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TMI Blog2024 (11) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... hi Bench-II) I.A. No. 188 of 2024 in CP (IB) No. 995 of 2018. By the impugned order, the Adjudicating Authority has dismissed IA No. 188 of 2024 filed by the Appellant seeking to place a settlement proposal under Section 12A of IBC before the Committee of Creditors ("CoC" in short) and to permit withdrawal and suspension of the Corporate Insolvency Resolution Process ("CIRP" in short) of the Corporate Debtor. Aggrieved by the impugned order, the present appeal has been preferred by the Appellant who is the suspended director of the Corporate Debtor. 2. To outline in brief the salient factual matrix of the present case at hand, the Corporate Debtor-M/s Primrose Infratech Pvt. Ltd. was admitted into CIRP on 21.01.2018. M/S One City Infrastructure Pvt Ltd submitted their resolution plan dated 24.01.2020 with the RP in respect of the Corporate Debtor under CIRP. The resolution plan along with the Addendum as submitted by them was approved by the CoC in the 8th CoC meeting held on 06.02.2020 with 80.84% voting share. The result of the voting was circulated to the CoC on 14.02.2020. The Respondent No.1-Resolution Professional ("RP" in short) filed IA No. 1489 of 2020 seeking the approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling the impugned order, it has been contended by the Ld. Counsel for the Appellant that Section 12A of IBC read with CIRP Regulation 30A provides scope for submission of multiple settlement proposals particularly when the resolution plan of the SRA has not attained finality. The Appellant has also raised questions on whether resolution plan which is approved by the CoC can be subjected to further amendments as has happened in the present case which tantamount to amendment of the resolution plan which impermissible under law. Reliance has been placed on the judgment of this Tribunal in Shaji Purushothaman Vs Union Bank of India & Ors. in CA(AT) No. 921 of 2019 ('Shaji' in short) wherein, according to the Appellant, it was held by this Tribunal that the settlement proposal given by the suspended director under Section 12A of IBC can be examined by the CoC to find whether the settlement proposal is better than resolution plan. Reliance has also been placed on the judgement of Brilliant Alloys Pvt. Ltd. Vs S. Rajagopal and Ors. (2022) 2 SCC 544 ('Brilliant Alloys' in short) wherein the Hon'ble Supreme Court has held that CIRP Regulation 30A is directory in nature and has to be read i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en approved by the CoC on 06.02.2020 with majority vote share. It was contended that upon approval of resolution plan by the CoC, it could not have considered a settlement proposal in view of the decision of this Tribunal in Hem Singh Bharana Vs Pawan Doot Estate Pvt. Ltd. in CA(AT)(Ins) No. 1481 of 2022 ('Hem Singh Bharana' in short) which decision has been subsequently upheld by the Hon'ble Supreme Court in Civil Appeal No. 443 of 2023. It was also contended that this Tribunal had again held in Nehru Place Hotels and Real Estates Pvt. Ltd. Vs Sanjeev Mahajan & Ors. in CA(AT)(Ins) No. 1715-1716 of 2023 ('Nehru Place Hotels' in short) that a settlement proposal under Section 12A cannot be put before the CoC after the CoC has approved the resolution plan and this judgment has also been upheld by Hon'ble Supreme Court in Civil Appeal No. 602-603 of 2024. With the approval of the resolution plan by the CoC, the plan became inter se binding between the CoC and the SRA and hence no settlement proposal of the suspended management could have been considered at this stage. 7. It was also pointed out that the RP had filed IA No. 1489 of 2020 under Section 30(6) of the IBC seeking approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 and only directed that the voting details may be communicated to the Appellant as desired by them. The present IA No. 188 of 2024 is the third attempt by the suspended management to derail the CIRP process. The Adjudicating Authority after holding that the resolution plan of the SRA was at the stage of consideration by the Adjudicating Authority and the suspended management not having shown their bonafide in their earlier settlement proposals on 28.08.2024 had dismissed IA No. l88 of 2024. The endeavour of the Appellant is therefore nothing but another attempt in the series of obstacles trumped up to subvert the revival of the Corporate Debtor. Thus, the applications for withdrawal/settlement proposals of the Appellant were clearly vexatious in nature and filed with the ulterior motive of delaying the process of plan approval by the Adjudicating Authority. 11. We have duly considered the arguments advanced by the Learned Counsel for the parties and perused the records carefully. 12. The short point for our consideration is whether in the attendant facts and circumstances, there is any infirmity in the impugned order in denying the Appellant yet another opportunity to submit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority has also observed that at the present stage when the resolution plan is under consideration, it is not deemed apt to give yet another opportunity to the Applicant to file a proposal under Section 12A besides noting that Section 12-A of the IBC stipulates that any such proposal needs 90% voting share of the CoC. 15. It is however the case of the Appellant that the statutory provisions of IBC and the Regulations framed thereunder are designed to allow flexibility for the suspended directors to resolve the insolvency process by facilitating settlement and withdrawal of CIRP at any stage. It has also been emphatically asserted that the Hon'ble Supreme Court in Brilliant Alloys supra has held that CIRP Regulation 30A which is directory in nature has to be read in conjunction with the statutory provision contained in Section 12A of IBC which renders it clear that 12A settlement proposal can be filed at any stage. It is also contended that the Adjudicating Authority failed to appreciate that the commercial wisdom of the CoC is supreme and therefore the settlement proposal should have been directed by the Adjudicating Authority to the CoC for its consideration as CoC can accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eek termination of the resolution plan. Pursuant to the order dated 14.01.2020 of the Adjudicating Authority, the suspended director gave the 12A proposal dated 08.02.2020 to the RP. The same was considered by the 8th and 9th meetings of the CoC on 19.02.2020 and it was decided by CoC with 80.22% vote share that the 12A proposal was not feasible or commercially viable. Following the decision of the 9th CoC meeting, the Adjudicating Authority dismissed IA No. 1511 of 2019. It is significant to note that the Adjudicating Authority on 14.01.2020 while directing that CoC may consider the proposal under Section 12A had also observed that the CIRP process "has been impeded at every stage by filing of such applications". 20. This brings us to IA No. 188 of 2024 by which the Appellant has fielded yet another settlement proposal before the Adjudicating Authority. Though, the Adjudicating Authority while considering IA No. 188 of 2024 had initially directed the RP to place the settlement proposal of the suspended management before the CoC for its decision, this order had been set aside by this Tribunal and the matter remanded back to the Adjudicating Authority. It may be pertinent to note t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of 8th CoC that as per commercial wisdom of CoC the 12 A proposal is not feasible or commercially viable they are not interested in 12 A and do not want any e-voting on the same. ........ It was also informed that during course of hearing, Advocate of suspended director Mr. Mrinal Harsh Vardhan raised the concern that application/proposal of the suspended directors has not been put to vote. RP informed the Hon'ble Bench that as per the e voting concluded on 13/02/2020, the CoC has voted with 80.84% in favour of the Resolution Plan of One Group M/s One City Infrastructure Pvt Ltd and APM City Infrastructure Pvt Ltd. (consortium member) and keeping in view the decision of CoC taken at 8th CoC that as per commercial wisdom of CoC the 12 A proposal is not feasible or commercially viable, they are not interested in 12 A and do not want any e-voting on the same. AGENDA ITEM NO 06 FOR E-VOTING: To consider and approve the application/ proposal under section 12(A) of IBC 2016 dated 08/02/2020 filed on behalf of the suspended director to allow withdrawal of application admitted under section 9 of IBC 2016, and suspension of ongoing CIRP. To consider and approve the applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity for its approval, any 12A settlement proposal can be entertained deferring consideration of approval of the resolution plan by the Adjudicating Authority. 25. While dealing with the above issue, this Tribunal took special notice of proviso to Regulation 30A of the CIRP Regulations and the intendment of this proviso after noticing that Regulation 30A has been substituted by Notification dated 25.07.2019 to give effect to the provisions of Section 12A. It is pertinent to note that this notification of 25.07.2019 came into effect after the judgement of the Hon'ble Supreme Court in Brilliant Alloys supra which is of 14.12.2018. We now proceed to reproduce the relevant extracts of the Hem Singh Bharana judgement to find the basis of its conclusion that the Regulation 30A was framed in this manner as it was never intended that after approval of Resolution Plan by CoC, an application under Section 12A can be entertained. The relevant paras read as follows: "14. Regulation 30A has been substituted by Notification dated 25th July, 2019 to give effect to the provisions of Section 12A, which was inserted in the Code by Act No.26 of 2018. Regulation 30A(1) (b) proviso provides: "Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a & Ors. in CA(AT)(Ins) No. 921 of 2019 which has been relied upon by the Appellant also does not come to the rescue of the Appellant because the above observations were made out in the facts of that case wherein it had simply allowed liberty that the decision on entertaining a Section 12A application could be done by the CoC and as such this Tribunal did not lay down any binding ratio that after approval of the Plan an Application under Section 12A ought to be entertained. 27. In the present facts of the case, we notice that the CoC in its deliberations in the 8th and 9th CoC meetings had already put their stamp of approval on the resolution plan. Such opinion expressed by the CoC after due deliberations in the meetings through voting represents collective business decision and constitutes an expression of the CoC's commercial wisdom. And it is here that primacy of the commercial wisdom of the CoC comes into play. The Hon'ble Apex Court in its judgement in "K. Sashidhar Vs. Indian Overseas Bank and Ors (2019) 12 SCC 150" has held: "52..... Besides, the commercial wisdom of CoC has been given paramount status without any judicial intervention, for ensuring completion of the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hance the corpus of funds for treatment of belated claims from Rs 2 Cr to Rs 10.94 Cr. The second Addendum dated 30.04.2024 since the claim of GNIDA has been held as that of a Secured Operational Creditor in terms of the judgment of the Hon'ble Supreme Court in the matter of Prabhjit Singh Soni Vs GNIDA 2024 SCC Online SC 122. The third amendment made on affidavit on 24.08.2024 was to fulfil the dues of the EPFO department within a period of 90 days as contemplated for other operational creditors under the resolution plan. At this stage, we do not wish to make any comments/observations on this issue as that would be premature and improper since the plan is pending consideration of the Adjudicating Authority. 30. We cannot be unmindful of the fact that the overarching objectives of the IBC as enshrined in the Preamble and articulated in the Statement of Objects and Reasons of this enactment is reorganization and insolvency resolution of corporate debtor in a time bound manner for maximization of the value of the assets. Thus, the said maximization has to be achieved within the timeline provided in the scheme. Speedy resolution is the essence of IBC. Time is a crucial facet of IBC p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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