TMI Blog2020 (12) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ection of the resolution plan by the dissenting financial creditors - HELD THAT:- The legislature has not endowed the Adjudicating Authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of Sick Industrial Companies Act, 1985 or under other such enactments which has now been forsaken. Besides, the commercial wisdom of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IBC, 2016, this Tribunal vide its order dated 16.12.2019 initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor and appointed the 1st Respondent as the Interim Resolution Professional (IRP). ii) Subsequent to the same, paper publication was made and the meeting of the First Committee of Creditors (CoC) was conducted on 13.01.2020, wherein the 1st Respondent was confirmed to act as the Resolution Professional (RP) of the Corporate Debtor. Further, it is stated that the 2nd and 3rd Respondent alone are the Financial Creditors of the Corporate Debtor and they hold 100% voting rights in the CoC as ascertained by the RP. iii) It is stated that the Applicant, in the first CoC meeting had discussed with the CoC in relation to the withdrawal of the CIRP under Section 12A of IBC, 2016, however the same never fructified. iv) Thereafter, certain dissension arose between the Applicant and the RP and the Applicant filed a complaint to the Insolvency and Bankruptcy Board of India (IBBI) on 26.02.2020, however the IBBI vide its order dated 15.04.2020 has rejected the complaint of the Applicant. Subsequently, the Applicant has filed a Writ Petition in W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.10.2020 - ₹ 2 Crores 2 Andhra Pradesh State Financial Corporation 4,50,00,000/- 20.08.2020 - ₹ 1 Crore 05.09.2020 - ₹ 1 Crores 20.09.2020 - ₹ 1 Crores 05.10.2020 - ₹ 1.5 Crore 5. The Ld. Senior Counsel for the Applicant submitted that the Applicant has already come to an agreement with the 2nd Respondent for a sum of ₹ 12 Crores and has also paid a sum of ₹ 2 Crores in relation to the same. Further, it was submitted that the debt of the Corporate Debtor is only a sum of ₹ 25 Crores, whereas the assets of the Corporate Debtor is valued at a sum of ₹ 30 Crores, which elucidates the fact that the debt-asset ratio in relation to the Corporate Debtor is very less and thereby the Applicant is very much willing and able to settle the Creditors of the Corporate Debtor. In order to bolster his argument, the Ld. Senior Counsel for the Application pressed into service the decision of the NCLT, Ahmedabad Bench in Sunil Kumar Agarwal, Rp of Digjam Ltd. -Vs-Suspended Board of Directors of Digjam Ltd. in IA/144/2020 in CP(IB)/594 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany into liquidation and as such the same cannot be affected due to the alleged pendency of the proceedings before the Hon'ble Madras High Court, which pertains to the alleged conduct of the RP. It is also averred in the reply filed by the 2nd Respondent that the secured creditor has not noticed even an iota of impropriety in the actions of the RP. Further, it was submitted that as per Section 33(2) of IBC, 2016, it is sufficient if the CoC during the CIRP decides to liquidate the Corporate Debtor with necessary statutory voting requirements and in the present case, 87.57% votes were casted in favour to liquidate the Corporate Debtor, 9. It was also submitted by the Learned Counsel for the 2nd Respondent that the loan availed by the Corporate Debtor from the 2nd Respondent from the Assignor viz. Andhra Bank, was classified as NPA way back on 28.02.2015 and under the guise of settling the matter, the Applicant has made several submissions before this Tribunal during the pendency of Section 7 Application, however has never re-paid the same as per the said terms of settlement. 10. The Applicant has filed rejoinder to the reply filed by the 1st and 2nd Respondents, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidate the Corporate Debtor, the Adjudicating Authority shall have to pass an order of liquidation. 13. Further, as to the issue raised by the Applicant that before the expiry of 180 days, the CoC ought not to have liquidated the Corporate Debtor is answered above by the above extracted decision of the NCLAT. In this regard, it is also pertinent to point out here that, by virtue of the Insolvency and Bankruptcy (Amendment) Act, 2019 (Act No. 26 of 2019) an Explanation to sub - section (2) of Section 33 of IBC, 2016, was inserted, which came into force on 16.08.2019, in and by which, it has been stated in the said Explanation that the Committee of Creditors may take the decision to liquidate the Corporate Debtor, any time after its constitution under sub-section (1) of section 21 and before the confirmation of the resolution plan, including at any time before the preparation of the information memorandum. 14. It is also significant to refer to the decision of the Hon'ble Supreme Court in the matter of Mr. K. Sasidharan -Vs- Indian Overseas Bank, wherein in relation to the decision taken by the Committee of Creditor, the Hon'ble Apex Court has held as follows; The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o refer to the decision of the Hon'ble Supreme Court in the matter of Committee of Creditors of Essar Steel India Limited -Vs- Satish Kumar Gupta Ors. in Civil Appeal No. 8766 - 67 of 2019, wherein at para 91 it has held as follows; 91. What is important to note is that when one reads the abovementioned judgment, it is a majority of 66% of the Committee of Creditors who has exercised the discretion vested in it under the Code in this particular manner, which has then correctly not been disturbed by the NCLT and NCLAT. Far from helping Shri Sibal's client, the principle that is applied in such a case is that ultimately it is the commercial wisdom of the requisite majority of the Committee of Creditors that must prevail on the facts of any given case, which would include distribution in the manner suggested in Orissa Manganese (supra). It is therefore, not possible to accept the argument that the Adjudicatory Authority and consequently the Appellate Authority would be vested with the discretion to apply what was applied by the Committee of Creditors in the Orissa Manganese case (supra). This submission is also devoid of merit and is, therefore, rejected. 16. Thus, fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
