Indereshwar Singh Paul vs Mohit Chawla And Ors

Indereshwar Singh Paul ...Appellant

Versus

Mohit Chawla & Ors. ...Respondents

Present: For Appellant: Mr. Aalok Jagga, Mr. APS Maddan, Ms. Pallavi Singh, Advocates. For Respondents: Mr. Krishnendu Datta, Sr. Advocate with Mr. Ashwini Sharma, Ms. Roopali Lakhotri, Mr. Ravi Sehgal, Mr. Rajat Sinha, Mr. Asav Rajan, Ms. Charu Trivedi, Mr. Arvind Nagar, Mr. Mayank Biyani, Advocates for R-1. Mr. V. Seshagiri with Ms. Prachi Jain, Advocates for R-2 (Bank of India). Mr. Harshit Agarwla and Mr. Asheesh Gupta, Advocates for R-3.

ORDER

(Hybrid Mode)

23.02.2024: Heard learned counsel for the Appellant. This appeal has

been filed against order dated 22.12.2023 passed by the Adjudicating

Authority by which order the application being I.A. No.1748 of 2023 filed by

the Appellant - Promoter/Director has been decided.

2. In the CIRP of the Corporate Debtor, Form G was issued thrice.

Resolution Plans were submitted which came for consideration before the

CoC. Appellant before us were the Promoter/Director, they did not file any

resolution plan in the CIRP. On 14.03.2023 they sent a proposal to the Bank

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of India offering to make payment of Rs.64.5 crores which letter was in form

of OTS forwarded to the Bank. After the said OTS there has been

correspondence of the Appellant with the Bank with regard to the said OTS.

In the CoC meeting dated 29.06.2023, the Promoter who was present in the

committee meeting made a request the fresh Form G be issued so that

management may give Resolution Plan. The said request was considered as

Item No.7, where the CoC informed that the concerned Financial Creditors at

their head office has to take a final decision on the Resolution Plan and OTS

proposal and they are still awaiting the final decision of their head office.

Subsequently, the meeting of the CoC was held on 27.07.2023, on which date

three Resolution Plans were considered and decision was taken to file an

application for extension of CIRP period and decision was also taken to vote

on three Agenda Items, as noticed in the minutes. In pursuance of the voting,

one of the Resolution Plan was approved and the application has been field

by the Resolution Professional for approval of the Resolution Plan. The

Appellant - Promoter/Director filed an I.A. before the Adjudicating Authority

being I.A. No.1748 of 2023, where he made following prayers:

"i. The applicant Erstwhile Promoter Director of the corporate debtor, i.e., Drish Shoes Limited-MSME, which was declared as a Non-Performing Asset by the bank on 09.11.2021. Subsequently, M/s. Reem Tanners Private Limited, one of the suppliers of the corporate debtor filed an application under Section 9 and CIRP was initiated in the case of the corporate debtor on 12.05.2022.

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ii. The Resolution Professional completed the procedures under the CIRP process and in the 19th meeting dated 27.07.2023, the proposal of Resolution Plan of M/s Saboo Tor Private Limited was approved by the sole member of the CoC, i.e., Bank of India.

iii. It is stated by the applicant that he had intended to submit an application under Section 12A of the IBC. In this connection, a letter to the Assistant General Manager, Bank of India, Chandigarh Branch dated 05.07.2022 (Annexure A4) has been referred.

iv. Furthermore, a reference has been made to the reply of respondent No. 2-bank dated 27.07.2022. It is further stated that the applicant carried on the negotiations with the bank and raised its offer on 27.03.2023 INR 67.50 Crores under OTS as reflected by the applicant. It is stated that the proposal of OTS was Rs.11 Crores more than that of the H-1 bidder which was placed before the CoC member in its 18th meeting held on 29.06.2023.

v. Subsequently, in its 19th meeting dated 27.07.2023, the CoC approved the Resolution Plan. In this connection, the applicant has relied upon the decision of the Hon'ble NCLAT in the matter of Saravana Global Holdings Ltd. & Anr. vs. Bafna Pharmaceuticals Ltd. & Ors., CP CA (AT) (INS) No. 203 of 2019 dated 04.07.2019 and the judgment passed in the matter of PLBB Products Pvt. Ltd. vs Piyush Periwal & Ors., Company Appeal (AT) (Insolvency) No. 160 of 2021 & IA No. 1117 of 2021.

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vi. It is submitted by the applicant that the conduct of the Resolution Professional is not in accordance with the provisions of law as the applicant was offering more value than the H-1 bidder and the Resolution Professional who have published for the invitation of Expression of Interest again in view of the communication received by the applicant.

vii. It is further stated that as the bank did not take a decision on the OTS proposal given by the applicant, it was prevented from submitting its own Resolution Plan beforehand and the same should, therefore, be considered by the CoC.

3. The Adjudicating Authority by the impugned order has dismissed the

application.

4. Learned counsel for the Appellant Mr. Aalok Jagga submits that when

the OTS proposal submitted by the Appellant was under consideration and

was not yet finalised, in meeting dated 27.07.2023, there was no occasion to

approve any Resolution Plan. He further submits that after submission of

OTS proposal dated 14.03.2023, there has been several correspondences

between the Appellant and the Bank and when the proposal was under active

consideration, no Resolution Plan ought to have been approved without

taking into consideration the OTS submitted by the Appellant.

5. Learned counsel for the Resolution Professional submits that the

Appellant was well aware that the his OTS has not been accepted and he also

sent an email on 27.07.2023 at 23:48 hrs asking that the upfront amount of

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Rs.1.30 Crores be refunded and on the next day the bank wrote to the

Appellant refunding the amount as well as informing that the Bank has not

approved the OTS.

6. Learned counsel for the Bank also submitted that the Bank did not

approve the OTS due to which reason the refund was asked for by the

Appellant.

7. We have considered the submissions of learned counsel for the parties

and perused the record.

8. The OTS proposal was submitted by the Appellant on

14.03.2023/28.03.2023. We notice Clause (A) and (B) as contained in letter

dated 28.03.2023, which is as follows:

"(A) (i) We make a final and last most offer of a total net sum of Rs. 57.5 crores (Rupees Sixty Seven crores fifty lacs) by way of OTS against sale of all assets of Drish Shoes Ltd. land, buildings, all machines and all stocks.

(ii) In comparison. the highest offer as H1 from CIRP process is Rs. 56.42 crores.

(B) (i) We have somehow managed to garner with great difficulty through our own sources, friends and relations a total up front sum of Rs. 1.30 crores (Rupees One crore thirty lacs). Within two days of your giving us the No lien Account details we would deposit Rs. 1.3 crore into the 'No lien Account

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(ii) This amount, whether from us or friends and relations would be put into a no-lien account by the bank to be adjusted against OTS amount if our request is accepted, or returned from the no-lien account if our request is not accepted. Please confirm your understanding of the same.

(iv) Within one month of NCLT approval under IBC Section 12-A and your giving us an approval letter that provides as per our mutual discussions and requests, we would further deposit Rs. 6.75 crores being 10% of the OTS offer.

(v) Within further two months, Le total 3 months of NCLT approval under Section 12-A and your approval letter, we would deposit additional amount of Rs. 35.0 crores. We would try our best to increase this amount.

(v) We would pay interest on the remaining Rs. 24.45 crores or whatever amount is left after 3 months of 12-

A approval date. We have made a separate provision for this interest payment so that our NPV remains at Rs. 67.50 Cr."

9. The emphasis of learned counsel of the Appellant is that since OTS

proposal was under consideration and no decision was communicated by the

Bank till 27.07.2023, when CoC proceeded to vote for Resolution Plan, the

entire process is vitiated. We have looked in to the proposal dated 28.03.2023

on which reliance has been placed and the Appellant in this Appeal has

prayed for following reliefs:

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"a. Allow the present appeal and set aside the impugned order dated 22.12.2023 as passed by the Hon'ble Adjudicating Authority;

b. Set aside 19th CoC proceedings dated 27.07.2023 approving the resolution plan and / or applicant be also allowed to submit his Resolution Plan under the current CIRP process for consideration of COC as applicant is suspended director of MSME-CD and condone delay in submitting the same due to pendency of OTS proposal of the applicant offering about Rs. 11 Crore more than the Final Plan received;

or

c. Direct the Respondent No. 1 to publish fresh Form G for inviting competitive bids for the revival of the Corporate Debtor in order to maximise the value of the Corporate Debtor, and

d. Grant ad-interim injunction on Ld. NCLT's adjudication of IA No. 1734 of 2023 filed for approval of Resolution Plan;

e. Pass any other order in the facts and circumstances of the present appeal and in the interest of the Justice."

10. In so far as the prayer of the Appellant to publish fresh Form G, the

said request was considered in the CoC meeting and was not acceded to, Form

G having issued thrice. In so far as OTS proposal dated 28.03.2023, the

clauses, as extracted above, clearly indicated that the proposal of the

Appellant was to pay Rs.67.50 Crores against sale of all assets of Corporate

Debtor; land, buildings, all machines and all stocks. The proposal of the

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Appellant to sell all land, buildings, and machines of the Corporate Debtor

cannot be treated as any proposal by the Promoter of OTS. The assets which

are under CIRP are assets of the Corporate Debtor that cannot be touched by

the Promoter/Director to include in any OTS proposal. We are of the view

that proposal submitted by the Appellant was not an OTS proposal.

11. We do not find any ground to interfere with the impugned order by

which the application filed by the Appellant has been dismissed. The mere

fact that there has been correspondence of the Appellant with the Bank with

regard to consideration of OTS proposal does not make the proposal valid, as

noticed above. We, thus, are of the view that there is no ground to interfere

with the impugned order. Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No.374 of 2024