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TMI Blog2020 (8) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... Shraddha Gupta and Mr. Pawan Kumar, Advocates. JUDGMENT ( Through Virtual Mode ) 20.07.2020 : Appellant is aggrieved of the rejection of the Resolution Plan submitted by Mr. Madhusudhan Raju Chintalapati, in respect whereof the Resolution Professional had filed I.A No. 64 of 2020 on 12th March, 2020 under Section 31 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) for approval of the Resolution Plan before the Adjudicating Authority (National Company Law Tribunal), Amaravati Bench, in C.P. (IB) No. 423/9/HDB/2018, and consequent declining of prayers in I.A No. 66 of 2020, I.A No. 67 of 2020 & I.A No. 68 of 2020 primarily on the ground that the Resolution Applicant was not disqualified under Section 29 of the 'I&B Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plans. Committee of Creditors authorised the Resolution Professional to negotiate with the prospective Resolution Applicants to improve upon their plans. One of the Resolution Applicants namely- Mr. Madhusudhan meanwhile entered into an agreement with P. Vijay Kumar (former Managing Director of the Corporate Debtor) undertaking to invest substantial amount and under the restructured shareholding pattern, Mr. Madhusudhan was allotted 50% shareholding and P. Vijay Kumar was allotted 30.81% shareholding, remaining percentage of shareholding going to four other minor shareholders. I.A. No. 15 of 2020 came to be filed before the Adjudicating Authority on 27th January, 2020 seeking direction to place the Restructuring Plan of Mr. Madhusudhan befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2020. The Adjudicating Authority heard these I.As together as the same could impact the decision in I.A. No. 64 of 2020. 4. The Adjudicating Authority noticed the factum of the Corporate Debtor becoming insolvent and defaulting in repaying its debt obligations while being managed by P. Vijay Kumar. It observed that the erstwhile management which had mismanaged the affairs of the Corporate Debtor rendering it insolvent could not be allowed a role in the forward continuance of the Corporate Debtor. It noticed that the former Managing Director P. Vijay Kumar entered into an agreement with one of the Resolution Applicants lowering his stake in the Corporate Debtor from 45.32% to 30.81%. After taking into consideration the new shareholding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements of Section 30(2) of the 'I&B Code'. It accordingly declined to approve the Resolution Plan submitted by Mr. Madhusudhan and proceeded to pass the order of liquidation under Section 33(1) (b) of the 'I&B Code'. 5. We have given our anxious consideration to the submissions made by learned counsel for the Appellant. It is the settled law of land that the approval of the Resolution Plan depending upon various factors including feasibility, viability, financial matrix and distribution mechanism rests upon the business decision taken by the Committee of Creditors in its commercial wisdom which are not to be interfered with by the Adjudicating Authority or even by this Appellate Tribunal. But at the same time the Adjudicating Authority has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or viz by entering into an agreement with an investor in the form of a settlement and then submitting a Restructuring Plan masquerading as a Resolution Plan while retaining the majority shareholding and without divesting his effective control in the management. In this regard, it would be apposite to reproduce the dictum of Hon'ble Apex Court in "Chitra Sharma vs. Union of India- (WP(Civil) No. 744 of 2017 decided on 09.08.2018)": "The provisions for insolvency resolution and liquidation of a corporate person in the Code did not restrict or bar any person from submitting a resolution plan or participating in the acquisition process of the assets of a company at the time of liquidation. Concerns have been raised that persons who, with thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts in the CIRP. Section 30 of the IBC, as amended, also clarifies that a resolution plan of a person who is ineligible under Section 29 A will not be considered by the CoC" 6. Admittedly, the Settlement Agreement entered between P. Vijay Kumar and Mr. Madhusudhan (one part) with the Operational Creditor- 'M/s. Priya Trading Company' (Second part) for withdrawal of the Company Petition was placed before the Committee of Creditors for consideration along with the Restructuring Plan but the Committee of Creditors did not consider the withdrawal of the Company Petition in terms of the provisions of Section 12A of the 'I&B Code' and instead approved the Restructuring Plan treating it as Resolution Plan which undoubtedly was based on an agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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