TaxTMI 
TaxTMI 
2018 (8) TMI 1034
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....ate ORDER Per Shri Jinan K. R., Member (J). By this common order, we propose to dispose of all the four applications filed under sub-section 5 of section 60 of the Insolvency and Bankruptcy Code, 2016. CA(IB)No.402/KB/2018 2. This is an application filed by the Financial Creditor namely State Bank of India for initiating Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short, I&B Code) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (in short, the Rules) against Corporate Debtor/Orissa Manganese & Minerals Ltd. (OMML). 3. Vide Order dated 3rd August 2017, the application was admitted and Shri Sumit Binani was appointed as the Interim Resolution Professional (IRP). Upon admission CIRP was initiated with effect from 3rd August 2017. The appointment of IRP was confirmed by the Committee of Creditors in their meeting held on 4th September 2017. The Resolution Professional continued the process inviting application by issuing advertisements as per provisions of the Code and Regulation. However, the initial period of CIRP of 180 days has been expired on 29th Janu....
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....solution professional was in receipt of three resolution plans from respective applicants namely GMSPL, EARC and Srei Infrastructure Finance Limited (SIFL). Those resolution plans were considered by the CoC in its 11th meeting held on 13th April 2018 and after evaluation and scoring of the resolution plans, the CoC ranked the resolution plan submitted by one resolution applicant namely GMSPL as H1 bidder. 7. Negotiation has been undertaken with the GMSPL, resolution applicant and upon several rounds of negotiations, the shortlisted resolution plan of the GMSPL has been considered by the CoC for its approval. In the 12th meeting held on 21st April 2018, the CoC unanimously taken a decision to convene a meeting of the Committee of Creditors on 25th April 2018 at around 6 P.M for voting on the Resolution Plan proposed by GMSPL. In continuation of the decision taken in the 12th CoC meeting held on 25th April 2018, the CoC being satisfied with the Resolution Plan submitted by GMSPL and it meets all the requirements under sub-section (2) of Section 30 of the Code was placed before the Members of the CoC for voting and that plan was approved by more than 89.23% of voting share of finan....
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....osing the Mining Authority in the list of Creditors on Website or Information Memorandum. 11. The Resolution Professional has failed in its duty of disclosing of the required information in the Information Memorandum in terms of the Code and has wilfully concealed material liabilities from the Resolution Applicant despite full knowledge. The Resolution Plan of the Applicant is higher in offer and the Applicant should have been declared as H1. The Applicant has offered Rs. 350 crores in its Resolution Plan. On the other hand, GMSPL has offered a total sum of Rs. 313.79 crore. This scoring for classification of Resolution Applicant's rank has been done by the Resolution professional without considering the experience of the Resolution Applicant and thereby failed in qualitative assessment in recording the classification of the ranking of the Resolution Applicant and thereby exercised the discretion in an arbitrary manner and declared GMSPL as H1 is quite improper and illegal. The Resolution Professional allowed the liquidation value of Corporate Debtor to be reduced to bridge the gap between the Resolution Plan of GMSPL and liquidation value of Corporate Debtor determined by exper....
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....-voting on 3rd April, 2018. But an email dated 2nd April, 2018 was received from Edelweiss by the COC confirming that the waiver of uncrystallized mining liabilities by NCLT would not be a condition precedent. It was however noted that enterprise value attributable to equity state is arrived by calculating the 24% proportion of all cash value offered by Edelweiss in their Resolution Plan. It was not acceptable to COC who decided that the enterprise value of the equity stake should be paid as upfront cash which was not agreed to by Edelweiss. 14. Thereafter, H2 bidder's proposal was taken but was also unacceptable to the members. It was decided by 97.62% of the COC to restart a fresh process and seek invitation only from those entities who had earlier submitted expression of interest pursuant to an advertisement dated 21st September, 2017. The last date for submission of resolution plan was 10th April, 2018 which was known to Edelweiss. In the second round of bidding, in meeting dated 13th April, 2018, Edelweiss was scored as last and was declared H3 and Ghanshyam Mishra & Sons (P.) Ltd. as H1 on a basis of fair and transparent scoring. As soon as the meeting was over, the Repres....
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....e Orissa Manganese and Minerals Limited (OMML) not being admitted by the Resolution Professional, its claim on the strength of pledge of shares invoked by the applicants violated the Regulation 13 and Regulation 14 of the CIRP Regulations 2016. Upon the said contentions, the applicant prays for rejection of the Resolution Plan. In the alternative, prays for issuing direction to the Resolution Applicant to undertake to pay the full amount due and payable under deed of corporate guarantee and to issue direction protecting the rights of the lenders of Adhunik Power and Natural Resources (APNRL) as pledgee. 17. The Resolution Professional contends that none of the prayers sought for by the applicant is liable to be allowed. Ld. Counsel appearing for the Resolution Professional submits that the applicant is also a resolution applicant who is ranked as H3 bidder and its attempt is to drag the CIRP only with an attempt to prevent CIRP from succeeding. According to him, what the applicant intending is to see that the Resolution Plan submitted to the Adjudicating Authority vide CA(IB) No.402/KB/2018 could not be approved and the Corporate Debtor may be gone into liquidation. He further c....
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....se v. Union of India). 20. Upon the above said grounds, it is alleged by the applicant that the Resolution Professional failed in conducting the CIRP process in accordance with the provisions of the Code and Regulation and thereby the Resolution Plan is liable to be rejected. 21. The Resolution Professional filed reply affidavit denying all the allegations levelled against him and contends that despite communication given to the applicant for submission of its claim with supporting documents, the applicant failed in giving response so as to verify the applicant's claim and thereby unable to admit the claim of the applicant and produced supporting proof to prove that repeated communications have been sent to the applicant requesting the applicant to furnish the details of the claim. He further submits that none of the Code or Regulations is violated by him nor there is any disobedience of the direction of the Hon'ble Supreme Court nor directions of the Hon'ble Jharkhand High Court is violated. The Resolution Professional, upon the said contentions prays for dismissing the application with exemplary cost. 22. Heard the Ld. Resolution Professional, his counsel and Ld. Counsel....
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....herm Vishram. As per the data available from the resolution plan it is under stood that the applicant is well experienced in the operation of mines. It says that mines under the jurisdiction of the group are one of the oldest and best proven reserves in India. These mines were leased out to the chief patron of the group, late Shri. Ghanashyam Misra in the year 1970. It claims that it is actively in operation and it has a capacity to deliver about 1.5 MTPA of High Grade Iron Ore. It is this group is the applicant in the case in hand. The above said claim of the applicant is not at all under challenge from any corner. Thus, the resolution applicant is a well experienced and competent bidder in doing the very same business of the corporate debtor. In the said back ground let us take the objections raised by the EARC, an unsuccessful bidder. EARC filed two applications challenging the approval of resolution plan of GMSPL by the CoC. 26. Raising various contentions EARC challenged the selection process of Resolution Applicants as well as approval of the Resolution plan of GMSPL by the CoC. Let us take the first and main objection in respect of the selection process for ranking of res....
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.... challenge in the case in hand. The selection of GMSPL as H-1 bidder was done as per the evaluation parameter and the evaluation framework already laid down by the CoC. It is significant to note here that the applicant herein not disputed the evaluation matrix. In order to have a comparison of the offers of all the three applicants it is good to have a look at the comparative chart and scoring summary of three Resolution Plans produced by the resolution professional in this case. The comparative chart and scoring summary produced along with the supplementary affidavit filed by the Resolution professional is shown as below:- Payment plan of Ghanshyam Misra Payment plan of SREI Payment plan of Edelweiss ARC Total payment to all Creditors. Workmen and employees & CIRP cost 321.19 300.00 282.00 Payment estimated for CIRP costs 3.41 3.41 3.41 Payment for workmen & employees 0.38 0.38 0.38 Payment to critical Operational Creditors 7.40 0.74 Payment to Financial Creditors 310.00 295.47 166.21 -Of which Upfront payment (within 90 days) 250.00 50.00 166.21 -Of which NPV of balance payments ....
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....ng liability of OMML was informed to all the resolution applicants and they were aware of the liability and that the objection is devoid of any merit. 32. Coming to the third objection, Ld. Sr. Counsel for the applicant stressed an argument that the meeting convened on 25/04/2018 by the Resolution Professional is to be held illegal as the Resolution Professional was absent in the meeting. The last and final meeting of the CoC was held on 25/04/2018 in Kolkata. Truly, on that date the Resolution Professional was not present in meeting in person. On the other hand his advisers were present in the CoC meeting and they lead the meeting under the guidance and advice from the RP who was in Mumbai. RP gave guidance through audio call through out the meeting. Thus the question is whether the absence of RP in the meeting held on 25.04.2018 amount to violation of any of the provisions of the Code or Regulation so as to nullify the meeting. 33. Let us see the provisions of the Code which dealt with the mode conducting meeting by an RP. Section 24. Meeting of committee of creditors (1) The members of the committee of creditors may meet in person or by such electronic me....
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....forced to attend before the National Company Law Tribunal at Mumbai Bench as a resolution professional and though he planned to return to Kolkata by availing 2.55 pm flight from Mumbai he could not free from the Bench and hence he could not reach in time in Kolkata and thereby as directed by him and with consent of all the members of CoC the meeting was convened as scheduled. He also submits that he did not request the CoC for postponement for want of time to complete the period which would expire on 29th April 2018. Since the CIRP is expiring in the instant case on 29/04/2018 he decided to continue with the CoC meeting as scheduled with the approval of the CoC and CoC successfully convened the meeting under his guidance and advice over phone. According to him none of the provisions of the Code or Regulations make him compulsory to attend in person in all the meeting and that expect in the said meeting he was present in all the meeting and there is substantial compliance of the provisions of the Code and Regulation. 36. We are now in a digital world. The term video audio conferencing has become prevalent conference tools in the global business world today. Keeping in pace with t....
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....erson what would be the consequence not at all dealt with in any of the provisions of the code or Regulations. Thus it appears to us that only because the RP not chaired the meeting on 25.04.2018 in person and had conducted the meeting by audio call the meeting of the CoC cannot be annulled as prayed for. 39. The next contention is that the Resolution Plan of GMSPL does not provide for provision of Corporate Debtor as a going concern, but provision is provided for slump sale without continuation of the Corporate Debtor. According to the Ld. Senior Counsel, the Resolution Plan of GMSPL is based on and/or is in the nature of slump sale and the Corporate Debtor is left with no such business operations or affairs which could be considered as a going concern. Therefore, the Resolution Plan submitted for approval is in violation of the provisions of the Code. He further would submit that Regulation 38 Section (5)26 of the Code are not at all complied in the case in hand. 40. The above said submission seems to have devoid of any merits, the resolution applicant truly proposed certain structural arrangements in regard to the operation of the mining units of the Corporate debtor. The ....
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....lution Plan is permissible under Section 37 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. As per Regulation 37(1)(a), a Resolution Plan may provide for the measures required for implementing it, including but not limited to the following - 7. Transfer of all or part of the assets of the corporate debtor to one or more persons; 8. Sale of all or part of the assets whether subject to any security interest or not; 9. The substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate debtor with one or more persons; 10. Satisfaction or modification of any security interest; 11. Curing or waiving of any breach of the terms of any debt due from the corporate debtor; 12. Reduction in the amount payable to the creditors; 13. Extension of a maturity date or a change in interest rate or other terms of a debt due from the corporate debtor; 14. Amendment of the constitutional documents of the corporate debtor; 15. Issuance of securities of the corporate debtor, for cash, property, securities or in exchange for claims or interest, or oth....
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....two claims were submitted to the resolution professional. 47. As per the records brought to our notice from the side of the applicant as well as from the side of the resolution professional, it reveals that on 06.04.2018 the applicant, by way of an e-mail, submitted its claim in Form 'C" for an amount of Rs. 648,89,62,395/-. To that e-mail the Resolution Professional has sent reply on 8th January 2018 requesting the applicant to clarify whether the corporate guarantee has been invoked by the applicant. The resolution applicant has not received any response till February 21st, 2018. Despite repeated request made by the resolution professional as evident from the copy of e-mail dated January 08, 2018, January 13, 2018, the applicant did not respond to the query addressed to it by the resolution professional. On the other hand, on 21st February 2018 vide Annexure-A to the Reply Affidavit submitted by the Resolution Professional, the applicant submitted to the resolution professional that the corporate guarantee has not been invoked. Thus, the question is whether an uninvoked corporate guarantee can be considered as matured claim of the applicant herein. 48. In view of the applic....
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....ttempted to stress an argument that the direction issued in the above cited order is binding on the resolution professional. A reference to the said order it is understood that the resolution professional in the above referred case was directed to consider the claim of the applicants in regard to the claim on the basis of uninvoked corporate guarantee. 52. It appears to us that the Interim Order referred to us has been passed by the Hon'ble Appellate Tribunal not in the case in hand. The appeal is still pending. Pending appeal, the Hon'ble Appellate Tribunal issued direction to the Resolution Professional in that case which cannot be a proposition to be applicable in the case in hand. An interim direction issued not in the case in hand cannot be considered as a proposition binding on the resolution professional. In the above said view we do not find any force in the argument advanced on the side of the applicant in regards non-admission of the claim of the applicant. 53. Coming to the second objection that the shares owned by the corporate debtor in APNRL which was pledged with IIFCL to secure the loan given by IIFCL to APNRL which has been assigned to the applicant being inv....
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....led on 01.06.2018. The CoC in the meeting held on 25th April 2018 approved the resolution plan of H1 applicant by more than 89.23% vote share and till 21st February 2018 the applicant herein not given any response to the proof of claim pending for consideration by the Resolution Professional and did not approach this adjudicating authority challenging the non-consideration of its claim prior to the period of CIRP expires. There is undue delay and unexplainable delay in challenging the non-consideration of the claim of the applicant by the resolution professional. No valid explanation forthcoming as to why the applicant not approached the Adjudicating Authority immediately after the non-admission of its claim by the resolution professional. So also invocation of pledge on 30.04.2018 by the applicant is bad in law. 57. It appears to us that it is a deliberate attempt to stage mange an objection against the approval of a resolution plan other than the plan submitted by the resolution applicant. We also found that CA 398 of 2018 filed for rejection of the resolution plan is liable to be dismissed since the very same applicant not at all succeeds in proving its contention and that th....
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.... to the Resolution Professional till the expiry of the period of Resolution process in the case in hand. 60. A reference of Annexure-4 (Form-B) shows that the applicant annexed enclosures of documents. However, the Annexure annexed to Form-B not at all enclosures but is a statement of computation of amounts claimed by the applicant. So Form B is in adequate to verify the claim in the absence of supporting documents or data furnished on the side of the applicant. In view of non-receipt of documents and affidavit, the Resolution Professional has sent repeated reminders on 23.03.2018 (Annexure R.2) Annexure R.4 dated 27.03.2018 and Annexure R.3 dated 29.03.2018 Annexure R.5 dated 09.04.2018. 61. This is a case in which Corporate Insolvency Resolution Process was expired on 29th April, 2018. It is significant to note here that on 31.03.2018 the applicant has sent a letter to the Resolution Professional (Annexure-5) enquiring him as to which Form is required for submission of claim. So also in the said letter a contention has raised as to his right to claim the amount as per Section 25(2) of the MMDR Act. To this letter also, the Resolution Professional has sent a reply (Annexure ....
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....d; 21. "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority. 64. A reading of the above said provisions, we do not find any force in the argument advanced on the side of the applicant that it is a secured creditor and not an operational creditor. Moreover the applicant has not issued any certificate as provided under Section 25(2) of the MMDR Act. The applicant has no such case that under Section 25(2) of the MMDR Act any certificate has been issued for realisation of the amount due. So the said contention is also found devoid of any merit. 65. The next contention is that applicant being considered as an operational creditor, then the operational creditor is entitled to participate in the proceedings of CIRP initiated by the resolution professional in view of Section 24 of the Code. According to the Ld. Counsel for the applicant, the claim of applicant constitutes more than 10% of the entire claim and hence deserved to be invited for attendin....
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....ized and cannot be taken into account. Regarding the remaining portion of the claim, there is no valid claim so far seen submitted before the Resolution Professional. For want of submission of valid claim we cannot come to a conclusion that the Resolution Professional has violated any of the direction of the Hon'ble Supreme Court. 68. We do not find any act of deliberate flouting of provisions of the Code or Regulations by the Ld. RP. On the other hand, we are satisfied that the Resolution Professional has complied with all the provisions of the Code and Regulations so as to enable him to have a successful resolution of the Corporate Debtor's assets. Deliberate negligence, lapses on the other hand brought to the notice of the Bench from the side of the applicant in not responding to the communication addressed to the applicant by the Resolution Professional. Moreover, the applicant approached this adjudicating authority at a belated stage without showing any valid reason. The reason advanced that the applicant came to know about the application filed by the Resolution Professional for approval of the Resolution Plan from the media report is found not true but false. In view of t....
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....unsel for the EARC and hearing Ld. Sr. Counsel for the CoC and Ld. RP and upon the above said findings we are of the considered opinion that the CIRP in the instant case was successfully completed by the RP in accordance with the provisions of the code and Regulations and selected H1 bidder in a transparent bidding process. 72. The plan provides provisions for management of corporate debtor post CIRP completion date. Provisions seen made to have a monitoring committee to supervise the mining business and pellet business to be run by the applicants. Provision for implementation and supervision of resolution plan is also provided. The proposed plan provides provisions to see that the business of the corporate debtor and SPV shall continue on a going concern basis and the operation of the company will be continued in the normal course of business upon implementation of the proposed plan. Provisions for payment of dues due to the workmen within 30 days of approval and discharging the resolution cost are certain highlights brought to our notice on the side of the resolution professional. The resolution professional being succeeds in showing us that all the requirements to be meted ou....