Subhlaxmi Investment Advisory Pvt Ltd vs Rbl Bank Limited

Company Appeal (AT) (Ins) No. 1104 of 2024 & I.A. No. 3977 of 2024

IN THE MATTER OF:

Subh Laxmi Investment Advisory Pvt. Ltd. ...Appellant

Versus

Committee of Creditors of Sintex Plastics Technology Ltd. & Ors. ...Respondents Present:

For Appellant: Mr. Pradeep Kumar, Ms. Shipra, Mr. Gaurav Garg, Advocates.

For Respondents: Mr. Sunil Fernandes, Sr. Advocate, Mr. Chitranshul A. Sinha, Ms. Pallavi, Mr. Shivam Shorewala, Ms. Rakshita Bhargava, Ms. Rajshree Chaudhary, Ms. Diksha Dadu, Advocates for R-1.

Mr. Deepayan Mandal, Mr. Naman Varma, Mr. Mridul Bansal, Advocates for R-2. Mr. Apar Gupta, Mr. Naman Kumar, Advocates for R3.

Mr. Navin Pahwa, Sr. Advocate, Mr. Himanshu Satija, Mr. Harsh Saxena, Advocates for R- 4 to 7. JUDGMENT

Per: Justice Rakesh Kumar Jain:

This appeal is filed by the Unsuccessful Resolution Applicant against

the order 03.05.2024 passed by the National Company Law Tribunal,

Ahmedabad, Division Bench, Court - 1 (in short ' Tribunal') by which an

application bearing I.A No. 09 of 2024 filed under Section 33(2) of the

Insolvency and Bankruptcy Code, 2016 (in short ' Code') by the RP for the

liquidation of the Corporate Debtor, namely, M/s Sintex Plastics Technologies

Ltd. has been allowed and Mr. Bimal Ashok Desai has been appointed as

the liquidator of the CD.

Company Appeal (AT) (Ins) No. 1104 of 2024 2

2. M/s Asset Reconstruction Company (India) Pvt. Ltd. filed a petition

under Section 7 of the Code bearing CP (IB) No. 175/Ahm/2022 against

the CD which was admitted on 21.02.2023 and Mr. Kshitiz Chhawchharia

was appointed as the Interim Resolution Professional (IRP) of the CD.

3. IRP made public announcement in Form A on 01.03.2023 in financial

express (English language), All India Edition and Financial Express (Gujarati

language) Ahmedabad Edition for submission of proof of claims till

13.03.2023.

4. After collating the claims received from the creditors, the IRP

constituted the Committee of Creditors (CoC) on 22.03.2023 of only one

financial creditor, namely, RBL Bank Limited.

5. The CoC in its second meeting held on 03.07.2023 appointed Mr.

Nimai Guatam Shah as the RP of the CD and an application in this regard

filed before the Tribunal under Section 22(3)(b) of the Code was allowed on

24.07.2023 appointing Mr. Nimai Gautam Shah as the RP.

6. The RP published invitation for expression of interest (EOI) in Form

G for submission of the resolution plans for the CD in Financial Express

(English and Gujarati Language) Ahmedabad edition on 14.08.2023 in

which the last date for submission of EOI was 30.08.2023.

7. The Appellant has alleged that it had submitted its EOI on

29.08.2023 which was confirmed by the email of the RP dated 30.08.2023.

the name of the Appellant was included in provisional list of PRAs.

Company Appeal (AT) (Ins) No. 1104 of 2024 3

8. The RP issued a provisional list of eligible PRAs on 01.09.2023 which

consisted of seven PRAs out of eight PRAs who had submitted their EOI.

9. The RP confirmed the inclusion of the Appellant in the final list of

the PRAs and subsequently shared the information memorandum, evaluation

matrix and a request for resolution plan to the Appellant on 07.09.2024.

10. According to the Appellant, the resolution plan was submitted

through email on 17.10.2023 alongwith EMD of Rs. 25,00,000/- with a

financial proposal of Rs. 4 Cr. with a term of one year from the date of

approval of resolution plan by the Tribunal.

11. It is alleged that the RP invited the Appellant by email dated

21.10.2023 to the fourth meeting of the CoC which was scheduled to be

held on 25.10.2023 for presentation of their resolution plan.

12. It is alleged that there was no response by the RP/CoC, therefore,

the Appellant itself amended the financial bid to Rs. 7,75,00,000/- on

27.10.2023 to be paid within four months from the date of approval of

resolution plan by the Tribunal.

13. It is further alleged that the RP subsequently sent an email dated

24.11.2023 to the Applicants for submission of revised financial proposal

through email on or before 27.11.2023.

14. The Appellant alleged to have submitted addendum for revised

financial proposal with an amount of Rs. 8 Cr. on 27.11.202 to be paid

within four months from the date of approval of resolution plan by the

Tribunal.

Company Appeal (AT) (Ins) No. 1104 of 2024 4

15. It is also alleged that the RP sent email to the PRAs asking them to

submit final revised resolution plan on or before 30.11.2023. The Appellant

alleged to have requested the RP to allow further two days time to ensure

submission of comprehensive resolution plan and on 30.11.2023 the RP

accepted the request of the Appellant and stated that plan may be submitted

by it before 02.12.2023. The Appellant alleged to have submitted its final

resolution plan on 02.12.2023 with a financial proposal of Rs. 8 Cr. to be

paid within four months from the date of approval of resolution plan by

the Tribunal.

16. It is also alleged by the Appellant that it once again took initiative and

submitted another addendum to the resolution plan through an email dated

21.02.2024 and made two proposals (i) to acquire the CD with its brand

named for an amount of Rs. 8 Cr. (ii) to acquire the CD without its brand

name for an amount of Rs. 4,50,00,000/-.

17. It is alleged that the RP put all the three compliant resolution plans

for voting through e-voting window which closed on 26.03.2024 wherein the

CoC abstained from voting on either of the resolution plans which were

neither approved nor rejected.

18. However, the RP on 26.03.2024 intimated the Appellant that resolution

plan has not been approved by the CoC and asked to provide the bank

account details for refund of EMD.

19. The Appellant has alleged that in response to the email received on

26.03.2024, requested the RP to apprise about the reason for not accepting

Company Appeal (AT) (Ins) No. 1104 of 2024 5

the resolution plan and requested to share the minutes of the meeting

through letter dated 08.04.2024.

20. It is further alleged that the Appellant received a letter dated

30.04.2024 from the CoC that it has chosen not to vote for the plan and

unsuccessful prospective resolution applicant cannot question the

commercial wisdom of the CoC.

21. It is further alleged that the RP filed an application for initiation of

liquidation process against the CD which was allowed by the impugned

order dated 03.05.2025.

22. On the other hand, Counsel for Respondent No. 1/CoC has alleged

that third CoC meeting was held on 11.08.2023 in which apart from

passing various resolution, approving fees of RP, Evaluation Matrix,

eligibility criteria etc. it was resolved with 100% of voting to file appropriate

application for extension of the CIRP of the CD for 90 days from the

completion of 180 days of the CIRP. Accordingly, I.A No. 944 of 2023 was

filed by the RP which was allowed and CIRP period was extended till

20.11.2023.

23. It is further submitted that in the 4th CoC meeting dated

25.10.2023, it was resolved to file IA seeking exclusion of CIRP period of

90 days. The RP filed I.A No. 1303 of 2023 praying for exclusion of CIRP

period which was dismissed by the Tribunal on 18.12.2023.

24. The order dated 18.12.2023 was challenged by way of two appeals CA

(AT) (Ins) No. 82 and 89 of 2024 by the RP as well as the RBL Bank which

Company Appeal (AT) (Ins) No. 1104 of 2024 6

was allowed on 30.01.2024 and the period of CIRP was extended till

30.03.2024.

25. It is further submitted that in the 5th meeting of the CoC,voting was

kept open till 31.12.2023 in which the sole member of the CoC abstained

from voting on either of the three resolution plan. It is also submitted

that in the 6th CoC meeting held on 22.03.2024 e-voting was kept open till

26.03.2024 and the CoC was informed that as per order of the NCLAT, the

extended period of CIRP is expiring on 30.03.2024. It is alleged that in the

said meeting, the resolution plans were placed before the CoC to cast their

vote in which three resolutions were to approve or reject the resolutions

plans so received from PRAs, one resolution for passing resolution for

liquidation of the CD as the CIRP was getting over on 30.03.2024 and

one resolution for approving the fee of the RP at the minimum permitted

scale as per Regulation 34B.

26. It is alleged that the CoC was not in favour of the resolution plans,

therefore, in its commercial wisdom it has abstained from voting. It is also

submitted that on 27.03.2024 the RP informed the CoC that he was

proceedings to file a petition for liquidation. He has also suggested CA Bimal

Ashok Desai as the liquidator. He sought consent of the Bank/CoC latest by

27.03.2024. On the same day, the sole member of the CoC gave consent

for the name suggested by the RP as the liquidator. Thereafter, since CIRP

period had expired on 30.03.2024, therefore, the application was filed

bearing I.A No. 6 of 2024, however, the said application was dismissed on

09.04.2024 granting liberty to file fresh application for liquidation with copy

Company Appeal (AT) (Ins) No. 1104 of 2024 7

of Form H. It is alleged that in compliance of order dated 09.04.2024, RP

filed the application with Form H bearing IA No. 09 of 2024. The application

was filed for liquidation because the CoC did not approve any of the resolution

plans and the CIRP period of the CD was over on 30.03.2024 which was

inconformity with the provisions of Section 33 of the Code. It is also alleged

that vide order dated 24.04.2024 the Applicant sought time to amend the

cause title as well as to file revised form H which was allowed and in

compliance of order dated 24.04.2024, filed an additional affidavit on

29.04.2024 with revised form H alongwith revised memo of parties and also

the email correspondence with sole CoC, giving consent to appoint Mr. Bimal

Ashok Desai as the liquidator.

27. Consel for Respondent No. 4 to 7 has submitted that after the

impugned order was passed, the Respondent No. 3 issued the e-auction

notice on 21.06.2024 as per which the assets of the CD were proposed to

be sold in different blocks. The sale of the CD was proposed as a going

concern under Block A in accordance with Regulation 32(e) of the IBBI

(Liquidation Process) Regulations, 2016 (in short ' Regulations').

28. Pursuant to the e-auction notice, it is alleged that the Respondents

deposited EMD of Rs. 1 Cr. by way of RTGS in respect of Block A. The e-

auction was conducted on 21.06.2024, the Respondents submitted bid of

Rs. 20,63,00,000/- for purchasing the CD as a going concern which was

accepted and Respondents were declared as the successful bidders.

29. It is further alleged that on 22.06.2024 the Respondents received

letter of intent by Respondent No. 3 as per which they were required to

Company Appeal (AT) (Ins) No. 1104 of 2024 8

pay the balance consideration of Rs. 19,63,00,000/- on 18.07.2024. It is

further alleged that initially the Respondents were not a party to the appeal,

however, by the order dated 05.12.2024 of this Court in I.A No. 3977 of 2024,

successful auction purchasers were impleaded as parties.

30. Counsel for the Appellant has argued that the purpose for which the

Code was introduced was to facilitate debt ridden companies to be taken over

as going concern by avoiding liquidation. In this process, the CoC plays a key

role in assessing and evaluating the resolution plans in the interest of the

stakeholders alongwith maximization of the assets but in the present case,

the CoC has misused the process because it has made liquidation as a

recovery tool for securing payment of its debt and ignored the viable resolution

plan submitted by the Appellant as it abstained from voting on the plans

which were presented in the meeting because the CoC was not interested in

revival of the CD.

31. It is further argued that absence of the CoC from voting on the

resolution plan reflects the indecisiveness on its part. It is submitted that if

the CoC was not satisfied with the proposal made by way of resolution plan it

could have exercised the option of conducting swiss challenge method

amongst the PRAs.

32. It is further submitted that absence of the CoC from the voting on the

resolution plan cannot be deemed to be rejection and in this regard, referred

to an order passed by the Karnataka High court in the case of Kirloskar

Electric Co. Ltd. Vs. Unknown, C.P No. 97 of 2022 decided on 13.02.2023 to

contend that a member present and voting may remain neutral, indifferent,

Company Appeal (AT) (Ins) No. 1104 of 2024 9

unbiased, or impartial i.e. not engaged on either side. One is not supposed to

write anything except putting yes or no either in favour of or against the

proposition. A vote casted without indicating the mind of the voter either for

or against the resolution, is no voting at all.

33. It is submitted that the sole CoC abstained from voting neither decided

to cast its vote in favour or against the resolution, therefore, it cannot be

counted as voting at all. It is further submitted that even if the Bank is the

sole member of the CoC having 100% vote right, who had abstained form

voting, it cannot be considered to be commercial wisdom of the CoC against

the resolution plan submitted by the Appellant.

34. In the end, it is also argued that the Appellant being unsuccessful

resolution applicant is a person aggrieved in terms of the Section 61 of the

Code in view of the decision of the Hon'ble Supreme Court in the case of

Independent Sugar Corporation Ltd. Vs. Girish Sriram Juneja & Ors., Civil

Appeal No. 6071 of 2023.

35. Counsel for Respondent No. 1 has submitted that 6th CoC meeting was

convened on 22.03.2024 in which the erstwhile RP presented three resolution

plans for consideration. Voting line was kept open for three days from

23.03.2024 to 26.03.2024 but the sole member of the CoC in exercise of its

commercial wisdom, chose to abstain from voting to which he was entitled to

in accordance with the Regulations.

36. It is further submitted that in the 6th CoC meeting itself a detailed

discussion took place regarding the possibility of liquidation and CoC sought

Company Appeal (AT) (Ins) No. 1104 of 2024 10

recommendation for the nomination of liquidator. The CoC has also stated

that name of the liquidator would be suggested upon finalization.

37. It is submitted that since no resolution plan was approved by the CoC,

the RP sent an email to the CoC on 27.03.2024 seeking consent for filing

the liquidation application and the nomination of liquidator which was

consented to by the sole member of the CoC and accordingly, erstwhile RP

filed an application on 12.04.2024 for liquidation which was allowed.

38. Counsel for Respondent No. 1 has further submitted that the impugned

order has been passed under Section 33(1) of the Code because the Tribunal

did not receive the plan for consideration prior to conclusion of the CIRP on

30.03.2024.

39. It is further submitted that if the application is to be filed for liquidation

during the pendency of the CIRP then the decision of the CoC by at least 66%

voting share has to be obtained for the purpose of liquidation which was not

the situation in the present case because CIRP period expired on 30.03.2024.

In this regard, he has relied upon a decision of this court in the case of Dinesh

Gupta Vs. Vikram Bajaj, CA (AT) (Ins) No. 276 of 2021 in which this court has

held that "once the CIRP period expires, as envisages under Section 33(1) of

the Code, the RP has no option but to file an application for liquidation of the

CD and held that the order directing liquidation in such a case are free from

any error."

40. He has also relied upon a decision of the Hon'ble Supreme Court in the

case of Dr. Abraham Patani of Mumbai & Anr. Vs. The State of Maharashtra

& Ors., (Civil Appeal No. 5929 of 2022) in which the Hon'ble Supreme Court

Company Appeal (AT) (Ins) No. 1104 of 2024 11

expounded upon the doctrine of substantial compliance and held that a

procedural requirement is not strictly adhered to yet the essential purpose

underlying the requirement is fulfilled then the action in question may

nonetheless be deemed valid. This argument has been raised on the

submissions that the CoC gave consent on 27.03.2024 for filing the

liquidation application and nomination of Respondent No. 3 as the liquidator.

41. He has also highlighted the subsequent events which took place in this

case contending that when the appeal was listed for hearing on 31.05.2024

it was brought to the notice of the Court that e-auction notice had been issued

on 23.05.2024 scheduling the e-auction of the CD as a going concern on

21.06.2024 with a reserve price fixed at Rs. 20.61 Cr. This Court did not grant

any interim stay on the auction but recorded that the Appellant shall have

the right to participate in the auction process, however, the Appellant did not

participate in the auction process from which it is apparent that it has no

genuine interest in acquiring the CD as a going concern.

42. It is further submitted that pursuant to the e-auction notice dated

22.06.2024, consortium comprising Durgesh Infrastructure Pvt. Ltd., Atreyi

Vincom Pvt. Ltd. Unicorn Suppliers Pvt. Ltd. and Eastern Mercantiles Pvt. Ltd.

(Collectively called 'acquirers') successfully secured the bid for the acquisition

of the CD as a going concern at a price of Rs. 20.63 Cr. which exceeded the

reserve price.

43. It is submitted that the CoC has effectively maximized the value of the

CD within a time bound framework. The Appellant had submitted a financial

Company Appeal (AT) (Ins) No. 1104 of 2024 12

proposal only of Rs. 8 Cr. as opposed to Rs. 20.63 Cr. offered by the acquirers

in the liquidation process.

44. In the end, it is submitted that the Unsuccessful resolution applicant

does not qualify as an aggrieved person and relied upon a decision of this

court in the case of M.K. Rajagopalan Vs. Rajendran & Anr., CA (AT) (Ins) No.

58 of 2023.

45. Counsel for Respondent No. 2 (erstwhile RP) has submitted that the

contention of the Appellant that CoC has not approved the filing of the

application under Section 33 (1) of the Code is misconceived because there

is no legal bar on the RP to file such an application. In this regard, he has

submitted that Section 28 of the Code specifically lists out actions of the RP

which require a prior approval of the CoC in which application under Section

33 (1) is not included. It is further submitted that even otherwise the consent

was given by the CoC on 27.03.2024 for filing the application for liquidation.

46. Counsel for Respondent No. 4 to 7 has submitted that e-auction was

conducted on 21.06.2024 in which they have been adjudged as the highest

bidder. Entire payment has been made on 18.07.2024 after which the sale

certificate was issued on 25.07.2024. It is further submitted that the

commercial wisdom of the CoC is paramount and in this regard, the CoC was

not required to record reasons for approving or rejecting the plan and has

relied upon a decision of the Hon'ble Supreme Court in the case of K.

Sashidhar Vs. Indian Overseas Bank and Kalpraj Dharamshi Vs. Kotak

Investement Advisors Ltd., (2021) 10 SCC 401.

Company Appeal (AT) (Ins) No. 1104 of 2024 13

47. It is also submitted that the CIRP period expired on 31.03.2024 after

having been extended three times and in the 6th CoC meeting a detailed

discussion took place regarding the possibility of liquidation and in the course

of this discussion, the CoC also sought recommendation for the nomination

of liquidator. It is also submitted that with the extended CIRP period ending

on 31.03.2024 and no approved resolution plan was there, therefore, the R2

was duty bound to file the application seeking liquidation and in terms

thereof, he sought consent of the CoC which was accordingly granted,

therefore, it is argued that filing of the application for liquidation was not

erroneous as has been projected by the Appellant.

48. It is further submitted that there is a huge difference in the liquidation

value of the CD to the value offered by the PRAs in its plan because he had

only offered Rs. 8 Cr. whereas the CD as a going concern has fetched Rs.21

Cr. which was much higher than the capital sought to be injected by the

Appellant in the CD.

49. We have heard Counsel for the parties and perused the record.

50. There is no dispute to the fact that RBL Bank is the sole member of the

CoC with 100% voting right. It is also not in dispute that there were three

resolution plans before the CoC in which one of the resolution plan was

submitted by the Appellant and the sole member of the CoC abstained from

voting. The CIRP Regulations provides for different modes of voting. As per the

regulations, the members of the CoC may either vote in favour, against or

abstain from voting. In the present case, it is alleged that sole member of the

CoC abstained from voting, therefore, the resolution plan submitted by the

Company Appeal (AT) (Ins) No. 1104 of 2024 14

Appellant was not rejected but the very fact that the sole member of the CoC

did not vote in favour of the resolution plan submitted by the Appellant,

therefore, it had exercised its commercial wisdom and chose to abstain from

voting as has been held by the Hon'ble Supreme Court in the case of K.

Sashidhar (Supra) that commercial wisdom of the CoC is paramount,

therefore, the reason cannot be questioned by the Appellant.

51. In so far as, the application for liquidation, having been filed without

consent of the CoC is concerned, argument of the Appellant is not tenable

because in the 6th CoC meeting, there was discussion regarding the possibility

of the liquidation and in the course of said discussion, the CoC sought

recommendation for the nomination of liquidator. In this regard, erstwhile RP

sent email to the CoC seeking its consent to file the liquidation application

and the nomination of liquidator to which the sole member of the CoC gave

consent by returning email on the same.

52. Besides this, it is also a matter of record that after three extensions, the

CIRP expired on 30.03.2024, therefore, the RP had to file an application for

liquidation under Section 33(1) which has been filed on 12.04.2024 and has

been allowed on 03.05.2024 by the impugned order.

53. It is also a fact to be noticed that when the case was listed for hearing

on 31.05.2024 before this Court, it was brought to the notice of this court

that e-auction notice was issued on 23.05.2024 scheduling the e-auction of

the CD as a going concern on 21.06.2024 at the reserve price of Rs. 20.61 Cr.

Instead of granting stay, this court clearly said that the Appellant shall have

the right to participate but it had failed to participate whereas in the auction,

Company Appeal (AT) (Ins) No. 1104 of 2024 15

Respondent No. 4 to 7 were held to be successful as they gave the bid of Rs.

20.63 Cr. which was over and above the reserve price. The said amount has

already been paid by R4 to 7 and the sale certificate has been issued in their

favour whereas the Appellant had only offered a sum of Rs. 8 Cr. to take over

the CD as a going concern.

54. Keeping in view of the aforesaid facts and circumstances which have

also been noticed by the Tribunal, we do not find any error in the impugned

order for the purpose of interference, therefore, the present appeal is found to

be without any merit and the same is hereby dismissed though without any

order as to costs.

I.As, if any, pending are hereby closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

New Delhi 04th April, 2025 Sheetal

Company Appeal (AT) (Ins) No. 1104 of 2024