9911796707
TMI Blog2024 (5) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 2 on 17.07.2021 and 04.10.2021. i.e., much prior to his submission of Respondent Plan. It is also fact that no judicial stay existed in favour of the Appellant on 12.05.2022 regarding his status as wilful defaulter. Hence, the Appellant was not eligible to submit the Resolution Plan and this was rightly adjudicated by the Adjudicating Authority. There are no error in the Impugned Order dated 19.04.2023. The appeal devoid of any merit stand dismissed. - [ Justice Rakesh Kumar Jain ] Member ( Judicial ) , [ Mr. Naresh Salecha ] Member ( Technical ) And [ Mr. Indevar Pandey ] Member ( Technical ) For the Appellant : Mr. Krishnendu Datta, Sr. Advocate along with Ms. Neha Agarwal Mr. Nipun Gautam For the Respondents : Mr. Udita Singh, for R-1. Mr. Abhishek Sharma, Mr. Kritya Sinha Mr. Shawaiz Nisar, for R-2. Mr. Mithilesh Kumar Pandey, for R-3 JUDGEMENT NARESH SALECHA , MEMBER ( TECHNICAL ) 1. The present Appeal i.e., Company Appeal (AT) (Insolvency) No. 858 of 2023 has been filed under Section 61 of the Insolvency Bankruptcy Code, 2016 (in short Code ) by the Appellant herein i.e., Namdev Hindurao Patil, who is the Suspended Director and one of the Resolution Applicant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CoC Meeting held on 26.05.2022 and PRAs were asked to modify their plan. . 10. The Appellant alleged that the Respondent No. 2 wrongly declared the Appellant as wilful defaulter on 19.07.2021 and on 04.10.2021, which was challenged by the Appellant before the appropriate court and the Resolution Professional permitted the Appellant to submit the Resolution Plan subject to outcome of the challenge by the Appellant. 11. The Appellant pointed out that issue regarding his eligibility to submit the Resolution Plan was infact discussed in several CoC Meeting including 17th CoC held on 15.09.2022, 18th Coc Meeting held on 22.09.2022 and 19th CoC meeting held on 27.09.2022. 12. It is the case of the Appellant that Civil Judge granted the stay on 19.09.2022 as such CoC agreed to consider the Resolution Plan submitted by him in 20th CoC Meeting held on 03.10.2022 and the Resolution Plan of the Appellant was discussed. The Appellant was given another opportunity to give amended improved the Resolution Plan and accordingly during 21st CoC Meeting was held on 06.10.2022- 07.10.2022 to consider amended plan submitted by the Appellant. The improved offer of the Appellant was considered wherein C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations, 2016 (in short CIRP Regulations ). 19. The Appellant also alleged failure on the part of the Resolution Professional in terms of 36-A (8) of CIRP Regulations which casts duty on Resolution Professional to conduct due diligence and examine whether the Resolution Plan is in compliance with the provisions of the code and cited the judgment of the Hon ble Supreme Court of India in the matter of Arcelormittal India Private Limited Vs. Satish Kumar Gupta and Others. [(2019) 2 SCC 1] in support of his case. 20. The Appellant reiterated his pleadings regarding the rights of the Corporate Debtor as MSME for its continuation in existence in view of the Report of the Insolvency Law Committee of March 2018 contained in paragraphs 27.1, 27.3, 27.4 of the Report and also in view of the judgment of the Hon ble Supreme Court of India in the matter of Swiss Ribbons Private Limited and Anr. Vs. Union of India [(2019) 4 SCC 17] his case is covered. 21. Finally the Appellant submitted that his Resolution Plan should have been considered and voted upon by the CoC in terms of Regulation 39(3)(c) of CIRP Regulation for either approving his plan or rejecting his plan on merits and also it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the case of the Respondent that an ad-interim stay is not a final conclusion regarding the wilful defaulter status of the Appellant and it was meant only for not taking any further adverse action by the Respondent No. 2 against the Appellant and it did not absolve wilful defaulter status of the Appellant and therefore Section 29 (A) of the Code was clearly applicable to the Appellant barring Appellant from submitting the Resolution Plan. 29. The Respondent No. 2 further submitted that on 19.12.2022 the Civil Judge dismissed the Civil Suite No. 710 of 2022 and appeal preferred by the Appellant against this order dated 19.12.2022 was also dismissed by District Judge, Kolhapur on 01.04.2023. Thus, there is no valid ground raised by the Appellant which absolve him from ineligibility attracted under Section 29A due to wilful defaulter. 30. The Respondent No. 2 also refuted the contention of the Appellant that eligibility was considered by CoC and he was permitted to submit the Resolution Plan and in this regard drew attention to minutes of 17th CoC Meeting held on 15.09.2022 which took place prior to grant of alleged ad-interim stay order dated 19.09.2022, where it has been clearly re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and only on deemed vacation of the stay order CoC took a final decision in this regard in 21st CoC Meeting. 37. The Respondent No. 2 submitted that the decision taken in any case falls within the ambit of the commercial wisdom of the CoC and hardly any judicial review is required or permitted in view of several judgements of Hon ble Supreme Court of India as well as this Appellate Tribunal and cited the judgement of this Appellate Tribunal held in Epitome Components Pvt. Ltd. vs. Divyesh Desai, The Liquidator of Trend Electronics Ltd. Ors. [(2022) SCC OnLine NCLAT 305]. 38. The Respondent No. 2 refuted the allegations of the Appellant that Resolution Professional did not perform his duties under the Code regarding determination of eligibility of the Resolution Applicant and pointed out that the Resolution Professional complied with all statutory requirements including Regulation 36(A)(8)(b) of the Regulation. The Resolution Professional categorically commented on the eligibility criteria of the Appellant and the status of wilful defaulter proceeded before the Hon ble High Court of Bombay and placed the matter accordingly before the CoC for decision and therefore it was for CoC to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant has neither taken the ground for exemption as MSME under section 240 A of the Code in appeal No. 853 of 2023 not before the Adjudicating Authority in I.A. No. 2972 of 2022. The Respondent No. 3 submitted that the Appellant also did not qualify the conditions to be covered under Section 240 A of the Code. 46. The Respondent No. 3 also submitted that Appellant was required to challenge the status of wilful defaulter as RBI per Guidelines, within 15 days from the date of issue of notice by the Respondent No. 2, which the Appellant did not challenge and therefore the status of the Appellant as wilful defaulter attained the finality. 47. The Respondent No. 3 submitted that the Appellant is chronical and habitual litigant and filed various litigation before the Adjudicating Authority, this Appellate Tribunal, Hon ble High Court of Bombay, Civil Judge Kolhapur, District Judge Kolhapur and also Hon ble Supreme Court of India and did not get any support in judicial fora. In fact all the application and SLP were decided in favour of the Financial Creditors including the Hon ble Supreme Court of India who did not find any ground against the Order of this Appellate Tribunal and the Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till 03-10-2022 and up to filling of the reply by the IDBI. The order said that the reply to be filed by IDBI till 03-10-2022 and accordingly the reply was filed by IDBI and as per the order dated 19-09-2022 it seems that at present there was no stay and as of now they were not in receipt of the order of the hearing dated 03-10-2022. 53. The Respondent No. 3 highlighted that even if the COC was to hold the Appellant eligible, dismissal of the Appellant's Civil Suit subsequently on 19.12.2022 would have again made him ineligible to submit a Resolution Plan under the relevant provisions of the Code. 54. The Respondent No. 3 submitted that the CIRP process could further not have been kept pending only to wait for the Appellant to possibly succeed in overturning his Willful Defaulter declaration. The Resolution Professional as well as CoC had to conduct and proceed with the CIRP proceedings within the given statutory timelines which could not have been breached. 55. The Respondent No. 3 submitted that the issue of eligibility has been considered and decided by the Adjudicating Authority in the impugned order wherein it has observed that it felt the CoC had discussed both the eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Plan under section 29 A of the Code and issue regarding commercial wisdom of the CoC regarding non consideration of the Resolution Plan submitted by the Appellant and resultant recommendation of the CoC for liquidation of the Corporate Debtor which was accepted by the Adjudicating Authority in the Impugned Order dated 19.04.2023. 62. Here, we would like to take into account the relevant portion of the provision of the Code as contained in Section 29 A which reads as under :- 29A. Persons not eligible to be resolution applicant. A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person (a) is an undischarged insolvent; (b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949); ( Emphasis Supplied ) 63. Further, it would be desirable to look into Section 240 (A) of the Code i.e., application of the Code to the MSME and the relevant portion reads as under : - 240A. Application of this Code to micro, small and medium enterprises. (1) Notwithstanding anything to the contrary contained in this Code, the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, the exemption under Section 240 A of the Code is not applicable to Section 29 A (b) of the Code which is the case under discussion in the present Appeal. 70. It is well settled principle that the CoC has the powers to take informed decision with regard to approval of the Resolution Plan and once, the Resolution Plan is decided by the CoC, the Resolution Professional is required to file suitable application before the Adjudicating Authority for approval. Thus, the CoC has full powers to decide regarding approval or non approval of the Resolution Plan. 71. It is also viewed that the CoC is also duty bound to consider the eligibility or ineligibility of the Resolution Applicant under section 29 A of the Code as upheld in catena of the judgments passed by the Hon ble Supreme Court of India as well as by this Appellate Tribunal where it has been made clear that the ineligibility for submission of the Resolution Plan, would be determinate w.r.t date on which the Resolution Applicant submits his Plan. 72. We note that the Appellant submitted the Resolution Plan on 12.05.2022 which was considered in 11th CoC meeting held on 26.05.2022 and in various subsequent CoC meetings up to 21st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 14.03.2023 dismissed the application of the appellant filed in Company Appeal (AT) (Ins.) No. 1080 of 2021challenging the CIRP of Corporate Debtor under Section 7 of the Code by the Order of the Adjudicating Authority dated 16.09.2021, reads as under : - (iv) The order of this Appellate Tribunal dated 14.03.2023 was challenged before the Hon ble Supreme Court of India in Civil Appeal No. 4135 of 2023 which was dismissed vide its order dated 25.08.2023, which reads as under : - (v) In regular Civil Suit No. 710 of 2021 filed before the Civil Judge, Junior Division, Kolhapur, the order was passed by Civil Judge on 19.09.2022 which reads as under : - Note:- From the order dated 19.09.2022 it become clear that the defendants (Financial Creditor) were restrained by way of temporary injunction from any other adverse action based on the order of the Respondent No. 2 dated 19.07.2021 and 04.10.2021 till defendant file their say to the application for temporary injunction. (vi) The Civil Judge order sheet dated 03.10.2022 and dated 21.11.2022 are reproduced as under : - Note : English translation as made available in the Appeal Paper Book Note : English translation as made availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no other specific provision providing for cut off date which submits that it should be the date of application of making a bid. Thus, to opine that it is the initiation of the CIRP proceedings which is the relevant date, cannot be said to reflect the correct legal view and thus, we are constrained to observe that the law laid down in Digambar Anand Rao Pigle (supra) case by the Tribunal is not the correct position in law and the cut off date will be the date of submission of resolution plan. ( Emphasis Supply ) 80. From above relevant analysis, it is very clear that relevant date is the date of submission of the Resolution Plan and the Appellant was not eligible to submit the Resolution Plan on 12.05.2022, since he had already been declared as wilful defaulters by the Respondent No. 2 on 17.07.2021 and 04.10.2021. i.e., much prior to his submission of Respondent Plan. It is also fact that no judicial stay existed in favour of the Appellant on 12.05.2022 regarding his status as wilful defaulter. Hence, we hold that the Appellant was not eligible to submit the Resolution Plan and this was rightly adjudicated by the Adjudicating Authority. 81. Thus, we do not find any error in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
