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2019 (9) TMI 1556 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCHSeeking cancellation of the process of submission, finalisation and filing of the resolution plan for approval of this Adjudicating Authority - alleged non-disclosure of material facts - the resolution plan was already approved by the Committee of Creditors - terms of the Process Note was already agreed - role of Resolution Professional - Resolution plan is vitiated by misrepresentation and/or mutual mistake of fact - seeking stay on encashment of Bid Bond Guarantee - HELD THAT:- On perusal of the report, regarding the role of the Resolution Professional about the preparation of the Information memorandum, it is clear that Resolution Professional is duty-bound to provide the most updated information about the entity as accurately as is reasonably possible to this range of solution providers. It is also the duty of the Resolution Professional to prepare the Information Memorandum, in order for the prospective investors to provide solutions to keep the entity as a going concern, the information memorandum must be made available to potential financiers within a reasonable period of time and if the information is not comprehensive, the Resolution Professional must put out the Information Memorandum with a degree of completeness and the information that she is willing to certify. In the report, an example is also given that the part of the Information Memorandum; the Resolution Professional must clearly state the expected shortfall in the coverage of liabilities and assets of the entity presented in the Information Memorandum. The Resolution Professional also must make sure that the information is readily available to whosoever is interested in bidding, a solution for Insolvency Resolution Process - thus, Resolution Professional becomes the manager of the negotiation between the debtors and creditors in accessing the viability of the entity. The facts, information and material make it clear that Deccan Resolution Plan was based on misleading MM Report 2016 uploaded in VDR, and this has rendered the entire Resolution Plan un-viable, un-feasible and that cannot be successfully implemented. By subsequent event, there remains least possibility of getting the lease of sister concerns land i.e.Clover land,because of initiation of CIRP Process separately against the company Clover itself, for installation of 12500 MT Press , will also makes the Resolution Plan unviable. The IBC neither confers the power or jurisdiction on the Adjudicating Authority to compel specific performance of a plan by an unwilling resolution applicant. The letter and spirit of the I&B Code mandate the acceptance of only a viable and lawful resolution plan being implemented at the hands of a willing resolution applicant. Absence of these factors renders the Section 31 application liable to be rejected. The I&B Code envisages a scheme whereby the Corporate Debtor is taken over by the successful resolution applicant. This Scheme must contain a provision for its implementation and supervision under Section 30(2)(d) and as required by the proviso to Section 31(1). In the present case, undisputedly MM Report 2016 which contained,incorrect and unrealistic information, was uploaded on the VDR, which is created as a data centre to facilitate the resolution applicants to carry out their due diligence. The huge discrepancy in the vital and fundamental information such as the production capacity of the Corporate Debtor and financial information would undoubtedly raise questions on the credibility of the resolution plan - The resolution Professional cannot be said to have misrepresented any fact or misled the Resolution Applicant in any way as he has always represented and communicated the facts about the 2016 MM Report and has never represented otherwise. This conduct of Resolution Professional is also not controverted by the applicant. The Resolution Professional provided detailed financial information to all the potential resolution applicants with plant wise profit and loss statements, including specific classification of the revenue during those years into “Manufacturing” and “Trading / Metals” for the period between April 17 to September 17, as was made available to the Resolution Professional. Invocation of the Bid Bond Guarantee - HELD THAT:- The purpose of the Bid Bond Guarantee is to serve as security for adherence to conditions contained in the Process Note or Letter of Intent and it is invoked to penalise the applicants for their non-compliance. Every time the Bid Bond Guarantee is invoked, it is co-incident with the rejection of the applicant’s financial bid or the resolution plan. Invocation of Bid Bond Guarantee is a penal action as per the terms of the Process Note. The mere saving of the right of the CoC or the Resolution Professional to continue with the applicant’s Financial Bid or the Resolution Plan even after invocation of the Bid Bond Guarantee would not change the purpose of taking Bid Bond Guarantee neither the penal nature of invocation of the guarantee. The invocation of the Bid Bond Guarantee was on account of non-submission of performance guarantee by the successful Resolution Applicant. The CoC was within its rights to invoke the Bid Bond Guarantee as per the terms of the Process Document, Bid Bond Guarantee and Letter of Intent. However, this can’t be denied that information uploaded on VDR, which was the very basis of submission of the resolution plan was based on misinformation and was based on M. M. Report 2016, which was admittedly prepared for the particular purpose for invitation of investment. The Resolution Professional and the CoC is directed to invite the fresh offers within a period of 21 days from the date of receipt of this order, and within 2 weeks thereafter, the Committee of Creditors shall take a final call in the matter and the decision of the Committee of Creditors and the offers received to be placed before this Tribunal on the next date of hearing for consideration - Application disposed off.
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