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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 ..... uld have precluded the consideration of the 12A proposal of the Appellant by the CoC on the ground that the resolution plan was under consideration of the Adjudicating Authority? HELD THAT:- 80.22% of the CoC members had already voted against the settlement proposal dated 08.02.2020 of the Appellant. The 8th CoC meeting had also concluded that the 12A proposal is not feasible or commercially viable. The settlement proposal, therefore, stood clearly rejected by the CoC pursuant to deliberations in the 8th and 9th CoC meetings. It is equally significant to note that around the same time when the settlement proposal dated 08.02.2020 of the Appellant had been rejected, Respondent No. 3 had submitted their resolution plan dated 24.01.2020 with the RP. The resolution plan along with the Addendum as submitted by the Respondent No. 3 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 and the 9th CoC meeting had noted the approval of the resolution plan of the SRA with CoC having voted with 80.84% in favour of the plan. It is the case of the Respondents that once the resolution plan has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rishabh Govila , Mr. Srikant Singh, Ms. Nidhi Yadav , Mr. Sarthak Bhandari , Advocates Mr. Rishabh Nangia , Advocate for R - 3 / SRA JUDGMENT ( Hybrid Mode ) Per: Barun Mitra, Member ( Technical ) The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 ( IBC in short) by the Appellant arises out of the Order dated 28.02.2024 (hereinafter referred to as Impugned Order ) passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the suspended management not having shown their bonafide in their earlier settlement proposals on 28.08.2024, dismissed IA No. l88 of 2024. Aggrieved by the said impugned order, the present appeal has been preferred by the ex-director of the Corporate Debtor. 3. We have heard Shri Mrinal Harsh Vardhan, Ld. Advocate appearing for Appellant, Shri Sumant Batra, Ld. Advocate for the RP and Shri Rishabh Nangia, Ld. Advocate representing Respondent No.3-SRA. 4. Assailing 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 hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pass a resolution to liquidate the Corporate Debtor. Thus, the CoC is competent to determine which course of action is best, whether it be approval of the resolution plan or by way of a settlement proposal under Section 12A or by opting for liquidation. 6. Refuting the contentions and arguments submitted by the Appellant, the Ld. Counsel for Respondent No. 3-SRA submitted that the RP had issued EOIs thrice in Form-G. The resolution plan of the SRA had been 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 9 petition cannot be withdrawn by confining only to settling the claims of the operational creditor. The suspended management had again filed the second application seeking withdrawal of CIRP on which an opportunity was granted to place their settlement proposal before the CoC. However, the settlement proposal having been rejected by the CoC in the 9th meeting with 80.22% vote share, the Adjudicating Authority took note of the same on 28.02.2020 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 vexa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement earlier and it is just a repeated process to derail the approval of the Resolution Plan application. 14. From perusal of the impugned order, it is clear that the Adjudicating Authority has taken notice that the suspended management had also made attempts previously to invoke the provisions of Section 12A and these proposals after consideration by CoC and/or the Adjudicating Authority had been rejected. The Adjudicating 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded director invoking Section 12A of the IBC for withdrawal of the CIRP process on which the compromise proposal was directed to be placed before the CoC by the Adjudicating Authority. It was however left to the CoC by the Adjudicating Authority to accept the proposal of the suspended director and that in case their proposal received the approval of 90% of the members of CoC, the suspended director would be entitled to seek 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aiting, it is not to be considered or put to vote and this is as per the commercial wisdom the CoC, how Rs. 126 crore project can be built by infusing Rs. 2 Crores, when other party is infusing upfront of Rs.15 Crores as per commitment, last CoC was held on 24/01/2020 and after almost 2 weeks, there is no concrete proposal of suspended directors. It was reiterated by CoC/Home Buyers as stated in the Minutes 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 viab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nehru Place Hotels judgement supra that a settlement proposal under Section 12A cannot be put before the CoC after they have approved the resolution plan. 24. When we look at the Hem Singh Bharana judgement, we notice that this Tribunal had dealt with an analogous issue as to whether after approval of the resolution plan by the CoC which has been placed before the Adjudicating Authority 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent supra does not have any merit especially because the latter judgement had been pronounced on 14.12.2018 which date is anterior to the substituted Regulation 30A notification of 25.07.2019. The Appellant has therefore clearly misconstrued and misapplied the ratio of Hem Singh Bharana. Even the judgment of this Tribunal in Shaji Purushothaman vs. Union Bank of India 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 comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndum in the resolution plan were not in the nature of revision of the plan but was made to make the resolution plan compliant under law. The Addendum were made with the objective to cater to the changes in the IBC. Explaining further, it was pointed that the first amendment was made after deliberations in the 12th CoC meeting of 26.08.2023 so as to enhance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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