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TMI Blog2021 (1) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... witness in all agreements should submit all Bank Statements and Income Tax Returns for last five Financial Years and disclose true identity. c. To direct Axis Bank Limited (R9) to submit notarized stamped affidavit disclosing the relationship between the Axis Bank Limited (R9) and Mr. B.C. Ganesh (R10). d. To direct the Resolution Professional to provide the details of Resolution Plan consideration submitted by each of the Resolution Applicants from first time and every time revised Resolution Plan considerations by all the RAs till the finalization of the successful Resolution Applicant. This may be useful to understand how the successful resolution applicant has changed the consideration by using inside information from the Prudent ARC. e. To direct to all CoC members to submit notarized stamped affidavit declaring that either directly or indirectly during the period of CIRP or three years prior to the CIRP commencement date has no connection with either the MPL or MPL's Directors or MPL Group i.e., any subsidiary or holding or associated company of the MPR or MPL's directors or MPL Group Companies Directors i.e., its holding or subsidiaiy or associated companies d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and circumstance of the case. 2. Brief facts of the present case as stated by the Applicant are as under:- a. That the Applicant has submitted its Resolution Plan as per the Eol and RFRP on 08.04.2019. That RP sent an e-mail dated 03.05.2019 and pursuant to that mail, Applicant had submitted revised Resolution Plan before 5:00 P.M of 07.05.2019. That the RP has sent an e-mail dated 09.05.2019 and Applicant was called for negotiation with CoC. The applicant attended the CoC meeting and clarified all the points raised by CoC. Accordingly, Applicant presumed that it was the H1 Bidder. b. It was found that CoC negotiated with other Resolution Applicants as well contradicting their own e-mail dated 03.05.2019. c. That with reference to e-mails dated 04.06.2019 and 10.06.2019 from RP, the Applicant has revised its Resolution plan and submitted its offer in a sealed envelope on 15.06.2019. That Applicant has further submitted its revised Resolution Plan in a Sealed Cover before 5:00 P.M on 25.06.2019. d. That Applicant had an apprehension that some inside information was made available to the other Resolution Applicants. Therefore, the Applicant has addressed a letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Details of Directors between the M/s. Mahalakshmi Profiles Private Limited, Successful Resolution Applicant, (R7) and MPL Steel Industries Private Limited are as under: S. No. Names of the Directors on M/s.MAHALAKSHMI PROFILES PRIVATE LIMITED Names of the Directors on M/s.MPL STEEL INDUSTRIES PRIVATE LIMITED 1 VINOD KUMAR AGARWAL VINOD KUMAR AGARWAL 2 RAMNIRANJAN AGARWAL RAMNIRANJAN AGARWAL 3 LAX MI LAVANYA KORINI In view of the above, both the companies i.e., M/s. Mahalakshmi Profiles Private Limited and M/s. MPL Steel Industries Private Limited are group companies under the same management. ii. Common witness between the MPL steel Industries Ltd, Axis Bank Ltd, IFCI Ltd, Prudent ARC Ltd and ARCIL: a. That the Memorandum of Deposit of Title Deeds executed between the MPL Steel Industries Private Limited and Axis Bank Ltd on 25.01.2019, where one of the witness is Mr. B.C. Ganesh. b. That the Assignment Agreement executed between the 1FCI Limited and Prudent ARC Limited on 12.02.2019, where one of the witness is Mr. B.C. Ganesh. c. That the Assignment Agreement executed between the ARCIL and Prudent ARC Limited on 07.06.2019, where one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by R7, the successful Resolution Applicant. Therefore, the CoC members have in due compliance with the process of inter-se bidding shortlisted the R7 as the successful Resolution Applicant. c. The contention of the Applicant that the R1 is in collusion with R7 since one of the employees of R7 i.e., the R10 has signed as a witness to the Assignment Agreements entered between the R1, R2 and R3 is totally misconceived. The R10 has signed the Assignment Agreements as a witness and not as an authorised representative of any party. The mere act of signing as witness by R10 in no way can determine or establish collusion between two different entities. d. In Smt. Chandrakantaben Etc vs. Vadilal Bapalal Modi & Others, the Hon'ble Supreme Court held that "there is no presumption that an attesting witness of a document must be assumed to be aware of its contents." Further it is submitted that a witness attesting a document only means that the witness has seen the executant sign the document/instrument, it does not mean that the witness has the knowledge of the contents of the document/instrument. Therefore, the contention of the Applicant that R1 & R7 are acting in collusion stands de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Applicant has been given an opportunity to participate in the inter se bid and the inter se bid is valid for maximising the asset value of Corporate Debtor under CIRP. Applicant has not made out any case nor submitted the proof of violation of the provisions contained in Section 30(2). e. That the Applicant cannot compel the CoC to accept its bid only, when its bid is lesser than the competitive bid offered by the Successful Resolution Applicant. f. That the Committee of Creditors approved the Resolution Plan as per Section 30(4) of IBC Code, 2016 and as such the Resolution Plan is validly approved by the CoC within the parameters of IBC Code. Thus the contention of Applicant is not tenable. g. That R6 places reliance on the following judgements: i. Hon'ble National Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)(lnsolvency) No. 380 of 2018, In the matter of M/s.Bhaskara Agro Agencies Vs. M/s. Super Agri Seeds Pvt. Ltd. ii. C.A. No. 10719 of 2018, C.A. No. 10971 of 2018 and io (C) No. 29181 of 2018 in the matter of K. Sashidhar Versus Indian Overseas Bank & Ors. vide iii. Civil Appeal No. 8766-67 of 2019 Diary No. 24417 of 2019; in the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.25 42.71 42.71+0.25 42.96 Backed out/withdrawn e. That from the above table, it is clear that the Applicant and R7 both have participated in the inter-se bidding. Once the bidding was over, 100% CoC members voted in favour of the highest bidder i.e., R7. f. That Mr. B.C. Ganesh was just a part-time employee as on 13.12.2019. He had joined MPPL on 01.03.2008 and had retired as full-time employee on 01.03.2018. Till he was a full-time employee of MPPL, PF contributions were made and once he retired, there was no PF contribution to his account by MPPL. g. That the Applicant has not been able to prove any relation between R7 and R1 other than market rumours. h. Reiterating above, Ld. Counsel for R7 prayed to dismiss the instant Application. 6. Counsel for the R8 filed counter inter-alia stating as under: a. That in the fourth CoC meeting held on 02.05.2019, the CoC members have observed the receipt of Six Potential Resolution Applicants, which were received in pursuance of the publication of Form-G, Invitation for Expression of Interest for Submission of Resolution Plans by the Resolution Applicants, which was published on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pat Pvt Ltd. had submitted a bid of Rs. 21.50 crores and Mahalakshmi Profiles Pvt Ltd had submitted a bid of Rs. 28.11 Crores and that the evaluation matrix scores obtained were 89, 57 and 87 points, respectively. Further, the Resolution Professional placed a cover before CoC received from Mahalakshmi Profiles Pvt Ltd., just before the commencement of the meeting, which was opened in front of the CoC and the bid submitted by Mahalakshmi Profiles Pvt. Ltd. was Rs. 31.11 Crores. A CoC member, Central Bank of India had raised an objection to the bid received from Mahalakshmi Profiles Private Limited and but the CoC members have opined that the objective of the CoC is maximization of the value and that since the said plan was received before starting of the meeting, it could be considered and further decided that an opportunity can be given to the other PRAs, with a time frame of about one or two days to increase the amount and was also decided that the RP shall receive the Resolution Plans in sealed cover only and that the Resolution Plans shall be opened only at the CoC meeting. f. That after the extensive deliberations by the CoC, it was concluded to send mails to Vinayaka Steels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bidding and that the bids shall be opened only after taking the declarations from both the Applicants agreeing for inter-se bidding. That the bid covers shall be opened in front of the Applicants and the bid amount shall be increased by a minimum slab of Rs. 10 Lakhs each time by each Resolution Applicant. i. The Resolution Professional called the representatives of both the Applicants and briefed them about the said CoC instructions, further to which Vinayak Steels Limited, the Petitioner herein objected to negotiations with H2 bidder and that the negotiations shall be only with H1 bidder, to which Prudent ARC Ltd has stated that it was within the right of the CoC to call for improvement bids from both the parties and the bids were opened in front of both the Applicants. The amount offered by Vinayak Steels Limited, the Applicant herein, stood at Rs. 37.21 Crores and bid amount offered by Mahalakshmi Profiles Private Limited stood at Rs. 34.11 Crores. j. That upon opening of the bids, after acceptance of the terms imposed and informed by the CoC, Vinayak Steels Limited, the Applicant herein, through its representatives became furious and expressed their strong resentment towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 Axis Bank has no knowledge and is not aware of the various averments made by the Applicant. The only averment pertaining to the Respondent No. 9 is that memorandum of deposit of title deeds executed between MPL Steel Industries Pvt. Ltd and Axis Bank Ltd on 25th January 2019, contains the signature of Mr. B.C. Ganesh as one of the witnesses and he is the common witness between M/s. MPL Steel Industries Pvt. Ltd., Axis Bank Ltd., IFCI Ltd., Prudent Arc Ltd., and ARCIL. c. That M/s. MPL Steel Industries Pvt. Ltd., have availed loan facilities from Axis Bank Ltd., and the said company has created the mortgage in favour of the Bank to secure the said loan facilities and got the mortgage deed registered with concerned SRO. The said mortgage deed was executed by the mortgager and the same was witnessed by Sri B.C. Ganesh. The R9 Bank is not aware of the said Sri B.C. Ganesh and he is not a known party to the Bank. Hence, the Bank is not aware of the said Sri B.C. Ganesh and there is no relationship between Axis Bank Ltd and the said Sri B.C. Ganesh. d. That the R9 was unnecessarily impleaded in the above Application. e. Reiterating above, Ld. Counsel for the R9 prayed to dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely wrong. The reasons are as under: i. The R7 has not mentioned any reasons for increase of the Resolution Plan consideration. ii. The Respondent7 has submitted two more times revised Resolution plans without the consent of Resolution Professional or after cut off dates. There was no reasons explained by the Successful Resolution Applicant. The date line of the Resolution amount submitted by Respondent No. 7 clearly indicates that it had inside information regarding the bids submitted by the Petitioners. iii. The Rl/one of the CoC Members was not interested to make any disclosure regarding relationship with respect to the Successful Resolution Applicant. iv. One of the CoC Members i.e., R1 and an employee of the Resolution Applicant completely executed or witnessed the three documents. c. That the R7 told that Mr. B.C Ganesh (R10) is employed by him on part time basis and he is free to undertake any other liaison work. However, as per EPF records his date of joining in R7 i.e., Mahalaxmi Profiles Pvt. Ltd is 01.03.2008 and his member ID is APSID0032293000000117 and the Respondent No. 7 had been continuously contributing to EPF. It cannot be coincidence that Mr. B.C. Gan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plan Consideration i.e., either RP or any of the CoC members. Subsequently Applicant have understood that this is the plan of successful bidder with the help of Respondent 1 i.e. Prudent ARC Ltd only. ii. That the cut-off date for submission of bid was 15.06.2019 and the Applicant was H1 at 30.20 Cr and Mahalaxmi Profiles was H2 at 28.11 cr. However, Mahalaxmi Profiles Pvt Ltd submitted their bid on 21.06.2019 at 31.11 Cr well after the cut-off date of 15.06.2019. This is evident that the Mahalaxmi Profiles Pvt. Ltd. revised its price after knowing our bid. h. That one of the CoC Members, Central Bank of India pointed out that Mahalaxmi Profiles submitted the Resolution Amount after due date and should not be considered technically. However the above was over ruled by the Prudent ARC. i. That even though the Resolution Plan submitted by Mahalxmi Profiles was conditional plan, CoC was of the opinion that it should be decided by Adjudicating Authority. Even though it was conditional plan, still Mahalaxmi Profiles was asked to submit the bid in sealed cover and CoC negotiated also. Whereas the conditions put forwarded by Vinayak Steels Limited, were asked to be remove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt namely M/s. Mahalakshmi Profiles Pvt. Ltd. was at H1 position. Consequently, the CoC declared M/s. Mahalakshmi Profiles Pvt. Ltd. as the successful Resolution Applicant. The Resolution Plan submitted by the successful Resolution Applicant has been approved by the CoC with requisite majority of voting power and is pending for approval before this Adjudicating Authority. 13. The applicant has inter-alia levelled several allegations of bias and favouritism against CoC Members and the RP and has sought several directions to the respondents especially R1, R7. R8, R9, and R10 to reply on oath to these allegations. All these respondents have filed their counter affidavits against various allegations as already summarised in foregoing paragraphs. The Applicant has made three main prayers seeking relief from this Adjudicating Authority which are as hereunder: (i). To pass an order declaring the Respondent 7 as an ineligible Resolution Applicant; (ii). To pass an order to consider Resolution Plan consideration for Rs. 27.00 Crores when 2nd time Applicant submitted the Revised Resolution Plan, wherein the mail from Resolution Professional said that CoC will negotiate with H1 bidder; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor: Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan; (d) has been convicted for any offence punishable with imprisonment for two years or more; (e) is disqualified to act as a director under the Companies Act, 2013; (f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets; (g) has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code; (h) has executed an enforceable guarantee in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h unreasonable and against the tenets of IBC 2016. Therefore, this prayer is also negated. 19. The Applicant has also prayed to stay the process of finalization of the approval of the Resolution Plan submitted by the R 7 till the disposal of this IA. 20. According to the provisions of IBC, 2016 once a CIRP application is admitted, it is the duty of RP to constitute CoC and thereafter publish Eol, Information Memorandum and evaluation matrix on the basis of decisions taken in CoC meetings. Thereafter, upon receipt of Eol by potential Resolution Applicants, various Resolution plans are examined by the RP and the same are put up before the CoC for deliberations about each of those plans for considering their feasibility and reliability. In this regard, it is pertinent to note here that under the provisions of the Code, the commercial wisdom of the CoC has been given paramount status without any judicial intervention. As has been categorically held by Hon'ble Apex Court in K.Shashidhar vs.Indian Overseas Bank & Ors. (2019) ............... "There is an intrinsic assumption in the framework of the Code that that the Financial Creditor are fully informed about the viability of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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