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Judgment
O R D E R
23.02.2024: Heard learned counsel for the Appellant. This appeal has been filed against order dated 22.12.2023 passed by the Adjudicating Authority by which order the application being I.A. No.1748 of 2023 filed by the Appellant – Promoter/Director has been decided.
In the CIRP of the Corporate Debtor, Form G was issued thrice. Resolution Plans were submitted which came for consideration before the CoC. Appellant before us were the Promoter/Director, they did not file any resolution plan in the CIRP. On 14.03.2023 they sent a proposal to the Bank of India offering to make payment of Rs.64.5 crores which letter was in form of OTS forwarded to the Bank. After the said OTS there has been correspondence of the Appellant with the Bank with regard to the said OTS. In the CoC meeting dated 29.06.2023, the Promoter who was present in the committee meeting made a request the fresh Form G be issued so that management may give Resolution Plan. The said request was considered as Item No.7, where the CoC informed that the concerned Financial Creditors at their head office has to take a final decision on the Resolution Plan and OTS proposal and they are still awaiting the final decision of their head office. Subsequently, the meeting of the CoC was held on 27.07.2023, on which date three Resolution Plans were considered and decision was taken to file an application for extension of CIRP period and decision was also taken to vote on three Agenda Items, as noticed in the minutes. In pursuance of the voting, one of the Resolution Plan was approved and the application has been field by the Resolution Professional for approval of the Resolution Plan. The Appellant – Promoter/Director filed an I.A. before the Adjudicating Authority being I.A. No.1748 of 2023, where he made following prayers:
“i.The applicant Erstwhile Promoter Director of the corporate debtor, i.e., Drish Shoes Limited-MSME, which was declared as a Non-Performing Asset by the bank on 09.11.2021. Subsequently, M/s. Reem Tanners Private Limited, one of the suppliers of the corporate debtor filed an application under Section 9 and CIRP was initiated in the case of the corporate debtor on 12.05.2022.
ii.The Resolution Professional completed the procedures under the CIRP process and in the 19th meeting dated 27.07.2023, the proposal of Resolution Plan of M/s Saboo Tor Private Limited was approved by the sole member of the CoC, i.e., Bank of India.
iii.It is stated by the applicant that he had intended to submit an application under Section 12A of the IBC. In this connection, a letter to the Assistant General Manager, Bank of India, Chandigarh Branch dated 05.07.2022 (Annexure A4) has been referred.
iv.Furthermore, a reference has been made to the reply of respondent No. 2-bank dated 27.07.2022. It is further stated that the applicant carried on the negotiations with the bank and raised its offer on 27.03.2023 INR 67.50 Crores under OTS as reflected by the applicant. It is stated that the proposal of OTS was Rs.11 Crores more than that of the H-1 bidder which was placed before the CoC member in its 18th meeting held on 29.06.2023.
v.Subsequently, in its 19th meeting dated 27.07.2023, the CoC approved the Resolution Plan. In this connection, the applicant has relied upon the decision of the Hon'ble NCLAT in the matter of Saravana Global Holdings Ltd. & Anr. vs. Bafna Pharmaceuticals Ltd. & Ors., CP CA (AT) (INS) No. 203 of 2019 dated 04.07.2019 and the judgment passed in the matter of PLBB Products Pvt. Ltd. vs Piyush Periwal & Ors., Company Appeal (AT) (Insolvency) No. 160 of 2021 & IA No. 1117 of 2021.
vi.It is submitted by the applicant that the conduct of the Resolution Professional is not in accordance with the provisions of law as the applicant was offering more value than the H-1 bidder and the Resolution Professional who have published for the invitation of Expression of Interest again in view of the communication received by the applicant.
vii.It is further stated that as the bank did not take a decision on the OTS proposal given by the applicant, it was prevented from submitting its own Resolution Plan beforehand and the same should, therefore, be considered by the CoC.
The Adjudicating Authority by the impugned order has dismissed the application.
Learned counsel for the Appellant Mr. Aalok Jagga submits that when the OTS proposal submitted by the Appellant was under consideration and was not yet finalised, in meeting dated 27.07.2023, there was no occasion to approve any Resolution Plan. He further submits that after submission of OTS proposal dated 14.03.2023, there has been several correspondences between the Appellant and the Bank and when the proposal was under active consideration, no Resolution Plan ought to have been approved without taking into consideration the OTS submitted by the Appellant.
Learned counsel for the Resolution Professional submits that the Appellant was well aware that the his OTS has not been accepted and he also sent an email on 27.07.2023 at 23:48 hrs asking that the upfront amount of Rs.1.30 Crores be refunded and on the next day the bank wrote to the Appellant refunding the amount as well as informing that the Bank has not approved the OTS.
Learned counsel for the Bank also submitted that the Bank did not approve the OTS due to which reason the refund was asked for by the Appellant.
We have considered the submissions of learned counsel for the parties and perused the record.
The OTS proposal was submitted by the Appellant on 14.03.2023/28.03.2023. We notice Clause (A) and (B) as contained in letter dated 28.03.2023, which is as follows:
“(A)(i) We make a final and last most offer of a total net sum of Rs. 57.5 crores (Rupees Sixty Seven crores fifty lacs) by way of OTS against sale of all assets of Drish Shoes Ltd. land, buildings, all machines and all stocks.
(ii)In comparison. the highest offer as H1 from CIRP process is Rs. 56.42 crores.
(B)(i) We have somehow managed to garner with great difficulty through our own sources, friends and relations a total up front sum of Rs. 1.30 crores (Rupees One crore thirty lacs). Within two days of your giving us the No lien Account details we would deposit Rs. 1.3 crore into the 'No lien Account
(ii)This amount, whether from us or friends and relations would be put into a no-lien account by the bank to be adjusted against OTS amount if our request is accepted, or returned from the no-lien account if our request is not accepted. Please confirm your understanding of the same.
(iv)Within one month of NCLT approval under IBC Section 12-A and your giving us an approval letter that provides as per our mutual discussions and requests, we would further deposit Rs. 6.75 crores being 10% of the OTS offer.
(v)Within further two months, Le total 3 months of NCLT approval under Section 12-A and your approval letter, we would deposit additional amount of Rs. 35.0 crores. We would try our best to increase this amount.
(v)We would pay interest on the remaining Rs. 24.45 crores or whatever amount is left after 3 months of 12-A approval date. We have made a separate provision for this interest payment so that our NPV remains at Rs. 67.50 Cr.”
The emphasis of learned counsel of the Appellant is that since OTS proposal was under consideration and no decision was communicated by the Bank till 27.07.2023, when CoC proceeded to vote for Resolution Plan, the entire process is vitiated. We have looked in to the proposal dated 28.03.2023 on which reliance has been placed and the Appellant in this Appeal has prayed for following reliefs:
“a. Allow the present appeal and set aside the impugned order dated 22.12.2023 as passed by the Hon'ble Adjudicating Authority;
b. Set aside 19th CoC proceedings dated 27.07.2023 approving the resolution plan and / or applicant be also allowed to submit his Resolution Plan under the current CIRP process for consideration of COC as applicant is suspended director of MSME-CD and condone delay in submitting the same due to pendency of OTS proposal of the applicant offering about Rs. 11 Crore more than the Final Plan received;
or
c. Direct the Respondent No. 1 to publish fresh Form G for inviting competitive bids for the revival of the Corporate Debtor in order to maximise the value of the Corporate Debtor, and
d. Grant ad-interim injunction on Ld. NCLT's adjudication of IA No. 1734 of 2023 filed for approval of Resolution Plan;
e. Pass any other order in the facts and circumstances of the present appeal and in the interest of the Justice.”
In so far as the prayer of the Appellant to publish fresh Form G, the said request was considered in the CoC meeting and was not acceded to, Form G having issued thrice. In so far as OTS proposal dated 28.03.2023, the clauses, as extracted above, clearly indicated that the proposal of the Appellant was to pay Rs.67.50 Crores against sale of all assets of Corporate Debtor; land, buildings, all machines and all stocks. The proposal of the Appellant to sell all land, buildings, and machines of the Corporate Debtor cannot be treated as any proposal by the Promoter of OTS. The assets which are under CIRP are assets of the Corporate Debtor that cannot be touched by the Promoter/Director to include in any OTS proposal. We are of the view that proposal submitted by the Appellant was not an OTS proposal.
We do not find any ground to interfere with the impugned order by which the application filed by the Appellant has been dismissed. The mere fact that there has been correspondence of the Appellant with the Bank with regard to consideration of OTS proposal does not make the proposal valid, as noticed above. We, thus, are of the view that there is no ground to interfere with the impugned order. Appeal is dismissed.