TMI Blog2020 (10) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... done intentionally to keep the applicant out of race. However, no concrete evidence to prove these allegations have been placed on record, particularly in view of the admitted fact that a revised Resolution Plan was submitted suo motu by the applicant herein to RP, after the RP had already submitted IA No. 173/2019, inter-alia, seeking approval of this Adjudicating Authority to the Resolution Plan approved by the CoC in terms of section 30(4) of the Code. As per the provisions of IBC, 2016 once a CIRP application is admitted, it is the duty of RP to constitute CoC and thereafter publish EoI, Information Memorandum and Evaluation Matrix on the basis of decisions taken in CoC meetings. Thereafter, upon receipt of EoI by potential Resolution Applicants, various Resolution plans are examined by the RP and all the compliant Resolution Plans are put up before the CoC for deliberations about each of those plans for considering their feasibility and viability. In this regard, it is pertinent to note here that under the provisions of the Code, the commercial wisdom of the CoC has been given paramount status without any judicial intervention. In the instant case, the present applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) To direct the Respondent No. 2 to provide the source from which it got the information regarding the additional property / assets being available, the manner in which information was received by Respondent No.2, basis on which the offer made by Respondent No. 2 was revised and such other details relating to revision of offer by Respondent No.2 based on the information that it got from its own source. b) To direct the Resolution Professional to state on oath as to why such information was not included in the Information Memorandum and if the bid was revised by Respondent No. 2 based on some information that was available to it why was there no communication from the Resolution Professional about such information being available to the Respondent No. 2 and why the RP has not communicated the same before declaring the impugned H1 bidder as the successful resolution Applicant. 4. Brief facts of the Application bearing IA No. 166/2019 as stated by the Applicant are as under: a. That the present Corporate Debtor i.e., M/s. VBC Industries Ltd was admitted for CIRP vide order date 13.04.2018 and Mr. Ahalada Rao Vummenthala (IBBI/IPA002/IP/N00074/20172018/10172) was appointed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther Bids received. Thanking You, For Amaravathi Textiles Private Ltd., h. That the Applicant herein was not invited to the COC meeting 11.02.2019 at which the Revised Resolution Plans were to be discussed and considered. Subsequently when the Applicant herein enquired with the RP regarding the status of the Bid submitted by it, the RP informed that since the bid of Kamini Metalliks Private Limited (KMPL) is higher than the bid amount of the Applicant herein by a sum of ₹ 9,00,00,000/- (Rupees Nine Crore only) offered to the Financial Creditors, the RP expressed that M/s. Kamini Metalliks Private Limited is likely to emerge as H1. i. That as there was no communication regarding Approval/Rejection of the bid submitted by it, smelling something wrong in the CIRP, the Applicant voluntarily submitted an improved revised bid on 19.02.2019 (for ₹ 52.68 Crores) to the financial creditors in sealed cover to the office of the Resolution Professional and the same has been acknowledged by the office of the Resolution Professional. j. In the early office hours of 20.02.2019 when the Applicant herein enquired with the Resolution Professional/Fifth Respondent to find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL for ₹ 49.50 Crores. q. It defies any logic as to why a bidder who emerged as H1 with a difference of ₹ 9 Crores over H2 would all of a sudden on his own at the proposed last meeting of the COC held on 21.02.2019 prior to 2 hours from the commencement of the meeting would submit a bid for ₹ 57.15 Crores in a sealed cover by enhancing the bid for financial Creditors by a sum of ₹ 7.65 Crores. r. The important aspect to be noticed is that how at the eleventh hour KMPL submitted revised bid which was more than ₹ 9 crores over the very first Resolution Plan of H2, why the H1 party again increased the offer to the Financial Creditors by ₹ 7.65 crore when the H1 was already in a comfortable zone. s. Hence, the Applicant submits that the bid submitted by H2 at the eleventh hour on 21.02.2019 ought not to be considered at all and accordingly the bid of the applicant for ₹ 52.68 crores offered to Financial Creditors is only to be considered on all merits and treat the Applicant as H1 and award the bid in favour of M/s, Amaravathi Textiles Private Limited. t. It is evident from the above that there is a definite leakage of information f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rency. h. That the representative of M/s. Amaravathi Textiles while sending mail to the RP also marked copy of the same to Mr. Mutukumalli Rama Rao, the applicant's relative and the brother of the Managing Director of the suspended Board and Mr. Anantha Krishnaiah, which establishes beyond doubt that the unsuccessful applicant is hand in glove with the promoters of the suspended board. Only to suppress the same, the same has been attributed to the RP. i. That the RP always maintained confidentially. Though not required, the CoC only opened the sealed covers. j. That on the other hand, it is the applicant by receiving information from the directors of the suspended board who attended the CoC meetings, suo moto mailed proposal enhancing their offer from Rs. 40.4 Crores for asset to ₹ 52.5 Crores enhancing the plan value to Rs. 85.29 Crores. 6. Respondent No. 2 to 4 (Members of CoC) filed their respective Counters, in IA No. 166/2019, inter-alia, stating as under: i. That the CoC can engage in discussions only with H1 for further modifications as per Regulation 39(3) of the CIRP Regulations. ii. The Comparison of the values offered in Plan II of two RAs ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its Plan Value till the last minute / time it was accorded final approval by CoC: viii. That on 17.02.2019, the RP vide e-mail circulated the Agenda for the 15th CoC meeting to be held on 21.02.2019. Item 2 of the Agenda states To discuss the resolution plan and recommend appropriate decision to the Adjudicating Authority by the NCLT . While the things stood thus, on 20.02.2019, the RP forwarded an unsolicited revised Resolution Plan received form the Applicant herein with the date of 18.02.2019 (received by RP on 19.01.2019) (hereinafter referred to as Applicant's Plan III ) to the CoC through e-mail. As per Applicant's Plan III, the total Plan value was ₹ 85.29 crore, of which amount offered to FCs was ₹ 52.68 crore. In the light of improvised Resolution Plan offered by Applicant at this juncture, the RP requested the CoC to take appropriate action in this regard. ix. That after examining KMPL's Final Plan / Plan IV at the meeting of the 15th CoC held on 21.02.2019, the CoC unanimously approved KMPL's Final Plan / Plan IV for submitting the same to the Adjudicating Authority for approval. During the course of the said meeting, the CoC recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is not a violation of any of the provisions of law since the meeting was not to determine the eligibility of Resolution Applicants but to consider their plans and discuss the outcome of evaluation matrix; c. KMPL kept revising its Plan in furtherance to the discussions with CoC and RP and as such, it submitted its Final Plan on 21.02.2019 which was approved by the CoC in its commercial wisdom. d. Nothing under law prevents the CoC to seek the H1 bidder to improvise its Plan till the last minute and hence, there is no irregularity in KMPL submitting the best possible Plan on ,21.02.2019. e. The Applicant has submitted an unsolicited plan on 19.02.2019 and hence, the same need not be considered by CoC and the reason for non-consideration was also recorded in the minutes of the 15th CoC meeting. f. The Applicant's Final Plan submitted in the evening of 21.02.2019 cannot be considered in view of approval of Resolution Plan submitted by KMPL by such time by the CoC. g. As observed by the Hon'ble Supreme Court and other benches of Hon'ble NCLT, the CoC cannot be asked to reconsider a Resolution Plan that has already been rejected. h. That except making a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot considered by the Resolution Professional and the members of COC inspite of the value being offered to the Financial Creditors being more than that offered by Respondent No.2. Surprisingly on 19.02.2019 the Resolution Professional sent an email at 03.22 p.m stating that he did not ask for improved offer but only confirmation that the offer is final. d) The said email of the Resolution Professional is preceded by an email of the Respondent No. 2 addressed to Resolution Professional which states that as requested by the Resolution Professional the revised improved Resolution Plan will be submitted shortly. Further on 20.02.2019 at 15.43 p.m the Resolution Professional has submitted revised Resolution Plan submitted by Applicant herein to the members of COC. It is obvious that there has been leakage of sensitive information regarding the plan submitted by the Applicant herein. It is on account of such vitiating conduct of the CIRP that the Applicant has filed IA 166 seeking reliefs as stated therein. e) That during the hearing held on 23.08.2019, the learned Senior counsel submitted that Respondent No. 2 has revised its bid based on the information that was available to it re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Resolution Professional earlier is wrong and incorrect. Though the information relating to the liquidation value and valuation is confidential, it is evident that the entire CIRP has been conducted based on erroneous valuation of the Corporate Debtor and non-inclusion of certain vital information relating to the availability of certain assets in the Information Memorandum. Therefore, it is clear that the valuation conducted earlier by the Resolution Professional does not seek to maximize the value of the assets of the Corporate Debtor and on the contrary it has diminished the value of the assets of the Corporate Debtor. i) It is evident that the Resolution Professional has failed miserably in discharging his duties as a Resolution Professional. If it is true that Respondent No. 2 has secured the valuable and confidential information on its own then the Resolution Professional owes an explanation as to why such information was not provided by him and why was the same not included in the Information Memorandum or if it is the contention of the Resolution Professional that he was not aware of such information or that he did not have an access to such information then it pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a song, one who quoted ₹ 156 crore as the plan value (Rs. 86 crore as consideration for the asset) and subsequently reduced the same to Rs. 60 crore (Rs. 45 crore as consideration for the asset), finding that he lost the game, as an afterthought started making false allegations. f) The petitioner who went on interfering with the process and though no information was shared with him made false and baseless allegations that RP orally informed him of the Respondent 2's plan value or that the office of the RP was closed at 4 pm and so on and so forth. 10. R2 filed its counter and Written Submission, inter-alia stating as under:- a. That both, KMPL and ATPL had revised their bids on various occasions depending on their own assessments of various things, which were done by them during submissions of Resolution Plans. b. That on the hearing held on 23.09.2019, the learned senior counsel submitted that the respondent no. 2 has revised its bid based on the information that was available to it regarding availability of certain other assets which were earlier mortgaged to IREDA and the IREDA would be releasing those assets in future and that additional assets woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the H1 bidder nor gave a chance to the Applicant to negotiate with the members of COC. The Applicant herein was willing to participate in the open offer as well if the same was proposed to be undertaken. c. That on declaration of Respondent No. 2 as the H1 bidder by the members of COC in their meeting held on 11.02.2019 morning, the Resolution Professional reached out the Respondent No. 2 to check the availability of the members of Respondent No. 2 as two of the members are from outside Hyderabad. The Resolution Professional contradicts his own averments. On one hand it states that none of the Resolution Applicant was invited for the meeting and on the other hand it says that Respondent No. 2 was present in the Meeting of the COC at 2.30 p.m. Respondent No. 2 could have been present in the meeting only after the invitation of the Resolution Professional. This clearly indicates the intention of the Resolution Professional in twisting the facts and manipulating the Hon'ble Adjudicating Authority. 12. Heard submissions of all the concerned parties including the submissions made by KMPL and perused the record. 13. It is a matter of record that the CoC in its meeting dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial Creditor are fully informed about the viability of the Corporate Debtor and feasibility of the proposed Resolution Plan. They act on the basis of thorough examination of the proposed Resolution plan and the opinion expressed by them after due deliberations in the CoC meetings through voting, as per respective voting shares, is a collective business decision. The legislature, consciously has not provided any ground to challenge the 'commercial wisdom' of either the individual Financial Creditor or their collective decision before the Adjudicating Authority that is made non-justiciable. 17. In the recent judgement in Arcelor Mittal India Put Ltd us. Satish Kumar Gupta, (2019) 2 SCC1, Hon'ble Apex Court have laid down that a resolution applicant cannot claim a vested right that his Resolution plan be considered and therefore, no challenge can be preferred to the Adjudicating Authority at this stage. However, if on the other hand, a Resolution plan has been approved by the CoC and has passed muster before the Adjudicating Authority, this determination can be challenged before the NCLAT under section 61 or further challenged before the Supreme Court under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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