2019 (8) TMI 1746 - Tri - Insolvency and Bankruptcy

Tribunal Upholds Approved Resolution Plan, Denies Withdrawal Request and Modifications

Harindera Cargo Carriers Pvt. Ltd. and Ors. Versus Aster Building Solutions Private Limited and Ors.

The Tribunal denied the Resolution Applicant's request to withdraw from the approved Resolution Plan due to alleged undisclosed charges, stating there was ... Seeking permission to allow Resolution Applicant to withdraw the Resolution Plan - Seeking direction to Resolution Professional to return / refund the Bank Guarantee and the Earnest Money and 10% of the total consideration deposited by the Applicant - Section 60(5) of IBC, 2016 R/w Rule 11 of NCLT Rules, 2016 - HELD THAT:- This Tribunal approved the Resolution Plan of the Resolution Applicant on 04.06.2019. The Resolution Applicant filed Applications seeking certain clarification for successful implementation of the Resolution Plan. The Resolution Applicant is allowed to take over all the immovable assets including lease rights mortgaged to secured creditors etc. So, the lease hold rights held by the Corporate Debtor will be automatically taken over by the Resolution Applicant - the creditors to assign the interest rights and obligation arising out of Corporate Guarantee given by M/s. Aster Private Limited to be assigned in favour of Resolution Applicant. It is very clear as per Section 101 of Transfer of Property Act, no subsequent mortgagee or charge holder shall pay to foreclose or sale of such property without redeeming the prior mortgage or charge. If the contention of the Resolution Applicant is correct that ICICI Bank Ltd issued notice under Section 13(2) of SARFAESI Act to the subsequent charge holder, then it is bound to clear the 1st mortgage or charge which is to be transferred in favour of Resolution Applicant on payment of upfront amount. Thus, law is very clear that subsequent mortgage or charge holder can only proceed over the property only when it discharge the prior mortgage. Actually Resolution Plan provides all details and Resolution Applicant submitted the plan after seeing the Information Memorandum. There is no question of giving permission to Resolution Applicant to withdraw from the Resolution Plan. Already it has paid 10% of the upfront amount. Secondly, it has also given Bank Guarantee. The Plan was approved on 04.06.2019. Because of pendency of these Applications, there is a delay of payment of balance upfront amount. Having filed Resolution Plan which was considered by the CoC who approved the same and really there is no material concealment of any matter concerning the Corporate Debtor. Application disposed off. Issues Involved:1. Withdrawal of the Resolution Plan by the Resolution Applicant.2. Return/refund of the Bank Guarantee and Earnest Money.3. Modification/revision of the Resolution Plan.4. Clarification regarding the second charge or subordinate mortgage on the properties involved.Issue-wise Detailed Analysis:1. Withdrawal of the Resolution Plan by the Resolution Applicant:The Resolution Applicant filed IA No. 654 of 2019 seeking permission to withdraw the Resolution Plan approved by the Committee of Creditors (CoC) and the Tribunal. The Applicant argued that undisclosed charges amounting to approximately INR 1212 Crores on the Corporate Debtor's assets made the plan unviable. The Tribunal observed that the Resolution Plan, which was approved on 04.06.2019, included all necessary details and there was no material concealment. Therefore, the Applicant's request to withdraw from the Resolution Plan was denied.2. Return/refund of the Bank Guarantee and Earnest Money:The Applicant sought the return/refund of the Bank Guarantee and Earnest Money deposited. The Tribunal noted that the Applicant had already paid 10% of the upfront amount and provided a Bank Guarantee. Given that the Plan was approved and there was no material concealment, the Tribunal did not grant the relief sought for the return/refund of the Bank Guarantee and Earnest Money.3. Modification/revision of the Resolution Plan:In IA No. 655 of 2019, the Applicant sought to modify the Resolution Plan to include a clause that the CoC assigns a debt of INR 60 Crores to the Resolution Applicant along with the underlying security interest. The Tribunal noted that the Resolution Plan already provided for the transfer of all assets, including lease rights, free from encumbrances. Therefore, the Tribunal did not find it necessary to permit modifications to the Resolution Plan.4. Clarification regarding the second charge or subordinate mortgage on the properties involved:The Applicant raised concerns about a second charge on the Corporate Debtor's properties held by the lenders of the parent company, M/s. Aster Private Limited. The CoC filed a memo stating that the transfer of charge from CoC to the Resolution Applicant on payment of consideration is equivalent to enforcing the security by the first charge holders. The Tribunal clarified that the Resolution Applicant would have the first charge over the leased land, and any subsequent charge holder could only proceed against the property after clearing the first charge. This clarification was based on the provisions of the Transfer of Property Act and the clauses in the Resolution Plan.Conclusion:The Tribunal disposed of IA Nos. 654 and 655 of 2019 with the above clarifications. The Resolution Applicant was not entitled to withdraw from the Resolution Plan. The Tribunal provided necessary clarifications regarding the charges on the properties but did not permit the modification or return/refund of the Bank Guarantee and Earnest Money.