TaxTMI 
TaxTMI 
2026 (3) TMI 1252
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....rivate Limited on the ground of various regularities and non-compliance of the provisions of Law. Aggrieved by the said order, the appellant has preferred the instant appeal. 2. Brief facts of the case are that the CD was the corporate guarantor (CG) to Manjeera Retail Housing Private Limited (MRHPL), who is the Principal Borrower. MRHPL defaulted in its dues to Catalyst Trusteeship Private Limited, the financial creditor and CIRP was initiated by the said financial creditor against MRHPL, (the principal borrower) and its Corporate Guarantor, MCL, the CD in the instant case. Both the companies were admitted into CIRP under section 7 of I&B Code (to be referred to as Code hereafter) on application moved by Catalyst Trusteeship Limited vide order of Ld. Adjudicating Authority dated 18.07.2023. By the same order, Mr. Vamsi Khambamettu was appointed as Interim Resolution Professional (IRP) who was subsequently replaced by Mr. Virendra Kumar Agrawal (Respondent-1) as Resolution Professional (RP) on 14.09.2023. Claims were invited as against CD by public announcement and based on the claims received, the CoC was constituted. Further Form-G was published on 22.09.2023, inviting Express....
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....ore respectively, selection of Valentis by CoC as SRA who had offered only Rs. 83.54 crore is arbitrary and contrary to the principles of value maximisation of the CD and it violates the objectives of the code as enumerated in its preamble and reiterated by Supreme Court in Para 11 of its Judgment in the matter of Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Anr. in WP (Civil) No. 99 of 2018. He has further stated that the majority of CoC, that is, Catalyst and Fedbank having a total voting share of 74.19% will be fully recovering their claim amount from the SRA of MRHPL, who is the principal borrower and therefore they should not have continued to play any role in the CIRP proceedings of MCL and that, they have acted to the detriment of the CD with no regard to the interests of the CD and its stakeholders, and that the RP should have revised the voting share of CoC as the resolution plan of MRHPL had already been approved by CoC on 22.03.2024 and it was already known that the debt extended by these 2 FCs were being fully recovered, and therefore, they should not have been allowed to vote on the resolution process of the present CD, that is, MCL. 5. Further, he has submitt....
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....ready been assured of recovery of the dues and when he is convinced that the CoC is working against the objective of the code and its commercial wisdom is restricted to recovery of the dues of the secured creditors alone rather than resolving the insolvency of the CD and addressing the concerns of other stakeholders and therefore he will be a necessary party to challenge the resolution plan which has been approved by the COC by majority. Submissions of the Respondents: 9. Respondent -1 (RP) in his counter stated that the appeal is not maintainable due to non-existence of a prima facie case by the appellant, that the appellant was present in the CoC meetings and his objections were considered before the decision was taken, that he is a dissenting financial creditor and thereby holds no right to challenge the resolution plan once it has been duly approved by majority in CoC as held in the case of India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Limited & Anr. by Hon'ble Supreme Court in para-14 of the said judgement, that resolution plan cannot be challenged merely on grounds of individual dissatisfaction, particularly when mandatory legal requirements have been complied with, t....
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....mitted on the same day and the next two days being second Saturday and Sunday respectively, the transaction did not get settled and ultimately the transaction was completed on 12.02.2024 during banking hours. He had further submitted that since the issue was with the banking channel and the amount was debited from the bank account of the SRA on 09.02.2024, which was the due date, the same was considered as a normal course of transaction and therefore, non-crediting of EMD amount into the account of CD on 09.02.2024 will not form any valid ground for rejection of the resolution plan as proposed by the said SRA and therefore, the contention of the appellant that acceptance of the resolution plan of SRA is in violation of regulation 36B of CIRP regulations 2016 and section 30(2) of the code is false and misleading, and appeal is liable to be dismissed. 14. Respondent-2 (CoC) has submitted that the appellant was present in the CoC meeting and his objections were heard while approving the resolution plan, and hence he has no locus standi to challenge approval of the resolution plan by CoC, that all RAs were given fair opportunity to present their proposed resolution plans, on 10.06.2....
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....ion plan of MRHPL was yet to be approved by Ld. Adjudicating Authority and therefore the concerned FCs, that is, Catalyst, and Fedbank were yet to get their dues, that CIRP proceedings can be held simultaneously both against the principal borrower and the corporate guarantor as per the judgement of this tribunal in the matter of State Bank of India v. Athena Energy Ventures Private Limited Company Appeal (AT) (INS) No. 633 of 2020 for the same set of debt and default and hence the RP could not have revised the constitution of voting shares, that even after Catalyst and Fedbank are taken out from CoC, the votes in favour will still cross the statutory threshold of 66% and so the decision of CoC will still stand, that compliance under section 30(2) was duly certified by respondent-1(RP) and that the scoring was conducted by RP and the CoC will not have any say in this matters. 17. It has further submitted that the allegation of unilateral modification to RFRP and acceptance of EMD beyond the stipulated date is in the domain of RP and that the appellant has failed to establish how non- inclusion of the Khanamet property will, in any manner affect the resolution plan and that, if th....
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.... Resolution Plan. The Bid Bond Guarantee shall be valid for the Resolution Plan Validity Period (as may be extended from time to time), with an additional 30 days for making claims and shall be renewed / extended by the Resolution Applicant (not later than 15 days prior to the expiry of the Resolution Plan Validity Period) for such period as may be required by the Resolution Professional / CoC ("Bid Bond Guarantee Validity Period"). Alternatively, the Resolution Applicant shall provide Earnest Money Deposit of INR 1 Cr (Indian Rupees Once Crore only) by way of Demand Draft / RTGS or such other means as approved by Resolution Professional and Committee of Creditors in favour of the Corporate Debtor. ............................................................................................. ............................................................................................. It is hereby clarified that non-submission of the Bid Bond Guarantee or Earnest Money Deposit by the Resolution Applicant, along with the submission of the Resolution Plan, shall lead to rendering of that particular Resolution Plan as non-responsive by the Resolution Professio....
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.... MCL. The lenders who had taken the corporate guarantee were Catalyst and Fedbank. Resolution Plan of MRHPL stood approved on 22.03.2024 by CoC and as per the approved Plan, these two Lenders got back their full dues, or at least they had been assured of getting back their full dues. At that point of time, resolution plans for MCL were still being evaluated and deliberated upon. In such a situation, propriety demands that these two financial creditors should have withdrawn from the CoC as they had no claims as against the corporate guarantor(MCL) on 22.03.2024 and thereafter. Even if the plea of non-receipt of the amount because of pendency of Plan Approval Application before Ld. Adjudicating Authority is accepted, as a matter of prudence, they should have at least kept the resolution process of MCL on hold till the resolution plan in respect of MRHPL attained finality with approval of Adjudicating Authority in keeping with the objective of the Code. We fully agree that commercial wisdom of CoC should not be questioned, however that view will hold as long as it is exclusively confined to resolution of insolvency of the CD for the purpose of value maximisation as expounded by Hon....
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....06.2024 only after the Appellant specifically inquired about the same. 25. The Duties of Resolution Professionals are to preserve and protect the Assets of the Corporate Debtor, including continued business operations of the CD as per Section 25(1) of the Code. However, in the instant case, the RP has instead gone ahead with the Resolution process and approval process of the Resolution Plan knowing fully well that the Secured Financial Creditors who moved Section 7 Application in the first place by invoking Corporate Guarantee against MCL have already been assured of their dues in full from MRHPL CIRP process. He is also the RP of MRHPL; when he obtained Valuation Report of Assets of MRHPL, he would have very well known that the dues of two Secured Financial Creditors were more than fully covered by MRHPL assets. As a prudent man, committed to value maximisation of MCL, he should have advised the CoC to wait till approval of MRHPL Resolution Plan by Ld. NCLT or, could have moved an Application before Ld. NCLT seeking for directions to proceed further with the matter. He as a custodian of CD could have got the subject discussed in CoC meeting instead of dissenting FCs raising the....