NATIONAL COMPANY LAW APPELLATE TRIBUNAL

AT CHENNAI
(APPELLATE JURISDICTION)
COMPANY APPEAL (AT) (CH) (INS.) NO. 326/2023
(IA No. 992/2023)
(Filed under Section 61 of the Insolvency and Bankruptcy Code, 2016)

(Arising out of the Impugned Order dated 28/06/2023 in INVP. No. 7/2022
in IA No. 1344/2022 in C.P.(IB) No. 241/HDB/2021, passed by the
‘Adjudicating Authority’, National Company Law Tribunal, Hyderabad
Bench)
In the matter of :
M/s Afita Constructions Pvt. Ltd.
Through its Managing Director/
Authorized Signatory
Mr. Firoz Akbarali Sadikot
Having its registered Office located at
603/605, 6th Floor,
Thakoor House (Antariksh), Makwana Road,
Marol Village, Audheri East,
Mumbai – 400 059. …Appellant

Versus

1. Dr. G.V. Narasimha Rao

Resolution Professional bearing no.
IBBI/IPA-003/IP-N00093/2017-18/10893
Having address at B/1201, Lansum Etania
Puppalaguda, Near My Home Avatar,
Hyderabad, Telangana – 500075. …Respondent No. 1

2. Neoaska Pharma Private Limited

Having address at 401, 4th Floor,
Manjeera, Trinity Corporate,
JNTU-Hitech City Road, Kukatpally,
Hyderabad – 500071. …Respondent No. 2

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 1 of 11

 WITH

COMPANY APPEAL (AT) (CH) (INS.) NO. 331/2023

(IA No. 1004/2023)
(Filed under Section 61 of the Insolvency and Bankruptcy Code, 2016)

(Arising out of the Impugned Order dated 28/06/2022 in IA No. 1410/2022

in C.P.(IB) No. 241/HDB/2021, passed by the ‘Adjudicating Authority’,
National Company Law Tribunal, Hyderabad Bench)

In the matter of :
M/s. Afita Constructions Pvt. Ltd.
Through its Managing Director/
Authorised Signatory
Mr. Firoz Akbarali Sadikot
Having its Registered Office located at
603/605, 6th Floor,
Thakoor House (Antariksh), Makwana Road,
Marol Village, Andheri East,
Mumbai – 400059. …Appellant
Versus

1. Dr. G.V. Narasimha Rao

Resolution Professional bearing no.
IBBI/IPA-003/IP-N00093/2017-18/10893,
Having address at B/1201, Lansum Etania
Puppalaguda, Near MyHome Avatar,
Hyderabad, Telangana – 500075. …Respondent No. 1

2. Neoaska Pharma Private Limited

Having address at 401, 4th Floor,
Manjeera, Trinity Corporate,
JNTU-Hitech City Road, Kukatpally,
Hyderabad – 500071. …Respondent No. 2
Present :
For Appellant : Mr. Pritesh A. Burad, Advocate
For Respondents : Mr. Pradeep Joy, Advocate, For R1/RP
Mr. P.H. Arvindh Pandian, Senior Advocate
For Mr. Avinash Krishnan Ravi, Advocate, For R2

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 2 of 11

 JUDGMENT

(Virtual Mode)

[Per: Shreesha Merla, Member (Technical)]

1. The Appellant has preferred Company Appeal (AT) (Ins) No. 326/2023,

aggrieved by the Impugned Order dated 28/03/2023 in Intervention Application

No. 7/2022 in IA No. 1344/2022 in C.P. (IB) No. 241(HDB)/2021, whereby the

‘Adjudicating Authority’ / ‘National Company Law Tribunal, Mumbai Bench’

has dismissed the Application, filed by the Appellant herein seeking to intervene

in IA No. 1344/2022, filed by the first Respondent / Resolution Professional

(“RP”) of the Corporate Debtor for approval of the Resolution Plan.

2. Company Appeal (AT) (CH) (Ins) No. 331/2021 is preferred by the

Appellant challenging the Order dated 28/03/2023, whereunder the Interim

Application No. 1414/2022, filed by the Appellant in IA No. 1344/2022, seeking

a direction to allow the Appellant to submit a better Resolution Plan, was

dismissed by the ‘Adjudicating Authority’.

3. Since both these Appeals refer to common facts and circumstances, they

are being disposed of by this common Order.

4. The Learned Counsel for the Appellant submitted that the Resolution Plan

submitted by the ‘Successful Resolution Applicant’ (“SRA”) has allocated less

amounts to the Operational Creditors, than what would be payable to them in the

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 3 of 11

event of Liquidation. It is also submitted that the Plan does not meet the

requirements referred to in Section 30 (2) of the Code as the assets have been

undervalued; there was violation of Regulation 36A of the IBBI (Insolvency

Resolution Process for Corporate Persons) Regulations, 2016 as the invitation for

expression ought to be submitted not later than the 75 th day from the date of the

Insolvency commencement date, whereas in the instant case, the invitation for

expression was submitted after 111 days and further that the CoC Meetings were

conducted without giving Notice to the Appellant who is the Representative

Nominee of the Operational Creditor, thereby violating Section 24 of the Code.

5. It is also submitted that when the aggregate dues of the Operational

Creditors exceed 10 % of the debt, the Appellant ought to have been included in

these Meetings, in the absence of which, there is clear violation of Section 24 of

the Code. The Claim of the Appellant was admitted at a very belated stage just

prior to the 5th CoC Meeting and on receipt of the information, the Appellant had

immediately taken the necessary steps.

6. It is the case of the Appellant that a major decision was taken in the 4th CoC

Meeting excluding the Appellant and no publication for extension of time was

issued nor was it published on the IBBI website. It is submitted that the RP

admitted the Appellant’s Claim on 13/09/2022, even though the Claim was

submitted by the Appellant way back on 19/04/2022. As per advertisement dated

20/07/2022, the last date for submission of ‘Expression of Interest’ (“EOI”) was

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 4 of 11

04/08/2022 and the last date for submission of the Resolution Plan was

09/09/2022. It is the case of the Appellant that the RP without determining the

Claim amounts has directed the ‘Prospective Resolution Applicant’ (“PRA”) to

submit the Resolution Plan. The RP also did not circulate the Minutes of the

Meetings by electronic means to the Appellant by violating Regulation 25 (5) (a).

Regulation 37 of CIRP Regulations speaks about maximisation of the value of

the Corporate Debtor’s assets, whereas in the instant case, the assets of the

Corporate Debtor are grossly undervalued. The Learned Counsel for the

Appellant in support of his submissions placed reliance on the Judgment of the

Hon’ble Apex Court in the matter of ‘Committee of Creditors of Essar Steel

India Limited through Authorised Signatory Vs. Satish Kumar Gupta & Ors.’

reported in [(2020) 8 SCC 531] in which it is observed as follows:

“…corporate debtor needs to keep going as a

going concern during the insolvency resolution
process; that it needs to maximise the value of its
assets; and that the interests of all stakeholders
including operational creditors has been taken
care of”

7. It is the further case of the Appellant that the ‘Adjudicating Authority’ has

erred in dismissing IA No. 1410/2022 in which Application the Appellant had

sought for a direction to accept its Plan which was for a higher amount and

beneficial for all Stakeholders.

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 5 of 11

8. The ‘Adjudicating Authority’ has dismissed IA No. 1014/2022 in which

the Applicant / the Appellant herein after gaining knowledge about the details of

the Resolution Plan of the SRA, was not satisfied with the Plan submitted by the

SRA as the Plan was covering only 4 % of the Operational Creditor’s Claim and

sought to offer a better Resolution Plan that the one that was already approved by

the CoC. The ‘Adjudicating Authority’ has observed that the Application was

per se not maintainable firstly for the reason that the CoC had already approved

the Resolution Plan which he received pursuant to publication of Form – G.

Intervention Application, I.P. No. 07/2022 in IA No. 1344/2022 was dismissed

on the ground that the Code did not provide any rule to a third party including the

Unsuccessful Resolution Application to intervene in an Application filed under

Section 31 of the Code and therefore, the Applicant / the Appellant had no locus

standi to intervene.

9. The Learned Senior Counsel for the 2nd Respondent / SRA submitted that

the Plan was already implemented and the Order in IA No. 1344/2022 approving

the Resolution Plan has attained finality as the said Order in IA No. 1344/2022

had not been challenged. The Learned Counsel for the 1 st Respondent / the

Resolution Professional submitted that the Company Appeals are not

maintainable and are infructuous as the Plan has already been implemented and

the Appellant has not challenged IA No. 1344/2022. As regarding the contention

of the Appellant that the Resolution Plan fails to maximise the value of the assets

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 6 of 11

of the Corporate Debtor, it is submitted that the CoC in their commercial wisdom

has approved the Resolution Plan which provides for the following:

(a) Secured Financial Creditors – 100 % (INR 18.49 Cr.)

(b) Unsecured Financial Creditors – 100 % (INR 0.28 Cr.)
(c) Operational Creditors – 10 % (INR 2.84 Cr.)
(d) Other debts and dues – 100 % (INR 0.44 Cr.)

10. It is also submitted that the offer by the Applicant / the Appellant was

submitted after the Resolution Plan was approved by the CoC and the question

whether the amount is below the liquidation value or not is left to the commercial

wisdom of the CoC and the Operational Creditor being the unsuccessful

Resolution Applicant cannot challenge the Plan on that ground.

Evaluation:

11. At the outset, we address to whether the Appellant has any vested right to

file a Resolution Plan pursuant to the process in published Form – G. It is seen

from the record that the Resolution Plan was approved by the CoC and the ‘Letter

of Intent’ (“LOI”) was issued to the SRA on 09/11/2022. IA No. 1410/2022 was

filed subsequently on 10/11/2022. IA No. 1314/2022 was filed by the RP seeking

approval of the Resolution Plan on 11/11/2022. It is significant to mention that

the Appellant sought to intervene in IA No. 1344/2022 by filing an Application

only on 25/11/2022. It is also on record that Notice for the 7th CoC Meeting was

sent to the Appellant on 01/11/2022 but the Appellant did not choose to attend

the said Meeting. The contention of the Learned Counsel for the Appellant that

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 7 of 11

being the authorised Representative he was not issued the Notice to attend the

Meeting, is therefore untenable. It is also pertinent to mention that on 17/09/2022

the Appellant had attended the 5th CoC Meeting, wherein the entire terms and

conditions of the Resolution Plan was discussed. The Appellant did not choose

to attend the 6th CoC Meeting also. In this background, not having given a Plan

immediately pursuant to Form – G, seeking to give a better Plan at this stage,

subsequent to approval by the CoC, cannot be sustained in the light of the

judgment of the Hon’ble Apex Court in the matter of ‘Arcelormittal India (P)

Ltd. v. Satish Kumar Gupta’ reported in [(2019) 2 SCC 1] in which the Hon’ble

Apex Court has held as follows:

“82. Take the next stage under Section 30. A

Resolution Professional has presented a resolution
plan to the Committee of Creditors for its approval,
but the Committee of Creditors does not approve
such plan after considering its feasibility and
viability, as the requisite vote of not less than 66%
of the voting share of the financial creditors is not
obtained. As has been mentioned hereinabove, the
first proviso to Section 30(4) furnishes the answer,
which is that all that can happen at this stage is to
require the Resolution Professional to invite a
fresh resolution plan within the time-limits
specified where no other resolution plan is
available with him. It is clear that at this stage
again no application before the adjudicating
authority could be entertained as there is no vested
right or fundamental right in the resolution
applicant to have its resolution plan approved, and
as no adjudication has yet taken place.”

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 8 of 11

12. The Principal Bench, NCLAT vide Order dated 19/12/2022 in the matter

of ‘Kalinga Allied Industries India Private Limited Vs. Committee of Creditors

(Bindal Sponnge Industries Limited)’ in Company Appeal (AT) (Ins) No.

689/2021 has observed as follows:

“8……..In this case, the CoC sought fresh

consideration for another Plan after completion of
all timelines. It is pertinent to mention that these
Judgements are prior to the ratio laid down by the
Hon’ble Apex Court in ‘Ebix Singapore Pvt. Ltd.’
(Supra). It is the case of the Intervenors that I.A.
(IB) No. 815/2021 in C.P. IB No.-60(PB)/2018 is
still pending Adjudication before the Adjudicating
Authority and that the Appellant has no vested
right for consideration of its Resolution Plan as
they only continue to remain a prospective
Resolution Applicant. At this juncture, it is
significant to mention that the Order passed by this
Tribunal in ‘Kalinga Allied Industries India Pvt.
Ltd.’ (Supra), has set aside the Order of the
Adjudicating Authority observing as follows:
“With the aforesaid, we are of the view that
when the Application for approval of
Resolution Plan is pending before the
Adjudicating Authority at that time the
Adjudicating Authority cannot entertain an
Application of a person who has not
participated in CIRP even when such person
is ready to pay more amount in comparison to
the successful Resolution Applicant. If a
Resolution Plan is considered beyond the
time-limit then it will make a Company
Appeal (AT) (Ins.) No. 518 of 2020 never-
ending process. Thus, impugned order is not
sustainable in law as well as in fact. The
impugned Order is hereby set aside.”

9. This Order has attained finality and no fresh

consideration of any Resolution Plan at this stage
can be entertained. It is reiterated that the

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 9 of 11

 ‘Maximisation of Value of Assets’ ought to be
‘within the specified timelines’ and if it is not a
‘timebound process’, the entire scope and
objective of the Code would fail merely because
there is another higher offer made by a third party,
the CoC cannot consider another Plan of a third
party who did not participate in the CIRP
Proceedings. For all the ongoing reasons, this
Tribunal is of the earnest view that once Plan is
submitted for approval, it is binding between the
CoC and the SRA, unless there is any material
irregularity or is against the provisions of Section
30(2) of the Code the Adjudicating Authority
cannot, in its limited jurisdiction, interfere.”

13. It is clear from the aforenoted judgments that the Appellant does not have

any vested right in submitting the Resolution Plan in the absence of filing one

Plan pursuant to Form – G, and taking the right steps at the appropriate time,

specifically keeping in view that the Appellant had attended the 5 th CoC Meeting

when the entire contours of the Resolution Plan was discussed. At this juncture,

we find it relevant to place reliance on the Judgment of the Hon’ble Apex Court

in the matter of ‘Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh’,

reported in [(2020) 11 SCC 467] in which the Hon’ble Apex Court has held as

follows:

“28. No provision in the Code or Regulations has

been brought to our notice under which the bid of
any resolution applicant has to match liquidation
value arrived at in the manner provided in
Regulation 35 of the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016. This point
has been dealt with in Essar Steel [Essar Steel
India Ltd. Committee of Creditors v. Satish Kumar

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 10 of 11

 Gupta, (2020) 8 SCC 531] . We have quoted above
the relevant passages from this judgment.”

14. The ratio of the aforenoted Judgment directly contradicts the contention of

the Appellant that the bid value has to match the liquidation value. It is significant

to mention that the Resolution Plan has already been implemented and we do not

wish to set the clock back.

15. For all the foregoing reasons, this Tribunal is of the considered view that

there is no illegality in the Order of the ‘Adjudicating Authority’ dismissing the

Intervention Application, I.P. No. 07/2022 in IA No. 1344/2022, as well as

IA No. 1410/2022 in IA No. 1344/2022, seeking a direction to offer a better Plan.

The Company Appeal (AT) (CH) (Ins) No. 326/2023 and Company Appeal (AT)

(CH) (Ins) No. 336/2023 are dismissed accordingly. No Order as to Costs. All

connected pending Interlocutory Applications, if any, are closed.

[Justice M. Venugopal]
Member (Judicial)

[Shreesha Merla]
Member (Technical)
20/10/2023
SPR/TM

C.A. (AT) (CH) (Ins) Nos. 326 & 331/2023 Page 11 of 11