TaxTMI 
TaxTMI 
2018 (2) TMI 984
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....pplicant is a promoter-director of the MBL Infrastructure Ltd. (from now on also referred to as the Corporate Debtor or "MBL"). It is important to point out that application filed u/s 7 by RBL Bank Ltd. against the Corporate Debtor MBL has been admitted by the order dated 30th March 2017 of the Adjudicating Authority. After the admission of the petition, period of 180 days was to expire on 25.09.2017. Therefore, the Committee of Creditors recommended for seeking an extension of 90 days for submission of Resolution Plan, which was accepted by this Bench and a period of 90 days has been further extended with effect from 25.09.2017 up to 23rd December 2017 by our order dated 11th September 2017. Resolution Applicant has stated that on 29th June 2017, he has submitted a Resolution Plan and the same was discussed in the third meeting of Committee of Creditors. After that in the 4th meeting of the Committee of Creditors (in short CoC) held on 11th August 2017, it was decided to get the Resolution plan vetted by an external Agency to act as a Financial Advisor to CoC. PNB Investments Services was appointed as Financial Advisor to CoC. The Resolution Plan submitted by the Applicant was ....
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.... asking the Applicant to confirm whether the applicant continues to be eligible Resolution Applicant in adherence to the changes made through the said Ordinance. The Applicant in response to the e-mail submitted a detailed representation dated 27th November 2017 stating the reasons as to why he is not disqualified by reasons of the amendment made in the Code regarding Ordinance dated 23rd November 2017. Applicant has further stated that he is not ineligible under the newly inserted section 29A of the Code, 2016 to submit resolution plan because the applicant, nor any other person collaborating with the applicant, is a promoter or in the management or control of the Corporate Debtor; the applicant is not an undischarged insolvent under clause (a) of section 29A; applicant has not been identified as a wilful defaulter under clause (b) of section 29A; none of the accounts of the applicant is irregular; therefore, clause (c) of section 29A is not applicable to applicant. Even for the Corporate Debtor (MBL), a period of one year or more has not lapsed as on the date of commencement of insolvency resolution process; the applicant has not been convicted of any offence punishable by imp....
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....expression of interest on 2nd December 2017. Applicant states that the opinion of some of the members of CoC was based on incorrect interpretation of clauses (c) and (h) of section 29A of the Code. Applicant has further stated that he is not disqualified under clause (c) of section 29A of the Code as none of the bank accounts of the applicant is irregular, leave apart being NPA. Even in the case of Corporate Debtor, a period of one year or more has not lapsed as on the date of commencement of insolvency resolution process of the Corporate Debtor, from the time of classification of account of Corporate Debtor as NPA. Clause (c) does not prescribe the cut-off date to calculate one year or more. It merely states that, whose account is classified as NPA and period of one year or more has elapsed from the date of such classification and who has failed to make the payment of all overdue amounts with interest thereon and charges relating to NPA before submissions of the Resolution Plan. The petitioner has further stated that no payment of overdue amount with interest thereon and charges can be made to Financial Creditors of the Corporate Debtor during the Insolvency Resolution Proce....
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....t within four or five days, it is impossible that any new Resolution Applicant will come forward for submission of Resolution Plan and ultimately the Company will go into liquidation. The Sec. 60 of the Insolvency and Bankruptcy Code, 2016 authorises Adjudicating Authority to decide: (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 of the corporate debtor or corporate person under this Code. We have heard the argument of the Ld. Counsel for the Resolution Profession and the Ld. Counsel for the Resolution Applicant and other Advocates representing other Financial Creditors and perused the record. Resolution Applicant has submitted a Minutes of 11th CoC meeting held on 15th December 2017. In the last part of the minutes it is stated that with no other items, the RP thanked all the CoC members and once again requesting all present CoC members that "CoC members should put extra efforts to seek approvals from their respective authorities, subject to Mr A.K. Lakhotia being declared eligible. This would help a company of the stature of MBL Infrastructures Ltd. survive and creat....
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....k potential Resolution Applicant." It is further stated in the Minutes that on the point of discussion on treatment of claim of RBL Bank, that: "The Resolution Professional noted that as per the process followed for the verification of claims, claim made by RBL was being treated as unsecured. The basis was the latest charge documents (found based on the search report) filed with the Registrar of Companies, where the name of RBL did not appear on the modified charge. RBL claim that post choosing to move out of the Consortium the modified charge filed with RoC was not brought to their information either by CD or the Consortium. RP expressed his inability to go back in history and make any changes or change his stand on what went amiss during earlier transactions between the RBL, CD and the Consortium lenders. To avoid any blame game between the various stakeholders, RP provided an opportunity to consider RBL as secured should all CoC members agree to allow the present charge to be perfected by the due procedure of the law, which was declined by all the CoC members. Finally, CoC directed RP to maintain the status quo (of treating RBL as unsecured) as this....
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.... it is clear that the Financial Creditor RBL has opted to move out of Consortium, which is evident from the modified charge filed with the RoC. It also appears that RP provided an opportunity to consider RBL as secured , subject to the approval of the CoC. But the CoC directed RP to maintain its status quo, i.e. of treating RBL as an unsecured creditor. It also appears that PNB, one of the CoC member also informed that in the capacity of lead lender in SPV, he would go ahead with the corporate guarantee, but RP advised that invocation of the Corporate guarantee of the Corporate Debtor shall be a violation of moratorium. It is undisputed that Corporate Guarantee has not been invoked and during the moratorium, the corporate guarantee cannot be invoked. RBL itself has chosen to move out of the Consortium, and the modified charge has been filed with RoC. Therefore, during the pendency of moratorium, the corporate guarantee cannot be invoked. It is undisputed that on November 23, 2017, IB Code was amended by the Ordinance and section 29A, which specifies ineligibility to submit a resolution plan, has been added. The statement and objective echoes in the Ordinance state that the....
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....may be those guarantors who have antecedents, which may adversely impact the credibility of the processes under the IB Code. The guarantors in respect of whom creditor has not invoked the Guarantee or made a demand under guarantee. Therefore, no default in the payment of dues by the guarantor has occurred, cannot be covered under clause (h) of Section 29A. It cannot be the intent of clause (h) to penalise those guarantors who have not been offered an opportunity to pay by calling upon them to pay the dues, by invoking the guarantee. Therefore, the words "enforceable guarantee" appearing in clause (h) are not to be understood by their ordinary meaning or in the context of enforceability of the guarantee as a legal and binding contract, but in the context of the objectives of IB Code and Ordinance in general and clause (h) in particular. Enforceable guarantee in context of clause (h) means and refers to such class of guarantors within the entire class of guarantors, who on account of their antecedents, may adversely impact the credibility of the processes under the IB Code. A contract of guarantee under which no claim has been made and which need not be performed cannot be treated....