Patanjali Consortium's Resolution Plan Approved With Modifications, Emphasizing Creditor Equality & Legal Compliance

The resolution plan submitted by the Patanjali Consortium was approved by the tribunal with modifications, ensuring compliance with legal directives. The plan allocated specific funds to various creditor classes and stakeholders, totaling Rs. 4,350 crores. The tribunal upheld the Committee of Creditors' decision for equal distribution among secured financial creditors, rejecting claims for preferential treatment. The resolution plan included provisions for settling claims and equity infusion, emphasizing adherence to applicable laws and regulations. The tribunal mandated the Resolution Professional to secure necessary approvals and ensure compliance within a specified timeframe, highlighting the importance of equitable treatment of all creditors.

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Issues Involved:
1. Approval of the resolution plan for the Corporate Debtor.
2. Compliance with the directions of the Hon'ble Supreme Court.
3. Distribution of proceeds under the resolution plan.
4. Claims and objections raised by financial creditors.
5. Reliefs, concessions, and dispensations sought in the resolution plan.
6. Compliance with applicable laws and regulations.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan for the Corporate Debtor:
The Miscellaneous Application (MA) No. 1721 of 2019 was filed by the Resolution Professional (RP) under Section 30(6) of the Insolvency and Bankruptcy Code, 2016, seeking approval of the resolution plan submitted by the consortium led by Patanjali Ayurved Limited. The resolution plan was approved by the Committee of Creditors (CoC) with a vote share of 96.95%. The RP verified and constituted the CoC, invited Expressions of Interest (EOI), and evaluated resolution plans from various applicants. The final resolution plan proposed an infusion of Rs. 4,350 crores, with specific allocations for different classes of creditors and stakeholders.

2. Compliance with the Directions of the Hon'ble Supreme Court:
The Hon'ble Supreme Court, in Vijay Kumar Jain v. Standard Chartered Bank, directed that the time utilized in proceedings must be excluded from the resolution process period. The CoC was required to deliberate on the resolution plans afresh. Consequently, the approval of AWL's resolution plan was interdicted, leading to the withdrawal of MA 926/2018. The CoC later approved the resolution plan submitted by the Patanjali Consortium.

3. Distribution of Proceeds under the Resolution Plan:
The resolution plan proposed specific payments to various creditors, including secured financial creditors, workmen and employee dues, unsecured financial creditors, statutory dues, and operational creditors. The plan provided for a maximum offer of Rs. 4,235 crores for settling claims and Rs. 115 crores for equity infusion. The CoC approved the distribution mechanism, which was challenged by DBS Bank Ltd. (DBS) on the grounds of unequal treatment of secured creditors. However, the tribunal upheld the CoC's decision for pari passu distribution among secured financial creditors, rejecting DBS's claim for differential treatment.

4. Claims and Objections Raised by Financial Creditors:
DBS objected to the distribution mechanism, seeking differential treatment based on the quality of security held. The tribunal rejected this claim, citing the Hon'ble NCLAT's decision in Jyoti Structures Ltd. and the Supreme Court's dismissal of DBS's appeal in a similar matter. ICICI Bank Ltd. (ICICI) also filed an application regarding its increased claim due to ongoing proceedings before the Hon'ble NCLAT. The tribunal noted that the resolution plan accounted for the potential reversal of Rs. 65.98 crores and rejected ICICI's application for revised claims.

5. Reliefs, Concessions, and Dispensations Sought in the Resolution Plan:
The resolution plan sought various reliefs, including suspension of legal proceedings, tax exemptions, and waiver of stamp duty. The tribunal denied the extension of the moratorium period and tax exemptions, directing the resolution applicant to comply with applicable laws. The request for unilateral modification of contracts was also rejected, with the tribunal emphasizing adherence to due process.

6. Compliance with Applicable Laws and Regulations:
The resolution plan was certified by the RP as meeting all requirements of the Insolvency and Bankruptcy Code and related regulations. The tribunal directed the RP to ensure compliance with all applicable laws and obtain necessary approvals within one year from the date of the order. The tribunal also required the submission of detailed information on the source of funds, CIRP costs, and remuneration for the monitoring agent.

Conclusion:
The resolution plan submitted by the Patanjali Consortium was approved with modifications, subject to compliance with the tribunal's directions. The plan was found to have necessary provisions for effective implementation and was binding on all stakeholders. The tribunal emphasized the importance of adhering to legal requirements and ensuring equitable treatment of creditors.

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