TMI Blog2024 (5) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ial on the record to indicate that Respondent No.1, who has filed IA No.2767 of 2022 has brought into the notice of the Adjudicating Authority about the Resolution dated 02.12.2022. It is clear that Respondent No.1 having not brought on the record, the subsequent events, i.e., Resolution dated 02.12.2022, where it has participated and voted against the Resolution, clearly indicate that Respondent No.1 intended to obtain order of liquidation by concealing relevant facts. As noted above, Respondent No.1 in his Application has also not impleaded CoC, SRA or RP, whereas an order was sought by Respondent No.1 for liquidation. When the Adjudicating Authority directed the RP by order dated 04.05.2022 to convene the Meeting of CoC to take a decision, as to whether Corporate Debtor be liquidated or not, the decision taken by the CoC was a commercial decision of the CoC, i.e., not to liquidate the Corporate Debtor and the said commercial decision was not required to be interfered by the Adjudicating Authority by the impugned order directing for liquidation. The legal position that extension of time is not modification of the Resolution Plan is well settled and that fact that whether the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f liquidation. Both the Appeals having been filed against the same order, have been heard together and are being decided by this common judgment. 2. Brief facts necessary for deciding the Appeals are: (i) The Adjudicating Authority vide order dated 29.03.2019 directed for commencement of Corporate Insolvency Resolution Process ( CIRP ) against the Corporate Debtor - S.K. Wheels Private Limited. Mr. Vishal Ghishulal Jain was appointed as Interim Resolution Professional ( IRP ), who was confirmed as Resolution Professional ( RP ). (ii) The Corporate Debtor being a MSME, the Resolution Plan submitted by Anil Kumar, the Promoter/ Director of the Corporate Debtor was approved by the CoC in its 12th Meeting held on 23.01.2020 with 75.78% vote share. The RP filed IA No.976 of 2022 for approval of the Resolution Plan and Adjudicating Authority vide order dated 09.11.2021, approved the Resolution Plan. (iii) IA No.80 of 2022 was filed by Successful Resolution Applicant ( SRA ) for exclusion of time due to Covid-19 pandemic and extension of time for making further payments, which Application was dismissed by the Adjudicating Authority vide order dated 04.05.2022. (iv) IA No.1054 of 2022 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned on 02.12.2022 where CoC granted further time to the Successful Resolution Applicant to deposit the amount. It is further submitted that the proceeding of 02.12.2022 were not before the Adjudicating Authority. Any of the Appellant were not party to the Application. Learned Counsel for the Respondent submits that several opportunities were granted to comply the plan which was not complied hence the Adjudicating Authority rightly directed for liquidation. Submission needs scrutiny. Issue Notice. Requisites alongwith process fee be filed within three days. Let the Reply Affidavit be filed within three weeks. Rejoinder, if any, may be filed within two weeks thereafter. List these Appeals For Admission (After Notice) on 10th July, 2023. In the meantime, order impugned shall remain stayed. Looking to the issues in these appeals, the Appeals itself may be disposed of on the next date of hearing 4. In the Appeal, reply has been filed by Respondent No.1 - Edelweiss Asset Reconstruction Company Ltd. On 14.02.2024, learned Counsel appearing for Respondent No.1 sought liberty to bring IA No.2767 of 2022 on record by means of additional affidavit. By an affidavit dated 19.02.2024, Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Application. It is submitted that action of Respondent No.1 is wholly malafide and against the majority decision of the Financial Creditors. When the Financial Creditors have decided to extend timeline for payment by SRA, action of Respondent No.1 to pray for liquidation is against the spirit and object of the Code. Liquidation of the Corporate Debtor should be a last resort. Further, the Corporate Debtor being a MSME, hence, SRA, who was Promoter/ Director of the Corporate Debtor had every right to revive the Corporate Debtor. 7. Shri Neeraj Malhotra, learned Senior Counsel appearing for Respondent No.1 submits that Adjudicating Authority has heard all the parties in IA No.2767 of 2022, who were present on the date and whose presence has been noted in the impugned order. It is submitted that the fact that RP, CoC and SRA were not impleaded in the IA No.2767 of 2022, is immaterial, since they were present on the date when Application was heard. It is further submitted that Respondent No.1, who was not in agreement with the decision taken by the CoC, had every right to file the Application for liquidation, the SRA having not made the payment within the timeline as provided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessful Resolution Applicant, Mr. Anil Kumar miserably failed to implement the Resolution Plan which was duly approved by the Adjudicating Authority. The Bench notes that the Resolution Professional has made this application at the behest of Implementation and Monitoring Committee only on the oral recommendation of the IMC in such matters the view of the COC consists of the Financial Creditor and a majority beneficiary of the Resolution Process needs to be consulted. In view of this, the Bench hereby direct the Resolution Professional to convene the meeting of COC and file appropriate application for liquidation if suggested by COC with the mandate of COC. With the above observations and directions, the above I.A. 1054/2022 is disposed of. 12. The above order of the Adjudicating Authority clearly indicate that prayer made by RP for liquidation of the Corporate Debtor was not accepted. Rather, the Adjudicating Authority directed the RP to convene a Meeting of CoC and file an appropriate application, if suggested by the CoC with the mandate of CoC. 13. Consequent to the order dated 04.05.2022, a Meeting was held on 08.07.2022 in which Financial Creditors (Members of the erstwhile CoC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fying Applicant as a Financial Creditor who did not vote in favour of the Resolution Plan in terms of Regulation 38(1)(b) of CIRP Regulations; and ii. direct Resolution Applicant to pay the pro-rata Liquidation Value of Applicant s claim amounting to Rs8,06,03,853 (Rupees Eight Crores Six Lakhs Three Thousand Eight Hundred and Fifty Three only) in priority to other financial creditors in terms of Section 30(2)9b) read with Regulation 38(1)(b) of the CIRP Regulations. e. Pass any other orders as this Hon ble Tribunal may deem fit. 18. A perusal of IA No. 2767 of 2022 indicates that Respondent No.1 was aggrieved by the decision of the CoC, which was taken on 08.07.2022. In the synopsis of the Application in paragraphs 15, 16, 17, following has been pleaded by Respondent No.1: 15. That on 08 July 2022, the fourth meeting of the IMC was held wherein the Resolution Applicant again sought an extension to make upfront payment by 30 September 2022. The IMC agreed to table a resolution in front of the erstwhile members of the CoC to liquidate the Corporate Debtor. In this voting by the erstwhile members of the CoC, 59.73% of the members of voted to not liquidate, while 28.23% including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questioned, to give its reply. The Adjudicating Authority did not give any opportunity to the SRA to respond to IA No.2767 of 2022. 22. The Adjudicating Authority itself on 04.05.2022 has directed the RP to convene a Meeting of CoC and file liquidation application, after CoC give its mandate. The CoC has given the mandate otherwise, but the Adjudicating Authority had proceeded to allow the Application filed by Respondent No.1. 23. It is further relevant to notice that on 02.12.2022 a Meeting of Financial Creditors took place, where it was decided to grant further time to SRA to make payments as per schedule provided in the Resolution. The Resolution dated 02.12.2022 is as follows: Meeting of the Financial Creditors of S K Wheels P Ltd. held on Friday 2nd December 2022 at 05:00 p.m. at Vashi, Navi Mumbai, Maharashtra. WRITTEN RECORD OF THE SUMMARY OF THE DECISION TAKEN ON THE FOLLOWING AGENDA ITEM RESOLVED THAT the consent of the Financial Creditors (erstwhile members of the Committee of Creditors) of S. K. Wheels Private Limited be and is hereby accorded to allow further time to the Resolution Applicant to make the payment as per the schedule as hereunder: a. An amount of INR 1 Cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht into the notice of the Adjudicating Authority about the Resolution dated 02.12.2022. It is clear that Respondent No.1 having not brought on the record, the subsequent events, i.e., Resolution dated 02.12.2022, where it has participated and voted against the Resolution, clearly indicate that Respondent No.1 intended to obtain order of liquidation by concealing relevant facts. As noted above, Respondent No.1 in his Application has also not impleaded CoC, SRA or RP, whereas an order was sought by Respondent No.1 for liquidation. 26. The decision dated 08.07.2022 was taken by the Financial Creditors under the orders of the Adjudicating Authority dated 04.05.2022, which order was never challenged. When the Financial Creditors have taken decision, not to liquidate the Corporate Debtor, the said decision was relevant and could not have been ignored by the Adjudicating Authority while passing the impugned order. 27. The Adjudicating Authority in its impugned order while noticing the Resolution dated 08.07.2022 of the Financial Creditor had made the following observation: 18. It is pertinent to note that the first tranche of the payment was to be paid by 08.01.2022. It is fact borne on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all financial obligations in Resolution Plan and make payment of balance of Rs.30 crores shall not cause any prejudice to Financial Creditors, who have already been denied the said payment for a long period of time. In event, the Appellant is unable to make the payment as prayed for, it shall be open to proceed with the liquidation, no option being left thereafter. 27. In the result, we allow this Appeal. Set aside order dated 24th November, 2021 passed by the Adjudicating Authority and grant 30 days time to the Appellant from today to make the payment of balance amount of Rs.30 crores to the Financial Creditors on or before 20th February, 2022, failing which, it shall be open to proceed with the liquidation of Corporate Debtor. No order as to costs. 30. To the same effect is the judgment of this Tribunal in GP Global Energy Private Limited vs. Mr. Sandeep Mahajan and Anr. - Company Appeal (AT) (Insolvency) No.954 of 2021, where this Tribunal after noticing judgment of the Hon ble Supreme Court in Ebix Singapore Private Limited vs. CoC Educomp, made following observations in paragraphs 26, 27 and 28: 26. This Tribunal rejected the submission that the Adjudicating Authority has no j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore. The submission of Shri Neeraj Malhotra cannot be accepted. The legal position that extension of time is not modification of the Resolution Plan is well settled and that fact that whether the time is extended for one month or one year, does not change the legal position. The time extension for payment of amount as per the Resolution Plan is not modification of the Plan. The very basis of order passed by Adjudicating Authority that not to liquidate the Corporate Debtor would lead to modification of the Resolution Plan is fallacious and unsustainable. 33. In result, we allow the Appeal, set aside the impugned order dated 13.02.2023 passed in I.A. No.2767 of 2022 and dismiss I.A. No.2767 of 2022. The SRA having already deposited the amount along with interest @ 10% in the form of fixed deposit before the largest Financial Creditor as permitted by Resolution dated 02.12.2022 by the Financial Creditors, the RP shall proceed to distribute the amount to the Financial Creditors as per the Resolution Plan and decision of the Financial Creditors dated 02.12.2022, from the amounts already deposited by the SRA. Both the Appeal are allowed accordingly. Pending IAs, if any, are also stand di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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