TMI Blog2021 (3) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged act of the Resolution Professional in accepting the Resolution Plan after the expiry of the deadline for submission of Resolution Plan is arbitrary, illegal and against the principle of natural justice and cannot be treated as an act within the commercial wisdom of the CoC. Thus, after the expiry of the deadline for submission of Resolution Plan, the Resolution Professional, with the approval of CoC, was fully authorized to invite fresh invitation for Expression of Interest for submission of Resolution Plan. Thereby fair opportunity would have been available to all other Prospective Applicants to participate in the process thereby creating more healthy competition. Accepting one EoI, Resolution Plan from one party whose EoI had earlier been rejected by CoC after due deliberation is prejudicial and beyond the scope of the Code and the Regulations. When EoI is invited, then public notices are published. The action of the RP and CoC is in violation of the express provisions of the Code and Regulations made thereunder. However, if the CoC wanted to extend the timeline, it should have done so within the procedure prescribed there for. By providing a special treatment, bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Provisional list of Eligible Prospective Resolution Applicants . 5. The Applicant submits that in an email dated 06.03.2020 captioned as Final list of eligible Prospective Resolution Applicants - KGS Sugar And Infra Corporation Ltd the Resolution Professional informed the applicant that its EoI had been found eligible to be in the Final List of Eligible Prospective Resolution Applicants. 6. The Applicant submits that on 05.06.2020 the applicant received an email captioned as Intimation of appointment of the undersigned as the Resolution Professional of KGS Sugar Infra Corporation Limited (under CIRP) wherein it was communicated to the Applicant that the CoC had resolved to replace Mr. Balady Shekhar Shetty and appoint Mr. Pankaj Sham Joshi as Resolution professional for the Corporate Debtor. Furthermore, the NCLT Principal Bench by way of its order dated 27.05.2020 allowed the Interlocutory Application and approved the appointment of the new i.e. Current Resolution Professional of the Corporate Debtor and has taken office with effect from 27.03.2020. The Applicant further submits that the Respondent could not have taken office with effect from 27.03.2020 as the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any new Form G issued and without any new EoI has been called for, submitted its EoI once again, evidences that there is a bias on the part of the Respondent for the said DSKL. 11. The Applicant herein submits that it challenges the decision of the RP dated 16.06.2020 on the following grounds: i. The Resolution Professional has failed to give any detailed clarification regarding the reasons for inclusion of DSKL in the PRA list or as to how and when the said DSKL applied or showed interest in participation in the CIRP of the Corporate Debtor after it got rejected in the month of February 2020; the Resolution Professional has also failed to prove if the decision to add DSKL in the list was ratified by the CoC. Moreover, whether the CoC was aware of the fact that the same Resolution Applicant was disqualified by the former Resolution Professional; ii. The provisions of the Code and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (the Regulations for short) do not permit for change of the process as per the whims and fancies of the Respondent and the Respondent could not have reversed wheel which was alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.06.2020 when DSKL requested for participation. x. It is further submitted that inclusion of such a disqualified entity at a belated stage is also against the principle of natural justice and equality. xi. Those applicants could also have removed the disqualification due to which they were disqualified in the first instance by opting if such an opportunity would have been given to them and would have led to more competition. 12. The Applicant has learnt that another Resolution Applicant namely Jai Hind Sugar Pvt. Ltd. has also sent an objection via email to the Resolution Professional to the inclusion of DSKL in the PRA list wherein the Resolution Professional has rejected to consider their objection stating that as per the Regulations they have not followed the timeline of taking an objection to the PRA list which should be within 5 days from the date of issue of the Provisional List. It is significant to note that the same Resolution Professional who has himself not adhered to the Regulations and the timelines laid down in the Code has rejected Jai Hind Sugar Pvt. Ltd s objection on ground of delay. This clearly shows the prejudicial manner in which the process is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent has drawn attention to the Proviso to Order I Rule 9 of the Code of Civil Procedure, 1908 ( CPC ), non-joinder of necessary party shall prove fatal to a suit. Though the provisions of CPC are not applicable to this Hon ble Tribunal, it has been held by the Supreme Court, the High Courts and the Company Law Board (erstwhile Company Law Tribunal) in several cases that there can be no quarrel that the well-recognised principles embedded in the elaborate provisions of the CPC can be invoked to the proceedings before the CLB with a view to suppressing the mischief and advancing the cause of justice. This seems to be purpose of Regulation 44 of the CLB Regulations. It may be noted that Regulation 44 of the CLB Regulations dealt with the inherent powers of the Company Law Board. 19. The Respondent submits that he assumed office of the Resolution Professional of the Corporate Debtor on 27th May 2020. On perusal of relevant records, he noticed the following with regard to the Resolution Process of the Corporate Debtor: a. The invitation for Expression of Interest ( EoI ) for submitting a Resolution Planfor the Corporate Debtor i.e. Form G was published on 18th January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of their cane dues and for restarting the factory at the earliest; iv) Next crushing season may be delayed, and, v) Value of plant and machinery may get deteriorated by postponing crushing season. 24. Based on the factors highlighted by the erstwhile RP, the CoC in the 7th CoC meeting held on 3rd April 2020 resolved that, approval of CoC be and is hereby accorded to reject the request of M/s Dwarkadhish Sakhar Karkhana Ltd for submitting the Expression of Interest after the due date i.e. 10th February 2020 as per Regulation 36A (6) and RP be and is hereby authorised to communicate the decision to M/s Dwarkadhish Sakhar Karkhana Ltd accordingly . 25. The Respondent states that DSKL should not have been denied the opportunity to submit its EoI in the proper format and to participate in the Resolution Process of the Corporate Debtor, if found eligible, for the following reasons: The object of the Code overrides the Regulations. While, Regulation 36A (6) of the CIRP Regulations states that the RP shall reject the EoI which is submitted after the last date of submission of EoI, the primary object of the Code is maximisation of value of the assets of the Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I by DSKL. 28. The Respondent relied on the order in State Bank of India v. Impex Metal and Ferro Alloys Limited (C.A. (IB) No. 641/KB/2018 in C.P. (IB) No. 176/KB/2018), a similar situation had come up for consideration before the National Company Law Tribunal, Kolkata Bench. In the said case, the Resolution Applicant had submitted its EoI even after the last date for receipt of Resolution Plan. In fact, the Resolution Professional, therein, had already received 3 resolution plans. Despite all this, keeping in mind the objective of the Code and noting that the 180 days of CIRP were not over yet, the NCLT directed the Resolution Professional to consider the Resolution Plan submitted by the Resolution Applicant. The relevant portion of the order is as follows: 10. Regulation 36A has recently been amended (July 3, 2018). Sub-regulation (6) of regulation 36A mandates the RP to reject the EoI received after the time specified in the invitation. In this case, last date of submission of EoI was May 30, 2018 and the last date of submission of the RP was June 18, 2018. Admittedly, the applicant did not submit EoI on or before May 30, 2018 and the RP on or before June 18, 2018. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Plan for the Corporate Debtor was also extended from 5th April 2020 to 13th July 2020. If the belatedly submitted EoI of DSKL were to be accepted, DSKL would still have 30 days to submit its Resolution Plan and there would be no requirement to extend the last date of submission of resolution further any further from 13th July 2020. 32. Therefore, consideration of the EoI submitted by DSKL or allowing DSKL to submit a Resolution Plan would neither disturb nor prove fatal to the CIRP of the Corporate Debtor. 33. Since the EoI of DSKL was accepted beyond the last date for submission of EoI, in deviation to Regulation 36A (6) of the Regulations, there is no extension of the last date for submission of EoI. Therefore, no fresh Form G was required to be published. 34. The Respondent submits that the issue of late submission of EoI by DSKL and DSKL s eligibility to submit a Resolution Plan for the Corporate Debtor was included in the agenda for the 9th CoC meeting to be held on 13th June 2020. During the meeting, the Respondent apprised the members of CoC regarding the situation and proposed that DSKL be allowed to participate in the Resolution Process of the Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dwarkadhish Sakhar Karkhana Limited. 39. On 21st June 2020, Jai Hind Sugar Private Limited once again raised objections to the inclusion of DSKL the objections raised in the e-mail were the same as those raised in their e-mail dated 20th June 2020. On 22nd June 2020, the Respondent by way of an e-mail responded to the objections raised to the effect that the right of a PRA to raise objection to the inclusion or exclusion of an individual/ entity as a PRA of the Corporate Debtor arises from sub-regulation 11 of Regulation 36A of the Regulations. Regulation 36A (11) of the CIRP Regulation states that such objections shall be raised within 5 days from the date of issue of the provisional list of eligible PRAs by the resolution professional. The Respondent had issued the provisional list of eligible PRAs on 13th June 2020. Therefore, effectively the time for raising any objection expires on 18th June 2020. The period of 5 days as envisaged under Regulation 36A (11) had expired and therefore, the Respondent was not obligated to respond to the objections raised by it. However, the Respondent once again addressed the objections and rejected the objections after giving it due considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decisions of the Respondent is challenged. Furthermore, the Respondent has relied upon the Hon ble Supreme Court s judgement in Udit Narain Singh Malpaharia v. Member, Board Revenue, Bihar and Ors., AIR 1963 SC 786 the Applicant submits that impleading of a necessary party comes into the picture only when a specific relief is sought against it. The Applicant has not sought any relief against DSKL. Its presence is not required for adjudication of this Application. Without prejudice to the above, it is submitted that as per the provisions of CPC, no suit should fail or dismissed for non-joinder of a party, if this Tribunal comes to a conclusion that it is important that DSKL should be impleaded then the Applicant will implead them. 43. The Respondent had submitted that he assumed the office on 27th May 2020. He however has deliberately failed to mention in the Reply that, the Respondent was present as an invitee on 3rd April 2020 when DSKL s EoI was rejected in the 7th CoC meeting. The Respondent had consented to the rejection by stating that The decision of RP is aligned with the Regulation 36A (6) of the CIRP regulations for the corporate persons. The applicant submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have led to more competition and not only give such a red-carpet entry to DSKL. 48. The Applicant submits that the unfair and bias decision to accept DSKL s EoI at such later stage will definitely prejudice the other Resolution Applicants as after seeing the Respondent s conduct, the Resolution Applicants are now apprehensive for the fate of their Resolution Plans once submitted as there is always a commercial obligation which the Resolution Applicants must abide by for example the Performance Guarantee, Earnest Money Deposit etc. as mentioned in the Process Flow Document. 49. The Applicant submits with reference to decision making and permission/approval, it is submitted that the Respondent in para 18 has pleaded that After being sure that no such prejudice would be caused to any party to the CIRP of the Corporate Debtor the Respondent arrived to the decision to include DSKL in the Resolution process for the corporate debtor. the Respondent in his communication dated 5th June 2020, wherein he has conveyed to DSKL that he is a new Resolution Professional of the Corporate debtor and he has expressly said that I am inclined to grant you an opportunity to resubmit your EoI i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Only after publication of fresh invitation in Form-G and fixing a deadline, the Resolution Plan could have been accepted with the consent of CoC. It cannot be said that as per Process Memorandum, the Resolution Professional was entitled to accept any Resolution Plan at any point of time, without following the due process under the guise of maximization of value. The alleged act of the Resolution Professional in accepting the Resolution Plan after the expiry of the deadline for submission of Resolution Plan is arbitrary, illegal and against the principle of natural justice and cannot be treated as an act within the commercial wisdom of the CoC. 53. We are of the considered opinion that after the expiry of the deadline for submission of Resolution Plan, the Resolution Professional, with the approval of CoC, was fully authorized to invite fresh invitation for Expression of Interest for submission of Resolution Plan. Thereby fair opportunity would have been available to all other Prospective Applicants to participate in the process thereby creating more healthy competition. Accepting one EoI, Resolution Plan from one party whose EoI had earlier been rejected by CoC after due de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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