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(2024) ibclaw.in 189 NCLT

IN THE NATIONAL COMPANY LAW TRIBUNAL

Prasada Raju M.R.V

I.A. No. 78 of 2023 in I.A. No. 1468 of 2022, I.A. No. 331 of 2022 and I.A. No. 1468 of 2022 in CP
(IB) No.682/07/HDB/2018
Decided on 06-Feb-24

Coram: Shri Rajeev Bhardwaj (Judicial Member) and Shri Sanjay Puri (Technical Member)

Add. Info:

Corporate Debtor: Mantena Laboratories Ltd.

For Appellant(s): Mr. Y. Suryanarayana, Advocate, Mrs. A. Sandhya Rani, Advocate

For Respondent(s): Mr. V.S.R. Avadhani, Advocate

Brief about the decision:

I.A. No. 78 of 2023 in I.A. No. 1468 of 2022:

Through this IA the Applicant, a Director in the suspended Board of M/s. Mantena Laboratories
Limited, the Corporate Debtor, essentially seeks access to the Resolution Plans submitted by the
other Resolution Applicants. To this end, he has relied upon the judgment of Vijay Kumar Jain Vs.
Standard Chartered Bank (2019) ibclaw.in 24 SC to claim that as per the decision of Hon’ble
Supreme Court in this case, he is entitled to the records of all the deliberations of the CoC, including
all Resolution Plans considered by it.

The Adjudicating Authority holds that:

It is a fact that the Applicant has a dual role in this case. Besides being part of the suspended
Board, he is also one of the Resolution Applicants. As part of the suspended Board, he was
given notices of the CoC meetings as required under section 24(3)(b) of IBC. He was also
allowed to attend these meetings, except when the CoC was considering Resolution Plans.
However, the role of the Applicant as ‘Resolution Applicant’ is circumscribed. Under section
30(5) of IBC, “the resolution applicant may attend the meeting of the committee of creditors in
which resolution plan of the applicant is considered”. It clearly follows that a Resolution
Applicant can attend CoC meeting only in respect of the plan that was submitted by him, and
will have no access to the Resolution Plans submitted by others.
The cited caselaw of Vijay Kumar Jain Vs. Standard Chartered Bank (2019) ibclaw.in 24 SC
also does not support the Applicant’s argument. That case dealt with the eligibility of a former

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director who, being an unrelated financial creditor of the CD, sought access to CoC meetings
and Resolution Plans submitted by Prospective Resolution Applicants. The Apex Court decision
in that case affirmed the right of such individuals to attend CoC meetings and access
Resolution Plans. However, that judgment will not apply to a suspended promoter/director who
is also a Resolution Applicant.
In the present case, not only the Applicant is related to the CD, being a promoter/director, he
is also a Resolution Applicant. The CD being the MSME, he was permitted to submit a
Resolution Plan. However, he was rightly kept out by the CoC from the proceedings of
examination and evaluation of the Resolution Plans submitted by other Resolution Applicants.
We are also not persuaded by the argument of the Ld Counsel for the Applicant that, after the
Applicant’s plan was rejected by the CoC the conflict of interest does not survive and he
should have been allowed access to all deliberations of the CoC including the Resolution Plans
submitted by other Resolution Applicants.
The ‘conflict of interest’ for the Applicant, who was part of the CoC in the dual capacity did not
end with him being rejected as Resolution Applicant. His capacity to be an impartial observer
of the CoC’s deliberations was compromised and his views on the Resolution Plan submitted by
any other Resolution Applicant would necessarily have a potential of bias even after he was out
of the race.
The other argument of the Ld. Counsel that being an expert in the field of pharmaceuticals,
the Applicant presents those ‘exceptional circumstances’ in which it should have not been
considered necessary for him to even compete with other Resolution Applicants, is also not
convincing. Firstly, in this application, this is not the relief that the Applicant has sought, as he
has already competed with other Resolution Applicants. Secondly, it is his “expertise” in
managing the affairs of the CD which has resulted in the present state of affairs. If he was so
exceptional, he would not have run a debt of more than Rs 127 crores which the CD was
neither able to service nor repay, and was to be admitted into CIRP.About the allegations of
the Resolution Applicants being allowed to modify the plan more than once, and thus violative
of the Law, is the matter to be examined by this authority while examining IA No. 1468/2023,
through which the successful Resolution Plan has been presented. As held earlier, the
Applicant has no locus-standi in that application.
Applicant being an unsuccessful Resolution Applicant is not a necessary party for the approval
of a Resolution Plan. Once the CoC has endorsed a Plan by requisite percentage of voting
share, it is only for this Authority to adjudicate thereon and approve it under the provisions of
IBC. For the reasons as above, this application is dismissed.(p19-27)

I.A. No. 331 of 2022:

This application is filed by the Bank of Maharashtra, one of the Financial Creditors of the Corporate
Debtor (CD) M/s. Mantena Laboratories Limited, being aggrieved by the 10th CoC1 meeting held on
24.03.2022, wherein the Applicant did not receive the distribution pattern of the amounts to be
received by each Financial Creditor as per the Resolution Plan.

The central question raised by the Applicant is whether it is entitled to same percentage of the
distribution proceeds of the Resolution Plan as its voting right as a financial creditor.

The Adjudicating Authority holds that:

What amount is to be paid to different classes or subclasses of creditors in accordance with

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the provisions of the IBC and the related Regulations, is essentially the commercial wisdom of
the Committee of Creditors. In this context, it is to be emphasized that a dissenting secured
creditor, such as the Applicant in the present case, cannot dictate the amount to be allocated
to it based solely on the value of the security interest.
In the present case the Applicant held first charge only over the current assets, value of which
was reduced to nil. It could not have sought parity with the other secured creditors who had
first charge over the fixed assets and where the Resolution Plan majorly comprised of the
value placed on the fixed assets. The priority in which the resolution proceeds were to be
distributed to the secured creditors was to be determined by the CoC in its commercial
wisdom.
With these observations, the prayers of the Applicant are dealt with as below:
(a) As the 9th CoC meeting has already been held and the Resolution Plan approved by
CoC with more than the requisite voting share, this prayer has become infructuous.
(b) No directions are being given to the CoC for the reasons discussed in the preceding
paras.
(c) The minutes of 10th CoC meeting have already been provided by the RP to the
Applicant. Since the Resolution Plan is still to be approved by this Authority, any
determination about share of each of the financial creditor for distribution out of the
resolution proceeds is premature.
The Application is therefore dismissed.(p26-28)

I.A. No. 1468 of 2022:

This Application is filed by the Resolution Professional (RP) of the Corporate Debtor (CD) M/s.
Mantena Laboratories Limited under Section 30(6) of the IBC r/w Regulation 39(4) of IBBI
(Insolvency Resolution Process for Corporate Persons) Regulations 2016, seeking approval of
the Resolution Plan of Mr. Shiv Charan along with Mrs. Bharti Agarwal & Mrs. Pushpalata Bai,
as approved by the Committee of Creditors (CoC) with 79.41% of voting.
The instant Resolution Plan satisfies the requirements of Section 30 (2) of the Code and
Regulations 37, 38, 38 (1A) and 39 (4) of the Regulations. We also found that the Resolution
Applicant is eligible to submit the Resolution Plan under Section 29A of the Code.
Approve the Resolution Plan dated 28.02.2022 submitted by Mr. Shiv Charan along with Mrs.
Bharti Agarwal & Mrs. Pushpalata Bai, along with annexures, schedules forming part of the
Resolution Applicant annexed to the Application.

Judgment/Order:

Click here for Judgment

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