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2024 (5) TMI 137 - AT - Insolvency and BankruptcyLiquidation of corporate Debtor - Eligibility of the Appellant to submit the Resolution Plan under section 29 A of IBC - relevant time - commercial wisdom of the CoC regarding non consideration of the Resolution Plan submitted by the Appellant - resultant recommendation of the CoC for liquidation of the Corporate Debtor which was accepted by the Adjudicating Authority in the Impugned Order - HELD THAT - The relevant date is the date of submission of the Resolution Plan and the Appellant was not eligible to submit the Resolution Plan on 12.05.2022, since he had already been declared as wilful defaulters by the Respondent No. 2 on 17.07.2021 and 04.10.2021. i.e., much prior to his submission of Respondent Plan. It is also fact that no judicial stay existed in favour of the Appellant on 12.05.2022 regarding his status as wilful defaulter. Hence, the Appellant was not eligible to submit the Resolution Plan and this was rightly adjudicated by the Adjudicating Authority. There are no error in the Impugned Order dated 19.04.2023. The appeal devoid of any merit stand dismissed.
Issues Involved:
1. Eligibility of the Appellant to submit the Resolution Plan u/s 29A of the Insolvency & Bankruptcy Code, 2016. 2. Commercial wisdom of the Committee of Creditors (CoC) regarding non-consideration of the Resolution Plan and recommendation for liquidation. 3. Alleged violation of principles of natural justice. Issue-wise Comprehensive Details: 1. Eligibility of the Appellant to submit the Resolution Plan u/s 29A of the Code: - The Appellant, a Suspended Director and one of the Resolution Applicants of Warana Dairy and Agro Industries Ltd., challenged the Impugned Order dated 19.04.2023 by the National Company Law Tribunal (NCLT), Mumbai Bench, which allowed the liquidation of the Corporate Debtor. - The Appellant was declared a wilful defaulter by Respondent No. 2 (IDBI Bank Limited) on 19.07.2021 and 04.10.2021. - The Appellant submitted the Resolution Plan on 12.05.2022. The CoC discussed the plan in various meetings but ultimately decided not to accept it due to the wilful defaulter status of the Appellant. - The Appellant argued that he had obtained an ad-interim relief from the Civil Judge, Junior Division, Kolhapur, which restrained the respondents from acting upon the wilful defaulter declaration. However, the relief was conditional and vacated upon the filing of a reply by the respondents. - The Appellant's civil suit challenging the wilful defaulter status was dismissed on 19.12.2022, and subsequent appeals were also dismissed. - The Tribunal noted that Section 29A(b) of the Code disqualifies a wilful defaulter from submitting a Resolution Plan. The exemption under Section 240A of the Code does not apply to Section 29A(b). - The Tribunal upheld that the Appellant was ineligible to submit the Resolution Plan on 12.05.2022 due to his wilful defaulter status. 2. Commercial wisdom of the CoC regarding non-consideration of the Resolution Plan and recommendation for liquidation: - The CoC, consisting of IDBI Bank Limited, Punjab National Bank (International Limited) London, Shri Warana Mahila Sahakari Panth Sanstha Limited, and Amrut Sevak Sah Pat Sanstha Limited, decided not to consider the Resolution Plan submitted by the Appellant due to his ineligibility under Section 29A(b) of the Code. - The CoC resolved to liquidate the Corporate Debtor in the 21st CoC Meeting held on 06.10.2022 and 07.10.2022, which was supported by a 66.37% majority voting. - The Tribunal emphasized that the decision to liquidate falls within the commercial wisdom of the CoC, which is not open to judicial scrutiny, as upheld in several judgments, including the Hon'ble Supreme Court's ruling in Arcelor Mittal India Private Limited Vs. Satish Kumar Gupta and Ors. [(2019) 2 SCC 1]. 3. Alleged violation of principles of natural justice: - The Appellant alleged that the Adjudicating Authority did not consider his pleadings and violated the principles of natural justice. - The Tribunal found that the CoC had discussed the eligibility and the Resolution Plan of the Appellant in multiple meetings and had given due consideration to the judicial orders and the status of the Appellant as a wilful defaulter. - The Tribunal concluded that there was no violation of the principles of natural justice as the CoC and the Adjudicating Authority had followed due process. Conclusion: - The Tribunal dismissed the appeal, upholding the Impugned Order dated 19.04.2023, which found the Appellant ineligible to submit the Resolution Plan and accepted the CoC's recommendation for liquidation. - The appeal was found devoid of any merit and dismissed with no costs. Interlocutory Applications, if any, were closed.
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