NAVEEN KUMAR SOOD RP of Ujas Energy Ltd Vs. Bank of Baroda
IA/190(MP)2021 & IA/165(MP)2022 in CP(IB) 9 of 2020
Facts:
1.Corporate Debtor was admitted in the Corporate Insolvency Resolution Process (CIRP) on 17.09.2020. Mr. Navin Khandelwal was appointed as Interim Resolution Professional (IRP) and was replaced by the applicant as RP. On 21.09.2020 the IRP made public announcement of CIRP of the Corporate Debtor.
2.Form-G was published and four proposed resolution applicant submitted the resolution plan, of which two final plans- consortium of SVA Family Welfare Trust and M&B Switchgears and Manikaran Power Limited were put to vote in the 18th CoC meeting dated 09.08.2021 and resolution plan submitted by consortium of SVA Family Welfare Trust and M&B Switchgears was approved by the COC with 78.04% votes on 30.08.2021.
3.Application is filed by the Resolution Professional seeking approval of Resolution Plan under Section 30(6) of the IBC, 2016.
Issue: Whether Plan can be approved ?
Arguments:
For Respondents:
1.Counsel for respondent submitted that the said resolution plan seeks extinguishment of liability of personal guarantors of the corporate debtor and the resolution applicant has proposed a sum of Rs.2,49,42,613/- along with extinguishment of personal guarantee on the loan given by them (Bank of Baroda). It was also submitted that the MSME certificate placed on record by the resolution professional reflects the date of registration as 10.03.2021, whereas, the corporate debtor was admitted into CIRP on 17.09.2020 i.e. prior to the MSME registration, therefore, the resolution applicant is ineligible under section 29A to submit the resolution plan.
For Applicant:
1.RP through its Affidavit dated 18.01.2022 replied that the liquidation value of the corporate debtor is Rs.43,08,09,000/- and the payment proposed to the financial creditors in the plan is Rs.68,81,75,744/-. The CoC has approved the said plan after taking into account the payment proposed towards the release of personal guarantee and therefore, the said relief is in compliance with the laws. Further the corporate debtor holds an MSME Udyog Aadhar dated 26.05.2016 and subsequently obtained MSME Udyam Registration on 10.03.2021 since MSME notification dated 26.06.2020 required the existing enterprises registered under EM-Part-II or UAM to register again on Udyam Registration Portal and therefore the corporate debtor having Udhyog Aadhar and subsequently Udyam is MSME registered prior to the date of initiation of CIRP.
Decision: Plan cannot be approved.
Rationale:
1.AA noted that though resolution plan is submitted by the related party, however, the corporate debtor being MSME, would not be ineligible under section 29A as according to Section 240A of the Code, provisions of Section 29A (c) to (h) would not apply though the resolution applicant is a related party.
2.It held that CoC can take any commercial decision relating to insolvency of the corporate debtor only, the CoC cannot extinguish right of the particular secured creditor to proceed against the personal guarantor of the corporate debtor under the garb of its commercial wisdom. Such provision in the resolution plan is not only prejudicial to the right of such secured creditor but also against the provisions of law. Hence we cannot approve such resolution plan as it contravenes the provision of section 30(2)(e ) of the Code.
3.Resolution plan can not be approved and deserves to be rejected as the CoC by majority votes can not enforce its decision for extinguishment of the right of the dissenting creditor to proceed against the personal guarantors.
Order:
