TMI Blog2020 (3) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Mr. Savan Godiawala (hereinafter referred to as 'Applicant/Resolution Professional') under Section 33(1) R/w section 60(5) of the IBC, 2016, by inter alia seeking to pass an order requiring the Respondent to be liquidated, in terms of the provisions of section 33(1) of the Code; to issue a public announcement stating that the Respondent is in liquidation; to direct that a copy of the order be sent to the RoC, at Bengaluru etc. 2. Brief facts of the case, as mentioned in the Application, and subsequent pleadings filed, which are relevant to the issue in question, are as follows: (1) M/s. Falcon Tyres Limited, (the Corporate Debtor) was incorporated as a Public Limited Company on 29th November, 1973 and engaged in manufacture of tyres and tubes for two and three wheelers, jeeps, LCVs and farm vehicles. In due course of time, on account of labour unrest beyond the control of the management, manufacturing activities of the Corporate Debtor came to a standstill and the Corporate Debtor shut down its operations in 2015. Multiple attempts were made to revive the Corporate Debtor, but to no avail. Eventually, C.P. (IB) No.14/BB/2017 was filed by M/s. Edelweiss Asset Rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igibility criteria stipulated in the advertisement and had executed the confidentiality undertaking. (4) The fourth meeting of the CoC was held on 13.08.2018, wherein, the RP proposed that since few investors had shown interest in the resolution of the Respondent, potential Resolution Applicants can be given more time to express their interest. Members of the CoC agreed and decided to extend that the last date for submission of Resolution Plan till September 14th, 2018. An advertisement for extension of the last date for submission of Resolution Plan was published on August 17th, 2018, wherein the last date for submission of Resolution Plan was extended till September 14th, 2018. In the seventh meeting of the CoC dated 01.10.2018 with a few more investors showing interest the members of the CoC agreed to extend the last date for submission of Resolution Plan till October 12th, 2018. Accordingly another advertisement for extension of last date for submission of Resolution Pan was published on 03.10.2018. (5) During the eighth meeting of the CoC held on 15.10.2018, the RP informed the Members of the CoC that one Resolution Plan was submitted by Maple Tree Leather Goods Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative of the Resolution Applicant was invited for discussions with the members of the CoC. After detailed discussions with Members of the CoC and commercial aspects of the First Resolution Plan, the Representative of the Resolution Applicant agreed to submit another Resolution Plan by 23rd January, 2019. And this was continued on 23rd January 2019. The RP informed the Members of the CoC that fourth addendum to the First Resolution Plan was received by the RP on 23rd January, 2019. The RP invited the representative of the Resolution Applicant for the meeting, who had detailed discussion on the commercial aspects of the Resolution Plan. The Resolution Applicant was not agreeable to address some of the commercial concerns of the members of the CoC. Hence, most of the CoC members were of the view that the First Resolution Plan would be rejected. However, the Resolution Professional decided to put the matter on electronic voting. On 24th January, 2019, when the electronic voting was open for CoC Members to vote on either in favour of approval of the Resolution Plan or liquidation, another addendum on email was received from the representative of the Resolution Applicant, which revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appoint Mr. Velayudham Jayavel (Registration No. IBBI/IPA-001/IP-P01012/2017-2018/11663) as the liquidator of the Respondent Company, subject to the approval of this Adjudicating Authority. (9) It is stated that CoC has been cast with a duty to ensure a time bound process to better preserve the economic value of the asset. Simultaneously, it is the duty of the CoC to ensure that a Resolution Plan approved by it is viable, feasible and maximizes the assets of the Corporate Debtor. And it is for the CoC, which has to take a business decision to accept or reject a Resolution Plan and no provision is made in the Code, Rules or Regulations that would enable or enjoin upon the Adjudicating Authority to sit over the resolution of the CoC in rejecting a particular Resolution Plan. (10) The Hon'ble Supreme Court of India in the case of K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312 has clearly held that if opposition to the proposed resolution plan is purely a commercial or business decision, the same, being non-justifiable, is not open to challenge before the Adjudicating Authority or for that matter the Appellate Authority. The Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereby a Resolution Professional may only invite fresh resolution plans if no other resolution plan has passed muster. 79. Take the next stage under section 30. A Resolution Professional has presented a resolution plan to the Committee of Creditors for its approval, but the Committee of Creditors does not approve such plan after considering its feasibility and viability, as the requisite vote of not less than 66% of the voting share of the financial creditors is not obtained. As has been mentioned hereinabove, the first proviso to section 30(4) furnishes the answer, which is that all that can happen at this stage is to require the Resolution Professional to invite a fresh resolution plan within the time limits specified where no other resolution plan is available with him. It is clear that at this stage again no application before the Adjudicating Authority could be entertained as there is no vested right or fundamental right in the resolution applicant to have its resolution plan approved, and as no adjudication has yet taken place. 3. Heard Shri Nischal Dev, learned Counsel for Applicant/Resolution Professional and Shri Vikram Trivedi, learned Counsel for Petitioner/EARCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.00 96.38 108.76 Registered Assignment Agreement dated 27.06.2014 South Indian Bank 50.00 50.00 86.00 Registered Assignment Agreement dated 30.03.2015 ICICI Bank 290.00 289.60 461.55 Registered Assignment Agreement dated 29.06.2016 TOTAL 595.00 568.45 810.19 However, the Company Petition was filed by EARCL/Petitioner on the default committed by the Corporate Debtor with respect to the facility granted by South Indian Bank. 7. The Adjudicating Authority, vide its order dated 20th June, 2019 passed in LA. No. 294 of 2019, has granted exclusion of 194 days from computation of statutory period of CIRP in question, as a special case, as the statutory period of 270 days lapsed as early as on 22.01.2019, on various grounds viz., livelihood of several hundred workers depend on the Company, Govt., of Karnataka also shown its interest for revival of the Company, unsuccessful Resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the case on 1st May, 2018 by initiating CIRP, appointing IRP, imposing moratorium etc., so as to see whether any revival of operations of Corporate Debtor is possible during CIRP period. It is also to be noted here that Corporate Debtor has availed several Financial Facilities from several Banks viz., Central Bank of India (₹ 149 Cr.), Syndicate Bank (₹ 106 Cr.), South Indian Bank (₹ 50 Cr.), ICICI Bank (₹ 290 Cr.) amounting to ₹ 595 Cr. All these Banks have assigned their respective Loan Accounts with CD in favour of EARCL by executing separate Assignment Agreements dated 28.03.2014, 27.06.2014, 30.03.2015 and 29.06.2016 respectively. However, the Petition (C.P.(IB)No.l4/BB/2017) was filed by EARCL with respect to default for an amount of ₹ 107.95 Cr. committed by Corporate Debtor in respect of South Indian Bank. One of objects of code is that only one Application/Petition seeking to initiate CIRP in respect Corporate Debtor would lie, and after initiation of CIRP, all Financial Creditors and Operational Creditors of such Corporate Debtor would be covered by such CIRP. In the instant case, there are several claims from Banks, Commercial Dept., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies Act, 2013 (18 of 2013); he is not related party of the Corporate Debtor; he has not been an employee or proprietor or a partner; of a firm auditors or Secretarial Auditors or Cost Auditors of the Corporate Debtor or; of a legal or consulting firm, that has or had any transactions with the Corporate Debtor contributing 10% or more of the gross turnover of such firm, in the last three financial years; he is undertake to disclose the existence of any pecuniary or personal relationship with the concerned Corporate Debtor or any of its stakeholders as soon as he become aware of it, to the Board and the Adjudicating Authority; he is not a member of any Insolvency Professional Entity. 12. The aforesaid reasons and circumstances clearly established that the Resolution Professional and the CoC have made all efforts to revive the operations of CD but in vain. As stated supra, the Adjudicating Authority has also exercised its discretion in granting sufficient time in order to exhaust all possibility of getting solution to the issue in question. Therefore, there is no other alternative for the Adjudicating Authority except to initiate Liquidation proceedings, as per extant provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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