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2020 (3) TMI 32 - AT - Insolvency and BankruptcyAppointment of liquidator - Adjudicating authority rejected the Approval of Resolution Plan - 'Preferential transactions' - Power of adjudicating authority to cancel the lease agreement - Period of limitation for 'Related Party'- The bid of the appellant was approved the 'Committee of Creditors' with 97.20% voting - HELD THAT - If an Adjudicating Authority is dissatisfied with a 'Resolution Professional', he may appoint another 'Resolution Professional' as a 'Liquidator'. Needless, to make an emphasis that it is the duty of Corporate Debtor to cooperate with a Liquidator. Section 35 of the Code, confers powers and duties of a Liquidator to ensure an orderly completion of the 'Liquidation Proceedings'. Even an Adjudicating Authority may assign certain duties, to be discharged by him. Undoubtedly a 'Liquidator' is to act under the supervision of an 'Adjudicating Authority'. A Liquidator is to establish a 'connivance' between a 'Company' and the 'Transferee'. It is well settled that the Resolution Professional is required to examine and confirm the Resolution Plan subject to the same being in conformity with the ingredient of Section 30(2) of the Code. A Resolution Professional can submit his ex facie opinion to the 'Committee of Creditors' that the law was or was not violated. It is true that the Section 30(2)(e) of the Code does not authorise the Resolution Professional to determine whether the Resolution Plan does or does not violate the relevant provisions of Law - In reality, ascribing conditions in the 'Resolution Plan' by the Appellant/Resolution Applicant is an unacceptable one, in the considered opinion of this Tribunal. Therefore, the Adjudicating Authority in the impugned order came to the right conclusion that the plan of the Resolution Applicant/Appellant was in negation of Law. The Adjudicating Authority is not empowered to pass an order of eviction and it is for an 'Aggrieved party' to move the appropriate forum for redressal of its grievances in accordance with Law. In short, the Committee of Creditors had approved the Resolution Plan in utter disregard regard to the ingredient of Section 30(2)(e) of the I B Code and as hence the same was rejected by the Adjudicating Authority. Moreover, the Adjudicating Authority had appointed a 'Liquidator' other than the 'Existing Resolution Professional'. Appeal dismissed.
Issues Involved:
1. Validity of the lease deed executed by the Corporate Debtor. 2. Approval of the Resolution Plan by the Committee of Creditors (CoC). 3. Jurisdiction of the Adjudicating Authority to cancel the lease deed. 4. Compliance of the Resolution Plan with Section 30(2) of the I&B Code. 5. Appointment of a Liquidator and the liquidation process. Detailed Analysis: 1. Validity of the Lease Deed Executed by the Corporate Debtor: The lease deed dated 01-08-2016 executed by the Corporate Debtor in favor of Daaksh Jute LLP was challenged on the grounds of being void as it was executed after the receipt of notice under Section 13(2) of the SARFAESI Act. The Adjudicating Authority noted that the lease agreement was still subsisting and questioned the maintainability of the application filed under Section 45 of the I&B Code for cancellation of the lease deed beyond the CIRP period of 270 days. The Tribunal upheld the Adjudicating Authority's view that the application was not maintainable and that the lease deed could not be canceled as part of the Resolution Plan. 2. Approval of the Resolution Plan by the Committee of Creditors (CoC): The CoC approved the Resolution Plan submitted by K.L. Jute Products Pvt. Ltd. despite the plan containing conditions that were contrary to the "as is where is and as is what is" basis stated in the public notice. The Adjudicating Authority found that the plan sought exemptions and conditions that could not be complied with within a reasonable period, making it non-compliant with Section 30(2)(e) of the I&B Code. The Tribunal agreed with the Adjudicating Authority's decision to reject the plan due to these legal non-compliances. 3. Jurisdiction of the Adjudicating Authority to Cancel the Lease Deed: The Adjudicating Authority held that it did not have the jurisdiction to pass an order for the eviction of Daaksh Jute LLP from the premises of the Corporate Debtor as per the conditions laid down in the Resolution Plan. This position was supported by the Tribunal, which cited the NCLAT decision in Raj Builders vs. Raj Oil Mills Ltd., confirming that the Adjudicating Authority is not competent to pass eviction orders. 4. Compliance of the Resolution Plan with Section 30(2) of the I&B Code: The Resolution Plan submitted by K.L. Jute Products Pvt. Ltd. was found to contravene Section 30(2)(e) of the I&B Code, which mandates that the plan should not contravene any provisions of law. The Adjudicating Authority observed that the plan included conditions that required the cancellation of the lease deed and other exemptions, which were not permissible. The Tribunal upheld this finding, emphasizing that the Resolution Plan did not comply with the legal requirements and was rightly rejected. 5. Appointment of a Liquidator and the Liquidation Process: Given the expiration of the CIRP period of 270 days and the rejection of the Resolution Plan, the Adjudicating Authority ordered the liquidation of the Corporate Debtor as a going concern under Regulation 32(c) of the IBBI (Liquidation Process) Regulations, 2016. The Adjudicating Authority appointed a new Liquidator, replacing the existing Resolution Professional. The Tribunal found no legal flaws in this decision and affirmed the order of liquidation. Conclusion: The Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision to reject the Resolution Plan and order the liquidation of the Corporate Debtor. The Tribunal found that the Resolution Plan was non-compliant with Section 30(2) of the I&B Code and that the Adjudicating Authority did not have the jurisdiction to cancel the lease deed. The Tribunal also confirmed the appointment of a new Liquidator and the liquidation process as per the regulations.
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