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TMI Blog2022 (4) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... y Code, 2016 against Manthan Broadband Services Pvt. Ltd. for initiation of Corporate insolvency Resolution Process (CIRP). 3. Alliance Broadband Services Pvt. Ltd., being the petitioner Financial Creditor provided the Corporate Debtor with a loan for Rs. 10.20 Crore. On default of the same, Corporate Insolvency Resolution Process (hereinafter known as CIRP) against the Corporate Debtor was initiated vide this Adjudicating Authority's order dated 18.09.2019 in C.P. No. 1634/KB/2018. Mr. Shashi Agarwal was appointed the Interim Resolution Professional and on his resignation the applicant became the Resolution Professional. 4. Thereafter the Hon'ble National Company Law Appellate Tribunal, vide order dated 26.09.2019, directed the Interim Resolution Professional to not constitute Committee of Creditors (hereinafter known as CoC) if, not already constituted. The said embargo was lifted vide Hon'ble National Company Law Appellate Tribunal's order dated 22.10.2019. 5. The 180 day CIRP time period expired on 18.03.2020, after which the lockdown started. The Tribunal, vide order dated 1.11.2020 extended the CIRP period by 90 days with effect from 1.11.2020. In the meant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C and without appreciation on merits, in spite of the fact that 21 days were remaining for the completion of 270 days period. It is well established that all attempts have to be made towards achieving a successful resolution of Corporate Debtor before liquidation is considered. The Resolution Professional has not adopted the said approach. Hence the instant application has been filed seeking 2 weeks' time to submit a resolution plan, direction upon Resolution Professional to consider the said resolution plan, and dismissal of IA 356/KB/2021. 13. Furthermore, an application, IVN. 4/KB/2021 has been filed by the intervenor, Alliance Broadband Services Pvt. Ltd., praying for the following reliefs: a) the Applicant Financial Creditor be permitted to intervene in interlocutory application I.A. 379/KB/2021; b) if necessary, Applicant Financial Creditor be added as a party respondent in I.A. 379/KB/2021; c) I.A. 379/KB/2021 be dismissed. 14. The intervener here has a claim of Rs. 11.93 crores secured by way of pledge of equity shares and mortgage by deposit of title deeds of landed properties of Corporate Debtor in Tajpur, West Bengal. Intervenor was excluded from CoC due to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WPO 1767 of 2021. 20. The Applicant in IA 99/KB/2022 claims to be a secured operational creditor of Corporate Debtor, who has contributed to CIRP Cost, and has an admitted claim of Rs. 29 crores). The said applicant has submitted that on publication of form G, last date of submission of EOI was set on 21.12.2020. After the expiry of said date, ICNCL filed IA. 221/KB/2021 for seeking permission to submit EOI. This Tribunal allowed the same but the company withdrew from the process. Subsequently, Hathway jumped into the scenario with desire to submit EOI and demanded 2 weeks time. The Resolution Professional rejected the attempted tactics on 26.02.2021. 21. The applicant in I.A. 99/KB/2022 has submitted that since till 538 days of CIRP no resolution plan was received, CoC passed resolution to liquidate the Corporate Debtor at the 11th CoC meeting dated 11.03.2021 accordingly, IA 356/KB/2021 was filed on 17.03.2021 after 546 days of CIRP. Again after staying silent till 24.03.2021, Hathway filed IA 379/KB/2021 with contradictory prayers. 22. According to the said applicant, though as per section 33(2) of IBC, the Tribunal has no discretion but to allow for liquidation in case the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Applicant. 28. The relief sought by the applicant in the above application is opposed by Alliance Broadband Services Private Limited on the following grounds;- i. Alliance, though a Financial Creditor, could not be placed on the CoC because Corporate Debtor holds shares in Alliance. However, the same shares are pledged with Alliance for a substantial loan obtained by the Corporate Debtor. Alliance also has equitable mortgage of land owned by CD at Tajpur. Initially, though Corporate Debtor offered to settle the matter with Alliance by making payment of the debt but this was not done. ii. The application by Indian Cable Net Company Limited [ICNCL] is a mala fide attempt to delay and scuttle the CIRP of the Corporate Debtor. iii. On an earlier occasion, ICNCL had filed IA No. 221/KB/2021 inter alia, seeking extension of time to file a Resolution Plan in respect of the Corporate Debtor. On February 22, 2021 considering the fact that ICNCL was prevented from filing the Expression of Interest due to the surge of the Covid-19 pandemic, this Hon'ble Tribunal condoned the delay and granted a strict timeline of 5 days i.e. until February 27, 2021 to file a Resolution Plan i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of audited financials for year ended 31 March 2017. * Provisional list of PRAS initiated by Resolution Professional 9. 21.01.2021 Atria withdrew from CIRP via email. 10. 25.01.2021 * 9th Meeting held- ICNCL's interest in submitting Resolution Plan is discussed. Said interest interest was presented via email dated 25th January, 2021 (on 266th day of CIRP) * ICNCL has not submitted EOI. 11. 25.01.2021 Last date of submission of Resolution Plan 12. 5.02.2021 IA 221/KB/2021 was filed by ICNCL for permission to submit resolution plan. 13. 9.02.2021 vide order in IA 142/KB/23021, exclusion of 50 days was ordered. CIRP now scheduled to expire on 19.03.2021 14. 22.02.2021 in IA 221/kb/2021, ICNCL was allowed 5 days to submit Resolution Plan. Accordingly, Resolution Professional shared information memorandum with ICNCL. 15. 24.02.2021 ICNCL withdrew interest in submission of Resolution Plan within 48 Hrs of getting the information Memorandum. 16. 26.02.2021 Hathway Cable & Datacom Ltd. wrote email to Resolution Professional submitting its EOI, requesting 2 weeks for submission of Resolution Plan. Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has a right to approach this Authority and invoke the powers of this Tribunal under Section 60(5) of Insolvency and Bankruptcy Code Read with Section 11 of NCLT Rules to seek the direction to RP place and to grant the relief as sought in the present case. However, this submission was opposed by the Resolution Applicant. In order to determine the veracity and correctness of the argument of the Ld. Senior Counsel appearing for the applicant, this Adjudicating Authority summoned the record i.e. minutes of the CoC meetings and it have been produced before us and thus we had to opportunity to examine these minutes. 31. From the above facts emanating from record the picture that emerges is summarized as under:- i. Hathway Cable and Datacom Ltd. hereinafter called as Hathway, expressed interest submitting Resolution Plan and requested for two weeks vide email dated 21th February, 2021. ii. The Resolution Professional rejected the request of applicant on the basis of having received it 30 days after expiry of last date of submission of EOI that is 25.01.2021. iii. In the 10th meeting of Committee of Creditors (hereinafter referred to as the CoC) at Internal Page 4 of the minutes und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... best efforts by all, it seems chance of resolution/revival is remote although there is a new bidder inform of Reliance Jio which has submitted its EOI. viii. In view of the request from CISCO, it was decided to convene 11th meeting of CoC on 8th of February, 2021 at 3 PM which was agreed unanimously. 32. From the minutes of the 11th meeting of CoC it is emerges and is reproduced hereafter. i. At internal Page-4 of these minutes the CoC and other creditors deliberated in details all efforts put by the creditors to arrive at a successful and viable resolution plan within the framework of IBC, 2016 in spite of absolute non-cooperation from board of directors of the Corporate Debtor. The Operation Creditors (Sony/Star) even contributed costs/agreed to contribute certain costs (legal fees and 50% of RP fees) to run the CIRP along-with sole member of CoC (CISCO). The financials for FY 2017-18, FY 2018-19 and till insolvency commencement dated 18.09.2019 were never provided by the board of directors (suspended) till date, in spite of specific directions given by Hon'ble NCLT on an application by RP. The Board of Directors (suspend) of the Corporate Debtor never showed any serious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards counsels consultation and drafting of the petition to challenge the Illegal rights Issue by Alliance Broadband Services Pvt. Ltd. so as to appeal against the same and seek Direction from the Hon'ble NCLT for revoking of the Illegal Rights Issue which if granted will restore the Corporate Debtor to be the majority shareholder. The liquidation process is going to be long and painful and non-beneficial for all the creditors and it will kill any opportunity for revival of the Corporate Debtor. The 10.09 acres of the 13.5 acres Tajpur land is a converted land wherein the valuer has been informed that he should approach the local BLRO office to ascertain the same and arrive at the correct and proper valuation, considering the same as commercial land. The erstwhile Director of the Corporate Debtor had suggested that the CoC holds back its vote to understand and realize the full gamut of the Liquidation process and take an informed decision. a. Resolution for liquidation of the Corporate Debtor After deliberation and discussion above, the following agenda was put up for voting. "RESOLVED THAT the Corporate Debtor, Manthan Broadband Services Private Limited, be liquidated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussions and deliberations, the CoC arrived at following conclusions: a. There are no operations of the Company since mid of FY 2018-19 as per records. There is no running business of the Corporate Debtor. Hence the business of the Corporate Debtor cannot be sold off as a going concern within the meaning of Regulation 31(1) of the IBBI (Liquidation Process) Regulations, 2016. b. The CoC recommends to sell the Corporate Debtor under Regulation 32 C of the IBBI (Liquidation Process) Regulations, 2016. The following resolution was passed by CoC unanimously through voice voting "RESOLVED THAT in pursuant to the provisions of Regulations 39C of IBBI (CIRP) Regulations, 2016, the CoC recommends sale of Corporate Debtor as a going concern under Regulation 32(e) IBBI (Liquidation Process) Regulations, 2016 with all its assets and liabilities." To approve the minutes of the previous meeting of the Committee of the Creditors The minutes of the meeting held on 08th March, 2021 were approved and taken on record. 33. At internal Page 9 of the minutes of the 12th meeting which was referred and the same is reproduced hereinafter; "Mr. Gurmeet Singh pointed out that liquidation will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Corporate Debtor. 35. In the matter of Shashi Dhar Vs. Indian Overseas Bank and Ors., the Hon'ble Supreme Court has held that the legislature while enacting the IBC, consciously does not provide any ground to challenge the commercial wisdom of the individual Financial Creditors or the collective decision of the CoC before NCLT and the decision of the CoCs commercial wisdom has been made non-justiciable. The Hon'ble Supreme Court re-emphasized the primacy of commercial wisdom of CoC in its ruling in Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta and Ors., wherein the Apex court held the following: "there is no residual equity jurisdiction in the Adjudicating Authority or the Appellate Tribunal to interfere in the merits of a business decision taken by the requisite majority of the Committee of Creditors, provided that it is otherwise in conformity with the provisions of the Code and the Regulations, as has been laid down by this judgment." 36. In light of the above decisions, we reject the interlocutory applications IA 379/KB/2021 & IA 193/KB/2022. 37. Further, in light of the dismissal of the abovementioned applications, I.A. 99/KB ..... X X X X Extracts X X X X X X X X Extracts X X X X
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