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TMI Blog2022 (7) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the information received from District Industries Centre, Bhopal vide letter dated 23.5.2019 (attached at pg. 139 of the appeal paperbook) and letter dated 27.5.2019 (attached at pg. 140 of the appeal paperbook). The Resolution Professional also took into account the total investment in the plant and machinery by the corporate debtor to be as Rs. 45.90 crores, and also the definition of MSME which had been modified vide gazette notification dated 1.6.2020 for classification of the corporate debtor as an MSME w.e.f. 1.7.2020. Again, in the 9th meeting of CoC held on 10.2.2020, the CoC deliberated on the feasibility and viability of modified resolution plan dated 30.1.2020 presented by Mr. C.E. Fernandes. The minutes record that while the representatives of ICICI bank and Axis Bank did raise the issue of ineligibility of Mr. C.E. Fernandes under section 29-A of the IBC, the CoC as a body went ahead to consider the modified resolution plan presented by Mr. Fernandes. Thereafter the proposed resolution plan was put for electronic voting and the result of the electronic voting is tabulated at page 43 of the reply of Respondent No. 2/CoC, whereby the resolution plan was rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as directed the proposed Resolution Applicant to approach the Committee of Creditors (CoC) for deciding his eligibility under section 29A to submit a resolution plan for consideration, and aggrieved by the said order, the Appellant has prayed for setting aside the Impugned Order and issuing directions to the Adjudicating Authority to decide the question of law and fact with respect to the MSME status of the corporate debtor in order to establish his eligibility under section 29A to furnish a resolution plan in CIRP of the CD. 3. The Appellant has stated in the appeal that he is the promoter of the CD, which is an MSME unit, and has therefore submitted a resolution plan as Resolution Applicant in the Corporate Insolvency Resolution Process (in short CIRP ) of the CD GEI Industrial Systems Ltd., for the resolution of the corporate debtor. He has further claimed that the Adjudicating Authority had given a direction to the Committee of Creditors/Resolution Professional vide order dated 5.3.2020 to decide whether the corporate debtor was an MSME but in the absence of a clear decision regarding the MSME status of the CD, the proposed resolution plan submitted by him did not receive s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has further submitted that in the 9th meeting of the CoC, the issue about the MSME status of the corporate debtor again weighed heavily with the members of CoC and the observations of the representatives of ICICI Bank and Axis Bank are recorded in the minutes of the said meeting, which show that these representatives were not willing to accept the corporate debtor as an MSME enterprise, and in such a situation, the CoC did not look at the appellant s proposed resolution plan with any seriousness which caused serious prejudice in consideration of the resolution plan submitted by him. He has thus submitted that the matter of the MSME status of the corporate debtor should have been decided by the Adjudicating Authority rather than leaving it in the hands of CoC/Resolution Professional, but his request was not acceded to, and hence he has come in appeal. 7. The Learned Counsel for the CoC/Respondent No. 2 has argued that the Impugned Order requires the Resolution Applicant to approach CoC, and hence the proposed Resolution Applicant/Appellant did approach the CoC and Resolution Professional regarding the corporate debtor s status as MSME unit. He has further submitted that the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also pointed out that in an e-mail dated 12.6.2020, the Appellant had withdrawn the Resolution Plan submitted by him, since the investor backing the resolution plan had changed his mind. He has claimed that the resolution plan submitted by the Appellant was discussed by the CoC in its various meetings in great detail and the members of CoC also provided extensive suggestions for modification of the plan in the 7th CoC meeting and a modified plan was submitted by the Appellant on 10.2.2020 which was duly considered by the CoC on merits without any reservation about the eligibility or otherwise of the Appellant under section 29A. 10. We now look at the Impugned Order, which has been challenged by the Appellant. The portion of the Impugned Order with which the Appellant appears to be aggrieved is as follows:- We direct Proposed Resolution Applicant to approach COC instead of this Bench. IA No. 181 of 2018 is now fixed for argument for passing of an order of Liquidation as the Committee of Creditors and RP did not receive any Resolution Plan worth to be considered by them. 11. It is noted that the CIRP was initiated against the corporate debtor GEI Industrial Systems L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ESOLUTION PLAN SUBMITTED BY MR. C.E. FERNANDES xx xx xx xx Mr. Fernandes also told the CoC that he is at an advanced stage of discussions with the strategic investor. Since the strategic investor does not wish to get involved in the CIRP process, his identity has not been disclosed presently. The CoC noted the details of the resolution plan and a discussion ensued. The CoC members raised a number of queries which wee rep0lied to by Mr. Fernandes and Mr. Anil Chawla. The CoC told Mr. Fernandes that the members are willing to look at his resolution plan with a positive mindset. The plan must, however, clearly speel out sums payable to various stakeholders including to secured and unsecured financial creditors, operational creditors, and towards CIRP costs etc. further, the Coc was of the view that the plan would carry more weight if it were to be modified as follows: - Increase the amount offered; - Offer to bring some part of the offered amount into an escrow account upfront post sanction of the plan by Hon ble NCLT. The CoC requested Mr. Fernandes to give the above suggestions a thought. It also noted that the resolution plan in its current form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuary, 2020 and that in case no modified plan is received by the given date, it would be assumed that the RA has no modified resolution Plan to submit and the CoC shall be at a liberty to decide further course of action including approaching Hon ble NCLT for liquidation of the Company. In view of the foregoing deliberations, item nos. 5 to 8 of Agenda for the meeting forming part of notice were not discussed. 15. Again, in the 9th meeting of CoC held on 10.2.2020, the CoC deliberated on the feasibility and viability of modified resolution plan dated 30.1.2020 presented by Mr. C.E. Fernandes. The minutes record that while the representatives of ICICI bank and Axis Bank did raise the issue of ineligibility of Mr. C.E. Fernandes under section 29-A of the IBC, the CoC as a body went ahead to consider the modified resolution plan presented by Mr. Fernandes. Thereafter the proposed resolution plan was put for electronic voting and the result of the electronic voting is tabulated at page 43 of the reply of Respondent No. 2/CoC, whereby the resolution plan was rejected with a voting share of 70.60%. Thus it is unambiguously clear from the aforementioned consideration of the propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulated CIRP period, which has resulted in increase in CIRP costs and erosion of assets value of the corporate debtor. As sufficient opportunity had been given to Mr. C.E. Fernandes for presenting a feasible and viable resolution plan but he eventually failed and withdrew his proposed plan, the next step under section 33 of IBC was undertaken by the Resolution Professional. 19. In the circumstances and discussion as detailed in the foregoing paragraphs, we are of the very clear view that the CoC, without any prejudice regarding the eligibility of the Appellant under section 29A of IBC, did consider the resolution plan submitted by Mr. C.E. Fernandes and offered suggestions for its modifications/improvements. The withdrawal of the resolution plan vide e-mail dated 12.6.2020 meant that there was no resolution plan left before the CoC for consideration, and since almost three years had elapsed from the initiation of CIRP on 20.7.2017 till the 10th meeting of CoC, the provisions under section 33 of the IBC came into play and were duly considered by the Adjudicating Authority. We, therefore, do not find any substance in the grievance of the Appellant. The appeal, being devoid of mer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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