Ca Dhaval Jitendrakumar Mistry vs M/S Timbor Furnitech Private Limited ...

CA Dhaval Jitendrakumar Mistry ....Appellant Vs. Timbor Furnitech Pvt. Ltd. ...Respondent For Appellant Mr. Abhijeet Surha, Sr. Advocate with Mr. Atul Sharma, Mr. Aditya Shukla, Advocates. For Respondent Mr. Shwanshu Kumar, Ms. Aditi Sharma, Advocates.

ORDER

(Hybrid Mode)

15.02.2024: Heard Learned Counsel for the Appellant as well as Counsel

appearing for the Successful Resolution Applicant.

2. This Appeal has been filed against the order dated 02.11.2023 passed

by the Adjudicating Authority by which IA No.733 of 2022 filed by the

Resolution Professional seeking approval of the plan has been rejected.

Adjudicating Authority in paragraph 5 of the impugned order made following

observations:-

"5. We have heard the Learned Counsels and perused the material available on record. The Resolution Plan does not address the cash flows and value of the Assets enumerated and the Operational Debt claims received from Statutory Authorities. The valuation report (only a summary is submitted) of the assets is not satisfactory. The Resolution Plan presupposes 2

approval and ignores the claim that has been received from the Income Tax Department of dues to be paid. It also proposes to pay only Rs 1000 to employees in 90 days after the approval of the Plan. The Resolution Plan is rejected as it does not satisfy the provisions of Section 31 (2) of IBC 2016 and Regulations 36 of the Act of the Code."

3. We, while hearing the Appeal on 09.01.2024, passed following order:-

"09.01.2024: Issue notice. Learned counsel for the SRA accepts notice. He prays for and is allowed two weeks' time to file Reply Affidavit. In the Affidavit the Respondent may also indicate details of offer which was submitted subsequently on clarification.

List this Appeal on 15.02.2024."

4. Affidavit has been filed on behalf of the Respondent wherein paragraphs

5 and 6, following statement has been made:-

"5. I state and submit that however, as the Ld. Adjudicating Authority on 07.08.2023 inquired with the Resolution Professional that whether the successful resolution applicant is willing to consider the claim of the Income Tax Department. Thus, even when no claim was filed by the Income Tax Department during the entire CIRP of the corporate debtor, the Resolution Applicant by an e- mail dated 19.08.2023 (Page No. 277 of the Appeal) proposed to pay the statutory dues of the Income Tax Department accordance with the terms of proposal for the Operational Creditor (Statutory Authority) as provided in the Resolution Plan. Accordingly, the answering

Company Appeal (AT) (Insolvency) No. 19 of 2024 3

respondent proposed to pay additional amount of not more than Rs. 1000/- which was as per the payment terms proposed for the Operational Creditor (Statutory Authority) in Clause 1.5 of the Resolution Plan. Thus, it is submitted that even when there was no claim filed by the Income Tax Department and further even the corporate debtor did not have any outstanding tax liability as per its Financial Statement, the answering respondent with bona-fide intention considered the claim of the Income Tax Department as per the terms of the Resolution Plan.

6. I state and submit that the Resolution Plan is in compliance of Section 30(2) of the Code and therefore, the same is required to be approved."

5. The Adjudicating Authority's reason for rejecting the application is

contained in paragraph 5 as extracted above. One of the reasons given by the

Adjudicating Authority is that the claim of Income Tax Department of dues to

be paid has not been proposed.

6. In the facts of the present case, we are of the view that the Resolution

Professional may convene a meeting of the CoC for consideration of the

proposal as contained in paragraphs 5 and 6 of the Affidavit of SRA as

extracted above, as an Addendum to the resolution plan which was approved

by the CoC. The Resolution Professional may place the Addendum for approval

and make a fresh application for approval of the plan along with the

Addendum, if any, in accordance with the law.

Company Appeal (AT) (Insolvency) No. 19 of 2024 4

7. In view of the order above, we set aside the order and dispose of the

appeal with the direction aforesaid. The aforesaid exercise shall be completed

within the period of 30 days and a fresh application be filed before the

Resolution Professional for approval within a week thereafter.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Anjali/nn

Company Appeal (AT) (Insolvency) No. 19 of 2024