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TMI Blog2024 (8) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... ank is not in compete with the Resolution Plan received. It is, thus, noted by the CoC that when the Resolution Plan of the SRA is approved, the personal guarantees be still with the Bank and it is submitted by the learned Counsel for the Bank that total amount due is Rs.238 crores, hence, CoC after due deliberations decided not to accept the settlement proposal and approved the Resolution Plan. The decision of the CoC, which was taken through e-voting declared on 08.01.2023, was well considered and deliberated decision, in which Appellant was given full opportunity. The decision, which was taken with 100% vote share on 08.01.2023 to reject the settlement proposal of the Appellant, can in no manner be held to be arbitrary. The Hon ble Supreme Court in Arun Kumar Jagatramka vs. Jindal Steel and Power Limited and Anr. [ 2021 (3) TMI 611 - SUPREME COURT ] has held that a withdrawal under Section 12-A is distinguishable both from a Resolution Plan, which is approved under Section 31 and a scheme which is sanctioned under Section 230 of the Companies Act, 2013. The Adjudicating Authority did not commit any error in rejecting IA No.2594 of 2023 filed by the Appellant. There is no error i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gotiations undertaken by the Coc and the CoC can very well ask the Resolution Applicant to revise their Plan. Similarly, the Appellant can always be asked to revise his proposal to match the Resolution Applicant s offer. IA No.3410 of 2022 was disposed of accordingly. (iv) After order dated 21.11.2022, the Appellant submitted a revised settlement proposal vide letter dated 25.11.2022, offering an amount of Rs.100 crores with the timeline for payment. The revised settlement proposal submitted by the Appellant dated 25.11.2022 along with the Resolution Plan submitted by the Successful Resolution Applicant ( SRA ), came to be considered by the CoC in 13th CoC meeting held on 26.11.2022 and 14th CoC meeting held on 07.12.2022. The settlement proposal submitted by the Appellant as well as the Resolution Plan submitted by SRA was deliberated and decision was taken to put both the proposals for e-voting. The Resolution Plan of SRA as well as revised settlement proposal of the Appellant was placed for e-voting and as per the result of the e-voting declared on 08.01.2023, the Resolution Plan having value of 120.01 crores submitted by Nehru Place Hotels and Real Estates Pvt. Ltd. (Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2023 in IA No.2594 of 2023, giving a last opportunity to the Appellant so that any acceptable settlement can be arrived. Order dated 01.12.2023 passed by Adjudicating Authority in IA No.2594 of 2023 was challenged by the SRA (Respondent No.3) by means of Company Appeal (AT) (Insolvency) Nos.1715-1716 of 2023, which Appeal was disposed of by this Tribunal on 08.01.2024, deleting the part of the order, by which opportunity was granted to the Appellant for arriving at any acceptable settlement. This Tribunal observed that Adjudicating Authority may proceed to decide IA No.2594 of 2023 as well as IA No.987 of 2023 filed for approval of the Resolution Plan. (ix) After the above order of this Tribunal dated 08.01.2024, the Adjudicating Authority heard the Appellant as well as RP and SRA on IA No.2594 of 2023 and by the impugned order, dismissed the IA. Aggrieved by which order, this Appeal has been filed by the Appellant. 3. We have heard Shri Abhijeet Sinha, learned Senior counsel appearing for the Appellant; Shri Rajesh Kumar Gautam, learned Counsel appearing for Indian Bank; Shri Manju Nagrath, learned Counsel appearing for RP; and Shri Ajay Kumar, learned Counsel appearing for SRA. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posal of the Appellant, no grievance can be raised by the Appellant. It is submitted that Appellant in its settlement proposal has stated that on approval of Resolution Plan by the Adjudicating Authority, entire liability of the CD shall extinguish and the CD, its Promoter and Guarantors shall not be liable to make any further payments towards the outstanding amount to the Financial Creditor. It is submitted that the Appellant in the appeal has concealed the aforesaid part of the offer by the Appellant and it was noticed by the CoC in its 14th meeting held on 07.12.2022. The CoC deliberated and duly compared both, the Resolution Plan as well as settlement proposal and found the settlement proposal not acceptable. It is submitted that after approval of Resolution Plan on 08.01.2023, there was no occasion for the Appellant to send further settlement offers as sent by the Appellant on different dates, including the offer made by letter dated 21.03.2023 for Rs.118.26 crores. It is submitted that the Resolution Plan having been approved and settlement proposal submitted by the Appellant being considered and deliberated, there is no right left to the Appellant to make repeated offers. Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CoC Member, which was declined on 05.05.2023. The order of this Tribunal dated 03.02.2023, did not entitle the Appellant to submit fresh settlement proposal and the offers sent thereafter are wholly unacceptable. IA No.2594 of 2023 filed by the Appellant has rightly been rejected by the Adjudicating Authority. It is submitted that this Tribunal while deciding Company Appeal (AT) (Insolvency) Nos.1715-1716 of 2023 in the matter of Nehru Place Hotels and Real Estates Pvt. Ltd. vs. Sanjeev Mahajan Ors. has clarified the import of the order dated 03.02.2023, which does not entitle the Appellant to submit fresh proposal. It is submitted that there is no merit in the Appeal and the Appeal deserves to be dismissed. 8. We have considered the submissions of learned Counsel for the parties and have perused the record. 9. As noted above, the Appellant has earlier challenged the order dated 24.12.2021 admitting Section 7 Application in Company Appeal (AT) (Insolvency) No.03 of 2022. The Appellant in the Appeal has submitted OTS offer and was ready to give offer for the amount for which Bank was taking steps to transfer the debt to non-banking financial company. The Company Appeal (AT) (Inso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y been noticed in the Judgement that maximisation of the assets of the Corporate Debtor is one of the objectives and equally important is recovery of the financial dues of the Bank. The proposal of Applicant under section 12A for Settlement has naturally to be weighed against the Resolution Plans received in the process unless the Resolution Plans are opened and deliberated side by side with the proposal of settlement submitted by the Appellant, the objective as contemplated in paragraph 14(iii) cannot be achieved. We thus are of the view that the Order dated 04.07.2022 clearly entitled that the CoC to weigh the Resolution Plans as well as Settlement Proposal together. 11. Subsequent to the order of this Tribunal dated 21.11.2022, 13th meeting of the CoC was held on 26.11.2022, where the CoC noticed the order dated 21.11.2022 of the Appellate Tribunal and also taken note of the revised settlement proposal submitted by the Appellant (25.11.2022). The Appellant, who was present in the meeting, the CoC deliberated upon his proposal. The 14th CoC meeting was held on 07.12.2022. The Adjudicating Authority in the impugned order has noted deliberations of the CoC in 13th, 14th, 15th and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for payment of the financial value proposed. 14th COC meeting dated 07.12.2022 Item No. A4- To discuss and evaluate the resolution plans submitted by the resolution Applicants along with the Settlement Proposal submitted by the promoter in accordance with the order of the Hon ble NCLAT dated 21.11.2022 Mr. N C Nehra representing Indian Bank (sole CoC member) requested the promoter Mr. Sanjeev Mahajan to deliberate on his Settlement Proposal submitted, whereby the chairperson added that the promoter may present his proposal and both the parties are present here for any negotiation, modification or clarification, as may be required and assistance needed from his side, same is always available. ... Further, he (Applicant) informed that he has visited the head office of the Indian Bank in Chennai on Monday and met the General MangerRecover Mr. Ahluwalia for consideration of his proposal and deliberated upon his pros and cons of his proposal. The Indian Bank again inquired the promoter, if he wishes to improve/revise his offer as he has been a party to all the CoC meetings and is aware of the amount offered by the other two resolution Applicants to the financial Creditor, to which the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduced the time period of its payment Plan. Further the CoC member submitted that several rounds of discussions were held with Mr. Mahajan and he requested the physical meeting with the CMD of the bank, the Indian Bank in 15th CoC meeting, had asked the promoter to improve his offer value, however, the promoter submitted that it is his final offer and do not wish to revise any terms and financial amount offered. Further, the representative of the CoC added that the value offered by the promoter is less than the average liquidation value of the corporate debtor as determined by the valuers, also the value is much less than the plan value offered by the resolution Applicant ... After considering the aforesaid minutes of CoC meetings and considering the submissions of Learned Senior Counsel for the RP and Learned Counsel for the CoC, it emerges that the CoC in its meetings has considered the Settlement Proposal of the Applicant along with the Resolution Plans received from the Resolution Applicants after taking into the account all the factors which has been opined by the Hon ble NCLAT in its order dated 04.07.2022 21.11.2022 and thereon in their commercial wisdom rejected the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RP before the Adjudicating Authority for approval of the Resolution Plan. As noted above, after the approval of the Resolution Plan and rejection of settlement proposal of the Appellant by the CoC, an IA No.259 of 2023 was filed by the Appellant in the disposed of Company Appeal (AT) (Insolvency) No.03 of 2022 before this Tribunal, which IA came to be decided on 03.02.2023. In IA No.259 of 2023, following order was passed by this Tribunal on 03.02.2023: 03.02.2023: I.A. No. 259 of 2023 This Interlocutory Application has been filed by the Appellant in disposed of Company Appeal (AT)(Insolvency) No. 03 of 2022 which was disposed of by this Tribunal s Judgment dated 04.07.2022. Subsequently, another order was passed by this Tribunal on 21.11.2022 in I.A. No. 3410 of 2022 filed by the Appellant. The Applicant/Appellant has come up with in this Application claiming that the Applicant/Appellant was not given opportunity to meet the Chairman-cum-Managing Director, who is the Competent Authority for considering the proposal of the Applicant/Appellant who is an MSME. By our order 21.11.2022, we have already made necessary clarification with regard to earlier judgment dated 04.07.2022. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, this Tribunal had occasion to refer to the order dated 03.02.2023 passed by this Tribunal in IA No.259 of 2023, it was observed by this Tribunal in its judgment dated 08.01.2024 that order dated 03.02.2023 cannot be read to mean that this Tribunal granted liberty to Respondent No.1 to submit any further proposal for settlement. It is useful to extract paragraphs 14 and 15 of the judgment, which are as follows : 14. From the facts as noticed above it is clear that Resolution Plan of the Appellant was approved with 100% vote share and settlement proposal submitted by Respondent No. 1 under 12A of the Code was considered under the order of this Tribunal in 14th CoC meeting and rejected with 100% vote share on 08th January, 2023. 15. Learned Sr. Counsel for the Respondent No. 1 has placed reliance on order of this Tribunal dated 03.02.2023 passed in I.A. No. 259 of 2023. According to Respondent No.1 I.A. No. 259 of 2023 has been filed due to liberty granted by this Tribunal. When we look into the order dated 03.02.2023 of this Tribunal, it is clear that this Tribunal only observed that it is open to the Applicant (Respondent No. 1 herein) to make such an application as permissibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-A is the fact that ninety per cent of the Committee of Creditors has to allow withdrawal. This high threshold has been explained in the ILC Report as all financial creditors have to put their heads together to allow such withdrawal as, ordinarily, an omnibus settlement involving all creditors ought, ideally, to be entered into. This explains why ninety per cent, which is substantially all the financial creditors, have to grant their approval to an individual withdrawal or settlement. In any case, the figure of ninety per cent, in the absence of anything further to show that it is arbitrary, must pertain to the domain of legislative policy, which has been explained by the Report (supra). Also, it is clear, that under Section 60 of the Code, the Committee of Creditors do not have the last word on the subject. If the Committee of Creditors arbitrarily rejects a just settlement and/or withdrawal claim, NCLT, and thereafter, NCLAT can always set aside such decision under Section 60 of the Code. For all these reasons, we are of the view that Section 12-A also passes constitutional muster. 18. The question which needs to be considered in the present case is as to whether the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which was taken through e-voting declared on 08.01.2023, was well considered and deliberated decision, in which Appellant was given full opportunity. The decision, which was taken with 100% vote share on 08.01.2023 to reject the settlement proposal of the Appellant, can in no manner be held to be arbitrary. 21. When the settlement proposal, which was submitted by the Appellant, which came to be considered by the CoC and was rejected, it is not open for the Appellant, after the approval of Resolution Plan of the SRA and after rejection of settlement proposal of the Appellant by CoC, to sent emails increasing his offer from earlier submitted settlement proposal. The RP has stated in the affidavit that period of 330 days of the CIRP has come to an end on 28.01.2023. The CIRP has come to an end and settlement proposal submitted by the Appellant was duly deliberated and rejected by 100% vote share, it is not open for the Appellant to submit offer increasing his settlement value, after approval of the Plan. We have also observed that order dated 03.02.2023, which was passed by this Tribunal in IA No.259 of 2023, filed in the disposed of Appeal, did not entitle the Appellant to file fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de such decision under the provisions of IBC. 23. There cannot be any quarrel to the proposition laid down by the Hon ble Supreme Court in the above case. If the CoC arbitrarily rejects a settlement proposal, the same can be interfered with in an appropriate case by the Adjudicating Authority as well as by this Tribunal. However, in the present case, the decision of not accepting the settlement proposal was well considered, as noted above. Hence, the above judgment of the Hon ble Supreme Court in no manner helps the Appellant. 24. The learned Counsel for the Appellant has also referred to and relied on the judgment of the Hon ble Supreme Court in Arun Kumar Jagatramka vs. Jindal Steel and Power Limited and Anr. (2021) 7 SCC 474, where while considering the provisions of Section 12-A and Regulation 30-A, following was observed by Hon ble Supreme Court in paragraph 78: 78. There is a fundamental fallacy in the submission. An application for withdrawal under Section 12-A is not intended to be a culmination of the resolution process. This, as the statutory scheme would indicate, is at the inception of the process. Rule 8 of the Adjudicating Authority Rules, as we have seen earlier, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act was also strongly relied upon by the respondents. This section only states that once a resolution plan, as approved by the Committee of Creditors, takes effect, it shall be binding on the corporate debtor as well as the guarantor. This is for the reason that otherwise, under Section 133 of the Contract Act, 1872, any change made to the debt owed by the corporate debtor, without the surety's consent, would relieve the guarantor from payment. Section 31(1), in fact, makes it clear that the guarantor cannot escape payment as the resolution plan, which has been approved, may well include provisions as to payments to be made by such guarantor. This is perhaps the reason that Annexure VI(e) to Form 6 contained in the Rules and Regulation 36(2) referred to above, require information as to personal guarantees that have been given in relation to the debts of the corporate debtor. Far from supporting the stand of the respondents, it is clear that in point of fact, Section 31 is one more factor in favour of a personal guarantor having to pay for debts due without any moratorium applying to save him. ( emphasis supplied ) 25. There can be no quarrel to the proposition laid down by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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