TMI Blog2024 (3) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... ho is the only Financial Creditor consisting of 100% CoC. It is relevant to notice that there are no other creditors of the Corporate Debtor. It is also relevant to notice that Appellant is making efforts from very beginning to revive the Corporate Debtor - When the Appellant is ready to liquidate the entire debt of the Financial Creditor/, there are no reason to deny an opportunity to revive the Corporate Debtor on its feet. There is no doubt that Financial Creditor is entitled to entire debt and it cannot be directed to take any haircut. The present is a case where the Appellant has undertaken to clear the entire claim, which was admitted in the CIRP. The Adjudicating Authority committed error in not accepting the Bank Draft of Rs.75 lakhs shown to the Court on the date when the matter was heard. The Adjudicating Authority ought to have given an opportunity to deposit the Bank Draft to complete the payment of Rs.1 crore as was directed by the Adjudicating Authority. The order passed by Adjudicating Authority is set aside - the order dated 07.08.2022 passed in IA 64 of 2023 directing the liquidation is set aside - Appellant is permitted to deposit the entire balance amount of Rs.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected: 11.j. With the above directions, the IA-3887/2022 and I.A. No.64/2023 filed u/s 33(10 by the applicant is hereby allowed and disposed of. 5. It is relevant to notice that although in the beginning of the order dated 07.08.2023, in the Memo of Order, only IA No.64 of 2023 was mentioned, whereas in direction in paragraph 11(j), both, apart from IA No.64 of 2023, IA No.3887 of 2022 was also disposed of. We, thus, are of the view that order dated 07.08.2023 being common to both the Application, IA No.4170 of 2023 filed by the Appellant in this Appeal is allowed and the Appellant is permitted to amend the Memo of Appeal as prayed in the Application. We, thus, permit the Appellant to challenge order dated 07.08.2023 passed in IA No.3887 of 2022 and IA No.64 of 2023 in this Appeal. 6. Brief facts, necessary to be noticed for deciding this Appeal are: (i) The Corporate Debtor Supertharrm Engineers Pvt. Ltd. is registered MSME, of which the Appellants are Promoters/ Directors. By order dated 07.06.2022, the Corporate Debtor was admitted in the Corporate Insolvency Resolution Process ( CIRP ). Respondent No.2 Vidya Sahakari Bank Ltd. is the only Financial Creditor, constituting 100% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor. The Appellant aggrieved by the said order has come up in this Appeal. 7. When the Appeal was taken up by this Tribunal, following order was passed on 11.09.2023: 11.09.2023: Learned Counsel for the Appellant submits that on the date when the Order was passed, the Bank Draft of Rs. 70 Lakhs was shown to the Court but Court did not permit the amount to be given and directed for liquidation. It is submitted that Appellant is ready to make Rs. 70 Lakhs payment by Bank Draft to the Bank plus interest from 01st April, 2023 to show its bona fide. 2. Let the Appellant make the payment to the Bank of Rs. 70 Lakhs plus interest from 01st April, 2023 within three days from today. List this Appeal on 18th September, 2023. In the meantime, Liquidator shall not proceed any further in the liquidation. 8. The Appellant paid amount of Rs.70 lakhs on 01.04.2023 to the Financial Creditor and sought time to deposit rest of the amount out of Rs.4,92,81,826/- within 30 days, which as recorded in the order dated 18.09.2023. The Appellant, however, could not deposit the balance amount as prayed and resultantly, the interim order stand discharged on 08.01.2024. IA No.1129 of 2024 was filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses of more than Rs.40 lakhs during the CIRP. The Bank is resorting the CIRP as a mode of recovery and inspite of the Appellant ready to liquidate the entire debt, the Bank has never given any assistance to the Appellant to liquidate the debt. The Appellant has filed an IA No.3887 of 2022, much before the filing of liquidation Application, where the Appellant prayed for giving opportunity to submit a modified Resolution Plan and Adjudicating Authority was requested not to pass any order for liquidation. It is submitted that the Appellant also filed an affidavit before the Adjudicating Authority, undertaking to pay 100% debt of the Financial Creditor, i.e., total admitted claim of Rs. 4,92,81,826. The learned Counsel for the Appellant has also referred to an email received from the Financial Creditor, as late as on 18.10.2023, where amount of Rs.4,15,12,570/- was communicated. It is submitted that the Appellant has made bonafide endeavour and has already deposited amount of Rs.1.02 Crore approx. with the Bank and is ready to liquidate the entire debt. It is submitted that although there has been delay on the part of the Appellant in making the payment of outstanding, but the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to all stake holders. The Minutes of 01.12.2022 indicates that Financial Creditor has referred to the policy of the Bank that when value of the assets is more than the amount due, the bank is not ready to accept any haircut. On the proposal submitted by Resolution Applicant, i.e., the Appellant, the response of the Financial Creditor Bank has been noticed in the Minutes, which is relevant to notice, is as follows: Therefore, based on the above submissions, requested the CoC to consider the Resolution Plan as feasible, commercially viable and in accordance with the provisions of IBC, where the object is to resolve the Corporate Debtor's insolvency, as the payment of Rs. 4.15 Crores proposed to the secured financial creditors and the entire CIRP cost apart from payment to all other stakeholders. Mrs. Mankar while responding to the submissions made by the RA mentioned that Vidya Sahakari Bank had already filed its claim on initiation of CIRP and the admitted claim amount was Rs.4,92,81,826/-. She further mentioned that it was made very clear during the last CoC meeting that Vidya Sahakari Bank has the policy that when the value of secured assets is more than twice the amount due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Authority, an affidavit was filed by the Appellant stating that they are ready to make full and final payment of the entire claim of the Bank of Rs.4,92,81,826/-. In paragraph-3 of the affidavit, following has been stated: AFFIDAVIT BY APPLICANT NO.1 I, Pankaj Dayaprasad Tiwari, the Applicant No.1 herein the captioned I.A. (IBC) 3887/2022, residing at Survey No.10/11, A/35, Sunshine Villa Society, Jagat Diary Road, Behind Shivar Garden, Anudh Annexe, Pune, 411 017, do solemnly affirm and state as under : 1. That I am the only Resolution Applicant of Supertharrm Engineers Private Limited who along with the Applicant No.2 have jointly submitted our Resolution Plan to the Respondents. 2. That on the rejection of our Resolution Plan, the captioned Application bearing I.A. No.3887/2022 under the provisions of Section 60(5) of the Insolvency and Bankruptcy Code, 2016 has been jointly preferred by us seeking direction upon the Respondents for permitting us to submit the revised Resolution Plan. 3. That in furtherance to the Order dated 15.02.2023 of the Hon ble NCLT, Mumbai Bench in IA 3887/2022, I do hereby file the present Affidavit, in my capacity as the Applicant No.1 in IA 3887/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by this bench on 08.05.2023, however, the applicant took three months to mobilize the 20% of proposed resolution money. This bench is of the considered view that the Counsel for the applicant in IA-3887/2022 has been allowed sufficient time and opportunity to show their bona-fide and capacity to mobilize requisite amount for implementation of plan, if it came to be approved. The failure to deposit even 20% of proposed resolution money, despite having been allowed from 27.02.2023 to deposit the same, clearly demonstrates that the request for reconsideration of its plan was nothing but an attempt to further delay the CIRP process, and the Counsel for the applicant in IA-3887/2022 may not have sufficient resources to implement the plan, even if it is considered and approved by CoC as the circumstances lead us to conclude. Accordingly, this bench dismisses IA-3887/2022 and proceeds to decide IA-64/2023. 18. The Adjudicating Authority, however, observing that sufficient opportunity was given to the Appellant to deposit the amount, dismissed the IA-3887 of 2022 and proceeded to allow IA No.64 of 2023 directing for liquidation. 19. As noted above, the Appellant has filed an affidavit b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. (See ArcelorMittal [ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] at para 83, fn 3). 28. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters/those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that Adjudicating Authority committed error in not accepting the Bank Draft of Rs.75 lakhs shown to the Court on the date when the matter was heard. The Adjudicating Authority ought to have given an opportunity to deposit the Bank Draft to complete the payment of Rs.1 crore as was directed by the Adjudicating Authority. However, the Adjudicating Authority rejected the said offer and dismissed IA 3887 of 2022 and allowed the Application for liquidation being IA No.64 of 2023. We, thus, are of the view that Adjudicating Authority committed error in rejecting IA 3887 of 2022. Hence, the order passed by Adjudicating Authority in IA 3887 of 2022 is unsustainable. Consequentially, order passed in IA 64 of 2023 also cannot be sustained. It is clear that order on IA 64 of 2023 was passed consequent to dismissal of IA 3887 of 2022. In event the Adjudicating Authority would have allowed the IA 2887 of 2022, and accepted the offer of the Appellant to deposit Rs.75 lakhs with the Bank, there would have been no occasion for directing for liquidation. We, thus, are of the view that IA 3887 of 2022 deserves to be allowed and consequently IA 64 of 2023, ought not to have been allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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