Shahid Ali vs Mr. Kuldeep Verma And Ors

Shahid Ali ...Appellant(s)

Versus

KuldeepVerma&Ors. ...Respondent(s) Present: For Appellant : Mr. Salman Khurshid, Mr. HG Hasnain, Sr. Advocates, Ms. Jyoti Khurana, Ms. Latika, Mr. Nitin Kashyap, Ms. Sidra Khan, Ms. Riddhi Goyal, Ms. Ritika, Mr. Ankit Sarangi, Advocates. For Respondents : Ms. Manju Bhuteria, Sr. Advocate with Ms. Shreya Choudhary, Mr. Manish Jain, Advocates for R- 3/liquiator. Mr. Brijesh Kumar Tamber, Mr. Prateek Kushwaha, Advocates.

With Comp. App. (AT) (Ins) No. 656 of 2025 & I.A. No. 2550 of 2025

IN THE MATTER OF:

Shahid Ali ...Appellant(s)

Versus

KuldeepVerma&Ors. ...Respondent(s) Present: For Appellant : Mr. Salman Khurshid, Mr. HG Hasnain, Sr. Advocates, Ms. Jyoti Khurana, Ms. Latika, Mr. Nitin Kashyap, Ms. Sidra Khan, Ms. Riddhi Goyal, Ms. Ritika, Mr. Ankit Sarangi, Advocates. For Respondents : Ms. Manju Bhuteria, Sr. Advocate with Ms. Shreya Choudhary, Mr. Manish Jain, Advocates for R- 3/liquiator. Mr. Brijesh Kumar Tamber, Mr. Prateek Kushwaha, Advocates.

ORDER

(Hybrid Mode)

01.05.2025: These two appeals have been filed by the Suspended

Director of the Corporate Debtor challenging the order dated 20.02.2025 in

I.A. No. 2046/KB/2023 and I.A. No. 97/KB/2024.

2. Brief facts necessary to be noticed for deciding the appeal are:

3. On an application filed under Section 7 by the Central Bank of India

CIRP against the Corporate Debtor M/s Sasa Musa Sugar Works Pvt. Ltd.

commenced on 09.03.2021.

4. After issuance of Form G the appellant as Suspended Director has

submitted a Resolution Plan for consideration.

5. Earlier the plan was approved of one M/s SJPB Hathua Sugar & Bio

refinery Pvt. Ltd. who could not implement the plan and could not submit

the bank guarantee and thereafter the meeting of Committee of Creditors

was convened and appellant who was Prospective Resolution Applicant

(PRA) of consortium of Shahid Ali was asked to improve the financial

proposals. Appellants case is that the appellant improves the final proposal

and also given addendum on 08.12.2023 and another addendum in

16.02.2024.

6. The Committee of Creditor however took a decision not to accept the

resolution plan submitted by the appellant and decided to file an I.A.

2046/2023 praying for liquidation of the Corporate Debtor.

7. I.A. No. 97/2024 was filed by the appellant for reconsideration of

the plan.

8. Another application was filed by Central Bank of India (CBI) where

the CBI prayed for rejection of the plan submitted by the appellant in I.A.

No. 1849/KB/2024. Against the order passed by CBI in I.A. No.

1849/KB/2024 appellant has filed a Comp. App. (AT) (Ins) No. 654 of 2025

which has been dismissed as barred by limitation by order passed yesterday

i.e. 30.04.2025.

9. These two appeals challenges the order passed in I.A. No.

2046/KB/2023 that is for liquidation as well as I.A. (IB) No. 97/KB/2024

for consideration of the plan.

10. We have heard Shri Salman Khurshid, Ld. Sr. Counsel appearing for

the appellant.

11. Counsel for the Appellant submitted that appellant has given

addendum and CD being MSME. Appellant took all steps to revive the CD

and to the addendum, submitted the plan value was increased to Rs. 89

Crore.

12. It is submitted that Adjudicating Authority later directed to consider

the addendums submitted. Although the order was passed by the

Adjudicating Authority to consider the addendum of the appellant, the plan

was not considered.

13. Ld. Counsel appearing for the liquidator submitted that the

adjudicating authority has consider all aspects of the matter and has rightly

allowed the application for liquidation. It is submitted that a committee of Creditors in commercial wisdoms has considered and deliberated on the

plan submitted by the appellant and found that plan not to be approved, the

course open for the committee of creditor was only to direct for liquidation.

14. We have considered the submissions of the Counsel for the parties

and perused the record.

15. Adjudicating Authority has heard the parties and in the impugned

order has noted the deliberation of the CoC which took place on 17thCoC

meeting convened on 29.11.2023 as well as 19thCoC meeting held on

06.12.2023. The plan was discussed and it was put to the voting along with

addendum dated 08.12.2023.

16. The Adjudicating Authority also notice that total admitted claims

are 137.60 Crore and the liquidation value of the CD is Rs. 105.35 Crore.

The all aspect having been considered, the CoC took a decision not to accept

the plan submitted by the appellant and voted for liquidation on

12.12.2023.

17. The CoC under Section 33(2) of IBC has a power to take a decision

with not less than 66% of the voting share to liquidate the CD. Of course the

decision taken by the CoC to liquidate is amenable to judicial review but

only on the limited ground that the decision of the CoC is arbitrary.

18. Present is not a case where it can be said that the decision of the

CoC to liquidate is arbitrary, the CoC after considering all aspects of the

matter has passed a resolution for liquidation of the CD in which we do not

find any error warranting any interference. As far as the direction by the

adjudicating authority to consider the addendum submitted by appellant in February, 2024. The Central Bank has already filed an application stating

that the said proposal cannot be accepted which application has also been

allowed by the adjudicating authority which order has become final.

19. Ld. Counsel for the appellant lastly submitted that as per regulation

2B of the liquidation regulation 2016 the appellant is entitled to submit a

scheme for arrangement it being MSME and hence the opportunity be given

to the appellant to submit a scheme of arrangement as contemplated in 2B.

20. Ld. Counsel for the liquidator has referred to second proviso to 2B

and submit that in the present case there is no recommendation under

Regulation 39-BA of the Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

21. It is further submitted that although notice for e-auction was issued

by liquidator fixing 03.05.2025 but no bid has been received so far.

22. The Insolvency and Bankruptcy Board of India (Liquidation Process)

Regulations, 2016 Regulation 2B of liquidation Regulation provides as

follow:

"2-B. Compromise or arrangement-(1) Where a compromise or arrangement is proposed under Section 230 of the Companies Act, 2013(18 of 2013), it shall be completed within ninety days of the order of liquidation under [***] section 33:

[Provided that a person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor, shall not be a party in any manner to such compromise or arrangement:] [Provided further that the liquidator shall file the proposal of compromise or arrangement only in cases where such recommendation has been made by the committee under regulation 39-BA of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016:

Provided further that the liquidator shall not file such proposal after expiry of thirty days from the liquidation commencement date.]"

23. The second proviso on which the liquidator relies is a provision

where CoC while taking a resolution has recommended to explore a proposal

for compromise or arrangement. It is for liquidator to file proposal within 30

days of the order of liquidation.

24. The present is not a case where there is any recommendation under

Regulation 39-BA of the Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

25. We however are of the view that second proviso of Regulation cannot

control the provision of Section 2B (1) which is a provision giving a

opportunity for submitting a compromise or arrangement under Section 230

of the Companies Act, 2013.

26. We thus are of the view that the appellant is fully entitled to submit

a scheme compromise or arrangement under Regulation 2 B.

27. We thus are of the view that the appellant may submit a

compromise or arrangement on or before 20.05.2025.

28. The liquidator shall after receiving any compromise or arrangements

take such further steps as required by law.

29. Subject to liberty as above, we dismiss both the appeals.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) sr/nn