Unsuccessful Resolution Applicant Has No Locus To Challenge Approval Of Resolution Plan By CoC: NCLT Kolkata

The NCLT Kolkata bench of Justice Bidisha Banerjee (Judicial Member) and D. Arvind (Technical Member) has held that Unsuccessful Resolution Applicant has no locus standi to challenge the approval of Resolution Plan by the Committee of Creditors(CoC). Brief Facts This application has been preferred by Ganga Construction (Consortium) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, for brevity “I&B Code” against Anil Kumar Mittal, Resolution Professional (RP) of Varutha Developers Pvt. Ltd. (Corporate Debtor) and Ors. The corporate debtor was admitted into insolvency on an ex parte order passed by the Adjudicating Authority. The default stemmed from a Loan Agreement executed on July 26, 2019 between SREI Equipment and the corporate debtor under which a loan facility of Rs, 300 crore was sanctioned The applicant, ganga construction, submitted a resolution plan with a financial proposal of Rs. 200 crore and a bank guarantee of Rs. 6 crore which was later increased to Rs. 250 crore. The applicant contended that Information Memorandum prepared by the RP divulged only tangible assets of the corporate debtor. However, the RP failed to incorporate publicly available information concerning the subject property which left the PRAs and the CoC with no clarity about its possession, title and encumbrances. Contentions: The applicant submitted that t the Applicant, Ganga Construction (Consortium), has a direct and substantial interest in CIRP of the Corporate Debtor as a genuine and bona fide Prospective Resolution Applicant. The Applicant has been unlawfully deprived of its right to participate fairly in the process due to the fraudulent and premeditated actions of RP and CoC, who have colluded to manipulate the CIRP in favour of Manglam Multiplex Pvt. Ltd., who is a proxy of M3M India. It was also argued that a deliberate suppression of material information, the biased negotiation process, and the active participation of ineligible PRAs barred under Section 29A of the Code are clear indicators of a pre-planned scheme to undermine the fairness, transparency, and sanctity of the CIRP. It was contended that the applicant submitted a resolution plan with a financial proposal of Rs. 200 Crore with a bank guarantee of Rs. 6 Crore. The applicant approached the RP to enquire about further details concerning the subject property, however, the RP with an ulterior motive deliberately withheld the vital information in respect of the only tangible asset of the corporate debtor. Refuting the submissions, the respondent argued that the applicant is an Unsuccessful Resolution Applicant does not have locus to challenge the process once a resolution plan has been approved by the CoC unanimously. With regard to the allegation on eligibility of the SRA in terms of Section 29A, the RP would submit that the applicant has failed to substantiate as how the SRA is ineligible to participate on the process. All the allegation raised by the Applicant lacks supportive documents having an ulterior motive to derail the entire process, just because the applicant became unsuccessful. Counsel for the SRA submitted that although two associate companies of M3M India, namely New Era Propcon and Swastik Infrasolutions has entered into a Share Purchase Agreement on 17.05.2019, with the erstwhile shareholders of the corporate debtor and the same was never acted upon and no shareholding was transferred by the shareholders of the corporate debtor to the two associate companies of M3M India or to M3M India. It was also argued that what is referred to in Sub-clauses (c) and (g) is de jure or de facto proactive or positive control, and not mere negative control which may flow from an expansive reading of the definition of the word "control" contained in Section 2(27) of the Companies Act, 2013, which is inclusive and not exhaustive in nature. It was contended that M3M India and the Corporate Debtor entered into the Collaboration Agreement dated 13.01.2020 does not ipso facto prove that the Corporate Debtor is "under the control and management" of M3M India. A plain perusal of the clauses of the aforesaid Collaboration Agreement would also reveal that it did not contemplate the transfer of control and management of the Corporate Debtor to M3M India; but only provided for the entire development rights qua the land asset of the Corporate Debtor. Observations: The tribunal referred to its own judgment in Experion Developers Pvt. Ltd. VS Anil Kumar Mittal, 2024 where it was held that the applicant's case is that one of the PRAs has got more details and the same should be obtained by RP and shared with all the PRAs. First of all, this contention of the applicant is purely based on assumptions and presumptions without any basis. Even assuming that one of the PRAs has more details/information about the land, the resolution professional cannot...

Unsuccessful Resolution Applicant Has No Locus To Challenge Approval Of Resolution Plan By CoC: NCLT Kolkata

Mohd Malik Chauhan

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Unsuccessful Resolution Applicant Has No Locus To Challenge Approval Of Resolution Plan By CoC: NCLT Kolkata

Mohd Malik Chauhan

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers