THE KARAD URBAN COOPERATIVE BANK LTD. versus SWWAPNIL BHINGARDEVAY & ORS.

THE KARAD URBAN COOPERATIVE BANK LTD. versus SWWAPNIL BHINGARDEVAY & ORS.

Because the CoC, the Resolution Professional and the Successful Resolution Applicant had been aware of and taken into account the relevant issue regarding the ethanol plant and machinery and had taken a conscious commercial decision to approve the Resolution Plan, the NCLAT erred in substituting its view on viability/feasibility; there was insufficient proof of breach of confidentiality and the advertisement complied with the regulation in force at the time; accordingly NCLAT's remand was unjustified, the NCLAT order was set aside and the NCLT order approving the Resolution Plan was restored.

Parties
Appellant/financial Creditor: The Karad Urban Cooperative Bank Ltd.; Respondents: Swwapnil Bhingardevay & Ors.; Corporate Debtor: M/s. Khandoba Prasanna Sakhar Karkhana Limited; Successful Resolution Applicant: M/s. Sai Agro (India) Chemicals; Resolution Professional: Mr. Jitendra Palande
Jurisdiction
India
Judgment Date
04 September 2020
Procedural Posture
Civil Appeal / Appeal From Nclat; Final Judgment Restoring NCLT Order
Outcome
Appeals allowed; impugned NCLAT order set aside and NCLT Mumbai order dated 01.08.2019 restored
Legal Topics
Resolution Plan, Committee of Creditors, Viability and Feasibility, Confidentiality of Information, Regulation 36 a, Advertisement/invitation for Resolution Plans, SARFAESI
Insolvency and Bankruptcy Company Law Resolution Plan Committee of Creditors Viability and Feasibility Confidentiality of Information Regulation 36 a Advertisement/invitation for Resolution Plans +1 more

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Parties

The Karad Urban Cooperative Bank Ltd.

Appellant/financial Creditor

Swwapnil Bhingardevay & Ors.

Respondents

M/s. Khandoba Prasanna Sakhar Karkhana Limited

Corporate Debtor

M/s. Sai Agro (India) Chemicals

Successful Resolution Applicant

Mr. Jitendra Palande

Resolution Professional

Procedural Posture

Civil Appeal / Appeal From Nclat; Final Judgment Restoring NCLT Order

Legal Issues

  1. 1 Whether NCLAT was justified in setting aside NCLT approval of the Resolution Plan on grounds of viability and feasibility
  2. 2 Whether there was a breach of confidentiality/leakage of liquidation value in violation of Regulation 35(2)
  3. 3 Whether assets (ethanol plant and machinery) claimed in the Resolution Plan were incorrectly treated as assets of the corporate debtor when owned/possessed by a third party (Sarvadnya Industries Pvt. Ltd.) and subject to SARFAESI possession

Ratio Decidendi

Because the CoC, the Resolution Professional and the Successful Resolution Applicant had been aware of and taken into account the relevant issue regarding the ethanol plant and machinery and had taken a conscious commercial decision to approve the Resolution Plan, the NCLAT erred in substituting its view on viability/feasibility; there was insufficient proof of breach of confidentiality and the advertisement complied with the regulation in force at the time; accordingly NCLAT's remand was unjustified, the NCLAT order was set aside and the NCLT order approving the Resolution Plan was restored.

Court Disposition

Appeals allowed; impugned NCLAT order set aside and NCLT Mumbai order dated 01.08.2019 restored

Orders

  • Impugned order of the National Company Law Appellate Tribunal dated 02.06.2020 set aside
  • Order of the National Company Law Tribunal, Mumbai Bench dated 01.08.2019 restored