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TMI Blog2020 (3) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... e in question, are as follows: (1) M/s. Falcon Tyres Limited, (the Corporate Debtor) was incorporated as a Public Limited Company on 29th November, 1973 and engaged in manufacture of tyres and tubes for two and three wheelers, jeeps, LCVs and farm vehicles. In due course of time, on account of labour unrest beyond the control of the management, manufacturing activities of the Corporate Debtor came to a standstill and the Corporate Debtor shut down its operations in 2015. Multiple attempts were made to revive the Corporate Debtor, but to no avail. Eventually, C.P. (IB) No.14/BB/2017 was filed by M/s. Edelweiss Asset Reconstruction Company Limited (EARCL), a Financial Creditor, under Section 7 of the IBC, 2016 R/w Rule 4 of the I&B (AAA) Rules, 2016, by inter alia seeking to initiate CIRP in respect of M/s. Falcon Tyres Limited (Corporate Debtor) on the ground that it has committed default for an amount of Rs. 107,95,37,383/-. Thereafter, the Company Petition was admitted by this Adjudicating Authority, vide order dated May 1st, 2018 (Admission Order') by initiating CIRP, appointing Mr. Vijay Kumar V. Iyer, bearing IBBI Registration No. IBBI/IPA-001/IP-00526/ 2016-2017/1370 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gust 17th, 2018, wherein the last date for submission of Resolution Plan was extended till September 14th, 2018. In the seventh meeting of the CoC dated 01.10.2018 with a few more investors showing interest the members of the CoC agreed to extend the last date for submission of Resolution Plan till October 12th, 2018. Accordingly another advertisement for extension of last date for submission of Resolution Pan was published on 03.10.2018. (5) During the eighth meeting of the CoC held on 15.10.2018, the RP informed the Members of the CoC that one Resolution Plan was submitted by Maple Tree Leather Goods Private Limited on 12.10.2018. In the ninth meeting of the CoC held on 25th October, 2018, the RP briefed the members of the CoC that the Resolution Plan submitted by the Resolution Applicant does not comply with the mandatory provisions of the Code, CIR regulations and the process Memorandum. The Representative of the Resolution Applicant was also invited by the RP for discussions with the members of the CoC. Following discussions with the representative of the Resolution Applicant, the CoC rejected the Resolution Plan submitted by the Resolution Applicant since it was non-complia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led discussion on the commercial aspects of the Resolution Plan. The Resolution Applicant was not agreeable to address some of the commercial concerns of the members of the CoC. Hence, most of the CoC members were of the view that the First Resolution Plan would be rejected. However, the Resolution Professional decided to put the matter on electronic voting. On 24th January, 2019, when the electronic voting was open for CoC Members to vote on either in favour of approval of the Resolution Plan or liquidation, another addendum on email was received from the representative of the Resolution Applicant, which revised the commercial aspects of the Plan. (7) On the advice of Members of the CoC, the RP convened another meeting on 24.01.2019 via teleconferencing to get view of the members of the CoC on the fifth addendum submitted by the Resolution Applicant. The CoC members, who attended the meeting, were not in favour of the approving the Resolution Plan because the Resolution Plan as proposed by the Resolution Applicant does not appear to be credible, capable and genuine. The Resolution Applicant is also not ready to submit the performance guarantee, which is a requirement, as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Plan and no provision is made in the Code, Rules or Regulations that would enable or enjoin upon the Adjudicating Authority to sit over the resolution of the CoC in rejecting a particular Resolution Plan. (10) The Hon'ble Supreme Court of India in the case of K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312 has clearly held that if opposition to the proposed resolution plan is purely a commercial or business decision, the same, being non-justifiable, is not open to challenge before the Adjudicating Authority or for that matter the Appellate Authority. The Hon'ble Supreme Court went on to further hold that in such a situation, non-recording of any reason for taking such commercial decision will be of no avail. The Hon'ble Supreme Court held as under: "..........33. Besides the commercial wisdom, the CoC has been given paramount status without any judicial intervention, for ensuring competition of the stated process within the timelines prescribed by the Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(4) furnishes the answer, which is that all that can happen at this stage is to require the Resolution Professional to invite a fresh resolution plan within the time limits specified where no other resolution plan is available with him. It is clear that at this stage again no application before the Adjudicating Authority could be entertained as there is no vested right or fundamental right in the resolution applicant to have its resolution plan approved, and as no adjudication has yet taken place." 3. Heard Shri Nischal Dev, learned Counsel for Applicant/Resolution Professional and Shri Vikram Trivedi, learned Counsel for Petitioner/EARCL. We have carefully perused the pleadings of both the parties and extant provisions of the Code and Rules made thereunder. 4. The learned Counsels, have once again reiterated their respective averments, as briefly stated supra. They have reiterated that they explored all possibilities to get resolution rather than to send the Corporate Debtor for liquidation. However, they failed to get any viable Resolution Plan and the Resolution to seek liquidation of the Corporate Debtor was approved with 99.3%. Therefore, they urged the Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds viz., livelihood of several hundred workers depend on the Company, Govt., of Karnataka also shown its interest for revival of the Company, unsuccessful Resolution Applicant has also Application seeking to accept their Resolution Plan etc. Therefore, basing on various offers/contention made by Resolution Applicant in question, the issue was again re-considered by the CoC by calling a meeting of financial creditors on 25th September, 2019 to discuss the revised financial offer submitted by the Resolution Applicant. However, it is found that revised offer is not Rs. 370 Cr., as contended by Resolution Applicant and it is only Rs. 100 Cr. And there is no change for Financial Creditors, no comfort has been given to them with respect to upfront payment which will be paid by the and no performance bank guarantee has been furnished securing the payment promised by the Resolution Applicant. The Financial Creditors insist they should get latest Rs. 170 Cr., apart from compliance of provisions of Code and the Rules made thereon. However, the Resolution Applicant has not proved its bonafide even at the stage of offering their terms and conditions of plan and trying to get confidential i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor would be covered by such CIRP. In the instant case, there are several claims from Banks, Commercial Dept., Operational Creditors, Workers etc., running into more than Rs. 2000 Cr. 10. After verification of claims, 6 Financial Creditors EARCL (Rs. 1,253 Cr./82.65%), SBI-GF (Rs. 97.27 Cr./6.43%), PNB (Rs. 67.66 Cr./4.47%), SBI (Rs. 59.41 Cr./3.93%) OBC (Rs. 25.02 Cr./1.65%) and Amondz Finanz Limited (Rs. 9.91 Cr/0.66%) alone entitled for total amount of Rs. 1,512.63 Cr. Apart from above Financial Creditors, Commercial Tax dues are to the tune of Rs. 379 Cr., apart several crores of rupees due to operational Creditors, workers etc. And the operation of Company was stated to have been suspended as early as April, 2015 due to various reasons. Therefore, various contentions raised by Applicant that its Resolution Plan is most viable, alternative to revive operations of the Company etc., are not all tenable and baseless and thus they are liable to be rejected. The CoC has dispassionately considered the issue vis a vis the object of code, interest of all stake holders, and thus found that the Resolution Plan in question is not at all tenable and the same was view was alm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority except to initiate Liquidation proceedings, as per extant provisions of Code, in respect of Corporate Debtor, and the delay occurred till this date is deemed to be condoned in the interest of justice. 13. In the result, I.A. No.47 of 2019 in C.P.(IB) No.l4/BB/2017 is hereby disposed of with the following directions: (1) We hereby ordered that M/s. Falcon Tyres Limited (Corporate Debtor herein), to be liquidated in the manner as laid down in Chapter III (Liquidation Process) of Part II of the Code; (2) We hereby appointed Shri Shivadutt Bannanje, Insolvency Professional, bearing registration No.IBBI/IPA-002/IP-N00266/2017-18/10779 as Liquidator for the Corporate Debtor; (3) We hereby directed the Liquidator to issue immediate public announcement by stating that the Corporate Debtor is in liquidation; (4) The Registry is directed to communicate this order to the Registrar of Companies, Karnataka for information and necessary action. (5) The liquidator is directed to strictly adhere to the extant provisions of the Code and the Rules made there under framed by IBBI from time to time and also directed to take expeditious steps to complete the liquidation process ..... 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