Canara Bank vs Subodh Kumar Agarwal & Ors. on 8 April 2021

ORDER

(Virtual Mode) 08.04.2021 Seen Record of Proceedings of this Tribunal dated 06th April, 2021.

2. Subsequently, the Respondent No. 2 has filed hard-copy of Application (Diary No. 26632) along with Annexure A, which is stated to be Revised Resolution Plan. The Application makes a request that matter may be sent to Committee of Creditors (CoC in short) to consider the Revised Resolution Plan which is filed by the Applicant.

3. This Company Appeal (AT) (Ins.) No. 1377 of 2019 was filed by the State Bank of India against Impugned Order dated 07th November, 2019 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench). Impugned Order was passed in CP No. 1790/IBC/NCLT/MB/MAH/2017. Before the Adjudicating Authority there were MA 626/2019 filed by the Resolution

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

Professional seeking liquidation under Section 33 of IBC; MA 517/2019 filed by Canara Bank (Appellant in C.A. (AT) (Ins.) No. 07/2020); MA 716/2019 filed by a CoC Member; MA 989/2019 filed by Promoter of Corporate Debtor; MA 762/2019 filed by Taguda Pte. Ltd. the Unsuccessful Resolution Applicant and MA 857/2019 filed by Employees of the Corporate Debtor. The Corporate Debtor is Ushdev International Ltd. Company Appeal (AT) (Ins.) No. 07/2020 by Canara Bank also is challenging the same impugned Order.

4. The Learned Counsel for the parties before us accept that the CoC had by requisite majority rejected the Resolution Plan which had been earlier submitted by Respondent No. 2-Taguda Pte. Ltd. (Taguda in short) and the Resolution Professional had moved the Adjudicating Authority for liquidation of the Corporate Debtor filing Application under Section 33 of IBC. Record Shows the Adjudicating Authority however went into various details and Impugned Order in Paragraph 41 onwards recorded reasons why although the CoC rejected the Resolution Plan, the Adjudicating Authority was accepting the Resolution Plan submitted by Respondent No. 2.

5. It is stated by Learned Counsel for the Appellants that when CoC had taken a commercial decision rejecting Resolution Plan Adjudicating Authority could not have substituted it by its own decision to accept the Resolution Plan.

6. It is stated that during pendency of the Appeal there have been developments and the Respondent No. 2-Taguda who was unsuccessful before the CoC earlier has materially revised the offer in Revised Resolution Plan. The Affidavit filed by Assistant General Manager of State Bank of India shows and it

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

is argued by Sr. Advocate for State Bank of India that majority of Members of CoC are in favour of considering Revised Resolution Plan. The Affidavit filed is in C.A. (AT) (Ins.) No. 1377 of 2019, (Diary No. 26360) and the relevant part reads as under:

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

7. The Application which is referred in Paragraph 4 it is stated was earlier filed electronically but now hard-copy has been filed as Diary No. 26632.

8. The Learned Sr. Counsel for ICICI Bank who has filed Intervention Application Diary No. 16612 submits that ICICI Bank has certain reservations with regard to the part of revised resolution plan. It is stated that the ICICI Bank has corporate guarantee in its favour from one Ushdev NG Tech Ltd. which is tried to be assigned to the Resolution Applicant which according to the counsel is not permissible in law. The Learned Counsel states that the Appeal also raises this ground. According to us the statute is designed to be workable . The contentions are left open for consideration after CoC considers Revised Resolution Plan, and takes a decision.

9. Considering the Impugned Order which was passed and the law as it stands inter alia with regard to Commercial Wisdom of CoC, if the Appeals are allowed, and impugned Order is set aside the consequence would be liquidation. In such scenario, considering the Aims and Objects of IBC as they are, there is no harm if we send back the matter to CoC to consider the Revised Resolution Plan as has been filed and give some time for the same. It is settled law that liquidation should be last resort and if resolution is possible, every effort should be made for the same.

10. We may not be taken as expressing any opinion on the merits of the matter. We keep all contentions open. We find that the Revised Resolution Plan as has now been submitted should be sent to CoC. The CoC can consider the

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

Resolution Plan and negotiate with the Respondent No. 2 and take commercial decision in the best interest of the Corporate Debtor to find Resolution if possible.

For the above reasons, both the Appeals are allowed. Impugned Order is quashed and set aside. We remit back the matter to the CoC to consider the Revised Resolution Plan as has been filed with Diary No. 26632. It is stated that the Resolution Professional has been managing the Corporate Debtor in view of the Order dated 29th November, 2019 passed by this Tribunal in Company Appeal (AT) (Ins.) No. 1377 of 2019. The Resolution Professional is directed to call CoC meeting urgently and immediately place the Revised Resolution Plan as has been tendered in this Tribunal for the consideration of CoC.

11. We grant period of six weeks from today for completing the process which time will be considered as extended CIRP Period. During this time the CoC to consider the Revised Resolution Plan and take decision on the Revised Resolution Plan. The Resolution Professional will then take further steps depending on whether CoC accepts the Revised Resolution Plan (with or without modifications) or rejects the same.

12. If the Revised Resolution Plan is rejected the MA 626/2019 filed by the Resolution Professional under Section 33 of IBC would stand revived and Resolution Professional will move Adjudicating Authority for Orders regarding Liquidation and the Adjudicating Authority would be at liberty to pass orders as per law, of liquidation. If the Resolution Plan is approved, with or without modifications, the Adjudicating Authority will consider the same on motion by the Resolution Professional for further steps under IBC.

Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020

Both the Appeals are disposed, accordingly. No Order as to costs. [Justice A.I.S. Cheema] Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

Basant B./md