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TMI Blog2020 (8) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings . When the Committee of Creditors is of the view that no useful purpose will be served in continuing/elongating the Insolvency Resolution Process because of the fact that there was no Resolution Plan to the satisfaction of the Committee of Creditors , then an Adjudicating Authority is undoubtedly to pass necessary orders as per Sec 33(1)(a) and Sec 34(1) of the I B Code for announcement of Liquidation in respect of a Corporate Debtor . Section 240A of the Code to Micro, Small and Medium Enterprises - HELD THAT:- Financial Creditor or an Operational Creditor has a right to file necessary application for Insolvency . The creditors of Micro, Small and Medium Enterprises can take it to Insolvency . In fact, Sec 240A (2) of the Code confers power on the Central Government to direct by notification in Public Interest that any of the provisions of I B Code shall not apply to MSMEs or apply to them with such variations as may be mentioned in the notification. Appeal dismissed. - COMPANY APPEAL (AT) (INS) No. 1402 of 2019 - - - Dated:- 4-3-2020 - (Justice Bansi Lal Bhat) Member (Judicial) , (Justice Venugopal, M) Member (Judicial) And (Justice Anan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I B Code. Further developments took place in the Resolution Process such as filing of a fresh Resolution Plan by the Learned Applicant on 20.9.2019 and that the Resolution Applicant had also transferred Rupees Fifty lakhs by RTGS transfer on 27.9.2019 and further gave the Original Title Deeds of a prime property along with the Valuation Report and Legal Opinion worth ₹ 6.6 crores, on or before 26.9.2019. However, these facts were not brought to the notice of the Adjudicating Authority by the Resolution Professional and hence the impugned order is not valid in the eye of Law. 5. The Learned Counsel for the Appellant submits that the date of admission of Appeal against the Admission Order dated 10.12.2018 before this Tribunal was 10.1.2019 and that the Appeal was dismissed on 7.5.2019 and that 117 days are required to be excluded. Further, 330 days after exclusion of 117 days expired on 2.3.2020. Moreover, the Committee of Creditors meeting dated 4.9.2019 clearly established that the members of the Committee of Creditors had agreed to seek further extension of time but the Resolution Professional projected M.A. No.989/2019 on 6.9.2019 (filed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts feet, instead of sending it into Liquidation beyond 330 days. 8. The Learned Counsel for the Appellant takes a stand that the Corporate Debtor/Company was certified to be a Small Scale Ancillary Undertaking , as per the registration certificate issued by the District Industries Centre dated 12.7.1993 and that the MSME certificate dated 23.1.2019 confirmed the date of commencement of activities of the Corporate Debtor company from 21.06.1991. In this connection, the Learned Counsel for the Appellant refers to the Hon ble Supreme Court decision in Arcelor Mittal India Pvt. Limited vs. Satish Kumar Gupta ((2019) 2 SCC 1) 109 para 46) wherein it is observed as under: According to us, it is clear that opening word of Section 29A furnish a clause as to the time at which clause (c) is to operate. The opening words of Section 29A state, a person shall not be eligible to submit a resolution plan 9. The Learned Counsel for the Appellant refers to the Hon ble Supreme Court decision in Swiss Ribbons and Another Vs. Union of India (AIR 2019 at page 739) wherein the ingredients of Sec 29A of the I B Code were upheld. 10. The Learned Counsel for the Appellant submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Plan except for the Plan submitted by the Appellant as the Corporate Debtor Company is a MSME company . 13. It is the version of the Appellant that in the Resolution Plan by the Appellant, the Resolution value was mentioned as ₹ 242/- crores and that the Liquidation value as determined by the Resolution Professional is ₹ 161.25 crores as mentioned in the impugned order. Besides this, out of ₹ 242/- crores, ₹ 222.5 crores would go to the Financial Creditors thus moving forward on Resolution Plan makes more sense than going for Liquidation of Company in issue. Further, that much more than the principal sum of the Financial Creditors is being given under the Resolution Plan. It is brought to the fore before this Tribunal that in respect of Earnest Money Deposit of ₹ 5 crores asked by the Committee of Creditors , ₹ 50 crores was deposited with the Resolution Professional by means of RTGS on 27.9.2019 by the Appellant and that the Original Title Deeds of a property valued at ₹ 6.6 crores was submitted with the Resolution Professional on 26.9.2019, in terms of the discussions that took place on 24.9.2019 by the Commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.A. No.995/19, dated 14.9.2019, wherein the Appellant had prayed that the Resolution Plan dated 25.8.2019 be reconsidered by the members of the Committee of Creditors and it is quite evident that the Plan was not approved by the Committee of Creditors on 4.9.2019 and no Appeal was filed against the order of dismissal passed in M.A. No.995/2019. At this juncture, the Learned Counsel for the Respondent points out that the CIRP of the Respondent was initiated by the Adjudicating Authority on 10.12.2018 and in fact, the Appellant had not filed any application seeking exclusion of any period of time before any Court or Tribunal and that there was no stay of CIRP at any stage; also that no time was excluded from the Respondent s CIRP period of 270 days (including 90 days extension granted by the Adjudicating Authority on 7.6.2019). 18. Advancing his argument, the Learned Counsel for the Respondent contends that the Appellant s Plan was not approved by the Committee of Creditors after a full consideration on merits of its commercial viability and feasibility . In terms of the ingredients of Section 30(4) of the Code, at least 66 per cent of the Committee of Creditors s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28.8.2019 and the same was not approved. When that being the fact situation, the aspect of CIRP period , the Committee of Creditors request for 15 days extension and the eligibility of the Appellant as per Section 29A of the I B Code on account of MSME registration are not relevant. 21. The plea on behalf of the Respondent is that the Resolution Professional had discharged his duties as per Section 25 of the I B Code by filing a Miscellaneous Application before the Adjudicating Authority for the determination of MSME status of the Respondent and by bringing to the attention of the Committee of Creditors without making an adjudication in this regard. Further, in the order dated 6.8.2019, of the Adjudicating Authority (NCLT, Guwahati Bench), in Bank of India v M/s Maxim Infrastructure Real Estate Limited and Others, it is observed as under: act of obtaining the MSME status by the ex-promoter is not but another attempt to submit a Resolution Plan through back-door entry which is not at all as per the true letter and spirit of 240 A of IBC. I the true spirit of 240A is to protect genuine MSME entrepreneurs which are MSME entrepreneurs from the beginn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions were effected in numerous newspapers as per Sec 15 of the Code, inviting claims from the Creditors of the Corporate Debtor . Although the management of the affairs of the Corporate Debtor vested in the hands of the Resolution Professional on 23.1.2019 (after the initiation of CIRP), the promoters who were employees of the Corporate Debtor, without the knowledge of the Resolution Professional, had applied for and obtained a Registration Certificate under the MSME Act to circumvent the ingredients of Sec 29A of the Code. 24. The first meeting of the Committee of Creditors of Corporate Debtor took place on 8.1.2019. After obtaining the nod of the Committee of Creditors on 23.2.2019, the Resolution Professional , in terms of Form-G as per the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016, invited Expression of Interest from interested and eligible Resolution Applicants to submit their respective Resolution Plans and ten such interests were received, out of which only two were found eligible. That apart, the said the two Resolution Applicants had not complied with the terms mentioned in I B Code. The Appellant had to deposit the Earne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstained from voting in regard to the Resolution Plan. Therefore, the said Resolution Plan projected by the Appellants, could not secure the minimum required vote of 66% of the voting share of the Committee of Creditors and the Resolution Plan submitted by the Appellant came to be rejected. The Resolution Professional filed an Application under Sec 33(1) of the Code for initiation of Liquidation Process of Corporate Debtor and the Adjudicating Authority passed an order on 21.11.2019 whereby a direction was issued for initiation of the Liquidation Process of the Corporate Debtor . In short, the present Appeal filed by the Appellant is only to stifle the Liquidation Process of the Corporate Debtor . 27. It will not be out of place for this Tribunal to make a significant mention that a Liquidation can be triggered under the following circumstances: (i) Where no Resolution Plan is received by an Adjudicating Authority from the Resolution Professional prior to the expiry of the Insolvency Resolution Process period (ii) Where the Adjudicating Authority rejects the Resolution Plan under Sec 31 of the Code for noncompliance of the requirements specified there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose will be served in continuing/elongating the Insolvency Resolution Process because of the fact that there was no Resolution Plan to the satisfaction of the Committee of Creditors , then an Adjudicating Authority is undoubtedly to pass necessary orders as per Sec 33(1)(a) and Sec 34(1) of the I B Code for announcement of Liquidation in respect of a Corporate Debtor . 31. It is true that the I B Code is a social legislation not just to take into account the stakeholders interests (including the Corporate Debtors , Employees and others who have stake in Business). Sec 29A of the I B Code mentions the persons who cannot be a Resolution Applicant (including an Undischarged Insolvent , Wilful Defaulter of loans, anyone who has an NPA loan as per RBI Guidelines, etc.). In fact, restrictions shall apply in respect of an ineligible individual or any other person acting jointly with such person and submitting a plan. 32. As per Regulation 39(1) of IBBI (Insolvency Resolution Process) for Corporate Persons) Regulations, 2016, a Resolution Plan is to be submitted to the Resolution Professional 30 days before the expiry of maximum period of 180 days. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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