Smt.Aruna Patel vs 1.Punjab National Bank 2.Satyendra ...

IN THE MATTER OF: Smt. Aruna Patel ...Appellant Vs. Punjab National Bank & Anr. ....Respondents

For Appellant: Mr. Nitesh Srivastava, Advocate For Respondent: Mr. Amol Vyas, Sinha, Mr. Vivek Malik, Mr. Karan Aggarwal, Advocates for R2 Mr. Ankit Raj, Mr. Piyush Beriwal, Mr. K.Shashan Shekhar, Mr. Rajnish Kumar, Advocate for R1

ORDER

Per : Justice Rakesh Kumar Jain (Oral)

03.05.2023: Company Appeal (AT) (Ins) No. 526 of 2021

1. This appeal is directed against the order dated 02.03.2021 passed by the

National Company Law Tribunal, Jaipur Bench by which an application bearing

IA No. 131/JPR/2020 in CP No. 205/7/JPR/2019 filed by the Resolution

Professional (RP) under Section 33 & 34 of the Insolvency and Bankruptcy Code,

2016 (hereinafter referred as to 'the Code') for initiation of liquidation

proceedings against M/s. Atlas Alloy (India) Pvt. Ltd. (Corporate Debtor), has

been allowed.

2. Brief facts of the case are that the Corporate Debtor availed various credit

facilities from the Financial Creditor (Punjab National Bank), by way of Cash

Credit Facility, Bills Discounting, Term Loan, in the year 2005, the said facilities

Company Appeal (AT) (Ins) No. 526 of 2021 & IA No. 1974 of 2021 & 726 of 2023 2

were renewed and the limits were enhanced from time to time by the Financial

Creditor on the request of the Corporate Debtor. The Corporate Debtor executed

various documents such as Hypothecation Agreement dated 09.11.2011 to

secure the Term Loan. Since the Corporate Debtor did not maintain the financial

discipline, therefore, its accounts were declared as NPA by the Financial Creditor

on 30.09.2017 and recall notice dated 03.10.2017 was issued and outstanding

amount of Rs. 11,25,09,298.94 was demanded. Thereafter, the Financial

Creditor filed an application under Section 7 of the Code for initiation of

Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.

The said application bearing CP No. 205/7/JPR/2019 was admitted on

20.09.2019 by the Adjudicating Authority.

3. The order of admission came to be challenged by way of two separate

appeals. One appeal was filed by Girish Baduni, Ex-Director of the Corporate

Debtor bearing Company Appeal (AT) (Ins) No. 290 of 2020 which was dismissed

by this Tribunal by order dated 27.08.2020 and the second appeal bearing

Company Appeal (AT) (Ins) No. 525 of 2021 was filed by none other than the

present Appellant (Smt. Aruna Patel) which too was dismissed by this Tribunal

on 30.07.2021, on the ground that the appeal was filed beyond the period of

limitation and that appeal filed by the Ex-Director titled as "Girish Baduni Vs.

Punjab National Bank & Ors", was dismissed by a detailed order dated

27.08.2020.

4. It so transpired that in the 4th meeting of the CoC, held on 07.03.2020, the

Erstwhile Director of the Corporate Debtor, proposed a 'One Time Settlement'

Company Appeal (AT) (Ins) No. 526 of 2021 & IA No. 1974 of 2021 & 726 of 2023 3

(OTS) of an amount of Rs.7,30,00,000/- and decided to pay an upfront of Rs.

80,00,000/- to the Financial Creditor assuring that the OTS proposal would be

sent before 13th March, 2020. It was decided that the CoC shall, upon the receipt

of the proposal, present before the competent authority of the member of the

CoC for further consideration. The RP convened the 5th Meeting of the CoC on

17.03.2020 and informed that he had neither received any OTS proposal nor any

upfront amount before 13th March, 2020 from the Ex-Director of the Corporate

Debtor. Since, the statutory time limit of 180 days for CIRP was going to expire

on 18.03.2020 and no resolution plan was received till then for the purpose of

resolution / revival of the Corporate Debtor as well as no viable proposal was

submitted by the Erstwhile Director of the Corporate Debtor for settlement of the

account, the CoC in its wisdom decided to proceed with liquidation of the

Corporate Debtor in the said meeting (5th Meeting). Apropos, the decision taken

by the CoC, the application bearing IA No. 131/JPR/2020 in CP No.

205/7/JPR/2019 was filed by the RP for seeking approval of the Adjudicating

Authority for initiating the liquidation proceedings. Aggrieved against the

aforesaid order of the Adjudicating Authority, the present appeal has been filed.

5. Counsel for the Appellant has vehemently argued that the Appellant had

submitted two demand drafts dated 16.03.2020 amounting to Rs. 40,00,000/-

(Rs.30,00,000 & 10,00,000/-) towards the part of proposal which were not

considered by the CoC. It is further submitted that there was no tearing hurry

on the part of the CoC for the purpose of driving the going concern into

Company Appeal (AT) (Ins) No. 526 of 2021 & IA No. 1974 of 2021 & 726 of 2023 4

liquidation because a period of 180 days can further be extended for a period of

90 days and can go up to 330 days.

6. On the other hand, Counsel for Respondent No.1 (PNB) has referred to the

minutes recorded in the 5th meeting of the CoC and submitted that the CoC had

taken into consideration all the aspects of the matter much less the fact that the

conduct of the Erstwhile Director of the Corporate Debtor was not genuine as

they have been found indulging in unnecessary litigation and delaying the

matter. He has, particularly, referred to the following part of the minutes of 5th

Meeting of the CoC which read as under:

"The conduct of the erstwhile director of the corporate debtor is evident enough to prove that the party is not willing genuinely to settle the account but just to delay and frustrate the proceedings regularly submitting the proposals and disown them. He is reluctant to pay the dues rather by making various litigations to different forum/ authority creating hurdles in the recovery proceedings. Thus, such assurance of the erstwhile director of the corporate debtor can't be relied upon. As the statutory time limit of 180 days for CIRP proceedings is going to complete shortly and no resolution plan received therein for resolution/ revival of the corporate debtor as well as no viable proposal is submitted by the erstwhile director of the corporate debtor for settlement of the account, COC has decided to proceed for liquidation of the corporate debtor as per provisions of IBC, 2016"

7. Counsel for the Liquidator has also referred to the 5th meeting of the CoC

to contend that time was granted to the Appellant for the purpose of submitting

Company Appeal (AT) (Ins) No. 526 of 2021 & IA No. 1974 of 2021 & 726 of 2023 5

the proposal till 13.03.2020. No proposal was received by that date, however, it

has been recorded in the minutes that Ravi Vaishnav of Mayur Xerox Centre (3rd

party) vide email dated 16.03.2020 attached a copy of a proposal along with copy

of 2 DD dated 16.03.2020 amounting to Rs. 40 lakh (30 lakh and 10 lakh)

pertaining to the said corporate debtor. However, the said communication, much

less a copy of the two DD, was not found authentic to establish that the erstwhile

Director of the Corporate Debtor had the intention to give a viable proposal.

Minutes in this regard, recorded are reproduced as under:

"ln this regard, it is to inform that neither we have

received any OTS proposal nor any upfront amount before

13.03.2020 as assured by the erstwhile director of the

corporate debtor. The bank has only received a

communication from one Mr. Ravi Vaishnav of Mayur

Xerox Center vide e-mail dated L6.03.2020 attaching

therewith copy of a proposal along with copy of 2 DD

dated 16.03.20 amounting Rs. 40.00 lac (30 lac and 10

lac) only purported to be pertaining to said corporate

debtor, which also does not seems to be authentic. The

same is sufficient to establish that the erstwhile director

of the corporate debtor have violated the commitment

made during last COC and not complied with its own

submissions."

Company Appeal (AT) (Ins) No. 526 of 2021 & IA No. 1974 of 2021 & 726 of 2023 6

8. We have heard counsel for the parties and perused the record with their

able assistance. The issue involved in this appeal is as to whether the period of

180 days should have been further extended for the purpose of

accepting/awaiting the proposal made by the Appellant for the purpose of

keeping the Corporate Debtor as a going concern?

9. From the perusal of the record, we have found that sufficient time was

given to the Appellant for this purpose on their own asking because it has been

recorded in the 5th meeting of the CoC "The Chairman found that in the previous

COC meeting the erstwhile directors of the corporate debtor have informed to the

CoC that they will submit revise OTS (One time Settlement) proposal to the financial

creditor namely Punjab National Bank till 13.03.2020, and as per information

available with Resolution Professional as the said revised one time settlement

proposal has not been submitted to the bank till date and the CIRP period will be

expiry on 18.03.2020".

10. Thereafter, it has been recorded that "This has reference to CIRP

proceedings commencing from 20.09.2019 and you are appointed as Resolution

Professional for the same. Committee of creditor constituted with 100)% share of

Punjab National Bank, ln the last COC meeting held on 07.03.2020 in your office,

apart from other agenda items the proposal offered by the erstwhile director of the

corporate debtor for settlement of the account was discussed and it was asserted

by the erstwhile director of CD that OTS proposal of Rs. 7.30 crore will be given

along with upfront amount of Rs. 80,00 lac to the financial creditor (PNB) before

1,3.03.2020. It was submitted by the COC that on receiving the proposal before

Company Appeal (AT) (Ins) No. 526 of 2021 & IA No. 1974 of 2021 & 726 of 2023 7

committed date the same will be presented to the competent authority for further

consideration".

11. However, the Appellant has miserably failed to make the proposal of the

amount of Rs. 7.30 Crore along with upfront of Rs. 80 lakh before 13.03.2020

which was the committed date. Be that as it may, the Corporate Debtor had

rather sent an email through Ravi Vaishnav of Mayur Xerox Centre (third party)

dated 16.03.2020 with the proposal along with copy of two DD dated 16.03.2020

of Rs. 40 lakh which was not the upfront amount of Rs. 80 lakh, therefore, it

was rightly not found to be authentic and sufficient to establish that the

Erstwhile Directors were really interested in the resolution of the dispute rather

it has been, thereafter, recorded in the 5th CoC meeting that there has been a

continuous effort on the part of the Erstwhile Director of the Corporate Debtor

to delay and frustrate the proceedings in one manner or the other.

12. Thus, in view of the aforestated facts and circumstances of the case, we

do not find any bonafide intention on the part of the Appellant and as such we

are not inclined to accept the appeal. No other point has been raised.

13. The Appeal is hereby dismissed though without any order as to costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Naresh Salecha] Member (Technical) Raushan/Ravi

Company Appeal (AT) (Ins) No. 526 of 2021 & IA No. 1974 of 2021 & 726 of 2023