Global vs Commodity Services (FZE) Vs Hitesh Goel & Ors.

Per: RAVICHANDRAN RAMASAMY, MEMBER (TECHNICAL)

Under consideration is an application filed by M/s. GLOBAL VS COMMODITY SERVICES (FZE) against Hitesh Goel, Resolution Professional seeking the following reliefs:

It is stated that the Corporate Debtor was admitted to CIRP vide order of this Adjudicating Authority dated 18.10.2022. The 1st Respondent had issued paper publication under Form-G inviting prospective applicants for Expression of Interest ("EOI") to take over the Corporate Debtor as a going concern.

It is stated that Form-G was initially published on 17.12.2022 indicating the last date for submitting the Expression of Interest as 01.01.2023. The applicant had submitted its Expression of Interest on 31.12.2022 along with Rs.11.0 Lakh as Earnest Money Deposit. The Applicant had also submitted its Resolution Plan to the 1st Respondent on 12.05.2023 and remitted a sum of Rs.1.0 Crore on 27.04.2023 as Earnest Money Deposit as part of the Resolution plan Process.

It is stated that on 03.06.2023, 1st Respondent had sent an e-mail stating that the Applicant is prima facie ineligible to submit the Resolution Plan and is barred under Section 29A of the Code for the reasons that one Mr. Suresh Kumar Gupta being a Key Managerial Person of the Applicant is the brother of Mr. Arvind Gupta, the promoter of M/s. Gita Power and Infrastructure Private Limited (“GPIPL”), the holding company of the Corporate Debtor and erstwhile Director of the Corporate Debtor. It is stated that the Applicant vide e-mail dated 05.06.2023 clarified that there exists no relationship as alleged by the RP.

It is stated that the 1st Respondent raised another query vide e-mail dated 06.06.2023 and thereafter, vide e-mail dated 27.06.2023 again rejected the Applicant as ineligible to submit the Resolution Plan under Section 29A of the Code.

It is stated that the Corporate Debtor had availed Working Capital Facility arrangement from M/s. OPG Power Generation Private Limited to the tune of Rs.70.0 crore. Subsequently, the said facility was assigned to M/s. Garg Iron and Energy Private Limited vide Assignment-cum-Novation Agreement dated 02.04.2019.

It is stated that the Corporate Debtor had availed another Working Capital Facility from M/s. Gita Power and Infrastructure Private Limited to the tune of Rs.100.0 Crore. Subsequently, the said facility was also assigned to M/s. Shoka Tradelink Private Limited vide Assignment-cum-Novation Agreement dated 09.05.2019.

It is stated that the Applicant understands that the 1st Respondent has admitted the claims of the above-mentioned entities, however, classified the said entities as related parties of the Corporate Debtor for the sole reason that the assignors namely M/s. Gita Power and Infrastructure Private Limited (“GPIPL”) and M/s. OPG Power Generation Power Generation Private Limited are the related parties to the Corporate Debtor and hence the assignees namely M/s. Garg Iron & Energy Private Limited and M/s. Shoka Tradelink Private Limited became the related parties in respect of the Corporate Debtor.

It is stated that the above-mentioned assignees vide IA No.1139 of 2023 and IA no.1140 of 2023 have approached this Adjudicating Authority seeking directions to include the aforementioned assignees in the Committee of Creditors. The said applications are under consideration before the Adjudicating Authority.

It is stated that in case, the IAs filed by the above assignees are decided in favour of the assignees and the assignees are held to be not the related parties of the Corporate Debtor, such a situation would not bar the Applicant from submitting its Resolution Plan, for the sole reason that Section 29A is inapplicable to a Prospective Resolution Applicant.

It is stated that while the Assignee Financial Creditors and the Applicant are related to each other, the 1st Respondent herein adjudicated the relationship between the Applicant and the Corporate Debtor and equated the Applicant as a related party to the Corporate Debtor and hence rejected the Resolution Plan submitted by the Applicant, which is illegal and premature without any application of mind by the 1st Respondent.

It is stated that the Applicant in order to buttress this proposition, relies upon the order passed by the National Company Law Tribunal, Hyderabad in the matter of M/s. Trimex Industries Private Limited vs. M/s. Sathavahana Ispat Limited & 2 Others (IA. No.791 of 2021 in CP/IB/No.179/HDB/2020) where it was held that Section 29A of the Code bars Related Party of the Corporate Debtor to submit a Resolution Plan, however no such bar is applicable to a Related Party of the Financial Creditor to submit a Resolution Plan.

It is stated that the 1st Respondent floated another revised Form-G on 29.07.2023 indicating the last date to submit EOI as 09.08.2023. Pursuant to that, the Applicant herein submitted its EOI on 16.08.2023 with a delay of 7 days. It is stated that the Applicant received the e-mail dated 24.08.2023 from the 1st Respondent informing that the Expression of Interest submitted by the Applicant cannot be considered in accordance with Regulation 36A (6) of the CIRP Regulations as the EOI submitted by the Applicant was beyond the timelines as mentioned in the Form-G dated 29.07.2023.

It is stated that Regulation 36A (3) of the CIRP Regulations stipulates that last date for submission of EOI shall not be less than 15 days from the date of issuance of Form- G. Therefore, the last date for submitting EOI should have been 13.08.2023 instead of 09.08.2023.

It is stated that even considering 13.08.2023 as the last date of submission of EOI, the Applicant submitted its EOI on 16.08.2023, with a delay of 3 days. It is stated that the reason for the delay in submitting the EOI is that the Applicant is incorporated in United Arab Emirates, and a considerable time was lost in arranging and executing the relevant documents that were to be submitted along with the EOI.

It is stated that initially the documents were made ready for execution at the Registered Office of the Applicant, however owing to some constraints faced by the Applicant, the same could not be processed. Therefore, the Applicant authorized Mr. Anil Kumar Saraff, an Indian Resident to sign all the documents with respect to the submission of EOI. For these reasons, the Applicant could not submit the EOI within the time limit prescribed. It is stated that delay in submitting the EOI by the Applicant was neither wilful nor wanton. It is stated that the principal object of the Code is to maximize the value of the assets of the Corporate Debtor, and therefore allowing the Applicant herein to participate in the Resolution Process will encourage healthy competition between the Prospective Resolution Applicants thus benefiting all the stakeholders of the Corporate Debtor.

The Applicant in order to substantiate its arguments, places reliance on the following cases:

Ankit Patni vs. State Bank of India & ors (Company Appeal (AT) Insolvency NO.326 of 2022),

M/s. Squarevision Properties Private Limited vs. Pinaki Sircar (IA No.310 of 2023 in CP/IB/No.1536/KB/2019),

We have heard Ld. Counsel for the parties and perused the documents.

Regulation 36(A) of the IBBI (CIRP Regulations), 2016 provides for Expression of Interest. Sub-Regulation 3 reads as under:

In the case of Ankit Patni supra, the EoI from M/s. Tata Steel Mining Limited was received on 16.03.2021 i.e. after the expiry of the last date of submission of EoI. Tata Steel Mining Ltd while citing its reason for delay, also requested for condonation of delay in submission of EoI. In order to maximise the value of the assets of the Corporate Debtor, EoI submitted by Tata Steel Mining Limited was placed before the CoC in its meeting held on 18.03.2021. The CoC after considering all the aspects, decided to condone the delay of Tata Steel Mainlining Ltd in submitting its EoI and included its name in the Final List of Prospective Resolution Applicants. The matter came before Hon'ble NCLAT and it was held that the commercial wisdom of CoC is to be given due regard. The CoC having decided to condone the delay in submission of EoI by Respondent No.3 and to include the Respondent No.3 in the list of Resolution Applicants, no exception can be taken by the Appellant to the decision of CoC. The object of IBC is to maximise the assets of the Corporate Debtor. The Hon'ble NCLAT did not find any substance in the appeal and dismissed the appeal.

In the case of M/s. Squarevision Properties Private Limited vs. Pinaki Sircar supra, there was a delay of 72 days in submission of EoI as per Form-G. The Tribunal considered the reasons and held that primary objective of the Code is to provide a timebound and efficient process for resolving Insolvency and Bankruptcy in a transparent manner. Nevertheless, it is also one of the tenet of the Code is to put endeavour the Corporate Debtor on its feet for the larger benefit of all the stakeholders. Reference was made of the case Babulal Vardharji Gurjar v. Veer Gurjar Aluminium Industries Private Limited (2020) 15 SCC 1 : where it was held that the primary focus of the Code is to ensure revival and continuation of the Corporate Debtor and, as far as feasible, to save it from liquidation. The NCLT therefore condoned the delay in the submission of EoI.

As seen from the record, in the instant case, the 1st Respondent /RP did not place the EoI submitted by the Applicant before the CoC and he instead, rejected the EoI citing delay. In the case of Ashok Patni supra, the RP had placed the EoI submitted by Tata Steel Mining Private Limited before the CoC which was submitted with delay and the CoC in its wisdom, condoned the delay in submitting its EoI and included its name in the Final List of the Prospective Resolution Applicants. It is also to be noted that as per Regulation 36A (3) (CIRP Regulations), 2016, the last date for submission of EoI should not be less than 15 days from the date of issue of the detailed invitation, however, in the revised invitation, the Respondent No.1 had given the time less than 15 days. RP has also admitted that the EoI submitted by the Applicant after the last date mentioned in the Form-G, was not put before the CoC for its decision as to whether the delay may be condoned or not.

This Adjudicating Authority is well aware, that the primary object of the code is to provide a time-bound and efficient resolution process in a transparent manner. However, another major tenet of the code is to put the Corporate Debtor back in its feet with larger benefits to its stakeholders. It is the object of the code and a well settled proposition of law, that the value of the assets of the Corporate Debtor is to be maximised, for which having more number of bidders shall ensure that a highest bid is obtained.

It is seen that the Corporate Debtor is into the business of energy industry, which is typically the need of the hour. Therefore, we find it exceptional to explore the possibility for revival.

In view of the observations made by Hon'ble NCLAT in the case of Ankit Patni supra, and keeping the objectives of the code, the Resolution professional is directed to place the EoI of the Applicant along with the submissions and documents filed by the Applicant in the instant Application before the CoC for its consideration. It is further directed that the CoC may take a decision on the EoI without being influenced from the earlier observations made by the Resolution professional/1st Respondent while not considering the Resolution Plan submitted by the Applicant earlier.

The Resolution Professional/1st Respondent is directed to convene the CoC Meeting, in accordance with law.

It is made clear that the decision rendered in this application is in view of the peculiar facts and circumstances of the instant case. Nothing mentioned hereinabove shall be tantamount to an expression on the merits of the case.