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2022 (8) TMI 837 - AT - Insolvency and BankruptcySeeking withdrawal of application admitted - OTS proposal of the Appellant accepted by the Bank or not - RP received any such communication by the Bank regarding the acceptance of OTS of the Appellant, or not - HELD THAT - The Letter dated 16.10.2020 is the only communication which was received by the Appellant from the Bank regarding OTS Offer of the Appellant. When we read the letter dated 16.10.2020 it clearly indicates that OTS Offer dated 14.10.2020 was not accepted by the Bank rather the second paragraph of Letter clearly indicates that if the Corporate Debtor intends to settle the matter under OTS, appropriate application is to be filed by the Corporate Debtor under Section 12A of the IBC, 2016 mentioning the details of offer, source of fund, payment schedule etc. Thus the letter dated 16.10.2020 required further information as indicated in the Letter for consideration of OTS Offer - From the pleadings, it does appear that Application under Section 12A was shared by the Appellant to the RP and the Bank, but the said Application under Section 12A was never filed before the Adjudicating Authority. The Resolution Professional has stated in his Reply that he never received any acceptance from the Bank of OTS offer of the Appellant hence there was no question of filing any Application under Section 12A of the Code. Whether the minutes of Committee of Creditors dated 03rd February, 2021 indicates that OTS proposals made by the Appellant was not considered and without consideration of the OTS Proposal, CoC proceeded to approve the Resolution Plan of the Respondent No. 3? - HELD THAT - Form-FA was never provided. It was also noted that officials of Corporate Debtor were in talk with the Bank and matter regarding the settlement was yet to be formalized through NCLT. CoC resolved that CIRP need to be continued and steps in the process need to be covered accordingly. The CoC when decided to proceed to consider the Resolution Plan at hand it is implicit the OTS Offer made by the Appellant was never accepted. Thus, withdrawal Application under Section 12A after the constitution of CoC is to be dealt in further two sub-heads. There is stringent requirement which is to be mentioned by the Appellant for withdrawal if the Application is made after the issue of invitation of EoI. In the present case, EoI was published on 15.09.2020 and even the OTS Offer made by the Appellant was after publication i.e. 14.10.2020 thus present is the case where invitation of EoI was made much earlier than OTS offer hence there has to be some reason justifying the withdrawal after issue of such invitation. Present is a case where Application under Section 12A was never filed before the Adjudicating Authority. Thus, for withdrawal, in the present facts of the case, specific reasons were required justifying withdrawal when the OTS Offer was made after publication of Form-G. There is no material to indicate that OTS Offer of the Appellant was ever accepted by the Bank. We had also noticed the Letter dated 16.10.2020 which requires certain information from the Appellant for consideration of the OTS Offer. Thus the present is a case where OTS offer of the Appellant was never accepted hence occasion to proceed under route of Section 12A did not arise. There is no error in the Order of the Adjudicating Authority - The Adjudicating Authority also did not commit any error in passing the Order dated 19th April, 2022 approving the Resolution Plan filed by the Resolution Professional - Application disposed off.
Issues Involved:
1. Acceptance of One Time Settlement (OTS) Proposal. 2. Consideration of OTS Proposal by Committee of Creditors (CoC). 3. Approval of the Resolution Plan. 4. Jurisdiction and commercial wisdom of CoC. Issue-wise Detailed Analysis: 1. Acceptance of One Time Settlement (OTS) Proposal: The Appellant proposed an OTS amount of Rs. 10 Crores to the Central Bank of India on 14.10.2020, which the Bank responded to on 16.10.2020, indicating that if the Corporate Debtor intended to settle under OTS, an appropriate application under Section 12A of the Insolvency and Bankruptcy Code, 2016 (IBC) needed to be filed. The Bank's letter did not accept the OTS offer but required further details for consideration. The Appellant reiterated its proposal on 09.11.2020, but the Bank never formally accepted the OTS offer. Consequently, no application under Section 12A was filed before the Adjudicating Authority. 2. Consideration of OTS Proposal by Committee of Creditors (CoC): The CoC considered the OTS proposal during its meeting on 03.02.2021. The Suspended Board of Directors presented the OTS offer, but the CoC decided to continue with the Corporate Insolvency Resolution Process (CIRP) and proceed with the Resolution Plan. The CoC's decision indicated that the OTS offer was not accepted. Regulation 30A of the IBC specifies the procedure for withdrawal applications under Section 12A, which includes obtaining 90% CoC approval, which was not achieved in this case. 3. Approval of the Resolution Plan: The Resolution Plan submitted by Respondent No. 3, Kundan Care Products Ltd., was approved by the CoC with 100% voting. The Appellant's argument that their OTS offer was better than the Resolution Plan was dismissed, as the commercial wisdom of the CoC in approving the Resolution Plan is not subject to judicial review. The CoC's decision was based on the commercial viability and overall benefit to the stakeholders. 4. Jurisdiction and Commercial Wisdom of CoC: The Tribunal emphasized that the commercial wisdom of the CoC cannot be judicially reviewed. The CoC's decision to approve the Resolution Plan over the OTS offer was within its jurisdiction and commercial discretion. The Tribunal referenced previous judgments to support this principle, highlighting that the CoC's decisions are based on commercial considerations and are not to be interfered with unless there is a procedural irregularity or illegality. Conclusion: The Tribunal found no error in the Adjudicating Authority's order rejecting the Appellant's I.A. No. 70 of 2021 and approving the Resolution Plan as per I.A. No. 134 of 2021. The appeals were dismissed, affirming the CoC's decision and the Adjudicating Authority's orders. The Tribunal reiterated the importance of the CoC's commercial wisdom and the procedural requirements under Section 12A of the IBC.
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