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Judgment
Ashok Bhushan, J.
These two Appeals have been filed against the impugned orders passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Court-IV dated 25.11.2021 passed in I.A No. 4918/ND/2021 in Company Petition No. (IB) 1689/ND/2018 read with order dated 01.10.2021. Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor- 'Dignity Buildcon Pvt. Ltd.' by order dated 24.04.2019 of the Adjudicating Authority. The Respondent No.1 was appointed as Resolution Professional. Resolution Professional notified the publication of Form-G on 01.07.2019. 16 Expression of Interest (EoI) were received from various Prospective Resolution Applicants. After several meetings of the Committee of Creditors (CoC) and discussions with Prospective Resolution Applicants, there has been three rounds of voting on the Resolution Plans. In the first round of voting held on 18.12.2020, Resolution Plan of 'Sattva' received the highest vote i.e. 64.64% but could not obtain the requisite vote. Second round of voting of plan concluded on 12.02.2021 in which 'Sattva' again received 64.64% but could not achieve the requisite vote. 'Experion Developers Pvt. Ltd.' ('Experion' for short), a Resolution Applicant, had made certain revisions in its plan hence plan was not considered in the voting dated 12.02.2021. 'Experion' filed an Application before the Adjudicating Authority seeking to submit the revised Resolution Plan before the CoC for consideration. The order dated 17.02.2021 was passed by the Adjudicating Authority observing that the Resolution is the prime purpose of the 'I&B Code', hence, the Application filed by 'Experion' was allowed and CoC was directed to consider the revised plan submitted by 'Experion' and along with three other plans for voting. Third round of voting was held on 08.03.2021 in which Resolution Plan of four Prospective Resolution Applicants were put to vote i.e. (i) 'Sattva', (ii) 'MD/ AD', (iii) 'M3M' and (iv) 'Experion'. Both 'Sattva' and 'Experion' having obtained 64.64% vote on tie breaking formula, the 'Experion' was put to second round of voting again it acquired 64.64% votes and could not obtain the requisite number of votes i.e. 66%.
Before proceeding to note subsequent facts, we may notice the composition of CoC and the respective votes share. CoC consisted of Financial Creditors i.e. 'Standard Chartered Bank' and the Appellant having maximum voting share. Voting share of Financial Creditors is as follows:-
Sl No.
Name of the Financial creditors
Voting Right %
Resolution Plan by Sattva Developers Private Limited
Resolution Plan by Alok Dhir & Madhav Dhir
Resolution Plan by M2M India Private Limited
Resolution Plan by Experion Developers Pvt. Ltd.
Yes
No/ Abstain
Yes
No/ Abstain
Yes
No/ Abstain
Yes
No/ Abstain
1.
Standard Chartered Bank
49.83
49.83
-
-
49.83
-
49.83
-
49.83
2.
Alchemist Assets Reconstruction
Company Ltd.
35.36
-
35.36
-
35.36
-
35.36
-
35.36
3.
BREP Asia Rainbow Holding (NQ)
Pte. Ltd.
10.13
10.13
-
-
10.13
-
10.13
-
10.13
4.
BREP Asia SBS
Rainbow Holding (NQ) Ltd.
0.02
0.02
-
-
0.02
-
0.02
-
0.02
5.
BREP VIII SBS
Rainbow Holding (NQ)
Ltd.
0.01
0.01
-
-
0.01
-
0.01
-
0.01
6.
Addon Realty
Private Limited
0.24
0.24
-
0.24
-
0.24
-
-
0.24
7.
Logos Holding Company
Private Limited
4.14
4.14
-
4.14
-
4.14
-
-
4.14
8.
Rapid Buildwell
Limited
0.27
0.27
-
0.27
-
0.27
-
-
0.27
Voting Share %
100.00
64.64
35.36
4.65
95.35
4.65
95.35
0.0
100.00
The Appellant has voting share of 35.36%, although the Appellant's voting share was not sufficient enough to get any plan approved but its voting share was sufficient to get any Resolution Plan rejected. One more fact noted is that the Appellant- Financial Creditor itself has submitted Resolution Plan and there is another Resolution Plan submitted by 'Madhav Dhir and Alok Dhir' (MD / AD) who are promoters of the Appellant- 'Alchemist Assets Reconstruction Company Ltd.'. Madhav Dhir has filed the other Appeal being Company Appeal (AT) (Ins.) No. 1062 of 2021 challenging the impugned orders. In voting, both 'Sattva' and 'Experion' has received 64.64% vote but could not obtain requisite percentage of 66% since the Appellant did not vote in their favour. The Appellants voting share has capacity to get any plan rejected when in the third round of voting held on 8th March and 9th March, 2021 no Plan could receive requisite number of votes, an Application being I.A No. 1342/ND/2021 was filed by 'Experion' giving details of earlier voting and praying that 'Alchemist Assets Reconstruction Company Ltd.' i.e. Appellant who is ensuring that no Resolution Plan is approved should be excluded from voting. 'Standard Chartered Bank', the Financial Creditor having more than 49% voting share also filed an I.A No. 2530/ND/2021 praying that Appellant be excluded from voting. In third round of voting, no Resolution Plan having secured requisite number of votes, Resolution Professional filed an Application No. 1367/ND/2021 seeking liquidation. All the three Applications came for consideration before the Adjudicating Authority on 01.10.2021. The 'Standard Chartered Bank' withdrew its Application No. 2530/ND/2021. On Application No. 1367/ND/2021, the Adjudicating Authority directed that the same be deferred. On I.A No. 1342/ND/2021, following order was passed on 01.10.2021:-
"I.A No. 1342/ND/2021:
Application filed by one of the Resolution Applicants seeking direction against RP. Reply is filed by RP by way of affidavit and affidavit on behalf of non-applicant is also filed. After hearing, the counsels of both the sides, it is felt that in the interest of all the stakeholders and in the interest of Learned Counsel for the Corporate Debtor, two plans which are pending for transparent and proper voting need to be reconsidered by CoC. We direct RP to conduct CoC meeting as early as possible. Put both the plans before CoC. Both the Resolution Applicants are at liberty to explain CoC and seek liberty either to revive their plan or refer to any proceeding conducted by CoC.
Learned Counsel for the other Resolution Applicant Alchemist Assets Reconstruction Company (one of the CoC member) states that Resolution Plan submitted by Alchemist Assets Reconstruction Company is withdrawn in terms of the said statement. Hence prayer "a" of this application becomes infructuous. With respect to prayer "b" we have given direction to RP and CoC. Application stands disposed of in terms of above order".
After order dated 01.10.2021 of the Adjudicating Authority, 54th meeting of the CoC was held on 07.10.2021 where CoC noticed that in the meantime, two Prospective Resolution Applicants i.e. 'Sattva' and 'M3M' has sent e-mail expressing their intend to withdraw and praying to return their BBG. BBG of INR 20 Crores was returned to those two Prospective Resolution Applicants. Noticing the aforesaid facts, the CoC requested the Resolution Professional to approach all four Resolution Applicants and seek confirmation whether they are interested to participate again in the process. It is useful to extract following deliberation of the CoC on 07.10.2021:-
"During the meeting, the representative of SCB noted that there is lack of clarity in the Order as to which resolution plans are required to be put to vote. The representative of Blackstone was also of the same view that there is no clarity as to which resolution plans are required to be voted upon. Alchemist was of the view that the Order referred to currently live plans where Bid Bond Guarantee ("BBG") was still existing. The RP legal counsel also informed that the NCLT was not aware as to status of BBG of different plans and hence, it is not clear whether the two plans referred to Alok Dhir and Madhav Dhir ("Dhirs"') plan and Experion plan or Sattva plan and Experion plan. In the meanwhile, the RP apprised the members of the COC that he had received letter/email from Sattva and M3M India Private Limited ("M3M") expressing their intent to withdraw from the CIRP process and seeking return of their BBG. Hence, the RP with the approval of the COC had refunded their BBG of INR 20 Crores. However, in its letter, Sattva had stated that the letter is being issued without prejudice to their rights under applicable law including the right to bid, re-bid and/or improve its resolution plan (commercially or otherwise), if the NCLT and/or COC decide to recommence the CIRP of the Corporate Debtor. The RP informed the members of the COC that currently, Experion and Dhirs are the only RAs who have not withdrawn from the CIRP Process; however Sattva had expressed its intent to participate again in case of rebidding etc.
Due to lack of clarity in the Order, the members of the COC decided and requested the RP to approach all 4 RAs, Sattva, M3M, Dhirs and Experion and seek confirmation whether they are interested to participate again in the process and if they intend to submit a revised resolution plan. Depending on the responses received, an application shall be filed with the Hon'ble NCLT seeking clarification of the Order and permission to allow the COC to vote on resolution plans of applicants who have expressed their intent to participate in the process.
It was also decided that where EMD has been withdrawn, the participation would also need to be confirmed by re-deposit of the EMD within a specified period.
The RP took note of the same and informed the members of the COC that he will reach out to all the 4 RAs as instructed and decided by the COC.
The members of the COC took note of the same."
Resolution Professional filed an I.A. No. 4918/2021 seeking clarification of earlier order dated 01.10.2021. In the Application, Resolution Professional mentioned that out of four plans on which three rounds of voting took place,
two Prospective Resolution Applicants i.e. 'Sattva' and 'M3M' by their respective letters dated 8th July, 2021 and 7th May, 2021 have withdrawn without prejudice to their rights under applicable law. After the decision of the CoC dated 07.10.2021, the Resolution Professional by e-mail dated 12.10.2021 requested all the four Prospective Resolution Applicants namely- 'Sattva', 'Experion', 'MD/ AD' and 'M3M' to confirm whether they are interested in participating again in the CIRP. 'Sattva' did not respond. 'M3M' by its e-mail stated that they are interested in participation. 'Experion' informed the Resolution Professional that they should be permitted to submit the revised Resolution Plan in the event any request is received from any other Resolution Applicant. 'MD/ AD' responded that they are interested in participating in the CIRP of the Corporate Debtor. In the Application I.A. No. 4918 of 2021, following prayers were made by the Resolution Professional:-
"In view of the aforesaid facts, circumstances and submissions, it is most humbly prayed that this Hon'ble Adjudicating Authority may be pleased to:
a. Allow the present application
b. Clarify the order dated 1 October 2021 passed by this Hon'ble Adjudicating Authority, specifically:
i. Whether the 2 resolution plans refer to resolution plans of Sattva Developers Private Limited and Experion Developers Private Limited, and if yes, given that Sattva Developers Private Limited has not confirmed its interest in participating in the corporate insolvency resolution process of the Corporate Debtor, should the resolution plan of only Experion Developers Private Limited, be put for voting?
ii. Whether the 2 resolution plans refer to resolution plans of Alok Dhir and Madhav Dhir and Experion Developers Private Limited?
iii. In either of the aforesaid scenario, should M3M India Private Limited also be given an opportunity to submit their resolution plan as they have expressed their interest in participating in the corporate insolvency resolution process of the Corporate Debtor subject to them providing a BBG?
c. pass any other order(s) as may be deemed fit and proper in the facts and circumstances of the present case".
The Adjudicating Authority on Application No. 4918 of 2021 passed following orders on 25.11.2021:-
"IA No. 4918/ND/2021:
Arguments heard. Apparently, the present application has been filed for clarifications of order dated 01st October 2021, of this bench, whereby two Resolutions Plans need to be placed for voting. The order is very clear and in view of the Regulation 39(3)(b), no such clarification is required. RP should proceed accordingly. There are two Resolutions Plans namely, Experian and another one which have received 64.66% of voting shares each and RP shall consider those Resolutions Plans as per Regulations. RP should give certificate that these two Resolution Applicants comply with the requirements of the Code and Regulations. The CoC/RP is directed to ensure the completion of the voting process within 7 (Seven) days without further loss of time and the RP is to file outcome of the voting in the form of IA within 3 (Three) days thereafter for further directions from this bench, if required."
Aggrieved by the order dated 25.11.2021, 'Alchemist Asset Reconstruction Company Ltd.' as well as 'Madhav Dhir' has filed these two Appeals.
We have heard Shri Abhijeet Sinha, Learned Counsel for 'Alchemist Asset Reconstruction Company Ltd.', Shri Krishnan Venugopal, Learned Senior Counsel for 'Madhav Dhir', Ms. Pooja Mahajan, Learned Counsel for the 'Resolution Professional' and Mr. Sajan Poovayya and Mr. K. Datta, Learned Senior Counsel for 'Experion'.
Shri Abhijeet Sinha, Learned Counsel for the Appellant- 'Alchemist Asset Reconstruction Company Ltd.' submits that the order dated 25.11.2021 is review of earlier order dated 01.10.2021. It is submitted that by earlier order dated 01.10.2021, two plans which were pending were directed to be voted. It is submitted that the two plans which are alive and pending is the plan of 'Experion' and the plan of 'MD/ AD'. Now by order dated 25.11.2021, the said order has been reviewed. The Adjudicating Authority has directed that the two plans which received 64.64% voting share should be put to vote. It is submitted that 64.64% vote was secured only by 'Sattva'. 'Sattva' having withdrawn, virtually now there are no two plans to put for voting. It is submitted that the order dated 25.11.2021 has been passed in different combination than one which passed the earlier order dated 01.10.2021. It is true that 'Alchemist Asset Reconstruction Company Ltd.' has filed its Resolution Plan but it has been withdrawn on 01.10.2021. The mere fact that 'MD/ AD' are promoters of 'Alchemist Asset Reconstruction Company Ltd.' the 'MD/ AD' are not disentitled to submit a plan. It is submitted that when the CoC vide its decision dated 07.10.2021 decided to approach all four Resolution Applicants, MD/ AD ought to have been permitted to vote. It is submitted that the Application filed by 'Experion' to exclude the Appellant from voting was misconceived and the Appellant has also filed Application which was not considered.
Shri Krishnan Venugopal, Learned Senior Counsel appearing for Appellant- Madhav Dhir has reiterated the same submissions as raised by Shri Abhijeet Sinha. Shri Krishnan Venugopal, Learned Senior Counsel submits that the plan of Madhav Dhir is a live plan and it could not have been excluded from voting. It is submitted that the Resolution Professional is unduly favouring the plan of 'Experion'. It is submitted that the 'Experion' acted in connivance to defeat the Appellant- Madhav Dhir. The intent of 'I&B Code' is to maximise the assets of the Corporate Debtor and efforts of Resolution Professional ought to have been to give opportunity to all the Prospective Resolution Applicants to get their plans considered and voted upon. The order dated 25.11.2021 is virtually review of the earlier order dated 01.10.2021. Under the order dated 01.10.2021, two pending plans were only of 'Experion' and 'MD/ AD' which ought to receive vote.
Ms. Pooja Mahajan, Learned Counsel for the Resolution Professional submitted that the voting in pursuance of the order dated 25.11.2021 took place. It is also submitted that it was only 'Experion' who was put to vote.
On 09.12.2021, when Company Appeal (AT) (Insolvency) No. 1026 of 2021 was taken, we directed that till the next date, the voting may be completed but no further steps be taken. Ms. Pooja Mahajan, Learned Counsel for the Resolution Professional informs the outcome of the voting held on 09.12.2021 that 'Experion' who alone was put to vote could not receive requisite number of votes i.e. 66% votes, hence no Resolution Plan could not be approved.
Learned Counsel appearing for 'Experion' submitted that it is 'Experion' which has submitted the best plan but due to adamant attitude taken by the Appellant- 'Alchemist Asset Reconstruction Company Ltd.'. 'Experion's plan could not get the requisite vote. It is submitted that the Appellant- 'Alchemist Asset Reconstruction Company Ltd.' was the person who has a conflict of interest it having itself submitted a plan and further it was only interested in the plan submitted by Madhav Dhir for whom it voted. Appellant- 'Alchemist Asset Reconstruction Company Ltd.' has voted against the 'Experion' although 'Experion' was the best plan to maximise the value of the Corporate Debtor but due to its vested interest Appellant did not approve the plan of 'Experion'. It is submitted that 'Experion' has already filed an Application before the Adjudicating Authority being Application No. 1342 of 2021 for excluding 'Alchemist Asset Reconstruction Company Ltd.' from voting due to obstruction created by it in CIRP of the Corporate Debtor which Application is still pending.
We have heard Learned Counsel for the parties and perused the record.
The object of CIRP is Resolution of the Corporate Debtor. 330 days including the extensions granted by the Adjudicating Authority was coming to an end on 09.03.2021. The Adjudicating Authority noticing that object of CIRP is Resolution of the Corporate Debtor had directed for consideration of all the four plans who have permitted to give revised plan. As noted above, in the voting held on 8th March and 9th March, 2021, no Resolution Plan could get 66% votes. Two Resolution Plans i.e. 'Sattva' and 'Experion' received 64.64% vote. Both the plans received votes of all other Financial Creditors except 'Alchemist Asset Reconstruction Company Ltd.'. The matter has been pending before Adjudicating Authority after the last round of voting due to Applications filed by 'Standard Chartered Bank' and 'Experion' to exclude 'Alchemist Asset Reconstruction Company Ltd.' from voting. Liquidator also filed an Application No. 1367 of 2021 praying for liquidation in view of the fact that no Resolution Plan having received requisite number of votes which Application was deferred by the Adjudicating Authority by its order dated 01.10.2021.
The Adjudicating Authority on 01.10.2021 has directed for consideration of two plans which were pending. In subsequent order dated 25.11.2021, direction was passed for voting on two plans which received 64.64% votes. The above order was passed by the Adjudicating Authority since it was not posted with the fact that two Prospective Resolution Applicants namely- 'Sattva' and 'M3M' has withdrawn their Bid Bond Guarantee on 07.05.2021 and 09.07.2021, respectively. Hence, 'Sattva who had earlier received 64.64% was not fulfilling the eligibility for consideration and it was only 'Experion' who was left alone to be considered which actually received vote consequent to the order dated 25.11.2021 and could not receive the requisite vote as informed by the Learned Counsel appearing for the Resolution Professional. The net result of the above proceeding is that although there were four plans which came for consideration before the CoC but no one could achieve requisite number of votes i.e. 66% vote. In the CIRP of the Corporate Debtor, serious efforts were made for Resolution of Insolvency. 54 meetings of the CoC have been conducted so far but unfortunately no plan could receive requisite number of votes to get approval.
In the present case, although 330 days have elapsed but present is a case where as per direction of the Adjudicating Authority only re-voting has to be conducted to find out as to whether any Resolution Plan could get requisite number of votes failing which liquidation order is to be passed for which Application has already been submitted by the Resolution Professional which is pending consideration before the Adjudicating Authority and the Adjudicating Authority has deferred the consideration of liquidation Application only due to the fact that it had directed for fresh voting.
We have noticed that although Adjudicating Authority on 01.10.2021 directed consideration of only two plans which were pending i.e. which were alive. From the facts brought on record, it is clear that on 01.10.2021 only two plans were alive i.e. 'Experion' and 'MD/AD'. Prior to 01.10.2021, plans of 'Sattva' and 'M3M' had already been withdrawn and their BBG returned. We also noticed that the CoC in its meeting dated 07.10.2021 decided to approach all four Resolution Applicants and the Resolution Professional did issue e-mail dated 12.10.2021 to all four Resolution Applicants asking their willingness to participate. After 25.11.2021 order, voting again took place in 2nd week of December but only plan of 'Experion' was voted and it could not get 66% since admittedly the Appellant did not vote for the plan.
There are only two option available as on date, first to direct the Adjudicating Authority to take up the Application filed by the Resolution Professional for passing an order for liquidation and second to make a last effort to see as to whether any of the four plans could get the requisite number of votes i.e. 66% vote. The Resolution Process having gone such a long way, we are of the view that it should be brought to its logical end. We record out approval to the CoC decision dated 07.10.2021 to approach all the four Resolution Applicants. Much time having lapsed, we are of the view that before the Application filed by the Resolution Professional praying for liquidation is taken by the Adjudicating Authority, we may give one more opportunity to all the four Resolution Applicants to submit their revised plan and thereafter the CoC may deliberate and vote on all the four plans. Since BBG have been returned to two Resolution Applicants, we are inclined to give opportunity to those Resolution Applicants who have withdrawn their BBG to submit fresh BBG of INR 20 Crores if they intend to get their plan considered.
In view of the above discussions, we dispose off these two Appeals with following directions:-
(i) All four Resolution Applicants may submit their revised plan within 15 days from date of this order.
(ii) The Resolution Applicants i.e. 'Sattva' and 'M3M' and any other who have withdrawn their BBG may submit their BBG along with revised plan, if they so intend, within a period of 15 days as indicated above.
(iii) CoC may deliberate all the plans so received and plans be put to vote in accordance with law. We request the CoC to complete the process consideration and voting within a period of 30 days after all the four plans is received.
(iv) We have no doubt, the CoC will deliberate and consider all the plans and make serious efforts to save the Corporate Debtor from going into liquidation.
(v) Orders of the Adjudicating Authority dated 25.11.2021 and 01.10.2021 are modified accordingly.
The Appeals are disposed off as above. No order as to costs.