TaxTMI 
TaxTMI 
2017 (12) TMI 1212
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....1/2016 u/s 7 of IBC), Innoventive Industries Ltd. (R7 - It is the Corporate Debtor against which R6 filed this CP) seeking this Bench to grant reliefs: a. To declare that the position of law clarified by the Ministry of Corporate Affairs by general Circular No. IBC/01/2017 - Notification No. 30/14/2017 - Insolvency dated October 25, 2017 would be applicable to the corporate insolvency resolution process of the Corporate Debtor; b. To declare that the in view of General Circular No. IBC/01/2017 - Notification No. 30/14/2017 - Insolvency dated October 25, 2017, approval of shareholders of the Original Respondent for actions under the resolution plan for its implementation which would have been required under the Companies Act, 2013 or any other law would not be required and would be deemed to have been given upon approval of a resolution plan by this Bench; c. To allow this Applicant to submit revised Resolution Plan after reducing the time earlier envisaged for obtaining shareholders' approval from the period for making cash payments for fresh vote thereon; d. To direct the Resolution Professional to present to the Committee of Creditors, modified....
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....f the Resolution Plan, the applicant shall be permitted to submit revised Resolution Plan after reducing the time earlier envisaged for obtaining shareholders' approval for change of period for making cash payments, consequently to direct Resolution Professional to present the modified Resolution Plan before CoC, basing on which, CoC be directed to cast votes on such modified Resolution Plan. The justification this applicant has given for seeking such reliefs is - (i) That the Corporate Debtor provides employment to 1200 workmen. (ii) That the turn-over of the Corporate Debtor for the years ended 31-03-2015, 31-03-2016 and 31-03-2017 is Rs. 372crores, Rs. 368crores, and Rs. 337crores respectively, besides this, the Corporate Debtor has contributed approximately Rs. 70crores towards taxes for the years ended 2015-16 and 2016-17. (iii) That the Resolution applicant is aggrieved of the wrongful rejection of the plan by CoC without giving an opportunity to the applicant to give revised Resolution Plan after considering the effect of the circular given by Ministry of Corporate Affairs on 25.10.2017. (iv) That the salient features of the proposed Re....
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.... the Counsel for this applicant submits that this Code is meant for maximization of value of assets and balance the interest of all stakeholders, that being so, since the object of the Code contemplates ease of doing business facilitating more investment leading to higher economic growth and development, if this plan is not approved, all the objects behind enactment would get defeated. 6. As to the Notification given on 25.10.2017 by Ministry of Corporate Affairs clarifying that shareholders' approval not required for actions to be taken under the resolution process, the Counsel says, is directly repugnant to section 35 of Companies Act, 2013 mandating the company to pass an ordinary resolution for increase of share capital of the company. 7. The Counsel further submits that the time period of 270 days as contemplated u/s 12 of the Code is to be conceived as directory because the insolvency resolution process is a complex process that required assessment of business viability, preparation of Resolution Plan, discussions and negotiations with various stakeholders, he therefore says, strict adherence to the period would result in value destruction of the business of the corpora....
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.... 3 .............. Section 27: Replacement of Resolution Professional by CoC. 1................ 2. The CoC may, at a meeting, by a vote of 75% of voting shares, propose to replace the Resolution professional appointed under section 22 with another resolution professional. 3................ Section 28: Approval of Committee of Creditors for certain actions. 1 ................ 2. ................ 3. No action under sub-section (1) shall be approved by the CoC unless approved by a vote of 75% of the voting shares. 4 ................ Section 30: Submission of Resolution Plan. 1 3. ................ 4. The CoC may approve a resolution plan by a vote of not less than 75% of voting share of the financial creditors. 5 ................ 6................ 11. When it has been replete in the provisions of the Code mandating resolution approved by CoC means a resolution with vote not less than 75% of the voting share of CoC, and when for passing a resolution, a cap is set out as an inbuilt measure in a statute without leaving any ambiguity to the judiciary, wi....
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....r the sake of clarity, as against the contentions of the applicant Counsel saying that the primary objects of this enactment is not liquidation of assets but to save business, let us examine the statements and objects of this Code, which are as follows: "An Act to consolidate and amend the laws relating to re organization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and bankruptcy board of India, and for matters connected therewith or incidental thereto". 16. In this statement, what appears to us is, this is an Act come into force for consolidation of various laws such as repeal of Provincial Insolvency Act and Presidency - Towns Insolvency Act in addition to amendments to Sick Industrial Companies (special provisions) Repeal Act, 2003; Indian Partnership Act, Central Excise Act 1944, the Income Tax Act, the Customs Act, Recovery of Debts due to banks an....
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....e-a'-versa, it all depends upon the context involved in that particular case. First, we don't have such constitutional powers, second - we have to examine it as to whether any such necessity is there for us to go to such an extent, when mandate is clear and language of statute is as clear as sunlight. 17. Before going into the proposition raised by the applicant counsel, it is also necessary to note the Code name itself is Insolvency and Bankruptcy Code applying insolvency to the company and bankruptcy to individuals. That being the case, can it be conceived that insolvency in respect to corporate persons is limited to resolution plan alone ignoring the liquidation process i.e. part and parcel of Part-II of this Code? To our sense, the phrase "insolvency resolution of corporate persons" mentioned in the statement is inclusive of liquidation process, therefore, it is inconceivable to understand that the Code has come into existence for restructuring of the companies alone and not for liquidation. If we see the objects closely, it is also clear a word " reorganisation" is included before the phrase "and insolvency resolution of corporate persons", so as to say that the phrase "and....
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....ght of the total financial liability. It has also been said this subject squarely falls in the responsibility of the Creditors' Committee, not in the realm of Adjudicating Authority powers. 20. The creditors committee will have power to decide the final solution by majority vote in the negotiations. The majority vote means more than or equal to 75 percent of the creditors committee by weight of the total financial liabilities. The majority vote will also involve a cram down option on any dissenting creditors once the majority vote is obtained. This is inevitable to arrive to a decision. The Adjudicator enables the RP to clarify matters of business from the creditors committee during the course of the IRP. For example, if the RP needs to raise fresh financing during the IRP, he/she may seek approval from the creditors committee rather than the Adjudicator. The list of these matters, which fall in the responsibility of the creditors committee, are specified in the Code. 21. In view of the statute mandate and the statements and objects of the enactment and the report of the Committee who drafted the legislation have not minced words in saying that the pre-requisite for approval ....
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....s set out under the Code. Now let us examine what is said in section 60(5) of the Code- 60. Adjudicating Authority for corporate persons (1)................... (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the national Company Law Tribunal shall have jurisdiction to entertain or dispose of - (a) Any application or proceeding by or against the corporate debtor or corporate person; (b) Any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) Any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings or the corporate debtor or corporate person under this Code. 25. Looking at this section, it is understandable that sub-section 1 of this section speaks that the Adjudicating Authority under this Code shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located, so, the thing visible is, the territorial juris....
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....in this Code by giving an interpretation contrary to the mandate in that particular section. It has to be understood that this sub-section is not meant for exercising jurisdiction over the mandates already given in the Code. Therefore, asserting jurisdiction u/s 60(5) of the Code to tweak super majority is a misconceived idea, therefore, we have not found any merit to consider the plea of this applicant to direct the committee of creditors to take up something which has already been decided by them in compliance of the provision of this Code. 32. The applicant counsel has raised various contentions saying that workmen will suffer; the resolution plan value is double to the net liquidation value given by the valuers, likewise many other contentions. By seeing all these contentions, can all these assume jurisdiction to this Authority to go as if they were not in the mind of the legislators when this Code has been passed. To bring in this Code, thorough exercise has been done by studying the Indian law and various foreign laws, thereafter committee dedicated its time and then it went before parliament, referred to standing committee, soon after examination by the standing committee....
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.... any provision of law in any enactment, general provision cannot pervade into special provision given for specific action under the statute. In this statute, dos and don'ts in respect to Resolution Plan has already been set out in the respective chapter. Section 60(5) of the Code cannot be invoked for a relief which has not been granted under those special provisions (sec 30 and sec 31). Moreover, it is already said that it is a general logic that when something is directly not permitted, it cannot be achieved indirectly by truncating the special jurisdiction given under the said statute. 38. As we said in the MA filed by the Resolution Applicant, the jurisdiction lies with this Bench to exercise its power u/s 31 of IBC only when a plan is approved by the CoC as stated in the Code, here, for no plan has been approved by the CoC, there cannot by any occasion to this Bench to make any observation in respect to a decision come from CoC meeting. In section 30 also, no discussion has made in respect to rejection of a Resolution Plan, it only talks about approval of a Plan with 75% super majority of vote share of the CoC. When there is no consensus to take any decision with 75% majori....
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....that they have sought an Order from this Bench under Article 14 of the Constitution of India which is not within the reach of this Bench, lest any other Court except Constitutional Courts i.e. Hon'ble High Court and Hon'ble Supreme Court. It is a Code that has given complete powers to the CoC as to whether or not to approve the resolution plan with super majority as mentioned under the Code, therefore, this Bench cannot and will not interfere with the rights of the CoC unless an approved plan has come before this Bench for examination under Section 31 of the Code. Since the approved plan has not been received by this Authority u/s 30(6) of the Code, this Bench has not even got the occasion to examine a plan under section 31 of the Code, therefore, the relief sought by this Workmen organization is beyond the reach and power given to this Adjudicating Authority, therefore this Application is hereby dismissed. IA 72/2017 41. This Intervention (Misc.) Application is filed under Section 33 r/w Section 60(5) of the Code by the Applicant/RP with a prayer to pass an order requiring the Corporate Debtor to be liquidated in terms of the provisions of Chapter III of Insolvency & Bankrup....
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....tion of convertible instrument with the operational performance of the corporate debtor. 45. In this proposed plan, it has been said Rs. 180 crores of cash payment will be made within 360 days and the remaining debt of Rs. 1228 crores would be converted into CCORPS payable over 20 years by rating the present value of those instruments as Rs. 107.4 @13% p.a. It has been said equity infusion would be Rs. 90 crores of rupees. As to role of promoter is concerned, it has been said he will remain in non-executive capacity on contractual basis. Again, this proposed resolution plan was placed during 11th CoC meeting dated 4.10.2017, wherein since all members of the CoC were physically present, it was agreed that the voting on the proposed plan would take place by electronic means in the period between 3.00 p.m. on 6.10.2017 to 3.00 on 7.10.2017 as contemplated under regulation 26(1) of CIR regulations. On conclusion of the electronic voting process on 7.10.2017, 66.6% of the vote shares of the CoC voted in favour of the Resolution Plan whereas, 33.4% of the voted shares of the CoC voted against the Resolution Plan, since this Resolution Plan could not get approval of not less than 75% o....