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TMI Blog2025 (3) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... called the 'CIRP') of the Corporate Debtor, Aarya Industrial Products Private Limited (hereinafter called the 'Corporate Debtor') was dismissed. 2. The relevant part of the impugned order dated 13.09.2022 of Ld. NCLT, Kolkata is reproduced below for ready reference: "2. This application has been filed on 1 October, 2021 seeking direction on the Resolution Professional to accept the Resolution Plan of the applicant and to forward the same to the Committee of Creditors of the Corporate Debtor for consideration thereof. It is an admitted position that the Committee of Creditors rejected the resolution plan of the applicant on 9/10th April, 2021 which is at page 27/28 of the connected IA /422/KB/2021. It transpires from the minutes of the CoC that the plan submitted by the applicant was non-compliant and the CoC recorded approval for liquidation by 100% voting, 3. It is stated by Ld. Counsel appearing for the RP upon request by the applicant, that the EMD was refunded on 10th May, 2021, which is annexed at page 16 of the Supplementary Affidavit. 4. Admittedly, the EMD was returned to the applicant, and this is apparent from page 16 of the Supplementary Affidavit filed by the RP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016, he had conducted due diligence to satisfy whether the Appellant complies with the applicable provisions of Section 29A of the IBC. iii) It was found that the Appellant is ineligible to submit resolution plan as per Section 29A. One Mr. Avanish Kumar Singh was a director in two companies, namely, M/s Fortune Chemicals Ltd., the Appellant and M/s Gomtidhara Agro & Dairy Products Pvt. Ltd. (hereinafter called the 'GADPPL'). The GADPPL was incorporated in 28.02.2014 and since then it has not filed its financial statements or annual returns. Thus, Mr. Avanish Kumar Singh becomes disqualified to be appointed a director of any other company as per provisions of Section 164(2) of Companies Act, 2013 for a period of five years with effect from 01.12.2017 (i.e. the date on which GADPPL failed to file financial statements and annual returns for a continuous period of three financial years). iv) Since Mr. Avanish Kumar Singh was disqualified to act as a director under the Companies Act, 2013, and he was a director of M/s Fortune Chemicals Ltd., the Appellant was ineligible under Section 29A of IBC, 2016. v) It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erce & Ors., 2021 SCC Online NCLAT 4 that the commercial wisdom of the CoC in accepting or rejecting a resolution plan is "non-justiciable" and that the scope of judicial intervention is very limited. 7. The Respondent No. 2, the CoC, in their oral and written submissions have stated that State Bank of India is the only financial creditor and sole member of the CoC. The CoC submitted that the Appellant had frequently defaulted in adhering to the timelines. The Appellant was given time till 19.03.2021 to submit requisite documents and information, including eligibility under Section 29A of IBC, 2016, with a rider that in case of non-submission within the time, the plan would stand rejected without any consideration. Since the Appellant did not comply by 19.03.2021, the CoC was informed that the Appellant is only killing time, consequently, in the CoC meeting dated 25.03.2021 it was decided that the Corporate Debtor should be sent to liquidation. The CoC decided that since the proposed plan is non-compliant, and sufficient time has gone by, the only option is to go for liquidation of the Corporate Debtor. Some of the short comings regarding the resolution plan submitted by the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution plan has an account,] or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) 3 [or the guidelines of a financial sector regulator issued under any other law for the time being in force,] and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor: Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to nonperforming asset accounts before submission of resolution plan: [Provided further that nothing in this clause shall apply to a resolution applicant where such applicant is a financial entity and is not a related party to the corporate debtor. Explanation I.- For the purposes of this proviso, the expression "related party" shall not include a financial entity, regulated by a financial sector regulator, if it is a fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor or a court, and such resolution applicant has not otherwise contributed to the preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction;] (h) has executed 2 [a guarantee] in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code 3 [and such guarantee has been invoked by the creditor and remains unpaid in full or part]; (i)[is] subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or (j) has a connected person not eligible under clauses (a) to (i). Explanation [I]. - For the purposes of this clause, the expression "connected person" means- (i) any person who is the promoter or in the management or control of the resolution applicant; or (ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan; or (iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii): [Provided that nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on who is or has been director of the company which has not filed financial statements and annual returns for any continuous period of three years shall be eligible to be reappointed as a director of the company or appointed as a director in any other company for the period of five years from the date on which the said company continuously failed to file accounts of three years. 11. The default under Section 164(2) had occurred on 01.12.2017, the date on which the GADPPL failed to file financial statements and annual returns for a continuous period of three years. Thus, Mr. Avanish Kumar Singh was ineligible to be a director as per provisions of Section 164(2) of the Companies Act, 2013 and the Appellant company also accordingly was not eligible to be a resolution applicant in terms of provisions of clause (e) of Section 29A of IBC, 2016. Further, it is noticed that the Appellant, after writing repeated reminders to RP, had taken back the EMD amount, and it is only as an afterthought, after nearly six months, that the Interlocutory Application was filed for consideration of the resolution plan. This clearly appears to be an attempt to delay the process of CIRP/liquidation. The CoC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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