Sunbeam Structurals Private Limited vs Mr. Sachin Shrinivasa Bhattad & Ors.

Oral Judgment: Justice Sharad Kumar Sharma, Member (Judicial)

These are a bunch of five Company Appeals. Each of these Company Appeals, though they are emanating from a common order i.e., an order dated 15.06.2023, as it has been passed in IA (IBC)/1381/CHE/2022 that was preferred in IBA/653/2020, IA(IBC)/391(CHE)/2022 in IBA/653/2020 and IA(IBC)/1453(CHE)/2022 in IBA/653/2020. The consequential effect of the Impugned Order, has been the rejection of the Resolution Plan of M/s. Sunbeam Structural Pvt. Ltd. by Learned NCLT, Chennai, which was placed for its approval under Section 30(6) of the I & B Code. Appeal against the aforesaid rejection of the Resolution Plan is for consideration before this Appellate Tribunal.

The parties to these Company Appeals have ventured into a settlement and in relation there to, they have placed on record the memorandum of settlement based on, which they have resolved to settle the dispute. But still for the purposes of closing all these Company Appeals, based on the terms of settlement owing to certain marginal differences of facts and the consequences which will flow from today’s order, we will be dealing with each of the Company Appeals independently and in brief.

Earlier, when these Company Appeals were taken up by this Appellate Tribunal, the Resolution Professional was expected to submit an affidavit with regards to the compliance of the proposed settlement with the provisions of Section 29A of the I & B Code, in view of the proceedings which was held in the previous dates. The Resolution Professional has submitted the affidavit on 18.07.2025, wherein a certain typographical error has crept in. The Counsel for the Resolution Professional as she had participated in the proceedings on 28.07.2025 through video conferencing and was not in a position to carry out the minor typographical error on the spot. Hence, she has requested her colleague, Mr. Anant Merathia the Learned Counsel, to carry out the necessary correction in the affidavit, with the leave of this Appellate Tribunal. The Counsel in brief of the Resolution Professional Mr. Anant Merathia was permitted to carry out the necessary corrections by using red pen during the course of the day and the same has been carried by him with the consent of all the parties to these Company Appeals.

Comp App (AT) (CH) (Ins) No.173/2023 has been preferred by the Resolution Applicant challenging the aforesaid Impugned Order dated 15.06.2023, by which the Resolution Plan that was submitted by M/s. Sunbeam Structural Pvt. Ltd. was rejected and consequently, Learned NCLT, denied the relief, which was prayed for in IA(IBC)/1381(CHE)/2022, preferred in IBA/653/2020 which was of the following nature: -

The nature of relief, which was modulated therein was that M/s. Sunbeam Structural Private Limited, the Appellant herein who was the Resolution Applicant had sought for a direction that, the plan as submitted by them may be directed to be made binding on the Corporate Debtor and its employees and all other connected staff. The said application was rejected by Learned Adjudicating Authority after observing certain irregularities in the functioning of the Resolution Professional, with regard to procurement of MSME Certificate as it has been observed in para 3.2 & 3.3 of the impugned order, and in para 3.9 & 3.10 of the said order, in respect non-filing of application under Section 66 of the Code, and coming to a conclusion in para 3.11 of the impugned order that, the Resolution Professional has failed to exercise its duties as contemplated to be exercised under the Code and that there were dereliction in performance of the duties by the Resolution Professional. Further Learned Adjudicating Authority in para 3.12 to 3.14 said impugned order, directed appointment of a new RP, and for conduct of CIRP afresh from the stage of Form C.

In Comp App (AT) (CH) (Ins) No.174/2023, the appeal has been preferred by the Suspended Director of the Corporate Debtor as being aggrieved against the Impugned Order dated 15.06.2023, as it has been passed by the Learned Adjudicating Authority on IA(IBC)/1381(CHE)/2022 declining to approve the Resolution Plan that was submitted by M/s. Sunbeam Structural Pvt. Ltd.

Comp App (AT) (CH) (Ins) No.175/2023 has been preferred by the erstwhile Resolution Professional of the Corporate Debtor as against the observations that has been made by the Learned Tribunal in the impugned order dated 15.06.2023 while deciding the aforesaid IA being IA(IBC)/1381(CHE)/2022 and in particular, those made in para 3.2 & 3.3 regarding his complicity in facilitating the Suspended Director to obtain MSME Certificate for the Corporate Debtor after commencement of CIRP and those made in para 3.9 & 3.10 regarding his inaction in respect of suspect and apparently fraudulent transactions and failure to take action under Section 66 of the Code and where the conclusion was drawn that the Resolution Professional has failed to exercise its duties as envisaged under the Code read IBBI Regulation in respect of the Corporate Debtor. In this Company Appeal, being Comp App (AT) (CH) (Ins) No.175/2023, the Resolution Professional has given limited challenge to the observations made against the Resolution Professional qua the conduct of him.

The Company Appeal being Comp App (AT) (CH) (Ins) No.211/2023 has been preferred by the Appellant herein (Premier Chennai Properties Ltd.), who was the Financial Creditor and unsuccessful Resolution Applicant of the Corporate Debtor. He had preferred an application being, IA(IBC) No.1453(CHE)/2022 in IBA/653/2020, objecting to the approval of the Resolution Plan of the promoters of the Corporate Debtor on account of the fact that, the same happens to be in apparent violation committed by the promoters themselves in obtaining the MSME Certification contrary to the provision contained under Section 17 of the I & B Code and submitted that, since the Resolution Plan that has been submitted by them was in contravention to the provision contained under Section 30(2)(e) of the I & B Code, it deserves to be dismissed. The said application was dismissed by Learned NCLT on the ground that the unsuccessful Resolution Applicant has no vested rights to challenge the Resolution Plan which has been approved by the Committee of Creditors.

Comp App (AT) (CH) (Ins) No.263/2023 has been preferred by the Financial Creditor, (Premier Chennai Properties Limited) the Appellant herein as against the order which has been passed on IA(IBC)/391(CHE)/2022, which was preferred in IBA/653/2020 wherein the Appellant has sought for the following relief: -

The Learned Tribunal has rejected the Application IA(IBC)/391(CHE)/2022 on the ground that, the relationship between the parties in the given set of circumstances of the proceedings of the Company Petition, should be taken into consideration only for the purpose to determine the status of the Financial Creditor and in the light of the observations that has been made by the Hon’ble Apex Court in the matter of Phoenix ARC Private Limited Vs Spade Financial Services Limited & Ors., the Application preferred by the Appellant was rejected holding it to be non-sustainable.

During the course of hearing, the parties sought for time as they were trying to enter into a settlement. Subsequently, they came up a draft settlement on while this Tribunal called for Report from RP under Section 29A of the Code. In compliance of the order of this Appellate Tribunal dated 17.07.2025, the Resolution Professional has filed an affidavit on 19.07.2025 submitting thereof that, after obtaining circular resolution passed by the CoC on 17.07.2025, appointed an expert firm to conduct the process of due diligence regarding the compliance of Section 29A of the I & B Code vis-à-vis, M/s. Winwind Power Energy Private Limited and to submit its Report, that the report was submitted to RP on 18.07.2025 and that he is now submitting the same with his sworn affidavit with the words that “on the basis of the perusal of the report submitted to me and based on my own independent diligence, I submit that M/s. WinWind Power Energy Private Limited in compliance under Section 29A of the I & B Code”. The contents of this affidavit as filed by the Resolution Professional, Mr. Sachin Shrinivas Bhattad, is relation to satisfaction of Section 29A, is not being opposed by anyone, hence the same is accepted.

The Appellants in Comp App (AT) (CH) (Ins) No.173/2023 & Comp App (AT) (CH) (Ins) No.174/2023 have jointly filed an affidavit on 09.07.2025 under the joint signatures which has been duly verified by the respective Learned Counsel for the Appellants contending thereof that, owing to the substantial effort made, for the settlement of dispute between the Appellants and the Financial Creditors of the Corporate Debtor, they have entered into the settlement, as per the terms of the settlement provided therein along with M/s. Winwind Power Energy Private Limited, who will now be the new Successful Resolution Applicant replacing M/s. Sunbeam Structural Private Limited vide its second addendum to the Resolution Plan. M/s. Winwind Power Energy Private Limited has also affirmed the same by signing the second addendum to the Resolution Plan.

In the terms of the settlement that has been submitted by way of an affidavit by Sunbeam Structural Private Limited, it was submitted that the creditors of the Corporate Debtor i.e., M/s. Edelweiss Asset Reconstruction Company Limited and M/s. Premier Chennai Properties Private Limited have expressed their willingness and have consented to the revised payout as per the second addendum to the Resolution Plan, which contains the stipulation that the amount as agreed upon will be paid within 7 working days, from the date on which the plan, thus submitted stands approved by the Learned NCLT. The same conditions as contained in the proposed settlement are extracted hereunder:-

In view of the settlement terms as extracted above, which provides for payment of the cost of the CIRP upto the date of the approval of the Resolution Plan, and increase in the total payout to the secured Financial Creditor, Edelweiss Asset Reconstruction Company Limited from ₹38.00 Crores to ₹42.00 Crores, and increase in the total payouts to Unsecured Financial Creditor M/s. Premier Chennai Properties Private Limited from ₹1.00 Crore to ₹8.00 Crores, the parties have unanimously submitted that if this Appellate Tribunal sets aside the Impugned Order, and to approves the Resolution Plan in terms of the affidavit, which has been preferred by the Appellant in the two Appeals, they will not have any grievances as such.

In response to the said proposed settlement submitted in form of an additional affidavit along with an addendum to the Resolution Plan and annexures, connected as extended by the Appellants of Comp App (AT) (CH) (Ins) No.173/2023 & Comp App (AT) (CH) (Ins) No.174/2023, the conditions of which has been extracted above, Respondent No.3 i.e., Edelweiss Asset Reconstruction Company Limited, the sole Financial Creditor while supporting the relief sought for, in the memorandum of settlement that has been submitted by the Appellants of Comp App (AT) (CH) (Ins) Nos.173 & 174/2023, have submitted a memo, on 09.07.2025 confirming this willingness/commercial acceptance of the same, Respondent subject to the certain conditions as extracted below: -

The Learned Counsel for the Appellant submitted that, their proposals for acceptance of the Resolution Plan with modifications as proposed in the addendum to it would be covered by the principles laid down by the Principal Bench in Comp App (AT) (Ins) No.732/2025, which was decided on 20.05.2025 in the matters of Vashishth Builders and Engineers Limited and Vashisth Estates Limited and Ors. Vs. Trishul Dream Homes Limited and Ors. For the aforesaid purpose, the Learned Counsel for the Appellant has made a reference to para 30 of the said Judgment, wherein the Appeals were allowed, the Impugned Order therein was set aside, and the Resolution Plan which has been submitted by the SRA was approved with the advice to the Learned Adjudicating Authority to pass the consequential order, within 60 days from the date of production of the order of the approval of the Resolution Plan before the Learned Adjudicating Authority. The relevant para 30 of the said Judgment, which is extracted hereunder: -

As far as the compliances to the code and extant Regulation including Section 29A of I & B Code, in this process of setting aside the Impugned Order and the consequential approval of the Resolution Plan are concerned, all necessary orders may be passed by the Learned NCLT in pursuance to the order, which has been passed today by us, which based on the memorandum submitted by the Appellants of the two Appeals, being Comp App (AT) (CH) (Ins) No.173/2023 & Comp App (AT) (CH) (Ins) No.174/2023, subject to the condition that, the amount as promised in the settlement is remitted within 7 days from the date of approval of the Resolution Plan as it has been stipulated in the memorandum filed by Respondent No.3, particularly as that contained in its para 3, which has already been extracted above.

In the light of the memorandum of settlement, which has been arrived at between the parties leading to the conclusion as dealt with hereunder, the observations that has been made in the Impugned Order, as against the Appellant of Comp App (AT) (CH) (Ins) No.175/2023 would too stand expunged, being considered unduly excessive because of the fact that, it is being pointed out, the auditors in their report have not mentioned about any fraudulent transaction and have not raised any specific allegations with regards to the avoidance transaction.

As far as the Appellant Premier Chennai Properties Limited in Comp App (AT) (CH) (Ins) No.211/2023 & Comp App (AT) (CH) (Ins) No.263/2023 are concerned, they don’t have any objection as such tothe proposal as discussed above of allowing the Appeals and remitting the matter back to the NCLT for reconsideration of the plan, subject to the condition that within 7 days of the approval of the Resolution Plan, thereafter the conditions given under Clause (c) of para 6 of the memorandum dated 09.07.2025 filed by the Appellants of Comp App (AT) (CH) (Ins) No.173/2023 & Comp App (AT) (CH) (Ins) No.174/2023, is complied with. For the reasons aforesaid, all these Company Appeals would stand allowed and the Impugned Orders in the respective Company Appeals will stand quashed, the matter is remitted back to the Learned NCLT to reconsider the plan in accordance with the directives contained in para 30 of the Judgment of Vashishth Builders and Engineers Limited and Vashisth Estates Limited and Ors. Vs. Trishul Dream Homes Limited and Ors. and the Learned Adjudicating Authority may pass the consequential order of the approval of the Resolution Plan subject to terms of memorandum of settlement. The Learned NCLT is expected to take a decision on the approval of the Resolution Plan within a period of 30 days from today and pass a consequential order upon approval of the plan, and the same will not give effect to, for a period of 7 days till the payment is made to the creditors of Comp App (AT) (CH) (Ins) No.211/2023 & Comp App (AT) (CH) (Ins) No.263/2023 as assured by Clause (c) of Para 6 of the memorandum dated 09.07.2025 filed by the Appellants. Subject to the above, all these Company Appeals would stand allowed. All pending Interlocutory Applications would stand closed.