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Judgment
O R D E R
10.03.2022: Heard Learned Counsel for the Appellant as well as Learned Counsel for the Resolution Professional and Resolution Applicant. Learned Counsel for the Appellant does not want to file Rejoinder.
This Appeal has been filed against the Judgment and Order dated 24.12.2022 passed by the Adjudicating Authority (National Company Law Tribunal, Principal Bench, New Delhi) in C.A. 1364(PB)/2020. By which Order, the Resolution Plan submitted by the Resolution Professional has been approved. By challenging the Order/Judgment of the approval of the Resolution Plan, The Appellant has come up in this Appeal.
Learned Counsel for the Appellant submits that in pursuance of publication made in prescribed ‘Form-G’ on 12th July, 2019, Appellant, a Promoter of the Corporate Debtor submitted an ‘Expression of Interest’ (hereinafter referred to as ‘EOI’). The Resolution Professional on 14.08.2019 informed the Appellant that ‘EOI’ of the Appellant cannot be accepted. The second ‘Form-G’ was again published on 16th September, 2019 inviting ‘EOI’ and the third ‘EOI’ on 18th November, 2019 in pursuance of which corporate entity i.e. Respondent No. 2 filed its ‘EOI’. The final plan submitted by Respondent No. 2 came for consideration before the ‘Committee of Creditors’ (hereinafter referred to as ‘CoC’) which was approved on 29.01.2020/08.02.2020. Subsequent to the ‘Approval of the Resolution Plan’, Resolution Professional filed an Application under Section 30(6) on 24TH March, 2020 before the Adjudicating Authority for approval of the Resolution Plan. An I.A. was filed by the Appellant i.e. I.A.-3646/2020 seeking direction to the Resolution Professional to receive the ‘EOI’/Resolution Plan of the Appellant which application came on 09.09.2020 and was directed to be listed on 1.10.2020. It is submitted that the said Application remained pending and Order dated 24.12.2020 approving the Resolution Plan have been passed.
Learned Counsel for the Appellant has three submissions challenging the Resolution Plan. Learned Counsel for the Appellant submits that Resolution Professional committed error in refusing the ‘EOI’ of the Appellant although Appellant was MSME and was entitled to submit the Resolution Plan. Secondly it is submitted that under certain directions issued by the NCLT, the Financial Creditors who were Banks, their claims were accepted subsequent to the Approval of the Resolution Plan by CoC hence the Plan of the Appellant could also have been considered which was submitted on 01.09.2020. Thirdly, he submits that the Plan submitted by the Appellant had better financial proposal than the plan of the Resolution Applicant which was approved by the CoC. Hence in the interest of justice, the Plan of the Appellant ought to have been considered and be directed to be considered.
Learned Counsel for the Resolution Professional submits that ‘Corporate Insolvency Resolution Process’ (hereinafter referred to as ‘CIRP’) in the present case was initiated vide Order dated 19th March, 2019 whereas certificate of MSME which was obtained by the Appellant was subsequent to initiation of ‘CIRP’ hence the Appellant’s ‘EOI’ was not accepted. With regard to second submission of Learned Counsel for the Appellant, it is submitted that after the direction of the NCLT to include the claims of four Financial Creditors which were public sector banks, the Resolution Applicant himself offered to make certain payments i.e. nominal payment to them and hence the approval in the Resolution Plan was made however at no point of time the CoC was reconstituted or any Resolution was passed by the CoC after the approval of the Resolution Plan. With regard to third submission, it is submitted that the CoC having already approved the Resolution Plan of Respondent No. 2 after taking into consideration all aspects of matter and finding the plan in compliance of the provisions of the Code and viable, the commercial wisdom of CoC cannot be questioned by the Appellant.
Learned Counsel for the Resolution Applicant submits that he has already made the payments in pursuance of the Resolution Plan and Resolution Plan is under implementation and at this stage, no direction needs to be issued for consideration of the Plan of the Appellant. It is further submitted that Appellant himself has not pressed his Application being I.A.-3646/2020 and others cannot be blamed for that.
We have considered the submissions of Learned Counsel for the parties and perused the record.
‘CIRP’ in the present case was initiated on 19th March, 2019. Certificate of MSME which has been filed by the Appellant is dated 09th May, 2019 which is subsequent to the initiation of CIRP. Learned Counsel for the Resolution Professional has relied on a Judgment of this Tribunal in the matter of “Harkirat Singh Bedi vs. The Oriental Bank of Commerce & Ors.” (Company Appeal (AT) (Ins.) No. 40 of 2020) wherein paragraph 39 of the Judgment which is to the following effect:
“39.The appellant in its EOI claimed the advantage of section 240A of the code claiming exemptions from applicability of section 29A(c) and 29A(h) in terms of eligibility to be a resolution applicant as a medium level enterprise under MSME Development Act, 2006. On reading the provisions under section 29A along with section 240A of I&B Code. It can be concluded that the exemption is only in respect of clause (c) and (h) of Section 29A of the I&B Code. However, in this case the Appellant is declared ineligible under clause (b) of Section 29A where no exemption has been given to MSME. Also, the date of registration of the Corporate Debtor as MSME as on record was 5 th June, 2019, i.e. after CIRP admission order dated 29th March, 2019. The application for registration of MSME by the Appellant was without authorization, being subsequent to initiation of CIRP and hence was invalid. Therefore, the Appellant is ineligible to take the benefits of section 240A under I&B Code.”
The above judgment do support the submission of Learned Counsel for the Resolution Professional that Resolution Plan of the Corporate Debtor as MSME being subsequent to the CIRP, no benefit can be taken of the said MSME certificate. In so far as the submission of Learned Counsel for the Appellant that when payment of certain amount to the Financial Creditors under the Order of the NCLT could have been given by the Resolution Applicant, there was no impediment in considering the plan of the Appellant. Suffice it to say that the Payment made to the Financial Creditors under the Order of NCLT was offered by the Resolution Applicant himself which was a nominal payment and that in no manner affect the approval of the Resolution Plan nor that can be basis for consideration of the plan of the Appellant. The earlier Plan was approved on 29.01.2020/08.02.2020 there was no occasion to consider the plan which was submitted by the Appellant on 01.09.2020. So far as the submission of Learned Counsel for the Appellant that his plan has given the better financial proposal as compared to the Plan which has been approved, the CoC having approved the Plan of Respondent No. 2 and accepted the Financial Proposal which was held to be viable and in accordance with the provisions of the I & B Code, 2016, the Appellant cannot question the commercial wisdom of CoC.
We see no reason to have any other view with regard to the approval of the plan by the CoC. The Judgment of the Hon’ble Supreme Court in the matter of “K. Sashidhar Vs. Indian Overseas Bank & Ors.’ (Civil Appeal No.10673 of 2018) may be referred to and relied on in the above context. We thus are of the clear view that no error can be found in the Order of the Adjudicating Authority approving the Resolution Plan. There are no merits in the Appeal, the Appeal is dismissed. Learned Counsel for the Appellant submits that along with ‘EOI’, the Appellant had submitted EMD of Rs. 10 Lacs. Resolution Professional may return the aforesaid EMD amount to the Appellant in view of the Order which is being passed in this Appeal within two weeks from today.