FI under the CIBIL Mechanism to "Standard Category" from NPA on the completion of the Upfront Payment to Secured Financial Creditors under this Resolution Plan so as to enable the Resolution Applicant to revive the business of Corporate Debtor afresh and such action would enable the Resolution Applicant to take Loans for Balance Payment of the Resolution Plan or Upgradation of the Plant & Machinery of the Corporate Debtor which will assist in complete revival account of CFAL was upgraded to 'Standard Category from NPA upon its approval." 12. Thus, once the CFAL Resolution Plan was approved by the Hon'ble NCLT, the account of CFAL would no longer be NPA and was upgraded to Standard Category. Also, th....
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....aforesaid it is clear that on the date Cosmic had submitted its resolution plan i.e. June 28, 2024 and as on that date neither Cosmic nor any of its connected persons held any account which was classified as NPA nor were in management or control of the Corporate Debtor whose account have been classified as NPA and were also not a promoter of a corporate debtor whose account has been classified as NPA. 16. In my opinion, as on the date of submission of resolution plan by Cosmic it cannot be said that CFAL is NPA and thus Cosmic cannot be said to be ineligible under Section 29A (c). 17. Further, CFAL Resolution Plan itself notes that Mr. Aditya Vikram Birla will be working as Marketing Executive in the operation of Cosmic plant with no influence in the business decision making process, management and/or control of the Company, i.e. CFAT. 18. Thus, in my opinion Cosmic is eligible under Section 29A(c) of IBC. INELIGIBILITY UNDER SECTION 29A(A) (h) OF IBC: 19. PSA in its report dated February 18, 2025 has observed that Cosmic is ineligible under Section 29A(h) of IBC due to the following reasons: - i. Archana Impex Pvt. Ltd., a company co....
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....hat the shareholding of the Birla Family (including Mr. Aditya Vikram Birla) was extinguished after the CFAL Resolution Plan was approved by the Hon'ble NCLT. Hence, the Birla Family (including Mr. Aditya Vikram Birla) do not continue to control CFAL. Further, CFAL was no longer NPA after the CFAL Resolution Plan was approved by the Hon'ble NCLT. It is also noted that the report dated February 18, 2025 of PSA does not provide any reasoning as to how Cosmic is a connected entity of CFAL. Hence, CFAL does not fall under the definition of connected person nor related party under Explanation I to Section 29A(j) of IBC. 26. In view of the aforesaid, I am of considered opinion that Cosmic is eligible under Section 29A of IBC to take part in the CIRP of the Corporate Debtor. 27. The query is accordingly answered." 55th Meeting of CoC - Section 29-A compliance 97. The CoC in its 55th Meeting on 6th March 2025, decided that the applicant is eligible to be a resolution applicant and satisfies all the conditions under Section 29A. The relevant extract of the meeting of the CoC gives the details of the process undertaken for deciding that the RA is eligible and not the justificatio....
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....were serious doubts about its eligibility and also sufficient material was available on record against its eligibility. In such a situation analysis and reasoning under individual sub-sections of Section 29A would have provided a clear conclusion that the Applicant-Cosmic CRF is not ineligible under Section 29A of the Code. We find that the CoC has totally relied on the opinion of the Senior advocate as if he is the final arbiter and can overrule all other reports - whether of advocates or of financial experts - and has not brought out on record its own analysis and reasoning except for the process undertaken by them. This is particularly important in the background that all the earlier reports had flagged connections between the resolution applicant and another business entity [CFAL] which was resolved under the Code and various other conditions of ineligibility. In such a background, it is the CoC which has to ensure that the resolution applicant is in compliance of Section 29-A. Such a decision could have been basis speaking minutes determining eligibility under each sub-section of 29A. We don't find the self-speaking reasoning in the minutes of the CoC which could indicate that....
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....all not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person-- (a) is an undischarged insolvent; (b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949; (c) at the time of submission of the resolution plan has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 1949) 3[or the guidelines of a financial sector regulator issued under any other law for the time being in force,] and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor: Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of reso....
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....truments convertible into equity shares or completion of such transactions as may be prescribed,] prior to the insolvency commencement date; Explanation. II.-XXX 103. The intention of legislature to insert Section 29A becomes clear in para 2 of Statement of Objects and Reasons appended to Amendment Bill 2017, which is noted as follows: "The provisions for insolvency resolution and liquidation of a corporate person in the Code did not restrict or bar any person from submitting a resolution plan or participating in the acquisition process of the assets of a company at the time of liquidation. Concerns have been raised that persons who, with their misconduct contributed to defaults of companies or are otherwise undesirable, may misuse this situation due to lack of prohibition or restrictions to participate in the resolution or liquidation process, and gain or regain control of the corporate debtor. This may undermine the processes laid down in the Code as the unscrupulous person would be seen to be rewarded at the expense of creditors. In addition, in order to check that the undesirable persons who may have submitted their resolution plans in the absence of such a....
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....e target company, pursuant to an agreement or understanding (formal or informal), directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company. (2) Without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established: (i) a company, its holding company, or subsidiary of such company or company under the same management either individually or together with each other; (ii) a company with any of its directors, or any person entrusted with the management of the funds of the company; (iii) directors of companies referred to in sub-clause(i) of clause (2) and their associates; (iv) mutual fund with sponsor or trustee or asset management company; (v) foreign institutional investors with sub account(s); (vi) merchant bankers with their client(s) as acquirer; (vii) portfolio managers with their client(s) as acquirer; (viii) venture capital funds with sponsors; (ix) banks with financi....
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....fraid that these judgments are wholly inapplicable. All that is to be seen by the expression "acting jointly" is whether certain persons have got together and are acting jointly"in the sense of acting together. If this is made out on the facts, no super added element of "joint venture" as is understood in law is to be seen. The other important phrase is "in concert". By Section 3(37) of the Code, words and expressions used but not defined in the Code but defined inter alia by the SEBI Act, 1992, and the Companies Act, 2013, shall have the meanings respectively assigned to them in those Acts. In exercise of powers conferred by Sections 11 and 30 of the SEBI Act, 1992, the 2011 Takeover Regulations have been promulgated by SEBI." 111. Hon'ble Supreme Court has provided an expansive interpretation to hold that all that is to be seen by the expression "acting jointly" is whether certain persons have got together and are acting "jointly" in the sense of acting together and if this is made out on the facts, no super added element of "joint venture" is required to be seen. In the facts of the case, we find that the resolution applicant has been acting jointly with the erstwhile promote....
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....ate relatives" are also covered by sub-clause (v) - i.e., father and son, brothers, etc. Also of importance is the definition of "associate" in the explanation to Regulation 2(1)(q)(2), which subsumes not merely immediate relatives but other forms in which a person can be associated with another - which includes the form of trust, partnership firm and HUF. What is of great importance is that wherever persons act jointly or in concert with the "person" who submits a resolution plan, all such persons are covered by Section 29A....." 113. We observe that the meaning of 'persons acting in concert' is not explained in the IBC and Hon'ble Supreme Court in Arcelor Mittal (supra) referred to the definition of 'persons acting in concert' in SEBI Regulations. As per the said definition, 'persons acting in concert' are persons who, with a common objective or purpose of acquisition of shares or voting rights in, or exercising control over a target company, pursuant to an agreement or understanding, formal or informal, directly or indirectly co-operate for acquisition of shares or voting rights in, or exercise of control over the target company. SC held that any under....
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....t could be having different findings with respect to different clauses of Section 29A. For that reason, we have ourselves analysed each clause to arrive at our independent findings noted herein. 118. To appreciate the issue before us and also the grievance of the applicant we take the assistance of a question which was framed by a consulting firm (PSA @ 341, Vol-3) noted as below: "The key questions that arise from these opinions, reports, and complaints are summarized below for a better understanding of the matter: a) Whether 'Cosmic Ferro Alloys Limited (CFAL)' or Mr. Ravi Birla has, had, or currently has any connection, as defined under section 5(24) or 5(24A) of the Code, with the current promoters of the Resolution Applicant, M/s Cosmic CRF Limited." b) Even if the answer to (a) above is affirmative, whether such a connection falls within the ineligibility criteria outlined under clauses (a), (c), and/or (h), read in/or conjunction with clause (j) of Section 29A of the Code." 119. To find answer to the above question we now look into the connections as noted above and for this purpose rely on the material placed on record, including all....
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....reholding of Mr. Aditya Vikram Birla and Cosmic Ferro Alloys Limited (CFAL) as on 31.03.2018, even though it is prior to resolution of CFAL, which is extracted in below mentioned tables: Table A Company>>> Cosmic Ferro Alloys Limited Comic Steels Pvt. Ltd Aar Ess Homes Pvt Ltd Adarsh Technoco m Pvt.Ltd. Archana Impex Pvt Ltd Apollo Vinimay Pvt Ltd Topsell Vinimay Pvt. Ltd. Vista Vision Pvt Ltd Pragati Realtors Pvt Ltd Shareholders Birla Family 16.73% 1.23% 0.42% 46.25% 38.20% 0.13% - 39.68% 5.75% Aditya Vikram Birla 0.09% 0.41% - - - - - - - Cosmic Steel Pvt. Ltd. 2.88% - - 18.89% 5.74% 19.31% 12.04% 4.15% 5.75% AAR Ess Homes Pvt. Ltd. 2.50% 24.59% - 19.47% 13.00% - 8.03% 1.10% - Topsell Vinimay Pvt. Ltd. - 24.59% 17.71% 5.77% 17.17% 10.94% - 9.95% 2.30% Apollo Vinimay Pvt. Ltd. 10.14% - 33.16% - - - 11.24% 8.50% - Vista Vision Pvt. Ltd. 20.73% - 19.62% - 12.58% 17.51% 16.05% - 5.18% Pragati Realtors Pvt. Ltd. 0.50% - 14.2....
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....to the above, the material placed on record also indicates that the Birla family had controlling interest through shareholding and Directorship of more than 50% in CFAL, prior to commencement of its CIRP. 126. Thus, Birla Family along with Mr. Aditya Vikram Birla are/were having cross shareholding in different companies and were exercising significant control over Cosmic Ferro Alloys Limited. We further note that the loan account of Cosmic Ferro Alloys Limited was classified as Non- Preforming Assets (NPA) on 09.12.2016 and CIRP petition was admitted on 16.01.2018. Therefore, as on the date of classification as NPA and after commencement of CIRP Mr. Aditya Vikram Birla along with Birla Family were having significant control over the Cosmic Ferro Alloys Limited. Hence, at the time of NPA classification, the Birla Family including the current promoter of Resolution Applicant were in the control of the Cosmic Ferro Alloys Limited. Further while analysing the directorship of Mr. Aditya Vikram Birla, it was noted that Mr. Aditya Birla was holding and, in some cases, continue to hold directorship in the company which in turn were having shareholding in Cosmic Ferro Alloys Limited as n....
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...., which becomes clear in our analysis herein after. 130. Furthermore, it is also observed that Mr. Aditya Vikram Birla was retained as Marketing Executive of Cosmic Ferro Alloys Limited (CFAL) post approval of Resolution Plan from existing management. Thus, Mr. Aditya Vikram Birla was not only in management and control of Cosmic Ferro Alloys Limited but also continued to be in the operation and also post slump sale continued to control and enjoy the assets of NPA entities. 131. Thus, we find that Mr. Aditya Vikram Birla & others were the promoters and Directors in many of shareholders Company of Cosmic Ferro Alloys Limited with substantial interest prior to the commencement of CIRP and that entire debt in relation to the said debtor still remains outstanding after its declaration of NPA, with the secured lenders apparently taking huge haircuts in the Resolution Process. Further Mr. Aditya Vikram Birla along with other Birla family members were controlling both majority stakes and management control in Cosmic Ferro Alloys Limited as on the CIRP commencement date. In addition to above Mr. Aditya Vikram Birla along- with its related parties, was also holding direct controlling i....
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.... in CFAL. We also note that Mr. Aditya Vikram Birla was/is director in at least in the companies in Table B. These companies in turn had shareholding in M/s Archana Impex Pvt. Ltd. with shareholding of about 48.49% as under, apart from 100% control and ownership jointly with the related parties as shown in following Table: - Table E Name Status No.of Shares % Aar Ess Homes Pvt Ltd Company 43,000 13.00 Vista Vision Pvt Ltd Company 41,600 12.58 Cosmic Steels Pvt Ltd Company 19,000 5.74 Topsell Vinimay Pvt Ltd Company 56,800 17.17 TOTAL 48.49 136. We also that the status of invocation of corporate guarantee against M/s Archana Impex has not been brought on record, which in normal course should have been invoked by the financial creditor or the assignee of the debt. And if it was not done so what were the reasons but it has not been brought on record. It is claimed to be unrelated issue for the applicant but we find it to be an important determining factor. 137. Summarizing we note that: a) CFAL was declared NPA for the first time on 09.12.2016 and the CIRP in respect of CFAL commenc....
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..... And this reads as follows: "A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person suffers from any of the infirmities stated in clauses (a) to (i) or has a connected person not eligible under clauses (a) to (i)." Testing eligibility under Clause (a) of Section of 29A: 143. Section 29A(a) states that: "29-A: Persons not eligible to be a Resolution Applicant: A person shall not be eligible to submit a resolution plan if such person, or any other person acting jointly or in concert with such person (a) is an undischarged insolvent." We note that this provision determines ineligibility in case the Resolution Applicant(s) is an undischarged insolvent. The applicant claims that they are not undischarged insolvent and therefore this sub-section is not attracted against them. The applicant further contends that the applicant or its connected persons have not been declared as 'undischarged insolvent' by any court of law. In the absence of any court order declaring the Applicant or any connected person to be an undischarged insolvent, the ineligibility under Section 29A(a) will no....
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....intly having substantial interest in both Cosmic Ferro Alloys Limited and Cosmic CRF Limited, as the promoters. Further they have also acquired the substantial assets of Cosmic Ferro Alloys Limited through back door entry after its CIRP. Aditya Vikram Birla was having shareholding in Cosmic Ferro Alloys Ltd. through directorship in companies which went under CIRP process. Aditya Vikram Birla is also a promoter director in Cosmic CRF Ltd. The details from the report as mentioned makes Cosmic CRF Ltd. ineligible under Section 29A of IBC 2016 to participate in any CIRP process. f) Report of Sr. Advocate (Mr. Amit Sibal) dated 01.09.2024: Does not comment on ineligibility under Section 29A(a) however, generally considers ineligible. g) Report of PSA dated 08.10.2024: Based on the verification of records available in the public domain, it is clearly identified that there is no case against the Resolution Applicant however as explained to Executive Summary in this report (Page 05-10) its connected parties have been found to be ineligible. h) Report of Sr. Advocate (Mr. Krishnendu Dutta) dated 03.03.2025: I have perused the report of PSA dated February 18, 2025 ....
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.... his reliance on the submission by the parties recorded in the judicial precedents in an unusual and unprecedented manner. The Professional Agency seems to have ignored the law laid down and the ratio decided in such judicial precedents, which unquestionably, incontrovertibly and unequivocally supports the case of the Company. The Report prepared by the professional Agency is without any application of mind and has been premised on incorrect and non-existent provisions of law and fails to take into account the actual facts of the case. Aditya Vikram Birla was not a shareholder in such corporate entities. [Except 0.4% in Cosmic Steels which in turn had only 2.88% in CFAL]. The Resolution Plan of CFAL was approved on 11.10.2018 and taken over by consortium of United Tradeco FZC and QVC Exports Private Limited. As per the Resolution Plan, the account was upgraded to 'Standard Category' from NPA upon its approval. Applicant contends that the bar under Section 29-A(c) of the IBC would not apply for the reason that a Resolution Plan of a consortium of United Tradeco FZC and QVC Exports Private Limited has been approved by the NCLT, Kolkata Bench by an order dated October 11, 2018 and a n....
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.... "It may be noted that, the entire analysis/examination of the set of documents/data provided by the RP was done keeping in mind the Plan submission date as 31st July 2024. This covers the requirement of amended section 29A. However, inadvertently, the amended section/provisions were missed which has no impact on the outcome/findings of our report. The RA has not substantiated the fact by way of submission of any documentary evidence to proof their point. We draw attention to page 02 of our updated report dated 20.09.2024 and annexure thereto (List of Shareholder, Promoters and Directors of Cosmic Ferro Alloys Limited), wherein we have specifically demonstrated the connection of Mr. Adity Bilra with various companies classified as promoter of Cosmic Ferro Alloys Ltd. We additionally draw attention to point No. 06 at page no 02 of our updated report dated 20.09.2024 wherein Indirect holding interest of Mr. Aditya Birla is established with CFAL. We further draw attention to extract of approved Resolution of CFAL, wherein Mr. Aditya Birla has been retained as "Marketing Executive from the existing management. Hence plan itself admif that Mr. A....
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.... which went under CIRP process. Aditya Vikram Birla is also a promoter director in Cosmic CRF Ltd. The details from the report as mentioned makes Cosmic CRF Ltd. ineligible under Section 29A of IBC 2016 to participate in any CIRP process. Generally considers ineligible." e) Report of Sr. Advocate (Mr. Gopal Jain) dated 28.08.2024: "If the allegations in the said complaint against are correct, then it is apparent that Mr. Aditya Vikram Birla & others were the promoters and Directors in many of shareholders Company of Cosmic Ferro Alloys Limited with substantial interest prior to the commencement of CIRP and that entire debt in relation to the said debtor still remains outstanding after its declaration of NPA, with the secured lenders apparently taking huge haircuts in the Resolution Process. Further Mr. Aditya Vikram Birla along with other Birla family members were controlling both majority stakes and management control in Cosmic Ferro Alloys Limited as on the CIRP commencement date. In addition to above it is alleged Mr. Aditya Vikram Birla along-with its related parties, was also holding direct controlling interest in the Companies that have extended corporate guarantees ....
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....PA on 09.12.2016 and therefore its then shareholders/directors/promoters are prima facie ineligible to submit a Resolution Plan under section 29A(c) of the IBC, for the resolution of Amzen. The erstwhile directors/shareholders/beneficial owners of CFAL and present directors/ shareholders/beneficial owners of CRF appear to be common and therefore, prima facie, the ineligibility attaches to CRF as well." g) Report of PSA dated 08.10.2024: "It is brought to your notice that the NPA data is of defaults of more than Rs. 1 Crore as updated on CIBIL. As CIBIL data is updated on the last date of the Quarter, Real-time data is not available in CIBIL records. Based on the search, it is clearly identified that there is no connection identified against the Resolution Applicant or any of its connected persons with any Corporate Debtor and none of their accounts are declared as "Non-Performing Asset" account under Banking Regulation Act, 1949. This makes the Resolution Applicant not ineligible under Section 29A (c) of IBC. Though there are certain lists identified against connected party of Resolution Applicant, as explained to Executive Summary in this report (Page 05-10) its connected....
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....lution plan. The Hon'ble Supreme Court in the case of Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors. reported in [(2019) 2 SCC 1] while dealing with the issue under Section 29A(c) of IBC held as follows: "46. According to us, it is clear that the opening words of Section 29-A furnish a clue as to the time at which clause (c) is to operate. The opening words of Section 29-A state: "a person shall not be eligible to submit a resolution plan...''. It is clear therefore that the stage of ineligibility attaches when the resolution plan is submitted by a resolution applicant. The contrary view expressed by Shri Rohatgi is obviously incorrect, as the date of commencement of the corporate insolvency resolution process is only relevant for the purpose of calculating whether one year has lapsed from the date of classification of a person as a non-performing asset. Further, the expression used is "has", which as Dr. Singhvi has correctly argued, is in praesenti. This is to be contrasted with the expression "has been", which is used in clauses (d) and (g), which refers to an anterior point of time. Consequently, the amendment of 2018 introducing the words "at the....
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....vi has correctly argued, is in praesenti. This is to be contrasted with the expression "has been", which is used in sub-clauses (d) and (g), which refers to an anterior point of time. Consequently, the amendment of 2018 introducing the words "at the time of submission of the resolution plan" is clarificatory, as this was always the correct interpretation as to the point of time at which the disqualification in sub-clause (c) of Section 29A will attach. In fact, the amendment was made pursuant to the Insolvency Law Committee Report of March, 2018. That report clearly stated: "In relation to applicability of section 29A(c), the Committee also discussed that it must be clarified that the disqualification pursuant to section 29A(c) shall be applicable if such NPA accounts are held by the resolution applicant or its connected persons at the time of submission of the resolution plan to the RP." 47. The ingredients of sub-clause (c) are that, the ineligibility to submit a resolution plan attaches if any person, as is referred to in the opening lines of Section 29A, either itself has an account, or is a promoter of, or in the management or control of, a corporate debtor w....
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....or declared as a non-performing asset one year before the corporate insolvency resolution process begins, is ineligible to submit a resolution plan. The first proviso to sub-clause (c) makes it clear that the ineligibility can only be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the non-performing asset in question before submission of a resolution plan." 152. Plain reading of the above judgment makes it clear that as per Section 29A(c) if a person who wishes to submit a resolution plan and if such person or any person acting jointly or any person in concert with such person, happens to either manage, control or be promoters of a Corporate Debtor declared as a non-performing asset, one year before the CIR Process begins, is ineligible to submit a resolution plan. 153. Further, the first proviso to clause (c) make it clear that the ineligibility can be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the non-performing asset in question before submission of a resolution plan. Therefore, the Applicant must ....
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....d position of law, as emphasized in Chitra Sharma v. Union of India (2018) SCC 575, that insolvency proceedings should not become a route for backdoor entry of persons responsible for default. The present case is essentially one of such impermissible backdoor entry. 155. Furthermore, no party has placed material on record to show the current status of CFAL including its health, financial reports and invocation of corporate guarantees of M/s Archana Impex etc, to allay apprehensions that CFAL has been or getting reduced to a shell company after the sale of its assets to Cosmic CRF - which is an RA in the case hand. 156. The first proviso to clause (c) makes it clear that the ineligibility can only be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the non-performing asset in question before submission of a resolution plan. Any person who wishes to submit a resolution plan acting jointly or in concert with other persons, any of who may either manage, control or be a promoter of a corporate debtor classified as a non-performing asset in the period abovementioned, must first pay off the debt of ....
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....s not defaulted in any loan repayment. Furthermore, Archana Impex Pvt. Ltd. is not a connected person to the applicant. Aditya Vikram Birla is/was not a director in Archana Impex Pvt. Ltd. 159. PSA is factually incorrect in stating that the entities mentioned in Table B at Pg. 343 Vol. 3 are having significant shareholding in CFAL. The applicant further claims that the Resolution Plan of CFAL was approved by the Ld. NCLT, Kolkata Bench on 11.10.2018 and after approval of the plan since the equity shares were having 'nil' value thus the shares were extinguished and the shareholding vested with the new successful resolution applicant. Thus, the entities mentioned in Table B have no shareholding in CFAL after 11.10.2018. AHSK in its report has reproduced the shareholding of CFAL after approval of Resolution Plan as on 31.03.2021. Name of the none of the entities mentioned in Table B at Page 343 Vol. 3 would appear in the shareholding of CFAL as on 31.03.2021. Further, Archana Impex is not even a connected person as per the report of AHSK. AHSK reproduced the list of 96 connected persons to the applicant (Pg. 296-302 Vol 2) and the name of Archana Impex Pvt. Ltd. is not in the list ....
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....ount of CFAL was declared NPA for the first time on 09.12.2016 and the CIRP of Amzen commenced on 04.05.2022. The eligibility of M/s. Archana Impex Pvt. Ltd. under Section 29A(h) of the IBC also needs to be examined by the RP and the COC. f) Report of PSA dated 08.10.2024: Based on the verification of records available in the public domain, no such transaction was found entered into by the resolution applicant. However, as explained to Executive Summary in this report (Page 05-10), It was observed that M/s Archana Impex Pvt. Ltd. (a connected party of RA), had executed a Corporate Guarantee for the loans of CFAL (refer to Annexure I for Corporate Guarantee documents). CFAL was admitted to CIRP on petition made by Citi Bank NA. g) Report of Mr. Gopal Jain (Sr. Advocate) dated 28.08.2024: Does not comment on 29(A)(h), however generally considers ineligible. h) Report of Sr. Advocate (Mr. Krishnendu Dutta) dated 03.03.2025: As per Section 29A(h) of IBC, Cosmic shall be rendered to be ineligible if Cosmic or any of its connected person or any person acting jointly or in concert with Cosmic, has executed a guarantee in favour of a creditor in respect of a corp....
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.... (i) any person who is the promoter or in the management or control of the resolution applicant; or (ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan; or (iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii). For testing eligibility under this clause, now we extract the reports of financial experts and some legal opinions placed on record with respect to this clause and is noted below: a. Report of AHSK dated 19.08.2024 Based on the verification of background checks applied on related parties of RA and related parties of promoters of RA and its connected parties found to be ineligible as explained to Executive Summary in this report (Page 05- 10). b. CLA Indus Value Consulting Private Limited Does not comment on 29(A)(j), however generally considers ineligible. c. Report of Insolvency Professional-Khandelwal- dated 01.09.2024 Does not comment on 29(A)(j), however generally considers ineligible. d. Report of Sr.....
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....and circumstances of the case. We find that Birla Family along with Mr. Aditya Vikram Birla along with cross shareholding in different companies were exercising a significant control over Cosmic Ferro Alloys Limited. The loan account of Cosmic Ferro Alloys Limited was classified as Non-Preforming Assets (NPA) on 09.12.2016 and CIRP petition was admitted on 16.01.2018. Therefore, as on the date of classification as NPA and after commencement of CIRP the Mr. Aditya Vikram Birla along with Birla Family were having significant control over the Cosmic Ferro Alloys Limited. Hence, at time of NPA classification, the Birla Family including the current promoter of Resolution Applicant were in the control of the Cosmic Ferro Alloys Limited. Further while analyzing the directorship of Mr. Aditya Vikram Birla, it is noted that Mr. Aditya Birla was holding and, in some cases, continues to hold directorship in the companies, which were having shareholding in Cosmic Ferro Alloys Limited as aforementioned. Hence, at the time of NPA classification, the Birla Family including the current promoter of Resolution Applicant Mr. Aditya Vikram Birla were in the Management (Board of Directors) of companies....
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....(2018) 18 SCC 575] and continuing to ArcelorMittal [ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] and Swiss Ribbons [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] is significant in adopting a purposive interpretation of Section 29-A. Section 29-A has been construed to be a crucial link in ensuring that the objects of the IBC are not defeated by allowing "ineligible persons", including but not confined to those in the management who have run the company aground, to return in the new avatar of resolution applicants. Section 35(1)(f) is placed in the same continuum when the Court observes that the erstwhile promoters of a corporate debtor have no vested right to bid for the property of the corporate debtor in liquidation. The values which animate Section 29-A continue to provide sustenance to the rationale underlying the exclusion of the same category of persons from the process of liquidation involving the sale of assets, by virtue of the provisions of Section 35(1)(f). More recent precedents of this Court continue to adopt a purposive interpretation of the provisions of the IBC. [See in this context the judgments in Phoenix ARC (P) Ltd. v. Spade ....
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....that the objects of the Code are not defeated by allowing "ineligible persons", including but not confined to those in the management, who have run the company aground, to return in the new avatar of resolution applicant, whether in the CIR proceedings of the same corporate debtor or in the case of some other corporate debtor. 169. We note that a rationale has been advanced that once the resolution plan is approved the erstwhile promoters of the CD are released from the ineligibility as they cease to be the promoter of the Corporate Debtor. On the contrary, Hon'ble Supreme Court in ArcelorMittal India Private Limited V. Satish Kumar Gupta (2019) 2 SCC 1, has already clarified as follows: "The first proviso to sub-clause (c) makes it clear that the ineligibility can only be removed if the person submitting a resolution plan makes payment of all overdue amounts with interest thereon and charges relating to the non-performing asset in question before submission of a resolution plan. The position in law is thus clear. Any person who wishes to submit a resolution plan acting jointly or in concert with other persons, any of whom may either manage, control or be a promoter of ....
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....interpretation of such a provision as Section 29A, alone governs. For example, it is well settled that a shareholder is a separate legal entity from the company in which he holds shares. This may be true generally speaking, but when it comes to a corporate vehicle that is set up for the purpose of submission of a resolution plan, it is not only permissible but imperative for the competent authority to find out as to who are the constituent elements that make up such a company. In such cases, the principle laid down in Salomon v. A Salomon and Co. Ltd. [1897] AC 22 will not apply. For it is important to discover in such cases as to who are the real individuals or entities who are acting jointly or in concert, and who have set up such a corporate vehicle for the purpose of submission of a resolution plan." 173. Furthermore, we note that in the judgment of Phoenix ARC Pvt Ltd v Spade Financial Services Ltd (2021) 3 SCC 475, though rendered in the context of exclusion of related-party financial creditors from the Committee of Creditors under Section 21(2) of the Insolvency and Bankruptcy Code, 2016, lays down a broader interpretive principle that is directly relevant to the present ....
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....re, adopting a purposive interpretation of Section 29A, so as to advance the object of the provision namely, to prevent ineligible persons from regaining control of the Corporate Debtor through a backdoor mechanism-the applicant who is RA in the CIRP M/s Amzen is liable to be held ineligible. Conclusions 176. We observe that complete facts have not been placed on record, particularly with respect to the status of the CIR proceedings of CFAL. However, even the limited facts were sufficient for us to come to final conclusion about the ineligibility of the Applicant under Section 29A-A of the Code. 177. As noted in analysis herein, we could not come to a definitive conclusion with respect to ineligibility with respect to clauses (a) and (h) of Section 29-A of the Code mainly due to incomplete information. But we found that the resolution applicant suffers from ineligibility per clauses (c) and (h) of Section 29-A of the Code. It is to be noted that these are disjunctive clauses and the applicant suffers from ineligibility even with ineligibility under a single clause. 178. Furthermore, with the purposive interpretation as has been noted by us earlier, we come to a conclusi....
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....ad given corporate guarantees for securing the debt of CFAL. M/s Archana Impex was owned and controlled by members of Birla family through corporate shareholders. Mr. Aditya Vikram Birla was also Director in such shareholder Companies of M/s. Archana Impex Pvt. Ltd. We don't have sufficient material information, which could have helped us to find out the status of invocation of corporate guarantee. From the above noted facts, it's clear that Mr. Aditya Vikram Birla, was not only in the management and control of Cosmic Ferro Alloys Ltd. but also continues to be in the operations and also post slump sale, continues to control and enjoy the assets of NPA entities. 181. Furthermore, any person who wishes to submit a resolution plan acting jointly or in concert with other persons, any of who may either manage, control or be a promoter of a corporate debtor classified as a non- performing asset in the period abovementioned, must first pay off the debt of the said corporate debtor classified as a non-performing asset in order to become eligible under Section 29-A(c) and that has not happened in this case. 182. Thus, we find that Mr. Aditya Vikram Birla & others were the promoters an....
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....irs with respect to CFAL, we extract one of the reports as below: "18. Status of CFAL as on 31 07.2024: - Present status of CFAL under CIRP is still not known (as per NCLT website the next date of hearing is 04.10.2024) along with the ongoing litigation/outcome/wavier related to Promoter Guarantee, Personal Guarantee & Corporate Guarantee and Application filed under section 43,45,47 & 66 of IBC 2016. (IBBI & NCLT website screenshot attached). Furthermore, we are not been able to track the Company's official website on google." [page 100 of affidavit of R4 filed on 03.02.2026] 186. Few other inconsistencies which don't square up are as follows: "Our Company (Cosmic CRF Limited] has no association or connection of any nature with Cosmic Ferro Alloys Limited (CFAL] and the allegations relating to alleged irregularities by our Company during the CIRP of Cosmic Ferro Alloys Limited is false, baseless, unsubstantiated and motivated." [Reply sent by Cosmic CRF Limited dated 02.09.2024 to RP] Such a reply of the RA is inconsistent as the RA-applicant- Cosmic CRF have association or connection in the form of equity shareholding, promoters and relatives being th....
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.... a resolution plan is submitted by a resolution applicant, eligible under Section 29-A IBC, the RP is under an obligation to examine whether the resolution plan(s) received by him conform(s) to the conditions referred to in sub-section (2) of Section 30 IBC as elaborated in Regulations 37 and 38 of the CIRP Regulations, 2016." 192. Further in the judgment, dated 03.01.2022, passed in Canara Bank v. Mamta Binani, (Resolution Professional) & Ors, [2022 SCC OnLine NCLAT 31, this Tribunal held that it is the duty of the RP to determine as to whether the eligibility criteria of Resolution Applicants prescribed in Section 29A of the IBC are satisfied. Relevant paragraphs of the said judgment are quoted herein-below for reference: "33. A Resolution Professional has a duty among other things to invite the prospective Resolution Applicant who satisfies the requirements as prescribed by him with the approval of the 'Committee of Creditors' keeping in mind the complexity and scale of operation of the business of the 'Corporate Debtor' and other conditions as may be prescribed by the IBBI to place forward the Resolution Plans, project such plan to the 'Committee....
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....on 30(2) of the I & B Code, the Resolution Professional is to examine each Resolution Plan received by him to confirm that the Resolution Plan provides for payment of Insolvency Resolution Process Costs, Payment of Debts of the Operational Creditors, management of the affairs of Corporate Debtor, the fulfilment and supervision of Resolution Plan, other requirement as may be specified by the Board and does not violate any of the provisions of the law for the time being in force. 38. A Resolution Plan submitted by the concerned Resolution Applicant on accounts of its confidentiality, cannot be disclosed to any competing Resolution Applicant nor any opinion can be taken or objection can be called for from other Resolution Applicants in regard to one other Resolution Plan." (emphasis added) 193. Pending further investigations by IBBI, we don't want to pass any comments on the RP's role at this stage as the role of all stake holders have to be seen with the ultimate goal to improve IBC jurisprudence and accordingly we advise IBBI to look into this case. 194. We have also gone through the alleged factual errors raised by the Applicant from pages 29 to 35 referring speci....