TMI Blog2023 (7) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... nted extension of 90 days beyond 180 days of CIRP and further granted exemption of lockdown period w.e.f. 25.03.2020. The order dated 03.06.2020, although did not specify the number of days that stood exempted, but granted exemption in terms of Section 40-C. Whether the Resolution Applicant was barred under Section 29A of the Code or not? - HELD THAT:- It is the case of the Appellant is that Mr. Rahoul Subberwal was Managing Director of three companies which were liquidated in UK and being undischarged insolvent was not eligible and adversely effected eligibility of the M/s Sirius Foods Pvt. Ltd./ Respondent No. 2 as Mr. Subberwal is a shareholder of Respondent No. 2. In this connection, it is noted that the term undischarged insolvent has not been defined in the Code. Moreover, such orders for declaring are required to be issued by the Court. We also take note of the detailed averments of the Respondents that Mr. Subberwal has not been disqualified under Section 6 or Section 7 of the UK Company Directors Disqualification Act, 1986 and he continuous to serve as director in other UK based company in M/s Spice Trail Ltd. and he would not have been allowed to continue in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtor ), was admitted on 22.10.2019 and Corporate Insolvency Resolution Process (in short CIRP ) was allowed to be initiated. 3. The Appellant is Promoter, Shareholder and Suspended Director of the Corporate Debtor and aggrieved by the both Impugned Orders, the present appeal has been filed before this Appellate Tribunal. 4. We note that that the order dated 22.10.2019 for initiating the CIRP against the Corporate Debtor was challenged before this Appellate Tribunal, who granted interim stay on the operation of the said order, however finally this Appellate Tribunal rejected the Appeal of the Appellant on 28.02.2019 and the CIRP order dated 22.10.2020 of the Adjudicating Authority was upheld. It has also been brought out that the Appellant had challenged the judgment of this Appellate Tribunal dated 28.02.2020 before the Hon ble Supreme Court of India who initially granted interim stay on 14.10.2020 but finally rejected the appeal of the Appellant on 17.08.2021. 5. Heard the Counsel for Appellant and perused the records made available including cited judgments. 6. Learned Counsel for the Appellant submitted that the Respondent No. 1 filed an application before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion of only 409 days spent in litigation before this Appellate Tribunal and Hon ble Supreme Court of India and therefore the revised Resolution Plan submitted by M/s Sirius Foods Pvt. Ltd./ Respondent No. 2, which was approved by the CoC/ sole Financial Creditor on 22.12.2021, therefore period was much more than allowed time for Resolution Process. 11. Learned Counsel for the Appellant submitted that the Respondent No. 1 has wrongly relied on order dated 03.06.2020 of the Adjudicating Authority presuming that it has granted benefit of 128 days especially when I.A. No. 126 of 2020 filed by the Respondent No. 1 did not contain any table or chart indicating the same. 12. Learned Counsel for the Appellant also assailed that the Adjudicating Authority erred in approving the Resolution Plan of M/s Sirius Foods Pvt. Ltd./ Respondent No. 2 in violation of Section 29A of the Code. Learned Counsel for the Appellant stated that Mr. Rahoul Subberwal, was Ex- Promoter Shareholder of three foreign company in UK, namely, M/s Scalar Engineering Ltd., M/s Falcon Foods Ltd., and M/s Cascade Marine Foods (UK) Ltd., which have been liquidated and Mr. Subberwal was the Sole Promoter of all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia as submitted by the Appellant referring to laws 29 A (j) r/w 5 (28) of the Code are not attracted. 17. Learned Counsel for the Respondents submitted that it is the commercial wisdom of the CoC which is paramount and cannot be challenged by the Appellant. Learned Counsel for the Respondents further submitted that in the Court there is no stipulation that the Resolution Plan is required to be more than the liquidation value and the same has been upheld by the Hon ble Supreme Court of India in the matter of Maharashtra Seamless Ltd. V/s. Padmanabhan Venkatesh [(2020) 11 SCC 467]. 18. Learned Counsel for the Respondents stated that M/s. Sirius Foods Pvt. Ltd. is not ineligible under Section 29A of the Code as Mr. Rahoul Subberwal do not falls under the definition of related person and he does not suffer from any ineligibility under clauses (a) to (i) of Section 29A of the Code. As regards, to clause (iii) to explanation to section 29A, neither Scalar Engineering nor Falcon Foods comes within the definition of connected person as these companies do not fall within the definition of holding company or subsidiary company or associate company of the Respondent No. 2. Learned Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted exemption in terms of Section 40-C. We observe from the Order dated 03.06.2020, where the Adjudicating Authority has recorded the following: Considering the submission made by the Ld. Counsel for the Applicant, this Court is of the view that the cause shown is sufficient, accordingly, the application is hereby allowed. The extension of further period of 90 days beyond 180 days of CIRP is hereby extended along with exemption of lockdown period w.e.f. 25.03.2020 as per the notification issued by the Central Government . (Emphasis Supplied) Thus, it is clear that there was no error in the Impugned Order on this account. 23. Another contention of the Appellant is that the Resolution Plan was challenged by the Appellant through I.A. No. 30 of 2022 on the ground that the Resolution Applicant was barred under Section 29A of the Code. It is a case of the Appellant that Mr. Rahoul Subberwal, Ex- Promoter Shareholder of three foreign company in UK, which have been liquidated and Mr. Subberwal was the Sole Promoter of all these foreign companies and being shareholder of M/s Sirius Foods Pvt. Ltd. comes under the definition of related party under Section 5 (24) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant is regarding non consideration of the settlement offer made by him to the CoC and also that the Resolution offer of the M/s Sirius Foods Pvt. Ltd. / Respondent No. 2 / Resolution Applicant is lower than the liquidation value as well as the settlement offer amount of the Appellant. In this connection, during averments it has been brought to our notice that liquidation value was Rs. 17.87 Crores and the settlement offer of the Appellant was Rs. 19.63 Crores. However, the total Resolution Plan was of Rs. 27.27 Crores. As per the Resolution Plan total payment to be made to Financial Creditor consist of Rs. 16.27 Crores, along with CIRP cost of Rs. 1 Crore or actuals and proposal towards working capital and repair/ refurbishment of Rs. 10 Crores. Thus, the total Resolution Plan amounts to Rs. 27.27 Crores which is much more than both the liquidation value of Rs. 17.88 Crores and the settlement offer of the Appellant is Rs. 19.63 Crores. We also tend to agree with averments of the Respondents that the Code do not stipulate that the Resolution Plans size is required to be more than the liquidation value which was also supported by the Hon ble Supreme Court of India in the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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