AI Structured Summary
Not yet generated for this judgment
Judgment
(Hybrid Mode)
[ORAL JUDGMENT: Justice Ashok Bhushan (Chairperson)]
Heard the Learned Counsel for the Appellant as well as the Counsel for the Respondent. This Appeal has been filed against the order dated 26.05.2020, by which order the Learned Adjudicating Authority has decided IA Nos.64, 66, 67 & 68/2020 by rejecting the aforesaid IAs and directing for liquidation. The operating portion of the order passed by the Learned Adjudicating Authority on 26.05.2020 is as follows: -
“ORDER The Applications in IA No. 64 of 2020, IA No. 66 of 2020, IA No. 67 of 2020 & IA No. 68 of 2020 are rejected on contest. The Resolution Plan submitted in IA No. 64 of 2020 is rejected under section 31(2) of the Code. Prayers made in IA No. 66 of 2020, IA No. 67 of 2020 and IA No. 68 of 2020 are refused. The Resolution Plan having not found favour with this Authority an order for liquidation in terms of section 33 (1)(b) of the Code has to be passed.
i.The Corporate Debtor shall be liquidated in the manner laid down in Chapter III of the Code. The present RP Mr. Sisir Kumar Appikatla is appointed as the Liquidator in terms of section 34(1) of the Code. His fees shall be regulated as per section 34(8) of the Code.
ii.All powers of the board of directors, key managerial personnel and the partners of the Corporate Debtor shall cease have effect and are vested in the Liquidator.
iii.All personnel of the Corporate Debtor shall extend all assistance and cooperation to the Liquidator as may be required by him in managing the affairs of the Corporate Debtor.
iv.Issue public announcement stating that Corporate Debtor is in liquidation.
v.Send an extract of the order to the Registrar of Companies, Andhra Pradesh for necessary information.
vi.Subject to sections 33(6) and 52 of the Code no suit or other legal proceeding shall be instituted by or against the Corporate Debtor.
vii.The Liquidator, however, may institute any suit or other legal proceeding with the prior approval of this Authority.
viii.The order shall be deemed to be a notice of discharge to the officers, employees and workmen of the Corporate Debtor, except when the business as the Corporate Debtor is continued during the liquidation process by the Liquidator.”
The Appellant aggrieved by this order has filed this Appeal. It is submitted by the Appellant that the Appellant was the Managing Director of the Corporate Debtor and has submitted a restructuring plan which came to be considered by the Committee of Creditors. However, the Committee of Creditors, in its 20th meeting held on 03.03.2020, resolved to accept where a restructuring plan was submitted by Mr. Madhusudhan Raju Chintalapati. It was resolved that as per the direction given by the Learned NCLT by way of order dated 04.02.2020 proposal is considered and approved.
On the basis of the said decision of the Committee of Creditors, the IA No.64/2020 was filed before the Learned Adjudicating Authority, which was considered and rejected by the impugned order. The Learned Adjudicating Authority in the impugned order took a view that the approval of the Committee of Creditors, as recorded in the 20th CoC meeting, is not in accordance with the provisions of the I & B Code, since the restructuring plan is not a Resolution Plan and does not meet the requirements of Section 30(2) of the I & B Code, 2016.
The Learned Adjudicating Authority thus rejected the application IA No.66/2020; consequently, the liquidation was directed as noted above. The Learned Counsel for the Appellant, challenging the order, submitted that the main reason given by the Learned Adjudicating Authority for rejecting the restructuring plan of the Appellant was that the Appellant is coming in by backdoor entry and the restructuring plan is not the Resolution Plan, whereas the Appellant was fully entitled to submit the Resolution Plan and was not any way affected by Section 29A of the I & B Code, 2016. The Learned Counsel for the Appellant fairly submits that the subsequent to the consequent to the liquidation order after vacation of the interim order passed by the Appellate Tribunal, the assets have already been sold in the liquidation. The sale certificate has been issued on 03.12.2024.
The Learned Counsel for the Respondent, refuting the submission of the Appellant, submits that the Learned Adjudicating Authority has rightly not accrued and allowed the IA No.64/2020 since there was no Resolution Plan in accordance with the provisions of the I & B Code, before the Learned Adjudicating Authority.
The Learned Counsel for the Respondent submits that they were also aggrieved by the order and filed an appeal, which was already dismissed on 20.07.2020. We have considered the submissions of the Learned Counsel for the parties on perusal and perused the record. It is true that the Committee of Creditors, in its 20th CoC meeting, had approved the restructuring plan submitted by the Appellant, which was placed before the Learned Adjudicating Authority for approval by IA No.64/2020.
From the minutes of the Committee of Creditors, it does appear that the restructuring plan, which was submitted by the promoter of the Corporate Debtor where not the Resolution Plan within the meaning of the provisions of the I & B Code. The restructuring plan, which is given by the promoter, can at best be the proposal to the Financial Creditor to accept the proposal for permitting withdrawal under Section 12A of the I & B Code, 2016, for a plan to be treated as a Resolution Plan. Necessary statutory compliances as provided in the I & B Code, as well as the CIRP Regulations, 2016, are to be complied with. In the present case, the Resolution Plan was not submitted consequent to the expression of interest invited by the Resolution Profession on instructions of the CoC.
The Learned Adjudicating Authority had not committed any error in holding that the restructuring plan is not in compliance with Section 30(2) of the I & B Code, 2016. The Learned Adjudicating Authority has also not committed an error in taking a decision that there being no plan approved, under Section 33(1)(b) of the Code, liquidation has to be ordered.
We thus are of the view that the order of the Learned Adjudicating Authority directing for the liquidation does not suffer from any error. In any view of the matter as submitted by the Appellant himself in the liquidation proceedings, the Corporate Debtor has already been sold, and the sale certificate has been issued.
In view of the aforesaid, for all practical purposes, the appeal has also become infructuous, and no relief can be granted to the Appellant. The Learned Counsel for the Appellant submitted that the Appellant was not in-eligible under Section 29A of the I & B Code, 2016, on which there was no appropriate consideration.
We have observed above, the fact remains that there was no approved of the Resolution Plan under the I & B Code, and the Learned Adjudicating Authority had thus rightly directed for liquidation. We thus are of the view that no grounds have been made out to interfere with the impugned order, the Appeal is dismissed.