AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 1524
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....d, Fort, Mumbai-400001. 4. Further under the Head "Particulars of Financial/Operational Debt" the total amount of Financial Debt is stated as Rs.37,611.32 Lacs and Operational Debt stated to be of Rs.59,075.35 Lacs are outstanding and in default. 5. The Petitioner filed this application owing to its inability to repay the Debt claimed by various Financial & Operational Creditors as hereunder: Sr. No. Name of the Financial Creditor Facility Outstanding Amount (Rs. in Lacs) A. Secured Creditors (Banks & Financial institutions) 1. HDFC Bank Ltd. Working Capital Demand Loan 4,455.32 2. Edelweiss Asset Reconstruction Co. Ltd. Working Capital & Term Loan - Assigned by Export Import Bank of India 2,658 3. Bank of India Recompense Claim vide Terms of Settlement Agreement 2,500 Total 9,613.32 B. Unsecured Creditors 4. J.P. Morgan Chase Bank Term Loan towards Conversion of Forex Derivative Claims 12,375 5. HDFC Bank Ltd. Includes Term Loan towards Conversion of Forex Derivative Claims 8,727 6. ICICI Bank Canada Letter of Comfort (Guarantee) 6,896.34 Total: 27,998 6. As far as the details of the Operational Credit....
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....The said DRS submitted was already substantially implemented but could not be sanctioned due to vacancy in the bench of BIFR. The remedy offered in the notification dated 28.05.2016 for filing insolvency proceedings within 180 days of commencement of IBC i.e. 01.12.2016 was not availed. 10. Thereafter, a Writ Petition was filed in the Hon'ble Bombay High Court being W.P.(C) 9674/2017 on 28.10.2017 for challenging the validity of amended Section 4(b) of the Sick Industrial Companies (Special provisions) Repeal Act, 2003 as notified in Notification No. S.O. 3568(E) dated 25.11.2016 mainly on the ground that provisions of Section 4(b) of Sick Industrial Companies (Special Provisions) Repeal Act, 2003 was unconstitutional as it has made an arbitrary classification of the sick companies, wherein the DRS was sanctioned and which were protected by treating them as approved resolution plan, and whereas there was no remedy offered for the sick companies registered with the Hon'ble BIFR, whose DRSs were pending for sanction at an advance stage. This classification was challenged. 11. The Writ Petition was dismissed with a direction that the Corporate Applicant may apply for condonation of ....
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....and to the OA after including financials for FY 2012-13. 07.08.2013 Thereafter, the Corporate Applicant addressed a letter dated 07.08.2013 to the Hon'ble BIFR updating it on the settlements concluded by the Corporate Applicant as on that date. 24.09.2013 The Corporate Applicant also presented its latest version of the DRS to the OA on 24.09.2013. 01.10.2013 In a subsequent hearing dated 01.10.2013, the Hon'ble BIFR took on record the fact that the Corporate Applicant has entered into settlement with some of its creditors. The Corporate Applicant continued to negotiate the settlement with the remaining secured creditors in the interregnum period. 08.09.2014 Since 08.09.2014, on account of reconstitution of the Hon'ble BIFR Bench, no hearing had been scheduled at the Hon'ble BIFR for more than 2 years. 31.03.2016 The Corporate Applicant has duly complied with all the directions of the Hon'ble BIFR whereby the Hon'ble BIFR had directed the Corporate Applicant to submit a revised DRS from time to time after incorporating and taking into consideration the accounts ending particular financial years. Subsequently, the Corporate Applicant has also submitt....
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....ted altogether. 25.11.2016 Notification no. S.O. 3568(E) dated 25.11.2016, issued in exercise of powers conferred by Section 1(2) of the Repeal Act, was published in the Official Gazette thereby bringing into force the Repeal Act w.e.f. 01.12.2016. 25.11.2016 Notification no. S.O. 3569 (E) dated 25.11.2016 issued in exercise of powers conferred by Clause (b) of Section 4 of the Repeal Act whereby the Central Government notified 01.12.2016, as the date for the purposes of clause (b) of Section 4 of the Repeal Act. 01.12.2016 SICA was repealed in furtherance of the above mentioned notifications issued by Central Govt. of India. Consequently, BIFR and AAIFR stood dissolved in terms of Section 4(b) of the Repeal Act. It is pertinent to mention here that in view of the aforesaid, the protection granted under various provisions of the SICA also stood revoked. 28.10.2017 Consequent upon dissolution of the Hon'ble BIFR, the Corporate Applicant had approached to this Hon'ble High Court under Writ bearing W.P. (C) 9674/2017 for challenging the validity of amended Section 4(b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 as notified in Notifi....
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....lier of quality industrial minerals and ores. 1.3. AML was doing reasonably well upto 2007-08 and was earning good profits and had peak turnover in 2007-08 for Rs. 1491.64 crores with a group turnover of Rs. 1,743.37 crores. 1.4. However, since 2008-09, the AML has witnessed drastic reduction profits and also incurred huge losses subsequently owing to various reasons including claims raised by shipping companies and foreign exchanged derivatives losses which are disputed. Finally Net Worth of AML was completely eroded as per the financial results reflected in the Audited Balance Sheet (ABS) as at 31.03.2011. Hence, AML filed a reference application u/s 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) with the BIFR seeking registration of the unit as a Sick Industrial Company and requesting for appropriate measures to revive it. The said reference is registered as Case No. 34/2011. 1.5. The BIFR vide order of the hearing held on 12.3.2012, declared the company as sick industrial company in terms of Section 3(1)(o) of SICA and appointed Bank of India (BOI), as the Operating Agency (OA) under Section 17(3) of SICA with directions to submit Draft Rehabi....
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....3569E dated 25.11.2016. The background for the enactment and introduction of the Insolvency Code was that the existing law relating to Insolvency were ineffective. There were certain enactments in the past viz. SICA 1985, Recovery of Debts Due to Banks and Financial Institutions Act 1993, Violation and Reconstruction of Financial Provision and Security Interest Act, 2002, etc. had, as per the Legislature, proved to be ineffective and inefficacious, and were considered to be inadequate. Despite the aforesaid enactments there was a spiral increase and jump in the quantum of loans falling in the category of non-performing assets (NPA), adversely impacting financial institutions and banking section with negative fiscal repercussions on the economy. Delays and failure of the existing quasi-judicial mechanism in dealing with the aforesaid problem was a cause of grave concern and anxiety. This was adversely impacting India's rating on ease of doing business and investments. Need was felt to replace the said enactments with the Code, having improved and practical provisions with strict and fixed time lines. The objective of the Code is to consolidate and amend the laws relating to insolven....
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....in the Eighth Schedule to the said Code; And, whereas, the un-amended second proviso to clause (b) of section 4 of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 provides that any scheme sanctioned under sub-section (4) or any scheme under implementation under sub-section (12) of section 18 of the repealed enactment i.e., the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) shall be deemed to be a scheme under implementation under section 424D of the Companies Act, 1956 (1 of 1956) and shall be dealt with in accordance with the provisions contained in Part VIA of the Companies Act, 1956; And, whereas, section 424D of the Companies Act, 1956 provided for review or monitoring of schemes that are sanctioned or are under implementation; And, whereas the Companies Act, 1956 has been repealed and re-enacted as the Companies Act, 2013 (18 of 2013) which, inter alia, provides for scheme of revival and rehabilitation, sanction of scheme, scheme to be binding and for the implementation of scheme under sections 261 to 264 of the Companies Act, 2013; And, whereas, sections 253 to 269 of the Companies Act, 2013 have been omitted by Eleventh S....
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....isions of Part II of the said Code: Provided also that in case, the statutory period within which an appeal was allowed under the Sick Industrial Companies (Special Provisions) Act, 1985 against an order of the Board had not expired as on the date of notification of this Act, an appeal against any such deemed approved resolution plan may be preferred by any person before National Company Law Appellate Tribunal within ninety days from the date of publication of this order." 20. All these latest changes have duly been considered by the Hon'ble Delhi High Court in W.P. (C) 9674/2017 Order dated 01st November, 2017 titled as "Ashapura Minechem Ltd. Vs. Union of India". As per the final verdict, the Petitioner was advised that if deem fit may avail the remedy provided under the Insolvency Code, however, 180 days had lapsed hence could move request for condonation of delay to NCLT. This is one of the prime reasons that the Petitioner is now before NCLT u/s.10 of The Code and simultaneously seeking an Order u/s. 30 of The Code. 21. An interesting litigation cropped up revolving around the question of validity of the said Notification. In the case of M/s. Spartek Ceramics India Ltd., ....
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..... We are of the view that, having held that the appeal is not maintainable, the appellate Tribunal should not have adjudicated upon either the limitation aspect of the case or the merits of the particular Scheme before it. Therefore, while upholding the judgment passed by the appellate Tribunal on the ground that the appeal itself was not maintainable, we set aside the judgment insofar as it purports to deal with the limitation aspect of the case and the merits including the declaration of the Scheme as being illegal. 3) Insofar as Civil Appeal No. 8247 of 2018 and Civil Appeal D. No. 33241/2018 are concerned, it is clear that on the facts in these cases, originally., the appellants had approached the High Court of Delhi in writ Petitions. The High Court of Delhi, by judgment dated 22.,02.2018 (as modified by order dated 17.04.2018) and 14.09.2017, respectively ordered the parties to avail of the alternative remedy of filing an appeal before the NCLAT in view of the Notification dated 24.05.2017 which was done by the appellants in these appeals. 4) As the impugned judgment dated 28.05.20018 has set aside this Notification, and which has been upheld by us, the NCLAT, in both t....
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....re Notification dated 24.05.2017 (S.O. 3569(A) ) which was reproduced in the Order through which Sick Industrial Companies (Special Provisions) Repeal Act 2003 came into effect from 01.12.2016. On due consideration of all those Notifications it was held as under:- "5. FINDINGS : - On due consideration of the facts of this case and the Law applicable as discussed in the foregoing paragraphs, we have further noticed that there is a similarity in certain provisions now enacted as I & B Act, 2016 with the SICA provisions. There is also similarity in the intension for incorporation of these two Acts viz. Sick Industries Companies (Special Provisions) Act 1985 and Insolvency and Bankruptcy Code 2016, some of them as noted by us are as under :- (a) Under the SICA it was provided for timely detection of potentially sick Companies and therefore a speedy determination by a Board of Experts to explore remedial or ameliorative measures. Under the IB Code almost on the same lines the intention is to consolidate and formulate a procedure to reorganize the affairs of a Corporate Body to be proposed by Insolvency Resolution Professional in a time-bound manner. Therefore, under the SICA Act, i....
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....r inheres in the BIFR-to modify the scheme, it is always possible for the respondent-company or others to seek extension of time for accomplishing an important stage in the process of rehabilitation. That a provision prescribing time schedule is not mandatory but directory is a settled proposition of law. A reference may be made to a Full Bench judgment of Patna High Court in Shiveshwar v. District Magisrate . The full Bench after referring to Montreal Street Railways Co. v. Normandin AIR 1917 pc 142 and State of U.P. v. Manbodhan Lal Srivastava and various authorities including Maxwell on Interpretation of Statutes laid down that a provision regarding time limit is directory and not mandatory. The rehabilitation scheme binds the industrial company, the promoter, the participants of the company and the creditors and is in the nature of contract. Therefore, the same principle of statutory interpretation would equally apply in interpreting the rehabilitation scheme as well. Thus, under Section 22(1) of SICA, on expiry of seven years time schedule prescribed in the scheme for settlement of dues of all the other creditors, the protection granted to the respondent-company does not in an....
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....ur considered opinion the language of the Notification, comparison of the two statutes, facts of the case and the legal proposition laid down by the Hon'ble Courts, it is deemed expedient to take into account the proceedings already held in the case of this Company by BIFR/AAIFR. We have taken due cognizance of the guidelines issued by the Ministry of Corporate Affairs in the Notification dated 24.05.2017 as copied supra that the resolution process under the Insolvency Code can be taken up from the stage it was completed or left for further action under the SICA Act. It appears to be very logical that if a Company had undertaken a rehabilitation plan which for some reason or the other could not be finalized and any of the Party of the said DRS/MDRS is not satisfied thus moved Insolvency Petition before NCLT, then because of the impugned action of that solitary party should not hamper or thwart the steps taken so far for rehabilitation or rearrangement of the Debts in question. An altogether fresh exercise is not warranted which may lead to undue embarrassment to the new Investors who have proposed for rehabilitation and restructuring of the Company and its Debts. The comparativ....
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.... Creditors by constituting a Committee of Creditors. We hereby direct the IRP to inform the progress of the Resolution Plan along with a compliance report within 30 days on receipt of this Order. However, a liberty is granted to intimate the progress even at an early date, if need be. 8. To conclude, the Petition is hereby "admitted" and the commencement of the Corporate Insolvency Resolution Process is hereby declared with effect from the receipt of this Order. The IRP is hereby directed that, the Scheme Sanctioned under SICA shall be deemed to be an Approved Resolution Plan as prescribed U/s. 31 (1) of the I & B Code, 2016. However, rest of the compliances are to be made as per the provisions of the Code, some of them specified hereinabove. 9. Accordingly, this CP 1054/I & BC/NCLT/MAH/2017 stood admitted. The MA 177/2017 is also hereby made absolute only to the extent as directed." 25. The peculiarity and distinctiveness of this case from other routine cases is that on one hand the Corporate Debtor has moved the impugned petition U/s 10 (CP 4508 of 2018) of the Code i.e. commencement of Corporate Insolvency Resolution Process by declaring itself as insolvent. Simultaneous....
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.... COC. Fundamental reason of this observation and direction is that substantial exercise had already been done before the BIFR Authority therefore in less time the required I.M. can get finalised. In any case the appointed IRP is at liberty to collect data from other authorities so as to complete the process under IBC as per law. 28. However, this Bench is of the view that there is no requirement of publication to invite EoI. It can be said to be a path-breaking view, but according to my understanding, it is the only recourse available because in this case that exercise had already been completed under SIC Act. There is no requirement for inviting Resolution Plans in this case. As far as the applicability of S. 30 is concerned, a resolution plan is to be submitted by a Resolution Applicant on the basis of the Information Memorandum. But the situation in this case is that a Resolution Plan is already in existence. Not only that the said resolution plan is in existence, but it was duly acted upon. The said resolution plan was already considered by the bankers during SARFAESI proceedings. Those very bankers are now going to constitute CoC under Insolvency Code. This very 'Consortium' ....