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TMI Blog2023 (12) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... fair deal of deliberations. The framing of such terms and conditions, evaluation of the Resolution Plan against such matrix is considered to be entirely within the commercial wisdom domain of the CoC. After analysing the facts in the appeal in details in provisions paragraphs, it is held that the Appellant failed to comply with the conditions as stipulated in RFRP - there are no reason to interfere with the Impugned Order dated 02.02.2023 passed by the Adjudicating Authority since, there are no error in the Impugned Order. Appeal dismissed. - [ Justice Rakesh Kumar Jain ] Member ( Judicial ) And [ Mr. Naresh Salecha ] Member ( Technical ) For the Appellants : Mr. K. Parameshwar, Mr. Anand Dilip Landge Mr. Kanti, Advocates For the Respondents : Mr. Gaurav Mitra, Mr. Harshit Khare, Mr. Ishan Roy Chowdhury, Mr. Prafful Saini, for R-2,3, 4, 5 7 ORDER [ Per : Mr. Naresh Salecha , Member ( Technical ) ( Oral ) ] 12.12.2023 There are two connected appeals bearing Company Appel (AT) (Ins.) No. 190 of 2023 and Company Appeal (AT) (Ins.) No. 219 of 2023. Both have been filed by the Appellant Mr. Satish Dhondiram Chavan. In Company Appel (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the RBI in declaring him as a wilful defaulter in which the Hon'ble High Court of Bombay vide its interim order dated 30th June, 2022 directed the Bank not to take any precipitative steps pursuant to the impugned RBI circular and therefore he is not ineligible under Section 29A of the Code for submitting a Resolution Plan. This Bench observes that the Applicant was reported as fraud on 8th July 2021 by the Head Office of Fraud Monitoring Department and reported as fraud on 23rd July 2021 on the RBI platform and also the Respondent No. 2 has filed a FIR with CBI on 24th September 2021 which are very serious in nature. As rightly contended by the Respondents, the Applicant cannot escape the clutches of Section 29A simply because an interim stay has been granted by the Hon'ble High Court directing the Banks not to take any precipitative steps unless the Applicant comes out clean with specific findings from the Hon'ble High Court. In addition to the above, the rejection of the Resolution Plan on both the grounds of non-furnishing of Bank Guarantee and ineligibility under Section 29A is not on account of any precipitative action of the lenders and is not protected under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant(s) for a period as may be required by the CoC ( BSBG Validity Period ). The BSBG shall have a claim period of 30 days after the BSBG Validity Period. The form of the BSBG shall be as per the Format indicated in Appendix-3. The designated Lender will hold the BSBG in trust on behalf of the CoC. (Emphasis Supplied) 11. From the above, following emergence :- a. Applicant was required to provide bank guarantee of Rs. 1 Crore. b. This was a part of Binding Resolution Plan / BRP or referred as Binding Submission Bond Guarantee / BSBG. c. The BSBG should have been executed only from any nationalised bank located in India. d. The form of BSBG was prescribed as per the format indicated in Appendix 3. 12. We note that this Clause 1.8.1 of RFRP was with reference to eligibility criteria for Resolution Plan and Evaluation Matrix which was basis for the Resolution Applicant to submit the Resolution Plan and was also the basis for the CoC to consider the same. 13. Thus, we may treat this Clause 1.8.1. of RFRP akin to situation where the Applicant is required to meet the legal hurdle of Limitation Act and in case the application is submitted after the limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date of Plan Received Time of Plan Received Constitution 1. Mr. Satish Dhondiram Chavan 15/10/2020 19.50 Individual 2. Disha Milk and Milk Products Pvt Ltd 15/12/2020 17:50 Company ( Emphasis Supplied ) 21. The Appellant referred to minutes of 11th Meeting held on 25.02.2021 to show that the date was extended up to 01.03.2021. The Resolution Professional also apprised members that the Resolution Applicants have not yet submitted the requisite Bank Guarantee as per Appendix 3 read with clause 1.8.1 of the Request For Resolution Plan (RFRP). Promoter Resolution Applicant Mr. Satish D. Chavan present in the meeting confirmed to submit the Bank Guarantee by 1st March, 2021. Members agreed to the same. The Resolution Professional tried to talk to the other Resolution Applicant who connected to the meeting but the same couldn t be heard. Bank of Baroda suggested the Resolution Professional to also inform the other Resolution App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inally received on 5th March, 2021. At this, member representing SBI raised queries regarding the original time line for submission of bank guarantee. The RP informed that the original time line for submission of resolution plan along with which bank guarantee was to be submitted was 15th November 2020. However, the CoC had extended the time line to 15th December 2020. Both the Resolution Applicants did not submit the BG with their Resolution Plans and he had followed up with them frequently. The RP had circulated an email to the members about non-receipt of BG calling for their advice in the matter. Reminder was also sent, but there was no advice from any member. In the last meeting, the CoC had decided to extend the timeline to submit BG by 1st March, 2021 but one of the RAs submitted it only on 5th March, 2021. (Emphasis Supplied) 23. The Appellant also referred to 13th Meeting of CoC held on 03.05.2021 which discussed the issue regarding 29A of the Code as well as the submissions of bank guarantee. For the limited purpose of noting reference regarding bank guarantee, the following is relevant para which reads as under:- The Bank of India raised concern over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of Director of the Corporate Debtor. The Answering Respondents brought out that the interlocutory Application of the Appellant seeking direction from the Adjudicating Authority to direct the CoC to condone delay of three days in submitting bank guarantee in respect of Resolution Plan was rejected by the Adjudicating Authority vide Order dated 02.02.2023 in CP (IB) No. 1852/(MB)/2019 as the Appellant failed to furnish the bank guarantee within the stipulated time period which was extended on few occasions to accommodate the Resolution Applicant. 33. The Answering Respondent informed that the original last date for submission of the bank guarantee was on 15.11.2020 which was subsequently extended to 15.12.2020. The Answering Respondents submitted that in 11th CoC Meeting, it was further decided to extend the timelines for Resolution Applicant to submit the bank guarantee along with Resolution Plan up to 01.03.2021. 34. The Answering Respondents assailed the conduct of the Appellant, who despite such liberal extensions of time limits, the Appellant failed to furnish the bank guarantee, before the stipulated last date of 01.03.2023. 35. The Answering Respondents also pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CP (IB)- 1852/(MB)/2019 . 41. The Answering Respondents submitted that there is no ground for the Appellant to challenge the commercial wisdom of the CoC and relied on the judgment rendered in the case of K.Sashidhar V/s Indian Overseas Bank Ors. [(2019) 12 SCC 150]. 42. The Answering Respondents submitted that the CoC is very conscious about recovery of their outstanding dues from the Corporate Debtor and only as a last resort, the CoC was compelled to go for liquidation on the failure of the Appellant and therefore at this stage commercial wisdom of the CoC represented by the Answering Respondents cannot be challenged in the present Appeal. 43. Concluding arguments, the Answering Respondents requested this Appellate Tribunal to dismiss the appeal. Finding 44. From various averments and submissions we find that the Resolution Plan of the Appellant was not approved and rejected primarily on the following accounts :- a) Non submission of bank guarantee within the stipulated last date. b) Submission of bank guarantee in non compliance mode. c) The Appellant being ineligible in terms of Section 29A of the Code. 45. Having noted above, we tend to ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he I B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I B Code. There is an intrinsic assumption that fina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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