TaxTMI 
TaxTMI 
2018 (6) TMI 853
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....ad 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 master restructuring agreement by EARC and prays for issuing ....
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....s 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 parties in the forefront have a very narrow gap, it should only follow th....
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....ctions 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 letter dated 13.04.2018 giving an assurance to the applicant to consider their application for the bidding process is vitia....
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....plicant. 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 Private Limited and seven others under Sub-Section 5 (a) of Section 60 of the I&B Code challenging the resolution process initiated by the Resolutio....
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....e 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 against the non-verification of the claim of the Operational Creditors. The applicant contends that the final verified list admitting/rejecting the claim of the Op....
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....ance 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 applicants turned up further in conducting inspection of the plants of the Corporate Debtor and thereafter on 15.01.2018 the Resolution Professional received six Resolution Plans. 19. ....
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....itors 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 and Bankruptcy Code, 2016, therefore, the grievances raised by the applicant by way of the application under reply is not maintainable and also the applicant has no locus standi under the....
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....plicant 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 the provisions of the Code of the Regulations in declaring the H1 Resolution Applicant as the highest bidder. The CoC has decided that it would not consider the revised bid made by the appli....
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..... 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 to ensure maximum payment of the past dues. None of the applications put forward by the Applicants are worth consideration and it is liable to be dismissed in limine. 27. RPPL the resolution ....
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.... 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 and whose Resolution Plan is in compliance with the requirements of IB Code as confirmed by the Resolution Professional. 30. The Applicant has no right under the IBC to attend the meeting of CoC which....
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.... 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 and to approve the resolution plan submitted before the Adjudicating Authority. 33. Heard the ld. Sr. Counsel appearing for all the parties at length and perused the documents and various citations relied u....
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....eeting 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 the debt. (4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of committee of creditors, but shall not have any right to vote in such meetings: Provided that the absence of any such direct or, partner or....
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....n 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 legal force. In respect of issuing notice without agenda also, no valid explanation was offered from the side of RP. The above said conduct in managing the process of resolution of a corporate debtor is unfair. No doubt, it amounts to violation of the mandate of the Code and Regulations and violate the right of hearing especially when issues regarding the aff....
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....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 hrs) Tuesday - 22/8/2017 - Agenda Hari Bhakti Forensic 17 17 Onetime 17/11/17 - 5th CoC - Agenda 8 RP facilitator Deloitte TTILLP 240 240 4/10/2017 - 4th CoC Agenda 4 641.08 480.73 87.58 40. The ld. Sr. Counsel for the applicant submits that the RP contravenes he provisions of the Code violated code of conduct and the regulations in respect of continuing the process efficiently with utmost transparency. According to him expenditure in continuing the process is unreasonable and....
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....eflection 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 costs are not unreasonable. 41. It is also good to read Sub. reg. 7 of Sh. 1 of IBBI (insolvency professionals) Regulations. It reads as follows:- An insolvency professional shall not take up an assignment under the Code if he, any of his relatives, any of the partners or directors of the insolvency professional entity of which he is a partner or director, or the insolvency professional entity of which he is a partner or director is not independent, in terms of the Regulations related to the processes under the Code, in relation to the corporate person/debtor and its related parties. 42. Thus, a reading of above referred regulations no doubt it cautioned the reso....
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....ing 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 resolution plan of Ultra Tech Cement Limited not considered by the RP and reason for non-consideration of the plan not communicated to the applicant. According to him shortlisting of the resolution plan was done not in the presence of the applicant and an opportunity of hearing the applicants objection regarding ranking the resolution applicant as not H1 was denied. He also submits that entire procedure adopted in ranking the resolution applicants is vitiated and is in violation of the provisions of the Code as well as the regulation and as against the scheme of the Code. 44. By filing CA(IB) No. 277/KB/2018, the very same applicant challenged non-consideration of its revised offer submitted by....
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....n 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 CA(IB) No. 227/KB/2018 challenging non-consideration of the revised offer which has been filed 43 days before the date of expiry of the CIRP and filed CA(IB) No. 233/KB/2018 on 16.03.2018 for setting aside the decision of the CoC. Serious contentions also raised that the Resolution Professional acted unfairly, arbitrarily and against the interest of the applicants who is otherwise found eligible as a competing bidder but, however, it was ranked not as a H1 resolution applicant for the reason not brought to its notice that too without hearing the resolution applicant. 48. The ld. Sr. Counsel reiterated that the Ultra Tech was not classified as H1 Resolution applicant because of misappreciation....
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.... 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 offer. Admittedly at the time of classification of resolution applicants application as not H1 on 27.02.2018 an adverse order of regulatory authority was in force. So also bid amount offered by the Ultra Tech in the resolution plan is lesser than that of the H1 applicant offer. Truly, following the evaluation criteria already published the classification of Ultra Tech as not H1 on 27.02.2018 cannot be considered as irregular or arbitrary as alleged. Admittedly, the said regulatory authority's order not at all a disqualification of a resolution applicant under section 29A of the Code. 52. The question is whether an adverse decision can be taken by the CoC as against an applicant who has submitted a....
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....one 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. The first objection for non-consideration of revised offer is because it was offered through an e-mail. Mode of submission of revised offer by way of e-mail not at all prohibited by the Code, Regulations and the Rules. According to the ld. Counsel for RPPL the email offer is made not under section 25(2) (h) of the Code. S.25(2) (h) provide provision for inviting prospective lenders, investors, and any other persons to put forward resolution plan. Submission of revised offer is in continuation of the resolution plan already submitted and accepted by the RP. Admittedly, as per invitation called for the Ultra Tech submitted revised resolution plan on 12.02.2018 that is within time. So can a revised offer subsequent to submission of a....
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.... 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 the provisions of the Code and Regulations. It is thereafter the CoC considered all the resolution plans of the resolution applicants at a meeting held on 23rd February, 2018 and in that meeting, truly, all the resolution applicants were called for discussion. But admittedly, no decision regarding the acceptance or non-acceptance of any of the resolution applications plan was considered. The selection of the resolution applicant was done in the meeting held on 27.02.2018. It is in that meeting, the CoC admittedly declared the Rajputana Properties Private Ltd.'s (RPPL) application as the H1 plan and decided not to consider the Ultra Tech resolution plan and intimated the resolution applicant that its resolution plan is not H1 pl....
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....olution 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 Process Document or in the clarification matrix that its makers cannot amend it if necessity arises. 59. The clarification matrix is fixed based on the terms in the process documents. The preface of the Clarifications to Resolution Applicants read as follows:- 1. This document is being issued to provide certain clarifications on the illustrative list of parameters set out in Annexure 1 to the Process Document dated December 20, 2017 ("Process Document") that may be considered for the purpose of evaluation of the Compliant Resolution Plan submitted by the Resolution Application ("RA"). Please note that the clarifications mentioned herein are not meant to be exhaustive. The CoC reserves the right, in its sole discretion, to provide furthe....
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....eads 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 does not meet the provisions of the IB Code or the CIRP Regulations, the Resolution Professional may request the Resolution Applicant(s) to remedy the deficiencies in the Resolution Plan submitted, and submit a Revised Resolution Plan. The Revised Resolution Plan shall be reviewed by the Resolution Professional in consultation with his advisors for ensuring compliance with the IB Code and the aforesaid process would be repeated. If any Revised Resolution Plan is found to be a Compliant Resolution Plan, by the Resolution Professional, the same shall be submitted to the CoC for its consideration. 63. On a careful reading of the above said clauses, what we understood is that all the resolution plans which meets the requirements of section 30(2) of the Code shall be placed ....
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.... 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 document was framed. We do not find any merit in the said submission upon the reason already led in. In view of the abovesaid discussion we also hold that the second objection for non-consideration of revised offer is devoid of any merit. 66. The third objection is that the revised offer was beyond the time as stipulated by the IBC. It appears to us that this objection is also devoid of any merits. As referred to above, the CIR process when the applicant submitted revised offer, never expired so also the Resolution Plan originally submitted by the applicant was in time. No provision in the Code or Regulation restrict the Resolution Professional or the CoC from accepting the revised offer in addition to the offer already offered by a resolution applicant. Admittedly the revised offer ....
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....aken 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 Corporate Debtor. What we expected from the Resolution Professional and also from CoC is fair and transparent process in finding out a bidder who can satisfy all the claims of the lenders and operational creditors in a transparent manner without giving a chance to interrupt the process by affected parties. The CoC consists of financial creditors. When majority of its members like EARC and IDBI get benefit of clearance of their entire debt without haircut they are prompted to neglect minority unsecured financial creditors whose claim is accepted with haircut exceeding 50% and larger number of operational creditors would get nothing. RP or nobody else bargained for them. Though one of the representatives of the operational creditors is entitled to attend in the meeting of CoC that right was a....
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....e 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 representative of the Canara Bank further stated that process is not that important that outcome has been forgotten. If there is a value addition by INR 700 crores, (vide revised offer the Ultra Tech offered INR 700 crores in addition to the offer already made in its plan and that offer was subsequently revised to INR.1021.70 crores) definitely a thought should be made over it. EXIM Bank representative stated in the meeting that it is not necessary to be bound by the process document. There is world beyond that. He further stated that if we inform H1 that their plan would be considered without an increase, then there is no need to revise the offer. Similarly, EXIM Bank reiterated that in the correct spirit of IBC maximum recovery is to be made when the asset has the potential to generate that and th....
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....her 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 stakeholders but the CoC did not consider its request to negotiate with the Ultra Tech and since if it vote it would be an economical loss to the Bank and hence opted for vote fearing descenting creditors would get nil as per the Code. 75. Both Banks are corporate guarantees beneficiaries. Admittedly, Corporate Debtor not invoked the guarantees held by SBI and IDBI. According to the ld. Counsel, Mr. P. V. Dinesh for SBI Hong Kong and ld. Counsel Mr. Krishnaraj Thaker for EXIM Bank, IDBI is similar to SBI Hong Kong but the plan proposes 100% of its verified claim and therefore it is discriminatory and considered equals as unequal which cannot be permissible under the Code. It is significant to note here an order of this Bench dated 17.11.2017 passed in CA(IB) No.505/KB/18 filed by RP for clarification in res....
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....n 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 the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence". 77. Ld Sr. Counsel for R.P. at this juncture referred to the interim order of Hon'ble NCLAT in the above referred appeal. It reads as follows: "In the meantime, Interim Resolution Professional will consider the claim of the appellant uninfluenced by the order, if any, passed by the Adjudicating Authority Principal Bench New Delhi Which shall be subject to the decision of the appeal". He submits that in view of the interim order the RP has decided t....
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.... 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 benefit to the operational creditors. According to the ld. Counsel, Mr. Jishnu Chowdhury restructuring of the debt as per the plan only passes the benefit to the financial creditors and therefore no equitable consideration in respect of all the claims of all the stakeholders and therefore the plan is liable to be rejected. Another five Operational Creditors jointly filed CA(IB) No.343/KB/2018 and eight Operational Creditors jointly filed CA (IB) No.344/KB/2018 raising very same allegations. The Operational Creditors who filed CA(IB) No.248/KB/2018 alleged that their claims not at all fully admitted by the Resolution Professional for the reason that the verification of claim of Operational Creditors is pending with him. According to the ld. Counsel appearing for the Operational Creditors. the inaction on the side of the Resolution Prof....
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....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 crores are offered and that those dues exceeding an amount of more than Rs. 10 crores, maximum 5% of value of Rs. 2.5 crores are proposed. As per the plan, the total verified amounts of Operational Creditors not exceeding Rs. 1 crore comes to 2,941 operational creditors. Those dues is less than Rs. 5 crores and higher than Rs. 1 crore is only 24 Operational Creditors and there is only 5 Operational Creditors whose verified claim is in excess of Rs. 5 crores but less than Rs. 10 crores and there is only 10 Operational Creditors whose claim exceeds Rs. 10 crores. The total number of Operational Creditors found verified come to 2,980 and the total verified amount come to Rs. 429 crores. Admittedly, the total number of Operational Creditors exceeds 3,600. According to the ld. Counsel for the RP the total operational creditors including....
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....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 note that the said reduction is in general applicable to all class of creditors. So reduction in regarding restructuring of debt is applicable to financial creditors, unsecured creditors and operational creditors too. There is no distinction as per the code or Regulations. No doubt no financial creditor takes a haircut on his entitlement to realise the amount he claimed. Here in this case one unsecured creditors was given a haircut up to 90% another given 27% haircut and one another given no haircut. In the case of operational creditors whose claims not go beyond one crore is offered no haircut, operational creditors whose dues vary form 1 crore to 5 crores given a haircut of 40% or 1 crore which ever is higher. Similarly operational creditors dues very from 5 Crores to 10 crores 25% of 2 crores and if it exceeds 10 crores 5% of 2.5 crores. The abo....
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....ues 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 appears to us that Reg. 25 of Sh.1 of IBBI (Insolvency Professionals) Regulations, 2016 is violated. So also Reg.27 is not strictly followed. No effort seems to have taken by the RP so as to ensure that the resolution costs are not unreasonable. Non-consideration of revised offer is found without assigning substantive reasons and refusal to consider it is found on flimsy grounds on the strength of Process Documents and timeline fixed in evaluation criteria. The entire decisions of RP as well as CoC in respect of identifying one resolution plan from among six plans and denying opportunity to have negotiation so as to raise the bid amount by the willing bidders other than H1 bidder is found vitiated that they have acted against the objective of the code and against the interest of various stakeholders of the corporate debtor and also acted unfairly, arbi....
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....pplicable 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 also we are not bound to approve a resolution plan when we are satisfied upon relevant material regarding availability of a better resolution if RP is directed to have reconsideration of both plans under dispute. Interest of justice no doubt demand reconsideration of the resolution plans. For the afore said view we are inclined to allow the applications CA(IB)No. 233/KB/2018 and CA(IB) No.227/KB/2018 along with CA(IB)No.210/KB/2018 by excluding the duration of litigation from the date of filing of CA(IB) No. 227/KB/2018 till date of today. CIRP period of 270 days expired on 21.04.2018. In Quantum Limited V. Indus Finance Corporation Limited, CA(AT) (Insolvency) No.35/2015 dated 20.02.2018 the Hon'ble NCLAT by setting aside the order of Mumbai Bench of NCLT has held that "For the aforesaid reasons, we set aside the impugned order dated 18th December, 2017 a....
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....terruptions 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 partnership. Truly running an insolvent company pending exploration of a resolution process by him alone is not an easy task. A resolution professional like the RP in a case of this nature need some basic training in regards handling the resolution independently, efficiently so as to tackle with the multiple question may arises for consideration form different stakeholders in the courses of resolution. Whenever a question arise even if answerable by the RP independently or with advice from his advisors he comes to Adjudicating Authority for having determination so that he is not exercising his own effort to see that all the questions posed to him during the process is answered justifiably. He shift that burden too to the Adjudicating Authority. So also in a case of this nature nobody taking care of operational creditors claim. At least minimum amount as required ....
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....d 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 claim in excess of Rs. 2594.24 crores on the strength of master restructuring agreement evidently recalled by the EARC as it is also not maintainable. 3. CA(IB) No. 246/KB/2018 is dismissed. 4. In view of directing reconsideration of resolution plans by RP, no further directions is to be issued in the following CA(IB) 201/KB/2018; CA(IB) No. 234/KB/2018; CA(IB) No. 223/KB/2018; CA(IB) No.248/KB/2018; CA(IB) No. 249/KB/2018; CA(IB) No.343/KB/2018 and CA(IB) No.344/KB/2018 and these CAs are disposed as above. 5. Certified copy of the order may be issued, if applied for, upon compliance with all requisite formalities. 6. Urgent Photostat and/or certified copy of this order, if applied for, be supplied to the parties, subject to compliance with all requisite formalities. The registry is directed to forward a copy of this order to IBBI List it on 4th June, 2018 for filing progress report. 02-05-2018 ....
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....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 the instance of the Resolution Professional and the CoC. The applicant challenged that the Directors of the CoC has not been given proper access to the CoC meeting so as to avoid him in respect of taking any crucial decision affecting the Corporate Debtor. She alleges serious irregularities allegedly committed by the Resolution Professional regarding constitution of the CoC and particularly inclusion of IDBI Bank Limited and inclusion of SBI Hong Kong Branch and contends that both these banks are disentitled to be part of CoC. Despite directions given by the Hon'ble NCLAT, the Committee of Creditors continued its meeting not in terms of the Code and Regulations and not in accordance with the directions of the order passed by the Hon'ble NCLAT, that the entire process has been carried out in most arbitrary and non-transparent manner. She further contends that the liquidation value is fixed at very low value and that applic....