Sudip Dutta @Sudip Bijoy Dutta vs Deepika Bhugra Prasad & Anr

For Appellant: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Shwetank Singh, Mr. Zain A Khan and Mr. Aditya Shukla, Mr. Kumar Anurag Singh and Mr. Anando Mukherjee, Advocates.

For Respondent: Mr.Dhananjay Sud, Mr. Gaurav Mitra, Mr. Aditya Gauri, Mr. Amarvivek, Ms. Shalya Agarwal, Advocates for R-1 Mr. Ashwini Kumar Singh, Advocate for R-2/SBI

ORDER

(Date: 10.11.2021) (Through Virtual Mode)

This appeal was heard on admission on 29.10.2021.

2. This appeal, which has been filed by the Appellant, who is a

promoter and ex-Director of the Corporate Debtor, arises out of

order dated 8.10.2021 (hereinafter called Impugned Order) in IA Company Appeal (AT) (Ins) No. 883 of 2021

Page 1 of 10 No. 699/KB/2021 in CP (IB) No. 1284/2019 passed by NCLT,

Kolkata (henceforth called Adjudicating Authority).

3. On an application under section 7 of the Insolvency and

Bankruptcy Code, 2016 (in short 'IBC') filed by Respondent No.2

State Bank of India, Corporate Insolvency Resolution Process

(CIRP) was initiated against the Corporate Debtor vide order dated

14.2.2020 of the Adjudicating Authority, and Deepika Bhugra

Prasad was appointed as the Interim Resolution Professional (IRP).

On publication of Expressions of Interest (EOI), only one

prospective Resolution Applicant came forward to submit

resolution plan. Therefore, in the 4th meeting of Committee of

Creditors (CoC), it was decided to extend timeline in order to get

more applications for resolution plans. In the 5th meeting of CoC,

it was decided not to publish the EOI again and to obtain

Resolution Plan from the only prospective Resolution Applicant,

who had expressed interest earlier. The prospective Resolution

Applicant named IRC Natural Resources Private Limited submitted

a Resolution Plan on 7.10.2020, but later vide e-mail dated

29.10.2020 it communicated to the Resolution Professional about

its decision to withdraw the Resolution Plan and sought refund of

the Earnest Money Deposit (EMD).

Company Appeal (AT) (Ins) No. 883 of 2021

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4. In the 6th meeting of the CoC on 31.10.2020, the legal

representative of the Appellant informed that it had submitted a

One Time Settlement (OTS) proposal to Respondent No. 2 State

Bank of India as it was interested in submitting a fresh

restructuring proposal to the creditor bank. After withdrawal of

the Resolution Plan by Prospective Resolution Applicant IRC

Natural Resources Private Limited, a fresh EOI was published on

30.11.2020.

5. The Appellant has stated that its OTS dated 21.12.2020 was

rejected by the Respondent No. 2 Bank vide letter dated

30.12.2020, whereafter it submitted revised settlement proposal to

Respondent No. 2 on 13.1.2021, which was again rejected by

Respondent No. 2. Again vide e-mail dated 25.2.2021, a revised

scheme of restructuring and OTS was submitted by the Appellant

to the Respondent No. 2 bank but this was also found

unsatisfactory and rejected.

6. The Appellant has further stated that in the CIRP, the only

Resolution Plan received from IRC Natural Resources Private

Limited was considered by the CoC and put up for vote.

Simultaneously, in the same CoC meeting, a proposal for

liquidation was also put up and in the event the submitted

Company Appeal (AT) (Ins) No. 883 of 2021

Page 3 of 10 Resolution Plan was not approved the liquidation proposal would

be considered and approved by the CoC. While the liquidation

proposal was considered by the CoC, the Appellant again

submitted a revised settlement plan vide e-mail dated 9.7.2021,

which according to him, offered better returns to the creditors than

what would have been available after liquidation of the Corporate

Debtor.

7. Upon recommendation by the CoC, Respondent No.1 filed

application under section 33 of IBC for obtaining liquidation orders

from the Adjudicating Authority. The matter was listed on

11.8.2021 and reserved for orders. The Appellant has claimed that

he was not aware of the action of filing application for liquidation

by the Resolution Professional, and therefore he could not file any

objection in the liquidation proceedings. He has further stated

that after he received information of the order reserving judgment

of the liquidation application he filed an application before the

Adjudicating Authority for recalling the interim order passed on

11.8.2021 in the liquidation proceedings. This application was

listed on 4.10.2021, when it could not be heard, and soon

afterwards, the Adjudicating Authority passed orders for

liquidation of the Corporate Debtor on 8.10.2021.

Company Appeal (AT) (Ins) No. 883 of 2021

Page 4 of 10 8, The Learned Counsel for the Appellant was heard in the

matter. He has pleaded that the Appellant was not given effective

opportunity to place on record his objections on section 33

application, and when the Appellant moved application for recall of

the order by which judgment was reserved, he was not provided an

opportunity of hearing. Therefore, the Learned Counsel has

claimed, the Appellant's right to be heard in accordance with the

principle of natural justice has been infringed. He has further

argued that the CoC approved initiation of liquidation proceedings

even though there was a valid scheme of settlement offered by the

Appellant, which was financially viable and would have resulted in

better returns to the creditors and should, therefore have been

considered by the CoC.

9. In support of his arguments, the Learned Counsel for

Appellant has placed reliance on the following judgments:-

(i) Judgment of NCLAT in Navaneetha Krishnan vs.

Central Bank of India, Coimbatore [CA (AT)(Ins) No.

288 and 289 of 2018].

(ii) Judgment of NCLT, Mumbai in Satyanarayan Malu

vs. SBM Paper Mills Limited [MA 1396/2018,

Company Appeal (AT) (Ins) No. 883 of 2021

Page 5 of 10 827/2018, 1142/2018 and 828/2018 in CP (IB)

1362(MB)/2017].

(iii) Judgment of Hon'ble Supreme Court in Reliant

Alloys Pvt. Ltd. Vs. Mr. S Rajagopal and Ors.)

(iv) Judgment of NCLAT in Shaji Purshottam Vs. Union

Bank of India [CA (AT) (Ins) No.921 of 2019].

(v) Judgment of NCLAT in Jai Kishan Gupta vs.

Greenedge Buildtech and Ors. [CA (AT) (Ins) No.

969-970 of 2019].

10. We note that the CIRP against the Corporate Debtor was

initiated vide order dated 14.2.2020 of the Adjudicating Authority.

The IRP, (who subsequently became the Resolution Professional

and is now the Liquidator) started prescribed actions for resolution

of the Corporate Debtor. During the course of the CIRP, the

Committee of Creditors (CoC), in its 13th meeting held on

16.6.2021, rejected the single resolution plan and decided that the

Corporate Debtor should go into liquidation. Consequently the

Resolution Professional filed an application under section 33 of

IBC seeking orders for liquidation from the Adjudicating Authority.

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11. We also note that the Appellant (a promoter and ex-Director

of Corporate Debtor) was pursuing a One Time Settlement proposal

with the Respondent No. 2State Bank of India and in this process

submitted a series of OTS proposals. The first OTS proposal was

submitted by the Appellant on 21.12.2020 and after many

revisions and submissions of revised proposals to Respondent

No.2, the last OTS proposal was submitted by the Appellant vide e-

mail dated 9.7.2021, which was also rejected by Respondent No.2.

Since no settlement proposal was acceptable to the Respondent

No. 2, the Appellant did not file application under section 12A of

IBC.

12. It is recalled that the CIRP of the Corporate Debtor was

initiated on 14.2.2020 and the decision by the CoC regarding

moving for liquidation of Corporate Debtor was taken in its

meeting dated16.6.2021. Thus, there is a passage of 16 months

from the initiation of CIRP to the decision by CoC to move for

liquidation. The Hon'ble Apex Court has held in many judgments

that proceedings under IBC should be completed in a time-bound

manner. Moreover, if any resolution plan is not approved by CoC,

the provision of section 33 of IBC has to kick in, with no option but

to go for liquidation of the Corporate Debtor.

Company Appeal (AT) (Ins) No. 883 of 2021

Page 7 of 10

13. The catena of judgments cited by the Learned Counsel for

Appellant (supra), relate to cases where applications were filed

under section 12A of the IBC. In the instant case, no application

was filed under Section 12A of IBC since there was no OTS that

was acceptable to the Respondent No. 2 bank. In such an event,

and in the absence of any valid settlement plan, the COC, in its

wisdom, decided in its 13th meeting on 16.6.2021 (minutes of the

meeting attached at pp. 111-135 of Appeal Paperbook) to move for

liquidation of the corporate debtor.

14. Hon'ble Supreme Court has observed in the matter of

Gujarat Urja Vikas Nigam Limited v. Amit Gupta [(2001) 9 SCC

512] that a "delay in completion of the insolvency proceedings

would diminish the value of the debtor's assets and hamper the

prospects of a successful reorganization or liquidation. For the

success of an insolvency regime, it is necessary that insolvency

proceedings are dealt with in a timely, effective and efficient

manner". The timelines and a detailed procedure provided under

the IBC is, therefore, to ensure timely completion of CIRP.

15. Hon'ble Supreme Court has held in many matters that the

decision of the COC, taken in its commercial wisdom, should

prevail unless such a decision has some legal infirmity.

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16. The Hon'ble Apex Court has held in the matter of Kalparaj

Dharamshi versus Kotak Advisories Limited (2021 SCC Online

SC 204) that the commercial wisdom of the COC is not open to

judicial intervention, unless it has some legal infirmity. The

relevant extract from this judgment is reproduced below:

"150. It will therefore be clear, that this Court, in unequivocal terms, held, that the appeal is a creature of statute and that the statute has not invested jurisdiction and authority either with NCLT or NCLAT, to review the commercial decision exercised by COC of approving the resolution plan or rejecting the same.

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155. This court observed, that the court ought to cede ground to the commercial wisdom of the creditors rather than assess the resolution plan on the basis of quantitative analysis. This Court clearly held, that the appellate authority ought not to have interfered with the order of the adjudicating authority by directing the successful resolution applicant to enhance their fund inflow upfront.

156. It would thus be clear, that the legislative scheme, as interpreted by various decisions of this Court, is unambiguous. The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Section 30 and 31 of the I&B Code"

17. The Ld. Counsel for Appellant has not pointed out to any

legal weakness in the decision of the COC nor any infirmity in the

order under section 33 of the Adjudicating Authority on which the

liquidation order has been challenged.

Company Appeal (AT) (Ins) No. 883 of 2021

Page 9 of 10

18. In the light of the above discussion, we are not inclined to

interfere with the impugned order passed by the Adjudicating

Authority for liquidation of the corporate debtor. We find it

entirely legal, just and proper for taking care of the interests of all

the creditors. The appeal is, therefore, dismissed at the stage of

admission. No order as to costs.

(Justice Jarat Kumar Jain) Member (Judicial)

(Dr. Alok Srivastava) Member (Technical)

New Delhi 10th November, 2021

/aks/

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