Shri Ashish Mohan Gupta vs M/S. Hind Motors Limited

(Arising out of Order dated 28.08.2017 passed by the Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh in Company Petition (IB) No.-01/Chd/2017)

IN THE MATTER OF:

Shri Ashish Mohan Gupta ... Appellant

Versus

M/s. Hind Motors Limited ... Respondent

WITH

Company Appeal (AT) (Insolvency) No. 240 of 2017

Arising out of Order dated 12.09.2017 passed by the Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh in Company Petition (IB) No.-06/Chd/CHD/2017)

IN THE MATTER OF:

Shri Ashish Mohan Gupta ... Appellant

Versus

M/s. Hind Motors India Limited ... Respondent

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 2

WITH

Company Appeal (AT) (Insolvency) No. 241 of 2017

Arising out of Order dated 12.09.2017 passed by the Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh in Company Petition (IB) No.-03/Chd/2017)

IN THE MATTER OF:

Shri Ashish Mohan Gupta ... Appellant

Versus

M/s. Hind Motors Mohali Private Limited ... Respondent

Present: For Appellant : Shri Sandeep Bajan, Ms. Pallavi Singh and Ms. Sonal Chaujar and Mr. Soayib Qureshi, Advocates.

For Respondents : Shri Kamal Satija, Advocate.

JUDGEMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

'M/s. Hind Motors Limited', Chandigarh, filed an application

under Section 10 of the Insolvency and Bankruptcy Code, 2016

(hereinafter referred to as "I&B Code") in CP (IB) No. 01/Chd/2017, for

its 'Corporate Insolvency Resolution Process'. The application under

section 10 of the 'I&B Code' was admitted by the Adjudicating Authority

(National Company Law Tribunal), Chandigarh Bench, Chandigarh, on

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 3

14th February, 2017 declaring the 'Moratorium' and one Mr. Manik

Goyal was appointed as 'Interim Resolution Professional'.

2. Another Company namely, 'M/s. Hind Motors India Limited',

Chandigarh, filed an application under Section 10 of the "I&B Code" in

CP (IB) No. 06(Chd)/2017, for its 'Corporate Insolvency Resolution

Process', which was admitted by the Adjudicating Authority (National

Company Law Tribunal), Chandigarh Bench, Chandigarh on 9th March,

2017 declaring the 'Moratorium', one Mr. Krishan Vrind Jain was

appointed as 'Interim Resolution Professional'.

3. A third Company namely, 'M/s. Hind Motors Mohali Private

Limited', Chandigarh, filed an application under Section 10 of the "I&B

Code" in CP (IB) No. 03(Chd)/2017, for its 'Corporate Insolvency

Resolution Process', which was admitted by the Adjudicating Authority

(National Company Law Tribunal), Chandigarh Bench, Chandigarh on

20th February, 2017 declaring the 'Moratorium', one Mr. Manik Goyal

was appointed as 'Interim Resolution Professional'.

4. By the impugned orders dated 28th August, 2017 in CP (IB) No.

01/Chd/2017; order dated 12th September, 2017 in CP (IB) No.

06(Chd)/2017 and order dated 12th September, 2017 in CP (IB) No.

03(Chd)/2017, the Adjudicating Authority after expiry of 180 days in all

the cases passed order under Section 33(1) of the 'I&B Code' and

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 4

started Liquidation Process in respect to the aforesaid three 'Corporate

Applicants' giving rise to the present appeals.

5. The Appellant- Mr. Ashish Mohan Gupta is a Promoter of all the

aforesaid 'Corporate Debtors' who had also submitted 'Resolution Plan'.

In all these cases, the Appellant produced a letter dated 16th August,

2017 from the Corporation Bank along with the 'Resolution Plan' but in

the said letter it was mentioned that "please note that this letter doesn't

tantamount to firm commitment for sanction of the said loan." In one of

the cases, the Appellant- Mr. Ashish Mohan Gupta, Promoter proposed

to make payment of Rs. 1.25 crores as against the total outstanding

claim of Union Bank of India which amounts to Rs. 3.51 crores. In other

cases, similar 'Resolution Plan' was filed by the Appellant- Mr. Ashish

Mohan Gupta, Promoter. However, in all the three cases, the respective

'Committee of Creditors' by majority decision rejected the plan, which

resulted in initiation of liquidation proceeding under Section 33 of the

'I&B Code'.

6. The Appellant- Mr. Ashish Mohan Gupta has taken similar pleas

in all the appeals that the 'Corporate Insolvency Resolution Process' was

completed without following the prescribed provisions of the 'I&B Code',

the 'Resolution Professional' did not seek extension of 90 days' time and

therefore, the Adjudicating Authority in haste passed the order for

liquidation of the Company.

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 5

7. In the case of M/s. Hind Motors Limited- Company Appeal (AT)

(Insolvency) No. 239 of 2017 highlighted the following facts:

i. No Resolution professional: The first meeting of the

'Committee of Creditors' convened on 9th March, 2017,

thereafter, the 'Insolvency Resolution Professional', Mr.

Manik Goyal was removed.

ii. No Application under Section 22(3)(b) of the Code: After

order dated 19th May, 2017 passed by the Adjudicating

Authority at Chandigarh, issuing notice to Union Bank of

India, to file an application for appointment of a new

'Resolution Professional' as per the procedure in the 'I&B

Code' that an application was filed. Furthermore, the

application under Section 22(3)(b) of the 'I&B Code' came to

be filed on 31st May, 2017 and thereafter, the name of the

'Resolution Professional' was confirmed by the Insolvency

and Bankruptcy Board of India on 16th June, 2017.

iii. No Resolution Process in terms of Section 12 and non-

compliance with Sections 25, 27 and 29 of the 'I&B

Code': Section 12 of the 'I&B Code' provides for a period of

180 days further extendable by 90 days for the completion

of the 'Corporate Insolvency Resolution Process'. During

that period certain acts have to be carried out by the

'Resolution Professional' in view of Section 25 of the 'I&B

Code'. It is pertinent to mention herein that as per the

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 6

affidavit of the Respondent dated 10th January, 2018, that

no invitations were invited from prospective lenders,

investors and any other person to put forward 'Resolution

Plans' as per Section 25(h) of the 'I&B Code'.

iv. No extension application under Section 12(2) of the

'I&B Code': Even though Section 12(2) of the 'I&B Code'

provides for the filing of an application seeking extension of

time of 90 days, the 'Resolution professional' did not file

any application in pursuance to the same. The 'Resolution

Professional' was confirmed on 16th June, 2017 and the

first meeting of the 'Committee of Creditors' was held

thereafter. As per the additional affidavit dated 18th

December, 2017 filed by the Respondent in the minutes of

the meeting dated 24th July, 2017, it has been recorded:

"2. Information memorandum not prepared: The

information memorandum should contain all information as

specified by Regulation 36(2) of the IBBI (Insolvency

Resolution process for Corporate Persons) Regulations, 2016,

however, various information as required by the above

regulation to be prepared and complied as information

memorandum has been prepared by the IRP."

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 7

Therefore, it is quite clear that even though merely 20 days

for conclusion of the 'Resolution Process' were left, the basic

procedure as prescribed under Sections 25, 27 & 29 of the 'I&B

Code' were not complied with by either the 'Resolution

Professional' or the 'Committee of Creditors'.

8. It was submitted that the 'I&B Code' provides for procedure from

Section 22 (Appointment of Resolution professional) to Section 29

(Preparation of Information Memorandum), which are mandatory at

every stage but all procedures were not properly followed as the post of

the 'Resolution Professional' remained vacant for more than three

months (90 days). The application for seeking appointment of a new

'Resolution Professional' was filed on 31st May, 2017, the 'Resolution

Professional' was appointed much later. Thereafter, the 'Resolution

Professional' was never provided the time period of 180 days as

envisaged under Section 12 of the 'I&B Code'.

9. Similar plea has been taken by the Appellant- Mr. Ashish Mohan

Gupta, the Promoter in the other two appeals.

10. The Respondents have filed affidavit and taken plea that all steps

as required under the provisions of the 'I&B Code' were taken.

11. From the record of CP (IB) No. 01/Chd/2017, we find that the

case was admitted on 14th February, 2017 appointing Mr. Manik Goyal

as 'Interim Resolution Professional'. The 'Financial Creditors' namely

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 8

Union Bank of India, State Bank of India, ICICI Bank and 37 depositors

held meeting on 10th March, 2017. The lead Bank is the Union Bank of

India holding more than 75% of the voting share of the 'Committee of

Creditors'. On the request of the 'Committee of Creditors', the 'Interim

Resolution Professional' was removed and another 'Resolution

Professional' was appointed pursuant to the order of the Adjudicating

Authority dated 19th May, 2017.

12. Mr. Krishan Vrind Jain was appointed as 'Resolution Professional'

in the aforesaid case on 16th June, 2017. The said 'Resolution

Professional' convened the meeting of the 'Committee of Creditors' on

24th July, 2017, 2nd August, 2017 and 11th August, 2017. The last

meeting was held on 11th August, 2017 and the minutes of meeting

were submitted to the Adjudicating Authority by Mr. Krishan Vrind Jain

on 14th August, 2017.

13. The Respondents have enclosed the newspapers publication dated

18th February, 2017 published under Regulation 6 of the Insolvency

and Bankruptcy Board of India (Insolvency Resolution Process for

Corporate Persons) Regulations, 2016 giving public announcement. It

was followed by the progress report submitted by the 'Interim

Resolution Professional' dated 27th February, 2017. The minutes of 1st

meeting of the 'Committee of Creditors' dated 10th March, 2017 is on the

record. The progress report in the matter of M/s. Hindi Motors Limited,

Chandigarh, including, valuation report to be prepared by the valuer

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 9

were brought to the notice of the Adjudicating Authority and followed by

another progress report dated 12th April, 2017. By progress reports

dated 15th May, 2017 and 16th May, 2017, the 'Interim Resolution

Professional' intimated that pursuant to the notice, claims have been

received from different Creditors. The details of information/documents

sought for by the 'Committee of Creditors' was also brought to the

notice of the Adjudicating Authority by the 'Interim Resolution

Professional'.

14. All the aforesaid facts, including the decision of the 'Committee of

Creditors' held on different dates were taken into consideration by the

Adjudicating Authority before passing the impugned order. The

'Committee of Creditors' having rejected the only 'Resolution Plan'

submitted by the Appellant- Mr. Ashish Mohan Gupta, who is the

Promoter of the 'Corporate Debtor(s)', the Adjudicating Authority by

impugned order had no option but to pass order under Section 33(1) for

initiation of liquidation process by appointing a 'Resolution

Professional(s)' as Liquidator(s) of respective 'Corporate Debtor(s)'.

15. The plea taken by the Appellant that the 'Resolution Plan' were

not called for by advertising in the newspapers in terms of Section 29

cannot be taken into consideration for giving any benefit in favour of the

Appellant, as the Appellant though present during the meeting of the

'Committee of Creditors' submitted its 'Resolution Plan' but never raised

this question that 'Resolution Plans' should be called from the others.

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017 10

The 'Resolution Plan' submitted by the Appellant- Mr. Ashish Mohan

Gupta, Promoter having been rejected by the 'Committee of Creditors' in

all these three cases, it is not open to the Appellant- Mr. Ashish Mohan

Gupta, promoter to raise the issue that the applications should have

also been called for from the other 'Resolution Applicants'.

16. Once the 'Resolution Process' reaches finality and the 'Committee

of Creditors' reject the 'Resolution Plan' in view of Sections 30 & 31 of

the 'I&B Code', the Adjudicating Authority had no other option but to

order for initiation of Liquidation Process. In such case, there is no

occasion to grant further extension of time, as all the procedural has

been followed in letter and spirit.

17. We find no merit in these appeals. They are accordingly

dismissed. However, in the facts and circumstances of the case, there

shall be no order as to costs.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial)

NEW DELHI 26th April, 2018

/AR/

Company Appeals (AT) (Insolvency) Nos. 239, 240 & 241 of 2017