State Bank Of India vs Subodh Kumar Agrawal & Ors
- CitationCompany Appeal (AT) (Insolvency) No. 1377 of 2019
Ratio decidendi
The rule this decision rests on
The Adjudicating Authority cannot substitute its own decision for the commercial decision of the Committee of Creditors by accepting a resolution plan that the CoC has rejected by the requisite majority; its role is limited to the grounds prescribed by the Insolvency and Bankruptcy Code. Where a resolution plan has been revised during the pendency of an appeal and a majority of the CoC is willing to consider it, the matter may be remitted to the CoC to consider and take a commercial decision on the revised plan, extending the CIRP period for that purpose, in keeping with the object of the Code that liquidation is a last resort and every effort should be made to achieve resolution where possible. If the CoC rejects the revised plan, the Resolution Professional's pending application for liquidation under Section 33 revives and the Adjudicating Authority may proceed to order liquidation in accordance with law; if the CoC approves it, with or without modifications, the Adjudicating Authority considers it on the Resolution Professional's motion.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE MATTER OF: State Bank of India SAMB-II, Raheja Chambers, 1st Floor, B Wing, Free Press Journal Marg, Nariman Point, Mumbai - 400021 ...Appellant. Versus 1. Mr. Subodh Kumar Agrawal Resolution Professional of Ushdev International Ltd. 1, Ganesh Chandra Avenue, 3RD Floor, R. N-301, Kolkata - 700013 2. Taguda Pte. Limited, Singapore 1, Magazine Road, #04-11 Central Mall, Singapore 059567 3. Suman Gupta (Promoter) A/1, Brighton Apartments, 68-D, Neapensea Road, Mumbai 4. Lodha Development Management Pvt. Ltd. 7 Floor, Lodha Excelus, th
Apollo Mills Comound, M.M. Joshi Marg, Mahalaxmi, Mumbai, Maharashtra - 400011 5. Ushdev Employees Assocation Represented by Birendra Singh, 1302, Crimson Tower, Akurli Satya CHS Ltd, Lokhandwala Township, Kandivali East, Mumbai - 400101 ...Respondents.
Present: For Appellant: Mr. Ramji Srinivasan, Sr. Advocate with Ms. Misha, Mr. Vaijayant Paliwal, Ms. Shivani Sinha and Mr. Charu Bansal, Advocates. For Respondent: Vishrutyi Sahni, Mr.Kumar Kislay, RP, R-1. Mr. Arun Kathpalia, Sr. Advocate with Mr. Ujjal Banerjee, Mr. Akash Khurana, Advocates for R-2. Mr. Dhruba Mukherjee, Sr. Advocate with Mr. Vaibhav Manu Srivastava, Advocates for R-3. 2
Mr. Ashmi Mohan, Mr. Amit Aggarwal, Mr. Mustafa Motiwala, Mr. Shwetabh Sinha, Mr. Sunit Mandal, Advocates for R-4. Mr. Ketan Madan, Advocates for R-5. Mr. Amit Sibal, Sr. Advocate with Mr. Prakshal Jain, Mr. Nitesh Jain, for ICICI Bank. Mr. Vividh Tandon and Ms. Shivani Rawat (Intervenor) Futema Kachwalla, R-1, IRP.
W ITH Company Appeal (AT) (Insolvency) No. 07 of 2020
IN THE MATTER OF: Canara Bank Corporate Office At: 112, J C Road, Bangalore, Karnataka - 560002 One of its Branch at: Canara Bank, 150, Habibullah Road, Thiyagaraya Nagar, Chennai, Tamil Nadu 600017 ...Appellant. Versus 1. Subodh Kumar Agarwal Resolution Professional For Ushdev International Limited 1, Ganesh Chandra Avenue 3rd Floor, R. N-301, Kolkata - 700013 2. Taguda Pte. Limited, Singapore 1, Magazine Road, #04-11 Central Mall, Singapore 059567 ...Respondents.
Present:
Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 3
For Appellant: Mr. PBA Srinivasan, Ichchha Kalash, Mr. Parth Tandon and Mr. Avinash Mohapatra, Advocates.
For Respondent: Vishrutyi Sahni, Mr.Kumar Kislay, RP, R-1. Mr. Arun Kathpalia, Sr. Advocate with Mr. Ujjal Banerjee, Mr. Akash Khurana, Advocates for R-2. Futema Kachwalla, R-1, IRP. Mr. Amit Sibal, Sr. Advocate with Mr. Prakshal Jain, Mr. Nitesh Jain, Mr. Vividh Tandon, for ICICI Bank.
ORDER
(Virtual Mode)
08.04.2021 Seen Record of Proceedings of this Tribunal dated 06 th April,
2021.
2. Subsequently, the Respondent No. 2 has filed hard-copy of Application
(Diary No. 26632) along with Annexure A, which is stated to be Revised
Resolution Plan. The Application makes a request that matter may be sent to
Committee of Creditors (CoC in short) to consider the Revised Resolution Plan
which is filed by the Applicant.
3. This Company Appeal (AT) (Ins.) No. 1377 of 2019 was filed by the State
Bank of India against Impugned Order dated 07th November, 2019 passed by the
Adjudicating Authority (National Company Law Tribunal, Mumbai Bench).
Impugned Order was passed in CP No. 1790/IBC/NCLT/MB/MAH/2017. Before
the Adjudicating Authority there were MA 626/2019 filed by the Resolution Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 4
Professional seeking liquidation under Section 33 of IBC; MA 517/2019 filed by
Canara Bank (Appellant in C.A. (AT) (Ins.) No. 07/2020); MA 716/2019 filed by
a CoC Member; MA 989/2019 filed by Promoter of Corporate Debtor; MA
762/2019 filed by Taguda Pte. Ltd. the Unsuccessful Resolution Applicant and
MA 857/2019 filed by Employees of the Corporate Debtor. The Corporate Debtor
is Ushdev International Ltd. Company Appeal (AT) (Ins.) No. 07/2020 by Canara
Bank also is challenging the same impugned Orde r.
4. The Learned Counsel for the parties before us accept that the CoC had by
requisite majority rejected the Resolution Plan which had been earlier submitted
by Respondent No. 2-Taguda Pte. Ltd. (Taguda in short) and the Resolution
Professional had moved the Adjudicating Authority for liquidation of the
Corporate Debtor filing Application under Section 33 of IBC. Record Shows the
Adjudicating Authority however went into various details and Impugned Order
in Paragraph 41 onwards recorded reasons why although the CoC rejected the
Resolution Plan, the Adjudicating Authority was accepting the Resolution Plan
submitted by Respondent No. 2.
5. It is stated by Learned Counsel for the Appellants that when CoC had
taken a commercial decision rejecting Resolution Plan Adjudicating Authority
could not have substituted it by its own decision to accept the Resolution Plan.
6. It is stated that during pendency of the Appeal there have been
developments and the Respondent No. 2-Taguda who was unsuccessful before
the CoC earlier has materially revised the offer in Revised Resolution Plan. The
Affidavit filed by Assistant General Manager of State Bank of India shows and it Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 5
is argued by Sr. Advocate for State Bank of India that majority of Members of
CoC are in favour of considering Revised Resolution Plan. The Affidavit filed is
in C.A. (AT) (Ins.) No. 1377 of 2019, (Diary No. 26360) and the relevant part reads
as under:
Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 6
Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 7
Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 8
Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 9
Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 10
7. The Application which is referred in Paragraph 4 it is stated was earlier
filed electronically but now hard-copy has been filed as Diary No. 26632.
8. The Learned Sr. Counsel for ICICI Bank who has filed Intervention
Application Diary No. 16612 submits that ICICI Bank has certain reservations
with regard to the part of revised resolution plan. It is stated that the ICICI Bank
has corporate guarantee in its favour from one Ushdev NG Tech Ltd. which is
tried to be assigned to the Resolution Applicant which according to the counsel
is not permissible in law. The Learned Counsel states that the Appeal also raises
this ground. According to us the statute is designed to be workable . The
contentions are left open for consideration after CoC considers Revised
Resolution Plan, and takes a decision.
9. Considering the Impugned Order which was passed and the law as it
stands inter alia with regard to Commercial Wisdom of CoC, if the Appeals are
allowed, and impugned Order is set aside the consequence would be liquidation.
In such scenario, considering the Aims and Objects of IBC as they are, there is
no harm if we send back the matter to CoC to consider the Revised Resolution
Plan as has been filed and give some time for the same. It is settled law that
liquidation should be last resort and if resolution is possible, every effort should
be made for the same.
10. We may not be taken as expressing any opinion on the merits of the
matter. We keep all contentions open. We find that the Revised Resolution Plan
as has now been submitted should be sent to CoC. The CoC can consider the
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Resolution Plan and negotiate with the Respondent No. 2 and take commercial
decision in the best interest of the Corporate Debtor to find Resolution if possible.
For the above reasons, both the Appeals are allowed. Impugned Order is
quashed and set aside. We remit back the matter to the CoC to consider the
Revised Resolution Plan as has been filed with Diary No. 26632. It is stated that
the Resolution Professional has been managing the Corporate Debtor in view of
the Order dated 29th November, 2019 passed by this Tribunal in Company
Appeal (AT) (Ins.) No. 1377 of 2019. The Resolution Professional is directed to
call CoC meeting urgently and immediately place the Revised Resolution Plan as
has been tendered in this Tribunal for the consideration of CoC.
11. We grant period of six weeks from today for completing the process which
time will be considered as extended CIRP Period. During this time the CoC to
consider the Revised Resolution Plan and take decision on the Revised
Resolution Plan. The Resolution Professional will then take further steps
depending on whether CoC accepts the Revised Resolution Plan (with or without
modifications) or rejects the same.
12. If the Revised Resolution Plan is rejected the MA 626/2019 filed by the
Resolution Professional under Section 33 of IBC would stand revived and
Resolution Professional will move Adjudicating Authority for Orders regarding
Liquidation and the Adjudicating Authority would be at liberty to pass orders as
per law, of liquidation. If the Resolution Plan is approved, with or without
modifications, the Adjudicating Authority will consider the same on motion by
the Resolution Professional for further steps under IBC.
Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020 12
Both the Appeals are disposed, accordingly. No Order as to costs.
[Justice A.I.S. Cheema] Member (Judicial)
[Dr. Alok Srivastava] Member (Technical)
Basant B./md
Company Appeal (AT) (Ins.) No. 1377 OF 2019 and 07 of 2020
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