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Judgment
[Per: Shreesha Merla, Member (Technical)]
Dissatisfied with the Impugned Order dated 14/10/2021, passed in IA No. 114/2020 in C.P.(IB) No. 679/7/HDB/2018, whereby and whereunder the ‘Adjudicating Authority’ has rejected the said Application, filed by the ‘Resolution Professional’ (RP) under Section 31(1) of the ‘Insolvency and Bankruptcy Code, 2016’ (hereinafter referred to as ‘the Code’), it is observed as follows:
10.In the instant case before us, M/s Invent Assets Securitisation & Reconstruction Private Limited cannot submit resolution plan as co-Applicant along with M/s Longview Resources (HK) Limited Hong Kong, without the prior approval of RBI under Section 10 (2) of SARFAESI Act. Therefore, we are of the view that prima facie even though the entry point under Section 29A is satisfied, the Successful Resolution Applicant has to satisfy that they are capable of submitting the resolution plan, without the prior permission of the RBI as contemplated under the law. We hold that the Resolution Plan is in contravention of Section 30 (2) (e) of I&B Code, 2016.
11.This Bench earlier in the matter of ARCIL VS Viceroy Hotels Limited has taken a view that the resolution plan submitted by an ARC requires prior approval from the Reserve Bank of India (RBI) under SARFAESI Act. This Bench relies on para 85 of Hon'ble Supreme Court judgement in the matter of Manish Kumar vs Union of India [(2021) SCC Online SC 30), which is reproduced hereunder:-
"The resolution professional has to examine each resolution plan received by him on the basis of the invitation made by the resolution professional under Section 25(h) and ascertain whether the plan is in conformity with the various criteria mentioned in Section 30(2) of the Code. The matter is thereafter put up by the resolution professional before the committee of creditors. All resolution plans which conform to the conditions in sub-section (2) of Section 30 are, in fact, to be placed before the committee of creditors. The committee of creditors may approve the resolution plan after considering its feasibility and viability, the manner of distribution proposed, which may take into account the hurdles, priority amongst creditors as laid down in sub section (1) of Section 53 including the priority and the value of security interest of secured creditors and such other requirements as may be specified by the Board".
Having observed that the ‘Resolution Plan’ preferred by one of the Resolution Applicants, required prior approval of RBI, the ‘Adjudicating Authority’, while rejecting the ‘Resolution Plan’ passed an order for Liquidation.
The Appellant herein is the ‘Interim Resolution Professional’ (“IRP”) whose main grievance is that while ordering Liquidation of the Corporate Debtor, the ‘Adjudicating Authority’ had appointed the 2nd Respondent herein as the ‘Liquidator’ contrary to the Statutory Provisions, by disqualifying the Appellant under Section 34 (4)(a) of the Code.
While so, this Tribunal in Company Appeal (AT) (CH) (Ins) No. 181 of 2022 has set aside the rejection of the Resolution Plan by the ‘Adjudicating Authority’ observed as follows:
9.Without going into the aspect of whether RBI ought to be ‘impleaded’ or not, this Tribunal finds it relevant to place reliance on the submissions of the Learned Counsel regarding whether prior approval of RBI is required for participating as a Resolution Co-Applicant under the Code. It is submitted in Para 4 of the Notes of Submissions that ARC does not require prior approval of RBI for participating as a Resolution Co-Applicant. The relevant Paragraph is reproduced as herein:
“It is further submitted that an ARC does not require prior approval of RBI for participating as a ‘resolution co-applicant’ under IBC provided any of the activities undertaken by the ARC as part of the resolution plan submitted by it is not prohibited under SARFAESI Act. Hence, prima facie, when an ARC is a resolution “co-applicant”, as is in the instant case, RBI’s prior approval is not always required. Thus, there is no need to make RBI a party in the present appeal.”
[Emphasis Supplied]
10.It is significant to mention that Section 238 of the Code, will prevail over any of the provisions of the SARFAESI Act, 2002, if it is inconsistent with any of the Provisions of the ‘I&B Code, 2016’ and therefore the Adjudicating Authority ought not to have placed reliance on Section 10(2) of the SARFAESI Act, 2002. It is also pertinent to mention that the CoC has approved the Resolution Plan by the majority of 98.70% in its 27th meeting, held on 19/10/2020. The Hon’ble Supreme Court in a Catena of Judgments has held that the commercial wisdom of the CoC is non-justifiable and in the instant case, we do not see any material irregularity, under Section 30(2) of the ‘IBC Code, 2016’. 11. Keeping in view, the clarification given by the Counsel for RBI that the ‘prior permission’ is not required, this ‘Tribunal’ is of the considered view that the Adjudicating Authority ought not to have rejected the Resolution Plan, more so, when the principal objective of the Code is that ‘revival of the Corporate Debtor and Resolution’. Liquidation ought to be the last resort, keeping in view the scope and spirit of the Code.
As ‘Liquidation’ itself is set aside, this Company Appeal (AT) (CH) (Ins) No. 292/2021 is rendered ‘infructuous’ and for all the aforementioned reasons, the present Company Appeal (AT) (CH) (Ins) No. 292/2021 is dismissed as an infructuous one. No Order as to Costs. Connected pending ‘Interlocutory Applications’, if any, are closed.