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2025 Supreme(Online)(NCLAT) 263
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Hon'ble Justice Rakesh Kumar Jain (Member(Judicial)) , Hon'ble Mr. Naresh Salecha (Member (Technical)) , Hon'ble Mr. Indevar Pandey (Member (Technical)) ,
Amit Agarwal (Suspended Director of Sundaram Mahadeo Autoworld Pvt. Ltd) – Appellant
Versus
Mr. Sandeep Khaitan (Erstwhile Resolution Professional of Sundaram Mahadeo Autoworld Pvt. Ltd) – Respondent
919/ND/2024 COMPANY APPEAL(AT)(INS)
Mr. Nirmal Goenka, Advocate; Mr. Ankur Mittal, Mr. Srijan Jain & Ms. Muskan Jain, for R-2; Mr. Vikram Wadhera, for R-6/ Liquidator
The court upheld the inclusion of personal property in the CIRP, affirming that the interim moratorium does not bar such inclusion and that the CoC's decision to liquidate is based on commercial wisdom.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 10, 33(2), and 60(5) - Appeal against dismissal of application for inclusion of personal property in Corporate Insolvency Resolution Process (CIRP) - Tribunal allowed liquidation of Corporate Debtor (CD) based on commercial wisdom of Committee of Creditors (CoC) - Interim moratorium does not bar CIRP process for debts of personal guarantors. (Paras 22.5, 22.6, 22.7)
(B) Corporate Insolvency Resolution Process - Inclusion of personal property of guarantors in CIRP - The decision to liquidate the CD was supported by 99.78% majority vote of CoC, emphasizing the necessity of including all relevant assets for maximizing value. (Paras 28, 35)
(C) Legal principles - The court reaffirmed that the commercial wisdom of the CoC should not be interfered with unless proven to be perverse or illegal. (Paras 28, 36)
Facts of the case:
The Appellant, a suspended director of the CD, contested the inclusion of his personal property in the CIRP, arguing it was improperly included despite objections raised during the process. The Tribunal found that the inclusion was necessary for maximizing the value of the CD's assets.
Findings of Court:
The Tribunal's decision to allow the liquidation of the CD was upheld, emphasizing the commercial wisdom of the CoC and the necessity of including the personal property for effective resolution.
Issues: The main issues included whether the personal property of the Appellant could be included in the CIRP and the validity of the CoC's decision to liquidate the CD.
Ratio Decidendi: The court held that the interim moratorium does not prevent the CIRP process and that the CoC's decision to liquidate the CD was within its commercial wisdom, supported by a significant majority vote.
Result: Appeal dismissed.
JUDGMENT
Per: Justice Rakesh Kumar Jain:
The Appellant is the suspended director of the Corporate Debtor, namely, Sundaram Mahadeo Auto World Pvt. Ltd. who is aggrieved against the order dated 22.04.2024 by which the National Company Law Tribunal, Guwahati Bench (in short ‘Tribunal’) has dismissed the application bearing I.A No. 13 of 2024 filed by the Appellant and allowed I.A No. 127 of 2023 filed by Respondent No. 6.
2. In brief, the Tribunal admitted an application bearing CP (IB) No. 26/GB/2022 filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) on 20.01.2023.
3. Mr. Sandeep Khaitan was appointed as the Resolution Professional/Respondent No.1 (RP) vide order dated 17.03.2023.
4. The Appellant and his brother Sumit Agarwal (both promoters of CD) jointly purchased a land admeasuring 56,300 sq.ft., covered under Dag No. 395 of periodic Patta No. 204, under village Rangamati, mouza Bihaguri, P.O. Pithakhowa, P.S Tazpur, Dist. Sontipur, Assam (in short ‘Subject Property’) on 29.12.2014. 5. A portion of the subject property i.e land admeasuring 20,060 sq. ft. was leased by the aforesaid owners to the CD vide lease deed dated 21.01.2016 for a period of 15 years w.e.f 01.06.2015. The leased was to expire on 31.05.2030.
6. The leased property is landlocked from three sides and has a pathway to access.
7. The Appellant mortgaged the subject property with State Bank of India (Respondent No. 2) for securing loan facility availed by the CD by executing a deed of personal guarantee with his brother on 21.03.2016, 31.09.2019 and 29.09.2020.
8. The agency of Automobile of the CD has already been terminated.
9. The RP in CP (IB) No. 26 of 2022 published an expression of interest (EOI) on 10.04.2023 in the Assam Tribune (English) and Asomiya Pratidin (Assamese) in terms of Regulation 36A of the CIRP Regulation. No resolution plan was though received.
10. In the 08th meeting of the CoC which comprises of SBI voting share of 34.97%, Tata Motors Finance Solutions Limited (TMFSL) voting share of 35%, Tata Capital Financial Services Limited (TCFSL) voting share of 29.80% and IndusInd Bank voting share of 0.23 % it was decided to publish second round of invitation for EOI to provide fresh opportunity to the interested parties to submit their resolution plan for the CD.
11. Two resolution plans were received pursuant to second EOI after which one of the members of the CoC, namely, SBI vide its letter dated 05.09.2023 decided to include the personal property of the Appellant in the CIRP of the CD in the overall interest of resolution while reserving its right to receive the proceeds allocated towards the subject property.
12. In the 9th CoC meeting held on 26.09.2023, it discussed the inclusion of subject property in the resolution plan. It was noted that inclusion of subject property in the process will greatly aid the resolution of the CD.
13. In the 10th CoC meeting held on 13.10.2023 Mr. Sumit Agarwal who has not been made a party by the Appellant in this appeal appeared as an authorised representative or one of the PRA, namely, PADPL.
14. In the 11th CoC meeting held on 16.11.2023, the CoC considered the resolution plan submitted by PADPL and found it to be non-viable, however, one week time was provided for addendums.
15. The resolution plan was put to vote on 28.11.2023. The E- voting window was opened for resolution plan from 30.11.2023 to 06.12.2023 and the members of the CoC with 99.78% of majority votes (0.22% abstained) approved the liquidation of the CD as a going concern, subject to the approval of the AA.
16. In view of the decision of the CoC taken on 28.11.2023 in the 12th meeting of the CoC, Respondent No. 1 filed an application bearing I.A No. 127 of 2023 under Section 33(2) r/w Section 60(5) of the Code and Rule 11 of the NCLT Rules, 2016 for an order of liquidation of the CD.
17. At the same time, the Appellant herein also filed an application bearing I.A No. 13 of 2024 under Section 60(5) r/w Rule 11 of the Ru
