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TMI Blog2022 (8) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... w Tribunal, Hyderabad Bench, Hyderabad) in IA Nos. 606 & 697 of 2020 in CP (IB) No. 43/7/HDB/2018, whereby the Adjudicating Authority rejected I.A. 606 of 2020 consequently disposed of I.A. 697 of 2020. Brief Facts : Appellant's Submissions : 2. The Learned Counsel for the Appellant submitted that the erstwhile Andhra Bank (presently Union Bank of India) filed Section 7 Application seeking initiation of CIRP against the Corporate Debtor i.e. M/s Leo Meridian Infrastructure Projects Ltd. The Adjudicating Authority admitted the Application and initiated CIRP on 09.04.2019. The Resolution Professional invited Expression of Interest (EOI) from prospective Resolution Applicants and one Sh. D.V. Satyanarayana alone submitted Resolution Plan however, the CoC refused the said plan on the ground of ill net-worth. The RP again invited EOI. The Appellants on 02.03.2020 submitted EOI with all necessary documents and deposited processing fee of Rs.15 lakhs. On 14.04.2020 the Appellants as consortium submitted Resolution Plan enclosing bank guarantee for Rs.1 crore issued by State Bank of India, Vishakhapatnam. However, the CoC extended time till 27.04.2020 and advised the Applicants to revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the RP vide e-mail dated 20.07.2020 insisted the Appellants to engage services of monitoring agency at the cost of Resolution Applicant to assist the monitoring committee which is not part of terms and conditions of RFRP. Subsequently, the RP orally informed to engage PWC as monitoring agency with a package of Rs.30 lakhs per annum, but these Appellants refused the same on the ground that the said condition is not part of RFRP. Having not accepted the demands to increase CIRP cost and engaging PWC as monitoring agency, the RP started humiliating these Appellants on one or the other grounds. The Appellants did not visualise the wrongful intention of the RP. 7. It is submitted that the RP vide his mail dated 13.08.2020 informed that CoC meeting was held on 12.08.2020 and decided to consider all Resolution Plans which comply with the code and the Regulations. It is submitted that the RP travelled beyond the scope of IBC and IBBI Regulations of erstwhile and amended regulation dated 07.08.2020 and also in disobedience of orders passed in I.A. No. 299 of 2020 invited final compliant Resolution Plan from these Appellants and also from Sh. D.V. Satyanarayana with changes if any, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by Sh. D.V. Satyanarayana the Appellants sensed that the RP would have revealed the financial figures as mentioned in the plan by the Appellants to Sh. D.V. Satyanarayana, the Appellants prayed the Adjudicating Authority to direct the CoC not to conduct voting rights on plans till disposal of I.A. No. 606 and 650 of 2020. The Adjudicating Authority passed interim direction to RP and CoC not to conduct voting till 04.09.2020. 12. It is submitted that the Applicant in I.A. No. 697 of 2020 filed annexures along with memo seeking relief to take the same on record. From page 4 and 5 of the said papers i.e. e-mail correspondence exchange between RP and Sh. D.V. Satyanarayana clearly speaks that Sh. D.V. Satyanarayana submitted in-complete revised Resolution Plan on 15.08.2020 and on the suggestion of the RP submitted amended revised Resolution Plan on 21.08.2020 and this fact was suppressed by the RP during the proceedings held on 27.08.2020. From Page No.4 it clearly indicates that Sh. D.V. Satyanarayana is still not having net-worth and depending on his investors to prove his net-worth. It is to be noted that the earlier plan submitted by Sh. D.V. Satyanarayana was rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amendment to Regulation 39 of IBBI Regulations, 2016 to the ongoing CIRP of the Corporate Debtor, where the Resolution Plans are yet to be put for voting. The case of the Appellants is that the amended regulations would have prospective effect and ought not to be applied retrospectively. The issue raised by the Appellants is squarely covered by the decision of the Hon'ble Supreme Court in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. Vs. NBCC (India) Ltd. & Ors. Civil Appeal No. 3396 of 2020. The Adjudicating Authority rightly placed reliance on the above decision and dismissed the Application No. 606 of 2020. 19. The Appellants resorted to putting forth an entirely new case by pleading several new facts that did not form part of the original disputes or the pleadings before the Adjudicating Authority and consequently raising fresh grounds of challenge at the appellate stage. The Appellants have shifted the focus from the CoC to blaming the RP in the present Appeal. The Appellants have proceeded to make unwarranted personal attacks on this Respondent by levelling serious personal allegations against the RP, casting aspersions on his integrity and the credibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity and treatment as well by being invited to submit their Resolution Plan, if they choose to do so through e-mails dated 01.08.2020, 04.08.2020 and finally on 13.08.2020. 26. It is submitted that the Respondent has acted strictly in conformity with the provisions of the I&B Code and the Regulations. The Resolution Plan of the Appellant was not construed as approved by the CoC under Section 30 of IBC and these Appellants were declared H-1 bidder for the sole purpose of conducting negotiations and discussion on financial proposals by the CoC. The Appellants did not acquire any vested right to demand of voting by CoC only on their Resolution Plan. The plan of the Appellant was placed thrice by the RP in CoC meetings, the CoC in their commercial wisdom made certain observations and sought certain changes to the Resolution Plan of H-1 bidder. 27. It is reiterated that the IBBI had notified amendment to the Regulations (amendment) dated 07.08.2020 which effectively brought an amendment to the Regulation 39 by interalia imposing a requirement to vote on all compliant Resolution Plans simultaneously. It was decided in the 28th CoC meeting held on 12.08.2020 to consider all compliant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received during the CIR process and the Resolution Plan which is approved with prescribed voting percent will be considered as approved by CoC. Since the CoC is yet to vote on the plan, the aforementioned amendment would be applicable to the CIRP of Corporate Debtor. Accordingly, it was decided to give an opportunity to both the Resolution Applicants i.e. 3rd Appellant and Sh. D.V. Satyanarayana to submit their final compliant resolution plans vide letter dated 15.08.2020 and the same was intimated to the RA's by the RP through mail on 12.08.2020. 33. The Appellant challenged the decision of CoC in giving an opportunity to both RA's in view of the amendment to IBBI Regulations dated 07.08.2020 by filing I.A. No. 606 of 2020 before the Adjudicating Authority. The Adjudicating Authority vide order dated 27.08.2020 was pleased to grant interim stay on the voting proposal. Hence, the voting could not be initiated in view of the interim. 34. In view of the reasons as stated above the Learned Counsel prayed this Bench to dismiss the Appeal. Analysis / Appraisal: 35. Heard, the Learned Counsel appeared for the respective parties perused the pleadings, documents and relevant citation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 dated 29.04.2020. The said I.A. filed by Mr. D.V. Satyanarayana seeking direction to the CoC for extending the time to receive the Resolution Plan from him by another two weeks due to lockdown. The Adjudicating Authority in its order dated 29.04.2020 at page 78 of the Appeal paper book observed as under: "Here is the case where the CoC once rejected the resolution plan filed by the Applicant. In other words, the CoC has not approved the Resolution Plan given by the Applicant. the Applicant did not take steps for re-submitting the resolution plan as on date, even though fresh plans were called. The information was also sent to the Applicant as per Regulations for submitting any revised resolution plan. The last date for submitting resolution plan was 27.04.2020. However, Applicant has not submitted any resolution plan by 27.04.2020, but on the other hand, Applicant moved this Application on the very same date seeking extension of time for submitting the resolution plan. Considering the submissions made by the Counsel for Applicant and also hearing the Counsel for Resolution Professional and considering the existing circumstances due to lockdown, I feel some time to be given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98 of 2020 foreclosed their rights. 44. It is an admitted fact that the Appellants have been declared as H1 bidder and the same has been informed to the Appellants by e-mail from the Respondent (RP) (Annexure-XII). The contents of the letter read as "after evaluation of the Resolution Plan submitted by you vide e-mail dated 08.06.2020 by the CoC Members as per as per approved evaluation matrix and as per the provisions of approved RFRP document, we are pleased to inform you that you have been declared as highest bidder (H1) in 24th CoC Meeting of Leo Meridian Infrastructure Projects and Hotels Limited." The RP also admitted in its reply dated 22.11.2021 whereby it is admitted that the Appellant was declared H1 bidder and also stated that the Appellant modified the Resolution Plan based on CoC suggestions. 45. However, in the said letter, it is also stated that the said Resolution Plan will be voted separately and invited the Appellant to attend the 24th CoC meeting at 3:45 P.M. through WebEx. The Appellant also submitted revised Resolution Plan on 09.07.2020. The RP addressed a letter to the Appellant dated 20.07.2020 stating that the Appellant may be participated for the negotia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s e-mail dated 13.08.2020 addressed to the Appellant and the others concerned stating as under: "Dear Sir, As you may be aware, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020 came into effect on 7th August, 2020. In light of the same, the Committee of Creditors ("CoC") of Leo Meridian Infrastructure Projects and Hotels Limited ("Corporate Debtor"). In the meeting held on Aug 12, 2020, have decided to consider all resolution plans which comply with the requirements of the Code and the regulations made thereunder, for the purposes of voting (to determine on the acceptance of rejection of said plans). In view of the above, I am writing to request you to send in your "final" complaint resolution plan to us no later than midnight of August 15, 2020. You may take this opportunity to revise the financial proposal. If you choose to do so. However, in the interest of moving forward with the process quickly, we ask that you provide 2 versions of the final resolution plan - one "clean" version that can be presented to the CoC for voting, and another "marked up" version that shows the changes in "t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worth, accepting the plan by the RP on 21.08.2020 would give suspicious. Be that as it may, this Tribunal will deal with the amendment to the Regulations as contended by the Respondents to decide whether the said amendment is applicable to the facts of the present case or not? 52. The contention of the Appellants is that the 4th Applicant namely P. Vasudeva Reddy in I.A. No. 498 of 2020 which was filed before the Learned Adjudicating Authority seeking a direction to consider their plan to be considered by the CoC is concerned, the Adjudicating Authority dismissed the said I.A. vide order dated 27.08.2020 specifically holding that the Resolution Plan received after due date and placing them before the CoC is held to be illegal and CoC was not authorised to approve the arbitrary and illegal conduct of CIRP. The Appellants further contended that despite the above rejection of their Resolution Plan by the CoC, the 4th Applicant in hat I.A namely P. Vasudeva Reddy is submitting the plan through another Resolution Applicant by giving Power of Attorney, taking the advantage of the letter of the RP dated 13.08.2020. It is also contended that the RP contravening the provision of law by mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he highest votes, subject to the timelines under the Code." 56. The amendment is effective from 07.08.2020 and the initiation of CIRP of the Corporate Debtor was 09.04.2019 and as per the record the Appellant submitted its plan on 02.03.2020 and the RP informed vide its letter dated 18.04.2020 that the CoC had extended to submit the Resolution Plan till 27.04.2020, however, Mr. D.V. Satyanarayana filed an I.A. bearing No. 299 of 2020 before the Adjudicating Authority and the Adjudicating Authority extended the time till 04.05.2020. From the sequence of events, it is clear that the date extended to submit the resolution plans till 04.05.2020 and the said order had attained finality and no challenge was made to the said order. While so, the amendment is w.e.f. 07.08.2020. 57. As per the amendment to the above Regulation i.e. sub-regulation (3) (a), the Resolutions Plans shall be evaluated as per evaluation matrix under sub-regulation (2) of Regulation 39. Further, the committee shall vote on all such Resolution Plans simultaneously. However, as per sub-regulation (1) of Regulation 39, the prospective Resolution Applicant in the final list may submit a Resolution Plan or plans prepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e itself is doubtful. 58. The 1st Respondent/RP in his notes of submissions filed vide Diary No. 92 dated 13.07.2021 at para 10 stated as under: "Further, the RPs action under the direction of and in-consultation with CoC of inviting final compliant resolution plan from the eligible resolution applicants, including the Appellants herein, for the purpose of putting the plans to vote simultaneously, is strictly in accordance with law." From the above submissions, it is clear case that the RP intend to invite fresh resolution plans under the guise of final compliant resolution plan is in our view highly misinterpreting the amendment to the regulations and it is act of contemptuous. 59. Hence, this Tribunal also draws adverse inference against the RP. The amendment does not give the powers to call for fresh resolution plans as intended by the 1st Respondent/RP under the guise of final compliant resolution plan as stated by the Respondent/RP in his e-mail dated 13.08.2020. 60. This Tribunal makes it clear that the amendment to the Regulation 39(3) of the IBBI Regulations, 2016 as referred above is gave the powers to the committee to evaluate resolution plans received as per evalua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified by the Board, to submit a Resolution Plan or plans. This was done by the Resolution Professional as can be seen from Annexure A-3. The invitation was issued with last date and time fixed as 12 o' clock noon of 18th August, 2018. Regulation 36-A of "the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016" ('Regulations' - in short) deals with invitation for expression of interest. Clause - 6 of Regulation 36-A provides that "The expression of interest received after the time specified in the invitation under Clause (b) of the sub-regulation (3) shall be rejected." Although the Resolution Professional in his Affidavit before Adjudicating Authority mentioned the time of receipt of e-mail dated 18th August, 2018 (Annexure A-9) from the Appellant at 11:50:58 hours, the document filed by the Appellant himself shows that it was received/sent after 12 o' clock. In terms of Clause - 6 of Regulation 36-A, even if such e-mail was to be categorized as an expression of interest, it would require to be rejected." Finding 64. The Learned Adjudicating Authority misinterpreted the Regulations 39(3) of the I&B Code, 2016 and not p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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