TMI Blog2021 (6) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... No.2 Bank, which was the only Financial Creditor and thus the actions taken on 5th April, 2018 in third COC and 20th April, 2018 were only completion of formalities. The subsequent introduction of Section 240A of IBC and subsequent taking of certificate of being MSME will not cure the ineligibility at the time of submitting OTS-cum-Resolution Plan which was not permissible. The said Resolution Plan submitted by Mr. Wig could not have been acted upon and the Appellant erred in presenting the same before COC - matter is remitted back to the Adjudicating Authority. The Adjudicating Authority is required to pass Orders of liquidation of the Corporate Debtor under Section 33 of the IBC - Appeal allowed by way of remand. - Company Appeal (AT) (Ins) No. 121 of 2019 - - - Dated:- 4-6-2021 - [Justice A.I.S. Cheema] The Officiating Chairperson And [Kanthi Narahari] Member (Technical For the Appellant : Mr. Davesh Bhatia and Ms. Progoti Bose, Advocates Mr. Martin Golla (Party in person) For the Respondents : Mr. Rajendra Singhvi, Ms. Pooja Pandey and Ms. Ragini Singh, Advocates for R-1 Ms. Praveena Gautam and Mr. Pawan Shukla, Advocates for R-2, BOB Ms. Aishwarya Bhati, AS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10 of IBC against itself as there was debt of ₹ 4,85,14,000 of Bank of Baroda. The Petition was admitted on 24th August, 2017. After the CIRP started, there was a COC comprising only of one Financial Creditor, that is, Bank of Baroda. It appears that the sole Financial Creditor in third COC meeting held on 6th April, 2018 informed the Resolution Professional that it had sanctioned One Time Settlement Offer issued by Mr. Mahendra Wig. The Bank asked the Resolution Professional the option of treating One Time Settlement Offer as Resolution Plan. The Resolution Professional had obtained Valuation Report stating average liquidation value as ₹ 87.60 Lakhs. The sole Financial Creditor had to recover ₹ 1067.39 Lakhs. The Resolution Professional, it appears, placed such Resolution Plan before COC on 20th April, 2018 and the Resolution Plan was approved. With the approval of such Resolution Plan, it was placed before the Adjudicating Authority which approved the same. The Order of the Adjudicating Authority shows that there were some Operational Creditors also which included sales tax and income tax authorities. 6. The Impugned Order shows that Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing upon the fact that the Adjudicating Authority did accept the Resolution Plan even in the face of Section 29A of IBC. His arguments are on such basis. 8. The Respondent No.1 Corporate Debtor Wig Associates in view of the acceptance of the Resolution Plan, has argued to support the Orders passed by the Adjudicating Authority. According to the Respondent No.1, the Appellant had published expression of interest on 4th April, 2018 in newspapers and nobody came forward except Mr. Mahendra Wig who was guarantor of Respondent No.1. Mr. Mahendra Wig is guarantor of Respondent No.1 and he is also father of Mr. Puneet Wig and Mrs. Dolly Wig. In the third meeting of COC, it is claimed that the COC considered previous efforts of the Corporate Debtor and the guarantor of the Corporate Debtor to resolve the matter as per proposals and counter proposals submitted by the parties from time to time and the COC settled the whole matter of the bank qua Corporate Debtor for a sum of ₹ 3.55 Crores which, it is claimed, have been repaid to the Bank long back i.e. on 29th June, 2018. It is also claimed by Respondent No.1 regarding dues of Unsecured Creditors that almost all dues have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 29A has been enacted in larger public interest. On the date of approval of the Resolution Plan, Mr. Mahendra Wig was barred from being Resolution Applicant and the Appellant allowed Mr. Wig to be Resolution Applicant and also wrongly treated OTS as a Resolution Plan and placed the same before the Adjudicating Authority. In the written arguments, Respondent No.3 has submitted as under:- 24. At this stage, it is pertinent to refer to the landmark judgement passed by the Hon ble Supreme Court, in the case of Arcelormittal India (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1, wherein the Hon ble Supreme Court observed, 46 .The opening words of Section 29-A state: a person shall not be eligible to submit a resolution plan . . It is clear therefore that the stage of ineligibility attaches when the resolution plan is submitted by a resolution applicant. The contrary view expressed by Shri Rohatgi is obviously incorrect, as the date of commencement of the corporate insolvency resolution process is only relevant for the purpose of calculating whether one year has lapsed from the date of classification of a person as a non-performing asset The view was reiterated by the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pening words of Section 29A state: a person shall not be eligible to submit a resolution plan . It is clear therefore that the stage of ineligibility attaches when the resolution plan is submitted by a resolution applicant. The contrary view expressed by Shri Rohatgi is obviously incorrect, as the date of commencement of the corporate insolvency resolution process is only relevant for the purpose of calculating whether one year has lapsed from the date of classification of a person as a non- performing asset. Further, the expression used is has , which as Dr.Singhvi has correctly argued, is in praesenti. This is to be contrasted with the expression has been , which is used in sub- clauses (d) and (g), which refers to an anterior point of time. Consequently, the amendment of 2018 introducing the words at the time of submission of the resolution plan is clarificatory, as this was always the correct interpretation as to the point of time at which the disqualification in subclause (c) of Section 29-A will attach. In fact, the amendment was made pursuant to the Insolvency Law Committee Report of March, 2018. That report clearly stated: In relation to applicability of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above Judgments, the reasons recorded by the Adjudicating Authority to stretch the interpretations so as to hold that once CIRP is commenced, provisions as existing on the day of admission of the Petition would continue to apply even in the face of amendment brought about by way of Section 29A, the reasons cannot be maintained. Even the Respondent No.2 Bank of Baroda in its arguments (Diary No.25967) accepts that Section 29A of IBC was with effect from 23rd November, 2017 and the Hon ble Supreme Court in Swiss Ribbons vs. Union of India (referred supra) has upheld the insertion of Section 29A with retrospective effect. 16. From the above discussion, there is no doubt that at the time when Mr. Wig submitted the One Time Settlement to the Bank, which was converted by Respondent No.2 with the help of Appellant as a Resolution Plan, he could not have done so. The arguments of Respondent No.2 show that it had already approved the OTS of Mr. Wig on 27th March, 2018. It also appears that Mr. Wig had already paid ₹ 103 Lakhs to the Bank. This can be seen from the Impugned Order where it has referred to the compliance with Regulation 38 of CIRP Regulations in Para 14.1 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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