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TMI Blog2022 (9) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... on (6) of Section 30 of the Code. The power vested in the Adjudicating Authority, that it shall approve the Resolution Plan if it is satisfied that the plan has been approved by the CoC and meets the requirements or reject the Resolution Plan under sub-section (2) of Section 31 of the Code. Other than this the Adjudicating Authority simply cannot dispose of the application without considering the same on merits. The Adjudicating Authority miserably failed in exercising the powers vested in it and passed a cryptic and unreasonable order, this Tribunal is of the view that the said order is illegal and without application of mind. This Tribunal does not find any justification in passing the above impugned order when an application is pending for considering before the same Adjudicating Authority for approval of resolution plan. When an application is filed before the Adjudicating Authority seeking approval of Resolution Plan, meaning thereby the resolution process with respect to Corporate Debtor is in advance stage by overcoming the engrossing process as enshrined under the I B Code from the date of initiation of CIRP against the Corporate Debtor till the approval of Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Memorandum (in short IM ), evaluation matrix and Request For Resolution Plan (in short RFRP ) in accordance with Section 25(2)(h) of the I B Code, 2016 on 09.10.2019 in order to enable the consortium to submit Resolution Plan for the Corporate Debtor . Even Virtual Data Room (in short VDR ) access was provided to the consortium on 15.10.2019 along with 20 others Prospective Resolution Applicants (in short PRAs ). The consortium was included in the final list of PRAs . The consortium vide e-mail dated 05.11.2019 requested for a site visit on 11.09.2019 and also requested for the extension of a date for submission of the Resolution Plan. However, the consortium never asked for audited balance sheet and was proceeding on the basis of information available on the VDR and the IM as was disclosed to all PRAs . 4. It is submitted that on 06.11.2019 the consortium sent an e-mail to the Resolution Professional declining their participation in submission of Resolution Plan for the non-availability of audit financial statements of Corporate Debtor . It is submitted that all relevant information i.e. required under Section 2 of the Code and Regulation 36 of CIRP Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de i.e. time bound resolution for maximation of value of the assets of the Corporate Debtor . Instead, the application has been disposed of by passing a single line order. It is submitted that the Adjudicating Authority erred in holding that the RP did not conduct the CIRP in accordance with the provisions of the Code and applicable Regulations. Further, the Adjudicating Authority erred in extending time beyond 16.03.2020 and directing the RP to place the Respondents No.6 to 8 plan and the claims of the GST Department and Department of Industries and Commerce before the CoC . It is submitted that in the present case, the CIRP period had already exceeded 500 days and the claims of the Department of Industries and Commerce was not included and the said department has not filed any claim despite public announcement. 9. It is submitted that each and every application ought to be considered by the Adjudicating Authority on its own merits. 10. In view of the reasons as stated above the Learned Senior Counsel prayed this Bench to allow the Appeal and set aside the impugned order passed in I.A. No. 161 of 2020 in C.P. No. 51 of 2018. 5th Respondent s Submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel submitted that this Respondent supports the relief sought by the Appellant in the present Appeal and prayed this bench to allow the Appeal. 6 to 8 Respondent s Submissions: 15. The Learned Senior Counsel appeared for these Respondents submitted that these Respondents filed I.A. No. 227 of 2020 before the Adjudicating Authority and the present Appeal is against I.A. No. 161 of 2020 filed by the Appellant herein, which was pending before the Adjudicating Authority . Since the issues raised pertains to the same Corporate Debtor , the matters were heard together passed the common order in both the IA s. 16. It is submitted that out of many PRAs only two applicants survived and they only submitted the plan within the stipulated time. These Respondents were in a bonafide belief that the process was still ongoing, undertook all efforts to collate all information pertaining to the Corporate Debtor from the website of the Ministry of Corporate Affairs . In the process of collating information and submitting the plan, lockdown was imposed due to the outbreak of Pandemic Covid-19 and there was a delay in submitting the plan. These Respondents submitted its plan on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited through Authorised Signatory Vs. Satish Kumar Gupta Ors. (2020) 8 SCC 531 held that the term mandatorily in Section 12 is struck down as being manifestly arbitrary under Article 14 of the Constitution of India and as being an unreasonable restriction on the litigant s rights to carry on business under Article 19(1)(g) of the Constitution of India. 21. As stated (supra) the Hon ble Supreme Court extended the period of limitation from 15.03.2020 to 02.10.2021 and further the Adjudicating Authority directed the extension of CIRP period of 12 weeks, the plan submitted by these Respondents is well within the time. 22. In view of the reasons as stated above, the Appeal is devoid of merits and dismissed the same. 10th Respondent s Submissions 23. The 10th Respondent filed reply vide Diary No. 820 dated 09.11.2021 wherein it is stated that the loan facility extended by this Respondent, the Corporate Debtor had provided bank guarantee to the extent of Rs.20,80,44,296/-. Since the Corporate Debtor failed to renew the bank guarantee dated 19.06.2014 which would expire on 18.06.2019, this Respondent visited the office of the Corporate Debtor in February, 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29. The Adjudicating Authority has not given any reasons in disposing of the I.A. No. 161 of 2020 except simply stated that the said I.A. deemed to be disposed of. 30. The Appellant rightly invoked the jurisdiction of the Adjudicating Authority in filing I.A. No. 161 of 2020 seeking approval of Resolution Plan of the 5th Respondent which was approved by the CoC on 11.02.2020. The CoC in their commercial wisdom and by exercising the powers under sub-section (4) of Section 30 of the I B Code approved the Resolution Plan with 100% voting share, though as per the provision 66% of the voting share of the CoC, meets the requirement for approval of Resolution Plan. After approval of the Resolution Plan by the CoC , the Resolution Professional shall submit the resolution plan to the Adjudicating Authority for its approval under sub-section (6) of Section 30 of the Code. When an application is filed before the Adjudicating Authority , the Adjudicating Authority shall approve the Resolution Plan under sub-section (1) of Section 31 of the Code if it is satisfied that the plan as approved by the CoC under sub-section (4) of Section 30 meets the requirements as referred to in sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 of 2021 against the I.A. 227 of 2020 and I.A. No. 85 of 2021. iii) The Successful Resolution Applicant filed Company Appeal (AT) (Ins) No. 165 of 2021 against I.A. No. 227 of 2020, iv) The Resolution Professional filed Company Appeal (AT) (Ins) No.170 of 2021, v) The Resolution Professional / Appellant filed the present Company Appeal (AT) (Ins) being No. 172 of 2021 vi) Company Appeal (AT) (Ins) No. 173 of 2021 aggrieved against the orders in I.A. No. 85 of 2021 and I.A. No. 227 of 2021. 34. Thus, total 6 Appeals have been filed before this Tribunal and this Tribunal disposing of all the Appeals by passing separate judgements. 35. The reasons emanate from the impugned order dated 28.05.2021 that the Adjudicating Authority did not consider I.A. No. 161 of 2020 on the ground that the State of Karnataka filed I.A. No. 85 of 2021 and the Respondents Nos. 6 to 8 filed I.A. No. 227 of 2020 and the Assistant Commissioner of Commercial Taxes filed I.A. No. 134 of 2020. The Adjudicating Authority in all these I.As directed the Appellant herein that the Appellant shall put up the claim in Form-C of the State of Karnataka in I.A. No. 85 of 2021 before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bound. 39. Section 12 of the I B Code prescribes time limit for completion of Insolvency Resolution Process . Though proviso to sub-section (3) of Section 12 the word mandatorily incorporated, however, the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta reported in (2020) 8 SCC 531 at para 127 struck down the word mandatorily, holding that the said word being manifestly arbitrary under Article 14 of the Constitution of India. Further, the Hon ble Supreme Court held that in exceptional cases only the time can be extended, the general rule being that 330 days is the outer limit within which resolution of the Stressed Assets of the Corporate Debtor must take place beyond which the Corporate Debtor is to be driven into liquidation. Therefore, in all respects the outer limit of 330 days is paramount and in exceptional cases only the outer limit can be extended. In the present case, no such exceptional case has been made out except to afford an opportunity to the Respondents No.6 to 8 who initially backed out from the Resolution Process and stood outside the preview of the resolution process. On the other hand, these Respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), a one-time relief under Article 142 of the Constitution is provided with the conditions prescribed in Section K.2. 41. The Adjudicating Authority is not authorised to pass any orders which would circumvent and attempt to frustrate the Resolution Plan pending before it for consideration under Section 31 of the Code. The bitter fact remains that the Respondents No. 6 to 8 are completely standing outside of the CIRP and initially expressed their EoI in submitting its plan, however, backed out from participating in resolution application and now after completion of the CIR period their application cannot be considered. In this regard, this Tribunal in Kalinga Allied Industries Pvt. Ltd. Vs. Hindustan Coils Ltd. (2021) SCC Online NCLAT 51 at para 15 held as under: 15. In pursuant to the expression of interest issued by RP on 24.08.2018 the Appellant submitted a Resolution Plan. After several rounds of deliberation by the COC revised Resolution Plan was submitted by the Appellant on 19.12.2018. The same was approved on 28.12.2018 by the COC in the 13th meeting by requisite majority. Thereafter, the RP filed an Application under Section 30 (6) of the I B Code for approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No 1490/2019 deserves to be allowed. Conclusion 43. Having analysed the facts, legal position and the precedents and viewed in that perspective, this Tribunal unequivocally comes to a resultant conclusion that the impugned order , passed in I.A. No. 161 of 2020 in CP No. 51 of 2018 dated 28.05.2021 is per se illegal , without application of mind , the same is set aside, with the following directions to be complied with by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench). Directions: (i) I.A. No. 161 of 2020 in CP No. 51 of 2018 is restored to its original position on the file of the Adjudicating Authority , ( National Company Law Tribunal , Bengaluru Bench). (ii) The Adjudicating Authority is hereby directed to consider the plan of the Successful Resolution Applicant / 5th Respondent herein, i.e. Mohammed Enterprises Ltd. (Tanzania Ltd.) (in short METL) whose plan has been approved by the CoC with 100% voting share, within 4 weeks from the date of receipt of copy of this Judgment, in accordance with Law . (iii) The interim order granted by this Tribunal dated 03.08.2021 is made absolute. 44. In fine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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