AJAY GUPTA versus PRAMOD KUMAR SHARMA on 25 February 2022

196

SUPREME COURT REPORTS

[2022] 2 S.C.R.

A

AJAY GUPTA

v.

PRAMOD KUMAR SHARMA

(Civil Appeal No. 1385 of 2022)

B

FEBRUARY 25, 2022

[DINESH MAHESHWARI AND VIKRAM NATH, JJ]

Insolvency and Bankruptcy Code, 2016: s. 62 – Appellantwas one of the resolution applicants in the corporate insolvencyresolution processconcerning the corporate debtor – DeliberationCtook place between the appellant, the other applicant and theCommittee of Creditors (CoC) over the resolution plan submittedand as a result of which the appellant and the other applicant wereasked to remove defects from the resolution plan so submitted –Appellant proposed for modification/amendment of the resolutionDplan but the same was declined by the resolution professional –Aggrieved by it, the appellant approached the AdjudicatoryAuthority, which allowed the appellant’s prayer of modification ofresolution plan but at the same time, to provide level playing field,allowed the other resolution applicant also to make modification inits resolution plan which was submitted to the CoC – Pursuant toEthe order of the Adjudicating Authority, the CoC considered theresolutions plans of appellant and the other resolution applicantand approved the resolution plan of the other resolution applicant– Appellant questioned the order of the Adjudicating Authority beforethe Appellate Tribunal on the ground that since the resolution plan ofFthe appellant was known to everyone hence no opportunity shouldhave been given to the resolution applicant for modification –Appellate Tribunal dismissed the appeal – On appeal, held: Themodification was permitted at the request of the appellant himselfhence Adjudicating Atuhority, so as to provide level playing field,was justified for granting permission to other resolution applicant toGplace its modification for consideration of CoC – Since the appellanthad chosen to disclose the terms of its resolution plan before theAdjudicating Authority, there was no fault on the part of the resolutionprofessional or CoC or other resolution applicant – The view takenby the Adjudicating Authority as also by the Appellate TribunalHappeared to be reasonable and sound, calling for no interference.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1385of 2022.

From the Judgment and Order dated 13.01.2022 of the NationalCompany Law Appellate Tribunal, New Delhi in Company Appeal (AT)(Insolvency) No.35 of 2022.

Nakul Dewan, Sidhartha Dave, Siddharth Bhatnagar, Sr. Advs.,Shikhar Khare, M/s Kings and Alliance LLP, Nilotpal Shyam, GauravSrivastava, Sudhanshu Prakash, Mrs. Babita Jain, Ms. Aarushi Singh,Aditya Singh, Mahesh Thakur, Ms. Shailija Das, Abhishek Kumar,Ashutosh Kumar Sharma, Pracheta Kar, Aditya Sidhra, Nadeem Afroz,Advs. for the appearing parties.

The Order of the Court was passed by

DINESH MAHESHWARI, J.

Having heard learned senior counsel for the appellant at sufficientlength and having perused the material placed on record, we do not feelpersuaded to entertain this appeal under Section 62 of Insolvency andBankruptcy Code, 2016[1] by one of the resolution applicants[2] in thecorporate insolvency resolution process[3] concerning the corporate debtor-B.B. Foods Pvt. Ltd.

The appellant seeks to question the judgment and order dated13.01.2022 as passed by the National Company Law Appellate Tribunal,Principal Bench, New Delhi[4] in Company Appeal (AT) Insolvency No.35 of 2022 whereby, the Appellate Tribunal declined to interfere in theorder dated 13.12.2021 passed in I.A. No. 367 of 2021 in CP No.(IB)349/ALD/2018 by the National Company Law Tribunal, Allahabad Bench,Allahabad[5] by which, the Tribunal granted the prayer of the appellant toamend his resolution plan dated 22.10.2021 but, at the same time, alsoallowed the other resolution applicant to place any modification in theirresolution plan before the Committee of Creditors[6].

1 Hereinafter also referred to as “the Code’.

1 Hereinafter also referred to as “the Code’.

2 A consortium led by the appellant (comprising of a private limited company and theappellant himself) has been the resolution applicant.

3 ‘CIRP’, for short.

4 Hereinafter also referred to as ‘the NCLAT’ or ‘the Appellate Tribunal’.

5 Hereinafter also referred to as ‘the NCLT’ or ‘the Adjudicating Authority’.

6 ‘CoC’, for short.

A

B

C

D

EF

G

H

AShorn of unnecessary details, the relevant background aspectsfor the present purpose are that as regards the CIRP in question, therehad been two resolution applicants, the consortium led by appellant beingone of them. It appears that there had been deliberations in the CoCover the resolution plans submitted by the appellant and other resolutionapplicant; and in the minutes of eighth meeting dated 02.11.2021, theBCoC indicated its deliberations/observations concerning the two resolutionplans in the following terms:

A

“At this stage, the representative of Resolution Applicant, namely,Sirius Foods Private Limited was invited to have detaileddeliberations on the Resolution Plan submitted by Sirius FoodsPrivate Limited and during the course of deliberations, defects/technical difficulty was pointed out and thereafter, representativeof Resolution Applicant, namely, Sirius Foods Private Limitedassured that all defects would be removed to the extent possibleand to the satisfaction of the COC and Resolution Professional.No further objections/issues were raised by any other participantof the meeting and accordingly, representative of ResolutionApplicant, namely, Sirius Foods Private Limited left the meetingthereafter.

C

D

At this stage, the representative of Resolution Applicant, namely,Econsortium of Prabhat Warehouse and Cold Storage Limited andMr. Ajay Gupta was invited to have detailed deliberations on theResolution Plan submitted by, consortium of Prabhat Warehouseand Cold Storage Limited & Mr. Ajay Gupta and during the courseof deliberations, defects/technical difficulty were pointed out andthereafter, representative of Resolution Applicant, namely,Fconsortium of Prabhat Warehouse and Cold Storage Limited andMr. Ajay Gupta assured that all defects will be removed to theextent possible and to the satisfaction of the COC and ResolutionProfessional and left the meeting room. No further objections/issues were raised by any other participant of the meeting andGaccordingly, representative of the said Resolution Applicant, leftthe meeting thereafter.”

After the aforesaid deliberations/observations of CoC, the appellantsent a communication dated 18.11.2021 and annexed therewith his affidavitdated 17.11.2021 in the so-called ‘clarification in respect of the resolutionHplan’. The contents of this affidavit dated 17.11.2021 read as under: - “AFFIDAVIT

I, Ajay Gupta, a director in Prabhat Warehouse Cold StoragePrivate Limited and on behalf of Ajay Gupta individual, whichform a consortium and being the lead member of the saidconsortium, do hereby affirm as follows:

1. The consortium of Prabhat Warehouse Cold Storage PrivateLimited and Ajay Gupta have submitted a resolution plan dated27[th] September, 2021 which was further amended videResolution Plan dated 22[nd] October, 2021. In the amendedresolution plan, payment schedule and the resolution of thecorporate debtor has been mentioned, which we would behonouring at the earliest.

2. That while submitting the amended resolution plan, I was undercertain apprehensions regarding litigations being involved in theprocess of resolution of the corporate debtor, but now after seekinglegal advice on behalf of the consortium, state that the amount ofpayment to be made under the resolution plan of Rs. 16.10 croreswill remain the same and is not being modified, however I’mputting forth my gesture of making the payment upfront, if thebank allows the same within 90 days of the receipt of the order ofHon’ble NCLT approving our resolution plan, as I would be takingthe possession of the corporate debtor on the payment of upfrontamount of resolution amount i.e. Rs.16.10 crore.

3. Our payment of upfront amount under the resolution plan is inno way going to modify the plan and I am submitting this affidavitso to clear my point.”

It appears that the appellant’s proposal for such modification/amendment of the resolution plan was declined by the resolutionprofessional. Thereupon, the appellant approached the AdjudicatingAuthority by filing I.A. No. 367 of 21 in C.P. No. (IB) 349/ALD/2018.The Adjudicating Authority took note of the submissions made on behalfof the appellant and passed the order dated 13.12.2021 granting theprayer of the appellant but, at the same time, correspondingly allowedthe other resolution applicant to place any modification in their submittedresolution plan before CoC so as to provide level playing field. Theorder dated 13.12.2021 so passed by the Adjudicating Authority readsas under:- A

B

C

D

E

F

G

H

A“I.A. No. 367/2021

Ld. Counsel for the applicant present. Ld. Counsel for theCoC present. Ld. Counsel for the RP present. Ld. Senior Counselfor the other Resolution Applicant whose plan is also beingconsidered by the CoC present.

B

This is an application filed by one of the Resolution Applicantseeking to amend the final Resolution Plan dated 22.10.2021submitted by the applicant to make the following amendments:-(a) To uncaps the CIRP costs on conditions statedtherein; C

(b) To reduce term of the plan from 180 days to 90 days.

At this point of time, we are conscious of the fact that theCIRP period will come to end on 06.01.2022 and a decision on theresolution plans will have to be taken first by the CoC and,thereafter by this Adjudicating Authority.

D

Therefore, the ends of justice will be met if we direct theapplicant herein to place the affidavits at Page Nos. 290 to 298alongwith the covering letter addressed to the sole member of theCoC for consideration. Since we do not wish to disturb level playingfield, the other resolution applicants whose plans are also beingconsidered will also be permitted to place any modification in theirsubmitted resolution plan before the CoC for its consideration.Such modifications shall be communicated to the CoC, no laterthan 48 hours from now.

E

Accordingly, IA No. 367/2021 is disposed of.”

F

Thereafter, the resolution plans were considered by the CoC on21/22.12.2021 and the plan of the other resolution applicant was approved.

The appellant, on the other hand, attempted to question the saidorder dated 13.12.2021 before the Appellate Tribunal. The AppellateGTribunal took note of the grievance of the appellant that its resolutionplan came to be known to everyone and hence, no opportunity shouldhave been given to the others to modify.

The Appellate Tribunal found no substance in those submissionswhile taking the view that the Adjudicating Authority had passed theHimpugned order so as to maintain the level playing field. The Appellate AJAY GUPTA v. PRAMOD KUMAR SHARMA[DINESH MAHESHWARI, J.]

Tribunal also took note of the fact that the resolution plans had alreadybeen considered by CoC on 21.12.2021.

We may also indicate that earlier, the said order dated 13.01.2022as passed by the Appellate Tribunal was sought to be questioned beforeus by the erstwhile director of the corporate debtor but, we declined toaccede locus to the said appellant and hence, the said appeal [@ Dy.No. 2729 of 2022] was dismissed, while rejecting the application seekingpermission to file appeal, by our order dated 07.02.2022.

Now, the said order dated 13.01.2022 of the Appellate Tribunal issought to be questioned by the unsuccessful resolution applicant.

The learned senior counsel has painstakingly taken us through therelevant contents of the Request for Resolution Plan[7] as issued by theResolution Professional as also the minutes of the meeting of CoC andthe affidavit filed by the appellant. Learned counsel would strenuouslycontend that so far as the appellant is concerned, it had not been a caseof modification of the resolution plan because modification as such wasnot even permissible under the conditions of RFRP; and the submissionsof the appellant by way of the affidavit dated 17.11.2021 had only beento meet with the requirements of the COC, as reflected in the minutes ofthe meeting dated 02.11.2021 and for such a proposition, there was nojustification in granting any liberty to the other resolution applicant tomodify its resolution plan. Learned senior counsel has also contendedthat appellant had been rather prejudiced in the matter for the reasonthat the terms of its resolution plan became known to the other resolutionapplicant when the matter was examined by the Adjudicating Authoritywhile passing order dated 13.12.2021.

We do not find the submissions aforesaid making out a case forinterference. This is for the simple reason that on a perusal of the orderdated 13.12.2021, this much is clear that certain key features/stipulationsof the resolution plan were sought to be amended by the appellant.Whether it was done in response to the requirement of the CoC orotherwise, the fact of the matter remains that there was going to bemodification of the relevant terms of the resolution plan of the appellant.When that was being permitted at the request of the appellant himself,we cannot find fault in the Adjudicating Authority having passed an orderso as to balance the position of the respective parties and to provide 7 ‘RFRP’, for short.

A

B

C

D

E

F

G

Alevel playing field by granting corresponding permission to the otherresolution applicant to place its modification for consideration of CoC.

So far as affidavit dated 17.11.2021 is concerned, though theappellant stated in paragraph 3 thereof that the payment of upfront amountunder the resolution plan was in no way going to modify the plan but,Bthat had only been an expression of the understanding of the appellantabout the legal effect of the propositions put forward by him, whichincluded the modification of the term of plan from 180 days to 90 days.Such a proposition could not have been treated as formal or innocuousor of no material bearing.

CSo far as the factor relating to divulging of the contents of theplan is concerned, the same had been of the making of the appellanthimself. If the appellant had chosen to divulge/disclose the terms of itsresolution plan before the Adjudicating Authority, there had not been anyfault on the part of the resolution professional or the CoC or the otherresolution applicant.D

Thus, the view taken by the Adjudicating Authority as also by theAppellate Tribunal appears to be reasonable and sound, calling for nointerference.

Before concluding on the matter, we need to indicate two otherErelevant factors concerning this matter. One is that the other resolutionapplicant, whose resolution plan has been accepted by the Committee ofCreditors, is not before us and has not been impleaded as a partyrespondent in this appeal. Hence, no order prejudicial to the interest ofthe successful resolution applicant could be passed in this appeal.Secondly, the matter would nevertheless require further processing beforeFthe Adjudicating Authority; and for that matter, we are informed that theapproval of the Committee of Creditors has already been placed beforethe Adjudicating Authority.

Taking note of all the facts and circumstances of the case, whiledeclining to interfere in this appeal, we leave all the relevant aspects ofGthe matter open for examination by the Adjudicating Authority but, strictlyin accordance with law.