JUDGEMENT

(VIRTUAL MODE) Per: Kanthi Narahari Member (T) Brief Facts of the Case:

1) The present appeal is filed by the Appellant against the Impugned Order dated 25th March 2021 passed by the ‘Adjudicating Authority’ (NCLT, Hyderabad Bench) in IA No.968 of 2020 in CP No.744 of 2018, whereby the Adjudicating Authority directed the COC to consider ineligibility of 3rd Respondent under Section 29A of the Code.

2) The Learned Counsel for the Appellant submitted that the Appellant and the 3rd Respondent herein are Resolution Applicants for the Corporate Debtor, having submitted their Resolution Plans pursuant to the expression of interest issued by the Resolution Professional. While so, the promoters of the 3rd Respondent were found disqualified under Section 29A of the Code, on account of the Judgment of the Hon’ble NCLT, Hyderabad Bench, dated 18.08.2020.

3) Aggrieved by the said disqualification, the 3rd Respondent filed IA/968/2020 before the Adjudicating Authority. The Adjudicating Authority vide Impugned order dated 25.03.2021 directed the COC to take a call on the ineligibility of the 3rd Respondent under Section 29A (e)of the Code and also to consider the revised plan to be submitted by the 3rd Respondent.

4) The Learned Counsel for the Appellant contended that the Impugned Order passed by the Adjudicating Authority without considering the fact that the Appellants Application in IA/119/2021 challenging the rejection of its (Appellant) Resolution Plan by the COC is pending before the Adjudicating Authority.

5) In the meeting of the COC dated 30th March 2021 the SBI, the Lead Financial Creditor with 90.98% of the voting rights has decided without any basis that the 3rd Respondent is not disqualified under Section 29A of the Code.

6) The Learned Counsel for the Appellant contended that the Adjudicating Authority failed to appreciate the fact that the Committee of Creditors at no point in time objected to the decision of the Resolution Professional in holding that the 3rd Respondent is disqualified under Section 29A of the Code and submitted in their pleadings before the Adjudicating Authority that they would abide by the decision of the Adjudicating Authority with regard to the eligibility of the 3rd Respondent under Section 29A of the Code.

7) The main grievance of the Appellant is that the COC has no power to consider the ineligibility of the 3rd Respondent under Section 29A. The Adjudicating Authority ought not to have directed the COC to consider the ineligibility.

8) In view of the aforesaid reasons, the Learned Counsel prayed this Bench to set aside the Impugned order of the Adjudicating Authority dated 25th March 2021 and allow the Appeal.

RESPONDENT’S SUBMISSIONS:

9) The 1st Respondent filed detailed counter to the Appeal and submitted that the Appellant and the 3rd Respondent submitted their respective Resolution Plans before this Respondent on 05th September 2020 pursuant to extension for the submissions of Resolution Plans from 24th August to 5th September 2020 along with the Affidavit under Section 29A of the Code stating that the prospective Resolution Applicants are eligible to submit the resolution plan for the Corporate Debtor. After submission of the plans this Respondent became aware that the 3rd Respondent though an eligible resolution applicant as an independent entity, as a Director on the Board whose actions have been held as illegal by the NCLT for contravention of Provisions of Section 397, 398 of the Companies Act, 1956. After considering and in the light of Provisions of Section 29A and 30 of the Code read with respective rules and regulations made thereunder, the 3rd Respondent is ineligible under Section 29A of the Code to submit resolution plan for resolution of the Insolvency of the Corporate Debtor. This Respondent informed the Members of the COC about the said ineligibility of Respondent No.3 and the legal opinions obtained from various professionals. Considering the submissions made by this