TMI Blog2022 (6) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... ess can it be said to be an abuse of the process of law with some vested interest. Whether successful resolution applicant, namely, M/s Aggarsain Spinners Limited, is eligible under Section 29A(f) of the Code as per IA No.348/2021? - HELD THAT:- Proviso (1) to Section 30(4) requires that committee of creditors shall not approve a resolution plan where the Resolution Applicant is ineligible under Section 29A of the Code. Before submitting a plan before the committee of creditors, it is also incumbent upon the Resolution Plan to verify whether the Resolution Applicant is eligible under Section 29A of the Code - suffice for this Tribunal to pertinently point out that an ex-facie opinion is to be offered to the committee of creditors by the Resolution Professional that the law was violated. It is also the duty of the Resolution Professional to determine as to whether the eligibility criteria of the Resolution Applicant prescribed in Section 29-A of the Code are satisfied. The Resolution Professional has to consider the objections brought to his notice prior to the submission of the Resolution Plan to the Committee of Creditors . As per Section 30(2) of the Code, the Resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quasi-judicial function of SEBI, no such order was passed but under the regulatory functions, this power was delegated to the stock exchange to pass the appropriate order debarring the defaulter/non-compliant of the said circular issued by SEBI. Whether the Resolution Professional has discharged his duty diligently about verifying the eligibility of resolution applicant before submission of resolution plan to committee of creditors for discussion and approval? - HELD THAT:- There is no averment and evidence placed on record on behalf of the Resolution Professional that before submitting the resolution plan to committee of creditors for approval, he had verified the antecedents of the resolution applicant from the websites of SEBI and BSE. If SBI has accessed this information from the BSE website, then certainly Resolution Professional could have also done so, if acted diligently. In these circumstances, it can be safely concluded that Resolution Professional has failed to discharge its duties diligently about verifying the eligibility of Resolution Applicant. Whether the matter be referred back to the committee of creditors for determining the question of eligibility o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 29-A (f) of the Insolvency and Bankruptcy Code, 2016; b) Direct the Resolution Professional to place the present Applicant s Resolution Plan for consideration before the Committee of Creditors; 2. Brief facts necessary for adjudication of the present application are that M/s Phoenix Arc Private Limited ( financial creditor ) had filed an application under Section 7 of the Code before this Tribunal for initiation of Corporation Insolvency Resolution Process ( CIRP ) against M/s GPI Textiles Limited corporate debtor ). This Tribunal vide its judgment dated 06.07.2018 admitted the petition filed by the financial creditor and kept the matter for 12.07.2018 for appointment of Interim Resolution Professional. Vide order dated 12.07.2018, Mr. Jalesh Kumar Grover was appointed as Interim Resolution Professional ( IRP ). Pursuant to the majority decision of the Committee of Creditors Mr. Jalesh Kumar Grover, IRP was confirmed as Resolution Professional. 3. Through the instant application, the applicant seeks to challenge the approval of the Resolution Plan filed by the Successful Resolution Applicant (M/s Aggarsain Spinners Limited and Ramesh Kumar, Promoter of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said information being available on public domain was overlooked by the Resolution Professional. Copies of relevant extract of the information available on www.bseindia.com and www.nseindia.com have been annexed as Annexure A-4 and A-5 respectively, to the instant application. 8. It is further stated that as per the Notice No. 20180328-44 dated 28.03.2018 of BSE, the Exchange had shared the details of the non-compliant Exclusively Listed Companies and its Promoters/Directors with the Depositories on 22.03.2018, 23.03.2018, 26.03.2018, 27.03.2018 and 28.03.2018, for initiating the action against such Exclusively Listed Companies including Resolution Applicant and its Promoters/Directors in accordance with the above referred circular issued by SEBI. The particulars shared with the Depositories are based on the extent of the data made available by De-recognized/Non-operational/exited Stock Exchanges / ROC, to BSE. As per the notice, the promoters and directors of non-compliant ELCs shall not be eligible to remain or become director of any listed company till the promoters of such non-complaint ELCs provide exit option to public shareholders. in compliance with SEBI circular dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant has no locus standi to file the present application. 14. In the reply, while detailing the facts of CIRP chronologically, respondent No.1/Resolution Professional (hereinafter referred to as Resolution Professional ) stated that the CIRP proceedings were duly conducted by him as per the provisions of the Code and underlying Regulations. The 6th Meeting of the CoC was convened on 17.12.2018, wherein Resolution Professional informed the members of CoC that pursuant to publication of Form G dated 15.09.2018, Resolution Professional received one resolution plan and further informed the members that he had received interest from two more parties to submit the resolution plan after the last date of submission of expression of interest as stipulated in Form G. Upon discussions and deliberations, the members of the CoC decided to extend the CIRP period in term of Section 12(2) of the Code by a period of 90 days and approved the resolution for republishing of Form G in the matter of the corporate debtor. 15. After republishing of Form G on 22.12.2018, expression of interests were invited in the matter of the corporate debtor. Pursuant to this, various resolution plans were put b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. It is alleged by Resolution Professional that the applicant has filed this application with the intention to derail and cause hindrance in the approval of the resolution plan, which has already been approved by the CoC. According to Resolution Professional, he being an officer of the Court does not have any power or jurisdiction to adjudicate upon the question of eligibility of the successful resolution applicant and he has left this issue for adjudication on this Tribunal. 19. Reply on behalf of Resolution Applicant was filed vide Diary No.00842/2 dated 22.07.2021, wherein it is stated that the present application is false, frivolous and motivated by applicant for stalling the proceedings for consideration of the resolution plan. It is further stated that Resolution Professional has already placed the alleged complaint of Ayat Processors by way of an affidavit, to which Resolution Applicant has already filed a counter affidavit and the said issue of eligibility is still pending consideration before this Tribunal and the applicant has no locus standi to file the present application, as his resolution plan has already been rejected by the CoC more than 2 years back. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2017, within the timelines and paid the listing fees on 22.12.2017 and also informed BSE of the same and also submitted Plan of Action to BSE. According to Resolution Applicant, the said notice of BSE dated 28.03.2018 was a communication between the Stock Exchange and SEBI, and Resolution Applicant was not a party to it and no order of prohibiting Resolution Applicant from accessing the capital market was ever passed by SEBI, which at the most could be said to be a recommendation. 23. It is further submitted by Resolution Applicant that on 29.10.2020, it received information from SBI where it had submitted proposal for raising the funds. It was informed through e-mail that they have found Resolution Applicant s promoters/directors are in the debarred list of BSE for accessing the capital market for 10 years. Consequent upon this information, Resolution Applicant made a representation to the BSE informing that it was never informed about the said prohibition and that it had already filed an application for listing with MSEI within given time and have been compliant on SEBI Circulars. Ultimately, BSE revoked the said recommendation on 16.02.2021. Thus, it is submitted by Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it must not be forgotten that a Resolution Professional is only to examine and confirm that each resolution plan conforms to what is provided by Section 30(2). Under Section 25(2)(i), the Resolution Professional shall undertake to present all resolution plans at the meetings of the Committee of Creditors, This is followed by Section 30(3), which states that the Resolution Professional shall present to the Committee of Creditors, for its approval such resolution plans which confirm the conditions referred to in sub-section (2).This provision has to be read in conjunction with Section 25(2)(i), and with the second proviso to Section 30(4), which provides that where a resolution applicant is found to be ineligible under Section 29-A(c), the resolution applicant shall be allowed by the Committee of Creditors such period, not exceeding 30 days, to make payment of overdue amounts in accordance with the proviso to Section 290A(c) . 27. It is further submitted by the learned counsel for the applicant that commercial wisdom of the CoC would not come into the fray when a Resolution Applicant is disqualified under Section 29A as the same is a question of law and not a question of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Action against companies remaining on the DB. a. Any promoter or director whose company is on the DB and has failed to demonstrate adequacy of effort for providing exit to their shareholders in conformity with the exit mechanism as provided in the circular shall be for liable for the, inter alia, action:- The company, its directors, its promoters and the companies which are promoted by any of them shall not directly or indirectly associate with the securities market or seek listing for any equity shares for a period of ten years from the exit from the DB. In furtherance, to this circular, vide another circular SEBI/HO/MRD/DSA/CIR/P/2017/92 dated 01.08.2017, the SEBI has extended the time period upto 30.06.2017 for compliance of pending exit offer to shareholders as per the earlier timelines. Under para 4 of the circular, it was further clarified that ELCs refer to those companies whose equity shares were exclusively listed at a recognized stock exchange at the time of exit of such exchange and were subsequently moved to the dissemination board of NSE and BSE and whose shares are available for buying and selling on Dissemination Board. It is further alleged that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been done. Hence, the Resolution Applicant cannot now dispute the validity of the said circular. It is also added by learned counsel for the applicant that even a wrong order needs to be challenged and if not challenged, allowed to attain finality is binding. 34. In support of his arguments, learned counsel for the applicant has placed reliance on the following decisions: - i. Authorized Officer (Land Reforms) V/s MM Krishanmurthy Chetty 1998 (9) SCC 138 ii. Lal Bahadur Gautam V/s State of UP; 2009 (6) SCC 41 iii. PS Gopinath V/s State of Kerala; 2008(7) SCC 70 iv. Malthesh Gudda Pooma V/s State of Karnataka; 2011 (15) SCC 330 35. It is further contended by learned counsel for the applicant that words prohibition and restrain are interchangeable. He has referred to Black s Law Dictionary explaining the word prohibition and restrain . It is argued that when an expression is not defined, one can take into account the definition given to such expression in a statute as also the dictionary meaning. In this regard, learned counsel for the applicant has placed reliance upon judgment passed by the Hon ble Supreme Court in Kichha Sugar Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon judgment dated 31.08.2012 passed by the Hon ble Supreme Court in Civil Appeal No.9813 of 2011; Sahara India Real Estate Corporation Limited and Ors. Versus Securities and Exchange Board of India and Anr., wherein it is held as under:- 103. The first step would be to venture an understanding of section 11 of the SEBI Act, so as to grasp the effect and reach thereof. Sub-section (1) of section 11 of the SEBI Act casts an obligation on the SEBI, to protect the interest of investors in securities, to promote the development of the securities market, and to regulate the securities market, by such measures as it thinks fit . It is, therefore, apparent that the measures to be adopted by the SEBI in carrying out its obligations are couched in open-ended terms, having no pre-arranged limits. In other words the extent of the nature and the manner of measures which can be adopted by the SEBI for giving effect to the functions assigned to the SEBI, have been left to the discretion and wisdom of the SEBI. It is necessary to record here, that the aforesaid power to adopt such measures as it thinks fit to promote investors interest, to promote the development of the securities mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence can be altered, amended or clarified. Pleadings only can be clarified. Information memorandum is not a pleading but is an evidence, therefore no clarification is permissible and moreover, the additional affidavit has been filed without taking any permission from this Tribunal and at best it can be treated to be a request for clarification to MSEI and till today such request has not been accepted. It is well settled that a relief claimed, not granted is deemed to be declined. Even though CPC is not applicable, but general proposition and principles of law are applicable. Hence, it is prayed that additional affidavit filed by the Resolution Applicant may be taken off the record as it is an afterthought, beyond any legal sanctity and contains unsustainable arguments. 39. During the course of arguments, it is submitted by learned counsel for Resolution Applicant that the Applicant has no vested right to get his plan considered but it is an abuse of process of law. It is alleged that the applicant, Longowalia Yarna Ltd. and Ayaat Processors are a syndicate and related entities and are trying to create hurdles in consideration of application for approval of Plan in gross abuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hand, the applicant is saying that the Resolution Applicant has been debarred w.e.f. 28.03.2018, date of BSE notice and that BSE has not declared the Resolution Applicant debarred as there is no delegation of such power from SEBI, while on the other hand the Applicant is saying that the Resolution Applicant has been debarred by way of Administrative Circular dated 01.08.2017 and moreover, the circulars do not relate to prohibition and no such word is used in the circular. Hence, both the circulars issued by SEBI are administrative circulars and there is no occasion to either question the legality of the administrative circulars or to challenge the same on the part of the Resolution Applicant. 44. In support of his arguments, learned counsel for the Resolution Applicant has placed reliance upon the judgment of the Hon ble Apex Court in the matter of National Securities Depositories Ltd. Vs. Securities and Exchange Board of India; Civil Appeal No.5173 of 2006, wherein it has been held that while holding that under Section 11(1) of the SEBI Act, the circulars are administrative in nature, has distinguished the administrative and quasi-judicial power. In paragraph No.12 of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also prescribed heading, it was responded that as an inadvertent error with an unintended ignorance the word SEBI has been used. It is hereby clarified that SEBI has never restrained/prohibited the Directors/Promoters of our company to either access or trade in the capital market. BSE and not SEBI had initiated an action for restraint , which do not attain any finality and further has been reversed by BSE. Accordingly, it is submitted by learned counsel for the applicant that the application deserves to be dismissed with exemplary costs. 45. Learned counsel for the Resolution Professional has argued in terms of his reply. According to learned counsel for the Resolution Professional, an unsuccessful resolution applicant is neither a stakeholder nor a creditor of the corporate debtor and thus, the applicant being an unsuccessful resolution applicant has no vested right in the CIRP process of the corporate debtor. In support of his arguments, he has placed reliance on the order passed in Company Appeal (AT) (Insolvency) No.272/2020; IMR Metallurgical Resources AG Versus Ferro Alloys Corporation Limited and Others, wherein it was held that the Resolution Applicant has no ves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Plan of Successful Resolution Applicant have been varied or time extended to facilitate its implementation and the creditors have not claimed any prejudice on that count and the Committee of Creditors comprising of the creditors as stakeholders has not objected to same rather been privy to it on account of hardship due to prevailing circumstances, the Appellate cannot be permitted to cry foul. It is submitted that Civil Appeal No.2 of 2021 against the aforesaid order was filed before the Hon ble Supreme Court and the Hon ble Supreme, vide order dated 28.01.2021, dismissed the said appeal. 50. Learned counsel appearing for Phoenix Arc Pvt. Ltd. (Member of Committee of Creditors) has also placed reliance on order dated 15.03.2021 in Company Appeal (AT) (Insolvency) No.1079 of 2020; Interups Inc. Versus Kuldeep Kumar Bassi (Resolution Professional of Asian Colour Coated Ispat Limited), wherein the Hon ble NCLAT held that an unsuccessful resolution applicant has no locus to challenge the successful resolution plan. Further, reliance has been placed on a latest judgment dated 18.01.2022 passed by the Hon ble Supreme Court in Civil Appeal No.8411/2019; Bank of Baroda Vers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to investment of Rs.63 Crores. Contrary to the same, in the case in hand, neither resolution plan has been approved, nor implemented, and not even a penny has been infused. ii. Secondly, in the cited case, public importance projects (para 63) were already undergoing by the resolution applicant pursuant to approval of resolution plan, which could have been disrupted. On the contrary, in the case in hand there is no such public importance projects are being continued. iii. Thirdly, the Hon ble Supreme Court in para 64 itself had that this finding of permitting resolution applicant to continue is only in the present case on peculiar facts and never intended to be laid down or quoted as precedent. Hon ble Supreme Court clarified that it does not have any precedential value because this was in peculiar set of facts in that case alone and therefore, cannot be applied keeping in view the above caution words. Thus, it is argued that Hon ble Supreme Court relied upon Arcelor Mittal Case, which clearly laid down in Para 46 that eligibility has to be seen on the date of submission of resolution plan which is mentioned in Section 29A. In para 56 and 58, the Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, short reply has been filed on behalf of Phoenix ARC Private Limited, Member of the committee of creditors, wherein it is stated that the information, Annexure A-1(Colly) filed by the applicant/successful resolution applicant may be taken on record and no other issue/arguments is required at this stage as it would tantamount to re-hearing of the applicant as the matter is considerably delayed and appropriate orders may be passed on merits. 57. On the other hand, in its reply, it is submitted by Shreeji Cotfab Limited, respondent No.2/unsuccessful resolution applicant that the applicant has filed the instant application to the detriment of all parties as the same has been filed after much delay and after the arguments have been completed and the judgment has been reserved vide order dated 24.02.2022 by this Tribunal in CA No.287 of 2019, IA No.348 of 2021 and other connected applications. 58. In support of his contention, learned counsel for respondent No.2 has placed reliance upon judgment dated 22.02.2013, passed by the Hon ble Supreme Court in Civil Appeal No.1787 of 2013 (arising out of SLP(C) No.35268 of 2011); M/s Bagai Construction versus Gupta Building Material Stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of exemplary costs. 62. All the parties have argued in terms of their respective applications and replies thereto. 63. After hearing the parties and careful perusal of the facts and circumstances as well as law relied upon and cited by learned counsel for the parties, we are of the considered view that there are mainly three points for determination, which are as under:- i) Whether the Unsuccessful Resolution Applicant is having any locus standi to file the application challenging the eligibility of successful resolution applicant for presenting and approval of the resolution plan? ii) Whether successful resolution applicant, namely, M/s Aggarsain Spinners Limited, is eligible under Section 29A(f) of the Code as per IA No.348/2021? iii) Whether the information received from SEBI by a third party under the RTI Act, 2006, filed in IA No.155/2022 is having some bearing upon the eligibility part of the successful resolution applicant? 64. At the outset, it is contended by learned counsel for the Resolution Applicant as well as learned counsel for the Resolution Professional in IA No.348 of 2021 that applicant being an unsuccessful resolution applicant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely, M/s Aggarsain Spinners Limited is eligible under Section 29A(f) of the Code or not? It is contended by learned counsel for the applicant that Successful Resolution Applicant is debarred by SEBI from accessing the securities market at the time of submission as well as approval of the resolution plan by the committee of creditors, thus, was ineligible under Section 29A(f) of the Code. 66. Whenever a plan is submitted under Section 30(6) of the Code for approval of the resolution plan before the Adjudicating Authority then under Section 31 of the Code, the Adjudicating Authority has to satisfy itself that it meets the requirement as referred to under sub-section (2) of Section 30 of the Code. The relevant provisions of Section 31 of the Code are reproduced hereinbelow:- Approval of resolution plan. 31. (1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve3 the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, [including the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his clause shall be fair and equitable to such creditors. Explanation 2. - For the purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;] (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. [Explanation. - For the purposes of clause (e), if any approval o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot required to take any decision but he is to confirm that the Resolution Plan does not violate any of the provisions of Law for the time being in force (including Section 29A of the Code). Thus, suffice for this Tribunal to pertinently point out that an ex-facie opinion is to be offered to the committee of creditors by the Resolution Professional that the law was violated. It is also the duty of the Resolution Professional to determine as to whether the eligibility criteria of the Resolution Applicant prescribed in Section 29-A of the Code are satisfied. The Resolution Professional has to consider the objections brought to his notice prior to the submission of the Resolution Plan to the Committee of Creditors . As per Section 30(2) of the Code, the Resolution Professional has to examine each resolution plan received by him to confirm that the resolution plan provides for payment of Insolvency Resolution Process Costs, Payment of Debts of the Operational Creditors, management of the affairs of corporate debtor, the fulfilment and supervision of resolution plan, other requirement as may be specified by the Board and that it does not violate any of the provisions of the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors, its promoters and the companies which are promoted by any of them shall not be eligible to access the securities market for the purposes of raising capital till the promoters of such non-compliant Exclusively Listed Companies provide an exit option to the public shareholders in compliance with SEBI circular dated October 10, 2016, as certified by the concerned Designated Stock Exchanges. c. xx xx xx 4. xx xx xx xx 5. The concerned Designated Stock Exchanges and Depositories shall co-ordinate with each other and ensure compliance of these requirements. 6. SEBI may also take any other appropriate action(s) against the promoters/directors of Exclusively Listed Companies for non-compliance with SEBI circular dated October 10, 2016 7. This circular is issued in exercise of powers conferred under Section 11(1) and 11(2)(j) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. This circular is available on SEBI website at www.sebi.gov.in. It is explicit from the contents of both these aforementioned circulars issued by SE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the Board may, by notification, specify in this behalf;] (c) registering and regulating the working of 15[venture capital funds and collective investment schemes], including mutual funds; (d) promoting and regulating self-regulatory organisations; (e) prohibiting fraudulent and unfair trade practices relating to securities markets; (f) promoting investors education and training of intermediaries of securities markets; (g) prohibiting insider trading in securities; (h) regulating substantial acquisition of shares and take over of companies; (i) calling for information from, undertaking inspection, conducting inquiries and audits of the [stock exchanges, mutual funds, other persons associated with the securities market], intermediaries and self-regulatory organisations in the securities market; [(ia) calling for information and records from any person including any bank or any other authority or board or corporation established or constituted by or under any Central or State Act which, in the opinion of the Board, shall be relevant to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vested in the SEBI under sub-section (1) of section 11 of the SEBI Act, to protect the interest of investors in securities and to promote the development and to regulate the securities market by such measures as it thinks fit . Furthermore, sub-section (2) of section 11 of the SEBI Act, after making a reference to the measures generally referred to in sub-section (1) empowers/authorizes that SEBI may provide for a series of measures, which are delineated in clauses (a) to (m) thereof (of sub-section (2) of section 11 of the SEBI Act). The use of the words may provide for besides indicating the discretion vested in the SEBI, demonstrates that, the measures depicted in clauses (a) to (m) are illustrative and not exhaustive, more so, because subclause (2) of section 11 of the SEBI Act does not dilute the power vested in the SEBI under sub-section (1) thereof. While interpreting sub-section (1) of section 11 of the SEBI Act, it has already been concluded hereinabove, that the measures to be adopted by the SEBI in carrying out its obligations are couched in open-ended terms having no pre-arranged limits, to the discretion of the SEBI. Likewise, sub-sections (2A) and (4) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord vide additional affidavit filed vide Diary No.844/04 dated 02.02.2022, but this additional affidavit filed by the Resolution Applicant is of no consequence because firstly, the same was filed during the course of hearing the arguments in this case and purposedly the same has been filed to fill up the lacuna in the case of resolution applicant. Secondly, there is no provision under the law that the information memorandum dated 04.11.2020 submitted by the resolution applicant with MSEI, which has been uploaded, intimated and its benefits have also been taken by the resolution applicant then such clarification is tenable at this juncture stating that Prohibition by SEBI is written inadvertently in the information memorandum. Similarly, when Resolution Applicant was debarred by the notification of BSE dated 28.03.2018 then on representation by the Resolution Applicant to BSE, it was mentioned that name of resolution applicant has been shown in the debarred entity list of SEBI. Later on, vide its internal communication dated 16.02.2021, BSE reversed and revoked the debarred status w.e.f. 16.02.2021 and not retrospectively. It means that Resolution Applicant was not eligible unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to BSE, upon which BSE revoked its recommendation on 16.02.2021 regarding the restraint status of resolution applicant. Thus, the resolution applicant was not a non-compliant of the circular issued by BSE, however, this contention of the Resolution Applicant is devoid of any legal force because firstly its admission on its part that Resolution Applicant was in the debarred list of BSE from accessing the securities market for 10 years. Secondly, it is settled law that the eligibility of resolution applicant is to be seen on the date of submission of the resolution plan and not thereafter. In the case in hand, the last date for submission of the resolution plan was 28.01.2019 and admittedly, on that date resolution applicant was ineligible under Section 29A(f) of the Code. Thus, it can be safely concluded that under the SEBI Act, it enjoins two types of powers first is quasi-judicial power and second is regulatory power. So far as quasi-judicial powers of SEBI are concerned, a due process of law is to be adopted by SEBI before passing any order of punishment or penalty, but in the case in hand, it is the open-ended regulatory power of SEBI, which has been delegated to BSE, vide which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers of the SEBI, but so far as regulatory functions of SEBI is concerned, the said power stands delegated to BSE as so clarified by SEBI in its reply to the application under the RTI Act that SEBI by circular dated 01.08.2017, inter alia, states that the concerned stock exchange and depositories shall coordinate with each other and ensure compliance with the circular requirement. Therefore, it can be said that under the quasi-judicial function of SEBI, no such order was passed but under the regulatory functions, this power was delegated to the stock exchange to pass the appropriate order debarring the defaulter/non-compliant of the said circular issued by SEBI. 78. In these circumstances, the said information shared by SEBI under the RTI Act has got no bearing on the eligibility criterion of the Resolution Applicant at the time of submission of resolution plan. It is the contention of learned counsel appearing for Phoenix Arc Pvt. Limited (Member of the Committee of Creditors) that in view of judgment dated 18.01.2022 passed by the Hon ble Supreme Court in Bank of Baroda versus MBL Infrastructures Ltd. and Others (supra) though in the case in hand, Resolution Plan may not be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi in Canara Bank s case (supra), it is the bounded duty of the Resolution Plan to scrutinize the resolution plan furnished by numerous applicants is complete in all aspects, before presenting it to the committee of creditors. A Resolution Professional is not required to take any decision, but he is to confirm that the Resolution Plan does not violate any of the provisions of Law for the time being in force (including Section 29A of the Code). Elaborating further the role of Resolution Professional, it is worthwhile to note that admittedly the restraint order of BSE debarring the resolution applicant from accessing the securities market for 10 years was in the public domain w.e.f. 28.03.2018 i.e. date of notification of BSE. It is stated by learned counsel for the Resolution Applicant that he came to know about the said notification on 29.12.2020 from SBI when proposal for raising funds was submitted that promoters and directors of the Resolution Applicant are in debarred list of BSE from accessing capital market for 10 years. It means that the said information was in public domain and it was incumbent upon the Resolution Professional before submitting the resolution plan to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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