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Judgment
ORDER
Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial):
This Company Appeal (AT) (CH) (INS) No. 294 / 2024 is listed on an Application IA No. 812 / 2024, seeking an advance hearing, on the grounds that, the Application for Liquidation is expected to be considered by the NCLT, Bengaluru very soon.
The learned Counsels for the Parties agree that, the matter may be taken up today itself, because, the Resolution Plan submitted by the Appellant was rejected on very minor issues which could have been rectified by filing addendum to the said Plan, but, which was not accepted by NCLT, Bengaluru, while passing the Impugned Order.
Brief facts of the case are that the Corporate Debtor M/s. Merushikhar Realty (LLP) was admitted into CIRP on 30.05.2022, the IRP was appointed on 18.07.2022, Expression of Interest in Form G was published on 01.12.2022, 3 Prospective Resolution Applicants including the Appellants submitted EOI, out of the three, the Appellant alone submitted Resolution Plan on 20.01.2023 and a Revised Plan on 21.03.2023, the Committee of Creditors approved the Resolution Plan on 29.03.2023, the RP filed IA No. 397 / 2023 in CP(IB) No. 86 / BB / 2021 for approval of the Resolution Plan and the learned Adjudicating Authority, NCLT, Bengaluru rejected the Resolution Plan and dismissed the IA No. 397 / 2023 on 28.05.2024. Against this order, the instant Company Appeal has been filed by the Applicant.
The learned Counsel for the Appellant has submitted that, by the virtue of the Impugned Order of 28.05.2024, as it has been passed by the learned Adjudicating Authority in IA No. 397 / 2023, as preferred in CP (IB) No. 86 / BB / 2021,under Section 30 (6) of I & B Code, 2016, the learned Adjudicating Authority has rejected the Resolution Plan, on account of the certain minor defects, which had crept in submission of the Resolution Plan, as it has been detailed in the Impugned Order in Para Nos. 23 to 30. The defects listed therein are mostly non-compliance of certain Codal formalities laid down by Regulations 36, 38 & 39 of IBBI (CIRP) Regulations, 2016, in the Resolution Plan submitted and that, these defects are easily curable and therefore, the learned Adjudicating Authority should have called for an updated Form H or remanded the matter back to Committee of Creditors for fresh consideration, instead of rejecting the Plan.
What has been observed by the learned Adjudicating Authority is that the Resolution Plan does not contain due diligence report by RP as required by Regulation 36A(8), with respect to Section 29A, that it does not address the `Cause of Default’ as envisaged in Regulation 38(3)(A), that it does not demonstrate the Plan to be `feasible and viable’ as required by 38(3)(b), that the Compliance Certificate in Form H is defective thus not satisfying Regulations 39(4), and that performance security has expired, thus violating Regulation 36B (4A).
Observing the above, the learned Adjudicating Authority has concluded that the Resolution Plan did not meet the requirements of Section 30(2)(f) of I & B Code, 2016 read with IBBI Regulations, and hence, rejected the Plan and dismissed the IA No. 397 / 2023.
The learned Counsel for the Appellant submits that, all the defects as listed above are very much curable; non-compliance of 38(3)(a) and 38(3)(b) are not fatal to trigger rejections of the Resolution Plan and that they could have been rectified, that `Due Diligence Report’, could have been called from the RP, revised Form H could have been obtained and a direction could have been given to renew the Performance Guarantee. The learned Adjudicating Authority should have seen his capacity, his Net Worth and the source of funds and in view of very little Liquidation Value, should not have rejected the Resolution Plan and dismissed the IA No. 397 / 2023.
As far as the Respondent is concerned, who is participating in the proceedings of the instant Company Appeal in the capacity of being a Resolution Professional, he submits that he does not have any grievances as such, in case if the Appellant is permitted to file the required addendum to the Resolution Plan, as submitted by him so as to demonstrate compliance of the Resolution Plan with the provisions of Sec. 30(2) (f), to be read with Regulation 36(A)(8), Regulation 38(3) (a) & (b)and Regulation 39(4) and is permitted to renew the Performance Guarantee to satisfy Regulation 36(B) (4A) towards rectification of the defects / errors that have crept into the submitted Resolution Plan so as to qualify for approval under Section 31(1) of I & B Code, 2016.
After having heard the learned Counsels for the parties, and particularly for the reasons which has been given, we are of the view that the prayer of the Appellant being that his Resolution Plan submitted by the Respondent / RP, before the learned Adjudicating Authority being IA No. 397 / 2023under Section 30 (6), may not be rejected outright, but, that he may be given a chance to rectify it for fresh consideration by the Committee of Creditors and the learned Adjudicating Authority.
Owing to the aforesaid reasons, we are of the view that, the Appeal deserves to be allowed and the Impugned Order is to be quashed, and as a consequence there to, the IA No. 397 / 2023, as preferred by the Respondent / RP herein, under Section 30 (6), for seeking an approval of the Resolution Plan may be permitted to be rectified of the defects as pointed out and to be resubmitted with required addendums after rectification for re-consideration for its acceptance, in accordance with law.
Subject to the above, the Impugned Order would stand set aside, and the Respondent / Resolution Professional will take immediate steps to present the Resolution Plan, with addendums for consideration of CoC and file a fresh Application for approval of Resolution Plan before the learned Adjudicating Authority. The time period of CIRP will also stand extended by 45 days as prayed for to carry out the above order.