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TMI Blog2018 (2) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations, Committee of Creditors is perfectly justified in rejecting the Resolution Plan. Therefore, there are no facts and circumstances that warrant interference by this Adjudicating Authority in the rejection of the Resolution Plan dated 3.1.2018 submitted by the Resolution Applicant, even assuming that this Adjudicating Authority has got jurisdiction to decide the validity or otherwise of the rejection of the Resolution Plan submitted by the Resolution Applicant. Application dismissed. - IA NO. 9/2017 In C.P. (I.B.) NO. 5/7/NCLT/AHM/2017 - - - Dated:- 15-1-2018 - MR. MS. MANORAMA KUMARI AND MR. BIKKI RAVEENDRA BABU, JJ. For The Applicant : Navin Pahwa, Ld. Sr. Adv. and Prithu Parimal, Ld. Adv. For The Respondent : Vishal Dave, Nipun Singhavi, Ld. Adv., Lalit Patel, Ld. Adv ORDER Per : Hon'ble Sri Bikki Raveendra Babu, Member (J) 1. The Promoter/Director of the Corporate Debtor filed this Application seeking a direction to the Respondents to take all effective steps to ensure the Meeting of the Committee of Creditors is held and the Resolution Plan submitted by Respondent No.4/ARC is placed and considered by the Committee of Creditors and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce passed by the Central Government amending Section 29 of the Insolvency and Bankruptcy Code, 2016, the Resolution Plan submitted by the Promoters was rejected as they are not eligible to submit a Resolution Plan and the COC did not accept the same; (k) On 10.12.2017 the Resolution Professional made a publication in English daily newspapers inviting Resolution Applications on or before 20.12.2017; (l) On 19.12.2017 Resolution Applicant/ARC filed a Resolution Plan for ₹ 93.42 Crores; (m) On 30.12.2017, Resolution Professional rejected the Resolution Plan filed by the Resolution Applicant/ARC; (n) On 1.1.2018, Resolution Professional issued a Notice for convening meeting of the COC on 4.1.2018 with an Agenda to decide on the liquidation of the Corporate Debtor and to decide the name of the Liquidator for liquidation process; (o) On 2.1.2018, Resolution Applicant/ARC submitted a modified Plan to Respondent No.3 by e.Mail; (p) Resolution Professional requested the Resolution Applicant/ARC to forward a signed copy of the Resolution Plan to enable him to place it before the COC meeting held on 4.1.2018; (q) Resolution Applicant/ARC submitted the signed copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Resolution Plan approved by the COC but not to sit over Judgment on the Resolution of the COC in rejecting the Resolution Plan. Here itself, it is necessary to refer to Section 33 of the Code. Section 33 of the Code gives authority to this Adjudicating Authority to consider a Resolution Plan that is given before it before the expiry of Insolvency Resolution Process period or the maximum period permitted for completion of the Corporate Insolvency Resolution Process under Section 12. In case if no Resolution Plan is placed before this Adjudicating Authority before the expiry of the Insolvency Resolution Process period or the extended period, then this Adjudicating Authority has no other go except to order for liquidation. Section 33(1)(b) gives authority to this Adjudicating Authority to order liquidation in case it rejects the Resolution Plan under Section 31(2) for non-compliance of the requirements satisfied therein. Therefore, even at the stage of ordering liquidation, this Adjudicating Authority has no authority to consider a Resolution Plan that was rejected by the COC. 6. In this context, it is necessary to refer to the Background and Object-Purpose of the Insolvency Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e believes that there is only one correct forum, for evaluating such possibilities, and making a decision: a creditors committee, where all financial creditors have votes in proportion to the magnitude of debt that they hold. In the past, the laws in India have brought arms of the government (legislature, executive or judiciary) into this question. This has been strictly avoided by the Committee. The appropriate disposition of a defaulting firm is a business decision, and only the creditors should make it. The Committee came to the conclusion that the creditors and debts ought to be left to decide and realise and agree on whether the entity was facing financial failure or business failure and whether it was capable of being revived. The most significant change being, that when a company defaults on its debt, control of the company should shift to creditors rather than the management who was retaining control after default. It is apparent from a reading of the object and purpose for which IBC has been enacted is to set up an Insolvency and Bankruptcy resolution process, which has to be implemented in a strict time bound manner, by the appointment of an IRP and creation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan on 20.12.2017. It is styled as Indicative Resolution Plan . It was submitted without obtaining Information Memorandum (LA.) and signing Non-disclosure Agreement ( NDA ). The said Resolution Plan was rejected by the Resolution Applicant. There is no grievance about the rejection of the Resolution Plan given by the Resolution Applicant on 20th December, 2017. Thereafter on 2.1.2018, unsigned Resolution Plan was submitted. It was only on 3.1.2018 the signed Resolution Plan was submitted. As can be seen from the Minutes of the Meeting held on 4.1.2018, the Resolution Professional obtained the legal opinion also on the Resolution Plan filed by the Resolution Applicant on 3.1.2018. The Resolution Applicant informed the COC that the Resolution Plan filed by the Resolution Applicant did not conform to the mandatory criteria and it was relied on some information which was never part of the Information Memorandum. The Resolution Professional also brought to the notice of the COC the instances that were stated in the Resolution Plan are not there in the Information Memorandum. The Resolution Professional also informed the COC that the Resolution Plan does not meet the criteria specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 37 and 39. Regulation 39 require the filing of the Resolution Plan within 30 days before the expiry of the Corporate Insolvency Resolution Process period. But, in the case on hand, the Resolution Plan was filed only on 3.1.2018, whereas the Corporate Insolvency Resolution Process period was going to expire by 13.1.2018, and that too one day before the Meeting of the COC. To meet with this situation, it is contended by the learned Senior Counsel for the Promoter/Directors and learned Counsel for the Resolution Applicant that Resolution Applications were invited only on 10.12.2017 mentioning the last date as 20th December, 2017 . It is also contended that Section 29 of the Code enjoins upon the Resolution Professional to furnish Information Memorandum to the potential Resolution Applicant and the same has not been done. In the case on hand, for the first time, the Resolution Applicant filed the Resolution Plan dated 19th December, 2017 on 20th December, 2017 without obtaining Information Memorandum. It is the duty of the Resolution Applicant if he is really intended to file a Resolution Plan to obtain Information Memorandum and basing upon it he has to file the Resolution Plan. Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Debtor, it is not possible to hold that the Promoter/ Director is also an affected person or aggrieved person. 11. It is contended on behalf of the Resolution Applicant that no notice of the meeting of the COC was given to the Resolution Applicant. In fact, the signed Resolution Plan was submitted by the Resolution Applicant on 3.1.2018; and the Meeting was held on 4.1.2018. No doubt, there was a request by the Promoter/Director to postpone the Meeting of the COC. But that was not considered. Section 30 sub-section (5) of the Code only says that Resolution applicant may attend the meeting of the Committee of Creditors in which the Resolution Plan of the Applicant was considered. But no duty is cast upon the Resolution Professional to inform the date of Meeting of the Committee of Creditors to the Resolution Applicant. But without knowledge of the date of Committee of Creditors Meeting it is not possible for the Resolution Applicant to attend before the COC meeting in which its application was taken up for consideration. Therefore, there is a need for the notice of the COC meeting to the Resolution Applicant, but no such notice was given. The reason may be there is only one ..... X X X X Extracts X X X X X X X X Extracts X X X X
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