TaxTMI 
TaxTMI 
2024 (1) TMI 1165
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.... Mr. Narendra Jindal. In Company Appeal (AT) (Insolvency) No. 594 of 2022 M/s Sharda Ma Enterprises Private Limited (in short 'Corporate Debtor') is Respondent No. 1 and Mr. Vaneet Bhatia is the Respondent No. 2 herein, who is the Interim Resolution Professional (in short 'IRP') of the Corporate Debtor, Norvic Shipping North America Inc. is the Respondent No. 3 who is Operational Creditor to the Corporate Debtor and Committee of Creditors (in short 'CoC) of the Corporate Debtor is the Respondent No. 4. In this appeal, the Appellant has challenged the Impugned Order dated 08.04.2022 admitting the application filed by the Respondent No. 3 under Section 9 of the Insolvency & Bankruptcy Code, 2016 (in short 'Code') and putting the Corporate Debtor into Corporate Insolvency Resolution Process (in short 'CIRP'). 2. The Second Appeal i.e., Company Appeal (AT) (Insolvency) No. 506 of 2022 has been filed by the same Appellant i.e., Mr. Narendra Jindal and HDFC Bank Limited the Financial Creditor is the Respondent No. 1, the Assistant General Manager SAMB-(II) is the Respondent No. 2, ICICI Bank is the Respondent No. 3 and Mr. Vaneet Bhatia the Resolution Professional is the Respondent No. ....
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....ditor issued demand notice under Section 8 of the Code on 16.10.2019 and filed an application before the National Company Law Tribunal, New Delhi, Court- III (in short 'Adjudicating Authority') on 03.12.2019 No. CP (IB) No. 3370/ ND/ 2019 . 10. It is the case of the Appellant that he entered into the fresh settlement with the Operational Creditor after filing the application under Section 9 of the Code by the Operational Creditor and the Corporate Debtor was willing to settle the outstanding due of USD 1,57,234.17 at 75% of payable amount within a period of 12 months in monthly instalments and therefore the Adjudicating Authority should have taken the same on record and should have given an opportunity to the Corporate Debtor to revive therefore, the Impugned Order is perverse and need to be set aside. 11. In this connection, we also note from the reply submitted on behalf of the Corporate Debtor by IRP wherein the Respondent No. 2 i.e., IRP gave the background of the case and submitted that subsequent to the CIRP, the Respondent No. 2 published Form A on 10.04.2022 inviting claims against the Corporate Debtor and Respondent No. 2 vide e-mail dated 11.04.2022 also intimated HDFC ....
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.... further submitted that in view of failure of the settlement, the Resolution Professional is duty bound to continue its duties to conclude the CIRP in time bound manner and further requested to get removed stay by this Appellate Tribunal on Form G, thereby, allowing the Respondent No. 1 to carry out his duties pertaining to CIRP in accordance with the Code and help the Financial Creditors to recover their money and revive the Corporate Debtor. Company Appeal (AT) (Insolvency) No. 506 of 2022 16. In this appeal, the Appellant gave details of various joint lenders Meeting especially the 4th Joint Lenders Meeting held on 22.02.2022 in which the Corporate Debtor submitted comprehensive proposal vide letter dated 22.02.2022 for Rs. 22 Crores against the outstanding amount of Rs. 69 Crores and requested the consortium lenders to allow the Corporate Debtor accordingly. 17. It is the case of the Appellant that during hearing the pending Appeal, despite discussions about the settlement with the Creditors, the Adjudicating Authority passed order for initiating of CIRP on 08.04.2022 and the IRP took over on 11.04.2022. 18. The Appellant submitted that after the fresh settlement agreement ....
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....al wisdom of the CoC without looking into spirit of the Code, which is meant for revival of the Corporate Debtor and not for recovery mechanism for the bankers. 24. The Appellant highlighted that SBI and ICICI Bank together holding approximately 80% of the voting shares were in support of withdrawal of application in Form FA, whereas the HDFC holding 19.94% was not supporting and such solitary act of HDFC can only be treated as arbitrary, capricious and unreasonable act on part of HDFC. 25. Concluding his arguments, the Appellant submitted that the Impugned Order dated 15.03.2023 should be set aside and his Appeal should be allowed. 26. Per Contra, the Respondent No. 1 i.e., HDFC Bank denied all averments made by the Appellant. 27. The Respondent No. 1 stated that in the 7th CoC meeting on 06.06.2023, CoC discussed appeal filed by the Appellant and it was pointed out that the Appellant was hampering the CIRP process and further suggested that said appeal should be withdrawn by the Appellant. The Respondent No. 1 submitted that the representative of SBI requested Resolution Professional to bring to the notice of this Appellate Tribunal that SBI has confirmed the withdrawal of OT....
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....cial Creditor could bind other Financial as claimed by the Appellant. 35. The Respondent No. 1 also refuted averment of Appellant regarding interplay between Section 30(4) and Section 12A of the Code and emphasised that the commercial wisdom of the CoC is with regard to all matters and not limited to one or other aspect. 36. The Respondent No. 1 stated that that in light of the aforementioned provision, the settlement proposed by the Appellant herein has failed to procure a ninety per cent vote in accordance with Section 12A of the Code. The Respondent No. 1 also stated that the Form FA submitted by the Appellant before CoC was based on the Settlement Agreement dated 18.05.2022 executed between Norvic Shipping North America INC, the Operational Creditor and Sharda Ma Enterprises the (Corporate Debtor) and Respondent No. l and other Financial Creditors are not parties to the said Settlement Agreement. 37. Concluding his arguments, the Respondent No. 1 requested to dismiss the appeal with costs. 38. The Respondent No. 2 i.e., SBI also opposed the appeal treating it as misconceived and an attempt to mislead this Appellate Tribunal by making false statement. 39. The Respondent No.....
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....are of the view that Section 12A also passes constitutional muster." (Emphasis Supplied) 42. The Respondent No. 2 submitted that final OTS letter dated 06.06.2022 stood expired as the Appellant vide its OTS letter dated 22.02.2022 made the statement that entire compromise settlement account in respect of the loan account will be paid latest by 31.03.2023 but the Appellant filed to comply with the terms of OTS proposal dated 22.02.2022 and therefore, the alleged settlement by SBI with the Appellant is no more valid and legal. 43. Concluding his arguments, the Respondent No. 2 supported fully the Impugned Order passed by the Adjudicating Authority and opposed any relief to be granted to the Appellant. 44. The Respondent No. 4 i.e, the Resolution Professional has also briefed this Appellate Tribunal by filling the Status Report. 45. In Company Appeal (AT) (Insolvency) No. 594 of 2022 the main issue is whether the Adjudicating Authority committed any error in accepting the CIRP application of the Operational Creditor. We have noted during our discussion in the earlier paragraphs and found that there was clear debt of more than Rs. 1 Crore payable to the Operational Creditor which....
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....ional Creditor and due to his failure to meet the prior commitments, the first settlement was entered with the Operational Creditor dated 25.01.2019 whereby, he agreed to make the payment of USD 1,57,234.17 in 13 instalment. However, the Corporate Debtor could make the payment of only two instalments. Thus, the OTS entered between the Corporate Debtor and the Operational Creditor failed. 49. We observe that subsequent to admission of CIRP on 08.04.2022, the Suspended Management of the Corporate Debtor through the Appellant entered into second settlement with the Operational Creditor dated 18.05.2022 and according to which the Corporate Debtor agreed to make the payment @ 75% of the outstanding dues in 12 instalments. However, he could make payment of first instalment through someone else and second instalment was paid 9 days late and subsequently no instalment was paid. We note that in the meantime, the RP has invited the claims and has received the claims from three banks, namely, SBI, ICICI and HDFC and claims from two Operational Creditors. 50. We note that this Appellate Tribunal in the appeal filed by the Appellant in the meantime, gave interim relief to the Appellant statin....
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....f CoC for approving the resolution plan is 66%, the requirement under Section 12-A IBC for withdrawal of CIRP is 90%. 24. When 90% and more of the creditors, in their wisdom after due deliberations, find that it will be in the interest of all the stakeholders to permit settlement and withdraw CIRP, in our view, the adjudicating authority or the appellate authority cannot sit in an appeal over the commercial wisdom of CoC. The interference would be warranted only when the adjudicating authority or the appellate authority finds the decision of the CoC to be capricious, arbitrary, irrational and dehors the provisions of the statute or the Rules." (Emphasis Supplied) Here we have noted that HDFC has taken decision as the likely recovery from the Corporate Debtor was found to be less than 18% which fall in the commercial wisdom domain and there is no arbitrary or irrational decision on the part of the Financial Creditor/ CoC. 54. We note that the Adjudicating Authority in their order dated 08.04.2022 discussed all facts and noted that the Corporate Debtor has failed to comply the terms of settlement with the Operational Creditor dated 25.01.2019 and did not make the payment as req....