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TMI Blog2019 (2) TMI 2005X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 60(5)(c) of the I&B Code, 2016 praying the Tribunal to direct the COC members to reconsider the Resolution plan, further to extend the CIRP period and not to consider the request for liquidation filed by Resolution Professional. 2. The Averments in the application in brief: a. M/s. Servomax India Pvt. Ltd, is a leading manufacturer in the field of Power conditioning and power saving systems. b. The main Petition bearing No. CP (IB) No. 265/09/HDB/2017, filed by Murali Krishna Power Controls Pvt Ltd, under Section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted 22.02.2018 and Mr. Pavankankani, was appointed. as IRP. c. It is alleged that IRP conducted the First COC meeting on 28.03.2018 i.e. after 31 days and that IRP did not take any worthwhile steps in respect of CIRP in his tenure and IRP was replaced by Mr. Kondapalli Venkata Srinivas vide Tribunal order dated 03.04.2018. d. It is further averred that Mr. Kondapalli Venkata Srinivas filed application bearing IA No. 165/2018 praying to replace him by appointing Mr. G. Madhududhan Rao as Resolution Professional which was allowed by this Tribunal by order dated 28.05.2018. e. It is alleged that though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Application to the Adjudicating Authority for extension of CIRP Period for further 122 days and requested the CoC to reconsider his Resolution Plan. m. It is averred on receipt of above letter RP called for 9th CoC Meeting on 13.11.2018 and it is alleged that RP briefly pointed about the contentions of the Applicant and did not mention about the extension of time of CIRP or brought to the notice of CoC members about the detailed submissions and judgements filed by Applicant. Further CoC also informed that they have not voted for any of the Resolution. Plans keeping in view various terms and conditions of the Resolution plans and felt they could get higher realization at lesser time period. n. It is the case of Applicant / Director (Suspended Board) that he is the Promoter of Corporate Debtor company and invested an amount of Rs. 1299,51,930.00 in the form of capital and advances etc. It is his further case that he has given the right to use Servomax Brand, Logos along with special coined name of Servomax through an Agreement dated 20.12.2000 and till date he had not received any amount though he is entitled to receive Rs. 1.80 crores as per the said Agreement and thus it is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or and partner of IRP. d. It is further contented by the Resolution Professional that the two letters received from Applicant were placed before the CoC within 2 hours of receipt of the letters and decision of CoC on the Resolution Plan submitted by Applicant were communicated to the Applicant. Further minutes of CoC was also given to the Applicant. e. It is the case of Resolution Professional that IRP and RP delivered their roles and responsibilities as per IBC, 2016 and CoC justified their performances during the. CIRP. f. The Resolution Professional also denied the allegation regarding non-receipt of amount for the right to use Servomax Brand, Logo's. It is averred that even small petty expenses claimed from Corporate Debtor during CIRP was approved by RP many times and that actually the Brand is registered with the Corporate Debtor name and agreement regarding this is not registered. It is alleged Applicant has given his personal guarantee to the lenders and misusing the. Corporate Debtor's Brand with his group companies. g. The Resolution Professional denies all the allegations made against him The CoC has the power to approve any resolution plan. RP is dealing wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V. Srinivas subsequently appointed could not do worthwhile transactions in the CIRP. period from 22.02.2018 to 25.06.2018. The Resolution Professional also questioned the Locus standi of the Applicant who is Director (Suspended Board) of Corporate Debtor to file Application for exclusion of time. 8. The Resolution Professional has filed along with counter the summary of emails between IRP Shri Pavan Kankani and then Resolution Professional Shri K.V. Srinivas and Corporate Debtor during the period which is sought to be excluded from the CIRP. The summary of emails are shown. at page 57-120 and 46-56. Other supporting documents are also shown at page No. 122-145 of the Counter. I have gone through the emails and other documents filed by the Resolution Professional. The IRP Shri Pavan Kankani and the then Resolution Professional Shri K.V. Srinivas discharged functions during the relevant period. It is not as if no worthwhile transactions were done during the said period as alleged by the Applicant. The emails filed by Resolution Professional falsify the contention of the Applicant that nothing worthwhile was done during the said period by Shri Pavan Kankani IRP and the then Resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejecting the contention of the Applicant and passed order of Liquidation against Corporate Debtor. Therefore, the Applicant is not entitled for the relief (b). 13. This Tribunal simultaneously considered the prayer made by Applicant that his Resolution Plan again to be considered by the CoC. This question was also answered in IA 535/2018. At the cost of repetition, CoC is the competent Body to decide the feasibility and viability of any Resolution Plan. It is clear from the reply filed by Resolution Professional and the minutes of the meeting that the Resolution Plans filed were considered by the CoC by exercising its commercial wisdom and it had not approved any of the Resolution Plans. This Authority cannot sit in- Appeal over the decision taken by CoC. The CoC has examined the feasibility and viability of the plans including the plan submitted by Applicant herein who is a Member (Suspended Board of Directors) of Corporate Debtor. Therefore, Applicant is not entitled for the reliefs claimed in this Application and that the Application deserves to be dismissed. 14. In the result, the Application is dismissed. Per: Hon'ble Shri Ratakonda Murali, Member (Judicial) ORDER 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide this Tribunal order dated 28.05.2018. (5) It is averred, it was in the 2"d CoC meeting held on 25.06.2018 that CoC was reconstituted and CIRP practically started. Hence, it is prayed the period from admission of the Petition on 22.02.2018 to the date of actual start of CIRP i.e. 25.06.2018 i.e. a lapse of 122 days to be excluded for the purpose of counting the total period of 270 days. (6) It is averred for the purpose of determining the Liquidation value of the assets of the Corporate Debtor, Resolution Professional appointed two valuers, Further in the 3rd CoC Meeting held on 09.07.2018, Resolution Professional informed the CoC that total six Expression of Interest (EOI) were received till 05.07.2018. The Resolution Professional informed the CoC that promoters of the Corporate Debtor also submitted EOI for submission of Resolution Plan and CoC, after due deliberations, extended the date for submission of EOI till 13.07.2018. It is averred the Resolution Plan submitted by Applicant was found not eligible in view of Applicant's disqualification to act as Director and Applicant was barred by Section 29 A of the Code. The Applicant was Director of another Company viz Ster ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dus Finance Corporation Ltd and NCLT Mumbai order dated 23.10.2018 in the matter of M/s Polychroic Petrochemicals Pvt Ltd. 3. Counter is filed by Resolution Professional. Brief averments in the counter are: (1) It is contended, from the date of admission of the Petition filed under Section 9 of IBC by Operational Creditor till the 2" CoC meeting held on 25.06.2018 (total of 122 days) all activities were done as per IBC, 2016 by IRP and that Applicant has not raised this issue until 22.11.2018. It is raised only when CIRP period of 270 days came to an end on 18.11.2018. (2) The Resolution Professional further contended that it is only when CoC did not approve the resolution plan submitted by the Applicant, the Applicant is trying to delay the process. It is also contended that one of the Debtors namely M/s Murali Krishna Power Controls Private Limited was converted into Operational Creditor by passing Journal entries and initiated CIRP under Section 9 of IBC against the Corporate Debtor. (3) Further, Resolution Professional has extracted the proceedings of the Log book submitted by Interim Resolution Professional Shri Pavan Kankani, which clearly shows the activities carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held after re-constituting CoC by present Resolution Professional. Therefore, the period from the date of order to the date appointment of present Resolution Professional on 25.06.2018 totaling 122 days to be excluded from CIRP as there was no worthwhile progress during the said period. 6. The case of Applicant he has also addressed a letter to the Resolution Professional to seek for exclusion of 122 days vide letter dated 10.11.2018 shown at page Nos. 101 of the Application. However, CoC did not properly deal with the request made by the Applicant and Resolution Professional has also not properly apprised the CoC about the legal position laid down in the matter of M/s Velamur Varadan Anand Vs Union Bank of India & Anr, Quantum Limited (Corporate Debtor) Vs. Indus Finance Corporation Ltd and M/s Polychroic Petrochemicals Pvt Ltd. 7. The Resolution Professional strongly denied the contention of the Applicant that IRP Shri Pavan Kankani and Resolution Professional Shri K.V. Srinivas subsequently appointed could not do worthwhile transactions in the CIRP period from 22.02.2018 to 25.06.2018. The Resolution Professional also questioned the Locus standi of the Applicant who is Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present Application is filed with a view to prolong the CIRP and it is nothing but misuse of the process, Therefore, the present Application deserves to be dismissed. 11. In the result, the Application is dismissed Per: Shri Ratakonda Murali, Member (Judicial) ORDER 1. This Application is filed by Resolution Professional of M/s Servomax India Private Limited (Corporate Debtor) under Section 33 (1) (a) and 34 (1) of Insolvency & Bankruptcy Code, 2016, seeking directions to pass Liquidation Order against Corporate Debtor and further seeking direction to appoint Resolution Professional as Liquidator. 2. Brief averments in the Application are:- (1) The Petition bearing CP (IB) No. 265/9/HDB/2017 filed by Operational Creditor M/s Murali Krishna Power Controls Private Limited was admitted by this Tribunal on 22.02.2018 and appointed Shri Pavan Kankani (Reg No. IBBI/IPA-002/IP-N00368/2017- 18/11062) as Interim Resolution Professional. (2) It is averred, pursuant to above order, IRP carried out public announcement on 28.02.2018 in Economic Times and Nava Telangana. The IRP constituted CoC as under:- S. No No of the Financial Creditor Voting Percentage 1. State Bank of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Resolution Professional that in the 781 CoC meeting held on 24.10.2018, CoC deliberated upon the three Resolution Plans received which included the revised Resolution Plan received form M/s Jainco Projects (India) Limited. COC also reviewed the evaluation matrix for resolution plans received, NPV calculations and the summary of the Resolution plans. (9) It is the case of Resolution Professional that even in the 8° COC meeting held on 3rd November 2018 no revised Resolution Plans were received from Mr AV Rao and Mr D Harish Kumar/ Resolution Applicants. Further, COC members analyzed and discussed all other resolution plans received, their Evaluation Matrix marks, Resolution Applicant(RA)s Net worth certificates, RAs Statement of the availability of the Funds for payment of the Resolution Plan Consideration, RAs experience in the similar business line/any other business experience, Proposed Upfront payments and other repayment schedule and Net Present Value (NPVs) and other terms and conditions of the resolution plans such as sanction of the additional Loans to RAs, sale of the assets of the Corporate Debtor, release of the cases against the Old Promoters, etc. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28.03.2018 and IRP did not take any worthwhile steps as he was informed by Financial Creditors orally that he would not be confirmed as Resolution Professional. (3) It is also alleged that even Mr. Kondapalli Venkata Srinivass who was appointed as Resolution Professional did not take any effective steps and voluntarily wanted to leave the assignment. (4) It is the case of Respondent No. 3 due to replacement of RPs, CIRP could not be commenced till 25.06.2018 and that there is a lapse of 122 days. (5) It is averred, Respondent no.3 vide letter dated 05.07.2018 submitted EOI but was not eligible in view of disqualification to act as Director under Section 29A of the Code. He stated that he was Director of Steri Care Pvt Ltd which was stuck off by Registrar of Companies (Hyd) due to defaults in statutory compliance and RoC (H) initiated proceedings against the Company. It is averred subsequently the said Company was restored and DINs activated after complying the statutory compliance vide this Tribunal order passed in CA No. 745/252/HDB/2018 on 09.08.2018 u/s 252 of Companies Act. Thereafter, Respondent No.3 submitted Resolution Plan on 27.09.2018 and requested the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved any Resolution Plan to place before Adjudicating Authority under Section 31 of IBC and requested the Tribunal to pass order of liquidation. The case of Applicant, the Resolution Plans submitted by Resolution Applicants were examined by CoC and none of the Plan was approved by CoC. Therefore, the Adjudicating Authority has to pass an order of liquidation under Section 33 (1) (a) since no plan was approved by CoC and placed before Adjudicating Authority within the period of CIRP which - came to an end on 18.11.2018. 5. Respondent No.3 came on record who is Director (Suspended Board) of Corporate Debtor. He alleged that CoC ought to have moved through Resolution Professional, the Adjudicating Authority for exclusion of 122 days. The CoC has not properly considered the Plan submitted by Respondent No.3. 6. The contention of Respondent No.3 that Resolution Plan submitted by him be approved by CoC on the ground that payment offered under the Resolution Plan is Rs. 16405.91 lakhs whereas Liquidation value is Rs. 5000 Lakhs and therefore Plan ought to have been approved by the CoC taking into account the interest of the stakeholders. It is contended Resolution is the Rule and Liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be excluded from the CIRP for the reasons stated in the counter. Already Respondent No.3 / Director (Suspended Board) filed separate Application bearing IA No.538 of 2018 for exclusion of 122 days from CIRP and the said Application is also disposed of by dismissing the same. 13. I have gone through the minutes of 8th and 9th CoC meetings filed by the Resolution Professional. The Plans were considered by the members of CoC and did not approve any Resolution Plan. 14. Section 33(1) (a) of the IBC 2016 deals with an order to be passed for liquidation, which is as follows:- Section 33 (1) where Adjudicating Authority: - (a)Before the expiry of the Insolvency resolution process period or the maximum period permitted for completion of corporate Insolvency resolution process under section 12 or the fast tract corporate insolvency resolution process under section 56, as the case may be does not receive a resolution plan under subsection( 6) of section 30; It shall- (I) Pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this chapter; 15. Since no resolution plan is received by the Adjudicating Authority under Section 30 (6) of IBC, 2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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