Mr. Amit Sangal Proprietor Of M/S. Nitin ... vs Mr. Kairav Anil Trivedi Resolution ...

Company Appeal (AT) (Ins) No. 916 of 2023 & I.A. No. 1662 of 2024

(Arising out of the Order dated 15.05.2023 passed by the National Company Law Tribunal, Mumbai Bench, Court-II in IA/3525/2022 in CP (IB) 934/MB/2020.)

IN THE MATTER OF:

Mr. Amit Sangal Proprietor of M/s. Nitin Plastic Head/ Registered Office : First Floor, Rana Marke, Meerut Road, Muzaffar Nagar- 251003 (Uttar Pradesh) E-mail: nitinplastics@gmail.com ...Appellant Versus

1. Mr. Kairav Anil Trivedi IRP of M/s. Prince MFG Industries Private Limited (IBBI Registration No. :IBBI/ IPA-002/ IP-N00728/ 2018-2019/12332) Address: 413-414, Sharamjeevan B5, Opp. Lodha, New Cuffee Parade, Wadala (E), Mumbai - 400037 (Maharashtra) E-mail : kairavtrivedi2002@yahoo.com ...Respondent No. 1

2. Canara Bank Ltd. Member of Committee of Creditors of M/s. Prince MFG Industries Private Limited Office Address: Ground Floor, Mittal Tower, "C" Wing, Nariman Point, Mumbai - 400021 (Maharashtra) E-mail: cb2360@canarabank.com ...Respondent No. 2

Present For Appellants: Mr. Anuj Solanki & Mr. Rohit Gaur, Advocates.

For Respondents: Mr. Mohammed Zain Khan for Intervenor/SRA. Mr. Anuj P. Agarwala, for CoC. Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Mr. Prakash Shinde, Ms. Ruchita Jain, Advocates for CoC. Mr. Gaurav Mitra, Mr. Ishan Roy Chowdhury, Advocates for RP.

With

Company Appeal (AT) (Ins) No. 792 of 2023 & I.A No. 2680, 4184, 5214 of 2023, 2203, 2573 of 2024

(Arising out of the Order dated 15.05.2023 passed by the National Company Law Tribunal, Mumbai Bench, Court-II in IA/2977/2022 in CP (IB) 934/MB/2020.)

IN THE MATTER OF:

Mr. Amit Sangal Proprietor of M/s. Nitin Plastic Head/ Registered Office : First Floor, Rana Marke, Meerut Road, Muzaffar Nagar- 251003 (Uttar Pradesh) E-mail: nitinplastics@gmail.com ...Appellant Versus

1. Mr. Kairav Anil Trivedi Resolution Professional of M/s. Prince MFG Industries Private Limited (IBBI Registration No. :IBBI/ IPA-002/ IP-N00728/ 2018-2019/12332) Address: 413-414, Sharamjeevan B5, Opp. Lodha, New Cuffee Parade, Wadala (E), Mumbai - 400037 (Maharashtra) E-mail : kairavtrivedi2002@yahoo.com ...Respondent No. 1

2. M/s Prince MFG Industries Private Limited Through Resolution Professional Registered Address: A-101, 1st Floor, Sunshine plaza Naigaum Cross Road, Dadar (East) Mumbai - 400014 (Maharashtra) E-mail : kadam@princeswr.com; kairavtrivedi2002@yahoo.com ...Respondent No. 2

Page 2 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

3. Committee of Creditors (CoC) Which comprises of :

(a) Canara Bank Ground Floor, Mittal Tower, "C" Wing, Nariman Point, Mumbai - 400021 (Maharashtra) E-mail: cb2360@canarabank.com

(b) Axis Bank 7th Floor, Axis House, C-2, Wadia International Centre, P.B Marg, Worli, Mumbai - 400025 (Maharashtra)

(c) ICICI Bank ICICI Bank Tower, Bandra-Kurla Complex, Mumbai- 400051 E-mail: rupam.gupta@icicibank.com; Saurabh.periwal@icicibank.com; ...Respondent No. 3 Kamleshkumar.chaudhary@icicibank.com

Present For Appellants: Mr. Anuj Solanki & Mr. Rohit Gaur, Advocates.

For Respondents: Mr. Mohammed Zain Khan for Intervenor/SRA. Mr. Krishnendu Datta, Sr. Advocate, Mr. Anuj P. Agarwala, Mr. Akhil Nene, for CoC. Mr. Prakash Shinde, Ms. Ruchita Jain, Advocates for CoC. Mr. Gaurav Mitra & Mr. Ishan Roy Chowdhury, Advocates for RP. With

Company Appeal (AT) (Ins) No. 1034 of 2024

(Arising out of the Order dated 28.03.2024 passed by the National Company Law Tribunal, Mumbai Bench, Court-II in Company Petition No. 04/2023 in CP (IB) 934/MB/2020.)

Page 3 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

IN THE MATTER OF:

Mr. Amit Sangal Proprietor of M/s. Nitin Plastic Head/ Registered Office : First Floor, Rana Marke, Meerut Road, Muzaffar Nagar- 251003 (Uttar Pradesh) E-mail: nitinplastics@gmail.com ...Appellant

Versus

Mr. Kairav Anil Trivedi Resolution Professional/Insolvency Professional (IBBI Registration No. :IBBI/ IPA-002/ IP-N00728/ 2018-2019/12332) Address: 413-414, Sharamjeevan B5, Opp. Lodha, New Cuffee Parade, Wadala (E), Mumbai - 400037 (Maharashtra) E-mail : kairavtrivedi2002@yahoo.com ...Respondent No. 1

Present For Appellants: Mr. Anuj Solanki & Mr. Rohit Gaur, Advocates.

For Respondents: Mr. Gaurav Mitra & Mr. Ishan Roy Chowdhury, Advocates for RP. JUDGEMENT

(20.02.2025)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The first two appeals have been filed under Section 61(1) of the Insolvency

and Bankruptcy Code, 2016 ('Code') by the Appellant i.e., Mr. Amit Sangal,

Proprietor of M/s. Nitin Plastic (the Operational Creditor of the Corporate Debtor

herein), against the Impugned Order dated 15.05.2023 passed by the National

Company Law Tribunal, Mumbai Bench (II) ('Adjudicating Authority') in

IA/3525/2022 and IA/2977/2022 in Company Petition No. (IB) 934(MB)/2020). Page 4 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

2. The first appeal has been filed U/S 61(1) of the Code by the Appellant i.e.,

Mr. Amit Sangal, Proprietor of M/s. Nitin Plastic, the Operational Creditor of the

Corporate Debtor herein, under section 425 of the Companies Act, 2013 and

Section 60(5) of the Code r/w Section 10 and Section 12 of the Contempt of Court

Act, 1971, read with Rules 11 and 34 of the National Company Law Tribunal

Rules, 2016, against the Impugned Order 28.03.2024 passed by the National

Company Law Tribunal, Mumbai Bench (II) ('Adjudicating Authority') in

Contempt Petition No. 04/2023 in Company Petition No. (IB) 934(MB)/2020).

3. Mr. Kairav Anil Trivedi, who is the Interim Resolution Professional (IRP) of

M/s. Prince MFG Industries Private Limited ('Corporate Debtor') is the

Respondent No. 1 in all the three appeals.

Canara Bank who is the one of the Members of CoC of the Corporate Debtor,

is the Respondent No. 2 in Company Appeal (AT) (Ins.) No. 916 of 2023 and

Respondent No. 3(a) in Company Appeal (AT) (Ins.) No. 792 of 2023 .

The Committee of Creditors ('CoC') in Company Appeal (AT) (Ins.) No. 792

of 2023 have been bifurcated into three parts constituting Canara Bank holding

67.36% voting rights as Respondent No. 3(a), Axis Bank Limited holding 18.72%

voting rights as Respondent No. 3(b) and ICICI Bank, 13.92% voting rights as

Respondent No. 3(c), and together they constitute as the Respondent No. 3 herein.

M/s. Prince MFG Industries Private Limited ('Corporate Debtor'), through

its Resolution Professional, is the Respondent No. 2 in Company Appeal (AT)

(Ins.) No. 792 of 2023.

Page 5 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

4. The Appellant, the Operational Creditor of the Corporate Debtor filed an

application being CP (IB) No.934/MB/2020 under Section 9 of the Code for

initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate

Debtor, which was admitted by the Adjudicating Authority and CIRP was

initiated vide Impugned Order dated 05.10.2021.

5. The Appellant submitted that Respondent No. 1, who is the Interim

Resolution Professional was not appointed as the Resolution Professional (RP)

during the first meeting of the CoC held on 10.11.2021. The Appellant Submitted

that it is evident from item No. 15 of the said meeting agenda, which proposed

the confirmation of Respondent No. 1 as Resolution Professional, was rejected by

the members of CoC through a voting process. It is further submitted that this is

clearly evidenced by the email dated 19.11.2021, from Right2Vote Infotech

Private Limited, the online voting platform, wherein it was stated that the voting

result for Item No. 15 was recorded as "dissent." It is the case of the Appellant

that despite this, Respondent No. 1 manipulated the voting outcome by tampering

with the results and intentionally filed false and fabricated documents, thereby

wrongly claiming his appointment as the Resolution Professional of the Corporate

Debtor. Furthermore, the Respondent No.1 deliberately withheld correct facts and

misrepresented the outcome to the Adjudicating Authority through false

submissions and affidavits, thereby committing perjury for his personal gain and

for providing unlawful benefits to the Suspended Board of Directors ('SBOD').

Page 6 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

6. The Appellant contended that Canara Bank, a member of the CoC,

Respondent No. 2 in Company Appeal (AT) (Ins.) No. 916 of 2023 and

Respondent No 3(a) in Company Appeal (AT) (Ins.) No. 792 of 2023 filed an

application (I.A. No. 247/2022) on 02.02.2022, under Section 27 of the Code,

seeking the replacement of Respondent No. 1 as the Interim Resolution

Professional highlighting misconduct of Respondent No. 1. An additional

affidavit by Respondent No. 2 in Company Appeal (AT) (Ins.) No. 916 of 2023

and Respondent No 3(a) in Company Appeal (AT) (Ins.) No. 792 of 2023,

presented evidence of Respondent No. 1's false submissions, manipulation of

voting results, and violations of the Code's provisions, rules, and regulations. The

Appellant submitted that these actions reflect fraudulent intent of the Respondent

No. 1 to mislead the CoC, the Adjudicating Authority, creditors, stakeholders,

and the Insolvency and Bankruptcy Board of India (IBBI). The Appellant

submitted that Respondent No. 1 deliberately concealed the results of the e-

voting, misrepresented himself as being appointed as the Resolution Professional,

and committed serious irregularities during the CIRP in collusion with the SBOD

to undermine the integrity of the Code's framework and violated the rules and

procedures of the Adjudicating Authority which amounted to grave misconduct

and fraud.

7. The Appellant submitted that Respondent No. 1 executed a Memorandum of

Understanding ('MoU') dated 10.11.2021 in collusion with SBOD and handed

over possession of the factory, including movable assets, inventories, plant and

Page 7 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

machinery, moulds, etc., at Haridwar to M/s. Sarvashree Industries Private

Limited (SIPL), with retrospective effect, i.e. from 05.10.2021. The Appellant

highlighted that this occurred on the same date that the application under Section

9 of the Code was admitted, at a time when the Interim Resolution Professional

had neither received the order nor made a public announcement. This action was

carried out without the prior consent and approval of the CoC, which constitutes

a violation of Section 28 of the Code. The Appellant elaborated that under Section

28 of the Code, the Interim Resolution Professional is required to seek the prior

approval and consent of the CoC before transferring any assets of the Corporate

Debtor during the CIRP. The Appellant asserted that the transfer of assets to SIPL,

carried out without the necessary approval of the CoC is contrary to the interests

of all creditors and stakeholders of the Corporate Debtor. The Appellant also

contended that Respondent No. 1 acted beyond the duties assigned to the Interim

Resolution Professional under Section 18 of the Code during the CIRP, violating

the provisions of Section 18 of the Code and committed material irregularity in

exercise of power is arbitrary and illegal.

8. The Appellant submitted that on 30.12.2021, Respondent No. 1 presented a

draft MoU during the second meeting of the CoC for approval, however, it is

brought out by the Appellant that this MoU had already been executed on

10.11.2021 with retrospective effect from 05.10.2021, which was done without

the prior consent or approval of the CoC. The appellant contended that this action

was taken to mislead the CoC and the Adjudicating Authority.

Page 8 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

9. The Appellant highlighted that the Respondent No. 1 violated several

provisions of the CIRP Regulations. The Appellant cited some of these violations

as enumerated below: -

(a) Violation of Regulation 19: The appellant submitted that the first CoC meeting was called with only a 2-day notice dated 08.11.2021, whereas the regulations mandate a minimum of 5 days' prior notice for convening a CoC meeting.

(b) Violation of Regulation 26: The Respondent No. 1 as the Interim Resolution Professional failed to submit the record of the first CoC meeting and did not conduct the second CoC meeting for 50 days. Even during the second CoC meeting on 30.12.2021, the Interim Resolution Professional made false and misleading statements regarding the agenda. Specifically, item No. 7 in the minutes of the second CoC meeting was fraudulently included to mislead the CoC. The agenda mentioned the review of efforts made by the Respondent No. 1 for entering into a third-party MOU and the possibility of continuing plant operations at Haridwar during the CIRP where the said MoU mentioned was already executed on 10.11.2021 with retrospective effect dated 05.10.2021, without the consent of the CoC.

(c) Violation of Regulation 35A: The Interim Resolution Professional/alleged Resolution Professional failed to take any steps or furnish reports regarding preferential or fraudulent transactions, despite stating that the Corporate Debtor had borrowed a huge loan and that there was no balance in the bank accounts or any

Page 9 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

stock/inventory available at the factory in Haridwar. The Appellant accused that the Respondent No. 1 did not investigate how the funds were allocated by the SBOD or whether any preferential or fraudulent transactions occurred, which clearly indicates that the Respondent No. 1 was colluding with the SBOD for ulterior motives.

(d) Violation of Regulation 36: The Respondent No. 1 failed to provide the Information Memorandum to the CoC within the required time frame, resulting in a delay of 94 days.

10. The Appellant also submitted that the Respondent No.1 has violated the

Code of Conduct for Insolvency Professionals, as outlined in the First Schedule

of Regulation 7(2)(h) of the IBBI (Insolvency Professional) Regulations, 2016,

read with Sections 207 and 208 of the Code, which further established the

improper conduct and collusion of the Respondent No. 1 in the handling of the

CIRP.

11. The Appellant submitted that Respondent No.1, was never formally

appointed as the Resolution Professional in the first meeting of the CoC under

Section 22 of the Code, nor in any subsequent CoC meetings under Section 27.

Despite this, the Respondent No. 1 falsely represented himself as the Resolution

Professional in the MoU and the minutes of the first CoC meeting. The Appellant

alleged that Respondent No.1 committed fraud and misrepresentation before the

Adjudicating Authority to obtain orders, and such orders are void ab initio as per

established legal principles.

Page 10 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

12. The Appellant assailed that Respondent No. 1 had committed the offence

of perjury by intentionally and willfully filing false documents and submissions,

along with an affidavit, before Adjudicating Authority, including false or

tampered minutes of the first CoC meeting. As a result, Respondent No. 1 is liable

for proceedings under Section 195 read with Section 340 of the Code of Criminal

Procedure, 1973 ('CrPC'). The appellant further asserted that Respondent No.

1's actions constitute a serious violation of legal and procedural integrity, and

should be dealt with accordingly under criminal law.

13. The Appellant contended that the CoC filed an application IA 247 of 2022

for the replacement of the Resolution Professional under Section 27 of the Code.

The Respondent No. 1 submitted that under the provisions of the Code, there is

no requirement to make the Resolution Professional a party in the application for

replacement, as it is within the commercial discretion of the CoC to replace the

Resolution Professional without providing any reasons. However, in this case,

Respondent No. 1, with malafide intention, interfered and objected to his

replacement, arbitrarily attempting to retain and usurp the position of Resolution

Professional for the Corporate Debtor. The Appellant highlighted that

Respondent No. 1 had failed to specifically deny any of the allegations made by

the CoC in their additional affidavit filed in I.A. No. 247 of 2022.

14. The Appellant submitted that, as per item No. 13 of the Minutes of the 6th

CoC Meeting, the CoC informed Respondent No. 1 about the fraud committed by

the SBOD during the management of the Corporate Debtor before the initiation

Page 11 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

of the CIRP. The Appellant stated that Canara Bank, member of the CoC holding

67.36% voting rights of CoC, shared the Forensic Audit Report dated 10.05.2021,

with Respondent No. 1, and based on this report, further actions were initiated

against the Corporate Debtor and its promoters, including an intimation to the

CBI. The Appellant further submitted that the Canara Bank, has classified the

account of Corporate Debtor as "fraud" and was in the process of declaring the

promoters and Corporate Debtor as willful defaulters, in line with RBI guidelines.

Axis and ICICI Banks also classified the account as fraud.

15. The Appellant contended that despite having full knowledge of these facts

and documents, Respondent No. 1 failed to conduct any forensic or transaction

audit after the initiation of the CIRP against the Corporate Debtor. Additionally,

Respondent No. 1 did not file any application under Section 66 of the Code for

fraudulent trading or wrongful trading, which is a mandatory course of action in

light of the fraud identified by the CoC and the banks.

16. The Appellant submitted that on 13.10.2022, Respondent No. 1 filed an

IA - 2977 of 2022 seeking approval for the Resolution Plan. The Appellant

asserted that the Resolution Plan was presented by Respondent No. 1 to conceal

the misdeeds, fraud, material irregularities, and violations of the provisions, rules,

and regulations of the Code committed by him during his tenure as Interim

Resolution Professional/alleged Resolution Professional for the Corporate

Debtor.

Page 12 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

17. The Appellant submitted that the Adjudicating Authority, without

considering the documents and applications filed by the Appellant regarding the

material irregularities, fraud, and violations of the Code and other laws committed

by Respondent No. 1 in collusion with the SBOD, allowed IA No. 2977 of 2022

and approved the Resolution Plan on 15/05/2023 and further the Adjudicating

Authority dismissed the Appellant's application (IA No. 3525 of 2022) on the

same date, without reviewing the facts and documents provided by the Appellant.

18. The Appellant submitted that a complaint was filed by the Appellant

against Respondent No. 1 for misconduct before the IBBI, which was registered

on 03.10.2022 and disciplinary action was taken against Respondent No. 1,

finding him guilty of material irregularities and violations of the Code during his

tenure as Interim Resolution Professional and suspended the Respondent No. 1

for six months vide its order dated 23.05.2023 (IBBI/DC/173/2023).

19. The Appellant submitted that the Corporate Debtor transferred its assets

and inventories to M/s. SIPL, which was managed by the SBOD. This was done

to defraud creditors and suppliers, as shown by the matching GST registration

address. The Appellant stated that the Respondent No. 1 approved these asset

transfers without the CoC's consent, violating the principles of the Code that aim

to maximize value and protect stakeholders. The Appellant argued that allowing

such actions of the Respondent No. 1 would set a harmful precedent, encouraging

future insolvency professionals to bypass the Code for personal gain in collusion

with ex-management. The Appellant further asserted that permitting these

Page 13 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

unlawful acts will set a dangerous precedent for future Corporate Insolvency

Resolution Processes. It will encourage insolvency professionals to act in

collusion with the ex-management of the Corporate Debtor for personal gain,

undermining the integrity of the Code and enabling violations of the Code for

selfish motives.

20. The Appellant urged this Appellate Tribunal to dismiss the Impugned

Order dated 15.05.2023 and allow the Appeal Nos. 916 of 2023 and 792 of 2023.

21. As regards, the third appeal no. Comp. App. (AT) (Ins) No. 1034 of 2024

which is a Contempt Petition arising out of Impugned Order dated 28.03.2024 in

Contempt Petition No. 4 of 2023 in CP (IB) No.934/MB/2020, the Appellant

submitted that basic facts remain same as enumerated by him in Appeal Nos. 916

of 2023 and 792 of 2023.

22. The Appellant submitted that on 08.03.2023, the Appellant filed a

Contempt Petition (Contempt Petition No. 4 of 2023) before the Adjudicating

Authority against the Respondent No. 1, prompting the Adjudicating Authority to

issue a notice to the Respondent No. 1.

23. The Appellant contended that the Respondent filed a vague and evasive

reply to the contempt petition, failing to specifically deny the allegations made

against him. The Appellant further submitted that the Adjudicating Authority, in

passing the Impugned order dated 15.05.2023, approving the Resolution Plan in

IA 2977 of 2022 in C.P. (IB)/934/2020, did not properly consider the documents,

facts, submissions, and objections filed by the Appellant. These objections Page 14 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

highlighted material irregularities, fraud, violations of the provisions, rules, and

regulations of the Code, and other relevant laws committed by the Respondent in

collusion with the SBOD.

24. The Appellant submitted that he filed Company Appeal No. 792/2023

under Section 61(3) of the Code before this Appellate Tribunal, challenging the

approval of the Resolution Plan and this Appellate Tribunal issued a notice to all

Respondents on 21.06.2023, which was duly accepted by the Respondent No. 1.

The Appellant contended that despite the notice of this Appellate Tribunal,

Respondent No. 1 fraudulently and with dishonest intent proceeded to implement

the Resolution Plan during the pendency of the Appeal. The Appellant highlighted

that, as per the Terms of the Resolution Plan, once an appeal has been filed against

the order approving the Resolution Plan (IA 2977 of 2022 in C.P. (IB)/934/2020),

the Plan could not be implemented, a fact that was known to the Respondent

No. 1.

25. The Appellant submitted that the CoC, in its reply filed before the

Appellate Tribunal in Appeal No. 792 of 2023, has admitted that the management

of the Corporate Debtor was handed over to the SRA and acknowledged that the

Resolution Plan was implemented on 30.06.2023, just days after the Appellate

Tribunal issued a notice in Appeal No. 792 of 2023, which challenges the

approval of the Resolution Plan under Section 61(3) of the Code.

26. The Appellant submitted that on 11.01.2024, written submissions were

filed in Contempt Petition No. 04 of 2023 before the Adjudicating Authority and

Page 15 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

obtained favorable order from the Adjudicating Authority by concealing material

information and facts, thereby committing fraud to secure an order. The Appellant

further contended that the order obtained by the Respondent should be declared

void ab-initio.

27. The Appellant submitted that the Respondent is liable to be prosecuted for

Contempt of Court under Section 425 of the Companies Act, 2013, read with

Sections 10 and 12 of the Contempt of Court Act, 1971, as well as Rule 11 and

34 of the NCLT Rules, 2016. To buttress his point, he relied on the judgements

of Hon'ble Supreme Court of India in case of Suo-Motu Contempt Petition (Civil)

No. 3 of 2021 In Re: Perry Kansagra, A.V. Papayya Sastry and Ors. Vs.

Government of A.P. and Ors. [(2007) 4 SCC 22l] and Dhananjay Sharma v.

State of Haryana [(1995) 3 SCC 757], Chandra Shashi v. Anil Kumar Sharma

[(1995) 1 SCC 421] and in ABCD v. Union of India [(2020) 2 SCC 52]. The

Appellant stated that these judgements support his case.

28. The Appellant contended that the Adjudicating Authority dismissed his

Contempt Petition No. 4 of 2023 in C.P. (IB)/934/2020 without considering the

documents submitted by the Appellant, on the ground that there was no evidence,

whereas all relevant documents and evidence regarding false submissions and

fraudulent actions by the Respondent were on record, including the IBBI's Order

No. IBBI/DC/173/2023 dated 23.05.2023, which was filed before the

Adjudicating Authority on 12.06.2023.

Page 16 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

29. Concluding his arguments, the Appellant urged this Appellate Tribunal to

dismiss the Impugned Order dated 28.03.2024 and allow his appeal.

30. Per contra, the Respondent No. 1 denied all the averments made by the

Appellant in the all three appeals.

31. The Respondent No. 1 stated that the Appellant had no locus standi to

raise objections in the ongoing CIRP. The Respondent No. 1 stated that post CIRP

order, the Operational Creditor has no longer any role in the process and lacks

locus standi to challenge the proceedings. The Respondent No. 1 alleged that the

Appellant fraudulently obtained confidential documents, such as the minutes of

CoC meetings and the Contract Manufacturing MoU, which were not part of the

CoC, and has misused these documents to misrepresent facts. The Respondent

No. 1 submitted that the Appellant had been filing multiple applications before

the Adjudicating Authority, the IBBI, using these fraudulently obtained

documents, even after the CoC approved the Resolution Plan. The Respondent

No. 1 stated that the CoC has already resolved to retain the existing Resolution

Professional and the application for the replacement of the Resolution

Professional (IA/247/2022) was withdrawn long before the Appellant's

application in IA No. 3525 of 2022.

32. The Respondent No. 1 submitted that the Appellant's claim was fully

accepted, and payment was made as per the approved Resolution Plan, which was

implemented on 30.06.2023. The Appellant submitted that the CIRP had been

completed in accordance with the timelines specified in FORM G, despite the

Page 17 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

challenges posed by the COVID-19 pandemic. The Appellant stated that 12 CoC

meetings were held, and the Resolution Plan was approved by 100% of the CoC,

after multiple rounds of negotiations. A forensic audit was conducted with CoC

approval, and IA 993 of 2023 had been filed with Adjudicating Authority.

33. The Respondent No. 1 contended that the legal implementation of the

Resolution Plan remains unaffected by the CIRP followed in the First CoC

meeting, and therefore, it cannot be grounds for rejecting the Resolution Plan

under Section 30(2)(e) of the Code. The Respondent No. 1 asserted that the

Appellant is misusing the CIRP as a recovery tool rather than aiming for the

revival of the Corporate Debtor, filing multiple applications and complaints based

on fraudulent documents.

34. The Respondent No. 1 submitted that filing an appeal is not an automatic

right, but is only available to an aggrieved party on valid grounds of fact or law

and the Appellant has no role in the CIRP, nor is he a member of the CoC. The

Respondent No. 1 stated that the Appellant cannot be considered as an aggrieved

person regarding the appointment or replacement of the Resolution Professional

under Section 27 of the Code, and the Appellant has no entitlement to access

confidential CoC documents, including the minutes of meetings or the MoU.

Furthermore, the Appellants was not involved in the proceedings of IA 247 of

2022, which had been withdrawn long before the filing of his IA 3525 of 2022.

35. The Respondent No. 1 submitted that the Appellant has consistently

misused the CIRP for recovery purposes rather than facilitating the resolution of

Page 18 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

the Corporate Debtor. Prior to the initiation of the CIRP, the Corporate Debtor

had proposed a settlement to the Appellant, offering an upfront payment of

Rs. 25 lakhs along with post-dated cheques (PDCs) of Rs. 1 crore for full

repayment of the outstanding debt. Although the Appellant accepted the Rs. 25

lakhs, he refused to withdraw the case and insisted that the CIRP should proceed,

despite the debt being acknowledged. Furthermore, the Appellant neither returned

the Rs. 25 lakhs nor the PDCs as per the settlement terms, and instead filed section

138 of NI Act cases against the Corporate Debtor and its directors, alleging non-

honoring of the PDCs, even though the settlement had failed.

36. The Respondent No. 1 contended that during the CIRP, the Appellant

attempted to put pressure on the Respondent No. 1 for acting according to the

Appellant's demands and sought various favors, including the filing of Section

19(2) applications, police complaints, and fraud applications, all of which were

aimed at harassing the SBOD. The Respondent No. 1 stated that he refused to

comply with these requests, maintaining that the primary objective of the Code is

the revival of the Corporate Debtor, not recovery.

37. The Respondent No. 1 submitted that the Appellant, through his lawyer

Mr. Anuj Solanki, has made repeated misrepresentations in the past six months,

with the same request in all applications--namely, to stay, delay, or reject the

approval of the Resolution Plan. In the first instance, the Appellant objected to

the Resolution Plan at the hearing on 17.10.2022, but was informed by the

Adjudicating Authority that he was not a party and could not raise objections

Page 19 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

without filing a separate IA. In the second instance, the Appellant filed IA 3525

of 2022 under Section 60(5) of the Code, falsely claiming that the Resolution

Professional was improperly appointed and raising personal allegations against

the Resolution Professional, thereby seeking rejection of the Resolution Plan. The

third misrepresentation involved the Appellant filing IA 726 of 2023 under

Section 47 of the Code, where he again misrepresented the existence of

undervalued transactions without providing any supporting data, despite the

Resolution Plan already filing a fraud application being heard in IA 993 of 2023.

Finally, in the fourth instance, the Appellant filed Contempt Application 4 of

2023, once again seeking to stay the approval of the Resolution Plan. The

Respondent No. 1 emphasized that these actions highlight the Appellant's

ongoing attempts to derail the CIRP and undermine the Resolution Plan.

38. The Respondent No. 1 conceded that while the CoC filed an application

for the replacement of the Interim Resolution Professional due to its internal

policies, the Respondent No. 1 continued to perform his duties. The Respondent

No. 1 stated that he successfully ensured the completion of the Resolution Plan,

with all payments being received and distributed as per the plan approved by the

Adjudicating Authority.

39. The Respondent No. 1 contended that the Resolution Plan has been

approved by 100% of the CoC during its 10th meeting, conducted by the

Respondent No. 1. This was followed by approval from the Adjudicating

Page 20 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Authority 15.05.2023, in IA 2977 of 2022, after hearing and dismissing IA

3525/2022 of the Appellant as misconceived.

40. The Respondent No. 1 also refuted all the averments made by the

Appellant in the Company Appeal (AT) (Ins.) No. 1034 of 2024 and denied tha

the has committed any contempt.

41. Concluding his arguments, the Respondent No. 1 requested this Appellate

Tribunal to dismiss all three appeals with cost.

42. The CoC collectively submitted that the Corporate Debtor was admitted

into the CIRP under Section 9 of the Code in Company Petition No. 934 of 2020.

Pursuant to this, Respondent No. 1, was appointed as the Interim Resolution

Professional by an order dated 06.10.2021.

43. The CoC submitted that during the first CoC meeting, in the exercise of

their commercial wisdom, the CoC informed that, as per the bank's policy, the

Resolution Professional must be appointed from the bank's panel. Consequently,

the CoC filed an application for the appointment of the Resolution Professional

from the bank's panel. The CoC together stated that Respondent No. 1 executed a

MoU on 10.11.2021, concerning the factory and Respondent No. 1 explained and

clarified the benefits of executing this MoU, which was subsequently agreed upon

by the CoC.

44. The CoC jointly consented to retain the Resolution Professional appointed

by the Adjudicating Authority and decided to withdraw the application for the

replacement of the Resolution Professional.

Page 21 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

45. The CoC further submitted that following this, the Resolution

Professional filed Application No. 2977 of 2022 for the approval of the

Resolution Plan, which was approved by the CoC. The plan has been successfully

executed, with the entire amount under the plan having been received by the CoC.

Furthermore, the management has already been handed over to the Successful

Resolution Applicant.

46. The CoC submitted that the Resolution Professional has acted in the best

interests of the stakeholders and the Corporate Debtor. Furthermore, the CoC

contended that the Appellant, being an Operational Creditor, is not even a part of

the CoC and, therefore, has no standing to allege material irregularities or

challenge the Resolution Plan.

47. At this stage, we note that SRA has also filed his intervention application

which we will elaborate in finding.

48. Concluding the arguments, the CoC collectively submitted that the Appeal

being frivolous is liable to be dismissed with cost.

Findings

49. The first two appeals has been filed by the Appellant in Comp. App. (AT)

(Ins.) No. 916 of 2023 & Comp. App. (AT) (Ins.) No. 792 of 2023 against the

same Impugned Order dated 15.05.2023 passed by the Adjudicating Authority in

CP(IB) 934/MB/2020. The Adjudicating Authority has disposed of two IA's and

hence two appeals have been filed by the Appellant. IA No. 2977/2022 was filed

Page 22 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

by the Interim Resolution Professional for approval of the Resolution Plan which

is subject matter in present appeal before us in Company Appeal (AT) (Ins.) No.

792 of 2023 and IA 3525/ 2022 was filed by the Appellant raising his objections

to approval of the Resolution Plan, which was rejected by the Adjudicating

Authority in the Impugned Order dated 15.05.2023 which is in appeal before us

in Company Petition No. (IB) -934 (MB)/2020.

50. Since both the appeals have been filed against the same Impugned Order

dated 15.05.2023 on the approval/ rejection of the Resolution Plan by the

Adjudicating Authority and have been pleaded by the same counsels on the same

issues, hence we shall deal both the appeals jointly in the following discussion.

We have already noted the facts of the same, hence we shall not repeat the same

for the purpose of brevity.

51. From the pleadings, the following issues emerge which are required to be

resolved in order to decide the first two appeals.

Issue No. (I) (A) Whether, Mr. Kairav Anil Trivedi appointed as Interim

Resolution Professional by the Adjudicating Authority vide CIRP order dated

05.10.2021 was lawfully appointed as Resolution Professional by the CoC in

accordance with the Regulations or not.

Issue No. (I) (B) Whether the CoC dissented the appointment of Mr. Kairav

Anil Trivedi working as Interim Resolution Professional of the Corporate Debtor

being appointed as Resolution Professional of the Corporate Debtor or approved

his appointment as Resolution Professional in the First CoC Meeting.

Page 23 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Issue No. (I) (C) Whether conduct of Mr. Kairav Anil Trivedi the Interim

Resolution Professional of Corporate Debtor has been fair, reasonable and in

accordance with the provisions of the Code and Regulations or acted in arbitrary

and pre-judicial manner as alleged by the Appellant.

Issue No. (I) (D) What has been stand of CoC on CIRP Process.

Issue No. (II) (A) Whether the MoU signed with the SIPL was in accordance

with provision of the Code and the Regulations or otherwise. Whether Mr. Kairav

Anil Trivedi violated any of the laid down provisions in approving and signing

the said MoU.

Issue No. (II) (B) Whether the contractor of Haridwar plant of the Corporate

Debtor i.e., SIPL was related party of the Corporate Debtor. Whether Mr. Kairav

Anil Trivedi brought out misleading facts before CoC .

52. Issue No. (III) Whether, material irregularities, if any, by Interim

Resolution Professional /Resolution Professional while taking approval from the

Adjudicating Authority will affect the fate of approved Resolution Plan.

53. These points are interconnected and inter dependent and shall be dealt in

conjoint manner in the following discussions :-

Issue No. (I) (A) Whether, Mr. Kairav Anil Trivedi appointed as Interim

Resolution Professional by the Adjudicating Authority vide CIRP order dated

05.10.2021 was lawfully appointed as Resolution Professional by the CoC in

accordance with the Regulations or not.

Page 24 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Issue No. (I) (B) Whether the CoC dissented the appointment of Mr. Kairav

Anil Trivedi working as Interim Resolution Professional of the Corporate Debtor

being appointed as Resolution Professional of the Corporate Debtor or approved

his appointment as Resolution Professional in the First CoC Meeting.

Issue No. (I) (C) Whether conduct of Mr. Kairav Anil Trivedi the Interim

Resolution Professional of Corporate Debtor has been fair, reasonable and in

accordance with the provisions of the Code and Regulations or acted in arbitrary

and pre-judicial manner as alleged by the Appellant.

(a) It is noted that Mr. Kairav Anil Trivedi was appointed as Interim

Resolution Professional by the Adjudicating Authority while passing the

order of initiation of the CIRP of the Corporate Debtor vide order dated

05.10.2021 passed in application filed by the Appellant under Section 9 of

the Code in CP(IB) 934/MB/2020 which reads as under :-

Page 25 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(b) We note that the issue of confirmation and approval of the appointment of

Mr. Kairav Anil Trivedi was taken up as Agenda Item no. 15 in the first

CoC meeting held on 10.11.2021, as noted from the minutes of 1st CoC

meeting which reads as under :-

(c) We note that the voting on the proposed resolution for confirmation and

approval of Mr. Kairav Anil Trivedi as Resolution Professional was

conducted i.e., e-voting platform by M/s Right2vote Infotech Pvt Ltd

(Online Voting Platform Provider) that communicated result vide an e-mail

dated 19.11.2021, according to which the resolution of item No. 15 of First

Page 26 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

CoC meeting held on 10.11.2021 was "dissent" i.e., non approval. The

relevant portion of the said e-mail is reproduced as under ;-

(d) We take into consideration that on 30.12.2021, Second CoC meeting was

held in which CoC proposed name of new Resolution Professional

Mr. Pradeep Kabra in place of Mr. Kairav Anil Trivedi vide Item No. 16

of the minutes of meeting which is seen as under :-

Page 27 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(e) From the above, it is noted that Canara Bank who is the majority member

of CoC (holding 67.36 % of voting rights), proposed the name of

Mr. Pradeep Kabra as new Resolution Professional. We also take into

consideration that the said resolution has been put for e-voting and the last

date of e-voting was 06.01.2022. It was submitted during pleadings that

the said resolution for changing Mr. Kairav Anil Trivedi and appointing

Mr. Pradeep Kabra was approved by the CoC with 100% voting.

Page 28 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(f) The CoC filed an IA No. 247/2022 on 27.01.2022 and the relevant portion

of the said IA reads as under :-

Page 29 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(g) It is noted that in IA No. 247 of 2022, it was mentioned in Para 9 that the

Interim Resolution Professional Mr. Kairav Anil Trivedi was appointed as

Resolution Professional in the first CoC meeting held on 10.11.2021. We

consciously note that this fact has been wrongly pointed out in IA No. 247

of 2022 by the CoC in view of the previous facts where it has been clearly

stated vide an e-mail dated 19.11.2021 that M/s Right2vote Infotech Pvt

Ltd has declared resolution regarding appointment of Mr. Kairav Anil

Trivedi as Resolution Professional which was dissented i.e., not approved.

(h) Thus, it becomes clear that in Second CoC meeting, the CoC with 100%

voting rights, approved replacement of the Mr. Kairav Anil Trivedi and

appointment of new Resolution Professional Mr. Pradeep Kabra.

(i) We have noted that IA. No. 247 of 2022 was filed for replacement of

Mr. Kairav Anil Trivedi by new Resolution Professional and Canara Bank

filed an additional affidavit on behalf of the CoC on 28.03.2022. The

additional affidavit is reproduced as under :-

Page 30 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 31 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 32 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 33 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 34 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 35 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 36 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 37 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 38 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 39 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 40 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 41 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 42 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 43 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

➢ We note that Reply was filed by the Respondent No. 1/ Mr. Kairav Anil

Trivedi to I.A No 247 of 2022 filed before the Adjudicating Authority. The

relevant portion of the reply reads as under :-

Page 44 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

➢ From above additional affidavit dated 28.03.2022 of Canara Bank, we

observe that the Canara Bank has raised several objection and highlighted

misconduct of Mr. Kairav Anil Trivedi the Interim Resolution Professional.

From the above additional affidavit, we also note that the grounds for

replacement comprised of several violations of regulations by Respondent

No. 1/ Mr. Kairav Anil Trivedi. The grounds have been specifically

enumerated in para 9 above, where the CoC categorically stated that Mr.

Kairav Anil Trivedi attempted to mislead the Adjudicating Authority by

submitting that he is performing his duty in professional manner. The CoC

further mentioned in para 9 that Mr. Kairav Anil Trivedi has been

extremely unprofessional and CoC does not desire to continue him as the

Resolution Professional.

➢ In para 17 of the additional affidavit dated 28.03.2022, the CoC highlighted

that Respondent No. 1/ Mr. Kairav Anil Trivedi violated section 28 of the

Code in executing MoU with third party in collusion with SBOD and

handed over the possession of factory situated at Haridwar along with plant

and machinery, mould, etc. The alleged illegal action of Respondent No. 1

regarding MoU were also elaborated in Para 18 to 20 of the additional

affidavit, where the CoC has submitted that the Respondent No. 1/ Mr.

Kairav Anil Trivedi has falsely represented himself as Resolution

Professional duly appointed by CoC whereas voting for his appointment

was yet be take place at that stage. The CoC also mentioned that the

Page 45 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

contractor appointed by the Interim Resolution Professional was related

party of the Corporate Debtor and the Suspended Director of the Corporate

Debtor and concluded that the MoU was executed by the Respondent No.

1/ Mr. Kairav Anil Trivedi in collusion with SBOD with wrongful

intentions.

➢ In para 21 of additional affidavit dated 28.03.2022, the CoC highlighted

violation of regulation 19 by the Respondent No. 1.

➢ In para 22 of the additional affidavit dated 28.03.2022, the CoC

categorically and specifically mentioned that Mr. Kairav Anil Trivedi was

not appointed as the Resolution Professional in the first CoC meeting and

Respondent No. 1 has falsely represented himself as Resolution

Professional appointed by the CoC.

➢ The CoC also mentioned in the additional affidavit dated 28.03.2022 that

the Respondent No. 1 neither submitted report of first CoC meeting nor

conducted the Second CoC meeting for 50 days, violating regulation 26 of

CIRP Regulations.

➢ One of the other serious allegation made by the CoC before the

Adjudicating Authority in additional affidavit dated 28.03.2022 pertained

to conduct of the Respondent No. 1/ Mr. Kairav Anil Trivedi who has been

alleged by CoC that"IRP/RP maliciously and fraudulent mentioned item

No. 7 to the minutes of the Second CoC .....".

Page 46 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

➢ We further note that in para 26 of the additional affidavit dated 28.03.2022,

the CoC has stated that a total 171.13 Crores (approx.) was outstanding

admitted debts towards financial creditors and as per report of the

Respondent No. 1/ Mr. Kairav Anil Trivedi the Corporate Debtor was not

functioning as going concern and there was hardly any stock/ inventory,

whereas the Interim Resolution Professional at the cost of CoC claimed to

restart the plan under pretext of maximisation of value of the Corporate

Debtor.

➢ We further note that in para 27 of the additional affidavit dated 28.03.2022

the CoC pointed out that although the Resolution Professional himself

reported that inspite of huge loan borrowed by the Corporate Debtor, there

was no balance in the bank accounts of the Corporate Debtor nor any

stock/inventory was available in the factory at Haridwar. The Respondent

No. 1/ Mr. Kairav Anil Trivedi failed to take any action to investigate

regarding syphoning of funds and preferring the preferential or fraudulent

transaction applications before the Adjudicating Authority.

➢ The CoC also accused the Respondent No. 1 of violation of Regulation 36

regarding delay to furnish Information of Memorandum to CoC till date of

filing of additional affidavit of CoC (94 days).

➢ The CoC also accused Respondent No. 1 regarding violation of 36A i.e.,

delay "not later than 74 days from the commencement of CIRP. The RP

has delayed it after 148 days, therefore, there is a delay of 74 days. Due

Page 47 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

the acts of the RP the CoC has lost opportunities of having better

Resolution Plans for the resolution of the Corporate Debtor. The RP has

thereafter surpassed all the timelines and frustrated the entire CIRP of the

Corporate Debtor."

➢ We note that in Para 32 of the additional affidavit dated 28.03.2022 the

CoC has recorded that "....the RP in violation of Section 29A of IBC has

considered, the suspended Directors Mr. Piyush Chheda and Prince Pipes

and Fittings Limited a replated company having same management as

prospective resolution applicants."

➢ We also note that the CoC has categorically stated Para 33 of the additional

affidavit that, "From the aforesaid conduct of the RP, the CoC is of

considered view that either the RP has been incompetent to conduct the

CIRP of the Corporate Debtor in timely manner or the RP is working at

the behest of the suspended Directors to defraud the Creditors."

➢ Finally, the CoC gave concluding remarks and appealed to the

Adjudicating Authority in their additional affidavit which is self

explanatory and reads as "in view of the above, strict action may be taken

against the RP and report its conduct to IBBI and the application u/S 27 of

the IBC be allowed and existing RP be replaced by Mr. Pradeep Kabra".

➢ We also note from reply of the Respondent No. 1 to the I.A. No. 247 of

2022, wherein the Respondent No. 1 accused the CoC of misrepresentation,

not maintaining objectivity of the code and acting contrary to the Code.

Page 48 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

➢ Thus, we note that at the stage of additional affidavit dated 28.03.2022

before the Adjudicating Authority, the CoC has labelled the Respondent

No. 1/ Mr. Kairav Anil Trivedi as involved in malicious and fraudulent acts

based on specific facts.

(j) We observe that IA No. 247/2022 was filed by CoC on 27.01.2022 for

replacement of Mr. Kairav Anil Trivedi from Interim Resolution

Professional and appointment of Mr. Pradeep Kabra as new Resolution

Professional of the Corporate Debtor and additional affidavit was filed in

connection with IA. No. 247 of 2022 by Canara Bank on behalf of the CoC

on 28.03.2022. But till 09.11.2022 these were not adjudicated.

(k) We further note that on 10.11.2022, the CoC filed new IA No. 3346/2022

withdrawing I.A. No. 247 of 2022 which was approved by the Adjudicating

Authority on the same day i.e.., 10.11.2022 and the order reads as under :-

Page 49 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(l) From the above, it become clears that the Respondent No. 1/Mr. Kairav

Anil Trivedi although appointed as Interim Resolution Professional by the

Adjudicating Authority in the CIRP order dated 05.10.2021, was never

confirmed or appointed as Resolution Professional by the CoC. In fact, the

CoC dissented the confirmation or appointment of Mr. Kairav Anil Trivedi

as Resolution Professional as noted in the earlier discussions along with the

relevant extract of the minutes of the CoC meetings, Right2Vote email and

Page 50 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

the additional affidavit dated 28.03.2022 filed by Canara Bank on behalf of

the CoC before the Adjudicating Authority in IA No 247 of 2022. From

additional affidavit of the CoC dated 28.03.2022, we have already noted

that CoC castigated the conduct of Respondent No. 1 on several grounds

and used harsh words about the Respondent No. 1 to be "malicious and

fraudulent".

(m) At this stage, it would be desirable to note the developments which

happened between the first event i.e., denial of confirmation and approval

of Respondent No. 1/ Mr. Kairav Anil Trivedi as Resolution Professional

in 1st CoC meeting held on 10.11.2021 till the CoC withdrew the I.A. No.

247/2022 and filed new IA No. 3346 of 2022 on 10.11.2022 before the

Adjudicating Authority i.e., exactly one full year from 10.11.2021 to

10.11.2022. We note that the Resolution Plan by SRA was approved by

the CoC in 10th meeting held on 18.09.2022. An IA No. 2977/2022 was

filed by the Respondent No. 1 on 27.09.2022 before the Adjudicating

Authority for approval of the Resolution Plan. As both these events i.e.,

approval of the Resolution Plan by CoC as submitted by SRA and filing of

IA No. 2977/2022 for approval of Resolution Plan by the Respondent No.

1 before the Adjudicating Authority happened prior to withdrawal of

application for change of Interim Resolution Professional and appointment

of new Resolution Professional by the CoC before the Adjudicating

Authority on 10.11.2022, it is indicated that on both critical junctures, the

Page 51 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Respondent No. 1 was not lawfully confirmed/ appointed as Resolution

Professional by the CoC.

(n) In this regard, we also note that the same issue of non appointment of the

Respondent No. 1 as Resolution Profession by the CoC was also examined

by IBBI based on the complaint filed by the Appellant. The IBBI

investigated and has given the order finding Respondent No. 1 as guilty

and suspended the registration of Respondent No. 1 for a period of six

months. The relevant portion of IBBI order dated 23.05.2023 regarding

alleged misrepresentation by the Respondent No. 1 in the minutes of the

CoC is reproduced as under :-

Page 52 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 53 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 54 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 55 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(o) We find sufficient logic in IBBI reasoned order quoted above on the issue

being discussed herein.

(p) After discussing above, we come back to the moot question i.e., whether

the Respondent No. 1 was at all appointed by the CoC and the answer is

straight that Respondent No. 1 was never appointed by the CoC. In fact,

the CoC dissented for confirmation and appointment of Respondent No. 1

as Resolution Professional and further filed additional affidavit dated

28.03.2022 before the Adjudicating Authority accusing Respondent No. 1/

Mr. Kairav Anil Trivedi of several serious violations of regulations and his

involvement in misconduct. It is only after Resolution Plan was approved

by the CoC for which IA was filed by the Respondent No. 1, CoC decided

to change their stand and filed IA No. 3346/2022 before the Adjudicating

Authority for withdrawing earlier IA No. 247/2022 for change of Interim

Resolution Professional.

➢ Thus, we hold that there was no formal and proper appointment of

Mr. Kairav Anil Trivedi as Resolution Professional of the Corporate

Debtor by the CoC. We also find that CoC did not approve the

Respondent No. 1/ Mr. Kairav Anil Trivedi as the Resolution Professional

in 1st CoC meeting.

➢ On issue of contravention of Regulations by the Respondent No. 1/ Mr.

Kairav Anil Trivedi, we take into consideration material made available

before us especially additional affidavit dated 28.03.2022 filed by Canara

Page 56 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Bank on behalf of CoC before the Adjudicating Authority. We find

prima-facie Respondent No. 1/ Mr. Kairav Anil Trivedi conducted CIRP

proceeding in violation of several regulations.

(q) We will now take up another issue raised in the appeal i.e., misconduct of

Respondent No. 1/ Mr. Kairav Anil Trivedi as alleged by the Appellant.

➢ It is the case of the Appellant that the misconduct of the Interim

Resolution Professional Mr. Kairav Anil Trivedi has been seen in

various cases and has been held so in many other courts as well as

this court and the Respondent No. 1 is found to be guilty.

➢ The Appellant alleged that based on Appellant's complaint against

the Respondent No. 1, IBBI conducted investigation. As per the

order of Disciplinary Committee of Insolvency and Bankruptcy

Board of India bearing No. IBBI/DC/173/2023 dated 23 rd May,

2023, the committee thoroughly examined the conduct of Interim

Resolution Professional, Mr. Kairav Anil Trivedi and upon their

findings, has suspended him for a period of six months.

➢ The Appellant submitted that the IBBI, exercising its powers under

Section 218 of the Code, along with Regulation 7(2) and 7(3) of the

Insolvency and Bankruptcy Board of India (Inspection and

Investigation) Regulations, 2017, appointed an Investigating

Authority to conduct an investigation into the CIRP of the Corporate

Debtor.

Page 57 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

➢ The Appellant brought out that based on the findings of the

investigation detailed in the Investigation Report submitted by the

Investigating Authority, the IBBI issued a Show Cause Notice

(SCN) to Mr. Trivedi on 21.03.2023. The SCN, along with Mr.

Trivedi's response and other relevant material on record, was

referred to the Disciplinary Committee (DC) for consideration. Mr.

Trivedi was given an opportunity for a personal hearing, which he

attended virtually before the DC on 28.04.2023.

➢ After the investigation by the DC, it was found that Mr. Trivedi has

inter alia violated Sections 28(l)(h), 208(2)(a) &(e) of the Code and

Regulation 7(2)(a) and 7(2)(h) read with clauses 1, 2, 3, 5 and 14 of

the Code of Conduct of the IP Regulations. The order of the DC

suspending Mr. Kairav Anil Trivedi reads as under: -

"3.1. In view of the foregoing discussion, and material available on record, it is clear that Mr. Trivedi has not recorded the minutes of the 1st CoC meeting accurately. Moreover, it is evident that Mr. Trivedi has not disclosed to CoC about the factual status of MoU for Contract Manufacturing Activity. The draft MoU was shared with CoC on 30.12.2021 for vetting and a second opinion was being considered. However, the MoU was already executed on 10.11.2021 without the approval/intimation of CoC. Hence, the DC finds that Mr. Trivedi has suppressed the fact of already entered MoU with the CoC. Therefore, the DC, in exercise of the Page 58 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

powers conferred under section 220 of the Code read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 and Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016 hereby suspends the registration of Mr. Kairav Anil Trivedi bearing registration number IBBI/IPA- 002/IP-N00728/2018-2019/12332 for a period of six months."

(r) The Appellant conceded that the Respondent No. 1/ Mr. Kairav Anil

Trivedi filed a Writ Petition bearing W.P (L) No. 16317 of 2023 before the

Hon'ble High Court of Bombay, to which a reply affidavit was filed by

IBBI, responding the said Writ Petition. The reply by IBBI clearly

demonstrates that the Interim Resolution Professional was not confirmed

as the Resolution Professional during the first CoC meeting. Furthermore,

it highlighted that the Respondent No. 1 deliberately concealed crucial facts

and documents, thereby misleading the court through fraudulent means.

The Appellant submitted that Paras 3, 5, 6, 9,10,14, 29, and other sections

of the reply affidavit clearly establish misconduct of Appellant which reads

as under: -

"Para 3- I say that Petitioner has approached this Hon'ble High Court by suppressing material facts and therefore not entitled to invoke the extra ordinary jurisdiction of this Hon'ble Court. The Petitioner, it appears, has intentionally did not produce the email dated 19.11.2021 from online voting platform Right2Vote InfoTech Private Limited and

Page 59 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

the affidavit of Committee of Creditors (hereinafter referred as COC) dated 28.03.2022, both clearly stating that COC in its first meeting held on 10.11.202 l had voted against the appointment of the Petitioner as the Resolution Professional, contrary to what the Petitioner is contending now, Annexed herewith and marked as Exhibit 1 is the copy of the email dated 19.11.2021 from online voting platform Right 2 Vote InfoTech Private Limited and the affidavit of Committee of Creditors dated 28.03.2022 filed before the NCLT.

Para 5- I say that the Petitioner has further suppressed the facts which resulted in the impugned order. The Petitioner is guilty of two major lapses which undermines his integrity and honesty, namely (i) having wrongly recorded in the first COC meeting that he has been confirmed Resolution Professional by the COC and (2) in executing a Memorandum of Understanding (herein after referred as MOU) for contract manufacturing activity on 10.11.2021 with effect from 05.10.2021, whereas on the date of execution of MOU, no such approval was obtained from COC. Notwithstanding when the draft of the MOU was being discussed during the COC meetings for its vetting, the Petitioner did not disclose to COC that the MOU has already been executed.

Para 6- It is a settled doctrine that suppressing material facts amounts to playing fraud upon the Court and approaching the Court with unclean hands and not entitled for any discretionary reliefs. It is therefore prayed that this

Page 60 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Hon'ble High Court may be pleased to not extend the stay granted to the Petitioner.

Para 9- I say that the lapse on the part of Petitioner in not recording COC's objection to his appointment as the Resolution Professional and by misrepresenting that he has been confirmed as the Resolution Professional and further to enter into a MOU for contract manufacturing activity without the approval/intimation of the COC while the COC was deciding on the said proposal are serious lapses which attracts penal consequences as per the Code, notwithstanding that the Respondent was let off with mere six months suspension.

Para 10- The entire case of Petitioner is on the ground that COC has allegedly condoned his lapses by subsequently appointing him as the Resolution Professional and that the Resolution Plan submitted by him has been approved by the COC and hence no disciplinary action ought to have been against the Petitioner. It is submitted that the insolvency resolution process under the Code is in rem proceeding and therefore the COC approving the Petitioner as the RP or the approval of the Resolution Plan by the COC does not absolve the Petitioner from the serious lapses committed by the Petitioner while acting as an IRP during the course of CIRP.

Para-14 The Petitioner did not provide any explanation for the false statement recorded by him in the minutes of the first COC that he has been confirmed as Resolution Professional by the COC and secondly for executing the MOU with Sarvashree Industries Private Limited for

Page 61 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

contract manufacturing activity from 10.11.2021 with effect front 05.10.2021 while COC was only considering the said draft of MOL. The investigating authority subsequently after complying with procedure, submitted the report to the Board. The Report is annexed as Exhibit L to the Writ Petition. The Board after considering the report on coming to a prima facie opinion that sufficient cause exists 10 take action u/s 220 of the Code, issued a Show Cause Notice in accordance to Regulation 12 of the Inspection and Investigation Regulations, The copy of which is annexed at Exhibit Pto the Writ Petition. In reply thereof the Petitioner submitted his, Reply, which is annexed a Exhibit T to the Writ Petition.

- Para 24- The notes to clauses appended with the Bill, The Insolvency and Bankruptcy Code, 2015 as introduced before Parliament observed as follows:

"Clause 194 provides that no act or proceeding of the Board shall be invalid merely by reason of a) any vacancy in, or any defect in the constitution of the Board, or b) any defect in the appointment of a person acting as a member of the Board; or c) any irregularity in the procedure of the Board not affecting the merits of the case. This Clause also provides that the Board may appoint such other officers and employees as it considers necessary for the efficient discharge of its functions under this Code....."

➢ The Appellant stated that the Hon'ble High Court of Bombay granted

interim relief to Respondent No.1 on a limited issue regarding whether the

Page 62 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Chairperson is a Whole-Time Member, until the filing of IBBI's reply, as

per the order dated 20.06.2023. It was stated by the High Court of Bombay

that: -

"4. On the limited issue of Interim relief, we have heard the learned counsel for Petitioner. From perusal of Section 220 of the IBC, 2016 read with definition of the words "Disciplinary Committee" in the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017, prima facie we are of the opinion that the Disciplinary Committee can consist only of Whole Time Member(s), who can then pass orders. In the present case, the impugned order dated 23.05.2023 is passed by Mr. Ravi Mital, who, at least on the Website of the IBBI, is shown as the Chairperson of the IBBI and not its Whole Time Member."

➢ All these allegations were denied vehemently by the Respondent No. 1 who

stated that the Appellant is a habitual litigants. The Respondent No. 1 also

submitted that since he refused to comply ulterior and unlawful demand of

the Appellant, the Appellant has taken up personal vendetta against the

Respondent No. 1. The Respondent No. 1 also clarified that all cases cited

by the Appellant are misleading and the Respondent has also taken stay

from the Hon'ble High Court of Bombay in the present case, where IBBI

debarred him for 6 months. The Respondent No. 1 emphatically requested

to ignore the baseless allegations of the Appellant about his misconduct.

Page 63 of 97

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(s) The Appellant also brought to our notice that earlier also this Appellate

Tribunal has passed a judgment in the matter of Kairav Anil Trivedi vs.

State Bank of India & Anr., (MANU/NL/0955/2023) vide its order dated

05.12.2023 in Company Appeal (AT) (Insolvency) Nos. 1439 and 1440 of

2023 wherein this Appellate Tribunal adjudicated an appeal filed by the

Respondent No.1, Mr. Kairav Anil Trivedi, who was accused to mislead

the Adjudicating Authority regarding the application of Sections 22 and 27

of the Code. Para 10 of our earlier judgment states:

"10. From the facts which have been brought on the record, it is clear that the appointment of the Appellant as IRP was never confirmed by the CoC nor any material has been brought on record to indicate that the appointment of IRP was confirmed by the CoC by majority of not less than 66% of the vote. When Appellant's appointment as IRP has not been confirmed, the Appellant could have been replaced by the CoC under Section 22. The mere fact that in the Resolution which was placed before e-voting as extracted above, there was alternate resolution both under Sections 22 and 27 cannot be read to mean that there is any infirmity in the resolution passed for replacement with 100% vote."

(Emphasis Supplied)

(t) The above judgment of this Appellate Tribunal was challenged by Kairav

Anil Trivedi before the Hon'ble Supreme Court of India in Civil Appeal

Diary Nos. 3150/2024 who dismissed the appeal vide order dated

Page 64 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

19.04.2024 in the matter of Kairav Anil Trivedi Vs. State Bank of India &

Anr. (MANU/SCOR/55999/2024), which reads as under:

"We do not find any reason to interfere with the impugned judgement and other. The Special Leave Petition is accordingly dismissed. Pending application(s), if any, shall stand disposed of."

(Emphasis Supplied)

(u) Thus, we find that in case of State Bank of India (Supra), the Respondent

No 1 was clearly held guilty for same Section 22 & 27 of the Code and

finally the Hon'ble Supreme Court of India also rejected Respondent

No. 1 is appeal.

(v) The Appellant also mentioned that it has been observed at various instances

that Mr. Kairav Anil Trivedi has committed instances of fraud,

misrepresentation, ultra vires acts and concealment/suppression of facts

and documents during his assignment as the Interim Resolution

Professional/Resolution Professional. To buttress his point, the Appellant

brought out yet another instance of misconduct of the Respondent No. 1

can be observed in the CIRP of M/s Parenteral Drugs Private Limited

(Corporate Debtor), where the IBBI has once again recently on 17.12.2024

suspended Respondent No.1, Kairav Anil Trivedi, for almost similar

contraventions and irregularities for a period of two years.

Page 65 of 97

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(w) It has been brought to our notice that the IBBI issued a show-cause

notice to Respondent No. 1, Mr. Kairav Anil Trivedi, on 10.04.2024 in the

abovementioned matter to which an order was passed vide order no.

IBBI/DC/256/2024 dated 17.12.2024. The Disciplinary Committee of the

IBBI states that: -

"2.1. Irregularity in entering into an MoU.

Alleged contravention 2.1.1. It was observed that the CIRP of the CD was initiated by the AA vide its order dated 09.02.2023 and Mr. Kairav Anil Trivedi was appointed as IRP in the CIRP of the CD. It was further observed from Mr. Kairav Anil Trivedi's reply to the IA that he visited the Panwa plant of the CD on 13.02.2023 and on the same day, a contract manufacturing Memorandum of Understanding (MoU) between the CD and Virat Tradecorp Private Limited (Virat) was entered into in respect of pharmaceutical plant of the CD situated at Village -Panwa. District - Khargone, Madhya Pradesh. The first meeting of the Committee of Creditors (CoC) was conducted on 13.03.2023 which was adjourned to 18.04.2023. Hence, it is seen that the MoU with Virat was entered on 13.02.2023 without the knowledge and approval of the CoC. The CoC was informed of the MoU with Virat vide email dated 13.03.2023, the day on which first meeting of CoC was held partially.

2.1.2. Section 28(1)(k) provides that prior approval of COC is required for certain actions such as for

Page 66 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

transferring rights, delegation of authority etc. It was observed from Mr. Kairav Anil Trivedi's reply to IA that Panwa Plant of the CD had closed its operation one year prior to initiation of CIRP of the CD. It is mentioned in the SCN that starting manufacturing operation in a closed plant after commencement of CIRP was an important decision and not a decision in ordinary course of business. 3.1.In view of the foregoing, the DC in exercise of the powers conferred under Section 220 of the Code read with Regulation 13 of the Inspection and Investigation Regulations and Regulation 11 of the IP Regulations hereby suspends the registration of Mr. Kairav Anil Trivedi (Registration No. IBBI/IPA-002/IP-

N00728/2018-2019/12332) for a period of two years which shall run consecutive to period of suspension of registration of Mr. Kairav Anil Trivedi by any other DC order whenever the same takes effect."

(x) Based on above detailed submissions, we find that IBBI who is the

regulator for Resolution Professionals as per the Code, has categorically

held Respondent No. 1 as guilty in the present case and debarred the

Respondent No. 1 for six months. It is also a fact that the Respondent No.

1 filed a Writ Petition and obtained ad-interim relief from the Hon'ble High

Court of Bombay. However, we consciously note that the Hon'ble High

Court of Bombay gave interim relief to the Respondent No. 1 only on one

limited technical ground that whether Mr. Ravi Mittal who signed final

Page 67 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

disciplinary order acted as whole time member (WTM) or chairman of

IBBI. In fact, the Hon'ble High Court of Bombay did not comment on any

aspect of merit based on IBBI finding, holding Respondent No. 1 to be

involved in misconduct in the present case.

(y) We note that one of ground in the present appeal is violation of CIRP

Regulations No. 28 i.e., transferring assets of the Corporate Debtor during

CIRP without consent of CoC by signing MoU with SIPL, again alleged to

be a related party of Corporate Debtor. In the above quoted case of

Parental Drug (Supra) which is an independent case in relation to the

present appeal, the Respondent No. 1 has been found guilty of violation of

Regulation as well as Section 28(1)(h) (for obtaining prior approval of CoC

in certain cases) and IBBI, the regulator has debarred the Respondent No.

1/ Mr. Kairav Anil Trivedi for a period of two years.

(z) Thus, based on wholistic reading of several cases instituted against the

Respondent No. 1/ Mr. Kairav Anil Trivedi, we find merit in the arguments

of the Appellant and find Respondent No. 1 involved in misconduct which

has also been investigated and confirmed by IBBI.

Issue No. (I) (D) What has been stand of CoC on CIRP Process.

(a) We have already taken into consideration the various facts regarding stand

of the CoC w.r.t. non confirmation and non appointment of the Respondent

No. 1 as Resolution Professional. We have already noted the details of IA

Page 68 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

247 of 2022 filed by the CoC for replacement of Respondent No. 1 and

appointment of Mr. Pradeep Kabra as new Resolution Professional.

(b) We have further examined in detail the additional affidavit dated

28.03.2022 filed by the Canara Bank on behalf of the CoC in which several

allegations of malicious and fraudulent act by Respondent No. 1 were

elaborated along with violation of Code & CIRP regulations as contained

therein.

(c) In the additional affidavit dated 28.03.2022, the CoC has used the word

malicious and fraudulent act of the Respondent No. 1, whereas the CoC

filed a fresh IA 3346 of 2022 on 10.11.2022 withdrawing earlier IA 247

2022. During pleadings we asked the reasons for change of such drastic

stand from complete castigation and alleging the Respondent No. 1

involving fraudulent activities to clean chit to the Respondent No 1 vide

our earlier order dated 30.05.2024 advising CoC to submit facts explaining

same in affidavit which reads as under:-.

"On 13.05.2024 the following order was passed :-

"This appeal is directed against the order dated 15.05.2023 passed by National Company Law Tribunal, Mumbai Bench, Court-II by which IA 3525 of 2022 filed by the present appellant (Amit Sangal) under Section 65 (2) of Insolvency & Bankruptcy Code, 2016 (in short 'Code') seeking various reliefs, has been dismissed.

2. The CIRP proceedings was triggered by Amit Sangal (Appellant) as an Operational Creditor by filing an Page 69 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

application against 'Prince MFG Industries Pvt. Ltd.' which was admitted on 05.10.2021. By virtue of that order, Respondent No. 1 was appointed as IRP.

3. The first meeting of the CoC was held on 10.11.2021. In the said meeting, Item No. 15 was in regard to confirmation of approval of appointment of Respondent No. 1 as the Resolution Professional (RP) of the corporate debtor along with his fee and expenses and the manner of payments.

4. However, according to Respondent No. 1, he was duly appointed on 10.11.2021 and therefore, intimated the Adjudicating Authority through email dated 17.11.2021.

5. However, the Member of CoC who had voted in respect of that resolution had all dissented.

6. The second meeting of the CoC was held on 30.12.2021 in which the CoC proposed the name of Pradeep Kabra with his written consent and sought to replace Respondent No. 1.

7. As per Section 22 (3) (b) of the Code, the CoC has to file an application before the AA for the purpose of taking an order and in this regard, we have been informed that CoC filed the application bearing I.A. No. 247 of 2022 for confirmation of the appointment of Pradeep Kabra as the IRP. However, I.A. No. 247 of 2022 was withdrawn through an application filed by the RP (Respondent No. 1) bearing I.A. No. 3346 of 2022 though allegedly authorized by the CoC. The said application was withdrawal on 10.11.2022

8. During the course of hearing, the issue arose that if the resolution dated 10.11.2021, appointing the Respondent No. 1 as the RP was dissented then how Respondent No. 1 had

Page 70 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

conveyed to the AA on 17.11.2021 itself that he has been appointed as such.

9. We have pertinently asked Respondent No. 1 about the voting which may have taken place on the approval of his appointment on 10.11.2021.

10. At this juncture, he has submitted that he has no instructions for making the submissions in this regard, therefore, he prays for an adjournment. Adjourned to

29.05.2024.

11. The Respondent No. 1 shall state on an affidavit about the date on which voting took place on the resolution dated 10.11.2021 and also the detail of the voting and it has to be in consonance with the Regulation 26 of the IBBI (CIRP) Regulation, 2016 if it was the case of electronic voting."

2. Pursuant to the aforesaid order, Respondent No. 1 has filed his Affidavit dated 21.05.2024.

3. Counsel for Respondent No. 3 submits that the CoC passed the resolution in its first meeting dated 10.11.2021 regarding appointment of Respondent No. 1. But according to Appellant the CoC, at the time of confirming the appointment of Respondent No. 1/ Resolution Professional, dissented.

5. Counsel for CoC submits that the voting took place in the first CoC Meeting held on 10.11.2021 regarding appointment of Respondent No. 1. However, nothing is available on record about the voting.

6. Counsel for Respondent No. 3 is therefore directed to file an Affidavit of all the Members of the CoC, who have allegedly voted on the resolution dated 10.11.2021 on 10.11.2021 regarding appointment of Respondent No. 1 and

Page 71 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

also state as to why they dissented about his appointment on 17.11.2021.

7. The CoC shall also explain in its Affidavit about the contents of the Additional Affidavit of the application bearing I.A. No. 247 of 2022. In which working of Respondent No. 1 has been labelled as malicious and fraudulent and showed state about the sudden change of heart for filing the application I.A. 3346 of 2022.

8. Let the Affidavit be filed by the responsible person of the CoC before the next date of hearing with an advance copy to Counsel for the Appellant.

9. Adjourned to 22nd July, 2024.

(d) In pursuant to above, the CoC filed affidavit before this Appellate Tribunal

dated 29.07.2024. We have gone through the affidavit and will take into

consideration para no. 10, 11 and 12 explaining the reasons.

"10. We say that the Right2Vote document was erroneously created much after the confirmation of the IRP as RP in the first meeting of the CoC. The dissent reflected in the said Right2Vote document is on the part of Canara Bank which sought to replace the RP for the reasons set out above. We say that by this time, the RP was already confirmed in terms of Section 22 of the IBC and the notification thereof was already sent to the Adjudicating Authority. Consequently, the subsequent dissent recorded is on no legal consequence.

11.We say that thereafter, IA No.247 of 2022 was filed for replacement of the Resolution

Page 72 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Professional. At the first instance, the Hon'ble NCLT Bench Mumbai, was not impressed with the submissions made in support of the Application No.247 of 2022 and made critical comments against the CoC in order dated 3rd February 2022.

Therefore, the CoC filed an additional Affidavit dated 28th March 2022, in support of the Application stating additional grounds for replacement of the RP. The CoC made several allegations against the RP including his non-

appointment which were contrary to the record and incorrect due to the confusion caused on account of the Right2Vote document which was created at a later point of time as explained above.

12. It is pertinent to state and submit that subsequently during the CIRP, CoC realised that the RP acted in the best interests of the stakeholders & Corporate Debtor, and the Resolution Plan for Corporate Debtor being in place, CoC withdrew the allegations including non-appointment of RP and found no justifiable reason to pursue the Application. The unanimous decision to withdraw the application was taken during the 11th CoC Meeting dated 5th November 2022.

(e) From above, we observe that the CoC is trying to justify that the

Right2Vote document was erroneously created which caused confusion.

We find that the additional affidavit dated 28.03.2022 filed by Canara Bank

in support of IA 247 of 2022 before the Adjudicating Authority, where the

CoC made several allegations against the Respondent No.1 are quite

contrary to new affidavit dated 29.07.2024 before us.

Page 73 of 97

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(f) The CoC has now tried to justify their action in their affidavit dated

29.07.2024 before us merely on the ground that the right to vote document

was erroneously created and is the cause of all fall outs.

(g) When we compare this affidavit of the CoC dated 29.07.2024 filed before

us with the additional affidavit of the CoC dated 28.03.2022 filed before

the Adjudicating Authority in connection with the IA 247 of 2022 (which

we have already noted in detail reproducing the entire additional affidavit

in the preceding discussion), we find it rather strange that the affidavit filed

before the Adjudicating Authority was backed up by exact details of several

violation of regulations including Regulation 19, 26, 35A, 36 A, etc., by

the Respondent No. 1 which have completely been ignored by the CoC in

the new affidavit dated 29.07.2024 before us.

(h) We do not find the new affidavit dated 29.07.2024 filed by the CoC before

us as convincing and we rather find it in complete contrast with the factual

position presented before the Adjudicating Authority, in additional

affidavit dated 28.03.2022 in IA No. 247 of 2022, hence we are unable to

accept the reasoning given by the CoC in the present affidavit dated

29.07.2024. The bank management may like to review whole process

involved to safeguard public money of hundreds of crores of rupees. We

rest at this only.

54. Issue No. (II) (A) Whether the MoU signed with the SIPL was in accordance

with provision of the Code and the Regulations or otherwise. Whether Mr. Kairav

Page 74 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Anil Trivedi violated any of the laid down provisions in approving and signing

the said MoU.

(a) We note that the MoU was signed between the Respondent No. 1/ Mr.

Kairav Anil Trivedi on behalf of the Corporate Debtor and SIPL the

manufacture contractor for the purpose of allowing the SIPL to operate the

plant of the Corporate Debtor at Haridwar on agreed upon terms and

conditions. The MoU was signed by the Respondent No. 1 on behalf of the

Corporate Debtor. We note that the MoU was signed on 10.11.2021 with

the start date of contract manufacturer has been stated to be 05.10.2021 i.e.,

with retrospective effects.

(b) We consciously note that CIRP itself was initiated vide order dated

05.10.2021 by the Adjudicating Authority passed in Section 9 application

field by the Appellant. It is interesting to note that effective date of MoU

dated 05.10.2021 is also the date on which by the Adjudicating Authority

passed the order for initiation of the CIRP. We wonder how, when the

CIRP was initiated and the Interim Resolution Professional was appointed

on 05.10.2021, the SIPL plant was handed over to the contractor w.e.f.

05.10.2021. This does not stand to any logic.

(c) Incidentally in the said MoU, the Respondent No. 1 has represented himself

as duly appointed Resolution Professional of the Corporate Debtor, which

we have seen in preceding discussions that the Respondent No. 1 was never

appointed as Resolution Professional of the Corporate Debtor and

Page 75 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

apparently statement made by the Respondent No. 1 in the said MoU was

not correct. During the Second CoC meeting held on 30.12.2021, the

Respondent No. 1 had proposed agenda no. 7 with draft copy of MoU for

contract manufacturing dated 10.11.2021 for vetting of CoC and the agenda

reads as under :-

(d) In this case, we recall that CoC in their additional affidavit dated

08.03.2022 filed before the Adjudicating Authority has recorded as under:-

(e) We have already noted that the MoU was signed by Respondent No. 1 on

10.11.2021, however, the same was put up to the CoC in 2nd CoC meeting

Page 76 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

held on 30.12.2021 as draft MoU which again clearly shows mis-

representation by the Respondent No. 1.

(f) In this connection, we note that the CoC had filed IA No. 247 of 2022

before the Adjudicating Authority labelling the Respondent No 1 involved

in fraudulent, malicious intents without any authority. We have already

noted the details of additional affidavit filed by the CoC and also

reproduced the relevant extract in the previous discussion, which are self

explanatory and speak volumes.

(g) We observe that IBBI has taken cognizance of a complaint of the Appellant

on the same issue of signing MoU by the Respondent No. 1 without

authority of the CoC and found the Respondent No. 1 guilty of violation of

Section 28(1) (h), 208(2)(a) and (e) of the Code and regulation 7(2) (a) and

7(2)(h) read with clauses 1,2,3,5 and 14 of the Code of Conduct of the IP

Regulations of the Code and the relevant findings of IBBI reads as under :-

Page 77 of 97

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Page 78 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(h) We observe that the CoC is vested with the authority to oversee the work

of Interim Resolution Professional / Resolution Professional and need to

specifically approve actions that could impact the Corporate Debtor's

Page 79 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

financial health requiring the CoC's prior approval like the transfer of rights

or financial or operational debts under material contracts, except when

carried out in the ordinary course of business. This provision ensures that

the Interim Resolution Professional /Resolution Professional cannot make

significant changes to the Corporate Debtor's financial or contractual

arrangements without the informed decision and approval of CoC. We note

that in present appeal, the Respondent No. 1 did not take prior approval or

consent of CoC before signing the said MoU with SIPL.

(i) We take into consideration Section 28 K of the Code, which reads as

under:-

"Section 28 K of the Code

28. Approval of committee of creditors for certain actions -

(k) transfer rights or financial debts or operational debts under material contracts otherwise than in the ordinary course of business;"

(Emphasis Supplied)

(j) Based on above analysis, we hold that the Respondent No. 1 signed the said

MoU with SIPL in violation of the provisions of the Code and the CIRP

Regulations.

55. Issue No. (II) (B) Whether the contractor of Haridwar plant of the

Corporate Debtor i.e., SIPL was related party of the Corporate Debtor. Whether

Mr. Kairav Anil Trivedi brought out misleading facts before CoC .

Page 80 of 97

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(a) It has been brought to our notice that SIPL is a related party of the

Corporate Debtor and in this connection, the Appellant referred to GST

Registration details filed in annexures 16 of the appeal. From registration

details it is noted that even prior to commencement of CIRP on 05.10.2021,

the SIPL has given the registration effective date as 07.03.2021 and it

indicates that the principal places of business for SIPL is the same as the

address of the Haridwar plant of the Corporate Debtor. We have perused

that on effective date of GST document of SIPL i.e., 07.03.2021 the

principal office of SIPL was shown at address- Sarvashree Industries

Private Limited, C/O- M/S Prince MFG Industries Pvt. Ltd., Cabin No-02,

Ground Floor Plot No-5B, Sector 03, IIE,, Sidcul, Haridwar, Haridwar,

Uttarakhand, 249403. This prima-facie indicate that there was a co-relation

between the SIPL and the Corporate Debtor/ SBOD.

➢ The relevant documents are reproduced as under :-

Page 81 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 82 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

Page 83 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(b) Thus, we find that the Respondent No. 1 signed MoU with SIPL violating

provision of the Code and Regulations as discussed earlier.

(c) We also hold that the SIPL was related party of the Corporate Debtor and

Respondent No. 1 gave misleading facts to the CoC in 2nd CoC meeting.

56. Issue No. (III) Whether, material irregularities, if any, by Interim

Resolution Professional /Resolution Professional while taking approval from the

Adjudicating Authority will affect the fate of approved Resolution Plan.

(a) At the first instance, we would mention that there is no specific definition

of Material Irregularity in the Code :-

Page 84 of 97

Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

(b) We observe that the Black's law dictionary defines the terms "Material"

& "Irregularity" separately. These reads as under :-

Material: 'Important; more or less necessary; having influence or effect; going to the merits; having to do with matter, as distinguished from form. Representation relating to matter which is so substantial and important as to influence party to whom made is "material." See Material fact; Relevant.' and irregularity as-

Irregularity: 'The doing or not doing that, in the conduct of a suit at law, which, conformably with the practice of the court, ought or ought not to be done. Violation or non- observance of established rules and practices. The want of adherence to some prescribed rule or mode of proceeding; consisting either in omitting to do something that is necessary for the due and orderly conducting of a suit, or doing it in an unseasonable time or improper manner. The technical term for every defect in mechanics of proceedings, or the mode of conducting an action or defense, as distinguishable from defects in pleadings (see e.g. Fed.R.Civil P. 32(d), irregularities in taking of depositions). Term is not synonymous with "illegality." In Canon law, any impediment which prevents a man from taking holy orders.'

➢ Thus, as per the definition mentioned above, Material Irregularity refers to

a significant deviation from established rules, practices, or procedures that

is substantial enough to influence the outcome of a legal proceeding or

decision. It involves a failure to adhere to prescribed methods, either by

Page 85 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

omitting necessary actions or performing them improperly or untimely.

Such irregularities are not merely formal defects but have a material

impact, affecting the merits of a case or the rights of the parties involved.

Unlike illegality, which denotes a violation of law, material irregularity

pertains to procedural defects that can undermine the fairness or validity of

legal proceedings.

➢ It is crucial to note that the Code provides a comprehensive legal

framework for the resolution of insolvency of corporate debtor in a time-

bound manner, with the objective of maximizing the value of assets of the

Corporate Debtor and ensuring the equitable treatment of stakeholders. The

CIRP is a critical mechanism under the Code, and it is imperative that the

process is conducted fairly, transparently, and in strict compliance with the

provisions of the law.

➢ Thus, we may derive an interference that a material irregularity in the

conduct of the CIRP is one that significantly impacts the fairness, legality,

and integrity of the process. Such irregularities can lead to delays, financial

losses, and litigation, thereby defeating the objectives of the Code. Material

irregularities may arise from non-compliance with the statutory provisions,

rules, and regulations governing the CIRP. Any deviation from these

prescribed legal provisions, both procedural or substantive, may amount to

a material irregularity and affect the legitimacy of the resolution process,

Page 86 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

of-course, depending upon the facts and context of each case and no strict

guidelines can be laid down.

➢ In this connection, we note that Section 61(3)(ii) of the Code provides that

an appeal against an order passed by the Adjudicating Authority approving

the Resolution Plan may be filed if there has been material irregularities in

exercise of the powers of Resolution Professional during CIRP. Section

61(3)(ii) of the Code reads as under :-

"61(3) An appeal against an approving a resolution plan under Section 31 may be filed on the following grounds, namely, ....-

(ii)There has been material irregularities in exercise of the powers by the Resolution Professional during the corporate insolvency resolution period."

(Emphasis Supplied) ➢ Fraud or collusion by the resolution professional with the corporate debtor,

or any other stakeholder involved in the CIRP concealment of material

facts, non-adherence to significant CIRP Regulations etc. also constitutes

a material irregularities. Any act of misrepresentation, concealment, or

fraudulent conduct undermines the transparency and fairness of the

process. Similarly, mismanagement of the corporate debtor during the

CIRP can give rise to material irregularity. The resolution professional is

entrusted with the responsibility of managing the affairs of the corporate

debtor in a manner that preserves its value. Any instance of

mismanagement, including diversion of funds, dissipation of assets, or any Page 87 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

conduct that is detrimental to the corporate debtor, may be considered a

material irregularity.

➢ If a material irregularity is established, the Adjudicating Authority is

empowered under the Code to take corrective measures. Such measures

may include setting aside decisions taken during the CIRP, directing an

investigation into the conduct of the resolution professional, or imposing

sanctions on the parties involved. We are conscious that the Adjudicating

Authority has limited scope for rejecting a Resolution Plan under Section

31 of the Code and cannot unnecessarily interfere with the "commercial

wisdom of CoC". However, it may not mean that the Adjudicating

Authority cannot look into any relevant aspect before approving the

Resolution Plan proposed by the CoC. The Adjudicating Authority can

reject a plan, if it does not meet the requirement of the Code or Regulations

or it violate the Code or Regulations. The Resolution Plan has to be in

compliance with Section 30 of the Code. The Hon'ble Supreme Court of

India, time and again has stipulated that the commercial wisdom of the CoC

is supreme and cannot be interfered as held in catena of judgements

including, K. Shashidhar Vs. Indian Overseas Bank & Ors. [(2019) 12

SCC 15] and Committee of Creditors of Essar Steel India Ltd. Vs. Satish

Kumar Gupta [(2020) 8 SCC 531]. While the Adjudicating Authority

cannot interfere with the CoC's commercial decisions, it needs to ensure

that the procedure followed by the CoC and/or Resolution Professional is

Page 88 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

in accordance with the Code and Regulations. Any significant procedural

lapses may be a ground for rejection.

➢ The evolving jurisprudence in this area will continue to define the scope

and implications of material irregularities, but the fundamental principles

of fairness, transparency, and compliance with the law must be upheld at

all times. All parties involved in the CIRP, including resolution

professionals, creditors, and corporate debtors, must adhere to the highest

standards of integrity and diligence to ensure that the insolvency resolution

process is conducted in a manner that upholds the objectives of the Code

and protects the interests of all stakeholders.

➢ In the present matter before us, the material irregularities have been

observed in various instances. The conduct of Mr. Kairav Anil Trivedi, as

an Interim Resolution Professional has been investigated by IBBI

subsequent to which the Disciplinary Committee of IBBI found the

Respondent No. 1 guilty of misconduct and therefore suspended the

Respondent No. 1, for 6 months. Thus, we find that there have been

material irregularities in CIRP Process, which we have discussed earlier

and will not repeat once again here.

(c) In this connection, we note that the Respondent No. 1 has brought out

that the Resolution Plan as proposed by Ashish Shah has already been

approved by the CoC and confirmed by the Adjudicating Authority vide

the Impugned Order dated 15.05.2023 passed in I.A. No. 2977 of 2022

Page 89 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

for approval of the Resolution Plan. It has also been brought out by the

Respondent no. 1 that the Resolution Plan has been implemented and the

money has been distributed to the Creditors. The same fact has been

confirmed by the CoC. We also note that there has been intervention

application filed by Mr. Ashish Shah which also confirms the same fact.

(d) We further note that in both the appeals, i.e. Company Appeal (AT)(Ins.)

No. 916 of 2023 and Company Appeal (AT)(Ins.) No 792 of 2023, two

IAs have been filed, namely IA No. 1662 of 2024 and IA No. 2203 of

2024 respectively by an Intervenor/Applicant, Mr. Ashish Shah, who is

the Successful Resolution Applicant (SRA).

(e) The Intervenor has brought out that the Appellant had initiated CIRP

against Corporate Debtor under Section 9 of the Code, leading to the

appointment of Respondent No. 1 as the Interim Resolution Professional

by the Adjudicating Authority.

(f) The Intervenor submitted that Respondent No. 1 was subsequently

confirmed as the Resolution Professional vide order dated 10.11.2021

and, in compliance with the CIRP Regulations, undertook necessary

procedural steps, including the public announcement, constitution of the

CoC, and appointment of independent valuers. The valuation report

determined the Corporate Debtor's average liquidation value as Rs. 39.20

Crores and the fair market value as Rs. 53.16 crores. The Respondent

No. 1 proceeded with the issuance of an Expression of Interest ('EOI'),

Page 90 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

following which the Intervenor duly submitted its EOI and Resolution

Plan along with the requisite bidding amount of Rs. 5 Lakhs.

(g) It has been submitted by the Intervenor/Applicant that subsequently, the

Resolution Plans were presented before the CoC, and all prospective

resolution applicants were granted the opportunity to interact with CoC

members. After reviewing the submitted plans, the CoC, exercising its

commercial wisdom, unanimously approved the Applicant's Resolution

Plan through a 100% e-voting process. The said plan was deemed to be

most feasible and viable in terms of compliance with the provisions of

the Code and asset maximization. The Adjudicating Authority, vide order

dated 15.05.2023, also acknowledged the merits of the Applicant's plan,

approving it as the most suitable resolution plan in consonance with the

objectives of the Code. Furthermore, the Resolution Plan remained

unchallenged under Sections 43, 45, 49, 50, and 66 of the Code. The

Adjudicating Authority directed the Resolution Professional to hand over

all relevant records and documents to the Intervenor/Applicant for further

implementation.

(h) The Intervenor/SRA asserts that its role in the CIRP has been crucial,

from presenting the Resolution Plan before the CoC to obtaining

Adjudicating Authority's approval, thereby ensuring the successful

resolution of the Corporate Debtor. The Applicant has since taken over

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control of Corporate Debtor from the Resolution Professional as of

30.06.2023, rendering the present appeal infructuous.

(i) In this connection, we note that the total claims of the creditors were of

Rs. 286,95,18,291/- out of which Rs.278,62,79,988/- pertain to Financial

Creditors. The total admitted claim of Rs. 179,45,41,528/-. The claimed

amount of Canara Bank was Rs. 115,26,84,497/-, Axis Bank was

Rs. 32,03,6/8,777/- and ICICI Bank was Rs. 23,82,49,950/-. We also note

that the liquidation value of the Corporate Debtor was assessed at

Rs. 39.20 Crores and fair value of the Corporate Rs. 53.16 Crores.

(j) The Resolution Plan has been approved by the CoC and the Adjudicating

Authority which is incidentally lower than the fair value Rs. 53.16 Crores

and liquidation value of Rs. 39.20 Crores. However, we will not go into

aspect, as this lies within the domain of commercial wisdom of the CoC.

We note that Rs. 34.95 Crores has been paid by SRA to CoC.

(k) However, we have to deal with the issue raised by the Appellant in both

the appeals that if the approval of Plan was accorded based on

concealment of facts or misrepresentation of fact which affect the interest

of the stakeholders of the Corporate Debtor, then whether such

Resolution Plan could have been approved by the Adjudicating Authority

under Section 31 of the Code. We have already examined the that the

Appellant has been able to convince us regarding several irregularities

and violation of the Code and CIRP regulations by the Respondent No.

Page 92 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

1. We have already taken into account in detail and analysed the facts

brought out by the Canara Bank on behalf of the CoC in an additional

affidavit filed dated 28.03.2022 before the Adjudicating Authority in

connection with IA No. 247 of 2022,

(l) We have also taken into account the investigation conducted by the IBBI

on the issues of irregularities conducted by the Respondent No. 1 which

pertain to present case and we have noted the finding of IBBI holding the

Respondent No. 1 of guilty of misrepresentation and various concealment

affecting the stakeholders of the Corporate Debtor. We consciously note

that the IBBI has held the Respondent No. 1 responsible for violation of

provisions of the Code and CIRP Regulations and has debarred the

Respondent No. 1 for 6 months.

(m) In this connection, we would like to refer to the recent judgement of

Hon'ble Supreme Court of India in the matter of Independent Sugar

Corporation Ltd. v/s Girish Sriram Juneja and others, [(2025) SCC

OnLine SC 181] bearing Civil Appeal No. 6071 of 2023. Although, the

said judgement primarily focuses interplay between Competition

Commission of India Act, 2002 and IBC Code, 2016 and the mandatory

nature of the proviso to Section 31 (4) of the Code, it is much relevant to

the subject matter of our present case. The relevant portion of the above

mentioned case is reproduced as under:

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Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

"150. In the present case, for reasons discussed above, the statutory provision and legislative intent unequivocally affirm the mandatory nature of the proviso to Section 31(4) of the IBC. For a Resolution Plan containing a combination, the CCI's approval to the Resolution Plan, in our opinion, must be obtained before and consequently, the CoC's examination and approval should be only after the CCI's decision. This interpretation respects the original legislative intent, and deviation from the same would not only undermine the statute but would also erode the faith posed by the stakeholders in the integrity of our legal and regulatory framework.

152. Further, the indispensability of procedural safeguards as an integral component of a just legal order must be given its due weight, especially as procedural requirements are not mere formalities to be circumvented for expediency but substantive protections designed to ensure fairness and transparency. In that light, the procedural lapses with respect to objections to the proposed combination and the consequent divestiture modification proposed within the framework of the Competition Act, 2002, seriously vitiated the integrity of the process. It is therefore reiterated and reinforced that adherence to procedural propriety is non- negotiable and that the ends cannot justify the means.

153. By upholding the mandatory nature of the statutory provision and emphasising upon the critical importance of procedural safeguards, the principle of rule of law is upheld in alignment with global best practices which underscore fairness, predictability and transparency. Such an approach

Page 94 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

not only reinforces the integrity and credibility of the legal framework but also highlights India's commitment to fostering a regulatory environment, which is conducive to both business and innovation. Additionally, it also ensures the protection and enforcement of rights in an equitable manner, free from bias or favouritism.

154. Therefore, a balance between the need for expeditious relief and adherence to the statutory framework must necessarily be maintained, in order to ensure that the objectives of both, the IBC and the Competition Act are met in a manner that supports India's long term economic aspirations.

155.2. Any action taken pursuant to the Resolution Plan shall stand nullified, and the rights of all stakeholders shall be restored as per status quo ante, prior to the approval of the Resolution Plan by the CoC on 28.10.2022."

(Emphasis Supplied)

(n) From above, we note that the Hon'ble Supreme Court of India has

emphasised regarding indispensability of procedural safeguards as an

integral component of a just, legal ordered must be given its due weight,

especially as procedural requirements are not mere formalities to be

circumvented for expediency but substantive protections designed to

ensure fairness and transparency.

(o) The Hon'ble Supreme Court of India further laid down the law regarding

critical importance of procedural safeguards, the principle of rule of law

is upheld in alignment with global best practices which underscore

Page 95 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

fairness, predictability and transparency. We note that the Hon'ble

Supreme Court of India in the above quoted case has declared that any

action taken pursuant to the Resolution Plan shall stand nullified, and the

rights of all stakeholders shall be restored as per status quo ante, prior to

the approval of the Resolution Plan by the CoC.

(p) We find that the position is similar in the present case.

57. We are duty bound to follow ratio as stipulated by the Hon'ble Supreme

Court of India in above case of Independent Sugar (Supra). As such, we hold

that even the approved Resolution Plan will get affected.

58. In view of the above detailed examination, we find merit in both the appeals

bearing Company Appeal (AT)(Ins.) No. 916 of 2023 and Company Appeal

(AT)(Ins.) No 792 of 2023. Both appeals are allowed. Impugned Order dated

15.05.2023 is set aside. IA, if any, are closed. No costs.

59. Parties are directed to appear before the Adjudicating Authority on

28.02.2025.

60. As regards, the Appellant's Contempt Petition bearing no. 1034 of 2024, we

understand that the Appellant was aggrieved by the approval of the Resolution

Plan and rejection of his objection to approval of Resolution Plan, both in IA No.

IA/3523/2022 and IA/2977/2022 dealt in CP (IB) No.934/MB/2020 by the

Adjudicating Authority vide Impugned Order dated 15.05.2023. We also note that

before the Impugned Order dated 15.05.2023 in CP (IB) No.934/MB/2020 was

passed by the Adjudicating Authority, the Appellant also filed Contempt Petition

Page 96 of 97 Comp. App. (AT) (Ins.) No. 916 of 2023, 792 of 2023 & 1034 of 2024

No. 04 of 2023 before the Adjudicating Authority on 08.03.2024, which was

disposed of by Adjudicating Authority vide Impugned Order dated 28.03.2024 in

CP (IB) No.934/MB/2020.

61. Although we have noted the contention of the Appellant and Respondent in

the Company Appeal (AT) (Ins.) No. 1034 of 2024, we do not intend to examine

this further, in view of the fact that we have allowed the Company Appeal (AT)

(Ins.) No. 916 of 2023 and Company Appeal (AT) (Ins.) No. 792 of 2023. We are

of the opinion that no further purpose would be served now.

62. The Company Appeal (AT) (Ins.) No. 1034 of 2024 is disposed of in view

of the above observations. IA, if any, are closed. No costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

Sim

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