National Company Law Appellate Tribunal
M/S. Jiva Internet Solutions Pvt. Ltd vs Galada Power And Telecommunication Ltd on 4 May, 2023
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
Company Appeal (AT) (CH) (Ins) No. 111/2023
(IA No. 308/2023)
(Filed under Section 61 of the Insolvency and Bankruptcy Code, 2016)
Arising out of the Impugned Order dated 13/03/2021 in IA/663/2021 in
CP(IB)/384/7/HDB/2018, passed by the 'Adjudicating Authority',
(National Company Law Tribunal, Hyderabad Bench - I, Hyderabad)
In the matter of:
M/s Jiva Internet Solutions Pvt. Ltd. ....Appellant
V
Galada Power and Telecommunication Ltd. & 5 Ors. ...Respondents
Present :
For Appellant : Ms. Shubaranjani Anant, Adv.
For Respondents : Mr. ML Ganesh, Adv. For R2
Mr. Rohit Gupta, Adv. For R1
Mr. Praveen Kumar, Adv.
ORDER
(Virtual Mode) Per: Justice Rakesh Kumar Jain:
04/05/2023: This appeal is directed against the order dated 13.03.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench-II) by which an application i.e. I.A. No. 663 of 2021 filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 r/w Rule 11 of NCLT Rules, 2016 (in short 'Code') by the Applicant/Appellant in CP (IB) No. 384/7/HDB/2018 has been dismissed.
2. The brief facts of this case are that Stressed Assets Stabilisation Fund, Mumbai (Financial Creditor) filed a Petition under Section 7 of the Comp. App. (AT) (CH) (Ins) No. 111/2023 Page 1 of 7 Code bearing CP (IB) No. 384/7/HDB/2018 against M/s Galada Power and Telecommunication Ltd. (Corporate Debtor) which was admitted on 14.08.2019 and Nitin Panchal was appointed as the Interim Resolution Professional (in short 'IRP').
3. The IRP invited Expression of Interest (EOI) on 17.06.2021 in Form G from the Prospective Resolution Applicants. The Appellant submitted its financial proposal and resolution plan on 04.09.2021 for an amount of Rs. 39,87,26,575/-, however, the CoC selected M/s Amrutha Construction Pvt. Ltd. (Respondent No. 6) through e-voting which concluded on 17.09.2021 and received email dated 23.09.2021 from the RP stating that the resolution plan submitted by the Appellant has not been approved by the CoC and the EMD shall be refunded within 30 days. The Appellant sent an email on 24.09.2021 and reserved its right to approach the Adjudicating Authority. Thereafter, the Appellant filed I.A. No. 663 of 2021 seeking a direction to Respondent No. 1 to 5 to revoke the decision of approving the resolution plan submitted by Respondent No. 6 and to accept the resolution plan submitted by the Appellant. This application has been dismissed by the impugned order dated 13.03.2023 and hence this appeal.
4. The Adjudicating Authority has noticed the case set up by the Appellant, reply by the Respondent No. 1, 2 & 3 and also referred to the evaluation matrix, scores to the respective resolution applicants including the Appellant by the CoC.
5. On the factual aspect the Tribunal discussed the evaluation matrix and observed as under:-
"Thus, on the date of evaluation, the COC based on the information provided, explanations given and documents submitted before them, was of the view that M/s Amrutha Constructions Private Limited was having stronger Financial strength as well as in Comp. App. (AT) (CH) (Ins) No. 111/2023 Page 2 of 7 house Talent required for revival of the Corporate Debtor post its acquisition under IBC, whereas this essential & pertinent requirement was lacking in case of RA2, the Applicant herein as they do not have any core competence in this line of activity of the Corporate Debtor. Therefore, Amrutha Constructions Private Limited is on a higher footing in comparison to the Applicant herein in accordance with the above mentioned detailed analysis and evaluations conducted by the COC on the basis of approved evaluation matric annexed herewith. The Successful Resolution Applicant can make the operations more cost effective and the existing in house talent will help in a long way to revive the Corporate Debtor. On both counts i.e. financial strength and experience in the aluminium industry, the COC found that RA1 was on a much better footing as compared to RA2 for the reasons mentioned above. The CoC was also conscious of the fact that Insolvency and Bankruptcy Code has provided a platform for turning around distressed companies by way of resolution. Thus the intent of the CIRP process is finding a resolution and it is not any other recovery mechanism. Keeping in mind the purpose of the Code, the CoC after taking into account all the factors mainly financial strength and experience in the aluminium industry assessed the capabilities of both RA1 and RA2 and allocated marks. On the basis of these factors alone CoC has allotted marks to the respective Resolution Applicants.
XIII. Therefore, having carefully perused the record we find that the Evaluation Matrix process followed by the COC, which is under challenge in this application is in conformity with the criteria laid down in the Evaluation Matrix, besides based on the merits of the information provided by the Applicant as well as the 6th Respondent in this regard, as such, the same does not call for our interference. Mere plea of fraud and collusion in the absence of Comp. App. (AT) (CH) (Ins) No. 111/2023 Page 3 of 7 specific details of fraud and collusion besides its proof, is of no avail to the applicant."
6. It further observed regarding the larger sum being offered by the Appellant which read as under:
"XIV.(i).As regards the next plea of the Applicant that its resolution plan provides larger sum than the Plan submitted by the 6th Respondent, as such, accepting the Resolution Plan of the 6th Respondent does not fit in the real 'commercial wisdom' of CoC, we wish to rely on the ruling in, Rajaputana Properties Pvt. Ltd. vs. Binani Industries Ltd. and Ors., 2018 SCC Online NCLAT 521, wherein it was held by the Hon'ble NCLAT, "that the process of approving a 'Resolution Plan' under the Code is not an auction process whereby the highest amount ought to be accepted. It was further observed that the quality of the Resolution Plan instead depends upon the credibility and track record of the Resolution Applicant. It was therefore observed that feasibility/ viability of a 'Resolution Plan' is not a fare matter of auction so that one cannot contend that the Resolution Plan with the highest amount would be the most feasible. "3. Resolution Plan' The I&B Code' defines Resolution Plan' as a plan for insolvency resolution of the 'Corporate Debtor' as a going concern. It does not spell out the shape, colour and texture of 'Resolution Plan', which is left to imagination of stakeholders. Read with long title of the 1&B Code', functionally, the Resolution Plan' must resolve insolvency (rescue a failing, but viable business); should maximise the value of assets of the 'Corporate Debtor', and should promote entrepreneurship, availability of credit, and balance the interests of all the stakeholders. It is not a sale. No one is selling or buying the 'Corporate Debtor' through a 'Resolution Plan'. It is resolution of the 'Corporate Debtor' as a going concern. One does not need a 'Resolution Plan' for selling the 'Corporate Debtor'. If it were a sale, one can put it on a trading platform. Whosoever pays the highest price would Comp. App. (AT) (CH) (Ins) No. 111/2023 Page 4 of 7 get it. There is no need for voting or application of mind for approving a 'Resolution Plan', as it will be sold at the highest price. One would not need 'Corporate Insolvency Resolution Process', 'Interim Resolution Professional', 'Resolution Professional', interim finance, calm period, essential services, Committee of Creditors or 'Resolution Applicant' and detailed, regulated process for the purpose of sale. It is possible that under a 'Resolution Plan', certain rights in the 'Corporate Debtor', or assets and liabilities of the 'Corporate Debtor' are exchanged, but that is incidental.
It is not an auction. Depending on the facts and circumstances of the 'Corporate Debtor', 'Resolution Applicant' may propose a Resolution Plan' that entails change of management, technology, product portfolio or marketing strategy; acquisition or disposal of assets, undertaking or business; modification of capital structure or leverage; infusion of additional resources in cash or kind over time; etc. Each plan has a different likelihood of turnaround depending on credibility and track record of 'Resolution Applicant' and feasibility and viability of a 'Resolution Plan' are not amenable to bidding or auction. It requires application of mind by the 'Financial Creditors' who understand the business well."
(ii). The said Judgment of the Hon'ble NCLAT was also confirmed by the Hon'ble Supreme Court, vide its Order dated 19th November 2018 in Civil Appeal No.10998 of 2018."
7. Counsel for the Appellant argued vehemently and referred to a decision of this Tribunal rendered in the case of M/s Vadanta Limited Vs. CA Vikash Gautamchand Jain & Anr., CA (AT) (Ins) No. 712-713 of 2022 to contend that the approval of the resolution plan of Respondent No. 6 is under consideration before the Adjudicating Authority, therefore, the impugned order may be set aside and the Application filed by the Appellant may be referred to the Adjudicating Authority to decide the same with the application filed by the RP for approval of the resolution plan.
Comp. App. (AT) (CH) (Ins) No. 111/2023 Page 5 of 78. We have heard Counsel for the Appellant in this regard and after perusal of record are of the considered opinion that the Judgment relied upon by the Appellant in the case of M/s Vedanta Limited (Supra) is not applicable because the facts of the said case are altogether different from the facts of the present case as in the case of M/s Vedanta Limited (Supra) an appeal was filed by the Unsuccessful Resolution Applicant who had filed an application to set aside the communication issued by the RP rejecting his prayer to allow it to submit a revised resolution plan and since the Appellant in the said case could not appear, therefore, order was passed rejecting the application. However, subsequently, the Appellant in the said application filed another application for revival of the application I.A No. 406 of 2022 but the said application was also dismissed.
9. In this background, order was passed by this Tribunal that since the application for approval of the resolution plan is under consideration before the Adjudicating Authority, therefore, the appeal filed by the Appellant in the said case was not required to be entertained and the end of justice be served giving liberty to the Appellant to raise his objections regarding the approval of the resolution plan which may be heard by the Adjudicating Authority while considering the application for approval of the resolution plan.
10. However, in the present case, the Appellant has raised all the issues available to it for the purpose of revoking the decision of the CoC to approve the resolution plan submitted by the Respondent No. 6 and has also made a prayer that resolution plan submitted by the Appellant be accepted. The said application has been thoroughly discussed both on the issue of facts and law and ultimately the same has been dismissed by a detailed order.
Comp. App. (AT) (CH) (Ins) No. 111/2023 Page 6 of 711. In view thereof, we do not find any merit in the present appeal and hence, the same is hereby dismissed though without any order as to costs.
[Justice Rakesh Kumar Jain] Member (Judicial) [ShreeshaMerla] Member (Technical) Sheetal Comp. App. (AT) (CH) (Ins) No. 111/2023 Page 7 of 7