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TMI Blog2019 (5) TMI 1815X X X X Extracts X X X X X X X X Extracts X X X X ..... h, etc. 3. I.A. No.221 of 2019 is filed by Shri R. Kiran Gupta, the Authorised Representative of M/s.Peepul Capital Fund III LLC ('Applicant') under Sections 47 read with 45 and 48 of the IBC, 2016, by inter alia seeking to restore the position of the Corporate Debtor as it existed before such undervalued transactions as mentioned in the Application; to conduct forensic audit in relation to the undervalued transactions involving Corporate Debtor, etc. 4. Brief facts of the case, which are relevant to the issue in question, as mentioned in applications, are as follows: (1) The instant Applications are filed by Mr.R.Kiran Gupta i.e. the Authorized Representative of PEEPUL Capital Fund III LLC i.e. the "Applicant" a private equity fund incorporated under the laws of Mauritius. Mr. R.Kiran Gupta and he has been duly authorized to file the instant Applications by virtue of Board Resolution dated 19.03.2018. (2) It is stated that Mr.P.SadanandaMaiya, Mr.P.SudarshanMaiya and Mrs.SunandaMaiya were the Promoters and Shareholders of the Corporate Debtor. In May 2016, Mr.P.SadanandaMaiya, Mrs.SunandaMaiya and Mr.P.SudarshanMaiya (Promoters of the Corporate Debtor) approached the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affairs of the Corporate Debtor by stopping to make payments of the legitimate dues to the Labor Contractor and the Banks; closing the Factories of the Corporate Debtor situated at Sy.No.65/3, 66/3, KagallaHalli, HarohalliHobli, Kanakapura Taluk, Ramanagar District -562112 on 05.04.2018, without providing the Lock Out Notice to the Workmen as applicable under law. The Promoters of the Corporate Debtor knew that the Directors appointed by the Applicant would resign to prevent any liability. Accordingly, the said acts (of mismanaging the affairs of the Corporate Debtor) were done by the Promoters of the Corporate Debtor to make the Directors appointed by the Applicant resign from the Directorship of the Corporate Debtor as well as MRPL so as to ensure that the Promoters get complete control of the Corporate Debtor and MRPL, to give effect to their mischievous and devious goal of defrauding and causing wrongful loss to the Applicant and ensuring unjust enrichment for themselves. (5) In pursuant to the notification issued by the Resolution Professional inviting Expression of Interests, the Applicant has submitted its Expression of Interest. Therefore, the Applicant is given access to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , ("Regulations") a duty has been cast on the Resolution Professional to ensure confidentiality of the information relating to the insolvency resolution process. The said clause reads as under: "21. An insolvency professional must ensure that confidentiality of the information relating to the insolvency resolution process, liquidation or bankruptcy process, as the case may be, is maintained at all times. However, this shall not prevent him from disclosing any information with the consent of the relevant parties or required by law". (8) Further, Circular No. IP(CIRP)/007/2018 dated February 23, 2018 while substantiating upon the confidentiality obligation under Clause 21 of the Code of Conduct inter alia notes as follows: "33 The disclosure of information, except as provided for in the Code, or rules, regulations or circulars issued thereunder, is restricted. Unauthorised access to or leakage of such information has the potential to impact the processes under the Code. An Insolvency Professional, whether acting as Interim Resolution Professional, Resolution Professional or Liquidator, except to the extent provided in the Code and rules, regulations or circulars issued thereund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed) on a going concern basis. (11) It is alleged that the entire CIRP is vitiated by fraud committed by the Promoters of the Corporate Debtor in connivance with the Resolution Professional. More over the appointment of Mr.C.R.Murali as the Statutory Auditor in MRPL by the Promoters of the Corporate Debtor pursuant to him acting for the Resolution Professional cannot be a matter of co-incidence and establishes beyond reasonable doubt the nexus between the parties i.e. the RP and the Promoters of the Corporate Debtor. (12) The Applicant herein a member of the Corporate Debtor and is therefore eligible in view of Section 47 of the Code to report to this Tribunal any suspicious transactions involving the Corporate Debtor which are undervalued in nature and seek the reliefs as set out in Sections 45, 47 and 48 of the Code. Facts in relation to the Valuation of the Corporate Debtor, MRPL and the Brand 'Maiyas': (13) The Applicant has inter alia pointed certain undervalued transactions in the affairs of being undertaken concerning the Corporate Debtor. It is alleged that the Promoters of the Corporate Debtor without the knowledge and consent of the Applicant divested the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vitiated by fraud. 5. The instant application is opposed by the Resolution Professional by-filing Statement of Objections dated 11.04.2019, by inter alia contending as follows: (1) The Application is not maintainable either in law or on facts and it has no locus standi to prefer the Application at this stage and all the allegations are frivolous and untenable. The intention of the Applicant is to stall the CIR process and is made with the intention to lower down the value of the Corporate Debtor and the entire CIRP in question will become useless. (2) The Third Meeting of the Committee of Creditors held on 04.12.2018 has already considered with regard to the issue of Disinvestment of Shares held by the Corporate Debtor in the erstwhile Subsidiary, M/s.Maiyas Restaurants Private Limited. Therefore, the issue was duly considered and found that the allegations made by the Applicant found to be baseless. (3) Another allegation made by the Applicant was with regard to the conducting of Forensic Audit. The same was also considered by the Committee of Creditors in the Third Meeting held on 04.12.2018. (4) All the material information has been provided in the Information Memorand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons or proceedings. (3) The Karnataka Bank Ltd., is one of the members of the Committee of Creditors (CoC) in this matter. Karnataka Bank Ltd. is also a financial creditor with 96.01% voting share and admitted credit amount of over Rs. 77 Crores in Maiyas Beverages and Foods Pvt. Ltd. (MBFPL) in the year 2018 itself. ICICI Bank is the other financial creditor with 3.99% voting share and admitted credit amount of over Rs. 3 Crores in the year 2018 itself. ICICI Bank is also one of the members of the CoC. The other members of the CoC are the related parties with no voting share. It is submitted that under the IBC, 2016, the Resolution Professional acts under the instructions of the CoC and the Resolution Professional is accountable to the CoC. The Resolution Professional has examined the transactions to which the Applicant has raised objections and placed the same before CoC. The CoC have accepted the manner in which transactions were examined and conclusions arrived at by the Resolution Professional. The COC is of the opinion that the said transactions are in order and do not violate the provisions of the Code. In any event, under the Code, a resolution applicant has no right to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, basing on their commercial wisdom. 10. As stated supra, the Adjudicating Authority has discussed various allegations made by the Applicant, in the comprehensive common orders dated 10th May, 2019 passed in I.A. No.98 of 2019 & I.A. No.222 of 2019; and also order dated 10th May, 2019 passed in I.A. No.210 of 2019 &CP(IB) No.121/BB/2018, and found the Resolution Plan submitted by the Akashika Foods Private Limited is eligible to be approved, and thus the Resolution Plan was approved. The Petitioner though participating in the CIR Process, did not come with the higher proposal than the successful Resolution Applicant. However, the Applicant is raising many allegations with regard to the affairs of the Company and these allegations were already considered by Resolution Professional and CoC and the Adjudicating Authority as detailed in the above orders. The Applicant cannot seek any special treatment in comparison with other Resolution Applicants and the Applicant was admittedly given all the information uniformly to all those participating Resolution Applicants. The Applicant has not offered higher bid than the successful Resolution Applicant except raising un-tenable grounds. And ..... X X X X Extracts X X X X X X X X Extracts X X X X
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