TMI Blog2021 (1) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... .2019 respectively. Further, the Applicant also participated in inter se bidding with the successful Resolution Applicant wherein the Applicant itself made a bid for ₹ 42.71 Cr. It withdrew only after the successful Resolution Applicant made a bid for ₹ 42.96Cr. Therefore, seeking a direction to consider it's Resolution Plan for ₹ 27 Cr. at this stage is both unreasonable and against the tenets of IBC 2016. Therefore, this prayer is also negated. Seeking stay on process of finalization of the approval of the Resolution Plan submitted by the R 7 till the disposal of this IA - HELD THAT:- According to the provisions of IBC, 2016 once a CIRP application is admitted, it is the duty of RP to constitute CoC and thereafter publish Eol, Information Memorandum and evaluation matrix on the basis of decisions taken in CoC meetings. Thereafter, upon receipt of Eol by potential Resolution Applicants, various Resolution plans are examined by the RP and the same are put up before the CoC for deliberations about each of those plans for considering their feasibility and reliability. In this regard, it is pertinent to note here that under the provisions of the Code, the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it declaring that either directly or indirectly during the period of CIRP or three years prior to the CIRP commencement date has no connection with either the MPL or MPL's Directors or MPL Group i.e., any subsidiary or holding or associated company of the MPR or MPL's directors or MPL Group Companies Directors i.e., its holding or subsidiaiy or associated companies directors or any employees of the MPL or MPL Group companies employees. Further need to be declared (Notarized stamped affidavit) that either directly or indirectly has not contacted (either in person or email or cell phones or land line) or passed any information relating to the Corporate Debtor to the Successful Resolution Applicant or its directors or any of the Group companies of the MPL or MPLs Directors or any employees of the MPL or MPL's Group Companies employees or to any other person with a view to make the MPL as Successful Resolution Applicant. Further need to be declared(Notarized stamped affidavit) that in case of any proof contrary to the above notarized declaration, We are agreeing to withdraw from the voting and also agreeing for all legal actions including Civil Criminal prosecut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 and 10.06.2019 from RP, the Applicant has revised its Resolution plan and submitted its offer in a sealed envelope on 15.06.2019. That Applicant has further submitted its revised Resolution Plan in a Sealed Cover before 5:00 P.M on 25.06.2019. d. That Applicant had an apprehension that some inside information was made available to the other Resolution Applicants. Therefore, the Applicant has addressed a letter dated 25.06.2019 to Resolution Professional, stating as under: It has been found through market information/informed sources that one of the prospective Resolution Applicant acquired stake of two CoC members indirectly, by way of assignment of Debt to get the undue advantage in terms of pricing information and also to get their approval of their Resolution Plan. This appears to be a case of conflict of interest between the few CoC members and Prospective Resolution Applicants. Accordingly Applicant had asked the Resolution Professional (RP) to find out if the said Resolution Applicant is eligible to participate and also whether the few CoC members can be part of the committee. e. That in the CoC meeting held on 26.06.2019, the CoC members informed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited and M/s. MPL Steel Industries Private Limited are group companies under the same management. ii. Common witness between the MPL steel Industries Ltd, Axis Bank Ltd, IFCI Ltd, Prudent ARC Ltd and ARCIL: a. That the Memorandum of Deposit of Title Deeds executed between the MPL Steel Industries Private Limited and Axis Bank Ltd on 25.01.2019, where one of the witness is Mr. B.C. Ganesh. b. That the Assignment Agreement executed between the 1FCI Limited and Prudent ARC Limited on 12.02.2019, where one of the witness is Mr. B.C. Ganesh. c. That the Assignment Agreement executed between the ARCIL and Prudent ARC Limited on 07.06.2019, where one of the witness is Mr. B.C. Ganesh. d. That Mr. B.C. Ganesh is common person between the MPL Steel Industries Limited, Axis Bank Ltd, IFCI Ltd, Prudent ARC Ltd and ARCIL. iii. That R1 8s R7 colluded as per the above information and also as per the market information. The R7 has indirectly acquired the debt of IFCI Limited and ARCIL through Prudent ARC Limited, Rl, by paying ₹ 5 Crores to ARCIL and ₹ 1.96 crores to IFCI Limited for stake of 52.50%. The undue benefits to the R7 are as under: a. Get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the R7 as the successful Resolution Applicant. c. The contention of the Applicant that the R1 is in collusion with R7 since one of the employees of R7 i.e., the R10 has signed as a witness to the Assignment Agreements entered between the R1, R2 and R3 is totally misconceived. The R10 has signed the Assignment Agreements as a witness and not as an authorised representative of any party. The mere act of signing as witness by R10 in no way can determine or establish collusion between two different entities. d. In Smt. Chandrakantaben Etc vs. Vadilal Bapalal Modi Others, the Hon'ble Supreme Court held that there is no presumption that an attesting witness of a document must be assumed to be aware of its contents. Further it is submitted that a witness attesting a document only means that the witness has seen the executant sign the document/instrument, it does not mean that the witness has the knowledge of the contents of the document/instrument. Therefore, the contention of the Applicant that R1 R7 are acting in collusion stands defeated. e. That if all the allegations that the R1 was leaking information to the successful Resolution Applicant is true, then th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s valid for maximising the asset value of Corporate Debtor under CIRP. Applicant has not made out any case nor submitted the proof of violation of the provisions contained in Section 30(2). e. That the Applicant cannot compel the CoC to accept its bid only, when its bid is lesser than the competitive bid offered by the Successful Resolution Applicant. f. That the Committee of Creditors approved the Resolution Plan as per Section 30(4) of IBC Code, 2016 and as such the Resolution Plan is validly approved by the CoC within the parameters of IBC Code. Thus the contention of Applicant is not tenable. g. That R6 places reliance on the following judgements: i. Hon'ble National Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)(lnsolvency) No. 380 of 2018, In the matter of M/s.Bhaskara Agro Agencies Vs. M/s. Super Agri Seeds Pvt. Ltd. ii. C.A. No. 10719 of 2018, C.A. No. 10971 of 2018 and io (C) No. 29181 of 2018 in the matter of K. Sashidhar Versus Indian Overseas Bank Ors. vide iii. Civil Appeal No. 8766-67 of 2019 Diary No. 24417 of 2019; in the matter of Committee of Creditors of Essar Steel India Limited Through Authorised Signatory v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38.46 38.46+0.25 38.71 38.71+0.25 38.96 38.96+0.25 39.21 39.21+0.25 39.46 39.46+0.25 39.71 39.71+0.25 40.21 40.21+0.25 40.71 40.71+0.25 40.96 40.96+0.25 41.21 41.21+0.25 41.46 41.46+0.25 41.71 41.71+0.25 41.96 41.96+0.25 42.21 42.21+0.25 42.46 42.46+0.25 42.71 42.71+0.25 42.96 Backed out/withdrawn e. That from the above table, it is clear that the Applicant and R7 both have participated in the inter-se bidding. Once the bidding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CoC and also opined to meet other CoC members in the next CoC, further to which the CoC members met the team of Vinayak Steels Limited, the Petitioner herein and the CoC along with the RP had discussed on the Resolution Plan with the Applicant. d. That the Resolution Professional along with CoC members have met with Mahalakshmi Profiles Limited, another PRA, to understand the background and credentials of the Resolution Applicant, as to how the Resolution Plan is going to help the Company, improvement on the Resolution amount and on the availability of the funds, which was accordingly conducted. e. That at the 6th Meeting of CoC held on 16.05.2019 and 7th Meeting of COC held on 21.06.2019, the COC members inter-alia, took note of the discussions on the Resolution Plan submitted by Vinayak Steels Limited, wherein the amounts proposed in the Resolution Plans as submitted by the three PRAs were compared.lt was seen that Vinayak Steels Limited, had submitted a bid of ₹ 30.20 Croes, Somani Ispat Pvt Ltd. had submitted a bid of ₹ 21.50 crores and Mahalakshmi Profiles Pvt Ltd had submitted a bid of ₹ 28.11 Crores and that the evaluation matrix scores obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal to examine whether such applicant is eligible to participate in the submission of plan amongst others. The said letter dated 25.06.2019 was placed before consideration by CoC and was circulated amongst CoC and the Resolution Professional had sought declaration to disclose interest, if any with respect to prospective Resolution Applicant, to which a member of the CoC, Prudent ARC Limited had objected stating that the disclosure is bad in Law and also noted that the CoC and RP is running the CIRP process in a highly transparent process and also that the Resolution Applicant could approach this Adjudicating Authority in case of any such grievance. h. It was also discussed that the Resolution professional has received one sealed cover each from two Resolution Applicants and that the Resolution Professional offered opening of the sealed covers in the CoC meeting. That the CoC's opinion was also sought, to which the Prudent ARC Ltd has expressed to seek consent of both the Resolution Applicants to participate in inter-se bidding and that the bids shall be opened only after taking the declarations from both the Applicants agreeing for inter-se bidding. That the bid covers sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That the Resolution Professional has conducted all the meetings of the CoC in total compliance with the Code and Regulations thereunder. o. That the Resolution Professional has at all times maintained a zero-deviance policy from the Legal Advice / opinions as sought from the Advocates, including the statutory compliances under the Code. p. That there was no aspect of pre-determination of any Resolution Applicant as Successful Resolution Applicant at any point of time and only upon the last inter-se bidding, the HI Bidder was declared as Successful Resolution Applicant and it is also submitted that, Vinayak Steels Limited did not submit the final bid amount after the inter-se bidding and did not participate in the CoC meeting pursuant to it. q. Reiterating above, Ld. Counsel for the RP prayed to dismiss the Application. 7. Counsel for R9 filed counter inter-alia stating as under: a. That the instant Application before this Adjudicating Authority is between the other parties and the Axis Bank is not a necessary party in relation to the disputes. b. That the R9 Axis Bank has no knowledge and is not aware of the various averments made by the Applicant. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mere coincidence and does not reflect his association or the association between various companies as alleged in the Application. 9. R10 filed a memo stating that the R10 has quit employment of R7 Company in May 2018 while the subject documents of the above Company Application were executed and registered in the year 2019. 10. Counsel for the Applicant filed written submissions, inter-cilia, stating as under:- a. That the R7 has not mentioned any specific reason in the first for increase of Resolution Plan consideration from ₹ 9.95 Cr to ₹ 24.11 Cr. immediately without any open bidding process which has been an increase in price by 142.31% i.e., ₹ 14.16 Crores making the offer 242.31% of the initial Resolution Plan consideration offered by them. b. That the R7's have given an explanation that subsequent to identification of a Railway track available to Corporate Debtor, which was seen on factory visit and nowhere mentioned in the information Memorandum, they revised the Resolution amount to ₹ 28.11 Cr on 27.05.2019. However, the explanation given by the Resolution Applicant is completely wrong. The reasons are as under: i. The R7 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccessful Applicant will be winner for ₹ 9.95 crores as against the ₹ 42.90 crores of final bid amount. f. That as per page No. 26 of Counter of Resolution Professional (R8), the following are the details of date wise Resolution Plan consideration: Sl. No. Date of Resolution Plan Vinayak Steels Limited Somani Ispats Pvt Ltd Mahalakshmi Profiles Pvt Ltd 1 8th April 2019 22.40 15.21 9.95 2 7th May 2019 27.00 18.18 24.11 3 27th May 2019 28.11 4 15th June 2019 30.20 21.51 28.11 g. That from the above the following points are veiy clear which deviated the total CIRP process by RP CoC members: i. That the Applicant is H1 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members and Resolution Professional asked for declaration from CoC members to disclose their interest with the Resolution Applicant. That the Stressed Assets Stabilization Fund (R4) and International Asset Reconstruction Co Ltd (R5) have confirmed that they have no interest with any prospective Resolution Applicant. However Prudent ARC did not disclose and objected that disclosure is bad in law. m. That as decided by RP/CoC, the sealed covers submitted by Vinayak Steel Limited and Mahalaxmi Profiles Pvt. Ltd were opened by CoC on 26.06.2019 and the Applicant was H1 at 37.21 Cr and the Mahalaxmi Profiles Pvt Ltd had placed a bid of ₹ 34.11 Cr. n. That it is evident that Prudent ARC was interested in voting in favour of Mahalaxmi Profiles even if it had submitted conditional Plan and had not submitted any proof of availability of the funds/ source of funds. All actions of Prudent ARC at various stages of the Resolution process clearly indicate its interest in the Resolution Applicant i.e., Mahalaxmi Profiles Pvt Ltd. Reiterating above, Applicant prayed to allow the Application as prayed for. 11. Heard both the sides and perused the record. 12. The instant app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the witnesses. Moreover, as held by Hon'ble Supreme Court in In Smt. Chandrakantaben Etc vs. Vadilal Bapalal Modi Others, nthere is no presumption that an attesting witness of a document must be assumed to be aware of its contents. Thus signing a document as witness does neither prove that the witness is aware of the contents, nor establishes that he is an interested party involved in the relevant transaction. 15. It is further pertinent to note here that according to the provisions of S. 5(25) of the Code, a resolution applicant has been defined as under: (25) resolution applicant means a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of section 25 . 16. Thus any person, either singly or jointly with any other person, may submit a resolution plan pursuant to an invitation published by the resolution professional. However Section 29A of the Code excludes certain persons from being eligible to be a Resolution Applicant: 29A. A person shall not be eligible to submit a resolution plan, if such person, or any other person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party of a person referred to in clauses (i) and (ii): Provided that nothing in clause (iii) of this Explanation shall apply to- (A) a scheduled bank; or 54 of 2002. Ord 7 of 2017. (B) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; or (C) an Alternate Investment Fund registered with the Securities and Exchange Board of India. 17. Since the Applicant has not brought on record any fact or evidence to show that the successful Resolution Applicant falls within any of the categories of the ineligibile persons under Section 29A of the Code, the prayer made for declaring the successful Resolution Applicant as ineligible cannot be acceded to and is therefore negated. 18. The Applicant's prayer for passing an order to consider its Resolution Plan with the consideration for ₹ 27.00 Crores when it was the H1, is against the one of the prembled objectives of the IBC 2016, namely maximisation of value of stressed assets for resolving insolvency. In fact, the Applicant itself has been submitting revised Resolution Plans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 section 62, if a question of law arises out of such order. In para 79 of the order, Hon'ble Supreme Court held as under: 79. Given the timeline referred to above, and given the fact that a resolution applicant has no vested right that his resolution plan be considered, it is clear that no challenge can be preferred to the Adjudicating Authority at this stage. A writ petition under Article 226 filed before a High Court would also be turned down on the ground that no right, much less a fundamental right, is affected at this stage. This is also made clear by the first proviso to Section 30(4), whereby a Resolution Professional may only invite fresh resolution plans if no other resolution plan has passed muster. In JMF ARC vs. Welldo Holdings and Export Pvt Ltd (Company Appeal (AT) No. 134/2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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