Mr. Aadarsh Surana vs TruPro Insolvency Services LLP

(Hybrid Mode)

[Per: Justice Sharad Kumar Sharma, (Member Judicial)]:

The Appellant before this Appellate Tribunal is a prospective Resolution Applicant and the suspended director of M/s. Amar Prakaash Developerss Pvt., Ltd., the company under Corporate Insolvency Resolution Process (CIRP). He has filed the instant Company Appeal challenging the impugned order dated 19.02.2025 which has been passed by the Learned NCLT, Chennai, on IA(IBC)1958/CHE/2024, preferred in CP(IB)/73/CHE/2022. The Appellant had filed the said application before the Learned NCLT, by invoking the provisions contained under Section 60(5) of I & B Code, 2016, to be read with Rule 11 of NCLT Rules, 2016, wherein he had sought for direction against the Resolution Professional (Respondent No. 1) for not to consider the resolution plan submitted by the consortium, which included Mr. Sandip Agarwal, as member of consortium. The Appellant has raised an objection to the effect that under law, the said change in the configuration of the members of consortium by introducing a new member of prospective Resolution Applicant, cannot be permitted, as being in violation of Regulation 36 (B) (6) of IBBI (CIRP) Regulations, 2016.

The case of the Appellant was that, the Financial Creditor initiated proceedings by filing an Application under Section 7 of the I & B Code, 2016, to be read with Rule 4 of the I & B (Application to Adjudicating Authority Rules, 2016), before NCLT Chennai praying for the initiation of the CIRP proceedings as against the Corporate Debtor, M/s. Amar Prakaash Developerss Pvt. Ltd. The Learned Adjudicating Authority, after holding the proceedings under Section 7 of I & B Code, 2016, and hearing the parties to the proceedings by an order of 18.04.2023, admitted the Corporate Debtor into the CIRP Proceedings in CP(IB)/73/CHE/2022, consequent to which one Mr. Viswanathan Rajagopalan, was appointed as Interim Resolution Professional, to carry out the activities related to the CIRP proceedings of the Corporate Debtor. The IRP thus, appointed under the regulations, carried out a public announcement in Form A on 19.04.2023, thereby inviting the claim from the creditors of the Corporate Debtor, as per the stipulations contained under Section 15 of the I & B Code, 2016, to be read with Regulations 6 of Chapter III, of the IBBI(Insolvency Resolution Process for Corporate Persons) Regulations 2016.

Later on, the Learned Adjudicating Authority, by an order of 08.11.2023, replaced the RP and appointed M/s. TruPro Insolvency Services LLP, as the Resolution Professional of the Corporate Debtor in place of Mr. Vishwanathan Rajagopalan. The RP published expression of interest, in Form-G, inviting the Resolution Plans to be submitted by 29.12.2023. However, due to lack of response, the RP published Form-G again on 24.04.2024 inviting expression of interest to be submitted by 15.05.2024. The Appellant herein filed his EOI on 10.05.2024. The Respondent No. 1, in the communication made on 28.05.2024, informed the Appellant that he is in the final list of the prospective Resolution Applicants and that he has to submit the Resolution Plan by 27.06.2024. In all there were 12 PRAs in the aforesaid list of prospective Resolution Applicants, who were required to submit the Resolution Plan by 27.06.2024. The last date of submission of Resolution Plan was extended by the CoC on the request of other PRAs till 25.07.2024 & thereafter till 14.08.2024. The Appellant states that he was the only PRA who submitted his Resolution Plan within the originally fixed Time Limit of 27.06.2024, as per the minutes of 12^th CoC meeting held on 1^st July 2024.

The Appellant further submits that, as per minutes of 13^th CoC meeting held on 30.03.2024, no new Resolution Plan had been received from any of the other PRAs and hence timeline was extended to 14.08.2024 for submission of Resolution Plan. As per RP's report, Ayra Info Solutions Private Ltd submitted their Resolution Plan on 14.08.2024 which included Sandip Agarwal as the 4^th member of the Consortium. This is in direct contradiction to the minutes of the 14^th CoC meeting, dated 19.08.2025, where it categorically observes that, Resolution Plan has been received from 2 PRAs, namely M/s. Ayra Info Solutions Pvt. Ltd., M/s. Additya Infrastructures and Gopal Sharma, (Consortium) and M/s. Seaside Vanijya Pvt Ltd (Consortium).

The grievance of the Appellant is that as per the minutes recorded in the 13^th CoC meeting, and as per the published final list of prospective Resolution Applicants, the consortium of Ayra Info Solutions Pvt. Ltd., had only 3 constituent members, i.e. Ayra Info, Additya Infrastructures & Gopal Sharma, but in the 14^th CoC meeting, which was held on 19.08.2024, it is the case of the Appellant that the Respondent No. 1, has informed that, other than the Appellant, the Respondent No. 1, has also received the Resolution plans from two other prospective Resolution Applicants, namely the consortium of Arya Info Solutions Pvt. Ltd and the consortium of M/s. Subhlaxmi Investment Advisory Pvt. Ltd. It is further the case of the Appellant that, the consortium of Arya Info Solutions Pvt. Ltd. had deposited the earnest money of Rs. 2 Crores, along with the Resolution Plan and the prospective Resolution Applicant of the consortium of M/s. Subhlaxmi Investor Advisory Pvt. Ltd., had not submitted the required earnest money deposit despite, repeated remainders from Respondent No. 1, and finally the CoC despite of the time extension having being granted on submission of the earnest money, the consortium of M/s. Subhlaxmi Investor Advisory Pvt. Ltd., since having being not deposited the earnest money, therefore the two Resolution Applicants who were supposed to be considered by the CoC meeting pursuance to the 14^th CoC meeting, were held out to be considered which was held on 19.08.2024, there were two prospective Resolution Applicants only available, that was the Appellant and the consortium of M/s. Arya Info Solutions Pvt. Ltd. which was then including its members as M/s. Additya Infrastructures and Gopal Sharma. The Appellant submits that the deposit of the earnest money, as it has been then made was by the consortium at the stage when it was constituting of 3 members only.

On 22.08.2024, in the 15^th CoC meeting which was held, the Appellant submits that, the minutes of the 15^th CoC meeting, was not shared, with the Appellant by Respondent No. 1, which the Appellant expected that Respondent No. 1, ought to have shared the same, within two days from the date of holding of the meeting, but rather submits that the minutes of the 15^th CoC meeting which was held on 22.08.2024, was shared for the first time only on 30.08.2024, on the basis of the reminder, which was submitted by the Appellant on 29.08.2024 and it is only upon the information, which was imparted after the reminder submitted by the Appellant on 29.08.2024, a delayed information of the 15^th CoC meeting was imparted to them after 8 days of its meeting. In addition to this, even the revised minutes, was shared to the Appellant on 31.08.2024. The Appellant submits that on 04.09.2024, the Appellant was in receipt of an email with certain over writing and errors being placed, on the same creating doubts with regard to the selective sharing of the minutes, which eventually was treated by the Appellant, as a conclusion that there was certain concealment. The Appellant further while making reference to the implication of the Regulation 23(7) and 2 (1) of IBBI(Insolvency Regulation process of Corporate Persons) Regulations 2016, has submitted that under Section 24 of the I & B Code, 2016, the queries made by the Appellant, with regard to the decision taken by CoC meetings, was mandatorily required to be imparted, but the same was done in a clandestine manner and the Appellant submits that, in the reminder which was issued by the Appellant on 29.08.2024, when the Respondent No. 1, responded with regards to the imparting of the information of the 15^th CoC meeting, he submitted that apart from the submission of the Resolution Plan by the Appellant, Adarsh Surana, the consortium of M/s. Arya Info Solutions Pvt. Ltd. and Others, had submitted their plan and have deposited the earnest money too, but instead of its constituant of 3 members, they were shown to have included the 4^th member, Mr. Sandip Agarwal, who was added, as to be a member to the consortium with its lead member as M/s. Ayra Info Solutions Pvt. Ltd., which was ultimately revealed in the 17^th CoC meeting which was held on 02.09.2024, thus the grievances in regards the manner in which the minutes of the meeting were communicated by Respondent No. 1, it creates a doubt and malice, and an attempt of concealment of a vital fact being brought to the knowledge of the Appellant, about the change of the constitution of consortium by inclusion of Mr. Sandip Agarwal, as one of the members of the consortium and according to the Appellant, the grievance is that, with the inclusion of the 4^th member i.e., Mr. Sandip Agarwal, in the consortium will prejudice the rights and the scope of the Appellant in succeeding in the process of the Resolution Plan and would effect the process itself, because it will improve financial viability of the consortium of M/s. Ayra Info Solutions Pvt. Ltd., in the absence of which the Appellant will have a chance to approval of his Resolution Plan. The Learned Counsel for the Appellant had further submitted that there would be bar created by implications of Regulation 39(1B)(b) of the Insolvency and Bankruptcy Code of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and he submits that as per the aforesaid Regulation 39(1B)b, no members in the consortium could be permitted to be inducted, which may change the financial capability of the prospective Resolution Applicant, resultantly effecting the process of the Resolution Plan itself. The Regulation 39(1B)b is extracted hereunder: -

On a simpliciter reading of the aforesaid Regulation, it creates a bar that the committee shall not consider any Resolution Plan which is received after the specified date by the CoC, as contemplated under Regulation 39(1B)b by the language used in is“received from a person who does not appear in the final list of perspective Resolution Applicants” . In fact, Learned Counsel for the Appellant argues that the provisions contained under Regulation 39(1B)(b), creates a restriction of introduction of a new Resolution Applicant, after the process is completed under Regulation 36B, and therefore Mr. Sandip Agarwal, could not have been added as a member of the existing applicant consortium, as it may have an adverse bearing to the Appellant’s Resolution Plan. But this Appellate Tribunal is of the view that if the language used under Resolution 39(1B)(b) is taken into consideration, it specifically uses the word “person”, The word “person” has been defined under the I&B Code, in the following manner: Section 3(23) of the I&B Code, which is extracted hereunder:-

"person" includes--

In the definition of the “person” as given under the definition clause of the I & B Code, 2016, under Section 3(23) as extracted above, it does not include word consortium or a member of the consortium, to be included as a person to be brought within the ambit of a restriction imposed by Regulation 39(1B) (b). The logic behind this interpretation is that, the consortium in itself is only a constituent of its members who can apply to participate in a CIRP, which has not being independently defined under the Code, to be included and brought with in the definition of persons. If that be the situation, merely induction of another member to a pre-existing consortium, who has already participated in CIRP process by submission of the plan it does not at all prejudice or effect the rights of the Appellant when the plan submitted by the consortium remains unaltered, and there being no specific legal bar, as such. By virtue of an introduction of a member to an existing consortium will improve the financial viability of the consortium and it will provide a better value for the assets of the Corporate Debtor by the submission of the Resolution Plan, if that be the situation, there is no material right which prejudices or hampers the rights of the Appellant. Apart from it, if Regulation 39(1B), is read together with, the definition of the ‘person’ as described herein above, 39(1B) will not come into play and the restriction imposed by Regulation 39(1B) will not at all be attracted, because there is no consideration of new plan, which is required to be arrived at, which is barred by Regulation 39(1B), as no plan has been submitted after the appointed date, or after consideration of new member in the consortium.

Another important feature is that, the lead member of the consortium did not at any stage of the proceedings object to the inclusion of the 4^th member that is Mr. Sandip Agarwal, into the consortium and in that eventuality, the argument that there was an illegal addition of Mr. Sandip Agarwal, as a member of the consortium, may not be acceptable by this Appellate Tribunal. The Learned Counsel for the Appellant in support of his contention, had drawn the attention of this Appellate Tribunal to the observations made in of Para 30 & 39, of the Impugned Order in support of his contention that, the rationale of addition of a member to a consortium is not at all prejudicial to his interest and is not contrary to the interest of the Appellant. The manner in which Para-30 of the Impugned Order has been interpreted by the Learned Counsel for the Appellant, may not be a correct interpretation which has been assigned to it, for the reason being that, in view of the findings, which has been recorded i.e., right from the holding of the 14^th CoC meeting on 19.08.2024, till the 17^th CoC meeting, which has held on 02.09.2024, both the prospective Resolution Applicants were asked to present their plans and the plan which was submitted by the consortium of the M/s. Ayra Info Solutions Pvt. Ltd. in which Mr. Sandip Agarwal, was introduced later, as the member, which was not opposed at any point of time by the lead member of the consortium. Not even that, in the 17^th CoC meeting, after introduction of Mr. Sandip Agarwal, as a 4^th member of the consortium though apparently, it does not happens to be in violation of Regulation of 39(1B), the plan which was submitted by the M/s. Ayra Info Solutions Pvt. Ltd., - led consortium, with all the 4 members, as a part of which he included Mr. Sandip Agarwal, which was not objected by A and particularly, in the context of the observation which has been made by the Learned Tribunal in its finding recorded to the effect that, the consortium of the prospective Resolution Applicant, with its lead member as M/s. Arya Info Solutions Pvt. Ltd., after scrutiny of the Expression of the Interest, it was included in the final list of the PRAs and thereafter, only the RFRP was issued to it on 28.05.2024. This Appellate tribunal is of the view, that if Sub-Regulation 12 of Regulation 36A of CIRP Regulations are taken into consideration, it provides for that the Resolution Professional shall issue the final list of prospective Resolution Applicants to the committee, under the aforesaid Regulations. The potential Resolution Applicants, who had submitted their Expression of Interest as per Regulation 36A, i.e., after following the procedure as provided under the Regulation, can still submit the plan even after addition of the member in the consortium, when the lead partner with a single point of contact, continues to represent on behalf of the other members of the consortium who would be jointly and separately liable in respect of the obligations arising from the plan, as it contemplates that the lead members shall not change its shareholding in the consortium without the prior consent of the CoC. This embargo in itself, meets out the very objectives of the Resolution Process and that the change of the consortium by addition of Mr. Sandip Agarwal as its member, will not at all affect the process because, as per the Expression of the Interest submitted in the Resolution Plan, it specifically provides for the procedure for having a consortium, as to be a Resolution Applicant and none of the processes provided there in had ever create any restriction in inducting the 4^th member into the consortium while submitting the plan, rather it provided that, all the members of the consortium should fulfil the eligibility criteria as specified under Section 29 A of I & B Code, 2016.

It is not the case of the Appellant that at any point of time, that the new member thus inducted as a member of the consortium was not eligible under Section 29 A for not to be added in the consortium because the inclusion of the 4^th member and no objection was raised to the said effect alleging to be in contravention to Section 39 (1B) of I &B Code. Even according to our opinion, the process which has to be adopted for the purposes of the evaluation of the Resolution Plan before its finalisation, the decision-making process is exclusively within the domain of the CoC members and a right to negotiate is saved, to be provided, as per the finding recorded in Para 39 of the Impugned Order. Any of the terms of the Plan, is made open for consideration for all the Resolution Applicants, which is exclusively with the CoC, who may adopt any method including the method of the Swiss Challenge Mechanism. Even otherwise also, it is a settled preposition of law that the CoC may at its own discretion at any stage decide any method of the process of negotiation, for getting a better value with a Resolution Applicants regarding their Financial position, prior to the voting of the plan. The Learned Counsel for the Appellant had drawn the attention of this Appellate Tribunal and particularly to the item No. 3 as contained in the minutes of 15^th meeting. Nothing much could be culled out, by item No. 3, as it was discussed in 15^th CoC meeting held on 22.08.2024, which could be said to be in contravention to the regulations dealing with the process of the finalization of Resolution Plan and hence since the addition of the 4^th member in the consortium since not being barred under Section 29(A) of I&B Code, it cannot be said to be illegal in any manner whatsoever, in the absence there being any statutory bar created by law.

The Learned Counsel for the Appellant has made reference to a Judgement reported in 2024, SCC OnLine NCLAT 46, Jindal Power Limited Vs. Dhiren Shantilal Shah and Another. and particularly he has referred to Para-42, which is extracted here under:-

In said observation made in Para-42, it has been rather observed that the Tribunal has laid its hand off not to interfere into the commercial wisdom of the CoC for any act or the action taken in compliance with the provisions contained under Regulation 36 (1B) to be read with Regulation 36 B (7). As far as the aforesaid observation is concerned, it was dealing altogether with a different circumstances of the case, where the clarification application was the subject matter of consideration. Therefore the judgement rendered aforesaid may not be similar to the controversy to the one which requires consideration in this instant Company Appeal.

Thus, ultimately it could be concluded that the restrictions of Regulation 39 (1B), is not imposing an absolutely restriction on induction of a new member of the consortium and as such, there being no legal bar. Besides this, more particularly when the lead member of the consortium or when any of its members, has not opposed to the induction of the 4^th member and when the decision with regard to the Resolution Plan falls to be within the exclusive domain of the CoC, at this stage, no interference is called for in the Impugned Order as by induction of the 4^th member in the consortium, for the reason being that, the same not being in contravention to any of the provisions of the law nor the same has been established by the arguments extended by the Learned Counsel for the Appellant. Thus, the Company Appeal lacks merits and the same is accordingly dismissed.

All pending Interlocutory Applications would stand closed.