TaxTMI 
TaxTMI 
2018 (9) TMI 338
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....). 2. The facts in brief that are necessary for the disposal of IA 180/2018 are as follows:- 3. M/s. Rama Road Lines/Operational Creditor triggered the Corporate Insolvency Resolution Process in respect of The Sirpur Paper Mills Ltd. U/s 9 of the IB Code by filing CP(IB) 52/9/HDB/2017. This Adjudicating Authority, by its order, dated 18.09.2017, commenced Corporate Insolvency Resolution Process by appointing Mr. Mahadev Tirunagari Insolvency Professional as Interim Resolution Professional. 4. Thereafter, on the Application of CoC vide CA No. 192/2017, this Adjudicating Authority, as per the recommendation of the CoC, appointed Mr. Ram Ratan Kanoongo as Resolution Professional. 5. The CoC, in its 3rd meeting, held on 08.12.2017, resolved to call for Expression of Interest ("EoIs") and consequential submission of Resolution Plan from the prospective Resolution Applicants and accordingly, an advertisement was made in the newspaper on 11th and 13th of December, 2017 stating the last day for submission of Expression of Interest was 22.12.2017. 6. By the last date, seven Resolution Applicants had shown Expression of Interest. They were given time till 25.01.2018 to conduct....
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...., the Resolution Applicant submitted revised Resolution Plan. The Resolution Professional placed the revised draft Resolution Plan before the CoC on 05.03.2018. The CoC decided to wait for the confirmation relating to various benefits and concessions offered by the Govt. of Telangana. 15. The CoC instructed Resolution Professional to seek an extension of CIRP Process period for 90 days and accordingly Resolution Professional filed CA No. 50 of 2018 in CP (IB) No. 52/9/HDB/2017 and this Authority extended the duration of CIRP Process period by further 90 days, thereby granting time till 15.06.2018. 16. On 21.03.2018 the Industries and Commerce (IP & INF), Department of the Government of Telangana issued Government Order (G.O. Ms. No. 18) granted tailor made concessions and benefits to the Resolution Applicant, i.e. M/s. JK Paper Limited. 17. The Resolution Applicant-M/s. JK Paper Limited submitted its final revised Resolution Plan to the Resolution Professional and the same was placed before the CoC in its 9th meeting conducted on 28.03.2018. The CoC suggested for further improvements and requested the Resolution Applicant to submit its final revised Resolution Plan. Accord....
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....res to be issued to Secured Financial Creditors 43 - - 43 1.3 Preference shares to Secured Financial Creditors 162 - - 162 1.4 Debt/advance/security deposit-from the Resolution Applicant /new banks/financial institutions 118 135 138 391 1.5 Incentive from Govt. of Telangana - 22 28 50 1.6 Total Funding 371 207 204 782 2 Settlement 371 - - 371 2.1 Capex - 112 204 316 2.2 NCA/WC - 75 - 75 2.3 Cash for Contingencies - 20 - 20 2.4 Total Uses 371 207 204 782 25. The Resolution Plan was put to vote as required under section 30(4) of the Code and Regulation 39(3) of CIRP Regulations. 26. The CoC in its 11th meeting, held on 16.05.2018, passed the following regulations: "RESOLVED THAT pursuant to Section 30(4) of the Code, Resolution Professional has confirmed that the Resolution Applicant, M/s. JK Paper Limited is not ineligible to be a Resolution Applicant as defined under Section 29A of the Code and accordingly the Committee of Creditors (hereafter referred to as "COC") is satisfied to approve the Res....
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....2) of section 30, it shall by order approve the Resolution Plan which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan. (2) Where the Adjudicating Authority is satisfied that the Resolution Plan does not confirm to the requirements referred to in sub-section (1), It may, by an order, reject the Resolution Plan. (3) After the order of approval under sub-section (1), - (a) The moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) The resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the Resolution Plan to the Board to be recorded on its database. 30. Before approving the Resolution Plan, as approved by the CoC, it is the duty of the Adjudicating Authority that it should satisfy that the Resolution Plan, as approved by the CoC, under sub-section (4) of section 30 meets the requirements as referred to sub-section (2) of Section 30. 31. Therefore, it is necessary to refer to sub-section (2) of section 30, which r....
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....d to the operational creditors in the event of a liquidation of the Corporate Debtor under section 53 of the Code, Provides for the management of the affairs of the Corporate Debtor after approval of the Resolution Plan; the implementation and supervision of the Resolution Plan, does not contravene any of the provisions of the law for the time being in force, conforms to such other requirements as may be specified by the Board. 33. Therefore, this Adjudicating Authority has to necessarily examine whether the requirements of sub-section (2) of section 30 have been complied with or not. 34. A perusal of the Resolution Plan, approved by the CoC which is Annexure K (colly), provides for payment of Insolvency Resolution Process costs, set apart the amount for payment of operational creditors and it also provides for management of affairs of the Corporate Debtor after approval of the Resolution Plan. 35. The Resolution Applicant is not disqualified U/s. 29(a) of the IB Code. The operational creditors that choose to dispute the rejection of their claims also stated that they have no rejection for the approval of the Resolution Plan. 36. In the case on hand, the Resolution Plan....
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....en by the Board of Directors of the Corporate Debtor as Additional Director and also Whole Time Director, designated him as Executive Director & Chief Executive Officer (CEO), in the Board Meeting held, on 23.01.2015, on a monthly remuneration of Rs. 1,50,000/- and other perquisites. 47. In the 76th Annual General Meeting (AGM) of the Corporate Debtor, held on 31.12.2015, the members of the Company appointed the Applicant as Whole Time Director with a designation as Executive Director and CEO for a period of two years w.e.f., 23.01.2015 to 22.01.2017. 48. The Nomination and Remuneration Committee of the Corporate Debtor, in the meeting, on 23.01.2017, approved the remuneration and terms and conditions of appointment of the Applicant as Whole Time Director with designation as Executive Director and CEO of the Company and recommended for approval of the Board of Directors of the Company. The Company approved the appointment of the Applicant for a further period of two years i.e. from 23.01.2017 to 22.01.2019 with a designation as Executive Director & CEO of the Company and in the AGM held on 29.09.2017 the IRP, Mr. Mahadev Tirunagari appointed by this Authority was also present....
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....cant also submitted proof of the claim. The Applicant sent a letter, dated 21.04.2018, to the Resolution Professional stating that the CoC cannot substitute its wisdom in the place of the wisdom of the shareholders of the Company. 56. The Resolution Professional sent a reply, dated 28.04.2017, with vague and evasive reply. 57. It is stated by the Resolution Professional that the initial appointment of the Applicant on 29.12.2014 was without any approval from the lenders whereas the IB Code itself came into force w.e.f. 01.12.2016. 58. As can be seen from the website of the Corporate Debtor, the claim of the Applicant is allowed for an amount of Rs. 5,40,000/- and balance of Rs. 8,10,000/- is rejected. 59. The Resolution Professional filed reply. The appointment of the Applicant as Whole Time Director designated as Executive Director and CEO by the Board Resolution, dated 23.01.2015 for the period of two years from 23.01.2015 to 22.01.2017 on a remuneration of Rs. 1,50,000/- per month has not been approved by the Ministry of Corporate Affairs as can be seen from the e-mail, dated 14.10.2016 on the ground that "No Objection Certificate (NOC) from the lenders" has not been....
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....1.2017. The claim relates to the period from June, 2017 to February, 2018. 75. Therefore, there is no need to discuss about the validity or otherwise of the first appointment of the Applicant for the period from 23.01.2015 to 22.01.2017. 76. The second appointment of the Applicant for the second term of two years is from 23.01.2017 to 22.01.2019. 77. According to the Applicant, the appointment was approved by the AGM on 31.12.2015 in which meeting the Interim Resolution Professional was present. 78. The CIRP Process was commenced on 18.09.2017. The appointment of Applicant by IRP, Mr. Mahadev Tirunagari is not with the approval of the CoC. 79. There is no need for the approval of the CoC for the appointment of Applicant as CEO but the remuneration of the CEO has to be approved by the COC. 80. In the case on hand the CoC did not approve the remuneration of the Applicant. 81. Moreover Applicant is on leave from 21.10.2017 to 31.01.2018. 82. The Applicant did not file any document to show that he has got leave to his credit which earns salary for him. 83. In the absence of such documents it cannot be said that Applicant is entitled for salary during his leav....
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.... 931.00 3. 4772 29/03/2014 Supply 94,991.60 92,493.60 2,498.00 4. 4796 31/03/2014 Supply 100,036.13 97,025.13 3,011.00 5. 1090 18/06/2014 Power Esc. May '14 69,981.24 0.00 69,981.24 6. 1113 20/06/2014 supply 87,957.35 78,226.06 9,731.29 7. 1143 22/06/2014 supply 81,473.20 0.00 81,473.20 8. 1203 26/06/2014 supply 92,941.38 0.00 92,941.38 9. 1205 26/06/2014 supply 89,739.68 0.00 89,739.68 10. 1206 26/06/2014 supply 92,400.09 0.00 92,400.09 11. 1251 28/06/2014 supply 91,340.53 0.00 91,340.53 12. 1261 28/06/2014 Fixed Facility 68,764.62 0.00 68,764.62 13. 1277 30/06/2014 supply 80,934.80 0.00 80,934.80 14. 1305 30/06/2014 supply 94,090.37 0.00 94,090.37 15. 1306 30/06/2014 supply 83,451.22 0.00 83,451.22 16. 1311 02/07/2014 supply 94,090.37 0.00 94,090.37 17. 1330 04/07/2014 supply 80,384.71 0.00 80,384.71 18. 1377 08/07/2014 supply 93,364.71 0.00 93....
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.... 0.00 86,868.85 51. 2122 23/08/2014 supply 80,209.14 0.00 80,209.14 52. 2144 24/08/2014 supply 81,648.76 0.00 81,648.76 53. 2145 24/08/2014 supply 96,068.39 0.00 96,068.39 54. 2179 26/08/2014 Fixed Facility 68,764.32 0.00 68,764.32 55. 2213 28/08/2014 Supply 96,431.22 0.00 96,431.22 56. 2246 30/08/2014 Supply 96,431.22 0.00 96,431.22 57. 2269 31/08/2014 Supply 94,979.89 0.00 94,979.89 58. 2294 31/08/2014 Supply 86,342.16 0.00 86,342.16 59. 2354 05/09/2014 supply 95,705.55 0.00 95,705.55 60. 2380 07/09/2014 supply 94,265.93 0.00 94,265.93 61. 2383 07/09/2014 supply 81,461.50 0.00 81,461.50 62. 2451 11/09/2014 Diesel Esc. Aug'14 59,627.96 0.00 59,627.96 63. 2476 13/09/2014 Supply 84,715.27 0.00 84,715.27 64. 2477 13/09/2014 Supply 86,517.72 0.00 86,517.72 65. 2521 15/09/2014 Power Esc. Aug '14 86,886.47 0.00 86,886.47 66. 2546 17/09/2014 Supply 8....
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....95. 4453 25/01/2016 Fixed Facility 61,200.00 0.00 61,200.00 96. 5062 25/02/2016 Fixed Facility 61,200.00 0.00 61,200.00 97. 5582 25/03/2016 Fixed Facility 61,200.00 0.00 61,200.00 98. 499 30/04/2016 Fixed Facility 61,200.00 0.00 61,200.00 99. 932 25/05/2016 Fixed Facility 61,200.00 0.00 61,200.00 100. 1800000016 28/06/2014 CST Debit Note 5,960.35 0.00 5,960.35 101. CST Debit Note 1,44,218 0.00 1,44,218 For supplies from our Hyderabad Unit 102. 103. 13260 29/03/2014 Power esc. Dec '13 20,733.46 0.00 20,733.46 104. 13261 29/03/2014 Power esc. Jan'14 87,153.34 0.00 87,153.34 105. 13263 29/03/2014 Power esc. Sept'13 11,006.67 0.00 11,006.67 106. 13265 29/03/2014 Diesel Esc. Jan'14 7,839.18 0.00 7,839.18 107. 13266 29/03/2014 Diesel Esc. Sept'13 2,252.62 0.00 2,252.62 108. 13267 29/03/2014 Diesel Esc. Dec....
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....m 01.04.2015 to 31.10.2015, total balance of Rs. 95,59,742/- up to October, 2015. 102. The balance up to March, 2015 is Rs. 91,31,342/-. 103. According to the Applicant, the subsequent invoices were raised during the period of November, 2015 to May, 2016, which amounts to Rs. 4,28,400/- and an amount of Rs. 1,44,218/- towards Central Sales Tax. 104. It is stated by the Applicant that several emails are exchanged between IDBI Bank and the Applicant regarding the lifting of the storage tank, AV Coil and related equipment installed in the premises of the Corporate Debtor. IDBI Bank, by its letter, dated 15.02.2017, allowed the Applicant to lift the storage tank, AV Coil and related equipment from the premises of the Corporate Debtor at the Applicant's cost, risk and responsibility. 105. The Applicant also informed the IDBI Bank officials that it would be lifting the equipment on 16.03.2017, but IDBI Bank officials had requested the Applicant to defer the lifting of the equipment due to long shut down and sensitive situation prevailing in the premises of the Corporate Debtor. 106. The Applicant also wrote another letter dated 18.10.2017 to the Interim Resolution Prof....
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....tained by the Corporate Debtor, the outstanding as on 31.03.2015 is Rs. 51,67,213/- and therefore, the claim has been allowed to that extent only. The Resolution Professional stated that the factory closed its operations on 24.09.2014. 116. It appears that the Applicant has raised invoices as charges towards 'Fixed Facility' and 'Diesel & Power Escalation Cost' and the same has not been accounted by the Corporate Debtor to the extent of Rs. 7,37,666/-. The said amount corresponds to the invoices raised against Sl. Nos. 1 to 6, 24, 28, 34, 44, 46, 54 and 103 to 109 mentioned in the table in the Application. 117. The Applicant raised invoices for the remaining portion of Rs. 42,37,314/- from 14.10.2014 onwards, towards the charges of Short Lifting and Fixed Facility. 118. The lenders of the Corporate Debtor took possession of the factory under SARFAESI Act in December 2016. 119. It is stated by the Resolution Professional that the equipment of the Applicant is still lying in the factory premises of the Corporate Debtor and the Applicant continued to charge expenses till 25.05.2016, which is clearly not in the control of the Corporate Debtor. 120. It is ....
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....m out of the amount set apart for payment to operational creditors in the Resolution Plan. 132. This Application is disposed of accordingly. IA 237/2018 133. This Application is filed by M/s. FLSmidth Private Limited/Operational Creditor u/s. 60 of the Insolvency and Bankruptcy Code read with Rule 23 of the National Company Law Tribunal Rules, 2016 seeking to set aside the rejection of its claim by the Resolution Professional by his order dated 15.05.2018 as uploaded in the website of the Corporate Debtor. 134. It is stated by the Applicant that the Corporate Debtor had placed a purchase order towards manufacture, supply, unloading, storage, internal handling, complete erection and supervision of commissioning of 120 TPD Lime mud re-burning system including Producer Gas Plant at Sirpur on 03.01.2004 as amended by work orders dated 07.02.2004, 13.02.2004, 04.09.2004 and 22.12.2004. 135. It is stated by the Applicant that disputes crop up between the Applicant and Corporate Debtor were ultimately referred to a panel of three Arbitrators and the Arbitral Tribunal vide its award dated 21.10.2010 had awarded a sum of Rs. 3,16,01,403 together with interest @ 12% per annum ....
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....mpany Pvt. Ltd., it is held that the award passed by the Court, Tribunal or Arbitral Tribunal adjudicating on the default commonly known as award has been treated to be record of operational debt. 147. It is also stated that the Resolution Professional acted in a biased manner and did not adhered to the time lines prescribed in the Code and Regulations. 148. It is also stated that the Resolution Professional has not acted with the objectivity of amount. 149. It is also stated that the Resolution Professional mechanically rejected the Applicants claim. 150. This Application came up for hearing before this Bench on 11.07.2018. 151. The learned counsel appearing for the resolution professional made a statement that the claim of the Applicant/operational creditor in this Application would be included in the claim of operational creditors and Applicant could be paid proportionately out of the amount reserved for the payment towards operational creditor in the Resolution Plan. 152. The Resolution Professional on the ground that the matter is subjudice before the Appellate Court against the award passed by the Arbitral Tribunal, rejected the claim of the Applicant withou....
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....he Resolution Professional Mr. Ram Ratan Kanoongo to pay Rs. 3,50,000/-. The Resolution Professional sent a reply mail stating that as per the provisions of the IB Code the petitioner that moved the Insolvency Resolution Process has to bear the costs of Interim Resolution Professional. 163. It is also stated in the reply mail that CoC in its first meeting has not ratified the IRP costs for first 30 days. 164. It is also, stated in the reply mail that the CoC ratified and paid to IRP fees for the work done by him beyond first 30 days and accordingly Rs. 3,00,000 was paid to the IRP. 165. It is also stated in the reply mail that the 1st CoC meeting was conducted by Mr. Mahadev Tirunagari. 166. A perusal of the 1st meeting of the CoC held on 20.10.2014 show that CoC ratified the expenses incurred by IRP during the Resolution Process towards stationery, conveyance, utility and other expenses to the tune of Rs. 9,264/- . 167. However, the CoC did not approve the expenses incurred for public announcement in Form A made by Mr. Kishore Babu Venna. 168. The CoC also resolved that the fee of the Interim Resolution Professional has to be borne by the Petitioner/Applicant. ....