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TMI Blog2021 (10) TMI 1233X X X X Extracts X X X X X X X X Extracts X X X X ..... C') under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process (hereinafter referred as 'CIRP') of National Plywood Industries Ltd. i.e. the Corporate Guarantor. 2. It is submitted that CP (IB)/09/GB/2019 was admitted on 26.08.2019. The Respondent No. 2 i.e. Mr. Sandeep Khaitan was appointed as the Interim Resolution Professional. Subsequently he was confirmed as the Resolution Professional of the Corporate Debtor. 3. It is again submitted that the said admission was challenged before the NCLAT by the Respondent No. 1 i.e. Mr. Piyush Periwal in Company Appeal (AT) (Insolvency) No. 932/2019. However, the same was upheld by NCLAT vide order dated 25.11.2019. The said order of NCLAT was further challenged by the Respondent No. 1 before the Hon'ble Apex Court in Civil Appeal No. 9142/2019. The Hon'ble Apex Court vide order dated 20.01.2020 remanded the matter back to NCLAT for fresh consideration from the point of view of limitation. 4. It is submitted that the Hon'ble NCLAT on further adjudication of the issues remanded back for fresh decision, upheld the admission, vide order dated 24.11.2020. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal had challenged the order of this Hon'ble Tribunal dated 10.02.2021 before the NCLAT by filing Company Appeal (AT) (Ins.) No. 160 of 2021. The Hon'ble NCLAT vide order dated 18.05.2021 has directed that both the Resolution Plans may be placed before the CoC. A copy of the order dated 18.05.2021 is annexed herewith and marked as ANNEXURE 2. 9. It is further submitted that the Resolution Plan of suspended management of the CD and a modified plan of the PLBB Products Pvt. Ltd. were discussed in the CoC meeting dated 25th May, 2021 and finally the CoC has approved the Resolution Plan submitted by PLBB Products Pvt. Ltd. The said Resolution Plan is pending approval by this Hon'ble Tribunal in IA No. 31/2021. 10. It is submitted that Mr. Piyush Periwal is also the Vice-chairman of the National Boards Ltd. (NBL for short), and a Personal Guarantor of the loan of NBL. His conduct with regard to the payment of the dues of Financial Creditor, through the Borrower or as a Personal Guarantor is far from satisfactory and there are enough evidences to show that he did not put up a bona fide effort to pay the dues of the Financial Creditor/Petitioner. 11. It is fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auction and thereby recover maximum possible amount from such kind of chronic NPAs, where huge public money was locked for more than a decade. 14. It is submitted that the OTS sanctioned was revoked by SASF in September, 2012 due to the non-payment of agreed OTS amount and non-compliance of agreed terms and conditions of said OTS. Despite ample opportunities being presented, the borrower failed to fulfill the terms of OTS which resulted in non-materialization of OTS for more than 7 years i.e. from 2005 to 2012. A copy of the DRT order dated December 7, 2011 is annexed herewith and marked as ANNEXURE 4. 15. It is again submitted that in January 2012, while replying to the evacuation notice dated November 15, 2011 issued by the Hon'ble Tribunal, some of the encroachers viz. Mr. Ram Parvesh Mahato, Mr. Jaduram Kalita, Mr. Ratan Das and Mr. Krishna Yadav have revealed that they have requested Mr. Periwal to sell the encroached land to them at ₹ 50,000.00 per bigha. However, Mr. Periwal preferred to sell said land to one Mr. Shankar Charan Das merely at ₹ 10,000.00 per bigha. The encroachers also raised serious allegations that Mr. Periwal in order to avoid pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o happens to be in the Board of the Management of both the Borrower and Corporate Guarantor and also Personal Guarantor to the loan to NBL, had played an active role in ensuring that the dues of the Financial Creditor are not recovered. Thus attempts to submit Resolution Plan by Mr. Piyush Periwal would be nothing but an attempt to get a back door entry through the resolution process which is contrary to the scheme of the IBC, 2016. 20. It is again submitted that in the event Mr. Piyush Periwal is allowed to submit a Resolution Plan the same would negate the purpose of the legislation and legislative intent, which is to revive the business, in as much Mr. Periwal has been instrumental in working against the payment of the dues of the Financial Creditor/Petitioner. 21. It is submitted that on 26.08.2020 the petitioner had issued a Demand Notice under Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019. A copy of the notice dated 26.08.2020 is annexed herewith and marked as ANNEXURE 6. 22. It is further submitted that Mr. Piyush Periwal has not responded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No. 1 either by the learned DRT or by this Hon'ble Tribunal in a Personal Insolvency Resolution Process under IBC would have adverse effect on any Resolution Plan of which he is a part of and also adversely affect any recovery process by the learned DRT. 29. It is again submitted that Mr. Piyush Periwal may be restrained from participating in the resolution process of National Plywood Industries Ltd. 30. The Petitioner in the present application has prayed for the below mentioned reliefs: A. Direct that Mr. Piyush Periwal is not entitled to submit any Resolution Plan in the resolution process of National Plywood Industries Ltd. arising out of CP (IB)/09/GB/2019 (Corporate Insolvency Resolution Process of the National Plywood Industries Ltd.) B. Direct that Mr. Piyush Periwal is not entitled to participate in the resolution process of National Plywood Industries Ltd. arising out of CP (IB)/09/GB/2019 (Corporate Insolvency Resolution Process of the National Plywood Industries Ltd.) C. Pass such further or other order as this Hon'ble Tribunal may deem fit and proper in the interest of justice. 31. The Respondent No. 1 i.e. Piyush Periwal has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise. Further it also envisages power of Central Government to make specific directions as regards applicability and/or modifications in case of MSMEs. It is expected that with the introduction of these exemptions, the relatively smaller companies may find takers and won't have to face liquidation. f. Additionally, the disqualifications for Resolution Applicants have been tempered down by way of amending clauses (d) to (e) of Section 29A. These amendments, reducing the ambit of disqualifications makes sure that a genuine resolution applicant is not withheld from exercising his rights as what is being sought against Tata Steel in the Bhushan Power matter. The NCLT in the matter of RBL Bank Ltd. vs. MBL Infrastructures Ltd. stated that the object of Section 29A was not to announce all promoters ineligible to be resolution applicants. The Code's objective is to promote an efficient and speedy insolvency procedure, however, the introduction of Section 29A proved to be contrary to the set objectives. g. The Insolvency and Bankruptcy Code, 2016 was enacted in the year 2016 to provide a comprehensive consolidating legislation with regard to Insolvency and Bankruptcy in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not for the recovery of money for an individual creditor. l. That Hon'ble NCLAT in Saravana Global Holdings Ltd. vs. Bafna Pharmaceuticals Limited Ors. (CA(AT)(Insolvency) No. 203 of 2019 decided on 04.07.2019) affirmed by the Hon'ble Supreme Court, it was now settled that, if the Corporate Debtor is an MSME, it is not necessary for the promoters to compete with other Resolution Applicants to regain the control of the Corporate Debtor. Although Section 240A of the IBC only exempts corporate insolvency resolution process of Micro, Small and Medium Enterprises from the operation of clauses (c) and (h) of Section 29A, there is no discussion in the impugned order with regard to the application of any of the other provisions of Section 29A while allowing the suspended management to file its plan. As none of the other provisions of Section 29A of the Code operate as a bar against the suspended management, upon taking into account the exemption of the provisions of Section 29A(c) and (h). The relevant portion of the orders reads thus: 20. The 'Committee of Creditors' is to consider the feasibility, viability and such other requirements as has been specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rection restraining Sri Periwal from participating in any resolution process, in the event the matter is placed before the COC for any further consideration, considering the fact that the resolution process has already been delayed. ORDER 33. Heard the Counsels appeared from both the sides and perused the documents submitted. The CD is an MSME Unit and the Hon'ble NCLAT has passed an order in this regard dated 07.09.2021, wherein it was observed that: Keeping in mind the intention of the legislature, there is no harm in giving an opportunity to the MSME in accordance with the provisions of the Code for keeping the promotion of entrepreneurship alive. The Adjudicating Authority has only provided an opportunity to the MSME and has given the liberty to the CoC to negotiate with existing Resolution Applicant and MSME unit also and accept the one which is commercially viable and technically feasible. Considering the above observations, we do not find any infirmity in the order and hence, we are dismissing the appeal. However, the Adjudicating Authority is requested to consider IA No. 51 of 2020 in CP (IB) No. 09/GB/2019 before finally approving any Resolution Plan. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion plan by the Adjudicating Authority under this Code; (h) has executed a guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code and such guarantee has been invoked by the creditor and remains unpaid in full or part; 34.2 Section 240A: Application of this Code to micro, small and medium enterprises. 240A. (1) Notwithstanding anything to the contrary contained in this Code, the provisions of clauses (c) and (h) of section 29A shall not apply to the resolution applicant in respect of corporate insolvency resolution process [or pre-packaged insolvency resolution process] of any micro, small and medium enterprises. 35. One Resolution plan has been approved by the COC and placed before this bench and the Applicant has filed this Petition as a matter of abundant caution. 36. Considering the points mentioned above, we do not find any substance in the prayers made by the Applicant here: a. to direct that Mr. Piyush Periwal is not entitled to submit any Resolution Plan in the resolution process of National Plywood Industries Ltd. arising ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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