TaxTMI 
TaxTMI 
2019 (2) TMI 215
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.... Professional (in short "IRP"). 3. Further in the 1st Meeting of the Committee of Creditors (in short, CoC), held on 8th June, 2018, the CoC appointed the Interim Resolution Professional, Mr. Bijay Murmuria as the Resolution Professional (in short "RP') of the Corporate Debtor and since then the applicant has been discharging the functions of a Resolution Professional with respect to the corporate debtor. 4. The Resolution Professional Published Invitation for Expression of Interest (EoI) for Submission of Resolution Plan in Amar Asom (Regional language newspaper) at Tinsukia, where the registered office of the Corporate Debtor is situated and in Business Standard (English) - All Editions on 13.07.2018. The last date for submission of resolution plan was slated as 27.07.2018. However, Resolution Professional did not receive any Expression of Interest till 27.07.2018 and therefore, with the approval of Committee of Creditors publication for further extension of date of EoI in Financial Express - all editions on 27.07.2018 whereby time for submission of EoI was extended till 07.08.2018. 5. The Resolution Professional received Expression of Interest from the following ent....
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....e amendments in the Resolution Plan. 10. The Resolution Applicant submitted the Revised Resolution Plan dated 10th October, 2018 and the same was circulated to all the members of CoC vide email dated 11th October, 2018 for perusal. 11. The Resolution Professional in the Sixth Meeting of CoC convened as on 20th October, 2018 tabled before the members the Final Resolution Plan for approval. 12. Further in terms of Section 30(4) of the IBC 2016, the CoC approved the said resolution plan by 92.74% votes in favour of the said resolution vide e-voting dated 22.10.2018 after considering its feasibility and viability and other requirements specified by the CIRP Regulations where SREI Infrastructure Finance Limited, State Bank of India, IFCI Limited and Standard Chartered Bank voted in favour of the Resolution Plan. Pertinent to mention here that State Bank of India could not cast its vote on the portal because of some technical glitch but confirmed their Assent over Email and Letter to the Resolution Professional. 13. Furthermore, 7.26% members of the CoC voted against the said Resolution Plan. The members who voted against the said Resolution Plan are IDBI Bank, Canara Bank an....
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.... the affairs of the Corporate debtor after approval of the resolution plan; (d) The implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) confirms to such other requirements as may be specified by the Board. Explanation. - For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013(18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). (4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent, of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not appr....
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....hat the resolution plan has provisions for its effective implementation. (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. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 200....
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....n on the pretext that they were unable to collect such information. 19. The learned RP, however, chose to accept such very unsatisfactory explanation of the KMP of the CD although under the law the learned RP has an inescapable duty, cast on him, to make due diligence to get all the information as to family tree of the CD, more so, when such information is easily available in the public domain which would have shown that one of the important members of the CoC was a related party to the CD and in that event, such a party, in terms of law, laid down in proviso to section 21(2) of the code could not have any right of representation, participation or voting in a meeting of CoC and in such a scenario, perhaps the fate of various resolutions, adopted in CoC would have been different. 20. To support such a contention that RP has a mandatory duty of doing due diligence to certain the related party status of the members of the CoC, my attention was drawn to the decision of Hon'ble Supreme Court in Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta [Civil Appeal No.9582 of 2018, dated 4-10-2018]. The relevant part thereof is also reproduced below:- "Thus, the importance ....
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....Gaurav Goenka were furnished to the applicant which, according to Mrs M. Hazarika, was substantial, compliance of the request from the side of the applicant. The above revelations hardly support the allegation that one of the important member of the CoC was a related party to the CD which, in turn, serves to show that the applicant was fishing only in troubled water. The fact that the applicant kept on asking for liquidation value of the CD even at a stage when law prohibits sharing of such intimation with anyone makes such conclusion inevitable. 25. It has also been pointed out that the information relating KYCs of the promoters was sought for at a stage when the CIRP had almost entered into final phase which is certainly not in the tune of arrangements of things as envisages in the Code where time is the essence since the Code prescribes very specific period for completion of each and every stage of CIRP. In the face of such revelation, contention of the applicant that since one of the members of the CoC was the related party to the CD and since such a member of the CoC was allowed to have representation, participation or voting in a meeting of CoC, the entire CIRP becomes a n....
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....his Code, then, the provisions of this clause shall not apply to such resolution applicant for a period of three years from the date of approval of such resolution plan by the Adjudicating Authority under this Code;]" (d) has been convicted for any offence punishable with imprisonment - (i) for two years or more under any Act specified under the Twelfth Schedule; or (ii) for seven years or more under any law for the time being in force: Provided that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from imprisonment: Provided further that this clause shall not apply in relation to a connected person referred to in clause(iii) of Explanation I]; (e) is disqualified to act as a director under the Companies Act, 2013 (18 of 2013): [Provided that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;] (f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets; (g) has been a promoter or in the management or control of a corpor....
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....hares, prior to the insolvency commencement date;] [Explanation II-For the purposes of this section, "financial entity" shall mean the following entities which meet such criteria or conditions as the Central Government may, in consultation with the financial sector regulator, notify in this behalf, namely:- (a) ........................ (b) ........................ (c) ........................ (d) ........................ (e) an Alternate Investment Fund registered with Securities and Exchange Board of India; (f)........................" 27. In support of such contention, it has been submitted that one of the Resolution Applicant through one of its Fund, namely, India Growth Opportunity Fund had invested in the Oddisha Slurry Pipeline Limited (in short "OSPIL") and have around 69% shareholding and management control over the OSPIL, The OSPIL had defaulted in making payment to IDBI Bank Ltd. and the debt due from the OSPIL was declared NPA and the same was, therefore, referred to NCLT but such application was not admitted as yet as informed by the applicant. Such a fact was brought to the notice of the CoC in its 5th m....
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.... make investigation against each and every suspicion which may crop up while constituting the CoC regardless of whether or not such suspicion has any basis. 32. It is worth noting here that none of the members of the CoC raised any query as to the constitution of CoC since the constitution of CoC on 29.05.2018 till the fag end of September, 2018. Only on 27-09-2018, after a gap of almost five months from the date of initiation of CIRP, the applicant (IDBI Bank) raised such contention. I have found that the applicant at first wanted information as to the KYCs of the promoters of the CD as well as information about the mortgagors. I have found that some of the information so sought for was furnished while inability was expressed in regard to furnishing of other information vide email dated 29-09-2018 from RP addressed to the applicant. For ready reference, same is reproduced below: 'Dear Yogesh, With reference to the trial mail, we pursued /or KYCs of the promoters namely Vinay Goenka, Usha Goenka, Usha Goenka, Sunita Goneka and Caurav Goenka with KMPs of the Corporate Debtor. However they have shown their inability to arrange for the KYCs of the promoters as....
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....lid one, might have driven the applicant to keep on hurling queries after queries on the RP in regard to allegation that one of the members of the CoC is a related party to the CD. Being so, in my considered opinion, the RP cannot be adjudged guilty of non-performing of his statutory duty qua constitution of CoC only because of the non-furnishing of the KYCs of the promoters of the CD. 35. Here, it needs to be stated that the RP had published invitation for Expression of Interest (EoI) on 13.07.2018 stating 27.07.2018 as the last date for submission of EoI. However, none had submitted EoI within the date so fixed, for which the date for submission of EoI was extended till 07.08.2018. Pursuant thereto, three Prospective Resolution Applicants had submitted their EoI. In due course, RP has provided Information Memorandum, Evaluation Matrix, RFFP and other relevant documents to those Prospective Resolution Applicants (PRAs in short) and also obtained from them Confidentiality Undertaking/Non-Disclosure Agreement and the last date for submission of Resolution Plan was fixed on 01.10.2018. 36. However, the RP had received only one resolution plan from SMAIT within the stipulated pe....
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....cured creditors have been classified as Category B, on the ground that such creditors do not have a first charge on the fixed assets/current assets. Based on this classification, the Plan proposes particular manner of distribution of proceeds amongst the Class A Creditor and Class B Creditors. 6.1.7 In our view, there appears to be a strong rationale for such classification, which is discussed as under: 6.1.8 The category "A" secured creditor represent the sole Financial Creditor who are the single largest creditor of the Corporate Debtor and is having exclusive charge on the rand value of the corporate debtor and first charge on the fixed assets/current assets of the company, being the Corporate Debtor. 6.1.9 Category "B" Creditors represent those secured creditors who have minuscule exposure as compared to the Class A Secured Creditor, and who are not having first charge on the fixed assets/current assets of the company. 6.1.10 In the event of liquidation, the Secured Creditor having exclusive charge on the brand value of the corporate debtor and first charge on the fixed asset/current asset block of the corporate debtor if exercises the SARFAE....
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....I have considered such opinion in the light of materials on record and found reason to concur with the same. Resultantly, last allegation too, pressed into action to disqualify the resolution plan, is again found to be much without any substance. 40. It is not out of place to state here that a Resolution Plan was approved by a vote of 92.74% of voting share of the financial creditors whereas the applicant, who opposes it, holds only 6.74% of voting share of the FCs. In my considered opinion, in the facts and circumstances of the case, under consideration, it would be wholly preposterous to allow such a minuscule section of the financial creditors to hold the resolution plan to hostage, and that too, for no apparent valid reason 41. Resultantly, none of the allegations above stands to reason and accordingly all allegations are rejected. 42. But a perusal of Section 31 of the Code of 2016 also show that a heavy duty is cast on this Authority to satisfy itself before giving a seal of approval to the Resolution Plan, already approved by CoC under Section 30 (4) of the Code of 2016 that the Resolution Plan, so approved, meets the requirement of law as specified in Section 30 (2....
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....oval of the Resolution Plan by this Adjudicating Authority as per Exhibit E of Format-VA of the Resolution Plan. (h) The Final Resolution Plan has provisions related to re-starting of the manufacturing operations of the Assam unit of the corporate debtor which will bring about necessary employment. (i) The closure date for the purposes of the Final Resolution Plan would be the date when the Resolution Applicant acquires the management and control of the corporate debtor in accordance with the applicable laws subject to approval of the same by this Hon'ble Tribunal. (j) Clause 5 of Format-VA of the Resolution Plan provides that from the date of approval of the Final Resolution Plan by this Authority until the closure date, a Supervisory Committee shall be constituted which will supervise the implementation of the Final Resolution Plan and manage and control the operations of the Corporate debtor. (k) Clause No. xxxi of Glossary of terms in Format-VA of the Resolution Plan provides for the composition of the Supervisory Committee 43. The Resolution Professional has submitted the required Compliance Certificate in Form H of the Schedule certi....
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....wever, as noted above, the total amount provided for the stakeholders under the resolution plan is INR 175 crores which is significantly higher than the liquidation value. 46. Para 9 of Form H states that in terms of the Report from S.K. Agrawal & Co, Chartered Accountants (appointed for conducting due diligence of the financial of the corporate debtor), there were no transactions u/s 43, 45, 50 & 66 of the Insolvency & Bankruptcy Code, 2016. 47. The Resolution Applicant SREI Multiple Asset Investment Trust (Vision India Fund) has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit resolution plan. 48. Upon examination of the Final Resolution Plan, I note that the terms of the Final Resolution Plan appear to be in line with the objects and purpose of the IBC 2016 and provides for insolvency resolution in a time bound manner for maximization of value of assets and promotes entrepreneurship, availability of credit and balance interests of all the stakeholders. 49. Therefore, this Adjudicating Authority records its satisfaction for granting approval to the Final Resolution Plan. Further in the ligh....