TMI Blog2020 (10) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the networth certificate dated 1st October, 2018 shows the networth of ₹ 637.40 lakhs as on 31st August, 2018 qua M/s. Vaibhav Build Tech Pvt. Ltd., JSV Motors Constructions Pvt. Ltd. - It is brought to our notice that the Appellant has participated in Committee of Creditors meeting during CIRP process but never raised the issue with regard to the eligibility of Respondent No.3 as regards networth criteria. It is too late in the day to accept the argument emanating from the Appellant that the networth of the Resolution Applicant calculated on the basis of market value of fixed assets minus secured loans is not in accordance with the definition of networth under Section 2 (57) of the Companies Act, 2013. No objection to calculation having been raised at the relevant time and the criteria adopted for arriving at the conclusion in regard to networth not being shown to be fundamentally flawed and perverse, argument raised on this score is repelled. No objection on this score can be permitted to be raised by the Appellant after the Resolution Plan has been approved by the Committee of Creditors with huge majority of voting share. Objection in regard to valuation condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of said Resolution Plan. 2. Before dwelling upon the grounds on which the approval of Resolution Plan has been assailed, it would be appropriate to briefly advert to the factual matrix of the case. The Adjudicating Authority admitted Application under Section 9 of Insolvency and Bankruptcy Code, 2016 (for short IBC ) filed by an Operational Creditor viz Durga Enterprises. It happened on 2nd November, 2018. Subsequently Interim Resolution Professional (for short IRP ) came to be appointed on 15th November, 2018. Corporate Insolvency Resolution Process was set in motion with public announcement made by the IRP inviting Expression of Interest from prospective Resolution Applicants. Committee of Creditors was constituted which approved the eligibility criteria of networth of ₹ 5 crores for submission of Resolution Plan along with the evaluation matrix as proposed by the Resolution Professional. Respondent No.3 initially submitted networth certificate dated 1st October, 2018 but realizing that there was an error in the certificate, submitted a revised networth certificate dated 15th March, 2019, which was placed before the Committee of Creditors. Thereafter, Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res. The learned Counsel for the Appellant also submitted that Regulation 35 of the (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 has been violated as the valuers only asked to calculate liquidation value of plant and machinery and not entire assets of Corporate Debtor. It is submitted that Respondent No.2 failed to get the valuation of fixed assets properly and the current assets including receivables were not included in valuation. It is further submitted that the Resolution Professional as also the Committee of Creditors failed to ensure maximization of value of the assets of the Corporate Debtor and the approved Resolution Plan of Respondent No.3 contravenes provisions of law. 4. It is submitted on behalf of Respondent No.2 Corporate Debtor that the Appellant has no locus-standi as he had not raised any objection during Corporate Insolvency Resolution Process and in reply to CA No.703 the Appellant had contended that he had been falsely arrayed and shown as Director of Corporate Debtor while he had been attending the CoC meetings only to secure the release of his properties mortgaged with the Banks. It is further submitted that the valuation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.55 crores on building infrastructure. It is submitted that the Appellant has no locus standi with respect to valuation of the assets of the Corporate Debtor and commercial wisdom of CoC and the decision of the Adjudicating Authority cannot be assailed by the Appellant on this aspect. 6. Heard learned Counsel for the parties and waded through the record. It is not in dispute that as per eligibility criteria laid down by the CoC the Resolution Applicant was required to have a networth of ₹ 5 crores. Appellant is aggrieved of acceptance of bid of Respondent No.3 on the score that the Respondent No.3 did not comply with the networth eligibility. In this regard, it is pointed out that the networth certificate dated 1st October, 2018 shows the networth of ₹ 637.40 lakhs as on 31st August, 2018 qua M/s. Vaibhav Build Tech Pvt. Ltd., JSV Motors Constructions Pvt. Ltd. (page 91 of Appeal paper book). According to learned Counsel for the Appellant the certificate records the networth of two companies, including Respondent No.3, without specifying their relationship. It is submitted that the networth of Respondent No.3 was barely 2.93 crores at the relevant time when compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be fundamentally flawed and perverse, argument raised on this score is repelled. No objection on this score can be permitted to be raised by the Appellant after the Resolution Plan has been approved by the Committee of Creditors with huge majority of voting share. 7. Objection in regard to valuation conducted by the Resolution Professional and approved by the Committee of Creditors is equally without substance. It is not disputed that two registered Valuers were appointed to determine fair value and liquidation value of the Corporate Debtor. Such valuation reports were placed before Committee of Creditors which in its 6th meeting held on 18th July, 2019 considered the same before approving the Resolution Plan. In Maharashtra Seamless Ltd. vs. Padmanabhan Venkatesh Ors. - Civil Appeal 4242 of 2019 decided on 22nd January, 2020, Hon ble Apex Court observed that the object behind carrying out valuation of the assets of the Corporate Debtor is to assist the Committee of Creditors to take decisions on a Resolution Plan. It was further held that there is no requirement that the Resolution Plan should match the maximized asset value of the Corporate Debtor. Relevant extract fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready deposited an amount of ₹ 30 lakhs being 5% of cash contribution of the Resolution Plan having total value of ₹ 22.10 crores. An upfront payment of ₹ 3 crores besides investment of ₹ 4.5 crores on building infrastructure for setting up plant and machinery for the Corporate Debtor is said to have been made by Respondent No.3. It has been brought to our notice that the plant and machinery of the Corporate Debtor had been set ablaze and a criminal case stands registered against the Appellant and is pending judicial determination before learned Sessions Judge, Gautam Buddh Nagar, Uttar Pradesh. Admittedly, the Appellant is an Ex-Director of the Corporate Debtor and the law does not enjoin upon him any right or power to challenge the commercial wisdom of Committee of Creditors in regard to approval of Resolution Plan, which has already got the approval of Adjudicating Authority and is undergoing implementation. The Appellant cannot be permitted to scuttle the process at this stage and that too without substantial grounds. No material irregularity in resolution process vitiating it, has been canvassed or brought to our notice, which would render the whole exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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