Mapletree Leather Goods Pvt Ltd vs Savan Godiawala & Ors

IN THE MATTER OF: Maple Tree Leather Goods Pvt.Ltd. Applicant/Appellant Vs Savan Godiawala & 7 Ors. ....Respondents Present: For Appellant: Mr. Pankaj Jain, Advocate.

For Respondents: Mr. Vaijayanth Paili, Nitish Kumar, Advocate for Resopondent No. 1

Mr. Parul, Advocate for Respondent No. 2

Mr. V.M. Kannan, Mr. Sanjay Kapoor and Ms. Megha Karnwal, Advocate for Respondent No. 4.

Mr. Sanjay Lodha, Advocate for Respondent No. 8

(Virtual Mode)

M. Venugopal (J)

According to the Learned Counsel for the Applicant / Appellant, the

Appellant / Company has filed the instant Comp. App. (AT)(Ins.) 314/2020

on the file of this Appellate Tribunal, being dissatisfied with the order dated

30.12.2019 passed by the 'Adjudicating Authority' (National Company Law

Tribunal) Bengaluru Bench in I.A. No. 47/2019 in CP(IB)No.

14/BB/2017(filed u/s 33(1) r/w Section 60(5) of the I&B Code, 2016) (filed by

IA NO. 436 OF 2021 in TA No. 91/2021in Company Appeal(AT)(Insolvency) No. 314 of 2020 Page 1|8 the First Respondent / Resolution Professional of 'M/s. Falcon Tyres Limted

c/o Deloitte Touche Tohmatsu India LLP', Mumbai - 400013.

2. The Learned Counsel for the Applicant / Appellant brings to the notice

of this Tribunal that the 'Adjudicating Authority' on 30.12.2019 in I.A. No.

47/2019 in CP(IB)No.14/BB/2017(filed u/s 33(1) r/w Section 60(5) of the

'I&B Code', 2016) filed by the First Respondent / Applicant had passed an

order of Liquidating the M/s Falcon Tyres Limited (Corporate Debtor) as laid

down in Chapter III (Liquidation process) of Part II of the Code and appointed

Shri Shivvadutt Bannanje, 'Insolvency Professional' as Liquidator for the

'Corporate Debtor' etc.

3. It is represented on behalf of the Applicant/Appellant that the

impugned order dated 30.12.2019 passed by Adjudicating Authority on

30.12.2019 in I.A. No. 47/2019 in CP(IB)No.14/BB/2017(filed u/s 33(1) r/w

Section 60(5) of the I&B Code, 2016) was secured by the Resolution

Professional by suppressing the material facts and without providing any

opportunity to the Resolution Applicant to revise its offer for the betterment

of the 'Corporate Debtor' and also its Stakeholders.

4. It comes to be known that based on a company petition which was filed

by the Financial Creditor Viz. Edelweiss Asset Reconstruction Company Ltd.,

CIRP was initiated on 1.5.2018 and that Mr. VijayKumar Iyer was appointed

as the 'Interim Resolution Professional'. Subsequently, resting on the

application filed, the First Respondent was appointed as a Resolution

Professional and through an order dated 19.7.2018 his appointment was

affirmed as a 'Resolution Professional' to act as per the provisions of the Code.

IA NO. 436 OF 2021 in TA No. 91/2021in Company Appeal(AT)(Insolvency) No. 314 of 2020 Page 2|8

5. As against the impugned order dated 30.12.2019 in I.A. No. 47/2019

in CP(IB)No.14/BB/2017(filed u/s 33(1) r/w Section 60(5) of the I&B Code,

2016) the Appellant (the Applicant in IA No. 436/2020) has preferred the

instant Co. Appl. (AT)(Ins.)314/2020 on the file of this Tribunal contending

that the 'Adjudicating Authority' has passed the impugned order by not

applying its judicial mind by simply putting a rubber stamp on the

observations of the 'Committee of Creditors' in a meeting which was

specifically directed by the 'Adjudicating Authority' to reconsider the

'Resolution Plan' so that the 'Corporate Debtor' could be revived.

6. The plea taken by the Applicant / Appellant in the instant Comp. App.

(AT)(Ins.)314/2020 is that the 'Adjudicating Authority' had incorrectly and

without any basis or reason had proceeded to reject the Resolution Plan

furnished by the Appellant and ordered the liquidation of the Corporate

Debtor. Also that the 'Adjudicating Authority' had not provided an

opportunity to the Applicant/Appellant to place its case before it and

considering its proposal made over and above the 'Resolution Plan' submitted

by it.

7. The Learned Counsel for the Applicant / Appellant contends that the

'Adjudicating Authority' had ignored the fact that the stand of the Appellant

was all along bonafide and sincere endeavours were made by the Applicant /

Appellant to revive the 'Corporate Debtor'.

8. It is the version of the Applicant / Appellant that the 'Adjudicating

Authority' had ignored the objective of the 'Í&B' Code. Apart from this, it is

the plea of the Applicant/Appellant that just because the 'Committee of

IA NO. 436 OF 2021 in TA No. 91/2021in Company Appeal(AT)(Insolvency) No. 314 of 2020 Page 3|8 Creditors' which was basically 'Edelweiss Asset Reconstruction Company

Ltd'. had made certain caustic remarks in respect of the 'Resolution Plan',

which were a baseless and a frivolous one, the 'Adjudicating Authority' had

ordered the liquidation of the Corporate Debtor by rejecting the Resolution

Plan of the Appellant.

9. The Learned Counsel for the Applicant/Appellant comes out with a plea

that the finding of the Appellant is an unviable one, since the Appellant had

not provided any 'Performance Bank Guarantee' and the same is a 'Perverse'

one.

10. The Learned Counsel for the Applicant/Appellant brings it to the notice

of this Tribunal, that the status of 1500 Workers are at stake and if the

Company is sold like that in the proposed Auction on 29.9.2021, then, an

irreparable loss/injury/ hardship will be caused to the Applicant/Appellant

and refers to the to the decision of Hon'ble Supreme Court in 'Árcelor Mittal

India Pvt. Ltd. V. Satish Kumar Gupta & Ors., 2019 (2SCC pg. 1).

11. The Applicant / Appellant has projected I.A. No. 436/2021 in Comp.

App.(AT)(Ins.)314/2020 seeking stay of all further proceedings carried on

either by the Adjudicating Authority (National Company Law Tribunal) or by

the Liquidator including the stay of ''E-Auction' to be held on 29.09.2021

between 11.00 a.m. and 3.00 P.M. by the Liquidator in terms of Public Notices.

12. The Learned Counsel for the Applicant/Appellant points that if no stay

order is granted in regard to the 'E-Auction' to be held on 29.09.2021 between

11.00 a.m. and 3.00 P.M., then, the Applicant/Appellant shall suffer an

irreparable loss and injury and its remedy will get frustrated otherwise.

IA NO. 436 OF 2021 in TA No. 91/2021in Company Appeal(AT)(Insolvency) No. 314 of 2020 Page 4|8

13. On behalf of Second Respondent it is represented that in the

decision of Hon'ble Supreme Court in 'Pratap Technocrats (P) Ltd. &

Ors.' V. 'Monitoring Committee of Reliance Infratel Ltd. & Anr.' 2021

SCC online 569 wherein it is observed and held that the ambit of the

Adjudicating Authority is to decide whether the amounts distributed to the

Operational Creditors or in consonance with Section 30(2)(b) of the Code

and there does not lie any independent equity based jurisdiction with the

Adjudicating Authority.

14. On behalf of the Fourth Respondent it is represented that the relief

sought for by the Applicant/Appellant in IA 436/2021 in Company

Appeal(AT)(Insolvency) No. 314 of 2020 is not to be granted, as any stay order

in respect of all further Liquidation proceedings either before the Tribunal or

by the Liquidator(including stay of E-Auction to be held on 29.9.2021) will

amount to granting of final relief of allowing the Appeal filed by the Appellant.

15. Per Contra, it is the contention of the Learned Counsel for the eighth

Respondent/Liquidator that the Applicant / Appellant has not assailed any

of the previous steps towards auction of assets of the Corporate Debtor, which

were undertaken prior to the present attempt towards auction of the same.

Further, the present attempt in filing IA 436/2021 is nothing but an attempt

to scuttle the 'Liquidation Process', contrary to the letter and spirit of the 'I&B'

Code, 2016.

16. The Learned Counsel for the eighth Respondent submits that the

'Resolution Applicant' had not proved its 'Bonafide' towards the Resolution

Plan submitted by it as recorded at paragraph 7 of the impugned order on

IA NO. 436 OF 2021 in TA No. 91/2021in Company Appeal(AT)(Insolvency) No. 314 of 2020 Page 5|8 30.12.2019. Furthermore, resting on numerous offers and contentions made

by the 'Resolution Applicant', the issue of 'Resolution' was again reconsidered

by the 'Committee of Creditors' by calling a meeting of the Financial Creditors

on 25.09.2019 to discuss the revised financial offer submitted by the

Resolution Applicant but it was found that the revised offer was not Rs. 370/-

crores as pleaded by the 'Resolution Applicant' (based on which the order

dated 16.09.2019 was passed) and it was only Rs. 100/- Crores.

17. Besides the above, it comes to be known that there was no change for

the Financial Creditors and no comfort was given to them in regard to the

upfront payment and/or performance Bank Guarantee was not furnished for

obtaining the payment promised by the Resolution Applicant. Under these

circumstances, the order of Liquidation dated 30.12.2019 came to be passed

against the 'Corporate Debtor' by the 'Adjudicating Authority' after dealing

with the facts of the case in detail and assigned reasons thereto.

18. According to the Learned Counsel for the eighth Respondent, the

eighth Respondent filed IA No. 122/2021 before the Adjudicating Authority

claiming extension of Liquidation process by a period of 180 days from

28.4.2021 which was allowed on 7.8.2021. Furthermore, the E-Auction of

the assets belonging to the Corporate Debtor is now slated on 29.9.2021 on

an online portal, where the interested Buyers (including the

Applicant/Appellant) can register bid and receive affirmation of the

acceptance of their bid online.

19. In short, the submission of the Learned Counsel for the Eighth

Respondent is that the Applicant / Appellant is desirous of participating in

IA NO. 436 OF 2021 in TA No. 91/2021in Company Appeal(AT)(Insolvency) No. 314 of 2020 Page 6|8 the E-Auction he may submit his 'Bid' to the eighth Respondent which shall

be subject to the terms and conditions of the sale, as mentioned in the

complete 'E-Auction' process document.

20. The Learned Counsel for the eighth Respondent refers to the judgement

of Hon'ble Supreme Court in 'K.Sashidhar' V. 'Indian Overseas Bank &

Ors.' (Vide Civil Appeal No. 10673/2018) for the proposition that

'Commercial Wisdom' of the 'Committee of Creditors' is 'Paramount and

Supreme'.

21. The Learned Counsel for the Eighth Respondent refers to the

decision of Hon'ble Supreme Court in 'Arcelor Mittal India Pvt. Ltd.' V.

'Satish Kr. Gupta', reported in 2019 2SCC p.1) wherein at paragraph

77 it is observed that "However, it must not be forgotten that a Resolution

Professional is only to examine and confirm' that each Resolution Plan

confirms to what is provided by Section 30(2)".

22. Also, in the aforesaid decision at paragraph 47 it is observed that

'these decisions have laid down that the jurisdiction of the Adjudicating

Authority and the Appellate Authority cannot extend into entering upon

merits of a business decision made by a requisite majority of the CoC in its

'Commercial Wisdom' nor is there a residual equity based jurisdiction in the

Adjudicating Authority or the Appellate Authority to interfere in this decision,

so long as it is otherwise in conformity with the provisions of the I&B Code

and the Regulations under the enactment".

23. On a careful consideration of respective contentions, this Tribunal,

taking note of the fact that the instant Company Appeal(AT)(Insolvency) No. IA NO. 436 OF 2021 in TA No. 91/2021in Company Appeal(AT)(Insolvency) No. 314 of 2020 Page 7|8 314 of 2020 is pending on the file of this Tribunal, keeping in mind that the

Liquidation Order is dated 31.12.2019, and also considering the primordial

fact that the Eighth Respondent had taken steps based on the 'Liquidation'

Order dated 31.12.2019 comes to a resultant conclusion that (i) the 'Prima

Facie' (ii) the 'Balance' of convenience are not in favour of the grant of interim

relief of stay of all further proceedings carried on by either the NCLT or by the

Liquidator(including stay of E-Auction to be held on 29.9.2021 between 11.00

a.m. and 3.00 P.M. by the Liquidator in terms of Public Notices as per Public

Notices (as prayed for in IA 436/2021 in TA No. 91/2021 in Comp.

App.(AT)(Ins.) No. 314 of 2020) and viewed in that perspective dismisses the

I.A. No. 436/2021 filed by the Applicant/Appellant, to secure the ends of

justice.

In fine I.A. No. 436/2021 in TA No. 91/2021 in Comp. App.(AT)(Ins.) No.

314 of 2020) 314 of 2020 is dismissed. No Costs.

[Justice M. Venugopal] Acting Chairperson

(Kanthi Narahari) Member(Technical)

28.09.2021

Shashi

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