TMI Blog2021 (11) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... e and unfair advantage to Respondent No. 4. Moreover, the Appellants have also claimed that the CoC took a decision for liquidation without following the procedure under CIRP stipulated in the IBC. The basic reason for seeking Resolution Plan under CIRP is to ensure that the Corporate Debtor can continue to function as a going concern, while taking care of interests of its creditors. Liquidation is the last resort which implies corporate death of the company. For the Corporate Insolvency Resolution Process to result in successful resolution of the corporate Debtor, preparation of a correct information memorandum is a must, which may result in work able resolution plans. In the present case, it is found that information memorandum was not prepared with full and correct details of assets and liabilities of the Corporate Debtor. The RP also did not pursue his application u/s 19(2). As a result the CoC decided to abandon the step of inviting of EOI for Resolution Plan. A duty has been cast on the RP under section 25 of IBC where he has to take immediate custody and control of assets of Corporate Debtor, including the business record of the Corporate Debtor; and furthermore a dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating Authority (NCLT, New Delhi) in CP (IB)-771(PB)/2018 (hereinafter called Impugned Order) for liquidation of the Corporate Debtor (Respondent No. 1 Value Infratech India Pvt. Ltd.) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (in short IBC). 2. The Appellants, who are homebuyers in the project SKYWALK RNE being developed by Respondent No. 1, have stated in the appeal that the Resolution Professional (RP in short) has clubbed the claims of Respondent No.1, Respondent No.2 and Respondent No.3, amounting to ₹ 30.70 crores alongwith compound interest @ 24%, thereby giving Respondent No. 4 (Capri Global Capital Limited) undue advantage of much higher voting share than was permissible to the Respondent No. 4, in the constitution of the Committee of Creditors (in short CoC) in the Corporate Insolvency Resolution Process (CIRP in short). The first meeting of the CoC of Corporate Debtor (Respondent No. 1) was held on 31.01.2020. Thereafter the second meeting of the CoC was held on 10.12.2020 which was adjourned after some deliberations and reconvened on 12.12.2020, wherein decision for liquidation of Respondent No. 1 was taken despite objection put forth by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.1.2020 Second meeting of the CoC 10.12.2020/12.12.2020 Public announcement for submission of claims 8.1.2020 Next filing of application under section 21 (a) for appointment of authorized representative of home buyers and exclusion of time spent in litigation 11.3.2020 Order of Adjudicating Authority for appointment of Authorized Representative (AR) 27.11.2020 6. The Learned Counsel for Appellants has argued that the Capri Global Capital Limited (Respondent No. 4) had sanctioned a loan of ₹ 37.50 crores to Respondents No. 1, 2 and 3 vide a common loan agreement dated 17.9.2014 (attached at pp.133-165 of the Appeal Paperbook). He has stated that the Respondents No. 1, 2 and 3 are three separate companies who were disbursed separate loan amounts on the basis of the common loan agreement, whereas in the present matter wherein insolvency resolution of Value Infratech India Pvt. Ltd. (Respondent No. 1) is under consideration and, therefore, the claim of Respondent No. 4 should have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Ltd. in taking the total of all the 3 companies whereas only one of them is involved in the present proceedings. The CoC would tilt in favour of Capri Global Capital Ltd. as against the voting share of the home buyers, if the whole loan amount of 3 copies is clubbed. We expect the Resolution Professional to act fairly and dispassionately, which is found wanted in the present case because he was aware after the filing of the present application that aforesaid two matters are pending consideration before the NCLT, as he has given consent to act as IRP even in those two matters. 10. He has also cited Hon ble NCLAT s judgment dated 14.5.2019 in the appeal Capri Global Capital Limited vs. Value Infracon India Pvt. Ltd. (through its Resolution Professional Mr. Sanjay Kumar Singh Anr.) [CA(AT)(Ins) No. 29 of 2019] against the above mentioned order in [CP (IB) 22 (PB) 2018] whose relevant paragraphs affirming the order of the Adjudicating Authority are reproduced below:- 9. The amount having been separately disbursed as per request of three different entities who signed jointly, it is clear that individual entities like Value Infrabuild India Pvt. Ltd. received a sum of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ims or constitution of CoC at any time earlier. Therefore, challenging the liquidation order now is not in accordance with legal procedure. He has claimed that the allegations leveled against the RP are false, baseless and not based on facts. In fact, the RP has conducted the process in a very fair and transparent manner providing details at every step to the members of CoC. He has also argued that the liability to repay the disbursed loan amount falls of Respondents No.1, 2 and 3 jointly and severally and, therefore, the fixing of Respondent No.1 s vote share at 96.77% in the CoC is justified. 14. The Learned Counsel for Respondents No. 1 2 has cited the judgments of Hon ble Supreme Court in Chittoori Subbanna vs. Kudappa Subbanna and Ors [SC 1965 2 SCR 661] and in the matter of Phoenix Arc (P) Ltd. vs. Spade Financial Services Limited [2021 3 SCC 475]in support of his contention. On the basis of these judgments, he has contended that if no challenge was made to the constitution of CoC and the fixing of vote share in CoC earlier, these issues cannot be raised in the appeal now. 15. The Learned Counsel for Respondent No. 4 has argued that Respondent No. 1(Corporate Debtor V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07]. In both the judgments, the Hon ble Apex Court has held that once the Successful Resolution Plan has been approved by the Adjudicating Authority on the recommendation of CoC and implemented thereafter, the resolution plan achieved finality and cannot be reopened, unless the plan suffers from legal infirmity. 18. We have perused the loan agreement dated 17.9.2014 qua which Value Infrabuild India Pvt. Ltd. (Respondent No.3), Value Infracon India Pvt. Ltd. (Respondent No.2) and Value Infratech India Pvt. Ltd. (Respondent No.1) were sanctioned financial assistance up to ₹ 37.50 crores by Capri Global Capital Limited (Respondent No. 4).(Loan agreement attached at pp.138-165 of Appeal Paperbook). The request for drawdown of the loan amounts was sent by Directors of three above mentioned companies to Respondent No. 4 vide a common letter dated 19.9.2014, which was separately signed by the directors of all three companies. This letter is reproduced in the judgment of Hon ble NCLAT in CA (AT) (Ins) No. 29 of 2019 (attached at pp. 166-167 of Appeal paperbook). 19. Regarding the matter of the Appellant not getting a realistic opportunity to challenge the issues of constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct information memorandum is a must, which may result in work able resolution plans. In the present case, we find that information memorandum was not prepared with full and correct details of assets and liabilities of the Corporate Debtor. The RP also did not pursue his application u/s 19(2). As a result the CoC decided to abandon the step of inviting of EOI for Resolution Plan. Thereafter in undue haste, the CoC decided to go for liquidation of the Corporate Debtor. Since the CoC consisted of two members Capri Global and homebuyers with Respondent No. 4 being given inflated voting share, the decisions by CoC was completely swayed by the Respondent No. 4 and its selfish interests. The decisions of CoC was a blotted one, since it was taken in the CoC, in which Respondent No. 4 was given voting right much in excess of its real and correct share. 21. It is quite surprising that the Resolution Professional filed IA No. 827/PB/2020 under Section 19(2) of the IBC for issuing directions to the ex-Directors and promoters to provide documents and records including account details of Corporate Debtor. Without obtaining any order under section 19 (2) from the Adjudicating Authority, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd liabilities, financial statement from other records that have to be statutorily filed in relation to the company under the provisions of the Companies Act. 23. We are of the clear and firm opinion that in view of the judgment of this tribunal in Capri Global Capital Limited vs. Value Infracon India Pvt. Ltd. (through its Resolution Professional Mr. Sanjay Kumar Singh) Anr. (supra), it was the RP s responsibility to fix financial creditors claim amounts and vote shares properly and in accordance with law, moreso, when the NCLAT had already given its verdict in CA (AT)(Ins) 29 of 2020 (supra). He has been sadly remiss and found wanting in the performance of his duties as per the provisions of IBC. The hasty manner in which the items were taken up for discussion in the 2nd CoC meeting, and no action was taken to pursue the application u/s 19(2) and file an application for exclusion of time spent in judicial intervention, are stark pointers to the irresponsible handling of these issues by the RP, for which he can t be absolved of blame. An independent enquiry in his acts of omission and commission while carrying out the CIRP of the corporate debtor by the Insolvency and Bankru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l action reeking of favourtism for Respondent No. 4. 27. Thus we find that the CoC was not constituted in accordance with the provisions of IBC. In the matter, the CIRP was not pursued with fairness and due diligence by the Resolution Professional and the resolution for liquidation of the Corporate Debtor was taken in a meeting with an improper voting share ascribed to Respondent No. 4 and taken in unseemly haste. These are actions of omissions and commissions, which we cannot absolve the Resolution Professional from his conduct should be investigated by Insolvency and Bankruptcy Board of India and action as appropriate may be taken against the present Resolution Professional. 28. In the result, we direct the following:- (i) The CoC as constituted in the CIRP of the Corporate Debtor was not in accordance with provisions of IBC, therefore its constitution is quashed. (ii) The claims of various financial creditors including home buyers should be appropriately fixed, keeping in view the order of this Tribunal in CA (AT) (Ins) 29 of 2020. (iii) The application IA No. 1898 of 2020 wherein an application for exclusion of time spent in pursuing the application before the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
