TMI Blog2018 (11) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... for or on behalf of the CoC or substitute itself for CoC. In the instant case, Mr. Gupta deprived the CoC of its right to decide the fate of the corporate debtor and thereby pushed the corporate debtor into liquidation. Probably, Mr. Gupta does not know the full implications of what he did. It is difficult to appreciate the contention of Mr. Gupta that no law required him to have a certain number of meetings of the CoC and, therefore, he did not violate any law. It cannot be appreciated in the context of either the basic premise of the Code which provides a market mechanism for resolution of insolvency nor the role envisaged in the Code for an enlightened and empowered IP having the responsibility to run the corporate debtor as a going concern and conduct the entire CIRP. Mr. Gupta did not have a single meeting of the CoC in his term as the RP. How does one justify that the CoC has no role whatsoever in a CIRP? The Code envisages definite roles for different constituents. It is unimaginable that a constituent does not play its role or is not allowed to play its role or encroaches upon another’s role. By not allowing and facilitating the CoC to play its rightful role, Mr. Gup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )No.213/KB/2017] and the order dated 28th February, 2018 of the Hon ble National Company Law Appellate Tribunal (NCLAT) in the matter of Sandeep Kumar Gupta Vs. Stewarts Lloyds of India Ltd. Anr. [CA (AT) (Insolvency) No. 263 and 303 of 2017] carrying certain observations about the conduct and performance of Mr. Sandeep Kumar Gupta as Interim Resolution Professional (IRP) / Resolution Professional (RP) in the corporate insolvency resolution process (CIRP) of Stewarts and Lloyds of India Limited. 1.2 In its order dated 26th October, 2017, the AA observed: - From the record, it is clear that only one meeting of Committee of Creditors took place on 12th June 2017 and after that, no meeting of Committees of Creditors was held, and ultimately at the fag end of 180 days, Interim Resolution Professional has submitted his report that no Resolution Plan has been submitted Since the Resolution Professional, Shri Sandeep Kumar Gupta has conducted only one meeting of the Committee of Creditors during 180 days of the period prescribed, even though no Resolution Plan was under consideration, but he did not advertise the notice in the newspaper for inviting proposal from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 8th June, 2018. He availed an opportunity of personal hearing before the DC on 20th July, 2018 along with learned Counsel, Mr. Alok Dheer. Alleged Contraventions 2. The DC observes that though the genesis of the SCN is the order of the AA, it did not carry all contraventions observed in the said order. For example, the order had observed that Mr. Gupta did not advertise the notice in the newspaper for inviting proposal from investors / creditors. Mr. Gupta has, in his response dated 27th and 28th March, 2018 to the Board, clarified that he, in fact, did invite resolution plans through advertisements in newspapers and submitted evidence of the same. On probably being satisfied of the explanation, the Board did not pursue this contravention through the SCN. This order deals only with the contraventions alleged in the SCN, and not the alleged contraventions observed in the order of the AA. A summary of contraventions alleged in the SCN, Mr. Gupta s written and oral submissions thereon and the findings of the DC are as under: 2.1 Contravention : Mr Gupta, as IRP/RP conducted only one meeting of the CoC during the entire CIRP, particularly when many decisions are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the closure of e-voting window. Therefore, he could not have been appointed as RP. Submission : Mr. Gupta received additional votes through e-mail after voting window was closed, taking the voting share from 73.42% to 78.93%. He provided full details of voting to the AA, which approved his appointment as RP. He has cited the order dated 15th September, 2017 of the AA in the matter of Raj Oil Mills Limited where the AA confirmed the appointment of the RP despite having obtained 61.84% of votes with an observation that the votes cast in favour are in excess of the votes cast against. He has also cited the order dated 18th April, 2018 of the AA in the matter of RBL Bank Ltd. Vs. MBL Infrastructures Ltd. where the AA approved a resolution plan which received 68.5% of favourable votes during the e-voting window and additional 10% votes through e-mail after e-voting window was closed. Finding : The DC observes from the progress report dated 15th July, 2017 that Mr. Gupta received certain votes by e-mail after closure of voting window. He did not hide any relevant information from the AA. After considering the said progress report, the AA appointed him as RP. Where the AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) for resolving insolvency. The CoC alone is entitled under the Code to decide the fate of the corporate debtor, whether through resolution or liquidation. The Code empowers and facilitates the CoC to decide the fate of the corporate debtor and consequently of its stakeholders. The institution of IP is a key facilitatation. An IP, who is appointed by the AA on the recommendation of the CoC, can not substitute itself for the CoC. It is for the CoC to decide whether it needs additional time for resolution or to liquidate the corporate debtor. Mr. Gupta kept the CoC in dark for months, in fact, the entire duration when he was the RP. The contention that Mr. Gupta made the best efforts to receive resolution plans is preposterous. He issued advertisement on 15th September, 2017 inviting resolution plans by 25th September, 2017 and thereby expected a resolution plan within 10 days! He did not share the most critical information (whether any resolution plan has been received or not) in a CIRP with the CoC. While he deprived the CoC of its rights to resolve insolvency of the corporate debtor, he pursued his appointment as RP and as liquidator and worked to preserve value for better realisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidated. It is not the job of an IP to take a decision, directly or indirectly, or by omission or commission, for or on behalf of the CoC or substitute itself for CoC. In the instant case, Mr. Gupta deprived the CoC of its right to decide the fate of the corporate debtor and thereby pushed the corporate debtor into liquidation. Probably, Mr. Gupta does not know the full implications of what he did. 3.3 It is difficult to appreciate the contention of Mr. Gupta that no law required him to have a certain number of meetings of the CoC and, therefore, he did not violate any law. It cannot be appreciated in the context of either the basic premise of the Code which provides a market mechanism for resolution of insolvency nor the role envisaged in the Code for an enlightened and empowered IP having the responsibility to run the corporate debtor as a going concern and conduct the entire CIRP. Mr. Gupta did not have a single meeting of the CoC in his term as the RP. How does one justify that the CoC has no role whatsoever in a CIRP? The Code envisages definite roles for different constituents. It is unimaginable that a constituent does not play its role or is not allowed to play its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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