Mr. P. L. Adke vs Harshad S. Deshpande Liquidator Of ...

Ex-Director of Corporate Debtor Having Din No. 06411453 And Address at Laxmi Vijay Building, ...Appellant No. 1 Peth Phata, Pachwati, Nashik - 422003 Email Id: vaibhav@silveroak.co.in

VIKAS SURESH MALEKAR,

Ex-Director of Corporate Debtor Having Din No. 02558051 And Address at Flat No. 6, Shivkranti Society, Peth Road, Mehardham, Nashik - 422003 ...Appellant No. 2 Email Id: vikas_malekar@redifmail.com

Versus

CMA HARSHAD S. DESHPANDE

Liquidator of Corporate Debtor Having Registration No. IBBI/IPA-001/ IP-P-166/2017-2018/10335 And having office at Rohit Chambers, 4th Floor, Janmabhoomi Marg, Fort, Mumbai - 400 001 Phone No. 9890420201 ...Respondent No. 1 Email Id: harshad_de@hotmail.com

M/S SILVEROAKS COMMERCIALS LIMITED

Plot No. F-24 MIDC Satpur ...Respondent No. 2 Nashik - 422007

NASHIK MERCHANT CO-OPERATIVE BANK LIMITED Member of CoC having office at A/16, Late Babubhai Rathi Chowk, Netaji Subhashchandra Bose Marge, ...Respondent No. 3 MIDC, Satpur, Nashik - 422007 Email: ceo@namcobank.in 2

CITY CO-OPERATIVE CREDIT AND CAPITAL LIMITED Member of CoC having office at having its address at ...Respondent No. 4 224, 1st Floor, Opposite Mahalaxmi Theatre, Dindori Road, Panchwati, Nashik - 422003

MR. P.L. ADKE

Being Sole Proprietor of M/s P.L. Adke ...Respondent No. 5 Having office at 02-AB, Adgaonkar Plaza, AAB Circle, Trimbark Road, Nashik - 422 007 Email Id: pladke9@gamil.com

GALACTICO CORPORATE SERVICES LIMITED ...Respondent No. 6 Having office at Office No. 68, Business Bay Premises Co-Operative Housing Society Nashik - 422002 Present: For Appellants : Mr.Shyam Nandan, Mr. Gaurav Nail and Mr. Pranati Bhatnagar, Advocates. For Respondents : Mr.Rohit Rathi, Advocate for R-1. Mr. Rahul Totala along with Mr. Rajat Malu, Advocates for R-3

With

Company Appeal (AT) (Insolvency) No. 1123 of 2020

IN THE MATTER OF: CITY CO-OPERATIVE CREDIT AND CAPITAL LIMITED Member of CoC having office at having its address at 224, 1st Floor, Opposite Mahalaxmi Theatre, Dindori Road, Panchwati, Nashik - 422003 ...Appellant

Versus

CMA HARSHAD S. DESHPANDE

Liquidator of Corporate Debtor Having Registration No. IBBI/IPA-001/ IP-P-166/2017-2018/10335 And having office at Rohit Chambers, 4th Floor,

Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 3

Janmabhoomi Marg, Fort, Mumbai - 400 001 Phone No. 9890420201 ...Respondent No. 1 Email Id: harshad_de@hotmail.com

M/S SILVEROAKS COMMERCIALS LIMITED ...Respondent No. 2 Plot No. F-24 MIDC Satpur Nashik - 422007

NASHIK MERCHANT CO-OPERATIVE BANK LIMITED Member of CoC having office at A/16, Late Babubhai Rathi Chowk, Netaji Subhashchandra Bose Marge, ...Respondent No. 3 MIDC, Satpur, Nashik - 422007 Email: ceo@namcobank.in

MR. P.L. ADKE ...Respondent No. 4 Being Sole Proprietor of M/s P.L. Adke Having office at 02-AB, Adgaonkar Plaza, AAB Circle, Trimbark Road, Nashik - 422 007 Email Id: pladke9@gamil.com

GALACTICO CORPORATE SERVICES LIMITED ...Respondent No. 5 Having office at Office No. 68, Business Bay Premises Co-Operative Housing Society Nashik - 422002

SHAILAJA VAIBHAV PATIL

Ex-Director of Corporate Debtor ...Respondent No. 6 Having Din No. 06411453 And Address at Laxmi Vijay Building, Peth Phata, Pachwati, Nashik - 422003 Email Id: vaibhav@silveroak.co.in

VIKAS SURESH MALEKAR,

Ex-Director of Corporate Debtor ...Respondent No. 7 Having Din No. 02558051 And Address at Flat No. 6, Shivkranti Society, Peth Road, Mehardham, Nashik - 422003 Email Id: vikas_malekar@redifmail.com

Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 4

Present: For Appellant : Mr. Samesh Dhawan and Mr. Raghav Dembala, Advocates. For Respondents : Mr. Rohit Rathi, Advocate for R-1. Mr. Rahul Totala along with Mr. Rajat Malu, Advocates for R-3

With

Company Appeal (AT) (Insolvency) No. 11 of 2021

IN THE MATTER OF: MR. P.L. ADKE

Sole Proprietor of M/s P.L. Adke Having office at 02-AB, Adgaonkar Plaza, AAB Circle, Trimbark Road, Nashik - 422 007 ...Appellant Email Id: pladke9@gamil.com

Versus

HARSHAD S. DESHPANDE

Liquidator of Corporate Debtor Having Registration No. IBBI/IPA-001/ IP-P-166/2017-2018/10335 And having office at Rohit Chambers, 4th Floor, Janmabhoomi Marg, Fort, Mumbai - 400 001 Phone No. 9890420201 ...Respondent No. 1 Email Id: harshad_de@hotmail.com

NASHIK MERCHANT CO-OPERATIVE BANK LIMITED Member of CoC having office at A/16, Late Babubhai Rathi Chowk, Netaji Subhashchandra Bose Marge, ...Respondent No. 2 MIDC, Satpur, Nashik - 422007 Email: ceo@namcobank.in

CITY CO-OPERATIVE BANK LIMITED Member of CoC having office at having its address at 224, 1st Floor, Opposite Mahalaxmi Theatre, Dindori ...Respondent No. 3 Road, Panchwati, Nashik - 422003

SHAILAJA VAIBHAV PATIL Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 5

Ex-Director of Corporate Debtor Having Din No. 06411453 And Address at Laxmi Vijay Building, ...Respondent No. 4 Peth Phata, Pachwati, Nashik - 422003 Email Id: vaibhav@silveroak.co.in

VIKAS SURESH MALEKAR,

Ex-Director of Corporate Debtor Having Din No. 02558051 And Address at Flat No. 6, Shivkranti Society, ...Respondent No. 5 Peth Road, Mehardham, Nashik - 422003 Email Id: vikas_malekar@redifmail.com

Present: For Appellant : Mr. Varun Singh, Advocate. For Respondents : Mr. Rohit Rathi, Advocate for R-1. Mr. Rahul Totala along with Mr. Rajat Malu, Advocates for R-3

JUDGMENT

Per: Justice Rakesh Kumar Jain:

This order shall dispose of a batch of three appeals bearing CA (AT)

(Ins.) No. 1122 of 2020, CA (AT) (Ins.) No. 1123 of 2020 and CA (AT) (Ins.)

No. 11 of 2021, as all these appeals have been filed against the same

impugned order dated 16.12.2020, by which an application bearing M.A.

No. 510 of 2020 filed by the Resolution Professional seeking liquidation of

the Corporate Debtor under Section 33 of the Insolvency and Bankruptcy

Code, 2016 (in short 'Code') has been allowed by the Adjudicating Authority

(National Company Law Tribunal, Mumbai Bench, Court- III).

2. CA (AT) (Ins.) No. 1123 of 2020 'City Co-Operative Credit And Capital

Limited Vs. CMA Harshad S. Deshpande & Ors' has been filed by the

secured Financial Creditor. CA (AT) (Ins) No. 11 of 2021 'Mr. P.L. Adke Vs.

Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 6

Harshad Deshpande & Ors.' has been filed by the Resolution Applicant and

CA (AT) (Ins.) No. 1122 of 2020 'Shailaja Vaibhav Patil & Anr. Vs. CMA

Harshad Deshpande & Ors.' has been filed by the ex-director of the

Corporate Debtor. They are all aggrieved against the impugned order dated

16.12.2020, however, for the sake of convenience, the facts are being taken

from CA (AT) (Ins.) No. 1123 of 2020 treating it as the lead case.

3. In brief, an application under Section 9 of the Code was filed by an

Operational Creditor (M/s Ultratech Cement Ltd.) against the Corporate

Debtor (Silveroak Commercial Ltd.) which was admitted on 01.05.2019 and

Rajendra Kumar Khandelwal was appointed as an Interim Resolution

Professional (IRP). However, in the 3rd CoC meeting held on 16.07.2019,

Alkesh Rawka was appointed as Resolution Professional (RP) and his

appointment was approved by the Adjudicating Authority on 19.08.2019.

After the advertisement was published inviting expression of interest (EOI)

in Form-G, the RP received four EOI from (a). Nashik Merchant Cooperative

Bank Ltd. (CoC Member) (b). Galactico Cooperative Services Ltd. (c). Mr.

Prakash Adke (d). Mr. Amar Patil (Suspended Director). Out of the four,

only two submitted the resolution plan i.e. M/s Galactico Cooperative

Services Ltd. and Prakash Adke. The Prospective Resolution Applicants did

not satisfy the eligibility criteria and both were rejected by the CoC, having

two members, namely, City Co-Operative Credit And Capital Limited, having

18.55% voting share and Nashik Merchant Cooperative Bank Ltd., having

81.45% voting share. In the 10th CoC meeting held on 21.01.2020, finding

no chance of revival of the Corporate Debtor, resolution was passed to the

effect that "resolved that, pursuant to Section 33 of the Insolvency and Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 7

Bankruptcy Code, 2016 the approval of members of committee of creditors

be and is hereby accorded for liquidation of Corporate Debtor"

4. Pursuant to the aforesaid resolution, having been passed in 10th CoC

meeting held on 21.01.2020, the RP filed an application under Section 33 of

the Code for seeking following two reliefs (a) to pass an order under Section

33 of the Code commencing the liquidation process of the Corporate Debtor,

(b) to appoint Mr. Harshad Deshpande as a liquidator of Corporate Debtor.

The Adjudicating Authority, after considering the application of the RP,

found it to be a fit case to pass the order of liquidation under Section 33 of

the Code and after obtaining the consent of Harshad Deshpande, appointed

him as a liquidator and passed the formal directions.

5. It is pertinent to mention that all these three appeals are directed

against the same impugned order dated 16.12.2020 but in appeal bearing

no. 1123 of 2020 and 1122 of 2020 prayer for stay was declined whereas in

appeal bearing 11 of 2021 stay was granted to the effect that "the liquidator

may carry on the process but shall not sell the liquidation estate till next

date of hearing".

6. Counsel for the Appellant in CA (AT) (Ins.) No 1123 of 2020 has

submitted that since there was dissenting view of CoC in the 10th Meeting

and Nashik Merchant Cooperative Bank Ltd. was having a major voting

share, therefore, resolution was passed to appoint liquidator to proceed with

the liquidation but after the 10th Meeting of CoC held on 21.01.2020 and

passing of the impugned order on 16.12.2020, the Appellant (City Co-

Operative Credit And Capital Limited) has purchased the share of Nashik

Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 8

Merchant Cooperative Bank Ltd. by way of an assignment deed dated

05.04.2020 and has thus 100% voting share. It is submitted that with the

change of circumstances, the Appellant is now interested in approving the

plan submitted by P.L Adke. It is also submitted that the liquidation is the

corporate death of the corporate debtor and all the steps should be taken to

avoid it. It is also submitted that liquidation is the last resort to be adopted

after genuine attempts are made for revival of the Corporate Debtor. In

nutshell, it is argued that this Tribunal still can pass an order of turning the

clock back even after the CoC has become funcutous officio after the 10th

meeting of CoC passing the resolution of liquidation and the application

under Section 33 of the Code has been allowed by the Adjudicating

Authority, appointing the liquidator to proceed with the liquidation of the

asset of the Corporate Debtor. In support of his submissions, he has relied

upon a decision of this Court in the case of Mr. Sharad Sangi Vs. Vandana

Garg & Ors., CA (AT) (Ins.) No. 461 of 2018 and State of Maharashtra Vs.

Videocon Industries Ltd.& Ors., 2022 SCC Online NCLAT 6.

7. On the other hand, Counsel for the Respondent has argued that the

Code has not provided any express power to this Tribunal to set aside the

order of liquidation and that the judgments relied upon by the Appellant in

the case of Sharad Sangi (Supra) and State of Maharashtra (Supra) are not

applicable.

8. In reply, Counsel for the Appellant has fairly conceded that though

there is no provision as such in the Code to deal with such a situation but

Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 9

Rule 11 of the NCLAT Rules, 2016 provides the inherent power which may

be invoked.

9. We have heard Counsel for the parties and perused the record with

their able assistance.

10. The facts are not in dispute as these are borne out from the record.

The resolution plan submitted by M/s Galactico Cooperative Services Ltd.

and P.L. Adke were strongly opposed by Nashik Merchant Cooperative Bank

Ltd. having 81.45% voting share and a decision was taken in the 10th CoC

meeting held on 21.01.2020 for initiation of liquidation proceedings. The RP

filed the application under Section 33 of the Code which was allowed on

16.12.2020. It was during the pendency of these appeals, the assignment

deed dated 05.04.2022 has come into being as per which the Appellant (City

Co-Operative Credit And Capital Limited) has acquired the voting share of

Nashik Merchant Cooperative Bank Ltd. and has acquired 100 % voting

share. In these circumstances, it is sought to be argued that despite the fact

that CoC has become funcutous officio, the order passed under Section 33

of the Code by the Adjudicating Authority be set aside and the matter be

remanded back to the CoC for considering the resolution plan of P.L Adke.

The Appellant has tried to take support from an earlier decision of this

Tribunal in the case of Sharad Sangi (Supra). We have gone through the

decision of the coordinate bench. In this case the order was passed by the

Adjudicating Authority on two grounds, namely, total period of 270 days had

lapsed by the time last voting took place on 02.04.2018 and secondly, as on

26&27.03.2018 the voting percentage was 62.66% which is less than 75%.

Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 10

It was noticed as to whether a member who had already opined, can change

its opinion or not? It is the matter which can be decided by the CoC which

may extend the period and allow for a fresh voting and that Regulation 26(2)

being directory cannot override the power of the CoC which can take the

final decision accepting or rejecting the resolution plan. It was held in Para

24 of Sharad Sangi (Supra) "in view of the aforesaid findings and as we have

already held that the resolution process took place within 270 days and the

CoC had the jurisdiction to change its opinion in favour of the resolution

plan to make it a success and Regulation 26(2) being directory which also

stands deleted, we set aside the impugned order and hold that the

resolution plan being in conformity with Section 30(2) warranted approval

by the Adjudicating Authority". With utmost respect, the ratio in the case of

Sharad Sangi (Supra) is not applicable to the facts and circumstances of the

present case because there is a change in the voting share in the present

case that takes place after the order of liquidation. Similarly, the decision in

the case of State of Maharashtra (Supra) is also not applicable to the facts

and circumstances of the present case. Moreover, the said decision is under

challenge before the Hon'ble Apex Court.

11. It is also pertinent to mention that it has been time and again held by

the Hon'ble Apex Court that the Code is complete in itself and since there is

no provision to deal with such a situation as we have one in hand, we do not

find it to be a fit case to apply Rule 11 of the NCLAT Rules 2016 which

operate in altogether different sphere.

Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021 11

12. Thus, looking from any angle, we could not persuade ourselves to

accept the contention raised by the Appellants in the present three appeals

for setting aside the impugned order and to set the clock back on the asking

of the Appellant (City Co-Operative Credit And Capital Limited). Hence, all

the three appeals are found devoid of merits and the same are hereby

dismissed, though without any order as to costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Kanthi Narahari] Member (Technical)

New Delhi

05th December, 2022

Sheetal

Company Appeal (AT)(Ins) No. 1122 & 1123 of 2020 and 11 of 2021