Maple Tree Leather Goods Pvt.Ltd. vs Savan Godiawala & Ors.

M. Venugopal (J)

According to the Learned Counsel for the Applicant / Appellant, the Appellant / Company has filed the instant Comp. App. (AT)(Ins.) 314/2020 on the file of this Appellate Tribunal, being dissatisfied with the order dated 30.12.2019 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal) Bengaluru Bench in I.A. No. 47/2019 in CP(IB)No. 14/BB/2017(filed u/s 33(1) r/w Section 60(5) of the I&B Code, 2016) (filed by the First Respondent / Resolution Professional of ‘M/s. Falcon Tyres Limted c/o Deloitte Touche Tohmatsu India LLP’, Mumbai – 400013.

The Learned Counsel for the Applicant / Appellant brings to the notice of this Tribunal that the ‘Adjudicating Authority’ on 30.12.2019 in I.A. No. 47/2019 in CP(IB)No.14/BB/2017(filed u/s 33(1) r/w Section 60(5) of the ‘I&B Code’, 2016) filed by the First Respondent / Applicant had passed an order of Liquidating the M/s Falcon Tyres Limited (Corporate Debtor) as laid down in Chapter III (Liquidation process) of Part II of the Code and appointed Shri Shivvadutt Bannanje, ‘Insolvency Professional’ as Liquidator for the ‘Corporate Debtor’ etc.

It is represented on behalf of the Applicant/Appellant that the impugned order dated 30.12.2019 passed by Adjudicating Authority on 30.12.2019 in I.A. No. 47/2019 in CP(IB)No.14/BB/2017(filed u/s 33(1) r/w Section 60(5) of the I&B Code, 2016) was secured by the Resolution Professional by suppressing the material facts and without providing any opportunity to the Resolution Applicant to revise its offer for the betterment of the ‘Corporate Debtor’ and also its Stakeholders.

It comes to be known that based on a company petition which was filed by the Financial Creditor Viz. Edelweiss Asset Reconstruction Company Ltd., CIRP was initiated on 1.5.2018 and that Mr. VijayKumar Iyer was appointed as the ‘Interim Resolution Professional’. Subsequently, resting on the application filed, the First Respondent was appointed as a Resolution Professional and through an order dated 19.7.2018 his appointment was affirmed as a ‘Resolution Professional’ to act as per the provisions of the Code.

As against the impugned order dated 30.12.2019 in I.A. No. 47/2019 in CP(IB)No.14/BB/2017(filed u/s 33(1) r/w Section 60(5) of the I&B Code, 2016) the Appellant (the Applicant in IA No. 436/2020) has preferred the instant Co. Appl. (AT)(Ins.)314/2020 on the file of this Tribunal contending that the ‘Adjudicating Authority’ has passed the impugned order by not applying its judicial mind by simply putting a rubber stamp on the observations of the ‘Committee of Creditors’ in a meeting which was specifically directed by the ‘Adjudicating Authority’ to reconsider the ‘Resolution Plan’ so that the ‘Corporate Debtor’ could be revived.

The plea taken by the Applicant / Appellant in the instant Comp. App. (AT)(Ins.)314/2020 is that the ‘Adjudicating Authority’ had incorrectly and without any basis or reason had proceeded to reject the Resolution Plan furnished by the Appellant and ordered the liquidation of the Corporate Debtor. Also that the ‘Adjudicating Authority’ had not provided an opportunity to the Applicant/Appellant to place its case before it and considering its proposal made over and above the ‘Resolution Plan’ submitted by it.

The Learned Counsel for the Applicant / Appellant contends that the ‘Adjudicating Authority’ had ignored the fact that the stand of the Appellant was all along bonafide and sincere endeavours were made by the Applicant / Appellant to revive the ‘Corporate Debtor’.

It is the version of the Applicant / Appellant that the ‘Adjudicating Authority’ had ignored the objective of the ‘Í&B’ Code. Apart from this, it is the plea of the Applicant/Appellant that just because the ‘Committee of Creditors’ which was basically ‘Edelweiss Asset Reconstruction Company Ltd’. had made certain caustic remarks in respect of the ‘Resolution Plan’, which were a baseless and a frivolous one, the ‘Adjudicating Authority’ had ordered the liquidation of the Corporate Debtor by rejecting the Resolution Plan of the Appellant.

The Learned Counsel for the Applicant/Appellant comes out with a plea that the finding of the Appellant is an unviable one, since the Appellant had not provided any ‘Performance Bank Guarantee’ and the same is a ‘Perverse’ one.

The Learned Counsel for the Applicant/Appellant brings it to the notice of this Tribunal, that the status of 1500 Workers are at stake and if the Company is sold like that in the proposed Auction on 29.9.2021, then, an irreparable loss/injury/ hardship will be caused to the Applicant/Appellant and refers to the to the decision of Hon’ble Supreme Court in ‘Árcelor Mittal India Pvt. Ltd. V. Satish Kumar Gupta & Ors., 2019 (2SCC pg. 1).

The Applicant / Appellant has projected I.A. No. 436/2021 in Comp. App.(AT)(Ins.)314/2020 seeking stay of all further proceedings carried on either by the Adjudicating Authority (National Company Law Tribunal) or by the Liquidator including the stay of ‘’E-Auction’ to be held on 29.09.2021 between 11.00 a.m. and 3.00 P.M. by the Liquidator in terms of Public Notices.

The Learned Counsel for the Applicant/Appellant points that if no stay order is granted in regard to the ‘E-Auction’ to be held on 29.09.2021 between 11.00 a.m. and 3.00 P.M., then, the Applicant/Appellant shall suffer an irreparable loss and injury and its remedy will get frustrated otherwise.

On behalf of Second Respondent it is represented that in the decision of Hon’ble Supreme Court in ‘Pratap Technocrats (P) Ltd. & Ors.’ V. ‘Monitoring Committee of Reliance Infratel Ltd. & Anr.’ 2021 SCC online 569 wherein it is observed and held that the ambit of the Adjudicating Authority is to decide whether the amounts distributed to the Operational Creditors or in consonance with Section 30(2)(b) of the Code and there does not lie any independent equity based jurisdiction with the Adjudicating Authority.

On behalf of the Fourth Respondent it is represented that the relief sought for by the Applicant/Appellant in IA 436/2021 in Company Appeal(AT)(Insolvency) No. 314 of 2020 is not to be granted, as any stay order in respect of all further Liquidation proceedings either before the Tribunal or by the Liquidator(including stay of E-Auction to be held on 29.9.2021) will amount to granting of final relief of allowing the Appeal filed by the Appellant.

Per Contra, it is the contention of the Learned Counsel for the eighth Respondent/Liquidator that the Applicant / Appellant has not assailed any of the previous steps towards auction of assets of the Corporate Debtor, which were undertaken prior to the present attempt towards auction of the same. Further, the present attempt in filing IA 436/2021 is nothing but an attempt to scuttle the ‘Liquidation Process’, contrary to the letter and spirit of the ‘I&B’ Code, 2016.

The Learned Counsel for the eighth Respondent submits that the ‘Resolution Applicant’ had not proved its ‘Bonafide’ towards the Resolution Plan submitted by it as recorded at paragraph 7 of the impugned order on 30.12.2019. Furthermore, resting on numerous offers and contentions made by the ‘Resolution Applicant’, the issue of ‘Resolution’ was again reconsidered by the ‘Committee of Creditors’ by calling a meeting of the Financial Creditors on 25.09.2019 to discuss the revised financial offer submitted by the Resolution Applicant but it was found that the revised offer was not Rs. 370/-crores as pleaded by the ‘Resolution Applicant’ (based on which the order dated 16.09.2019 was passed) and it was only Rs. 100/- Crores.

Besides the above, it comes to be known that there was no change for the Financial Creditors and no comfort was given to them in regard to the upfront payment and/or performance Bank Guarantee was not furnished for obtaining the payment promised by the Resolution Applicant. Under these circumstances, the order of Liquidation dated 30.12.2019 came to be passed against the ‘Corporate Debtor’ by the ‘Adjudicating Authority’ after dealing with the facts of the case in detail and assigned reasons thereto.

According to the Learned Counsel for the eighth Respondent, the eighth Respondent filed IA No. 122/2021 before the Adjudicating Authority claiming extension of Liquidation process by a period of 180 days from 28.4.2021 which was allowed on 7.8.2021. Furthermore, the E-Auction of the assets belonging to the Corporate Debtor is now slated on 29.9.2021 on an online portal, where the interested Buyers (including the Applicant/Appellant) can register bid and receive affirmation of the acceptance of their bid online.

In short, the submission of the Learned Counsel for the Eighth Respondent is that the Applicant / Appellant is desirous of participating in the E-Auction he may submit his ‘Bid’ to the eighth Respondent which shall be subject to the terms and conditions of the sale, as mentioned in the complete ‘E-Auction’ process document.

The Learned Counsel for the eighth Respondent refers to the judgement of Hon’ble Supreme Court in ‘K.Sashidhar’ V. ‘Indian Overseas Bank & Ors.’ (Vide Civil Appeal No. 10673/2018) for the proposition that ‘Commercial Wisdom’ of the ‘Committee of Creditors’ is ‘Paramount and Supreme’.

The Learned Counsel for the Eighth Respondent refers to the decision of Hon’ble Supreme Court in ‘Arcelor Mittal India Pvt. Ltd.’ V. ‘Satish Kr. Gupta’, reported in 2019 2SCC p.1) wherein at paragraph 77 it is observed that “However, it must not be forgotten that a Resolution Professional is only to examine and confirm’ that each Resolution Plan confirms to what is provided by Section 30(2)”.

Also, in the aforesaid decision at paragraph 47 it is observed that ‘these decisions have laid down that the jurisdiction of the Adjudicating Authority and the Appellate Authority cannot extend into entering upon merits of a business decision made by a requisite majority of the CoC in its ‘Commercial Wisdom’ nor is there a residual equity based jurisdiction in the Adjudicating Authority or the Appellate Authority to interfere in this decision, so long as it is otherwise in conformity with the provisions of the I&B Code and the Regulations under the enactment”.

On a careful consideration of respective contentions, this Tribunal, taking note of the fact that the instant Company Appeal(AT)(Insolvency) No. 314 of 2020 is pending on the file of this Tribunal, keeping in mind that the Liquidation Order is dated 31.12.2019, and also considering the primordial fact that the Eighth Respondent had taken steps based on the ‘Liquidation’ Order dated 31.12.2019 comes to a resultant conclusion that (i) the ‘Prima Facie’ (ii) the ‘Balance’ of convenience are not in favour of the grant of interim relief of stay of all further proceedings carried on by either the NCLT or by the Liquidator(including stay of E-Auction to be held on 29.9.2021 between 11.00 a.m. and 3.00 P.M. by the Liquidator in terms of Public Notices as per Public Notices (as prayed for in IA 436/2021 in TA No. 91/2021 in Comp. App.(AT)(Ins.) No. 314 of 2020) and viewed in that perspective dismisses the I.A. No. 436/2021 filed by the Applicant/Appellant, to secure the ends of justice.

In fine I.A. No. 436/2021 in TA No. 91/2021 in Comp. App.(AT)(Ins.) No. 314 of 2020) 314 of 2020 is dismissed. No Costs.