AI Structured Summary
Not yet generated for this judgment
Judgment
DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER
The present appeals have been filed by the ‘Appellants' under Section 61 of the ‘Insolvency and Bankruptcy Code, 2016’ (in short ‘Code’) against the impugned order dated 19.08.2020 passed by the ‘Adjudicating Authority’ (National Company Law Tribunal), Allahabad Bench in CA No.215/2019, CA No.73/2020 and I.A No. 160/2020 and CP(IB) No. 223/ALD/2018.
The Appeals as stated (supra) have been filed against the impugned order of Adjudicating Authority dated 19.08.2020. The relief sought in both the appeals primarily is asking for setting aside the said order dated 19.08.2020 apart from quashing the appointment of the Liquidator or restraining the Liquidator from discharging the employees etc. Since both these appeals are against the same impugned order and relief sought are common and requires same question of law against the same Corporate Debtor (CD), we have clubbed the appeals together during the course of the hearing and now being decided by the ‘Common Judgment’.
While passing the impugned order on 19.08.2020 in CA No.215/2019, CA No.73/2020 and I.A No. 160/2020 and CP(IB) No. 223/ALD/2018 at paragraphs 15 to 25 had observed the following:
15.In view of the submission made by the Parties and the documents placed thereof this Adjudicating Authority is of the view that the intervention applications i.e CA No. 73 of 2020 and IA No160 of 2020 both filed by the Resolution Applicant after the completion of CIRP period i.e. more than 700 days directly to the Adjudicating Authority was need to be filed before the Appropriate Authority i.e. Resolution Professional to be put before the CoC and this Adjudicating Authority is not empowered to allow the applicant to file the plan before this Tribunal after the expiry of the such a long period of ending of CIRP. Further in CA No. 73 of 2020, it is also found that it is being filed by one of the Members of the Suspended Directors i.e., Mr. R.C. Garg, who was the CFO of the Company at the time when the application for insolvency was admitted which can also be reflected in the data of Ministry of Corporate Affairs of the corporate Debtor, thus being disqualified under Sec 29(A) of the Code. Thus, this Adjudicating Authority does not find any merit in the arguments raised by the Applicants for allowing the applications and accordingly CA No. 73/2020 as well as IA No. 160 of 2020 is rejected and accordingly disposed of.
16.Further, with regard to the Liquidation application i.e. CA 215/2019, this Tribunal finds that the ex-management has raised the objection that the object of the Code is maximization of value of assets. Therefore, the plan presented before this Adjudicating Authority shall be placed before the CoC instead of liquidating the Corporate Debtor. To this, I do not find any infirmity in the contention raised by the Corporate Debtor. In regard to the CoC, it shows that after the Resolution Plan of SREI was rejected by CoC with required majority and further was also rejected by this Adjudicating Authority vide order dated 5th February, 2020, there was no viable plan put before CoC for consideration and CIRP period has expired long back. Thus, in absence of any approved or viable plan the adjudicating authority has no option but to pass order of liquidation on completion of insolvency period.
17.The Resolution Professional has filed the present application for resolution as statutory period has elapsed from the date of · initiation of CIRP and no Resolution Plan has been approved by the CoC.
18.At this juncture, it is pertinent to refer Section 33(1 )(a) of the IBC, which mandates that "where the Adjudicating Authority before the expiry of maximum period permitted for completion of the corporate insolvency resolution process under Section 12 or the fast track corporate insolvency resolution process under Section 56, as the case may be, does not receive a resolution plan under sub-section (6) of Section 30, it shall pass an order requiring the Corporate Debtor to be liquidated in the manner as laid down in the manner."
19.Therefore, the Tribunal observes that upon failure of the resolution process and no approved resolution plan and further on completion of statutory CIRP process, there is no alternative left but to order in conformity with the decision of the CoC liquidation has to follow under Section 33 of the Code. Adherence of the statutory requirement has to be done, as the language of the Code is clear that the adjudicating authority must give effect to it whatever may be consequences.
20.Thus, the application is allowed by ordering liquidation of Corporate Debtor i.e. ,JVL Agro Industries Ltd. in the manner laid down in Chapter Ill Part Il of lBC, 2016 and further appoint Supriyo Kumar Chaudhari with Registration No. IBBI/IPA-001/IP-P00644/2017-2018/ 11098 as a liquidator in terms of Section 34(1) of the Code, and he is directed lo issue public announcement stating that the Corporate Debtor is in liquidation, in terms of · Regulation 12 of IBBI (Liquidation Process) Regulations, 2016.
21.The registry is directed to communicate the order to ROC Kanpur and to Insolvency and Bankruptcy Board of India.
22.The order of moratorium passed under Section 14 of IBC, 2016 cease to have its effect and a fresh moratorium under Section 33 (5) of IBC shall commence.
23.The Liquidator is directed to proceed with the process of liquidation in the manner laid down and in accordance with the Code and Regulations. 24. The liquidator shall file progress report of every three months.
25.With the aforesaid observation, the CA No. 215/2019 is allowed and accordingly stands disposed of.”
4. Company Appeal (AT) (Ins) No. 832 of 2020
Submissions of the Appellant:-
a. It is submitted by the learned counsel for the Appellant that the Appellant is a ‘Promoter’ and ‘Shareholder’ of the Corporate Debtor (CD) with a shareholding of 2.66%. The Appellant is also a member of the suspended ‘Board of Directors’ of the CD as well as part of the ‘Committee of Creditors’ (CoC) on account of being a ‘Managing Director’ of the previous management. Prior to the commencement of ‘Corporate Insolvency Resolution Process’ (CIRP), the Appellant alongwith his association were in control of the CD. The Adjudicating Authority has admitted the petition and initiated the CIRP against the CD vide its order dated 25.07.2018.
b. It is also stated that the Respondent No.1/Resolution Professional (RP) is a former employee of ‘State of bank of India’ (SBI), which owns the largest share/voting percentage in the CoC i.e. 26%. This goes on to show that the actions of R1 were at the behest of SBI, in order to secure their interest, even at the cost of the insolvency process. Importantly, SBI possesses first charge over the assets and properties of the CD and would therefore exclusively benefit on liquidation of the CD, as compared to a resolution. As a Financial Creditor (FC), SBI would receive a high amount if the CD underwent liquidation, as opposed to the receivables generated from a Successful Resolution through CIRP. In other words, the interest of SBI rank higher on liquidation as compared to a ‘Successful Resolution Process’. Therefore, R1 in cohorts with SBI attempted to drive the CD into liquidation. It is also stated that that the CD is profit making entity which underwent distress temporarily. In fact, the CD was under the process of bouncing back from the same, when the CIRP was admitted by the Adjudicating Authority. But the CD soon overcame its financial difficulties and operated as a going concern throughout the CIRP on its own accruals. Importantly, the CoC did not have to pay for the costs of the CIRP and the entire costs were borne from the internal accruals of the CD. As would appear from the ‘Annual Report’ of the CD for the ‘Financial Year 2018-19’, the CD owns Rs. 578.27 Crore as liquid assets and properties apart from owning assets and properties in terms of property, plant and equipment worth Rs. 550.40 Crore. In fact, the value of the land is taken at a book value and the market value of such land shall be much higher. Particulars of these assets, properties and funds are given below:
| Sl No. | Particulars of the Asset | Amount (in Rs. Crore) |
|---|---|---|
| 1. | Property, plant & Equipment | 550.40 |
| 2. | Current Asset | 578.27 |
| Total | 1128.67 | |
c. It is also stated that the willful inaction on the part of RP is manifest against the fact that it failed to seek exclusion of the following periods of time:-
| Sl No. | Particulars | From | To | Total no. of days |
|---|---|---|---|---|
| 1. | Period of litigation initiated by SREI | 07.08.2019 | 03.02.2020 | 181 |
| 2. | Period of litigation when the employees resolution plan was pending with the Respondent No.-RP (including the Covid-19 period) | 06.02.2020 | 19.082020 | 196 |
(Note : Lockdown period ought to be excluded)
d. It is also stated that the Application filed u/s 7 of the Code against the CD, was admitted by the Adjudicating Authority on 25.07.2018. Thereafter, the RP received several EOI’s from potential RAs but no Resolution Plan was furnished within the allotted time. Because of this, the last date for submission of the Resolution Plan kept getting pushed until ‘SREI’ submitted a plan on 02.05.2019. The Resolution Plan was later rejected by the CoC on 07.05.2019 but the negotiations continued between them in pursuit of a more acceptable Resolution Plan. Meanwhile the ‘Adjudicating Authority’ determined that the CIRP should continue vide order dated 21.05.2019 in light of negotiations with SREI. Thereafter, SREI revised the offer on the basis of CoC’s comments and resubmitted the Resolution Plan, which was rejected by the CoC on 19.07.2019. Hot on its heels, the RP filed an Application for liquidation u/s 33(1) of the Code even before the CIRP lapsed (appearing at page No. 1 of the Written submissions of the Appellant Diary No.23266).
e. After the rejection, SREI changed the commercials of the Plan with a view to convince the CoC and deposited a final revised plan on 25.07.2019. Notwithstanding the fact that (i) payment under revised plan of SREI was increased from Rs. 395 Crs to Rs.401 Crs; (ii) certain members of the CoC were in fact willing to consider the revised proposal; (iii) the RP never sought a resolution from the CoC to the effect that the CIRP be terminated; and that (iv) the RP did not place the final revised offer before CoC for consideration; the RP took a unilateral and self-serving decision, filed an Application for Liquidation on 29.07.2019. While the CIRP was ongoing, Section 12 of the Code was amended to extend the total period of CIRP to an upper limit of 330 days, allowing the CD the benefit of reconsidering RAs or issuing a fresh EOI. This would have made the liquidation application premature as even for CIRPs which were not completed by then, an additional 90 days’ period was granted. But the RP disregarded to it the hilt and then blindsided the ‘Adjudicating Authority’ to obtain an order of liquidation on 19.08.2020. In this regard, the RP also disregarded two orders of the ‘Adjudicating Authority’ dated 30.04.2019 and 07.05.2019 which categorically provided that the CIRP should continue.
f. In this regard, attention must be drawn at the intention and motive of the RP in the whole process. It has been brought to the notice of the Appellant that the RP was a former employee of the SBI, who is the lead banker of the consortium with a voting share of about 26%. In fact, he was appointed as the RP at the insistence of SBI and still manages to draw pension from it. In the circumstances, the motive of the RP is gravely impugned with malafides and, therefore, the RP should not be allowed to control the reigns of the CD as a Liquidator.
g. It is also stated that the impugned order suffers from the vice of the coram non judice and is therefore, illegal. The impugned order is without jurisdiction since it has been passed by a bench of the Adjudicating Authority comprising of a single member and therefore in the teeth of Section 419(3) of the Companies Act, 2013. The Hon’ble Supreme Court in Sonu Cargo Movers Vs. UOI (WP(C) No.722/2019) categorically directed that the NCLT constitute a two-member bench including a ‘Judicial’ and a ‘Technical’ member for hearing. On the basis, even this Appellate Tribunal has asked the Adjudicating Authority in Indison Agro Vs. Registrar & Anr. CA(AT) (Ins) No. 726-727 of 2020 to constitute a two-member bench in compliance with the directions of the Hon’ble Apex Court.
h. It is also stated that the Application for liquidation filed by the RP is unauthorized and ex facie illegal. In this regard, it is submitted that the RP failed to seek a resolution from the CoC to the effect that the CIRP is terminated or that the Company should enter into liquidation. In the absence of the above, the ‘Adjudicating Authority’ should have waited until the CIRP lapsed before passing an order for liquidation. In addition to this, the RP took the unilateral decision to file the liquidation application in spite of the fact that in the 13th meeting of the CoC dated 02.05.2019, the CoC had requested the RP to take a vote on the issue of liquidation of the CD. Even then, no such voting on liquidation was conducted by the RP.
In the present case, the RP failed to place SREI’s final plan before the CoC for consideration pursuant to self-serving interests arising out of its relationship with SBI. SBI has 26% stake in the CoC and is keen on a liquidation as opposed to Resolution. In addition to this, the RP drove the CD into liquidation by filing a premature application for liquidation despite the order of the Adjudicating Authority dated 21.07.2019 proclaiming that the CIRP continue. Lastly, the RP failed to even furnish resolutions from the CoC to the effect that CIRP has come to an end and thus liquidation must ensure. The further malafide and illegal conduct of the RP is further evident from the fact that despite there being an alternate plan available to revive the Company for an amount of Rs. 512 Crore, which is way more that the liquidation value of the company (Rs. 385 Crore), the RP has not even bothered to place the same before the CoC. Despite there being an order dated 14.02.2020 from the Adjudicating Authority granting liberty to the employees to place their plan before the CoC, the RP in his haste to liquidate the CD, did not even allow for the said process to take place. The Hon’ble Supreme Court in Innoventive Industries Vs. ICICI bank (2018) 1 SCC 407 identified the duty of the RP to be synonymous with acting as a conduit between the Creditors and the Debtor in the following words:
“The law must appoint a resolution professional as the manager of the resolution period, so that the creditors can negotiate the assessment of viability with the confidence that the debtors will not take any action to erode the value of the enterprise. The professional will have the power and responsibility to monitor and manage the operations and assets of the enterprise. The professional will manage the resolution process of negotiation to ensure balance of power between the creditors and debtor, and protect the rights of all creditors. The professional will ensure the reduction of asymmetry of information between creditors and debtor in the resolution process.”
j. This Appellate Tribunal in ‘Tata Consultancy Services Ltd. Vs. Vishal Ghisulal Jain’, CA(AT) No. 237 of 2020, has reiterated that it is both the primal objective of the Code as well as the solemn duty of the RP to keep the CD as a going concern.
k. The Hon’ble Supreme Court in Arcellor Mittal India Pvt. Ltd. Vs. Satish Kumar Gupta (2019) 2 SCC 1 has succinctly identified the intention of the Code while drawing analogies with the consequence of the chopper falling in a corporate death and observed as follows:
“It is also true that the time taken by a Tribunal should not set at naught the time limits within which the corporate insolvency resolution process must take place. However, we cannot forget that the consequence of the chopper falling is corporate death. The only reasonable construction of the Code is the balance to be maintained between timely completion of the corporate insolvency resolution process, and the corporate debtor otherwise being put into liquidation. We must not forget that the corporate debtor consists of several employees and workmen whose daily bread is dependent on the outcome of the corporate insolvency resolution process. If there is a resolution applicant who can continue to run the corporate debtor as a going concern, every effort must be made to try and see that this is made possible.
l. The Hon’ble Supreme Court recently granted interim relief against a liquidation order in ‘Kridhan Infrastructure Pvt. Ltd Vs. Venkatesan Sankaranarayan’ in Civil Appeal No. 3299 of 2020 while remarking as follows:
“9.Liquidation of the CD should be a matter of last resort. The IBC recognizes a wider public interest in resolving corporate insolvencies and its object is not the mere recovery of monies due and outstanding.”
Thus, in light of the above submissions, the impugned order dated 19.08.2020 ought to be set aside with a direction to the CoC to consider other plans readily available with it and even otherwise, quashing the appointment of the RP as the ‘Liquidator’.
5. Submission of the Respondent No.1- Supriyo Kumar Chaudhuri
a. It is stated by the Respondent No.1 that CIRP of JVL Agro Industries Limited (Corporate Debtor) had commenced CIRP on 25.07.2018 pursuant to an order passed by the Adjudicating Authority. Subsequently by an order dated 10.09.2020 passed by the Adjudicating Authority, the Respondent No.1 herein had been appointed as the RP. On 05.10.2018 had issued the request for submitting the ‘Expression of Interest’ (EOI) were received from the potential/prospective ‘Resolution Applicants’ within the due date provided in the request for EOI. Thereafter, in the 5th CoC meeting held on 27.11.2018, it was decided to re-issue the request for EOI and a revised Request for EOI was published in the newspapers. Accordingly, in response to the said publication, 12 EOIs were received by the RP within the due date provided in the revised Request for EOI. Based on the examination of the EOI, the RP shortlisted all 12 potential Resolution Applicants and provided them access to the virtual data room and issued Information Memorandum as well as ‘Request for Submission of the Resolution Plan’ (RFRP) to the potential Resolution Applicants. The last date for submission of Resolution Plan as per the RFRP was 2nd February, 2019. However, no Resolution Plan was received by RP till the last date and therefore, the RP requested the CoC to extend the Resolution Plan submission date. The same was agreed upon the 7th CoC meeting held on 31.01.2019 and accordingly, the last date for submission of Resolution Plan was extended till 02.03.2019.
b. It is stated that on 19.02.2019, the RP received an email from ‘SREI Multiple Asset Investment Trust Vision India Fund’ (SREI) attaching therewith an EOI for submitting Resolution Plan for CD. In the meeting of the CoC held on 08.03.2019, the resolution process advisor informed the CoC members that an EOI was received from SREI on 19.02.2019 which was rejected by the RP on account of submission beyond the stipulated deadline which had expired on 19.12.2018. It was proposed in the said meeting that since there were no other Resolution Plan received as on 02.03.2019, the CoC may consider accepting EOI of SREI and condoning the delay in submission off the said EOI. Under the circumstances, the members of the CoC agreed that the last date of submission of the Resolution Plan be extended till 25.03.2019.
c. It is submitted that the CoC in this meeting held on 06.09.2018 had requested the then IRP to file an Application before the Adjudicating Authority for exclusion of time. Since immediately thereafter the Respondent No.1 herein i.e. the RP had replaced the IRP, the RP filed an Application being CA 95 of 2019 in CP(IB) No. 223/ALD/2018 for exclusion of 18 days from CIRP period being the time between the 1st meeting of the CoC and the appointment of the present RP (September, 10, 2018). The Application for exclusion of time was allowed by the Adjudicating Authority on 14.08.2019 thereby extending the CIRP period by a further period of 18 days i.e. till 09.05.2019. It is pertinent to mention that the order dated 14.08.2019 passed by the Adjudicating Authority has intentionally been suppressed by the Appellant herein.
d. In the CoC meeting held on 26.03.2019, it was agreed to further extend the Resolution Plan submission date to 06.04.2019. Despite further extension, no Resolution Pan was received till 06.04.2019 i.e. till the last date for submission of Resolution Pan. However, the RP had received a request from one of the prospective Resolution Applicants, namely SREI for further extension of timeline for submission of Resolution Plan by 10 days i.e. 16.04.2019. The CoC agreed to further extend the Resolution Plan submission date till 16.04.2019. On 16.04.2019 SREI submitted its Resolution Plan in respect of the CD. However, since SREI had submitted the Earnest Money Deposit (EMD) in the form of Bank Guarantee (BG) of INR 1,00,00,000 as against as amount of INR 10,00,00,000 required as per the RFRP, the CoC granted a time of 48 hours to SREI to revert on whether they would be in a position to submit the BG amount as per the RFRP and accordingly submit the BG as per the RFRP before 23.04.2019. However, the SREI submitted an additional BG of Rs.4 Crore only towards the EMD. It was based on deliberations in the CoC meeting on 24.04.2019 Resolution Pan submitted by SREI was considered. However, the SREI financial commitment was below the liquidation value and EMD was below the required amount, on conclusion of voting process on 07.05.2019, the Resolution Plan so submitted by SREI was rejected by 98.18% of voting share. Again SREI convened to the Resolution Applicant to improve financial offer and revised the same from Rs.395 Crore to Rs.401 Crore. In any case, the RP forwarded the same to the members of the CoC. No CoC member shown interest in pursuing the new offer and CIRP period of 270 days was already over. Constraint to file the Application under Section 33(1) of the Code for Liquidation of the CD, the RP did the same on 29.07.2019. SREI even gone to the Adjudicating Authority through CA No.214 of 2019 in CP(IB) No. 223 /ALD/2018 for calling the meeting of CoC and considering their revised offer and the Adjudicating Authority dismissed the said application through an elaborate order that the standalone commercial offer cannot be considered as the Resolution Plan requires to have certain mandatory content as per CIRP Regulations. Thereafter, there was nothing to be persuaded except a Resolution Plan on behalf of the employees of the CD moved by the CFO of the CD on 06.02.2020. The Resolution Plan was proposed by a trust and were directly approached to the Adjudicating Authority and even that plan under the directions of the Adjudicating Authority were provided to the CoC for the purpose of their information. However, no positive response was received to the CoC in this regard. As also the employed trust was not inexistence on the date of filing of the Resolution Plan, the source of funding from such purported trust could not be verified by the RP and the Appellant- Mr. R.C Garg, CFO was disqualified under Section 29(A) of the Code. The Adjudicating Authority has rightly dismissed the application in view of the provisions of the Code.
6. Submission of the Respondent No.2- Committee of Creditors (CoC)
a. It is submitted by the Ld. Sr. Counsel for the Respondent No.2-CoC that the Appellant is a ‘Shareholder cum Director’ of the CD and has no locus standi to prefer this instant appeal. The Appellant is not personally aggrieved in any manner and is rather making a concocted argument on behalf of others. The Appellant being a ‘Promoter and Ex-Director’ of the CD has come up in appeal with mala fide and ulterior motive to scuttle the liquidation proceedings of the CD. SREI the apparent aggrieved party, who had filed a revised offer in relation to the Resolution plan submitted by it, has not come up in appeal before this Appellate Tribunal and has already accepted the order of the Adjudicating Authority dated 03.02.2020. However, the Appellant in its fraught wisdom has chosen to file the present appeal without any grievance of its own. Further, the other Resolution Applicant (RA) i.e., Ramesh Chandra Garg has preferred a separate appeal being CA(AT) (Ins) No. 846 of 2020 before this Appellate Tribunal challenging the impugned order and praying for identical reliefs and raising the same issues as raised by the Appellant herein. Thus, the present appeal filed by the Appellant is not maintainable as is liable to be dismissed in limine.
b. It is also submitted by the Ld. Sr. Counsel for the CoC that the Code provides for time bound resolution of a company. There is no provision under the Code allowing a RA to wait for an indefinite period or till other RA(s) plans are rejected by the CoC or the Adjudicating Authority and then file a Resolution Plan. In this regard, emphasis is supplied on the following provisions of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016:
“36A. Invitation for expression of interest
..(3) The Form G in the Schedule shall –
…(b) provide the last date for submission of expression of interest which shall not be less than fifteen days from the date of issue of detailed invitation.
(5)A prospective resolution applicant, who meet the requirements of the invitation for expression of interest, may submit expression of interest within the time specified in the invitation under clause (b) of sub-regulation (3).
(6)The expression of interest received after the time specified in the invitation under clause (b) of sub-regulation (3) shall be rejected.
(10)the resolution professional shall issue a provisional list of eligible prospective resolution applicants within ten days of the last date of submission of expression of interest to the committee and to all prospective resolution applicants who submitted the EOI.
(12)On considering the objections received under sub-regulation (11), the RP shall issue the final list of prospective resolution applicants within ten days of the last date of receipt of objections to the committee.
36B – Request for resolution plans-
(1)The RP shall issue the information memorandum, evaluation matrix and a request for resolution plans, within five days of the date of issue of the provisional list under sub-regulation (10) of regulation 36A..
(7)The RP may, within the approval of the committee re-issue request for resolution plans, if the resolution plans received in response to an earlier request are not satisfactory, subject to the condition that the request is made to all prospective resolution applicants in the finalist.
30. Approval of the resolution plan
(1)A prospective resolution applicant in the final list may submit resolution plan or plans prepared in accordance with the Code and these regulations to the RP electronically within the time given in the request for resolution plans under regulation 36B alongwith (a) an affidavit stating that it is eligible under Section 29A to submit resolution plans:
(1)A resolution plan which does not comply with the provisions of sub- regulation (1) shall be rejected”.
c. In conjunction with the above provisions of the CIRP Regulations, emphasis is also placed on the following provisions of the Code:
Section 5(25) “resolution applicant” means a person, who individually or jointly with any other person, submits a resolution plan to the RP pursuant to the invitation made under clause (h) of sub-section 2 of the Section 25;
Earlier clause read as follows: “resolution applicant” means any person who submits a resolution plan to the RP;
12.Time limit for completion of the Insolvency resolution process:-
(3)On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that CIRP cannot be completed within one hundred and eighty days, it may be order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days: …Provided further that the CIRP shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension of the period of CIRP granted under this section and the time taken in legal proceedings in relation to such resolution process of the CD.”
30. Submission of resolution plan –
The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan— (f) conforms to such other requirements as may be specified by the Board.
(4)The committee of creditors may approve a resolution plan by a vote of not less than seventy-five sixty-six per cent, of voting share of the financial creditors, after considering its feasibility and viability the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor, and such other requirements as may be specified by the Board:
…Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section.
d. It is evident from the above provisions that before a resolution plan can be submitted, a prospective resolution applicant will have to qualify the criteria laid down in the invitation for EOI and the RP can only call for submission or resolution plans from the prospective resolution applicants who have qualified such criteria. All RA(s) are required to submit their Resolution Plans pursuant to publication of the invitation of EOI within the last date specified therein as per the provisions of the Code.
e. The CIRP cannot be permitted to continue indefinitely. Admittedly, the CIRP period of the Corporate Debtor expired on 09.05.2019. Since there was no Resolution Plan approved by the CoC in relation to the CD, the RP had no other option but to proceed for liquidation. On 06.02.2020 the Mr. R.C.Garg and other employees of CD filed a purported Resolution Plan directly with the Adjudicating Authority after expiry of 700 days from the commencement of the CIRP. Pertinently, no order/direction had been given by the Adjudicating Authority for considering the Resolution Plan. Reliance is also placed on the judgment of the Hon’ble Supreme Court in the case of Arcelor Mittal (India) (P) Ltd. Vs. Satish Kumar Gupta (2019) 2 SCC 1, where the Court explicitly held a resolution applicant has no vested right that his resolution plan be considered by the CoC. The relevant portion of the judgment is reproduced as follows:
“76.Given the timeline referred to above, and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudicating Authority at this stage.
81.Section 60(5), when it speaks of the NCLT having jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person, does not invest the NCLT with the jurisdiction to interfere at an applicant’s behest at a stage before the quasi-judicial determination made by the Adjudicating Authority. The non-obstante clause in Section 60(5) is designed for a different purpose: to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings.”
f. Further, an Applicant who has not submitted an EOI or the Resolution Plan within the deadline, and whose eligibility under Section29A has not been confirmed by the RP, cannot file a Resolution Plan belatedly and directly before the Adjudicating Authority. No Resolution Applicant can be allowed herein to bypass and frustrate the prescribed mandatory and statutory procedure prescribed under the Code by attempting to slip in a Resolution Plan and make a backdoor entry. It is also stated by the CoC that under the proviso to Section 12 of the Code, for pending CIRP an additional period of ninety days has been given from the commencement of the Code (Amendment) Act, 2019, i.e. 06.08.2019. Thus, the CIRP period of the CD expires on 04.11.2019. However, it is only subsequent to the filing of the aforesaid application, the Code (Amendment) Act 2019 came into force with effect from 06.08.2019. Therefore, the amendment brought to Section 12 of the Code, in not applicable in the instant case.
g. The Liquidation Application has been filed and directions have been passed by the Adjudicating Authority under Section 33(1) of the Code which does not contemplate any prior approval of CoC. The Liquidation Application was filed by the RP in term of Section 33(1) of the Code. Admittedly, there has been no objection by any of the CoC members to the Liquidation application. The Liquidation Application was thereafter duly adjudicated and approved by the Adjudicating Authority after due consideration in terms of Section 33 (1) of the Code, 2016 Section 33(1) provides that:
“33.Where the Adjudicating Authority, —
(a)before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under section 12 or the fast track corporate insolvency resolution process under section 56, as the case may be, does not receive a resolution plan under sub-section (6) of section 30;”
From the aforesaid, it is evident that the Adjudicating Authority is empowered to pass an order of liquidation in case no Resolution Plan duly approved by the CoC is presented before it expiry of CIRP period. Thus, when liquidation order is passed by the Adjudicating Authority in terms of Section 33(1), no prior approval of CoC is required (which is contemplated only in case of liquidation under Section 33(2).
h. It is also stated by the CoC that the Appellant has relied on Section 419(3) of the Companies Act, 2013 and falsely attempts to establish that the order has not been passed by an appropriate quorum of the Adjudicating Authority. However, the Appellant has failed to appreciate that the first proviso to Section 419(3) provides that:
“It shall be competent for the members of the Tribunal authorized in this behalf to function as a bench consisting of a single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general order, specify.”
It is also stated that by an order Bearing No. 10/36/2016- NCLT dated 07.12.2019, the Adjudicating Authority was reconstituted with Member (Judicial) as the only member. The constitution of the Bench was mentioned to be in accordance with Section 419(3) of the Companies Act, 2013. Furthermore, Section 5(1) of the Code defines ‘Adjudicating Authority’ as follows:
“Adjudicating Authority for the purpose of this part (i..e Part II of the Code – Insolvency Resolution and Liquidation of Corporate persons), means National Company Law Tribunal constituted under Section 408 of the Companies Act, 2013 (18 of 2013)”. Thus, the impugned order has been passed by the Adjudicating Authority having jurisdiction and constituted in accordance with the provisions of the Companies Act, 2013.
j. It is also submitted by the Ld. Sr. Counsel for the CoC that the Appellant has made false allegations that the RP being an ex-employee of the SBI and is acting hand in glove with SBI to push the CD into liquidation as SBI would get a better value from its secured assets at the time of liquidation. However, the Appellant’s band allegations in this regard are strongly denied. The RP is an independent professional and has no nexus with SBI. The Hon’ble Supreme Court of India in the case of SBI Vs. M/s. Metenere Ltd (Civil Appeal No. 2570 of 2020) has held that merely because the RP was in service of SBI and getting a pension from it, he was not disentitled to be the RP. As a matter of fact, SBI had voted in favor of SREI’s Resolution Plan. However, SBI only has a 26% voting share in the CoC and the Resolution Plan was rejected by 71% majority of the CoC. Therefore, contrary to the Appellant’s stand, SBI had in fact supported resolution to the CD, however the same could not sail through because of dissent of remaining CoC members. Thus the Appellant’s contentions in respect of the same are strongly denied and the Appellant is called to strict proof thereof.
k. It is stated that this Appellate Tribunal during the course of hearing on 06.11.2020 had asked the parties to examine its judgment in CA(AT) (Ins) No. 515 of 2020 (“Panna pragati”), and analyse if the same was applicable in the present matter. In this regard, it is submitted that the judgment of this Tribunal in Panna Pragati is wholly inapplicable to the present matter. In Panna Pragati, the Appellants were excluded from consideration of their Resolution Plan primarily on the ground of impending expiry of 180 days of CIRP. On account of the exclusion, the revised Resolution Plan of the appellants (filed within the CIRP period) was not considered or placed before the CoC. After the Appellants were excluded, the RP filed an application for extension of CIRP for a further period of 90 days. In the ensuing extended time, the Resolution plan of an eligible highest bidder was voted upon and accepted by the majority of the CoC. Thus, this Appellate Tribunal held that the exclusion of the Appellants was unwarranted and the appellants could not be excluded from consideration of their revised Resolution Plan on the strength of earlier exclusion which had nothing to do with disqualification ineligibility. It is apparent that the issue in present case is substantially different from that in Panna Pragati. In the present case, no eligible Resolution Plan was received by the RP/CoC during the continuation of the CIRP period. In any case, the RP cannot without application of his mind submit any plan for consideration before the CoC. The RP under Section 30(3) of the Code, can only submit such plans to the CoC which confirm to the requirements under Section 30(2) of the Code which also includes being complaint with requirements under Section 29A.
7. Company Appeal (AT) (Ins) No. 846 of 2020
Submission of the Appellants
a. The Appellants are employees of the CD and representing all the employees of the CD and they are stakeholders of the CD who are interested in the CIRP of the CD. The Appellants filed the Resolution Application for consideration and approval of the same under the provisions of the Code, a resolution plan for resolution of the CD thereby preventing a catastrophe of the CD going into liquidation. The CD was incorporated on 17.11.1989 as M/s. Jhunjhunwala Vansapati Ltd. The CD commenced its operations as a small scale industry for manufacturing of hydrogenated vegetable oil in 1989. Thereafter, the name of the CD was changed to M/s. JVL Agro Industries Limited on 21.10.2008.
b. It is also stated that the CD is engaged in manufacturing of vegetables oil and fats (other than hydrogenated). Its products including Vasnaspati, refined oil, mustard oil, rice and bakery shortening. Its refined oil variants including olein, soyabean, cotton seed, palm and sunflower. Its mustard oil variants including kachchighani and pakkighani. Its Vanaspati variants include Vanaspati ghee variant. Its rice variants include steamed, par-boiled and white rice. The Registered office of the CD is located in Varanasi. The CD gradually set up and its manufacturing facilities at 5 different locations in India. The CIRP process was admitted against the CD vide an order dated 25.07.2018 passed by the Adjudicating Authority.
c. It is stated that the RP was an employee of the SBI, which has the largest share/voting percentage in the CoC i.e. 26%. The R! is acting at the behest of SBI and to secure the best interest of such financial creditor at the cost of the process. It is submitted that as a consequent of the R1 long association with a Financial Creditor, the said Respondent has failed to act fairly and has consequently resulted in vitiating the entire CIRP of the CD and the consequent impugned order is a nullity. On 03.02.2020, when the application of SREI was dismissed by the Adjudicating Authority, the workers and the employees came to know that no resolution plan is approved and the CD might go for liquidation. The Appellants as earlier discussed this with other employees of the CD reached a consensus and decided to file a resolution plan. Thereafter, the Appellants filed a prospective resolution plan on behalf of the employees of the CD as liquidation is not in interest of stakeholders and their source of livelyhood would be lost and then thereafter filed an application before the Adjudicating Authority in CA No.73 of 2020. The said Resolution Application alongwith the Resolution Plan was handed over to the RP on 06.02.2019. An order passed by the Adjudicating Authority for considering the resolution plan to the RP and the same was already handed over to the RP. Even after receiving the prospective the Resolution Plan, the RP did not place the same before the CoC. The RP did not also inform the CoC of the said fact. The RP also did not inform the Appellants that whether the Resolution Plan attracts any infirmity under the Code. Without any such intimation from the RP, the Appellants were confident that the resolution plan will be placed before the CoC.
d. It is also stated that the question that arises in the present appeal is (1) whether a going concern CD which has been functional should be sent for liquidation even when a Resolution Plan which is pending for consideration of CC and which proposes to payRs 512 Crore when the liquidation value of the CD is Rs. 385 Crore? (2) Can an ongoing concern should be liquidated after closing down the company and deliberately put to the end its life in liquidation? (3) Can there be automatic Liquidation of CD even when there is plan which can keep it as a going concern? (4) Can a liquidation order be passed by a bench which is coram non judice and hence lacks jurisdiction?
e. The Appellants have submitted that in the light of the order dated 03.02.2020 passed by the Adjudicating Authority, CIRP was going on and not concluded in interest of all stakeholders. The order dated 03.02.2020 is extracted below:
“After the rejection of the resolution plan submitted by SREI, it would be equitable that the resolution process is open for all resolution applicants in order to maximize the recovery for the creditors of the CD” as there were interest resolution applicants (appearing at page No. 69 of the Appeal paper book in CA(AT) (Ins) No. 846 of 2020).
f. It is also stated that the Resolution Plan never put before the CoC for it to apply its commercial wisdom. Application C.A No.70 of 2020 having plan of the appellant filed before the Adjudicating Authority on 06.02.2020 i.e. within 3 days of direction passed in the order dated 03.02.2020. However, the plan never placed before the CoC, no document or record of the same on record. The Adjudicating Authority vide order dated 14.02.2020 observed the plan will be submitted to RP within 24 hours and put for consideration on 20.02.2020. The Application of the Appellant was listed before the Adjudicating Authority on 06.07.2020 and was considered. It was proposed the plan be submitted before CoC which confirmed higher value of plan than proposed liquidation value, matter again listed on 13.07.2020 and again listed on 17.07.2020, suddenly the liquidation order is passed in haste and hurry without confirming the fact that there was no resolution by CoC for liquidation and its only IRP application without CoC approval. The RP always interested in liquidation as he has more gain and profit in liquidation and commission on sale of assets as per Regulation 4.
g. It is also stated that the Adjudicating Authority erred in holding that one of the Appellant, who was the CFO was disqualified u/s 29A to submit a resolution plan. A CFO is a key managerial person (as defined under the Companies Act, 2013) and is required to be appointed pursuant to the requirements under the Companies Act, 2013. A key managerial person may also be the authorized signatory of a company and hence such name would be reflected in the Master Data of the Company available with ROC. Mr. Ramesh Chander Garg was the CFO and the authorized signatory and hence his name was reflecting in the Master Data of the CD with the ROC. Disqualification provisions contained u/s 29A of the Code is not attracted to a CFO or a KMP. The RP failed to seek a resolution from the CoC to the effect that the CIRP should be terminated and liquidation of the CD should ensue. In the absence of the above, the Adjudicating Authority should have waited until the CIRP lapsed before passing the impugned order for liquidation. In addition to this, the RP took the unilateral decision to file the liquidation application in spite of the fact that in the 13th meeting of the CoC dated 02.05.2019, the CoC has requested the RP to take a vote on the issue of liquidation of the CD. Even then, no such voting on liquidation was conducted by the RP. No such vote taken.
h. It is also stated that the Adjudicating Authority completely misinterpreted the provisions of the Code insofar as they relate to the jurisdiction in respect of applications for liquidation under Section 43 of the Code. The Code itself provides that an application for liquidation must be considered by the Adjudicating Authority. Put differently, the Code provides for the justifiability of such application. Commercial wisdom has no role or connection justifiability. In the case of K.Shashidhar Vs. Indian Overseas Bank & Ors. (Civil Appeal No. 10673 of 2019) as and Essar Judgment, the Hon’ble Supreme Court did not lay down any law to the effect that matters which are otherwise justiciable under the Code can be made non-justiciable only because of a view taken by the CoC. The Application for liquidation was allowed by the Adjudicating Authority without considering and / or considering the objective of the Code as explained by the Hon’ble Supreme Court in several judgments including the following:
Swiss Ribbons Pvt.Ltd Vs. Union of India (2019) 4 SCC 17 Committee of Creditors, Essar Steel India Ltd, through authorized Signatory Vs. Satish Gupta & Ors. (Civil Appeal No. 8766-8677 of 2019)
Duncans Industries Ltd Vs. J Agrochem (2019) 9 SCC 725 Civil Appeal No. 9402-9405 of 2018 ArcelorMittal India Pvt, Ltd. Vs. Satish Kumar Gupta & Ors.
The Judgment of this Tribunal in CA(AT) (Ins) No. 606 of 2019 Hammond Power Solutions Pvt. Ltd. Vs. Mr. Sanjit Kumar Nayak & Ors., wherein the Hon’ble Tribunal has set aside the impugned order and remit the matter back to the Adjudicating Authority with a direction to send back the Resolution Plan to the CoC to resubmit the plan after satisfying the parameters as laid down by the Hon’ble Supreme Court in the judgment in the matter of “Essar Steel”, as the decision of the CoC also does not reflect that it has taken into account the fact that the CD needs to be kept as a going concern and that there is need to maximise the value of the assets and that the interest of all the stakeholders including Operational Creditor has to be taken care of. Thus, in the light of the above submissions, the Appellant submits that the impugned order dated 19.08.2020 ought to be set aside with a direction to the CoC to consider other plans readily available with it.
8. Submission of the Respondent No.1
a. The CIRP of the CD had commenced on 25.07.2018 pursuant to an order passed by the Adjudicating Authority. Subsequently, by an order dated 10.09.2020, Mr. Supriyo Kumar Chaudhuri (the Respondent No.1 herein) had been appointed as the RP. The RP has issued the request for submitting the EOI in the newspapers on 05.10.2018. Only 2(two) were received from the potential/ Prospective Resolution Applicants within the due date provided in the request for EOI. Thereafter, in the 5th CoC meeting held on 27.11.2018, it was decided to re-issue the request for EOI and a revised request for EOI was published in the newspaper. Accordingly, in response to the said publication, 12(twelve) EOIs were received by the RP within the due date provided in the revised request for EOI. Based on the examination of the EOI, the RP shortlisted all 12 potential Resolution Applicants and provided them access to the virtual data room and issued Information Memorandum as well as RFRP to the potential Resolution Applicants. The last date for submission of Resolution Plan as per the RFRP was 02.02.2019. However, no Resolution Plan was received by the RP by the last date and therefore, the RP requested the CoC to extend the Resolution Plan submission date. The same was agreed upon in the 7th CoC meeting held on 31.01.2019 and accordingly, the last date for submission of Resolution Plan was extended till 02.03.2019.
b. It is stated that the CoC in its meeting held on 06.09.2018 had requested the then IRP to file an application before the Adjudicating Authority for exclusion to time. Since immediately thereafter the R1 herein i.e. the RP had replaced the IRP (by an order dated 10.09.2018 of the Adjudicating Authority), the RP filed an application being CA 95 of 2019 in CP No. (IB) 223/ALD/2018 for exclusion of 18 days from CIRP period being the time between the 1st meeting of the CoC and the appointment of the present RP. The Application for exclusion of time was allowed by the Adjudicating Authority on 14.08.2019 thereby extending the CIRP period by a further period of 18 days i.e. till 09th May, 2019. It is pertinent to mention that the order dated 14.08.2019 passed by the Adjudicating Authority has intentionally been suppressed by the Appellant herein.
c. It is also stated that in the CoC meeting held on 26.03.2019, it was agreed to further extend the Resolution Plan submission date to 06th April, 2019. Despite further extension, no Resolution Plan was received till 06.04.2019 i.e till the last date for submission of Resolution Plan. However, the RP had received a request from one of the prospective Resolution Applicants, namely, SREI, for further extension of timeline for submission of Resolution Plan by 10 days i.e. till 16.04.2019. The CoC agreed to further extend the Resolution Plan submission date till 16.04.2019. On 16.04.2019 SREI submitted its Resolution Plan in respect of the CD. However, since SREI had submitted the Earnest Money Deposit (EMD) in the form of Bank Guarantee (BG) of INR 1,00,00,000 as against an amount of INR 10,00,00,000 required as per the RFRP, the CoC granted a time of 48 hours to SREI to revert on whether they would be in a position to submit the BG amount as per the RFRP and accordingly submit the BG as per the RFRP before 23.04.2019. Thereafter, SREI submitted an additional BG of INR 4,00,00,000 towards the EMD. On the basis of the deliberations in the meeting dated 24.04.2019 of the CoC, the RP opened the Resolution Plan submitted by SREI and commenced the examination of the said Resolution Plan. The RP presented the Resolution Plan submitted by the SREI to the CoC members in the said meeting whereof it was recorded that the financial commitment made by SREI was way below the liquidation value of the CD and that SREI did not wish to comply with the requirements under the RFRP regarding EMD deposit and submission of performance bank guarantee. Accordingly, on conclusion of voting process on 07.05.2019, the Resolution Plan submitted by SREI was rejected by 98.18% voting share of the Financial Creditors.
d. After the rejection by the CoC of the Resolution Plan submitted by SREI by such a massive margin of over 98%, SREI again sent standalone offer increasing the financial value of the proposal from Rs.395 Crore to Rs.401 Crore. As RP, he forwarded the same to all CoC members and only one CoC member categorically mentioned that CIRP is a time bound process and there cannot be and less negotiation. No other members responded. Hence, it is assumed that CoC is not interested in such proposal of SREI.
e. The RP then filed Liquidation application on 29.07.2019 before the Adjudicating Authority as no other Resolution Plan was in hand and two rounds of EOI did not yield any acceptable proposal to CoC and more than one year was getting lapsed. He has moved the Liquidation application. Thereafter, employee trust filed an application before the Adjudicating Authority on 06.02.2020 which included the CFO of the Company. CFO is disqualified under Section 29A of the Code. Based on the order of the Adjudicating Authority on 14.02.2020, the RP was asked to send the Resolution Plan to CoC. The RP, thereafter, send the Resolution Plan to the CoC for the purpose of information. However, he is categorically submitting that no positive response was received from CoC in this regard. As RP, he found several infirmity in the Resolution Plan submitted by the employees which includes non-existence of trust on the date of filing of the Resolution Plan and the employee who is filing the Resolution Plan, he himself disqualified and he also could not find out how a new trust can generate funding from different sources.
9. Submission of the Respondent No.2:- Committee of Creditors
a. As far as the issue of order delivered by a single Judicial Member Bench of the Adjudicating Authority. It is clarified that Section 419 of the Companies Act, 2013 is amply clear on this subject that a single member can constitute the Bench. For brevity and clarity, the same is depicted below:
Section 419 of the Companies Act, 2013
“Section 419: Benches of Tribunal.
(1)There shall be constituted such number of Benches of the Tribunal, as may, by notification, be specified by the Central Government.
(2)The Principal Bench of the Tribunal shall be at New Delhi which shall be presided over by the President of the Tribunal.
(3)The powers of the Tribunal shall be exercisable by Benches consisting of two Members out of whom one shall be a Judicial Member and the other shall be a Technical Member: Provided that it shall be competent for the Members of the Tribunal authorised in this behalf to function as a Bench consisting of a single Judicial Member and exercise the powers of the Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as the President may, by general or special order, specify: Provided further that if at any stage of the hearing of any such case or matter, it appears to the Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the President, or, as the case may be, referred to him for transfer, to such Bench as the President may deem fit.
[(4) The Central Government shall, by notification, establish such number of benches of the Tribunal, as it may consider necessary, to exercise the jurisdiction, powers and authority of the Adjudicating Authority conferred on such Tribunal by or under Part II of the Insolvency and Bankruptcy Code, 2016.]
(5)If the Members of a Bench differ in opinion on any point or points, it shall be decided according to the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President for hearing on such point or points by one or more of the other Members of the Tribunal and such point or points shall be decided according to the opinion of the majority of Members who have heard the case, including those who first heard it.” Cited several judgments to support it stands. 2017 SCC OnLIne GUJ 1183 (Nipun Praveen Singhivi Vs. Union of India). 2021 SCC OnLine SC 1044, Newtech Promoters and Developers Pct. Ltd Vs. State of UP and ors.
b. It is also stated that the Appellant didn’t raise any objections against the constitution of the Single Member Bench before the Adjudicating Authority and is thus estopped from raising the same at this belated stage. Cited Hon’ble Apex Court Judgment in Mahabal Ram (DR) Vs. Indian Council of Agricultural Research (1994) 2SCC 401 which requires either party before a single member to suggest to the member hearing the matter that it should go to a Bench of two members. Hence, raising such questions at this stage is impressible under the framework of law laid down.
After going through the submissions made by the learned Sr. Counsels for the parties and the available records submitted by the parties, we observed the followings:
a. It is not in dispute that the CIRP commenced from 25.07.2018.
b. It is also not in dispute that the RP published the request for EOI on 05.10.2018 and thereafter, again on 05.12.2018.
c. It is also not in dispute that 12 Applications for EOI were responded to the RP. Only one M/s. SREI wish to participate in the Resolution Process and submitted an EOI on the extension of the deadline for submission of the Resolution Plan in February, 2019.
d. The CoC agreed to accept the EOI of SREI and further extended the date of submission of the Resolution Plan from 02.03.2019 to 25.03.2019. However, SREI submitted the Resolution Plan on 16.04.2019 which was rejected by the CoC on 07.05.2019 by approx.98% vote. SREI went on improving the proposal just by a minuscule amounts and finally CoC decided to put the resolution plan to vote on 24.07.2019. However, the Resolution Plan was rejected by the CoC by approx.71% of the vote and rejection was communicated to the SREI. On 25.07.2019, SREI further sent a standalone financial offer raising its proposal from Rs.395 Crore to Rs. 401 Crore. The RP sent the same proposal to members of the CoC and no Member other than one raised the issue. The issue was why we are going on endlessly with the same firm as IBC is a time bound programme. No other members informed RP of any of its comments. Similarly, the RP received proposal from employee trust which are unregistered on the date of application and he could not verify the sources of funding authenticity etc.
e. It is observed that the RP has forwarded the proposal of employee trust to the members of the CoC as directed by the Adjudicating Authority. No response was received from any members of the CoC.
f. While hearing was initiated in March, 2020 to July, 2020 the Coram for the bench was comprising of two members but on the final concluding day of the final hearing only Judicial member was available and hence the Judicial Member has delivered the judgment as a single member Coram bench duly constituted by the ‘Competent Authority’.
g. IBBI (Liquidation Process) Regulations 2016 vide Chapter –VI Regulation 32 provides the sale of the CD as a going concern. Regulation 33 of the same Regulation also provides the methodology to sale. All this provides going concern sale.
h. It is very much clear there is no viable plan for the consideration of the CoC and CIRP period has expired long back.
All this suggests for that the Adjudicating Authority has no options but to pass order of Liquidation on completion of Insolvency Period and accordingly, the Adjudicating Authority has passed the liquidation order.
j. We also observe that the assets of the CD is valued at Rs.1128 Crore and it is one of the largest vanaspati manufacturer in India with five manufacturing units scattered in the states of Uttar Pradesh, Rajasthan, Bihar & employing 550 employees as per the list furnished by the Appellant in CA(AT) (Ins) No. 846 of 2020 at page no.106-118 of the appeal paper book.
k. Hence, we do not find any infirmity in the impugned order to set it aside. However, the RP is directed to make all attempts to sale the CD as a going concern or the business of the CD as a going concern in consultation with stakeholders consultations committee as constituted under Regulation 31A of the IBBI (Liquidation Process) Regulations 2016, in order to protect the livelihood of 550 families.
l. Accordingly, we dispose off the appeals with above observations and directions.
Pending application, if any, stands disposed off.
Interim Orders, if any, stands vacated.
No order as to costs.