Mr Suniel Hiroo Bharwani vs Deepak Advertising And Marketing & Ors

[Arising out of order dated 05.08.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court No.-I) in IA No. 244 of 2021 in C.P. (IB) No. 1661/MB/2018]

IN THE MATTER OF: Mr. Suniel Hiroo Bharwani Ex CMD, Gourmet Renaissance Pvt. Ltd. Having its office at 1500, B-Wing, Dalamal Towers, Free Press Journal Marg, Nariman Point Mumbai-400021. ...... Appellant. Versus 1. Deepak Advertisement & Marketing, Marya House, A/322, Plot No. B-66, 67, New Link Road, Andheri West, Mumbai-400053, Maharashtra, India. ....... Respondent No. 1. 2. Gourmet Renaissance Pvt. Ltd., Having its office at 1500, B-Wing, Dalamal Towers, Free Press Journal Marg, Nariman Point Mumbai-400021. Through its Resolution Professional Mrs. Vaishali Arun Patrikar, A-2, Shanti Doot Society, Parvati Darshan, Opp. Muktangan English School, Pune, Maharashtra, PIN- 411009. ....... Respondent No. 2. 3. The Nasik Merchants Co Operative Bank Ltd. Having its head office at A/16, Late Babubhai Rathi Chowk, Netaji Subhash Chandra Bose Marg, M.I.D.C. Satpur, Nashik, Maharashtra 422007. ....... Respondent No. 3 2

Present: For Appellant: Mr. Vijay Valson, Advocate. For Respondent: Mr. Rohit Rathi and Mr. Rahul Totla, Advocates for R-3/NAMCO.

JUDGMENT

(09th February, 2023) Justice Anant Bijay Singh;

The instant Appeal preferred under Section 61 of the Insolvency and

Bankruptcy Code, 2016 (for short IBC) being aggrieved and dissatisfied by the

order dated 05.08.2021 passed by the Adjudicating Authority (National

Company Law Tribunal, Mumbai Bench, Court No.-I) in IA No. 244 of 2021 in

C.P. (IB) No. 1661/MB/2018 wherein the application i.e. I.A. No. 244 of 2021

filed by the Resolution Professional Mr. Alkesh Rawka under Section 33 of the

I&B Code read with Rule 11 of the NCLT Rules 2016 for initiating Liquidation

Process against the Gourmet Renaissance Private Limited (Corporate Debtor). By

which the Adjudicating Authority passed the following orders:

"The application be and the same is allowed. Gourmet Renaissances

Private limited shall be liquidated in the manner as laid down in

Chapter-III of the Code with the following consequential directions:

a) Ms. Vaishali Arun Patrikar having Registration No. IBBI/IPA/-

002/IP-N00812/2019-2020/12566 to act as Liquidator of the Corporate Debtor.

b) She shall issue public announcement stating that Corporate Debtor is in liquidation.

c) The Moratorium declared under Section 14 of the IBC 2016 shall cease to operate here from.

Company Appeal (AT) (Insolvency) No. 805 of 2021 3

d) Subject to section 52 of the IBC 2016 no suit or other legal proceedings shall be instituted by or against the Corporate Debtor. This shall however not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

e) All powers of the Board of Directors, Key Managerial Personnel and partners of the Corporate Debtor shall cease to have effect and shall be vested in the Liquidator.

f) The Liquidator shall exercise the powers and perform duties as envisaged under Sections 35 to 50 and 52 to 54 of the Code, read with Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016.

g) Personnel connected with the Corporate Debtor shall extend all assistance and cooperation to the Liquidator as will be required for managing its affairs.

h) The Liquidator shall be entitled to such fees as may be specified in the Resolution 5 of the 10th extended CoC meeting held on 16.01.2021.

i) This Order shall be deemed to be a notice of discharge to the officers, employees and workmen of the Corporate Debtor, except when the business of the Corporate Debtor is continued during the liquidation process by the Liquidator.

j) Copy of the Order shall be furnished to the IBBI, to the Regional Director (Western Region), Ministry of Corporate Affairs; Registrar of Companies & Official Liquidator, Maharashtra, the Registered Office of the Corporate debtor; and the Liquidator."

2. The facts giving rise to this Appeal are as follows:

i) Appellant is the erstwhile CMD and Promoter of Corporate Debtor-

Respondent No.2 Gourmet Renaissance Private Limited, an SME and Private

Company Appeal (AT) (Insolvency) No. 805 of 2021 4

Limited Company, a reputed entity that was inter alia involved in organizing

premier sporting and lifestyle events such as IPL, Miss Diva, ISL, Miss India and

having a strong footprint in the organized Retail Food and Beverage industry,

engaged inter alia in catering operations, specialty restaurants, specialty

products etc. A copy of the udyog Aadhaar Memorandum, a twelve-digit Unique

Identification Number provided by the Ministry of Micro, Small and Medium

Enterprises, Government of India for micro, small and medium enterprises,

issued in the name of Appellant bearing No. MH19F0145436.

ii) The Respondent No.1, Deepak Advertisement & Marketing is an outdoor

Publicity & Hoardings contractor, primarily engaged in outdoor media

communications by erecting hoardings and advertisements in Mumbai. The

Respondent No. 2 Company, an MSME, is represented before this Tribunal

through its Insolvency Resolution Professional who was chosen by the

Committee of Creditors (CoC) constituted pursuant to an order dated 11.03.2019

passed by the Adjudicating Authority. The Respondent No. 3, The Nasik

Merchants Co-operative Bank Ltd., Nashik (hereinafter referred to as "NAMCO")

is a Multistate Scheduled Bank that in the usual course of its business, lent

certain sums to Corporate Debtor and went to have the largest representation

on the Committee of Creditors. On 28.06.2019, the aforementioned IRP, Mr.

Alkesh Rawka furnished FORM AA written consent to act as Resolution

Professional of Appellant pursuant to which was appointed as the Resolution

Professional vide a resolution passed by the CoC on 04.07.2019. The IRP

subsequently filed an Application under Section 33 of the IBC code, 2016 read

Company Appeal (AT) (Insolvency) No. 805 of 2021 5

with Rule 11 of the National Company Law Tribunal Rules, 2016 praying for

instituting Liquidation Process against Respondent No. 2 Company. The

Impugned order dated 05.08.2021 passed by the Ld. Adjudicating Authority in

the said Application, IA. No. 244 of 2021 in C.P. (IB) No. 1661/MB/2018 is being

challenged herewith vide the present Appeal before this Tribunal.

iii) A Petition under section 9 of the Insolvency and Bankruptcy Code, 20l6

was instituted by Respondent No. l on the alleged failure of Respondent No. 2

Company to pay Respondent No.1 Media Contractor a sum of Rs. 13,91,744/-.

The two entities had entered into a contract on 04.05.2017 for display of

hoardings at two outdoor locations in Mumbai. The Respondent No. 2 Company

allegedly defaulted on payment of outstanding amounts to Respondent No. l

concern on multiple occasions. A computation of the amounts involved is

provided hereunder:

S. No. Bill No. Date Amount

1 01/2017-18 19.07.2017 Rs.4,61,738/-

2 08/2017-18 14.08.2017 Rs.4,61,738/-

3 20/2017-18 13.09.2017 Rs.4,61,738/-

In addition to the above stated invoices, the Respondent No. 1 concern

alleged that there were seven (7) additional invoices for an amount of Rs. 6560/.

The Respondent No. 1, Operational Creditor also alleged that amounts due to be

paid in relation with Bill No. 105712017-2018 dated 05.05.2017 and 1062/2017

dated 08.06.2017 remained unpaid. Respondent No. l thus claimed that an

Company Appeal (AT) (Insolvency) No. 805 of 2021 6

amount of Rs. 13,91,744/- in addition to interest @ 18% was due from

22.06.2017 to 13.09.2017. A demand notice for the same was issued by

operational creditor on 05.02.2018. Subsequent to initiation of proceedings

before the Adjudicating Authority, Respondent No.1-Operational Creditor, on

13.02.2019 filed written communication of the proposed Interim Resolution

Professional, Mr. Naren Shah. In their Affidavit in Reply dated 22.11.2018,

Respondent No. 2, Corporate Debtor disputed the allegations of Respondent No.

l and stated that there were persuaded to carry on with the contract despite

communicating to Respondent No. 1 concern that they did not intend to utilize

the hoardings any further. Further, Respondent No. 2 - Corporate Debtor

emphasized that the defaults were not wilful and on account of unexpected force

majeure occurrences such as demonetization, restrictions on sale of liquor,

introduction of GST etc. Respondent No.2 -Corporate Debtor could not provide a

definitive timeline to settle unpaid amounts qua Respondent No. 1 Operational

Creditor until the implementation of a comprehensive resolution plan.

iv) Admitting the Section 9 Petition for initiation of CIRP, the Adjudicating

Authority inter alia declared a moratorium under Section 14 of the I&B Code,

2016 directing Corporate Debtor to refrain from acting to alienate in any way, its

assets legal rights and also forbid any action amounting to recovery/foreclosure/

enforcement of any security interest created by Corporate Debtor in respect of

its properties. The Adjudicating Authority declared that the Order of Moratorium

would be in effect till culmination of the resolution process, or an Order is passed

approving liquidation of Corporate Debtor, Respondent No. 2 under relevant

Company Appeal (AT) (Insolvency) No. 805 of 2021 7

provisions of the IBC. It also proceeded to appoint Mr. Naren Seth as the Interim

Resolution Professional to oversee functions delegated under the I&B Code,

2016. Pertinently it failed to notice that Appellant herein could not be excluded

from participation the CIRP on account of him being the Chairman and MD of

Corporate Respondent, an entity with a MSME certification. Public

announcements by the IRP were carried in local newspapers in accordance with

the conditions contained in Section 13 and Section 15 of the IBC, 2016. The last

date for submissions of claims qua Respondent No. 2 Corporate Debtor to be

24.03.2019. Pursuant to the submission of Claims and verification thereof from

Operational and Financial Creditors vide Form B and Form C respectively, a

report certifying the constitution of a Committee of Creditors (COC) was filed with

the Adjudicating Authority in compliance with Section 2I of the IBC and

regulation 17 (1) C of the I&B Regulations, 2016. The Committee of Creditors

had their preliminary meeting on 10.04.2019 wherein they perused the

Submission of Claims by Operational and Financial Creditors as on the cut-off

date i.e., 25,03.2019 and the amounts admitted by Respondent No. 2-Corporate

Debtor. The details of the Committee of creditors and their Voting Shares are

contained herein under.

Financial Creditors Number of Claims CoC Voting Share Nasik Merchant Co-op Bank 35,44,84,967 99.25% (NAMCO) New Growth 26,82,425 00.75% Total 35,71,67,392 100%

Company Appeal (AT) (Insolvency) No. 805 of 2021 8

The Committee also resolved to retain and reappoint Mr. Naren Shah as

the Resolution Professional and ratified his remuneration. Further, the

Committee assented to operation of the Current Account of Respondent No. 2

Corporate Debtor at Respondent No. 3, NAMCO by Mr. Naren Seth to meet CIRP

expenses. The Respondent No. 3, NAMCO expressed it unwillingness to finance

the estimated future CIRP costs and the COC authorized the Resolution

Professional to raise funds for the same. Pertinently, Appellant when asked about

his plans for repayment conveyed his intention to submit a comprehensive plan

by the next meeting.

v) On 28.06.2019, Resolution Professional Mr. Alkesh Rawka vide a letter to

the Committee of Creditors consented to being appointed as Resolution

Professional as provided under Regulation 3(1A) of the IBC. The second meeting

of the CoC was held on 01.07.2019 wherein only the matter for consideration

was the CIRP costs, the decision of which was deferred to the next meeting. The

proposed plan by Appellant alluded to in the first meeting of the CoC was

thereafter never discussed by the CoC despite the fact that Appellant would not

fall under the category of persons more fully described in Section 29 A of the IBC

which bars certain persons from being eligible as Resolution Applicant on

account of Section 240-A(1) acquiring primacy and overriding the former and

stating that notwithstanding anything to the contrary, that provisions of Clause

(c) and (h) of Section 29-A shall not apply to the resolution applicant in respect

of CIRP of MSME's. The third meeting convened at the behest of Respondent

Company Appeal (AT) (Insolvency) No. 805 of 2021 9

No.3, Mr. Alkesh Rawka, was appointed as Resolution Professional, replacing the

incumbent Mr. Seth. The proposal was approved by 99.91% of the Committee.

vi) In the fourth CoC meeting held on 07.07.2019, due to the fact that CIRP

would in all likelihood extend beyond the prescribed 180 days, approval was

accorded to Resolution Professional to approach the Adjudicating Authority

seeking extension after the 180 days period from the commencement of CIRP

(i.e., 07.09.2019) in line with Section 12 of the IBC. Subsequently M.A

3077/2019 was placed for consideration before the Adjudicating Authority,

wherein RP of Respondent No.2 sought a further 90 days for closure of the CIRP.

In its Order dated 18.09.2019, the Ld. Adjudicating Authority accorded sanction

to M.A 2434/2019 wherein the replacement of RP's was prayed for. The Ld.

Adjudicating Authority recorded the reasons for replacement as failure of then

RP to prepare an Information Memorandum and the contention that there was

no substantial work done by him. During the originally envisaged 180 days' time

frame provided for Resolution, no concrete measures by the COC were taken to

resolve the crisis of Corporate Debtor and substantial time was squandered. On

05.10.2019, the Fifth Meeting purportedly convened to appoint Registered

valuers and Forensic Auditors was concluded without carrying out the

appointments. The Appellant, debilitated by an illness and recovering in the

hospital was not present. The COC approved of the proposal to publish the

Invitation of Expression of Interest for Resolution Plans regarding Respondent

No.2 Corporate Debtor. On 1111.2019, as a precursor to its formal union to as

a minority member of the CoC, M/s Invent Arc, in response to queries from the

Company Appeal (AT) (Insolvency) No. 805 of 2021 10

CEO of Namco, Mr. Deepak Thakur, detailed out the payments to the tune of

over Rs. 10 crore that it made to unsecured financial creditors, operational

creditors and workmen who had be left in the lurch in view of the Orders of the

Adjudicating Authority. The prospective Resolution Applicant, Mr. Atul Kumar

Gupta expressed concern regarding the serious medical ailment plaguing

Appellant and revealed that the forensic financial audit was been undertaken

and that he hoped to determine the extent of statutory liabilities. Appellant

craves leave to refer to and rely upon the same when produced. In the Sixth

Meeting of the COC held on 16.11.2019, cognizance was taken of the updated

claims received by the IRP and the COC was reconstituted, reflecting the changes

in the claims. Two claimants assigned the entirety of their claims in favour of

IWs Invent Arc. The recast list of creditors stood as follows:

S. No. Particulars Amount

1 NAMCO Rs. 35,44,84,967/-

2 Invent Arc Ltd. Rs. 34,34,016/-

3 Arohan Financial Services Limited Rs. 10,71,273/-

Details of the Committee of Creditors, also reconstituted, are provided

hereinunder:

S. No. Particulars Amount (In Crores) Percentage

1 NAMCO 35.45 98.77%

2 Invent Arc Ltd. 0.35 0.98%

Company Appeal (AT) (Insolvency) No. 805 of 2021 11

3 Arohan Financial .09 0.25% Services Limited 4 Total 35.89 100%

vii) The new entrant to the COC, Invent Arc Pvt. Ltd was represented by Ms.

Yamini Surana and its COO, Mr. A.K Gupta. Invent Arc Pvt. Ltd. had acquired

all the liabilities owed by the Corporate Debtor to RBI licensed NBFC's under the

assignment of debt mechanism and went on to settle small creditors and played

a pivotal role in the Insolvency Resolution Process by engaging with multiple

domain experts and partook in facilitating the legal expenditure of the corporate

debtor in the multitude of litigations that arose during the Resolution Process.

On account of alleged lapses by Corporate Debtor regarding statutory

compliances, the regularization of the same was deferred for a later date after a

seriously Appellant submitted that he would provide records pertaining to the

Respondent No. 2 Company in a weeks' time. On 11.11.2019, Mr. Atul Kumar

Gupta provided certain details pertaining to measures adopted and undertaken

by Invent ARC in a letter to the Chairman of NAMCO, inter alia highlighting the

fact that Invent ARC had already settled liabilities to the tune of Rs.10 Crores.

The Resolution Applicant expressed serious concerns over the serious illness of

Appellant herein. The Appellant craves leave to refer to and rely upon the same

when produced the threat to move an Application under Section 19(2) by

majority members of the CoC and RP was made in every subsequent gathering

of the CoC and was used as leverage to relegate Appellant herein to the side-lines

and as evidenced by subsequent events and records, Appellant was always

Company Appeal (AT) (Insolvency) No. 805 of 2021 12

considered persona non grata, expressly contravening Section 240 (1) (A) of the

I&B Code,2016. The COC was informed of the appointment of Statutory Auditors

of Respondent Corporate Debtor, The COC further resolved to publish Form G

inviting expression of interest from prospective Resolution Applicants, which

were subsequently published on 19.11.2019 in two local newspapers. In view of

the resolution to publish the expression of interest from Strategic or Financial

Buyers, a decision to approach the Ld. Adjudicating Authority for a further

extension was taken or to proceed with liquidation was kept in abeyance till the

seventh meeting of the COC. The meeting also dealt with the appointment of

registered valuers and a forensic Auditor. The COC inter alia resolved to reduce

the notice period for subsequent meetings from 3 days to 24 hours.

viii) Pursuant to publication of Form G in the local newspapers, an Expression

of Interest (EOI) was submitted by Mr, Atul Kumar Gupta on behalf of Invent

ARC Private Limited. Subsequently, Invent ARC Private Limited filed a

Miscellaneous Application with the Ld. Adjudicating Authority intimating the

takeover of some of the loans of Respondent No.2, Corporate Debtor. On

18.12.2019, the COC met for the Seventh time, but Mr. Atul Kumar Gupta was

absent from the same. The COC inter alia discussed the failure of Appellant to

provide requisite documents relating to statutory compliances, the appointment

of values and forensic Auditor, and the Resolution Plan submitted by Mr. Aul

Kumar Gupta. It was resolved to allow the Resolution Plan after affording revision

of Eligibility Criteria. The Evaluation Matrix and the Request for Resolution Plan

("RFRP") was circulated and ratified by the COC. The COC deferred the

Company Appeal (AT) (Insolvency) No. 805 of 2021 13

discussion of proposed Application against Appellant under Section 19(2) of the

Code. The Miscellaneous Application No. 2434/2019 filed by IRP herein seeking

extension of CIRP before the Ld. Adjudicating Authority and the same was

dismissed on 02.01.2020 stating that "Under no circumstances, the extension of

CIRP period be granted twice. Earlier the Applicant has come forward for extension

of CIRP Period and the same was granted for 90 days. This Application is filed

seeking extension of further 90 days which is not permissible under law".

ix) In view of an unforeseen demand Order by the Income Tax Department

amounting to Rs. 30 Crore to Corporate Debtor, Respondent No. 2, Mr. Atul

Kumar Gupta, in a letter dated 14.01.2020, sought time till 25/26th January,

2020 for submission of a revised Resolution Plan. The Prospective Resolution

Applicant Mr. Gupta stressed on the fact that in the meeting at Respondent No.

3 NAMCO's headquarters on the 7th January, 2020, he had expressed his

inability to come up with a Resolution Plan by the 15th January, 2020 as

demanded by Respondent No. 3 NAMCO. He appealed to the fellow members of

the COC to consider the changed circumstances on account of the Income Tax

Demand Order pertaining to Respondent No. 2, Corporate Debtor and extend the

time to the proposed dates. The aforementioned dates proposed by Mr. Atul

Kumar Gupta were rejected by the COC who demanded that a Resolution Plan

be submitted by 21.01.2020. In light of this unilateral rejection, Mr. Atul Kumar

Gupta was constrained to send another appeal to the Chairman of Respondent

No.3 NAMCO requesting the lenders to consent to a revised date especially in

light of a further Show Cause Notice indicating enhanced penalties on Corporate

Company Appeal (AT) (Insolvency) No. 805 of 2021 14

Debtor. Mr. Gupta further pointed out that the date for submission of the

Resolution Plan set unilaterally by the lenders to be 21.01.2020 was not

communicated with him and therefore pointed out his inability to adhere to the

aforesaid timeline set out by the lenders. He urged caution on account of the

intricacies involved and to be considered in the IBC and requested that a

mutually agreeable revised date be provided to consider the proposal.

x) On 04.02.2020, the Eighth Meeting of the COC was convened and inter

alia, the Miscellaneous Applications filed by Invent ARC Private Limited and RP

on 04.12.2019 and 23.01.2020 respectively for the extension of CIRP before the

Ld. Adjudicating Authority were decided to be clubbed as the reliefs sought were

identical. The Appellant pointed out that alleged lapses on part of him, perceived

as non-cooperation by the majority in the CoC and IRP was on account of his

chronic ill health and that he had extended all possible assistance to RP. It was

resolved at the meeting that the timeline for the Resolution Plan proposed by

Prospective Resolution Applicant, would be extended till 11.02.2020. The COC

resolved to proceed with liquidation in case the Resolution Plan was not

submitted in time and proposed that Mrs. Vaishali Arun Patrikar oversee the

proposed liquidation of Respondent No. 2, Corporate Debtor. Alleging that the

Resolution Plan put forward by Prospective Resolution Applicant dated

11.02.2020 did not comply with Section 30 of the Code, read with Regulations

36B, 37 ,38 and 39 of the IBBI (Insolvency Resolution Process for Corporate

Persons), RP representing Respondent No. 2 herein in a mail dated 13.2.2020

informed Prospective Resolution Applicant that it was not acceptable. A revised

Company Appeal (AT) (Insolvency) No. 805 of 2021 15

plan dated 18.02.2021 submitted by Prospective Resolution Applicant was

rejected by RP representing Respondent No. 2 on the same grounds mentioned

herein above vide a mail dated 27.02.2020, Thereafter, in its Order dated

27.2.2020, the Ld. Adjudicating Authority allowed MA 58I of 2020 seeking

exclusion of 72 days on account of replacement of RP filed by Resolution

Professional representing Corporate Debtor herein and directed that the CIRP

period will end on 03.04.2020. Disposing MA 3693 of 2019, the Ld. Adjudicating

Authority directed Prospective Resolution Applicant to file a Resolution Plan

within 10 days of passing the Order and directed COC to take a decision

regarding the same two weeks thereafter.

xi) On 04.03.2020, M/s SMMP & Associates shared details of the financial

details including the list of creditors paid off by the Prospective Resolution

Applicant, M/s Invent Arc and the remaining unpaid creditors who would have

to be paid under terms of Section 53 of the IBC in a mail to members of the CoC.

A perusal of the details thus provided indicates that Appellant herein was to

undertake a substantial haircut and forego monies amounting to Rs.

744,150,4031/-. Prior to the scheduled 9th meeting of the CoC, the Prospective

Resolution Applicant transmitted the points proposed to be tabled at the meeting

of the CoC. Inter alia, it clearly details the proposed terms of payment including

redemption of outstanding amount of Rs. 3 Crore in 360 days but payment terms

of the Rs. 24 Crore Security Receipts would be redeemed within 24 months after

the first year i.e 3 years in total. The communication via WhatsApp dated

18.03.2021 was sent to members of the CoC including the Chairman, CEO, and

Company Appeal (AT) (Insolvency) No. 805 of 2021 16

the legal advisor of NAMCO Mr. Rahul Totala. Meanwhile, in response to

sustained and recurrent threats to file an Application under Section l9(2) of the

Code, in a detailed, emphatic, and unequivocal letter address to this Chairman,

COC dated 18.03.2020, Appellant herein expressed extreme anguish at the

prejudicial behaviour and non-cooperation of RP. Pertinently, the Appellant

appealed to table and record the letter during the Ninth meeting scheduled to

convene on 1 8.03.2020. Inter alia he detailed numerous instances of extremely

biased conduct of RP and several shortcomings in the discharge of RP's roles and

responsibilities. Appellant was constrained to step into shoes of RP and perform

duties that normally would been in the realm of Resolution Professional.

xii) Pursuant to Order dated 27.02.2020 passed by the Ld. Adjudicating

Authority a revised Resolution Plan was submitted by Prospective Resolution

Applicant, Mr. Atul Kumar Gupta on 01.03.2020. A response regarding

observations pertaining to the plan was sent on 09.03.2020 and 11.03.2020

informing Mr. Gupta that the next meeting of the COC will likely be held on

18.03.2020. In the Ninth Meeting convened on 18.03.2020, the Chairman

demanded that the plan should have been submitted in person and not through

emails. Alleging inter alia inconsistencies in the payment term, the Chairman

sought further details and additional compliances. Mr. Atul Kumar Gupta

provided clarifications sought for. It was then decided that a fine print of the

Resolution Plan shall be submitted by Prospective Resolution Applicant by

20.03.2020 and the same had to be submitted physically despite the onset of

Covid-l9 and the accompanying restrictions. The proposed meeting on

Company Appeal (AT) (Insolvency) No. 805 of 2021 17

21.03.2021 was postponed on account of Covid Restrictions. Thereafter, the

meeting i.e., the extended Ninth COC meeting could be held on 30.09.2020. In a

letter to the CEO of NAMCO dated 22.04.2020, Prospective Resolution Applicant

Mr. Atul Gupta expressed satisfaction with the proposed plan that had been

agreed to by all members of the CoC in principle. He appreciated the assistance

and cooperation rendered by Appellant Mr. Suniel Bharwani and inter alia

pointed out that the plan submitted by M/s Invent ARC was the onlv feasible

one submitted so far. The letter prayed for proceeding with the matter in a logical

and practical manner and avoiding trivial squabbles that would derail the

process resulting in all round hardships. Mr. Atul Gupta also requested the CEO

to direct members of the team to provide all possible help/details etc that could

be incorporated in the final plan.

xiii) In his response vide a mail dated 18.09.2020, to queries raised by the

Prospective Resolution Applicant on the proposed Resolution Plan, the legal

advisor of NAMCO, Mr. Rahul Totla attempted to discredit the plan by pointing

out purported acts of noncompliance/nonadherence by the Prospective

Resolution Applicant. The RA stressed that ARC Invent being both a Financial

Creditor as well as a Resolution Applicant, placed emphasis on clearing the

liabilities of NAMCO on a priority basis, over and above the Resolution

Applicant's own claims. However, the legal advisor viewed this as contradictory

to Regulations 30 and 38 (1) (b) of the I&B Code, 2016. The Resolution Plan

formulated by M/s ARC Invent unequivocally and unambiguously stated that

the term of implementation would be 36 months from the date of acceptance of

Company Appeal (AT) (Insolvency) No. 805 of 2021 18

the Resolution Plan by the Ld. Adjudicating Authority in accordance with the

provisions contained in Regulation 38(2)(a) of the IBC. There was no semblance

of ambiguity in this elucidation. Pertinently, the response to this as seen in

Paragraph 4 of the mail dated 18.09.2020 was marked as 'Complied' by the legal

advisor of NAMCO. The Prospective Resolution Applicant also stressed that

Respondent No. 2, Corporate Debtor was an MSME and all regulations within

and without the IBC Code, 2016 supports the unbiased revival of an MSME. The

RA intended to retain the services of Appellant herein, Mr. Suniel Bharwani as

an external professional consultant during the term of implementation of the

plan. It was pointed out that Appellant and his family had invested a huge

amount of capital in the Corporate Debtor, dwarfing the amount owed to NAMCO

Bank but was still not accorded any compensation for his investment, skillset

and risks ploughed into setting up and running the Corporate Debtor. The

Resolution Applicant underscored the untiring full and complete support

rendered by Appellant herein despite his limitations and precarious health

condition. The RA pointed out that it was imperative to utilize the knowhow,

experience and intellectual properties vested in Appellant Mr. Suniel Bharwani

and pointed out that it was due to the unfortunate misjudgement of the former

top brass of NAMCO that Appellant, Mr. Bharwani was designated as a wilful

defaulter despite infusion by him of substantial equity and noteworthy

achievements of Corporate Debtor when it was helmed and managed by

Appellant herein. The RA stressed that the actions of the bank in branding

Appellant as a wilful defaulter effectively barred him from coinvesting in the

Company Appeal (AT) (Insolvency) No. 805 of 2021 19

Resolution Plan and acted as a barrier for other financial institutions to step in

and take over the entire amount owed to NAMCO. Needless to say, this was in

contravention to Section 240(A) (1) of the Code that specifically provided certain

privileges to MSME entities. However, the legal advisor chose to overrule this

portion of the plan stating that there could be no preconditions for the

implementation of the plan.

xiv) The Legal Advisor assented to setting up of a 3 member Implementation

and Monitoring Committee in accordance with Regulation 32(2)(c) of CIRP

regulations to monitor and ensure compliance of the proposed plan until

complete execution of the proposed plan i.e. 36 months as per the Resolution

Plan. However, he expressed scepticism on the feasibility and viability of

Resolution Applicant's plans to monetize land assets and remain entrenched in

the F& B Business. Mr. Atul Kumar Gupta had already clarified that he had

taken an informed decision to invest in the revival of the corporate Debtor and

had ensured the participation of Appellant herein, linking him to specific

performance of certain measurable parameters amongst other aspects within the

purview and knowledge of Appellant. The Legal Advisor however found this

proposal noncompliant with provisions set out in Regulations 38(3)(d) and

38(3)(e), contingent to approval from the Ld. Adjudicating Authority. The

document addressed other concerns that were raised, and the Resolution

Applicant inter alia undertook to ensure compliance with the Regulations of CIRP

and the same was accepted by the Legal Advisor in principle. The RA also pointed

out that there was unequivocal agreement between him and NAMCO regarding

Company Appeal (AT) (Insolvency) No. 805 of 2021 20

the settlement of Rs.25 crores as outstanding Principal owed to NAMCO and the

same had been adequately provisioned by the Auditor of Corporate Debtor. The

RA was amenable to suggestions by the COC regarding changes to the proposed

terms of provision of Performance Guarantee and pointed out that the plan was

accorded in principle verbal acceptance by the Chairman of NAMCO. The

Resolution Applicant pointed out that all purported contradictions were actually

expounded in detail in the fine print of the Resolution Plan and that the

settlement of amounts in accordance with Regulations 38 (1) A & (2) (A) were to

be 100% of the outstanding amounts.

xv) The Prospective Resolution Applicant also addressed a letter dated

18.09.2020 to Mr. Vijay Sane, the Chairman of the CoC at that point in time

inter alia brining to his attention the challenges and the devastation wrought by

the prevailing Covid-l9 Pandemic. Reference was made to the recommendations

of the M.V Kamath Committee for measures to mitigate the effects of the

pandemic and steps to revive MSME's and a request was made for extension of

repayment tenure by a further 12-24 months. The RA requested for the passing

of a resolution to revoke the wilful defaulter tag unfairly invoked upon Appellant

herein so as to involve him in the resolution process and enable him to invest in

the revival of Corporate Debtor. It was pointed out that this would pave the path

for takeover of the outstanding loans by competent banks or other financial

institutions and expedite the payment of outstanding dues in full to NAMCO. On

22.09.2020, the Prospective Resolution Applicant was constrained to voice out

several procedural discrepancies, acts smacking of malafide intentions and

Company Appeal (AT) (Insolvency) No. 805 of 2021 21

prejudicial actions indulged in by the RP and the legal counsel that belittled the

entire CIRP in a detailed mail addressed to Mr. Sane, Chairman of the CoC. The

Resolution Applicant had in fact submitted the proposed Resolution Plan within

the specified timeline in the March 2020 and provided clarifications to queries

raised by the RP vide a mail dated 04.08.2020. However, the Bank responded

through its legal advisor only on 18.09.2020, just one day prior to a meeting with

Appellant herein that took place at the NAMCO headquarters at Nashik. The RA

was asked to furnish his response prior to a proposed meeting of the CoC

scheduled to be held on 23.09.2020 despite knowing that the time provided for

preparing the response was highly inadequate and that the RA was crippled due

to lack of support staff on account of pandemic related work restrictions. Despite

the challenges, Mr. Atul Kumar Gupta pointed out that he had already in

compliance with 33 of the 55 queries raised by the Resolution Professional and

that the rest of the queries required either clerical rectifications or were merely

repeated questions that were already addressed elsewhere. He pointed out that

it was unfair on the part of the Resolution Professional to unexpectedly raise a

demand for a detailed business plan despite the Resolution Professional not

providing a signed balance sheet indicating the current financial status of the

Corporate Debtor. Addressing a number of issues dealing with questionable

ethical decisions of the Resolution Professional, the Resolution Professional

beseeched the CoC to refrain from turning a blind eye to multiple instances of

wrongdoings on part of the Resolution Professional that would ultimately be

detrimental to the wellbeing of all stakeholders including NAMCO. Mr. Gupta

Company Appeal (AT) (Insolvency) No. 805 of 2021 22

again wrote a letter to the Chairman of the CoC on 23.09.2020 and on

29.09.2020 requesting him to treat and discuss the matter threadbare and on

its merits with the other members of the CoC inter alia reminding hm that the

option of liquidation is not financially viable for all stakeholders. He again

pointed out that Resolution Professional had hitherto desisted from making any

reference to a business plan but had suddenly sought to treat the non-existent

plan as pivotal to the successful implementation of the proposed Resolution Plan.

The Resolution Applicant hoped that saner minds would prevail, and a positive

outcome could be achieved by cooperation from all concerned personnel. The

Resolution Applicant stressed that he had already demonstrated his bonafides

and earnestness in resolving issues and anomalies relating to the Corporate

Debtor and had invested a substantial sum in the process.

xvi) In a mail dated 30.09.2020, the Resolution Professional representing

Corporate Debtor made certain critical observations to the logical reworked

Resolution Plan submitted by Mr. Atul Kumar Gupta. The Resolution

Professional alleged that the payment waterfall mechanism and the plan being

conditional of retaining Appellant herein as consultant was noncompliant.

Further objections were raised to the planned land monetization and Security

Receipt Structures proposed in the Resolution Plan. On 01.10.2020, Prospective

Resolution Applicant, Mr. Atul Kumar Gupta acceded to certain changes

pertaining inter alia to the Performance Guarantee and Security Receipts

structure and also provided clarifications on issues such as the sale of land, tax

liabilities and expected timelines for obtaining permissions from statutory and

Company Appeal (AT) (Insolvency) No. 805 of 2021 23

regulatory authorities. However, he reiterated that the continuation of Mr. Suniel

Bharwani, Appellant herein, as consultant was non-negotiable, and he indicated

that the matter would be put forth to the Ld. Adjudicating Authority. He

requested NAMCO to issue a letter declassifying Mr. Bharwani as a wilful

defaulter as his classification as such was solely on account of errors by

predecessors of the current management personnel helming NAMCO. He pointed

out that this would not only speed up the turnround of the MSME but also allow

equity participation of Appellant and persons connected with him. A copy of the

email dated L10.2020 is annexed herewith in the list of additional documents

accompanying the present petition and being filed with the leave of this Hon'ble

Tribunal.

xvii) In a letter dated 08.10.2020, Prospective Resolution Applicant, Mr. Atul

Kumar Gupta informed the Chairman, CoC that submissions pertaining to

clarifications of the revised Resolution Plan could not be proceeded with on

account of various reasons including a Sales Tax summons issued to

Respondent No.2-Corporate Debtor that would result in an enhanced tax

liability. Raising a number of pertinent issues that cropped up or needed

addressing, Mr. Atul Kumar Gupta objected to the stance of the Process Advisor

who refused to hear Appellant. He pointed out that it was imperative to have the

support and involvement of Appellant in the ongoing CIRP and also requested

defining and firming up of CIRP costs prior to the formal submission of the Plan.

Thereafter, the extended Ninth Meeting on the CoC was held on 0r.10.2020 and

12.10.2020. A resolution was passed to file an Exclusion Application before the

Company Appeal (AT) (Insolvency) No. 805 of 2021 24

Ld. Adjudicating Authority and the reworked Resolution Application was to be

filed after another 8 days. An Application No. IA 2215 of 2020 was subsequently

filed before the Ld. Adjudicating Authority seeking exclusion time period of l0

days. The Ld. Adjudicating Authority on 07.01 .2021 heard and passed an Order

granting an exclusion of 10 days. The Ld. Adjudicating Authority observed that

the CIRP would normally come to an end on 17.0I.2020. In the Tenth Meeting

dated 12.01.2021, CoC inter alia decided to extend the final CoC meeting to

16.01.2021. In a letter dated 14.01 .2021 addressed to the Resolution

Professional, the Resolution Applicant placed on record a formal protest against

the refusal by the Resolution Professional to share details of the valuation details

of the Corporate Debtor which was crucial to fine tuning of the Resolution Plan

and that was being withheld for malafide reasons. The Resolution Applicant also

expressed dismay at the belated announcement by the Resolution Professional

of the Order dated 07.01 .2021 passed by the Ld. Adjudicating Authority in IA

2215 of 2020 that was communicated to the Resolution Applicant only on

12.01.2021. The Final Resolution Plan drawn up by Prospective Resolution Plan

was submitted on 15.01.2021. The comprehensive turnaround plan to pay down

all creditors within a 36 months period from the approval date by the

Adjudicating Authority, envisaged Invent ARC acquiring the entirety of

Respondent No. 3 NAMCO's loan for Rs. 25 Crores. Invent ARC proposed to pay

Rs.1 crore through invocation of Bank Guarantee or via Bank Draft or electronic

transfer within 30 days from the receipt of the Resolution Proposal by the

Adjudicating Authority, pay a further Rs. 3 Crore within 12 months of the

Company Appeal (AT) (Insolvency) No. 805 of 2021 25

approval and the remaining Rs. 21 Crore in a space of 36 months as set out in

the Financial Section of the Resolution Plan. The plan detailed the various

compliances in consonance with Section 30 of the I &B Code, 2016 and

Regulation 37 & 38 of the Insolvency and Bankruptcy Board of India (Insolvency

Resolution Proposal for Corporate Persons). It also contained the future roadmap

for restructuring Respondent No. 2 Corporate Debtor. ARC Invent Pvt Ltd. also

proposed infusion of fresh funds to rejuvenate ailing Corporate Debtor. The

extended Tenth Meeting took place on 16.012021. The roadmap and intricacies

of the Plan were dealt with in detail by Resolution Applicant.

xviii) Mr. Umesh Biyani, consultant confirmed that most of the infirmities called

out in the earlier meetings had been dealt with by Resolution Applicant.

Subsequent to detailed observations made by Mr. Biyani, he submitted that

Prospective Resolution Applicant had the capacity to implement the Resolution

Plan. He also stated that the Resolution Plan is not entirely non- compliant, and

it can be accepted by the CoC as many of the important observations have been

taken care of in the plan. However, Respondent No. 3 NAMCO put forward

conditions that would act as a bar on any logical Resolution. In view of the abrupt

volte face by Respondent No. 3 NAMCO who were already aware of the proposals

as the same had been discussed with them in detail, the new conditions put

forward by the Bank were not acceptable by Resolution Applicant. Prospective

Resolution Professional requested Mr. Sanjay Bagul, AGM of Respondent

NAMCO Bank to discuss the proposal received from the Resolution Applicant Mr.

Sane, chairperson of the Bank and consider the same- After discussion, Mr.

Company Appeal (AT) (Insolvency) No. 805 of 2021 26

Bagul informed that the proposal put forward by Mr. Gupta was not acceptable

to the Bank and the Resolution plan stands rejected. It is pertinent to mention

that terms elucidated in the Resolution Plan submitted was as per the terms

discussed and deliberated with the Chairperson of the CoC a few hours before

the last CoC meeting and that the Chairperson had not indicated any

disagreement with the Proposal. Had he done So, Resolution Applicant would

have revised the terms that attained finality on account of it being the last and

final meeting of the CoC to discuss the plan. Furthermore, the Ld. Adjudicating

Authority granted time whilst passing the order in IA 2215 of 2020 on

07.01.2021 solely on the ground that the CoC was not in a position to consider

the revised plan and hence requested time but rather unsurprisingly, the CoC

did not wait to discuss changes with Resolution Applicant when the revised

proposal was sent on 15.01.2021 indicating that this was a premeditated tactic

to torpedo the CIRP. In view of the rejection of the Proposed Resolution plan, the

CoC resolved to proceed with Liquidation of Corporate Debtor pursuant to

Section 33 of IBC on going concern basis pursuance to Regulation 39(c) of CIRP

Regulations, 2016 and that the Liquidator could at first explore the sale of

Corporate Debtor as Going Concern. Mrs. Vaishali Arun Patrikar was appointed

to act as Liquidator. Thereafter, IA. No.244 of 2021 was moved praying for

initiation of the Liquidation Process and for appointment of Mrs. Patrikar as

Liquidator of Respondent No. 2 Corporate Debtor.

xix) The Appellant was incapacitated on 27.12.2020 on account of a stroke.

Acute and extensively dispersed hematoma was indicated in the left half of

Company Appeal (AT) (Insolvency) No. 805 of 2021 27

midbrain, which resulted in Appellant being admitted for a fortnight at the

hospital and he was discharged from the Sir. H. N Reliance Foundation Hospital

and Research Centre only on 06.01.2021. He was thereafter advised rest for

another 16 weeks to allow for recovery and rehabilitation. On 05.08.2021, the

Ld. Adjudicating Authority allowed IA. No. 244 of 2021 stating that it found no

reason to take a contrary view in terms of Section 33 (1) (a) of the Act and that it

had no option than to pass an order for liquidation of the Company in the

manner laid down in Chapter III of the Code. The Ld. Adjudicating Authority

inter alia directed that Ms. Vaishali Arun Patrikar act as Liquidator of Corporate

Debtor and lifted the Moratorium declared under Section 14 of the I& B Code,

2016. Hence this Appeal.

3. The Ld. Counsel for the Appellant during the course of argument and

grounds mentioned in his memo of appeal submitted that the Adjudicating

Authority has seriously erred in granting assent to the Liquidation Process

despite serious flaws in the CIRP and also despite holding a Udyog Aadhaar

Memorandum has been excluded from the CIRP of Corporate Debtor. A bare

perusal of the minutes of the meetings of the Committee of Creditors would have

revealed a recurring pattern to subdue the rights of Appellant and the Ld.

Adjudicating Authority failed to notice that the said conduct was tantamount to

extinguishing protections granted to MSME's under the Code and subsequent

notifications that were pronounced for MSME's particularly after the onset of

COVID-19.

Company Appeal (AT) (Insolvency) No. 805 of 2021 28

4. It is further submitted that the intention of Appellant, as borne out by the

facts herein, to come up with a plan to revive Corporate Debtors was ignored and

his rights stand supressed on account of the pronouncement of the Impugned

order and thus is violative of Section 240-(A) (l) of the I&B, Code,20I6. The

Appellant was erroneously designated as a wilful defaulter by the erstwhile

management of NAMCO and the same was brought to the attention of the CoC

who chose to ignore the same so as to achieve its objective of liquidation of

Corporate Respondent rather than a meaningful resolution. The NAMCO did not

revoke the status of Appellant as a wilful defaulter despite an overt and

unambiguous request by the Resolution Applicant who felt that it would pave

way for his participation in Resolution Process and aid in the infusion of funds

to revive Corporate Debtor. The refusal by NAMCO to include Appellant herein

in the Resolution process also prevented takeover of the loans owed to NAMCO

by competent financial institutions.

5. It is further submitted that the response of Resolution Professional to the

clarifications provide by the Resolution Applicant indicate that there was

virtually no opposition to the term of the Resolution plan (36 months). The

Resolution Professional conveyed that Regulation 38 (2) (A) of the CIRP

Regulations, 2016 pertaining to the implementation schedule was complied with

in letter and spirit. The proposed plan by the Appellant alluded to in the first

meeting of the CoC was thereafter never discussed by the CoC despite the fact

that the Appellant would not fall under the category of persons more fully

described in Section 29 A of the I& B Code,2016 which bars certain persons from

Company Appeal (AT) (Insolvency) No. 805 of 2021 29

being eligible as Resolution Applicant on account of Section 240-A(1) acquiring

primacy over the former and stating that notwithstanding anything to the

contrary, that provisions of Clause (c) and (h) of Section 29-A shall not apply to

the Resolution Applicant in respect of CIRP of MSME's. Further, the Ld.

Adjudicating Authority failed to notice that the majority member of the CoC and

the Resolution Professional always engaged in threats to move an Application

under Section l9(2) of the I&B code despite Appellant extending cooperation with

the CoC and Resolution Professional in the face of a debilitating illness that

significantly incapacitated Appellant.

6. It is further submitted that the Impugned Order stands in stark contrast

to the subsequent stance of the Ld. Adjudicating Authority in the matter of

"Brijendra Kumar Mishra, RP of Lakeland Chemicals (India) Ltd" and that the

prevailing laws and notifications relied on by the Adjudication Authority were in

place at the time of pronouncement of the Impugned Order and remain

unchanged. The CIRP was meant to facilitate the equitable reliefs to all interested

parties and not enacted to fritter away assets and opportunities of stressed

entities under the guise of liquidation. The 'fair value' of Appellant and Corporate

Debtors were not arrived at by the CoC. The significant steps of CIRP of Corporate

Debtors were beset by various maladies including conflict of interest. The Ld.

Adjudicating Authority did not peruse well documented and voluminous

evidence put forth by the Resolution Applicant to the CoC regarding gross failings

and unethical practises indulged in by the Resolution Professional.

Company Appeal (AT) (Insolvency) No. 805 of 2021 30

7. It is further submitted that Ld. Adjudicating Authority did not consider

that the balance sheet of Corporate Debtor was wilfully withheld for the purposes

of scrutiny by the Resolution Applicant. The Resolution Professional

unexpectedly demanded a business plan without alluding to it at any point in

time in the past and made that a pivotal issue for the successful implementation

of the Resolution Plan. The Ld. Adjudicating Authority overlooked the fact that

there was no objection or alternative put forth by Respondent No.3 NAMCO with

regards to the tenure of payment at any point in time until they substantially

reduced the term from 36 months to 12 months in the last and final meetings

on 16.01.2021. The Prospective Applicant was effectively stonewalled from

providing an alternative payment term to the satisfaction of the CoC by members

acting in concert to prevent the approval of the Resolution Plan as the CIRP

timeline ended on 17.01.2021, a day after the plan was considered for approval

of the CoC. There was no inkling of any change with regards to the repayment

tenure of 36 months contained in the Proposal despite it being discussed in detail

by Resolution Applicant on multiple occasions. The NAMCO did not provide

Prospective Resolution Applicant with an opportunity to induct changes in the

repayment term by proposing the revised tenure of 12 months in the final hour

of the last meeting of the Committee of Creditors. The decisions and the

purported wisdom of the CoC were vitiated by its acts of suppression and conflict

of interest. Based on these submissions, the impugned order cannot be

sustained in the eye of law, therefore, the instant Appeal may be allowed.

Company Appeal (AT) (Insolvency) No. 805 of 2021 31

8. Pursuant to the order dated 23.09.2022 passed by this Tribunal, the Ld.

Counsel for the Appellant bringing on record the name of Official Liquidator of

Corporate Debtor i.e. Ms. Vaishali Arun Patrikar as representing party

Respondent No. 2.

9. The Ld. Counsel for the Respondent No. 2 in his reply affidavit submitted

that the Appellant has alleged that the Respondent No. 2 has not conducted CIRP

properly neither executed his duties and responsibility properly which is

specifically denied. Further, the Appellant went on to allege that he has

performed the duties of Resolution Professional as there was lack of cooperation

of behalf of Respondent No. 2. Further, the Respondent No. 2 would like to bring

to notice the opportunities given to the Resolution Applicant for the submission

of Resolution Plan.

• 19.11.2019 Expression of Interest was published by Respondent No. 2.

• 02.12.2019 Email was communicated by Respondent No. 2 to the

Prospective Resolution Applicant and had stated that 03.12.2019 was the last

date to submit the EOI and still no EOI was received. Further, it was also

intimated by the Respondent No. 2 that 05.12.2019 was the last date of CIRP

proceedings and thereafter the Corporate Debtor would go into liquidation.

The Respondent No. 2 received an email by the Prospective Resolution

Applicant regarding intention to share the EOI in night.

• 03.12.2019 Respondent No. 2 sent an email to Prospective Resolution

Applicant to share the EOI by the end of the day which was also received.

Further after due verification it was found by Respondent No. 2 that Financial

Company Appeal (AT) (Insolvency) No. 805 of 2021 32

of West End Investments and Finance Consultancy Private Limited instead of

ARC Pvt. Ltd. were submitted and did not meet the eligibility criteria as set

out by the committee of creditor and same was duly communicated to the

Prospective Resolution Applicant. Further second opportunity was provided

to Prospective Resolution Applicant to submit EOI and this time they provided

partial records financials of ARC Private Limited and same was found

ineligible by the Respondent No. 2. So as to save the Corporate Debtor from

going into liquidation, the Respondent No. 2 provided third opportunity where

they provided financials of Invent Assets Securitisations and Reconstructions

Private Limited.

• 04.12.2019 The Prospective Resolution Applicant submitted the EOI after

a delay of 1 week to the Respondent No. 2. Further, the Respondent No. 2

sent an email to the members of committee of creditors intimating about EOI

received and further requested that in the best interest it is necessary to

modify the EOI so as to make Prospective Resolution Applicant Eligible

Applicant and also intimated CoC and Prospective Resolution Applicant that

Seventh Meeting of CoC will be held on 18.12.2019 for discussing the process

ahead.

• 12.12.2019 The Respondent No. 2 sent an email to Resolution Applicant

requesting to submit Resolution Plan and also shared Information

Memorandum & RFRP stating all the facts, ongoing litigation of Income Tax

Department and Sales Tax Department, informed that Corporate Debtor don't

have proper registered office, no books of accounts has been maintained by

Company Appeal (AT) (Insolvency) No. 805 of 2021 33

them and further informed that audit for the Financial Year 2017-18 and

2018-19 has not been caried out and updated that all the documents were

prepared as per details available with him and by management and Appellant.

• 16.12.2019 Reminder email was sent by Respondent No. 2 to CoC and

Prospective Resolution Applicant regarding the Seventh Meeting of CoC which

was to be held on 18.12.2019.

• 28.12.2019 The intimated Resolution Applicant about the email dated

24.12.2018 received from Sales Tax Department and also informed about the

reply given to the department.

• 30.12.2019 The Respondent No. 2 again sent an email regarding Request

to submit the Resolution Plan and also intimated that last date of submission

of Resolution Plan is 15.01.2020.

• 07.01.2020 The Resolution Applicant requested, more time for submission

of Resolution Plan to the Respondent No. 2 just one day before the last date

of submission, stating that as the commercials of the Corporate Debtor which

had been affected due to order from Income Tax Department of Rs. 30 Crore

for the Financial Year 2016-2017 so extension of time is required to calibrate

the economic viability and appropriate means required to prepare resolution

plan. Thus, yet another opportunity was provided to submit the resolution

plan till 24.01.2020.

• 23.01.2020 The Respondent No. 2 filed Miscellaneous Application before

the Hon'ble National Company Law Tribunal. Mumbai Bench for the purpose

of seeking exclusion of time in the CIRP period of the Corporate Debtor for the

Company Appeal (AT) (Insolvency) No. 805 of 2021 34

total time period of 72 days. So, as to give opportunity to the Resolution

Applicant to submit resolution plan for revival of the Corporate Debtor.

• 28.01.2020 The Respondent No. 2 received another letter from Mr. Atul

Kumar Gupta, CEO of Invent ARC and Prospective Resolution Applicant

requesting more time to submit the resolution plan as it was not possible for

him to comply due to absence of communication, he could not schedule the

visit for deliberation of resolution plan and requested for revised date so as to

submit the resolution plan.

• 30.01.2020 The Respondent No. 2 responded to the letter received from

Prospective Resolution Applicant stating that as per the timelines specified

that under IBC, it is not possible to grant any further extension for

submission of resolution plan.

• 01.02.2020 The Respondent No. 2 sent notice of Eighth Meeting of

Committee of Creditors to be held on 04.02.2020 to the members of committee

of creditors and Resolution Applicant for discussion of finalisation of

Resolution Plan. After the due consideration and willingness of the Resolution

Applicant to submit the resolution plan, 7 days were granted to submit the

plan and intimated that by 11.02.2020 the resolution plan should be

submitted and if it is not received then liquidation application will be initiated

against the corporate debtor.

• 11.02.2020 The First Resolution Plan was submitted by the Resolution

Applicant and Respondent No. 2 on 13.02.2020 submitted a reply stating that

Company Appeal (AT) (Insolvency) No. 805 of 2021 35

the Resolution Plan is not compliant with the provisions of the Code and thus

required to be complied.

• 14.02.2020 The Resolution Applicant through a letter intimated

committee of creditors that the revised resolution plan will be submitted by

18.02.2020 and Respondent No. 2 should accept it. And again, another

opportunity was provided. Further the resolution plan received on

18.02.2020.

• 27.02.2020 The Respondent No. 2 informed the members of committee of

creditors that Hon'ble National Company Law Tribunal has provided 10 more

days for submission of resolution i.e., until 07.03.2020 and 2 weeks' time to

conduct committee of creditors meeting to consider the resolution plan

• 07.03.2020 Third revised resolution plan was received and on 09.03.2020,

after preliminary analysis it was stated by the Respondent no. 2 through

email that certain documents and details were not submitted as part of

Resolution Plan.

• 12.03.2020 The Respondent No. 2 sent Notice and agenda of Nineth

Meeting of Committee of Creditors on 18.03.2020 to members and Resolution

Applicant. Further, one day before the meeting it was requested by the

Resolution applicant to keep the meeting in Mumbai, he cannot visit Nashik

due health issues. The Resolution Applicant attended the meeting through

skype on 21.03.2020 as it was postponed by the Resolution Applicant.

• 20.03.2020 The fourth revised resolution plan was submitted by the

Resolution Applicant and on 03.04.2020 observations regarding the same

Company Appeal (AT) (Insolvency) No. 805 of 2021 36

was sent by the Respondent No. 2 and final observations were sent on

14.04.2020.

10. It is further submitted that on 17.04.2020 the Respondent No. 2 sent an

email to members of Committee of Creditors to hold meeting via video

conferencing and reminder email on 06.05.2020. On 13.05.2020, an email was

received by the Resolution Applicant regarding inability to attend the meeting

due to Covid-19 pandemic and thus meeting was cancelled. Due to every time

request of the Resolution Applicant the meetings were tend to be cancelled.

Further Respondent No. 2 on 05.09.2020 sent an email to member of committee

of creditors informing that there are no updates on the resolution plan. Further

on 16.09.2020 after telephonic discussion, a meeting was proposed to be held

on 23.09.2020 and again the Respondent No. 2 received an email from the

Resolution Applicant to postpone the meeting by indicating health issues. Later,

on 27.09.2020 a meeting was scheduled on 30.09.2020.

11. It is further submitted that on 29.09.2020 one day prior to the meeting

the Resolution Applicant requested for certain clarification merely after the

period of 10 months after submission of expression of Interest. The details

requested were already submitted in the Information Memorandum. Further, in

the meeting held on 30.09.2020 it was agreed by the Resolution Applicant to

clarify the issues raised by the Respondent No. 2 and it was decided to hold

meeting on 1.10.2020. In the meeting held on 01.10.2020, the Resolution

Applicant stated that the Resolution Plan will be submitted on 08.10.2020.

Again, the Resolution Applicant tried to halt the submission of resolution plan

Company Appeal (AT) (Insolvency) No. 805 of 2021 37

by seeking more and more clarification regarding the Sales Tax Liability, details

of which were already shared by the Respondent No. 2 well in advance. Further,

from the above facts it clearly shows that, the Resolution Applicant had very

casual approach toward the CIRP and submission of Resolution Plan. The

Appellant regarding letter submitted by Prospective Resolution Applicant alleging

that CIRP of the Corporate Debtor was disrupted due to malafide intention of

Respondent No. 2 and Respondent No.3 is false and specifically denied. The

Respondent No. 2 had within his scope asked for detailed business plan so as to

get better picture for the revival of the corporate debtor. Further, it has been

alleged that the Respondent No. 2 has not shared signed balance sheet indicating

current financial status of the corporate debtor is not true. The Resolution

Applicant was well aware in advance that the financial records of the Corporate

Debtors were never provided by the Appellant even though regular reminder

given and emails were sent. The Respondent No. 2 has timely provided all the

required details to the Prospective Resolution Applicant and adequately all the

concerns as available with him. And thus, Appellant is resorting to unwarranted

allegations devoid of merits. Further, the Respondent No. 2 would like to reiterate

the multiple opportunities given to the Resolution Applicant for the submission

of Resolution Plan.

12. It is further submitted that in the 10th meeting of Committee of Creditor

held on 16th January 2021, the Resolution Applicant submitted the resolution

plan before the committee and after the detail discussion, Respondent No. 3

requested for the following condition regarding payment terms to be revised.

Company Appeal (AT) (Insolvency) No. 805 of 2021 38

Subsequently, the revised conditions requested by the Respondent No. 3 were

not accepted by the Resolution Applicant. Further, the Respondent No. 2

requested the Authorized Representative of Respondent No. 3 to discuss the

proposal of the Resolution Applicant with the chairperson of the Respondent No.

3 and same was not accepted by the chairman of the Respondent No. 3. Thus,

the Resolution Plan was rejected and thus it was requested to the Respondent

No.2 by the Respondent No. 3 to proceed with liquidation of the Corporate Debtor

as per Section 33 of Insolvency and Bankruptcy Code, 2016.From the above-

mentioned facts, from nowhere it seems that Respondent No. 2 acted in malafide

manner and hampered the CIRP of the Corporate Debtor. Subsequently, IA. No.

244 of 2021 was moved praying for initiation of liquidation process of the

corporate debtor before the Tribunal, as the Resolution Plan submitted by the

Resolution Applicant was rejected by the Committee of Creditor of the Corporate

Debtor and on 5th August 2021, the Ld. Adjudicating Authority IA. No. 244 of

2021 stating that it found no reason to take a contrary view in terms of Section

33 (1) (a) of the Act and that it had no option than to pass an order for liquidation

of the company in the manner laid down in Chapter III of the Code. The Ld.

Adjudicating Authority inter alia directed that Ms. Vaishali Arun Patrikar act as

Liquidator of Corporate Debtor and lifted the Moratorium declared under Section

14 of the Insolvency and Bankruptcy Code, 2016. Based on above submissions,

the Appellant completely failed to make out any case. Therefore, this Tribunal

may be pleased to dismiss the Appeal filed by the Appellant.

Company Appeal (AT) (Insolvency) No. 805 of 2021 39

13. The Ld. Counsel for the Respondent No. 3 in his reply affidavit submitted

that the Appellant has been declared as a wilful defaulter on 24.04.2018. The

proposed Resolution Applicant, Mr. Atul Kumar Gupta, whose plan has been

rejected by the Respondent No. 3, CoC member in its commercial wisdom, has

not challenged the impugned order till today as per the knowledge of the present

Respondent. Despite having an opportunity of the purchasing the Company as

a going concern in Liquidation, pursuant to the notice dated 18.04.2022

published by the Liquidator, neither the Appellant nor the proposed Resolution

Applicant has chosen to participate in the said process for the reasons best

known to them. Further, the Respondent No. 3 rely upon the true meaning and

interpretation of the record, minutes of CoC meetings, correspondences

exchanged between the parties, opinion given by CIRP Advisors and legal

Advisors and orders passed by the Adjudicating Authority during the CIRP

period.

14. It is further submitted that with respect to Ground 9Q to 9X mentioned in

the memo of Appeal, since the Resolution Applicant has not challenged the

impugned order, the contents stated therein by the Appellant cannot be

accepted. Further, the Appellant has misrepresented the facts and failed to make

out any case. Therefore, this Tribunal may be pleased to dismiss the Appeal filed

by the Appellant.

15. After hearing the parties and going through the pleadings made on behalf

of the parties, we observed that during the Corporate Insolvency Resolution

Process all possible steps as required under the Insolvency and Bankruptcy

Company Appeal (AT) (Insolvency) No. 805 of 2021 40

Code, 2016 were taken and the Committee of Creditors did not receive any

resolution plan/proposal for revival of the Company. Further, the Committee of

Creditors in its wisdom has resolved with 99.78% voting share in favour of the

liquidation of the Company. Keeping in view of the aforenoted facts, we agree

with the reasons given by the Adjudicating Authority, therefore, the impugned

order dated 05.08.2021 passed by the Adjudicating Authority (National

Company Law Tribunal, Mumbai Bench, Court No.-I) in IA No. 244 of 2021 in

C.P. (IB) No. 1661/MB/2018 is hereby affirmed. The instant Appeal is hereby

dismissed. No order as to costs.

16. Registry to upload the Judgment on the website of this Appellate Tribunal

and send the copy of this Judgment to the Adjudicating Authority (National

Company Law Tribunal, Mumbai Bench, Court No.-I), forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Mr. Kanthi Narahari] Member (Technical)

New Delhi 09th February, 2023 R. Nath.

Company Appeal (AT) (Insolvency) No. 805 of 2021