NCLAT (20.01.2023) in M/s Shivashakti Elmech Pvt. Ltd. Vs. Shiv Nandan Sharma [Company Appeal (AT) (Ins.) No. 34 of 2021] held that;
Thus, we have found on the basis of pleadings and documents submitted by the parties that no ineligibility is attached to the SRA as per Section 29-A(c) and 29-A(h) r/w 29-A(i), merely the fact that the SRA is a related party of the CD as per Section 5(24) does not imply that the SRA is ineligible to submit a resolution plan in relation to the insolvency resolution of the CD.
Excerpts of the order;
This appeal is directed against the order dated 03.12.2020 by which an application filed by the Resolution Professional (in short ‘RP’) under Section 31 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) read with Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (in short ‘Regulations’) seeking sanction of resolution plan, approved in the meeting of Committee of Creditors (in short ‘CoC’) held on 13.11.2019, has been allowed, subject to comments in Para No. 35 to 39 of the impugned order regarding performance security, reliefs and concessions as provided in the plan and further directions were issued under Section 31(3) of the Code that the moratorium order passed by the Adjudicating Authority under Section 14 of the Code shall cease to have effect and the RP shall forward all records relating to the conduct of the CIRP and the resolution plan to the board to be recorded on its database.
# 7. It was informed to the CoC that in its 6th meeting, pursuant to the publication of Form G, since six persons have shown interest, but none has submitted EOI till the last date of submission i.e. 10.02.2019, it was resolved to publish revised Form G to enable the said parties or any other party having potential to submit the EOI. The revised Form-G was published on 25.02.2019 in which the last date of submission of EOI was extended to 03.03.2019.
# 8. . . . . . . . The CoC approved the extension of EOI and timeline to submit resolution plan in its 8th meeting. In the said meeting of CoC, it was informed that two RAs, namely Passavant Energy & Environment GmbH and Maa Pahari Mercantiles Pvt. Ltd. have submitted their proposal on 02.07.2019 and the proposals were opened in the CoC in its 8th meeting but they were advised for removal of deficiencies in the plans and to clarify observations of process advisors about the qualification provided in Section 29-A of the Code in the subsequent meeting i.e. 9th CoC meeting which was to be held on 12.07.2019. The CoC had advised both the RAs to revise their resolution plans to their satisfaction in the subsequent meetings, namely, 10th, 11th, 12th and 13th meetings which were held on 20.07.2019, 30.10.2019, 05.11.2019 and 09.11.2019. In the 13th meeting of CoC held on 09.11.2019, the resolution plan submitted by RP was found deficient in terms of Section 30 of the Code and the financial proposal was found inferior to the RA submitted by ‘Passavant Energy & Environment GmbH’. Both were given further time to submit plans but ultimately there was only one plan submitted by Passavant Energy & Environment GmbH which was approved with 100% voting of the CoC in its 14th meeting held on 13.11.2019.
# 9. The RP submitted the resolution plan of the RA, namely, Passavant Energy & Environment GmbH to the Adjudicating Authority for sanctioning of application bearing CA No. 1192 of 2019 which had been allowed by the Adjudicating Authority under Section 30(4) of the Code subject to comments in Para No. 35 to 39 regarding performance security, reliefs and concessions as provided in the plan.
# 10. The present appeal has been filed by the Operational Creditor, inter alia, on the ground that while passing the impugned order dated 03.12.2020 by the Adjudicating Authority, it had failed to appreciate the mandatory provision of Section 29-A, Section 24(3)(c) & Section 30(2) of the Code and considered ineligible party as Successful Resolution Applicant and erred in approving the resolution plan in terms of Section 30 of the Code.
# 11. The Appellant has submitted that as per Section 29-A of the Code, a person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person suffers from any of the condition mentioned in clause 29-A (a) & (i). He has referred to clause 29-A (j) which provides that “a person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person – has a connected person not eligible under clause (a) to (i). He has further referred to explanation (1)(iii) of the 29-A (j) which provides that “the holding company, subsidiary company, associate company or related company of a person referred to in clauses (i) and (ii). It is argued that if a connected person of the resolution applicant suffers from any of the condition enumerated under Section 29-A (i) then he would not be eligible to submit a resolution plan. However, in order to prove that the connected person is holding company of the SRA, he has referred to the averments made in para 24 and 25 of the memorandum of appeal, which are reproduced as under:-
“24. It is submitted that CD and SRA i.e. Passavant Energy & Environment GmbH, Germany are related & associated companies of same group & Group Holding Company is DRAKE and SCULL INTERNATIONAL PJSC, UAE. For this reference may please be made to the documents as available on the official website of Group Holding Company i.e. http://www.drakescull.com:
A. Page no. 13 and 27 of Consolidated Financial statement of Group Holding Company i.e. DRAKE AND SCULL INTERNATIONAL PJSC & ITS SUBSIDIARIES, UAE as on 30.06.2020. A copy of the same is attached herewith as Annexure-A9.
B. List of the Major Group Companies is attached herewith as Annexure -A 10(Colly).
C. Website page of Passavant Energy & Environment GmbH, Germany i.e. SRA is attached herewith as Annexure-A-11 which also claims that Passavant Energy & Environment is a German Based Subsidiary of Drake & Scull International PJSC, which is a UAE Based, public joint stock company. (https://www.passavant-ee.com/index.php/passavant-energyenviornment-gmbh-www-passavant-ee-com-232.html)
D. According to list of shareholder of CD as on 31.03.2017, Drake & Scull Engineering LLC, UAE is holding 83.17% in Corporate Debtor as on 31.03.2017 and the same is attached herewith as Annexure – A13.
25. Thus, that the CD and SRA are related to each other as shown in diagram below:
Shareholding of CD is controlled by Drake & Scull Engineering LLC, UAE (at serial no. 2 above 1) is 83.17% and Drake & Scull International PJSC, UAE (at serial no. 1 above) is 16.83%.”
# 12. It is further submitted that the averments made hereinabove have been admitted by both Respondent No. 1 and 2 in their reply. In so far as the reply of Respondent No. 1 is concerned, the averments made in para 27 and 28 of reply of Respondent No. 1 needs to be mentioned, which are reproduced as under:-
“27. In response to the contents of Para 7, sub-para 24, it is submitted that it is an admitted position that the CD and Respondent No. 2 (SRA) are related & associated companies of Drake and Scull International PJSC, UAE. However, it is stated that the authenticity and veracity of the documents, which have been annexed in the said paragraph, cannot be ascertained by the Respondent No. 1.
28. In response to the contents of Para 7, sub-para 25, it is a matter of record, however, as stated above, the Resolution Applicant does not become disqualified merely by virtue of being a related company.”
# 13. Similarly, the Respondent No. 2 (SRA) has also stated in this regard in Para 7.24 and 7.25 of the reply, which are as under:-
“7.24. The contents of Para 7.24 are a matter of record.
7.25. The contents of para 7.25 pertaining to the table presented are a matter of record.”
# 14. It is further submitted that Drake & Scull International PJSC, UAE (DSI) is the 100% holding company of the Passavant Energy & Environment GMbH, Germany (Successful Resolution Applicant) and is covered by the definition of a ‘connected person’.
# 15. It is thus clear from the flow chart included earlier in this judgment that the Corporate Debtor is a subsidiary of Drake & Scull Engineering LLC, UAE which in turn is a wholly-owned subsidiary of Drake And Scull International PJSC, UAE. Thus in accordance with Section 5(24)(i) Drake And Scull International PJSC, UAE is a related party of the Corporate Debtor. Clause (i) of Section 5(24) is reproduced below:
“(i) a body corporate which is a holding, subsidiary or an associate company of the corporate debtor, or a subsidiary of a holding company to which the corporate debtor is a subsidiary;”
# 16. It is further noted that Passavant Energy & Environment India Pvt. Ltd. is a wholly owned subsidiary of Passavant Energy & Environment GMbH, Germany which in turn is a wholly-owned subsidiary of the Drake and Scull International PJSC, UAE, therefore, in accordance with Clause (i) of Section 5(24) Passavant Energy & Environment India Pvt. Ltd. which is a financial creditor of the Corporate Debtor and also a related party of the SRA (Passavant Energy & Environment GMbH, Germany). It is also noted that the SRA is a related party of Drake and Scull International PJSC, UAE being a its wholly-owned subsidiary. Therefore, insofar as the constitution of CoC is concerned, the Financial Creditor Passavant Energy & Environment India Pvt. Ltd. is a related party of the Corporate Debtor as both are related to Drake and Scull International PJSC, UAE which is their step-down holding company. Therefore, the presence of Passavant Energy & Environment India Pvt. Ltd. in the CoC is as that of a financial creditor which is a related party.
# 17. Insofar as the issue of the inclusion of a representative of the Operational Creditors, who jointly hold more than 10% of the total debt is concerned, we note Section 24(3)(c) and Section 24(4) which are as follows:
“24-Meeting of committee of creditors.
(3) The resolution professional shall give notice of each meeting of the coc to-
(c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent. of the debt.
(4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings:
Provided that the absence of any such director, partner or representative of operational creditors, as the case may be, shall not invalidate proceedings of such meeting.”
# 18. In the above connection, the Appellant has alleged that the representative of the Operational Creditors should have been included as a member of the CoC and the RP has failed in his duty by not including the representative of the Operational Creditors in the CoC, thereby making the constitution of CoC defective and null and void.
# 19. In this connection, we note the emails dated 18.02.2019, 30.04.2019 and 27.05.2019 (attached at PP. No. 112-116 of the Respondent No’s 1 reply) addressed to all the Operational Creditors and also to the Counsel of the Appellant whereby the RP has stated and requested that the Operational Creditors to exercise their right to appoint an authorised representative to attend the meeting of the CoC who will not have the right to vote in such meeting. It is worthwhile to reproduce the relevant part of email dated 18.02.2019 to show how the RP has dealt with the issue of appointment of representative of the Operational Creditors:- . . . . . .
# 20. Further we note that the RP again sent an email dated 30.04.2019 requesting all the operational creditors to appoint a consensus representative but it is clear from a perusal of the relevant emails that no name of representative by consensus could be decided and while Shri Ashok Kriplani, vide email dated 13.04.2019, wrote to the RP that he is an AR of one of the operational creditors, namely Shiv Shakti Elmech Pvt. Ltd., he is proposing his name as representative in any forthcoming CoC. This email evidently was sent by Mr. Ashok Kriplani to all the Operational Creditors as is clear from the pg. 115 to 116 of the Respondent No’s 1 reply, but no name by consensus was then proposed. It is also clear from the email dated 27.05.2019 sent by the RP addressed to Mr. Ashok Kriplani requesting that a name representing all the operational creditors may be forwarded to the RP for necessary action but there is no document on record to show that such a name was suggested by all the operational creditors. Therefore, we do not find any fault or neglect committed by the RP in not including a representative of the operational creditors in the CoC.
# 21. We further note that the issue of representative of the operational creditors was raised by the Appellant in CA No. 314 of 2019 by the operational creditor before the NCLT, Chandigarh, wherein the following order is recorded:
“2. As per Section 21(2) of the Code, the CoC shall comprise of financial creditors only. Section 24(3)(c) on which the Ld. Counsel placed reliance only provides for issuance of a notice and participation by operational creditor who satisfies the requirement thereunder, without any voting rights. At present, the CoC has already approved the plan and the application filed by the RP seeking approval of this Adjudicating Authority was once heard finally and for want of certain information the same was reopened and is listed today for final hearing. Hence, even if the contention of the applicant that he fulfils the requirements under Section 24(3)(c) is accepted the applicant can only participate in the CoC meetings but without voting right and thereby cannot have any bearing on the decision of the CoC either in conducting of the CIRP in any manner or in approving the plan of any resolution applicant.
3. In the circumstances, we do not find any merit in the CA No. 314/2019 and accordingly, the same is dismissed.
4. CA No. 314 of 2019 is disposed of.”
# 22. It is noted that the Adjudicating Authority gave this order on 27.02.2020 and no appeal was preferred against this order, therefore, the order of Adjudicating Authority in CA No. 314 of 2019 has achieved finality and moreover, we also note that under Section 24(3)(c) the participation of a representative of the operational creditors does not confer any voting right on the representative of the operational creditors and therefore, non-participation of a representative cannot have bearing either in conduct of the CIRP or in the approval of the resolution plan. Thus, we are of the clear view that claim of the Appellant that in not following Section 24(3)(c) the CIRP was conducted with material irregularity is not found to be correct.
# 23. We now look at the claim of the Appellant that the SRA (Passavant Energy & Environment GMbH, Germany) is not eligible to submit a resolution plan due to ineligibility under Section 29-A(c) and 29-A(h) r/w 29- A(i)&(j). The relevant provisions in Section 29-A are reproduced as below:
“Section 29-A: Persons not eligible to be resolution applicant.
(c) at the time of submission of the resolution plan has an account,] or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 or the guidelines of a financial sector regulator issued under any other law for the time being in force,] and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor:
Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest thereon and charges relating to non-performing asset accounts before submission of resolution plan;
Provided further that nothing in this clause shall apply to a resolution applicant where such applicant is a financial entity and is not a related party to the corporate debtor.
(h) has executed a guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code and such guarantee has been invoked by the creditor and remains unpaid in full or part];
(i) is subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or
(j) has a connected person not eligible under clauses (a) to (i).
Explanation I.— For the purposes of this clause, the expression “connected person” means—
(i) any person who is the promoter or in the management or control of the resolution applicant; or
(ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan; or
(iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii):”
# 24. It is therefore necessary to look at Section 29-A(c) according to which at the time of submission of the resolution plan, the Resolution Applicant or any other person acting jointly or in concert with the Resolution Applicant who has an account which is classified as non-performing asset, and at least a period of one year has lapsed from the date of such classification as NPA till the date of commencement of the CIRP of the Corporate Debtor is ineligible to submit a resolution plan.
# 25. In the above connection, the Appellant has referred to press note dated 06.09.2020 issued by Drake and Scull International PJSC, UAE (attached at Pg. 161-162 of the appeal paper book) wherein the following is mentioned:-
“Earlier this year, to facilitate the Company’s financial reorganization process, DSI made an application pursuant to Federal Decree Law No. 9 of 2016 on Bankruptcy (the UAE Bankruptcy Law) and Cabinate Resolution No. 4 of 2018 forming the Financial Reorganization Committee (the FRC Regulations) for its financial reorganization process to be conducted under the supervision of the Financial Reorganization Committee (the FRC). That application was accepted by the FRC in May, 2020 and in June 2020 the FRC Confirmed the appointment of Aaronite Partners FZ LLC as the expert in accordance with the FRC Regulations (the FRC Expert). This acceptance marks a significant development towards achieving a successful financial reorganization of DSI. The FRC’s role is to facilitate the financial reorganisation through consensual agreement with the DSI’s creditors in an out-of-court process.”
# 26. There is no other document or record submitted by the Appellant or any other party in support of the claim that a connected party of SRA went into insolvency resolution. All that the press note states is that the company Drake and Scull International PJSC, UAE went into ‘Financial Reorganization Process’ which was accepted by the relevant authority and a Financial Reorganization Committee (FRC) to conduct the financial reorganization process was formed. The date when such application was accepted by FRC is stated to be May, 2020. It is further noted that the CIRP commenced on 30.10.2018 in the present case and even if we consider financial reorganization process that Drake Scull International PJSC, UAE was undergoing as insolvency resolution, it commenced only on May, 2020. Further the resolution plan was submitted by the SRA in July, 2019 and it was approved by the CoC on 13.11.2019 where after it was submitted before the Adjudicating Authority for necessary approval. It is thus clear that even if the financial reorganization process that Drake and Scull International PJSC, UAE is undergoing is taken as an insolvency resolution process, such a financial reorganization process started more than one year after the commencement of CIRP in the present case and not before the commencement of CIRP as is required in Section 29-A(c) in order to make the SRA ineligible to submit a resolution plan. Notably, the resolution plan was submitted in July 2019 by the SRA when its connected party and holding company ‘Drake and Scull International PJSC, UAE’ was not undergoing financial reorganization process. Thus, we are quite clear that any ineligibility under Section 29-A(c) is not attracted vis a vis the SRA.
# 27. In so far as, the claim alleged ineligibility of the SRA under Section 29- A (h) r/w Section 29-A(i) is concerned, we note the following statement in the written submissions submitted by the Respondent No. 1 vide diary no. 26907 dated 19.04.2021:-
“6(d). As far as applicability u/s 29-A(h) IBC is concerned it could be inferred that the same is only applicable wherein the CIRP has been admitted on the application of such creditor who had invoked the guarantee and the same has remained unpaid in part of in full. Although the corporate guarantee executed by Drake and Scull International PJSC had been invoked by the financial creditor of the CD on separate occasions, the application leading to commencement of CIRP was filed by a CD and not these financial creditors and hence the disqualification u/s 29-A(c) does not apply.”
# 28. Regarding the interpretation of Section 29-A(h), the Appellant has cited the judgment of Hon’ble Supreme Court in the matter of Bank of Baroda & Anr. Vs. MBL Infrastructure Limited & Ors. decided on 18.01.2022 in Civil Appeal No. 8411 of 2019 wherein the following is held:-
“52. Once a person executes a guarantee in favour of a creditor with respect to the credit facilities availed by a corporate debtor, and in a case where an application for insolvency resolution has been admitted, with the further fact of the said guarantee having been invoked, the bar qua eligibility would certainly come into play. What the provision requires is a guarantee in favour of ‘a creditor’. Once an application for insolvency resolution is admitted on behalf of ‘a creditor’ then the process would be one of rem, and therefore, all creditors of the same class would have their respective rights at par with each other. This position has also been dealt with by this Court in the case of Swiss Ribbons(supra):
“82. It is clear that once the Code gets triggered by admission of a creditor’s petition under Sections 7 to 9, the proceeding that is before the adjudicating authority, being a collective proceeding, is a proceeding in rem. Being a proceeding in rem, it is necessary that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim. A question arises as to what is to happen before a Committee of Creditors is constituted (as per the timelines that are specified, a Committee of Creditors can be appointed at any time within 30 days from the date of appointment of the interim resolution professional). We make it clear that at any stage where the Committee of Creditors is not yet constituted, a party can approach NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the parties concerned and considering all relevant factors on the facts of each case.”
53. The word “such creditor” in Section 29-A(h) has to be interpreted to mean similarly placed creditors after the application for insolvency application is admitted by the adjudicating authority. As a result, what is required to earn a disqualification under the said provision is a mere existence of a personal guarantee that stands invoked by a single creditor, notwithstanding the application being filed by any other creditor seeking initiation of insolvency resolution process. This is subject to further compliance of invocation of the said personal guarantee by any other creditor. We have already said that the concern of the Court is only from the point of view of two entities viz., corporate creditors and the corporate debtors. Any other interpretation would lead to an absurdity striking at the very objective of Section 29-A, and hence, the Code. Ineligibility has to be seen from the point of view of the resolution process. It can never be said that there can be ineligibility qua one creditor as against others. Rather, the ineligibility is to the participation in the resolution process of the corporate debtor. Exclusion is meant to facilitate a fair and transparent process.”
# 29. It is clear from a reading of the above mentioned portion of the judgment that it is not necessary for the same creditor who has invoked a guarantee to have filed an application for insolvency resolution of the CD. It is permissible for any creditor of the same class to file an application for insolvency resolution if some other creditor has invoked a guarantee given in respect of the CD. Para 52 of the judgment states that ‘all the creditors of the same class’ would have their respective rights at par with each other. While the Respondent No. 1 in its written submission has stated that corporate guarantee executed by Drake and Scull International PJSC, UAE had been invoked by a financial creditor of the CD on separate occasion, it is clear from a reading of Hon’ble Supreme Court’s judgment that the application for insolvency resolution of the CD is filed by an operational creditor and not a financial creditor. Moreover, the Appellant has not given any specific information about which financial creditor has invoked a guarantee given by Drake and Scull International PJSC, UAE in respect of the CD and when it was invoked. In the absence of any such definite information, it is not possible to infer that the corporate guarantee was definitely invoked by a financial creditor and when it was invoked. Thus, we find that a reading of Para 52 of the above cited judgment states that ‘all creditors of the same class’ would have a right to file an application for insolvency resolution. In the present case, the application for insolvency resolution is not filed by a financial creditor and therefore, we are of the view that ineligibility as per Section 29-A (h) r/w Section 29-A(i) is also not attracted vis a vis the SRA.
# 30. Thus, we have found on the basis of pleadings and documents submitted by the parties that no ineligibility is attached to the SRA as per Section 29-A(c) and 29-A(h) r/w 29-A(i), merely the fact that the SRA is a related party of the CD as per Section 5(24) does not imply that the SRA is ineligible to submit a resolution plan in relation to the insolvency resolution of the CD. The ineligibility of any party to submit a resolution plan has to be seen strictly in the lens of Section 29-A of the IBC and we find that such ineligibility under Section 29-A does not attach to the SRA.
# 31. We have perused the documents submitted by the Appellant vide diary no. 285870 dated 03.08.2021 and it is clear that while the related party aspect between Drake and Scull International PJSC, UAE and the CD has been shown in the documents they do not claim or show any ineligibility of the SRA under Section 29-A to submit a resolution plan.
# 32. We also examine the advice given by process advisor regarding the ineligibility of the SRA to submit a resolution plan and the legal opinions submitted by the Resolution Applicant from Legal Remedy and the Legal Opinion obtained by the RP from Dhir and Dhir Associates. The process advisor’s advice is included in the minutes of 9th meeting of CoC (attached at PP. 87 to 92 of the reply of the R1) the relevant portion of the minutes are as follows:-
“At the outset, the process advisors informed the CoC members that Passavant Energy & Environment GmbH, one of the two applicants in fray, was disqualified under Section 29-A of the Code. The CoC members had divergent view on the interpretation of the applicable provision under which the disqualification is being proposed by the process advisors. Detailed discussion took place on the issue and the CoC members asked the process advisor to obtain further legal opinions before proceeding to issue the disqualification report in order to avoid unnecessary litigations and in the interest of wider participation, as there are only two plans being considered. The process advisors informed the members that they have already taken the opinion of their internal legal team and informal verbal opinions too had been obtained from leading law firms and are awaiting the formal opinion only and they are of the firm view that the applicant is disqualified under Section 29-A.”
# 33. Thereafter, the RP obtained further legal advice to form a conclusive opinion which is as per recording in the minutes of 10th meeting of CoC held on 20.07.2019. Accordingly, the RP obtained legal advice from Dhir and Dhir Associates (attached at PP. 133 to 146 of the reply of R1). The legal advice after considering various issues and factors gave the following advice to the RP/CoC:-
“2.13. Thus, in view of the foregoing, it could be inferred that;-
• The Resolution Applicant, in the instant matter, is not disqualified in terms of the provisions of Section 29-A based on the limited information provided by the Querist for this opinion:
• As no default could be ascertained on part of the resolution Applicant and event mentioned in the fact have had happened subsequent to commencement of insolvency resolution process, the Resolution Applicant would not fall under the clutches of disqualification:
• Reliance could be placed on the statutory amendments and judicial precedents that have had evolved over period of time in issues connected thereto, that, the Resolution Applicant ought to have shown some delinquency or impregnated with some antecedents so to attract the vagaries of Section 29-A.”
# 34. In the light of the above, we are of the view that the RP only formed an opinion regarding the eligibility of Passavant Energy and Environment GmbH, Germany to submit a resolution plan. Both the plans were presented in their 13th meeting of CoC where members of Axis Bank and RBL Bank were present and noticeably the CoC members present in the meeting did not raise any issue about the ineligibility of Passavant Energy and Environment GmbH, Germany to submit a resolution plan and two resolution plans submitted by Maa Pahari Mercantiles Pvt. Ltd. and Passavant and Environment GmbH, Germany were considered in detail in the 14th meeting of CoC held on 13.11.2019. The resolution plan of Passavant and Environment GmbH, Germany was approved after voting and the following resolution was passed regarding the approval of resolution plan submitted by the SRA:-
“Resolved that, the Resolution Plan submitted by M/s Passavant Energy and Environment GmbH be and is hereby approved in compliance with the provisions of Section 30(4) of the IBC by CoC members having voting share of 100%. Further the CoC authorises the resolution professional Shiv Nandan Sharma to move an application under Section 31, on behalf of the CoC, for approval of resolution plan from the adjudicating authority.
RP informed the CoC members that he shall now proceed to issue letter to intent to the SRA, Passavant. The RA shall, as per terms of the RFFP, has to submit a performance bank guarantee of 10% of the bid amount.”
# 35. We also notice that representative of the Axis Bank and RBL Bank Limited were the members of CoC who attended 14th meeting of CoC wherein the successful resolution plan was approved by CoC quite obviously these members of CoC had no connection or were prejudiced in favour of the SRA nor has any such allegation been made by the Appellant.
# 36. Thus, we are of the view that the approval of the resolution plan with the shares of the financial creditor and operational creditor as contained therein cannot be faulted on account of any material irregularity, therefore, we are of the view that the approval of the resolution plan by the Adjudicating Authority vide order dated 03.12.2020 cannot be faulted.
# 37. On the basis of the detailed discussion as aforementioned, we are of the clear view that the approval of the resolution plan and the allegations of various irregularities regarding the ineligibility of the SRA as claimed by the Appellant do not hold any substance. We have found that the resolution plan was submitted in accordance with the provisions of IBC and approved by the Adjudicating Authority through a detailed order considering the various elements included in the resolution plan. We are also of the view that since the approval of the resolution plan and the conduct of the RP in undertaking the CIRP cannot be faulted, there is no ground that has been substantiated and found correct regarding initiation of penal proceedings against the RP under Section 70(2) and/or to refer to the matter to IBBI for taking disciplinary action against the RP.
# 38. Finding no merit in the appeal, we dismiss it. The appeal is accordingly disposed of with no order as to costs.
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