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TMI Blog2022 (8) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... 2A was shared by the Appellant to the RP and the Bank, but the said Application under Section 12A was never filed before the Adjudicating Authority. The Resolution Professional has stated in his Reply that he never received any acceptance from the Bank of OTS offer of the Appellant hence there was no question of filing any Application under Section 12A of the Code. Whether the minutes of Committee of Creditors dated 03rd February, 2021 indicates that OTS proposals made by the Appellant was not considered and without consideration of the OTS Proposal, CoC proceeded to approve the Resolution Plan of the Respondent No. 3? - HELD THAT:- Form-FA was never provided. It was also noted that officials of Corporate Debtor were in talk with the Bank and matter regarding the settlement was yet to be formalized through NCLT. CoC resolved that CIRP need to be continued and steps in the process need to be covered accordingly. The CoC when decided to proceed to consider the Resolution Plan at hand it is implicit the OTS Offer made by the Appellant was never accepted. Thus, withdrawal Application under Section 12A after the constitution of CoC is to be dealt in further two sub-heads. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, Chandigarh Bench (hereinafter referred to as The Adjudicating Authority ) in CP (IB) No. 122/Chd/HP/2019. Company Appeal (AT) Ins. No. 544 of 2022 has been filed against the Order dated 19th April, 2022 rejecting the I.A. No. 70 of 2021 filed by the Appellant. Company Appeal (AT) Ins. No. 591 of 2022 has been filed against the Order dated 19.04.2022 allowing the Application I.A. No. 134 of 2021 filed by the Resolution Professional for approval of the Resolution Plan submitted by Respondent No. 3-Kundan Care Products Ltd. 2. Brief facts of the case necessary for deciding these Appeals are: The Adjudicating Authority vide Order dated 23.12.2019 initiated Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor-M/s. Luni Power Company Pvt. Ltd. Interim Resolution Professional (IRP) made publication on 26.12.2019 in pursuance of which claim of Rs. 19.79 Crores were admitted. After the approval by the Committee of Creditors (CoC) Form-G was published on 15.09.2020 inviting Expression of Interest (EoI). The Appellant-Shareholder holding 2.92 % of share of the Corporate Debtor wrote a Letter dated 14.10.2020 to the General Manager, Central Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated 2nd February, 2021 was sent by the Suspended Board of Directors where the Suspended Board of Directors referred to Application filed by one of the Promoters of the Corporate Debtor for One Time Settlement. 08th CoC Meeting considered the letter dated 02.02.2021 sent by the Suspended Board of Directors and the Committee of Creditors decided to continue with the CIRP. The minutes further noticed that matter regarding the Settlement was yet to be formalized through the NCLT. The Committee of Creditors proceeded to consider the Resolution Plan received from M/s. Kundan Care Products Ltd. and after discussion the Resolution Plan was approved with 100% voting by the CoC Members. Aggrieved by the decision of the Committee of Creditors dated 03.02.2021 approving the Resolution Plan, I.A. No. 70 of 2021 was filed by the Appellant before the Adjudicating Authority praying that Resolution Plan in 08th Meeting be declared null and void and the CoC may be directed to call another CoC meeting and consider the proposal of the Appellant for OTS in Application No. 60 of 2021. In I.A. No. 70 of 2021, Reply was filed by the Bank as well as the RP to which Rejoinder was also filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated 16.10.2020 of the Bank itself made it clear that OTS Settlement was not approved and offer was yet to be considered and approved by the Bank, when the Bank had never approved the Offer of OTS of the Appellant there is no question of filing an Application under Section 12A of the Code. Appellant had filed an I.A. 60 of 2021 for staying CIRP on which no order was passed by the Adjudicating Authority staying the CIRP. CoC has rightly proceeded with the CIRP and approved the Resolution Plan. The submissions of the Appellant that Offer of the Appellant of Rs. 10 Crores is better than the Resolution Plan of Respondent No. 3 for payment of Rs. 09 Crores, the CoC in its commercial wisdom has considered the Resolution Plan as well as request made on behalf of the Appellant in its meeting dated 03.02.2021 and has rightly proceeded to approve the Resolution Plan. In the Resolution Plan approved, the personal guarantees given by the promoters and directors having not been extinguished which guarantee is sufficient to recover the dues of the Bank which are about Rs. 29 crores. The Respondent No. 3 in its Resolution Plan has also proposed to invest Rs. 20 Crores in the Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be settled in the best interest of both the parties. As discussed, we can make the tranches in such way so that the average maturity would not be more than 6 months as required by you. We look forward to receiving your confirmation/acceptance so that the filing of application u/s 12A of IBC can be forthwith undertaken and necessary orders obtained to facilitate the aforesaid settlement. Thanking you, Yours faithfully For Bharat Hydro Power Corporation Limited (Authorised Signatory) 8. In response to the Letter dated 14.10.2020, communication dated 16.10.2020 was sent by the Bank to the Corporate Debtor which is to the following effect: Reg: Offer for Compromise Settlement and filing of application u/s 12A of IBC, 2016 Ref: Letter dated 14.10.2020, sent by Bharat Hydro Power Corporation Ltd. Dear Sirs, We refer to the letter cited under reference sent by Bharat Hydro Power Corporation Ltd. addressed to our General Manager with a copy to us. In this connection we would like to inform you that CIRP is in progress as per NCLT, Chandigarh Order against the Corporate Debtor M/s. Luni Power Company Pvt. Ltd. Therefore, if the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.02.2021 sent by the Suspended Board of Directors regarding the offer of Appellant came for consideration. In the CoC Meeting under heading B. Matters discussed/noted for information ii. the letter dated 02/02/2021 received from Suspended Board of Director came for consideration. Suspended Board of Directors of the Corporate Debtor-Shri Amar Chand Bakliwal was present in the CoC Meeting and submitted a representation with regard to the OTS Offer made by Shareholder of the Company i.e. the Appellant. The said representation and Letter was noticed in the minutes is to the following effect: ii. To take note of the letter received from the suspended Board of Directors dated 02/02/2021. The Chairman informed the CoC members that a letter was received by the RP from the suspended board of directors vide dated 02/02/2021 regarding the application filed by one of the promoters of the CD. Shri A C Bakliwal discussed the matter with the CoC members and made the following representation to the CoC: The Promoters of Luni Power Co. Pvt. Have discussed and agreed to the proposal of Central Bank of India (Sole Financial Creditor) for one time settlement of the outstanding am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed with the decisioning on the Resolution Plan at hand. 11. The above discussion before the CoC clearly indicates that Form-FA was never provided. It was also noted that officials of Corporate Debtor were in talk with the Bank and matter regarding the settlement was yet to be formalized through NCLT. CoC resolved that CIRP need to be continued and steps in the process need to be covered accordingly. The CoC when decided to proceed to consider the Resolution Plan at hand it is implicit the OTS Offer made by the Appellant was never accepted. At this stage, we may notice the provisions pertaining to filing Application under Section 12A of the Code. Section 12A of the Code provides as follows: Section 12A: Withdrawal of application admitted under section 7, 9 or 10. 12A. The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as may be prescribed. 12. Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval by the Adjudicating Authority, as determined by the interim resolution professional or resolution professional, as the case may be, within three days of such approval, in the bank account of the corporate debtor, failing which the bank guarantee received under sub-regulation (2) shall be invoked, without prejudice to any other action permissible against the applicant under the Code. 13. The proviso of Regulation 30-A sub-rule (1) (b) which is applicable in the facts of the present case needs to be noticed. The proviso to Regulation 30-A (1)(b) reads as under: Provided that where the application is made under clause (b) after the issue of invitation for expression of interest under regulation 36A, the applicant shall state the reasons justifying withdrawal after issue of such invitation. 14. Thus, withdrawal Application under Section 12A after the constitution of CoC is to be dealt in further two sub-heads. There is stringent requirement which is to be mentioned by the Appellant for withdrawal if the Application is made after the issue of invitation of EoI. In the present case, EoI was published on 15.09.2020 and even the OTS Offer made by the Appellant was after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culminated vide correspondence from 14th Oct, 2020, 16th Oct, 2020 and 09th Nov. 2020. Resultantly no bindng arrangement/agreement quo one time settlement was ever executed between the Appellant and the answering Respondent: That, an attempt has been made by the Appellant to portray existence of an alleged acceptance of one-time settlement offer by the answering Respondent on the basis of correspondences [being emails dated 14.10.20, 16.10.20, 09.11.20] [ the relevant correspondence ] between the Appellant and the answering Respondent. Therefore, it is utmost important to highlight the true purpose and rationale of the relevant correspondences exchanged between the Appellant and the answering Respondent. Tabular treatment of relevant correspondences would fortify the stance of the answering respondent that the answering Respondent had never accepted the OTS offer proposed by the Appellant and that it was merely at the stage of discussion and thus no binding obligations were ever ensued between the Appellant and the answering Respondent. The tabular treatment of the relevant correspondences relied upon by the Appellant are extracted as hereunder: Offer by A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the commercial wisdom of CoC to approve the Resolution Plan cannot be judicially reviewed by this Tribunal. Learned Counsel for the Appellant has relied on the Judgment of this Tribunal in [(2022) SCC OnLine NCLAT 86] Periasamy Palani Gounder (Promoter and Erstwhile Director) Appu Hotels Ltd. Vs. Radhakrishnan Dharmarajan, RP Appur Hotels Ltd. Anr. to support his submissions that CoC is obliged to consider the Settlement Offer in Paragraph 145 and 146, following has been laid down: 145. Based on the pleadings of the parties, it appears that a settlement offer was made, and a 12 A application was to be submitted after getting the consent of 90% members of the COC. In the circumstances, the appellant requested to consider the settlement proposal in the COC. However, COC was never called to consider the settlement offer. The Resolution Professional has contended that the COC has rejected the settlement offer in its 9th meeting. This statement is also not as per the minutes of the 9th COC meeting. It appears from the minutes of the 9th COC that only a Resolution Plan was discussed in that meeting. After that, the Resolution Plan was sent back to the resolution applicant by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12A does not entitle Promoters of the Corporate Debtor to submit a Settlement Plan as is claimed by the Appellant. The Appellant has claimed before the Adjudicating Authority that the Settlement Plan submitted by the Appellant had not been considered by the CoC by any application of mind and it has been arbitrarily rejected. The pre-condition of accepting any withdrawal Application under Section 12A is on approval Company Appeal (AT) (Insolvency) No. 304 of 2022 14 by CoC by 90% of its voting shares. CoC having never granted its approval, Section 12A route was never open for withdrawal of CIRP. Furthermore, Section 12A proposal submitted by the Appellant was examined by the CoC in its meeting dated 05.03.2021. It is useful to notice the Minutes of the 12th Meeting of the CoC, where it did not agree with the withdrawal Application under Section 12A and following observations have been noted by the CoC: RP requested comments from the CoC members in the matter of the proposal forwarded by Mr. B. Hariharan, Director of Avantha Holdings Limited to the RP and some members of CoC (circulated to all members by RP upon receipt). The representatives of PFC submitted that the proposal s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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