National Company Law Appellate Tribunal, New Delhi: A Division Bench comprising of Ashok Bhushan*, J. and Barun Mitra (Technical Member) directed to keep the order of the Adjudicating Authority directing the liquidation of the Corporate Debtor in abeyance and provide one last effort for revival of Corporate Debtor. The Tribunal further directed that on the failure of same, the liquidation order shall stand revived.
In the instant matter, the Adjudicating Authority vide order dated 04-02-2020 initiated CIRP process against the Corporate Debtor, Ajanta Offset packaging Limited. The Resolution Professional issued Form G calling for Expression of Interest (EoI) from interested Resolution Applicants and in response two EOIs were submitted. The CoC unanimously passed a resolution for liquidation of the Corporate Debtor.
The Resolution Professional filed an application before the Adjudicating Authority praying for liquidation. The appellant, Suspended Directors of the Corporate Debtor submitted before the Adjudicating Authority that they are interested in submitting Resolution Plan for revival of the Corporate Debtor and filed an application seeking direction that the Resolution Plan be placed before the CoC for consideration. The Adjudicating Authority vide order dated 28-09-2021, allowed the appellant’s application and extended the period of CIRP for 150 days (about 5 months).
The Appellants submitted a Resolution Plan and the CoC decided to consider the Resolution Plan submitted by the Promoters. The Resolution Plan was approved by the e-voting with the requisite majority. The Appellant submitted the Performance guarantee, and the Resolution Professional filed an application for seeking approval of Resolution Plan before the Adjudicating Authority.
The Adjudicating Authority vide order dated 17-08-2022, set aside the approval of Resolution Plan and directed the liquidation of the Corporate Debtor. The Adjudicating Authority held that the Appellants’ Resolution Plan is not in compliance with the Code and CIRP Regulations. The Adjudicating Authority observed that the appellants were not eligible to submit the Resolution Plan under S. 29A read with S. 240A since the date when application for submitting EOI was issued, the Appellants were not eligible. Moreover, the registration of the Corporate Debtor cannot operate retrospectively making them eligible.
Aggrieved by the impugned order dated 17-08-2022 passed by the Adjudicating Authority, the appellant preferred the present appeal challenging the same before the Tribunal.
Contention of the Parties
The appellant contended that after registration of the Corporate Debtor as MSME on 30.08.2021, the appellant has become eligible to submit a Resolution Plan by virtue of S. 240A IBC. The appellant stated that no objection was filed by any of the parties to the approval of the Resolution Plan. The appellant further contended that the approval of the Resolution Plan was a decision taken in the commercial wisdom of the CoC and the same should not be interfered with.
The respondents contended that the appellant was not eligible to submit the Resolution Plan since his name was not included in the list of Prospective Resolution Applicants which was published by the Resolution Professional after issuance of Form G and MSME registration of the Corporate Debtor shall not give any benefit to the Appellant.
The Tribunal observed that the Adjudicating Authority extended the CIRP period and directed the Resolution Professional to call a lender meeting for taking appropriate decision, but the CoC only decided to consider the Resolution Plan submitted by the appellants and did not issue any fresh Form G and invite any other Resolution Applicants.
The Tribunal observed that though the Adjudicating Authority directed for the consideration of appellant’s Resolution Plan but at the same time the CoC had to consider other Resolution Applicants also and ought to have taken steps in accordance with provisions of CIRP Regulations. The Tribunal further observed that the order dated 28.09.2021 was not followed in its true spirit resulting in non-approval of Resolution Plan approved by the CoC on 30.12.2021.
The Tribunal observed that as the liquidation being the last resort for the parties, a time-bound opportunity can be provided for Resolution Professional and the CoC opportunity to make one more effort to revive the Corporate Debtor.
Upholding the impugned order of the Adjudicating Authority, The Tribunal directed to keep the impugned order in abeyance and provide last opportunity for revival of Corporate Debtor and if no Resolution Plan is approved by the CoC within the 90 days (about 3 months) from the date of order, the Corporate Debtor shall be put into liquidation. The Tribunal further directed the Resolution Professional to file an application before the Adjudicating Authority within a period of two weeks in case the CoC approves a Resolution Plan.
[Govind Prasad Todi v. Satya Narayan Guddeti, 2023 SCC OnLine NCLAT 65, decided on 14-02-2023]
*Judgment by Justice Ashok Bhushan.
Advocates who appeared in this case :
Ms. Aditi Sharma and Mr. Karan Valecha, Counsel for the Appellants;
Mr. Vaibhav Gaggar, Mr. Dhruv Mwehta, Mr. Mrityunjay M., Mr. Shashwat Anand and Mr. Dev Karn, Counsel for the Respondent No. 1;
Ms. Richa Sandilya and Ms. Nita Sharma, Counsel for the Respondent No. 2 to 5;
Mr. Abhishek Parmar, Counsel for the Resolution Professional.
*Ritu Singh, Editorial Assistant has put this report together.