2023 (1) TMI 945 - AT - Insolvency & Bankruptcy
Seeking sanction of resolution plan, approved in the meeting of Committee of Creditors - Section 31 of the Insolvency and Bankruptcy Code, 2016 - failure to appreciate the mandatory provision of Section 29-A, Section 24(3)(c) & Section 30(2) of the Code - considering ineligible party as Successful Resolution Applicant - HELD THAT:- It is noted that the Adjudicating Authority gave this order on 27.02.2020 and no appeal was preferred against this order, therefore, the order of Adjudicating Authority in CA No. 314 of 2019 has achieved finality and moreover, it is also noted that under Section 24(3)(c) the participation of a representative of the operational creditors does not confer any voting right on the representative of the operational creditors and therefore, nonparticipation of a representative cannot have bearing either in conduct of the CIRP or in the approval of the resolution plan. Thus, we are of the clear view that claim of the Appellant that in not following Section 24(3)(c) the CIRP was conducted with material irregularity is not found to be correct.
It is necessary to look at Section 29-A(c) according to which at the time of submission of the resolution plan, the Resolution Applicant or any other person acting jointly or in concert with the Resolution Applicant who has an account which is classified as non-performing asset, and at least a period of one year has lapsed from the date of such classification as NPA till the date of commencement of the CIRP of the Corporate Debtor is ineligible to submit a resolution plan.
There is no other document or record submitted by the Appellant or any other party in support of the claim that a connected party of SRA went into insolvency resolution. All that the press note states is that the company Drake and Scull International PJSC, UAE went into ‘Financial Reorganization Process’ which was accepted by the relevant authority and a Financial Reorganization Committee (FRC) to conduct the financial reorganization process was formed - It is thus clear that even if the financial reorganization process that Drake and Scull International PJSC, UAE is undergoing is taken as an insolvency resolution process, such a financial reorganization process started more than one year after the commencement of CIRP in the present case and not before the commencement of CIRP as is required in Section 29-A(c) in order to make the SRA ineligible to submit a resolution plan. Notably, the resolution plan was submitted in July 2019 by the SRA when its connected party and holding company ‘Drake and Scull International PJSC, UAE’ was not undergoing financial reorganization process. Thus, we are quite clear that any ineligibility under Section 29-A(c) is not attracted vis a vis the SRA.
On the basis of pleadings and documents submitted by the parties that no ineligibility is attached to the SRA as per Section 29-A(c) and 29-A(h) r/w 29-A(i), merely the fact that the SRA is a related party of the CD as per Section 5(24) does not imply that the SRA is ineligible to submit a resolution plan in relation to the insolvency resolution of the CD. The ineligibility of any party to submit a resolution plan has to be seen strictly in the lens of Section 29-A of the IBC and we find that such ineligibility under Section 29-A does not attach to the SRA - it is clear that while the related party aspect between Drake and Scull International PJSC, UAE and the CD has been shown in the documents they do not claim or show any ineligibility of the SRA under Section 29-A to submit a resolution plan.
The RP only formed an opinion regarding the eligibility of Passavant Energy and Environment GmbH, Germany to submit a resolution plan. Both the plans were presented in their 13th meeting of CoC where members of Axis Bank and RBL Bank were present and noticeably the CoC members present in the meeting did not raise any issue about the ineligibility of Passavant Energy and Environment GmbH, Germany to submit a resolution plan and two resolution plans submitted by Maa Pahari Mercantiles Pvt. Ltd. and Passavant and Environment GmbH, Germany were considered in detail in the 14th meeting of CoC held on 13.11.2019.
The approval of the resolution plan with the shares of the financial creditor and operational creditor as contained therein cannot be faulted on account of any material irregularity - the approval of the resolution plan by the Adjudicating Authority vide order dated 03.12.2020 cannot be faulted.