TaxTMI 
TaxTMI 
2018 (6) TMI 853
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....eria, Adv. Ms. Sweta Kakkad Adv., Angad Baxi And Ms. Pallavi kumar For SBI hongKong : Mr. P Dinesh, Sr. Advocate, Mrs. Poonam Keswani, Adv. Mr. Dwipayan Ghosh Adv. And Ms. Neha Negar Alam, Adv. For Income-Tax Dept. : Mr. Shiv Chandra Prasad, Advocate ORDER Per Shri Jinan K.R. Member (J) By this common order we propose to dispose of 12 applications filed under sections 60(5), 30 and 31 of the Insolvency and Bankruptcy Code, 2016 as common questions arise for consideration and for avoiding repetition of facts and for convenience. 2. Briefly, stating the facts of the applications as follows:- CA(IB) No. 201/KB/2018, CA(IB) No. 234/KB/2018 and CA(IB) No. 245/KB/2018 3. All these applications were filed by one Braj Bhushan Das Binani, a promoter director of the Corporate Debtor on 20.02.2018 mainly raising serious challenge against the resolution process initiated at the instance of the Resolution Professional. CA(IB) No 234/KB/2018 was filed on 16.03.2018 alleging wrongful and illegal actions of RP and CoC and prays for issuing directions to allow him to participate in the CoC meeting. CA(IB) No. 245/KB2018 was filed on 16.03.2018 alleging violation of mas....
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....ssional to provide access to him and other board of directors of the Corporate Debtor to have full information in regard to all matters transacted in the CoC meeting and issue directions to provide copies of bids, resolution applications so as to enable him to express his views and to direct investigation of the expenses incurred as part of the CIRP and to set aside the CIRP process by removing the Resolution Professional. CA(IB) No. 210/KB/2018 5. This is an application filed by Ultratech Cement Limited under Section 60 (5) of the Insolvency and Bankruptcy Code 2016 contending that the evaluation criteria as applied were to result in more than one resolution applicant coming close in the scoring, it would stand to reason that to discharge the statutory mandate of maximizing the value of the assets, the parties can be made to participate in a transparent auction that can be conducted in hours, and even electronically. The applicant contends that it apprehended misappreciation of competition law, upon correction would lead to the Applicant having the highest score, or even with a score lower by a few decimal points, and if it transpires that the price quoted by the parti....
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.... on to hold the meeting without considering the orders passed by the Tribunals to seek directions to hold meeting in a fair and just manner. Despite so, the CoC and the RP proceeded ahead to hold the meeting and approve the bidder whose offer is much lower than the revised offer of the Applicant. (ii) Despite the pendency of the application and the matter being sub judice before the court of law went on to take contradictory positions but at the same time when asked to disclose the information which the RP and CoC didn't (iii) The RP and CoC acted directly acted in contrary to the object and purpose of IB Code which mandates maximization of value of the assets (iv) Such act of RP and CoC is most opaque and non-transparent, relevant information were kept secret from the applicant and till date the applicant has not been informed the evaluation criteria based on which the applicant was relegated to the rank of second highest bidder. (v) The RP is duty-bound to maintain checks and balances to conduct the CoC meet under the IB Code, the RP is duty-bound to point out the objectives and obligations under the law. The RP's confirmation vide lett....
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....plicant had proposed only 72.59% of its verified claim and arbitrarily gave a haircut of 27.41% of the legal and verified claim of the applicant. The applicant claims that the liquidation value payable to unsecured financial creditors is nil and upon subrogation would not be sufficient to recover amounts paid to the applicant. The Resolution applicant proposed to make 52% payment in the initial plan and 72.5% payment in the later plan. The applicant further contends that there is no concrete basis for such discrimination against the applicant at par with other financial creditors and the Resolution Plan is contrary to the scheme of the I&B Code 2016. The practice of allotment of claim raised serious doubts about the process and, therefore, the applicant filed this application seeking the above-mentioned directions. The applicant further contends that Ultratech Cement Limited also given revised proposal which is to be considered by the CoC and, therefore, the applicant is to be permitted to intervene in the Company Petition and prays for passing appropriate directions. CA(IB) No. 248/KB/2018. 11. This is an intervention application filed by Shri. Khemisatia Polysacks Pri....
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.... list there is no mentioning regarding the verification of claim pending with the Resolution Professional or not. Some of the claims of the applicant were reduced by the Resolution Professional without giving an opportunity to justify its claim that the steps taken by the Resolution Professional in regard to the verification of claim of Operational creditors is not legal and liable to be declared null and void. The applicants also contend that they are not allowed to participate in the CIR process and no attempt made on the side of the Resolution Professional in protecting and preserving the rights of the Operational Creditors. Upon the said contentions, the applicant prays for permitting them to intervene in the main application and alternatively prays for issuing directions to the Resolution Professionals for permitting them to participate in the CIR process and for providing necessary information regarding the claim verified and admitted by the Operational Creditors. CA(IB) No. 344/KB/2018 13. This is an application jointly filed by eight Operational Creditors challenging the uploading of the claim of the Operational Creditors by the Resolution Professional and as ag....
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....rovided under Section 12 of the Code. The initial period of 180 days of CIR process has been extended as per application submitted by the Resolution Professional at the instance of the CoC and the CIR process of extended period expired on 21st April, 2018. The Resolution Professional allegedly succeeds in his attempt in finding out a resolution applicant, Rajputana Properties Private Ltd. (in short, RPPL) in time before the expiry of the CIR process of the Corporate Debtor and submitted the Resolution Plan along with the application for the approval of the adjudicating authority. 17. A brief summary of the submissions of ld. Resolution Professional in the application is the following: 18. Resolution Professional issued public announcements by way of advertisement published in the Economic Times dated 13th October 2017 and invited prospective Resolution Applicants to put forward their Resolution Plans for the Corporate Debtor. He was in receipt of 65 potential resolution applications. Out of that 65 resolution applications, 27 resolution applicants expressed their interest to submit Resolution Plans also executed confidentiality undertakings. Thereafter, 12 resolution applican....
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....ration of unsecured debts of unsecured creditors as well as debts due to Operational Creditors. One another allegation levelled is that the entire claims of certain Operational Creditors were ignored by the resolution professional without assigning any reasons and that despite request for verification of their claims the Resolution Professional did not provide access to the finalization of claims admitted by the Resolution Professional. Since all those applications were filed challenging the resolution process and the manner of approval of Resolution Plan by the CoC, and since common questions arise for determination and for avoiding repetition of facts and for convenience all these applications are taken together. 21. The resolution professional filed reply affidavits in CA(IB) 210/KB/2018, CA(IB) 201/KB/2018, CA(IB) 234/KB/2018 and CA(IB) 248/KB/2018 contending in brief is the following:- 22. The Resolution Professional in CA(IB) 210/KB/2018 contends that the applicant is neither a corporate debtor, nor a director, or a financial/operational creditor and while dealing with the resolution plan, the Resolution professional had complied with the provisions of the Insolvency an....
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....arification with the process document dated 20.12.2017 which inter alia stipulated general and qualitative parameters and clearly indicated that CoC will negotiate only with Resolution Applicant which reveals highest score based on the evaluation criteria and whose Resolution Plan is in compliance with the requirements of IB Code as confirmed by the Resolution Professional. 24. Therefore, non-consideration of the revised offer of the Ultratech Cement Ltd. does not violate any of the provisions of the Code, Regulations or the evaluation matrix and unsuccessful applicants has no right to ask for the evaluation criteria on the basis of which the other Resolution Professionals have been ranked. The applicant has submitted a Resolution Plan on 12.02.2018 and thereafter submitted five other resolution applications. The evaluation was done as per the evaluation criteria issued by the CoCs. The Tribunal has no role under Section 31 of the Code to conduct evaluation of any Resolution Plan other than the Resolution Professional presented under Section 34 of the Code, 2016. The allegation levelled in the application never demonstrated that there has been any circumvention or violation of t....
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....wers and not denied any opportunity to the members of the board of directors to make their submissions as alleged. By denying all the allegations the RP prays for dismissal of the application. 26. The Resolution Professional in its reply affidavit in CA(IB) 248/KB/2018 contended that the application under sections 30 & 31 of the I&B Code, 2016 by the operational Creditor is not maintainable on the ground that the aggregate claim amount which is less than 10% of the debt and as such, the applicant(s) have no right of participation in the CoC meetings and the resolution plan which stands approved by the CoC and which included the applicant cannot be altered/modified to include the claims of the applicant. The Resolution Professional also contends that the claims received by the resolution professional from the applicants and they were informed about their claims. The Resolution Professional also contends that some of the operational creditors attended the 12th CoC meeting and the CoC heard the submission/contentions of the operational Creditors and that no promise or allegation were made by the Resolution professional as alleged or otherwise and it was agreed that the CoC will try....
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....uarantee can, therefore, put in action for considering alternative Resolution Plan. The Letter of Intent has been accepted by the R.2 and Performance Bank Guarantee has been submitted already. As per the process documents and as per CVC guidelines, post-tender negotiation are not to be held except with the H1, highest tenderer. Indian Banks' Association (IBA) has referred a few suggestions from Member Banks and the same was placed before IBA Managing Committee and IBA Managing Committee issued certain guidelines to the Banks who approached the National Company Law Tribunal for resolution and the process documents is based on IBA Circular. Therefore, the Resolution Applicant Ultratech Cement Ltd who has submitted its revised offer on 8.03.2018 is beyond the cut-off date for filing Resolution Plan in the bidding process and the same cannot be entertained based on the evaluation criteria. The Resolution Professional issued a clarification with the process document dated 20.12.2017 which inter alia stipulated general and qualitative parameters and clearly indicated that CoC will negotiate only that Resolution Applicant which reveals highest score based on the evaluation criteria an....
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....and thus is mala fide and ultravires the I&B Code, 2016; the CIRP and the CIRP Regulations. The respondent also contends that on February 12, 2018, all six Resolution Applicants including the applicant and the Respondent No. 2 submitted their revised Resolution Plans to the resolution professional to which the cut-off date of February 12, 2018 has been actively suppressed by the Applicant in CA bearing No. 210/2018. The respondent also contends that no jurisdiction of this Hon'ble Tribunal under section 31 of the I&B Code, 2016 to conduct evaluation of any resolution plan other than presented under section 30 (4) of the I&B Code, 2016. The respondent furthermore contended that the Respondent No. 1 has filed the said resolution plan with this Hon'ble Tribunal, therefore, neither could this so-called substantially revised offer of the applicant be entertained by the committee of creditors in its meeting dated March 14, 2018 nor can the Hon'ble Tribunal at this stage direct the Respondent No. 3 to consider or re-evaluate based on the substantially revised offer of the applicant. Upon the said contentions second respondent also prays for dismissal of all the applications an....
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....solution Professional is also in violation of Regulation 21(3) (a) of the IBBI (Insolvency and Resolution Process for Corporate Persons) Regulations 2016. No document attached to the notice for enabling the directors to participate in the meeting effectively. The Resolution Professional acted mala fide and in contravention of the provisions of the I&B Code. Therefore, he violates Section 24 of the Code as well as Regulation 21(3)(a) of the IBBI (Insolvency and Bankruptcy Regulations for Corporate Persons) Regulations 2016. 36. In order to appreciate as to whether there is any violation of section 24 of the Code and 21(3) of the Regulations it is good to read the relevant provisions. Section 24 24. (1)..................... (2)......................... (3) The resolution professional shall give notice of each meeting of the committee of creditors to- (a) members of Committee of creditors; (b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be, (c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent. of t....
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.... of the directors appeared in person and their representatives were asked to wait outside because certain sensitive issues regarding certain diversion of fund and fraudulent transfers of the fund of the corporate debtor were taken for discussion. The copies of minutes produced for our screening also shows that what the director alleged in his application in respect of asking his representative to go out from the meeting hall is found true. The submission that the directors never attended the meetings but their representative attended the meetings and therefore the allegations were alleged for the sake of allegations seems to have no force. The Code permit any person who can attend the CoC meetings can send his representative. According to the ld. Sr. Counsel for the RP corporate debtor has been involved in dubious transactions leading to conflict of interest and discussion in respect of the said transaction being dealt with confidentially the representatives of the directors were asked to wait outside. Since persons who are attending the meetings has to undertook confidentiality undertaking the said reason for exclusion of representatives of corporate debtor is found to have no leg....
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.... -do- Deloitte Pre-audit of expenses and dispatch monitoring 13 13 Rs.65.00 lakhs for 5 months (Rs.13.00 lakhs per month) Tuesday - 22/8/2017 Security Agency Checkmate Services Pvt. Ltd. For safety of the assets of the Corporate Debtor at Binanigram & Neem Ka Thana 13.58 13.58 Rs.67.9 lakhs for 5 months (Rs.13.58 lakhs per month) Tuesday - 22/8/2017 Holtech Valuer 31.5 31.5 PWC Valuer 40 40 Argus Partner CoC legal advisers 10K/hr per lawyer & Managing Partner Rs. 15l/hr involved since December 2017 10K/hr per lawyer & Managing Partner Rs. 15k/hr involved since December 2017 16/1/2018 8th CoC - Agenda 12 Holtech technical consultant (3 people) Plant operations & mktg 14.5 14.5 Alvares & Marshall Evaluation of bids 200 16/1/2018 8th CoC - Agenda 11 Luthra & Luthra - Legal Consultant Assistance with submission to the NCLT 11.5 11.5 Rs.57.5 lakhs for 5 months (Rs. 11.5 lakhs per month subject to cap of 100 ....
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....essional; (c) any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern; (d) any costs incurred at the expense of the Government to facilitate the insolvency resolution process; and (e) any other costs as may be specified by the Board; 28. As per 5(13) (a) any other costs as may be specified by the board. Now it is also specified as per the following Regulations in Sh. 1 of IBBI (Insolvency Professionals) Regulations, 2016. 25. An insolvency professional must provide services for remuneration which is charged in a transparent manner, is a reasonable reflection of the work necessarily and properly undertaken, and is not inconsistent with the applicable regulations. 26. An insolvency professional shall not accept any fees or charges other than those which are disclosed to and approved by the persons fixing his remuneration. 27. An insolvency professional shall disclose all costs towards the insolvency resolution process costs, liquidation costs, or costs of the bankruptcy process, as applicable, to all relevant stakeholders, and must endeavour to ensure that such ....
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.... and workmen were not responsive to provide information and to ascertain the correctness of the information he appointed them. The above said discussions leads to a conclusion that ld. RP not taken any care to ensure that such resolution costs are not unreasonable as per Regulation 27 referred to above. So also not strictly followed Reg. 21(3) of IBBI(IRP for Corporate Persons) Regulations, 2016 in respect of issuing notice of meetings and in violation of the circular outsourced most of his works to his interested persons. This point is answered accordingly. Point No ii. 43. Ultra Tech Cement Limited a resolution applicant who has submitted its resolution plan for participating in the bidding process rushed to this Tribunal with three applications, CA (IB) 210/KB/2018, CA(IB) 227/KB/2018 and CA(IB) 233/KB/2018. The very challenge of applicant in CA(IB) No. 210/KB/2018 is that the evaluation criteria as applied were to result in more than one resolution applicant coming close in scoring is not permitted to participating in the bidding process amount to violation of the mandate of maximizing the value. ld. Sr. Counsel appearing for the applicant submits that the resolutio....
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....solution Process of the Corporate Debtor. The said contention seems to be not worthwhile. CA(IB) No. 210/KB/2018 was filed by the resolution applicant Ultra Tech Cement Limited on 06.03.2018. It has come out in the evidence that even after 06.03.2018 negotiation has been undertaken in respect of H1 resolution applicant and the H1 resolution applicant revised its offer on 07.03.2018 and submitted a revised resolution plan. That plan was approved by the CoC in the meeting held on 14.03.2018 despite pendency of the said CA as well as one another CA(IB) 227/KB/2018. Moreover, it has come out in evidence that Ultra Tech revised offer is much more the bid amount approved by the CoC in the resolution applicant's plan under challenge. Then how can it be viewed that Ultra Tech attempt is to see that the corporate debtor is to push to liquidation? 47. According to the ld. Sr. Counsel Mr. Mukul Rohatgi for the applicant what the applicant submitted is a substantially revised bid offer on 8th March 2018 and the Resolution Professional did not consider the revised offer and thereby caused great prejudice to the applicant. Pending the CA(IB) No. 210/KB/2018, the resolution applicant filed....
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....t offer because none of the provisions of the Code permit us to accept the bid offer made by the Id. Sr. Counsel for the applicant. 50. The ld. Sr. Counsel Mr. S.K. Kapur for RPPL repudiated the submissions advanced by ld. Sr. Counsel for the Ultra Tech, submitted that there is no merit in the arguments advanced on the side of the Ultra Tech and referred the evaluation scoring given to the resolution applicants. According to him as per the clarifications, qualitative parameters 4/6 the Ultra Tech applicant did not produce proof to prove that no adverse regulatory order has been passed against it by any regulatory authority within the last 5 years and thereby scored less 1 marks than that of the H1 applicant and that the bid amount is less than that of the H1 applicant and therefore there is no irregularity or arbitrariness in classifying Ultra Tech below the rank given to H1 applicant. 51. In reply to the said submission, ld. Sr. Counsel for the applicant submits that it has got Competition commission of India (CCI) approval and that the order of CCI refereed to in the scoring was stayed and therefore said classification doesn't arise at the time of submission of revised ....
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....valuation criteria and in the process document? We will answer it later. 53. In denying the request of the Ultra Tech request to reconsider its revised offer the ld. Sr. Counsel Mr. Abhrajit Mitra appearing for the RP submits that upon the following objections the CoC decided not to consider the revised offer of Ultra Tech. The objections as given in his reply affidavit read as follows: (i) That the revised offer was sent by way of merely an e-mail; (ii) (ii) That the offer was not made in accordance with the process documents and to consider it would be a deviation of the process laid down in the process document by the CoC. (iii) That the offer was beyond the time stipulated under the IBC 54. None of the above objections are substantive objections which can be raised in a case of this nature where the RP as well as CoC is duty-bound to ensure maximization of value within the time frame prescribed by the code. Such an object in finding out a bidder who can offer maximum bid amount so as to safeguard the interest of all stakeholders of the corporate debtor is lacking in the case in hand from the side of the RP as well as from the side of the CoC. Th....
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....st of all stakeholders then no doubt he is duty-bound to accept the offer and to be placed before the CoC or he would have convened a meeting for consideration of revised offer because on 8.03.2018 CIRP period never ends and there is sufficient time left to convene a special meeting of CoC. It is also significant to note here that EXIM bank demands for convening a meeting for taking a decision about the revised offer of UltraTech. In the light of the said discussion, we have no hesitation in holding that non-consideration of revised offer by the RP because it was sent by e-mail violate the object of the Code and absence of taking an independent decision in this regard by RP is in violation of Regulations. 56. Coming to the second objection in not considering the revised offer of the applicant that the offer was not made in accordance with the process document and to consider it would be a deviation of the process laid down in the process document by the CoC does not inspire our confidence. The resolution plan by the applicant has been submitted in time and admittedly all the resolution applicants were given liberty to rectify certain errors in order to come within the purview of....
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....the other hand he sent an email in reply on 13.03.2018 to the e-mail dated 08.03.2018 of Ultra Tech that when its plan would takes for consideration he will be called for. Even thereafter Ultra Tech did not receive any invitation hence it filed the CA. It is in the said background let us see any merit in the second objection submitted by the ld. Counsel for the RP. 58. The reason that the process document does not permit the resolution professional and the CoC in considering the revised offer of the applicant have no legal force at all. Even if the process document restricts CoC and the Resolution Professional which has been made by the CoC for their own convenience and for guidelines to the resolution applicant as well as to the Resolution Professional that is not a ground to deny a participant right in participating in the bidding process. Even if it is a document give rise certain guidelines it may not supersedes the provisions of the code and regulations. The process document referred to us even if considered as a valid document it does not entirely restrict the CoC from reconsidering a resolution plan which according to it not ranked first. There is no provisions in the Pro....
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....by the Resolution Applicants prior to the Resolution Plan Submission Date." 62. Truly, the said clause permit its maker to amend prior to the submission of resolution plan. It is good to have a look at certain other clauses of Process Document. Clause 1.6.1 provides that the CoC have right to accept or reject in or all plans prior to approval of the same by the Adjudicating Authority. A reading of clause 1.6.1 it cannot be held that the CoC's hand is fettered so as to avoid a resolution applicants plan from revising its offers only because it was ranked below H1 applicant. It can accept or reject any plan at any time before the approval of the plan submitted to the adjudicating authority. It is also good to read clause 1.6.2(a) in the process document . It reads as follows: 1.6.2 (a) On receipt of a Resolution Plan submitted by a Resolution Applicant, the Resolution Professional shall review the same for compliance under the IB Code in consultation with his legal advisors and have deliberations with the CoC in relation to the same. Where Resolution Applicant(s) are found to have submitted a Resolution Plan which is not a Compliant Resolution Plan, that is, one which....
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....mplete. Such a right of an investor cannot be restricted by way of framing guidelines by a CoC like the guideline in the case in hand argued by the ld Counsel for the applicant. The above cited order was passed by the Hon'ble NCLT PB in a case fairly similar to this case. The Hon'ble Principal Bench has held that: "The Resolution Plan with Liberty House shall not be rejected on the ground of delay emanating from process document or any other document entirely circulated by the Resolution Professional or the CoC. The rejection shall be on substantive ground as against flimsy work." 65. This proposition is squarely applicable in the case in hand. One among the three objections of the RP is that consideration of the revised proposal would be a deviation of the process document. Such a decision is not at all legally sustainable as held in the above cited decision. The said ground for non-consideration is not a substantive ground but is a flimsy ground. Much argued by the ld. Sr. Counsel for the H1 bidder and CoC that process document deviation by the CoC may call for litigation and to avoid the possibility of complaint and for upholding its transparency the process ....
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....tors and one of the resolution applicant. Why like interruptions comes? What legal standard should be followed by an insolvency professional is laid down in the Code and Regulations. A resolution professional must follow it. Without following it, a guideline prescribed on the basis of CVC and IBA is followed by the RP in disregards to the provisions of the code and Regulations. None of these applications could have filed by them provided RP and the CoC taken care in following the process as mandated under the Code. The RP forget his fiduciary duty owed by the lenders to stakeholders without any discrimination. His name as an RP is proposed by the applicant in the CP who is a lender. Can he is loyal to the lenders because of his name was proposed by a lender? Here in this case the RP not taken any independent decision of his own before placing the plans before the CoC. It cannot be ruled out that there is undue influence over him by the lenders who has larger voting share. 68. The very object of the Code is on revival and rehabilitation of the Corporate Debtor who is sinking for reason of non-payment of dues in time. The object of the Code is not to liquidate the business of the ....
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....hat plan is not at all placed before the Adjudicating Authority for approval and if another resolution applicant comes forward making an offer before the CIRP duration expires, that it will satisfy all the stakeholders of the Corporate Debtor, then there is nothing in the Code or Regulations to prevent the CoC from considering a revised offer of another applicant. It is significant to note that on 14.03.2018 when the Ultra Techs application came up for consideration before this Adjudicating Authority the CoC passed the disputed resolution plan disregards to the outcome of the application. 71. In this regard, it is also good to look into the minutes of the CoC in the meeting held on 14.03.2018. Some of the financial creditors, namely, EXIM Bank, Canara Bank as well as SBI Hong Kong requested the CoC to consider the revised offer of Ultra Tech received by all of its members of the CoC by email dated 08.03.2018. Though their request has been discussed in detail, no decision regarding the rejection or reconsideration of the application of the Resolution Applicant, Ultra Tech had been taken out. The Canara Bank stated before the CoC that if money is coming high, one must try. The rep....
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....application was filed on 14.03.2018, immediately before the approval of the plan. 74. Similarly, EXIM bank filed CA(IB) No.249/KB/18 alleging discrimination among the financial creditors. According to the ld. Counsel for the EXIM Bank the Resolution Plan proposes only 72.59% of its verified claim and arbitrarily gave a haircut of 27.41% of the legal and verified claim of the applicant. The 'applicant claims that the liquidation value payable to unsecured financial creditors is nil and upon subrogation would not be sufficient to recover amounts paid to the applicant. The Resolution applicant proposed to make 52% payment in the initial plan and 72.5% payment in the later plan. The applicant further contends that there is no concrete basis for such discrimination against the applicant at par with other financial creditors and the Resolution Plan is contrary to the scheme of the I&B Code 2016. According to the ld. Counsel the practice of allotment of claim raised serious doubts about the process and, therefore, the applicant filed this application seeking directions. According to ld. Counsel the Ultratech Cement Limited also given revised proposal which may satisfy all the stake....
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....order was challenged by the IDBI before the Hon'ble NCLAT but later it was withdrawn. Vide order dated 08.03.2018 Hon'ble NCLAT in CA(AT)(ins) No.313 of 2017 allowed the appellant to withdraw the appeal but without any liberty to challenge the same very impugned order. The said withdrawal order was on 08.03.2018. At this juncture, ld. Counsel for the EXIM Bank cited a decision of Hon'ble Supreme Court in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association [1992] 3 SCC 1 Cinod Secretariat, Madras for highlighting an argument that when an appeal challenging an order is withdrawn recoding that right of appellant in raising the very same challenge against the impugned order is barred, its effect is restoration of the order under 'challenge and this Adjudicating Authority's order become in force as if there is no challenge. It is good to read the following observation in the above cited decision. It read as follows:- "While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in ....
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....entire claim on a condition that IDBI gave consents to the resolution plan of RPPL. It leads doubts in regards undue influence of majority lenders who has majority of votes share requiring to cast vote so as to have minimum vote share to pass a resolution as per section 30(4) of the Code. Any resolution applicant who can satisfy the claim of EARC and IDBI can get an approval of its plan by a majority of votes share is a fact brought to our notice and no consideration of very similar financial creditors at par with IDBI add strength to the submission of the ld. Counsel for the above referred Banks that practice of allotment of claim is not based on any concrete basis or norms. So no doubt it amount to discrimination against the above refereed two banks. In the above said view we find some force in the argument advanced on the side of the Banks and satisfied that the plan under dispute requires modification. This point is answered accordingly. Point No. V 78. By filing CA(IB) No. 248/KB/18, eight(8) operational creditors jointly challenged the plan alleging that their claim was totally ignored by the RP and no attempt was made from the side of the RP to provide proportionate be....
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....n the application were in receipt of any of the demands from the Resolution Professional so as to submit proof of any claim. According to him, proof of claim already submitted to the Resolution Professional and, therefore, the contention on behalf of the Resolution Professional has no force at all. According to ld. Sr. Counsel for the R.P., all the admitted claims of Operational Creditors were considered by the Resolution Professional. However, on a reference to the resolution plan the clarifications submitted on the side of the Resolution Professional seems to be not true. However, the ld. Sr. Counsel appearing for the RPPL, the resolution applicant submits that the resolution applicant has been furnished data regarding admitted verified amount of 2,980 Operational Creditors and that 2941 operational creditors whose dues have been verified by the Resolution Professional not exceeds Rupees One Crore is offered 100% payment and those Operational Creditors' dues varied from Rs. 1 crore to Rs. 5 crores offered maximum 40% of verified amount of Rs. 1 crore and operational creditors, whose dues exceeded Rs. 5 crores and less than Rs. 10 crores maximum 25% of verified amount of Rs. 2....
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....manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under section 53. 79. The above provision must be read along with Reg. 37(1) and 38(1) (b) of IBBI(IRP for Corporate Persons) Regulations,2016. Reg. 37(1)(f) provides reduction in the amount payable to the creditors". 38(1)(b) says "liquidation value due to operational creditors and provide for such payments in priority to my financial creditor which shall in any event be made before the expiry of 30 days after the approval of a resolution plan by the Adjudicating Authority". 80. Thus RP is bound to see that all these requirements meets by a resolution applicant before the plan is placed before the CoC. It is good to read Reg. 39(2). it read as follows: (2) The resolution professional shall present all resolution plans that meet the requirements of the code and these Regulations to the committee for its consideration. 81. A reading of above referred provision shows that a resolution plan can be accepted even if there is reduction in the amount payable to the creditors. It is significant to not....
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....r the approval. A copy of the claim submitted to the RP also brought to our notice. It indicates that total outstanding claim of the Dy. Commissioner of Income tax is INR 33,37,18,692.00. Id. Sr. Counsel for the RP by referring to the resolution plan submits that out of the said total claim undisputed amount of Rs. 240635112/- is admitted by the RP and that amount is included in the plan for clearance. According to the ld. Sr. Counsel for the RP the remaining amount is disputed and an appeal is pending before the appellate authority and it is why the entire claim is not included. So it appears to us that statutory dues due to the Dy. Commissioner of Income Tax seen taken care of by RP. 83. To sum up, we find the following proved factors:- The representatives of suspended board of directors were not allowed to attend some of the meetings where issues regarding the corporate debtor was discussed. Though as per the directions from NCLAT and this Bench directors were permitted to attend the meeting under section 24(3) of the code, they were not permitted to attend the meeting till the meeting is completed. RP also violated section 21(3) of the code. In regards resolution cost it app....
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....able or an illegal scheme or is otherwise unfair or unjust to the class of shareholder or creditors for whom it is meant. Consequently it cannot be said that a Company Court before whom an application is moved for sanctioning such a scheme which might have got the requisite majority support of the creditors or members or any class of them for whom the scheme is mooted by the concerned company has to act merely as a rubber stamp and must almost automatically put its seal of approval on such a scheme. It is trite to say that once the scheme gets sanctioned by the Court it would bind even the dissenting minority shareholders or creditors. Therefore, the fairness of the scheme qua them also has to be kept in view by the Company Court while putting its seal of approval on the concerned scheme placed for its sanction". 85. The above said proposition is squirely applicable in the case in hand. Approval of the plan of RPPL doesn't satisfy larger claim of operational creditors and not satisfy some of the unsecured financial creditors claim. On the other hand the revised offer of Ultra Tech if approved by the CoC it would satisfy the claim of all the stakeholders. For the said reason ....
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....ngth. The preamble of the Code ensure a speedy disposal of a resolution in a time bound manner for maximisation of value of assets of a corporate debtor like the debtor in the case in hand. So also it ensure balancing the interest of all the stakeholders and order of priority of payment of Government dues. The adjudicating Authority is facing too much interruptions from various stakeholders. Till date we never come across any frivolous applications. All comes with some genuine grievance. All challenges the independence of the resolution professional and lack of transparency, competency and arbitrariness in the matter of resolution process. In the case in hand 12 applicants come forward challenging the process only for not following the process mandated under the Code by the resolution professional. The arbitrary way of dealing with the cases has always led to interruptions and also causes delay in disposal of like case. Here, in this case the resolution professional is a chartered account by profession. However he failed to take business decisions so as to run the corporate debtor by his own. He managed to run the company by appointing about 22 representative who are from his own p....
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....ication is found necessary and to take appropriate decision bear in mind the object of the Code. (iv) The CoC is also directed to reconsider the resolution plan of RPPL, if the resolution applicant is willing to raise the offer above the offer of Ultra Tech to be placed before it by the RP along with the resolution plan of Ultra Tech. It is made clear that if both resolution applicants if willing to participate in the bidding process CoC is expected to allow both resolution applicants in the bidding process and which is best for revival of the corporate debtor is to be decided by the CoC. (v) RP is also directed to comply the provisions of the Code and regulations in submitting the revised offer before CoC and in issuing notice to the director of the suspended board of the corporate debtor and notice also is to be issued one among the operational creditor who filed the above referred application as a representative if the requirement of section 24 (3)(c) of the Code is satisfied. 2. Since we are inclined to allow the above applications, we are dismissing CA(IB) No. 245/KB/2018 filed by the director praying for issuing injunction restraining EARC from making any....
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....impleadment of Committee of Creditors as party respondent. In order to enable the Committee of Creditors to present before this Tribunal the true facts and circumstances in the instant matter in respect of the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. The applicant contends that none of the parties in the main application will be prejudicially affected if direction for impleadment as sought by the CoC are allowed. Upon the said contentions it prays for impleading the CoC members as an additional respondent to the CP (IB) No.359/KB/2017. We have given ample opportunity to the ld. Counsel appearing for EARC and the CoC for submission of their arguments in respect of hearing of all the CAs and considered their arguments. Accordingly, this CA for impleading them so as to contest the CAs doesn't arise. Therefore, this CA is dismissed. However, no order as to cost. CA (IB) No.244/KB/2018 This is an application filed by Mrs. Visalakshmi Sridhar the Company Secretary of the applicant/Binani Industries Limited under Sub-Section 5 of Section 60 of I&B Code, 2016 read with Rule 11 of the NCLT Rules, 2016 challenging the resolution process initiating at ....