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Judgment
Per: Bidisha Banerjee, Member (Judicial)
1. The Court congregated through a hybrid mode.
2. Jai Prakash Jaiswal, hereinafter referred to as “Applicant”, being a suspended director of the corporate debtor company – Shree Sanyeeji Steel & Power Limited, has preferred this application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, for brevity, “I&B Code” against Sanjai Kumar Gupta, RP of the corporate debtor, hereinafter referred to Respondent No. 1, and the members of the CoC (Respondent No. 2 – 4), praying for the following reliefs:
1. a. Direction that the Form G published on 04.12.2024, be declared null and void.
2. b. Direction that the Resolution Plan filed based on Form G on 21.05.2023 and the Information Memorandum on 27.05.2024 be considered for approval.
3. c. Such further order(s) which may be deemed fit and proper.
3. Further, the interim order has been sought for as under:
a. Direction that until the physical identification, possession and valuation of the schedule of property mentioned in the alleged lease deed, the Form G and its timeline be stayed.
The applicant contends that this Tribunal allowed the applicant, being the registered MSME promoter of the corporate debtor, to participate in the process and furnish a resolution plan vide Order dated 13.06.2024, and accordingly a resolution plan based on the EoI published on 21.05.2024, was submitted. Subsequently, the applicant was declared the H1 bidder by the CoC on 13.11.2024. However, on 21.11.2022, the RP revealed two lease deeds claiming to have been allegedly executed in the name of the company by one of the ex-directors, namely, Vishal Poddar. After going through the contents of the said two lease deeds, the applicant learnt that there was a transaction for an amount of Rs. 10 Lakh. The applicant alleges that the said Vishal Poddar was never authorised by the corporate debtor company to enter into any lease deed, and the applicant was not aware of the said alleged lease deeds. Accordingly, the genuineness of the said alleged lease deeds was questioned by the applicant before the CoC meeting convened on 25.11.2024. The said meeting was adjourned on 27.11.2024, and the RP on that day proposed to re-publish the Form G again, and the same was put for voting before the CoC without any physical identification and valuation of the said alleged lease land.
The applicant further contends that a written objection was given on 24.11.2023, and on 03.12.2024, the CoC approved the publication of a fresh Form G and accordingly got published on 04.12.2024.
Per contra, the RP would assert that the applicant, being a suspended director of the corporate debtor, cannot question the commercial wisdom of the CoC. It is contended that though the applicant was the H1 bidder, the applicant's plan sought release of personal guarantee and corporate guarantee, which the applicant ought to discuss with the CoC. Thus, at the 16th CoC meeting, it was decided that in the next meeting, all the PRAs would submit their revised plan. As such, no vested right or any right at all accrued to the applicant.
It is submitted that the RP came to learn that the corporate debtor owns two more assets in the form of leasehold land parcels aggregating an area of around 9 acres at Baruipur and Bhangore by way of two lease agreements. At the 17th CoC meeting convened on 21.11.2024, the discovery of the said assets was discussed, and the applicant expressed his unawareness of the said leased land.
It is further submitted that at the 18th CoC meeting convened on 25.11.2024, the CoC decided to publish a fresh Form G as well as the identification and valuation of the said lease title documents, keeping in mind the time constraints and to maximise the value of the assets of the corporate debtor. As such, the applicant is barred by the principles of waiver, estoppel, acquiescence, and principles analogous.
The further submission is that on 04.12.2024, RP issued an email responding to the applicant’s email dated 03.12.2024, clarifying that upon discovery of the corporate debtor’s said properties, it was necessary that the same be made part of the Information Memorandum in order to enable transparency and value maximization. It was further pointed out that proceeding with the process without including the said assets would lead to continuation of an inadvertent and unavoidable defect in the Information Memorandum as the RP was not aware of the existence of the said leasehold properties at the time of issuance of the earlier Information Memorandum on which the applicant submitted his plan. the CoC decided to issue a fresh Form G and restart the process after due deliberation.
RP would contend that based on the documents and information available with RP, a revised Information Memorandum was issued on 16.12.2024, wherein the two properties were mentioned, and it was informed that the RP was not in custody or control of the same. It was further indicated that the identification and location of the said lands were under verification. Necessary disclaimer and caveat were provided in the revised Information memorandum to enable prospective resolution applicants to conduct due diligence prior to submissions of a resolution plan.
We have noted the rival contentions and perused the records.
We find that the decisions to publish a fresh Form G and re-run the CIR Process, after the discovery of the new leasehold lands, have been taken by the Committee of Creditors unanimously at its 18th CoC meeting convened on 25.11.2024. The CoC further decided to allow the existing PRAs to submit their final plan by revising the financial proposal. The minutes of the 18th CoC, annexed at pages 118 – 124 to the application records as under:
“New Title Documents
With regard to new registered title documents of leasehold land found in the name of the Corporate Debtor, the RP is in the process of verifying the genuineness, getting certified copy of the title documents, identifying the property, survey and valuation etc. which may take some time. Presently the RP Team is arranging Mouza Maps and will locate the plot on the map to find out the location. The Directors of the Suspended Board has informed vide email that they are not aware of the transactions. The transaction was done in cash, not recorded in books etc. The transaction is done by one erstwhile director on the Board at the time of transactions.
Negotiation process held on 28-10-2024 & 13-11-2024
As per the present negotiation process held on 28-10-2024 & 13-11-2024 (2nd day of continuing negotiation process) 3 PRAs out of the 6 PRAs came out of negotiation in the 1st Round. The RP further explains that during the negotiation process on 13-11-2024 (2nd day of negotiation process) in the 10th Round the value of the financials revision submitted by the two of the PRAs namely SPS & Ramdoot were much below the value of financials revision submitted by these two PRAs in the 9th Round. Further when these PRAs were told that the value in 10th Round being lower in real terms as per NPV than 9th Round and hence as per the process their 9th Round Financial shall be treated as their Final Financial revision. These two PRAs insisted that their 10th Round Financials is their Final Financial. However, as per the terms of the Negotiation Process the financial submitted by these two PRAs in 9th Round is the last & final financials of these two PRAs. Whereas, the financials submitted for the CD by Mr JP Jaiswal in the 10th round was as per the process for improvement of financials. However, Resolution Plan submitted by Mr Jaiswal also sought release of personal & corporate guarantees. Hence the financial submitted by the Mr Jaiswal was subject to separate discussions or negotiations with the Secured Financial Creditors with respect to the potential release of the Personal Guarantees, Corporate Guarantees, and/or third-party securities Hence, as per the negotiation process terms, Mr. Jaiswal is required to discuss & negotiate the financials for release of Corporate Guarantee & Personal Guarantee separately with the lenders. The CoC has to discuss it and is required to take a view on the matter which shall be treated as final. The RP further clarifies that in view of the finding of New Title Documents the PRAs would be required to submit the revised & final plan as discussed & to be confirmed by the CoC incorporating the assets as per New Title Documents in the plan and improving the plan for the value for the new assets. The CoC may at its discretion may discuss and negotiate with the PRAs as per their understanding of the matter. The RP requested the views of the CoC members. The CoC members expressed that at present no authentic & concrete information is available about the lease hold land as per the said title documents. Further valuation & identification of the new assets should be done. If required the process may be re-run as per the provisions of IBC. Hence, the RP should 1st do the identification and valuation of the assets. The RP requested the view of suspended Board. The director present in the meeting also said that the identification & valuation of the assets should be done to proceed further and if required process may be re-run as per the decision of the CoC. The director said that they are in agreement with the decision of the CoC. The RP clarifies that the process of identification & valuation will take time. Hence both the process of identification & valuation and communication with PRAs of the new title documents & submission of final plan incorporating the same as discussed above should be done parallelly. The PRAs will do their due diligence of the new title documents. This way time may be saved as after taking extension the CIRP period has expired on 24-11-2024 and further exclusion application for 60 days is pending. Hence not much time is left. He also informed to the CoC that in view of the two of the PRAs insisting to submit the Final Plan based on the 10th Round, financial value of which is lower than 9th Round Financial Value in NPV terms (10th round Financial value in NPV term is even lower than their original/ 1st Plan) this may lead to litigations. Further two title documents also require time to investigation. After taking legal view as per the decision of the CoC the process (from Form G) may be re-run, however there is time constraint. The CoC discussed and felt that internal discussion is required in the matter. Hence the CoC meeting was discontinued at this stage to again continue tomorrow or day after tomorrow as per the convenience of all
27-11-2024
The RP explained that on 25-11-2024 the meeting deliberated on the Two New Title Documents related to lease property and negotiation process held on 28-10-2024 & 13-11-2024 in which the two of the PRAs reduced their financial as per the NPV terms from the ninth-round financial values & also from their original/ 1st plan.
In view of these circumstances the forum was discussing about to proceed further in CIRP resolution process by
i.allowing the existing PRAs to submit their final plan by revising financials as per their last valid financials for the CD i.e for 3 PRAs as per 1st Round, for 2 PRAS as per the ninth round (to which they have not agreed during the negotiation) and 1 PRA i.e H1 for the CD as per tenth round (subject to discussion & negotiation for the financials for release of Corporate Guarantee & Personal Guarantee separately with the CoC members). Mr. Jaiswal has already submitted the Resolution Plan dated 13-11-2024 or
ii.publishing fresh Form G and rerun the process again.
The forum deliberated in length keeping in view to avoid litigation, time constraint and maximize the value of the CD. The meeting discussed that it will take time to authenticity, identification, valuation etc of the two new title documents. Further in the present negotiation process the said two PRAs insisted for submitting the Final Plan based on 10th Round instead of 9th Round. Hence after deliberation it was agreed to publish Fresh Form G and rerun the process. Now the CoC discussed the time line for fresh process in view of the CIRP timeline after taking 60 days exclusion already approved by the CoC pending before Hon'ble AA expiring on 23-01-2025. The Counsel present in the meeting confirmed that the fresh FORM G may be published. After deliberation it was decided to reduce the time line as per the provisions of IBC and if required shorter time period i.e. less than 30 days may be given to the PRAs to complete the Process within 23-01-2025. At this point one of the CoC enquired if PRAs request for more time for submission of Resolution Plan whether timeline can be allowed? The RP informed that given the circumstances at that time the RP with the approval of the CoC may apply for further exclusion. After long deliberation tentative timeline was approved by the CoC as under.
We have further noted that RP issued a revised Information Memorandum on 16.12.2024, annexed at pages 92 to the Affidavit in Reply. We find that in the said revised Information Memorandum, it has been rightly contended that:
“d)Copies of Two Lease Title Documents is discovered for around 9 acres of Land in Canning, Baruipur & Bhangore PS South 24 Parganas District WB.
- Lease hold land is not identified and also not in custody & control. - The identification, location of land in the documents under verification. - As informed the Directors of the suspended Board are not aware of the matter.
It is trite, axiomatic, and settled position of law that the decision adopted by the CoC unanimously by majority voting shares comes within the purview of the ‘commercial wisdom’ having less judicial interference as upheld by the Hon’ble Apex Court in catena of judgments, we find no good ground to allow the prayers of the applicant. However, we allow all the PRAs, including the applicant, to furnish a revised plan in terms of the fresh Form G within the stipulated period of time and submit the same before the RP. Further, we find no infirmity in the revised Information memorandum which expressly indicates the information relating to the said two lease hold lands available with the RP. Accordingly, the present application is dismissed.
Certified copies of this order, if applied for with the Registry, be supplied to the parties upon compliance with all requisite formalities.