CREATIVE CHANNEL ADVERTISING & MARKETING PRIVATE LIMITED vs ABHIJIT REALTOR & INFRAVENTURES PVT. LTD I.A No. 290 of 2024ANDI.A No. 614 of 2024IN CP (IB) No. 310 of 2022
Facts:
1) On 24th February 2023, the Hon’ble Tribunal (NCLT) pronounced the CIRP order in the present matter. Subsequently, on 14th April 2023, Respondent No. 1 issued the Expression of Interest (EoI) via Form-G, in accordance with Regulation 36A (1) of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, to solicit resolution plans for the Corporate Debtor.
2) Pursuant to section 25(2)(h) of the Insolvency & Bankruptcy Code, 2016, and Regulation 36B of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 the Respondent No. 1/RP issued the Request for Resolution Plans (RFRP) on 15th June 2022
3) The open challenge mechanism process was conducted and completed during the 10th CoC meeting held on 27th October 2023. The Applicant refrained from participating in this process as according to them due process was not followed by the RP during the said challenge process
4) In the 11th CoC meeting, the Applicant submitted a Resolution Plan amounting to INR 240 Crores to Respondent No. 1. Thereafter, on 11th November 2023, the resolution plans received by Respondent No. 1 were subjected to e-voting before the CoC. The e-voting concluded on 16th November 2023, with the result declaring M/s Sapphire Media Limited (Respondent No. 2) as the Successful Resolution Applicant (SRA) with 88.97% voting share.
5) Applicant is challenging the above resolution plan
Issue: Whether the application can be allowed ?
Arguments:
Applicant:
1. Counsel submitted that Respondent No. 1/RP is culpable for grave irregularities and illegalities in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor (CD), particularly concerning the approval of the resolution plan. Due to the negligence and misconduct of Respondent No. 1, the plan put forth by Respondent No. 2/SRA was sanctioned, despite factual disqualification as per the eligibility criteria outlined in the detailed Invitation for Expression of Interest (EoI).
2. Counsel submitted that CA report dated 11th January 2024 unequivocally state that Respondent No. 2/SRA fell short of meeting the specified criteria necessary for submitting a resolution plan. As of 31st March 2022, Respondent No. 2/SRA’s tangible net worth and average turnover were reported as Rs. 3,54,29,111/- and Rs. 39,30,10,227/- respectively which is below the threshold limit mentioned in the EOI.
3. Counsel submitted that the Applicant forwarded an email dated 16th December 2023, along with a letter, to Respondent No. 1/RP, raising objections regarding Respondent No. 2’s eligibility. However, Respondent No. 1/RP in response via email dated 23rd December 2023 stated that the Applicant should have raised objections earlier when provided the opportunity and Respondent No. 1 has examined all information submitted by Respondent No. 2/SRA in compliance with the Detailed Invitation for EoI, therefore the reply of the Respondent No 1/RP was vague, and it appears that the plan submitted by Respondent No. 2 was in collusion with Respondent No. 1.
4. It was submitted that RFRP mandates that a resolution applicant must submit an undertaking in Format VII, affirming the accuracy and completeness of all information provided. Any false information renders the Resolution Applicant ineligible. In this case, Respondent No. 2 provided a false declaration, thus violating the undertaking and rendering itself ineligible.
Respondent:
1. Counsel submitted that RP has meticulously reviewed all EOIs to check the eligibility criteria as laid down in IEOI and only after thorough scrutiny and confirmation of compliances with the eligibility criteria outlined in the Invitation Expression of Interest.
2. Counsel submitted that delay is fatal in terms of IBC which is a time bound process. once a plan is approved by COC then objection cannot be permitted in timelines of IBC. It was submitted that the financial proposal of the Applicants was only for Rs. 240 Crores and that too, to be paid over a period of 6 years. Further, the contention of the Applicant that the Pan submitted by the SRA / Respondent No. 2 does not meet the Eligibility criteria of Rs. 50 crores as net worth. In response to the above, the Ld. Counsel for the Respondent No. 1/RP submitted that based on the materials submitted by the SRA, along with its IEOI, the RP concluded that the SRA met the eligibility criteria at the group level, as per the EOI requirements
Decision: NCLT dismissed the application.
Rationale:
1. Hon’ble NCLAT noted that the objection by the Applicants are raised after 6 months from the date of issuance of the Provisional List, however no objection was raised within 5 days of issuance of the list. Regulation 36A (12) of the CIRP Regulations provides that RP will consider such objections and upon consideration, RP will issue the final list of PRAs to the CoC within 10 days of the last date for receipt of objections, to the committee. Therefore, the contention of the Applicant is not only belated but reliance for the objection is only on the CA certificate which is based on the half cooked information extracted from the ROC and selecting only 12 companies from the group of companies of SRA for computing its net worth.
2. It also held that unsuccessful resolution applicants have no vested right in objecting whether a Resolution Plan should be accepted by the CoC under the provision of the Code by exercising their commercial wisdom and selecting the SRA for the Corporate Debtor.
Order:
