TaxTMI 
TaxTMI 
2019 (3) TMI 1524
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....n Udyog Building, 3rd Floor, 278, D.N. Road, 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 (Gua....
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.... 4(b) of the SICA Repeal Act. 9. The case of the Corporate Applicant was that the dues of approximately 95% secured creditors were already settled. 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 st....
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....appointed and inducted Mr. Arun Chadha as a Special Director on the Board of the Corporate Applicant with immediate effect. 02.07.2013 A revised DRS was submitted on 02.07.2013 to the Hon'ble BIFR 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 ....
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.... Notification No. 3453(E) notifying Section 255 of the IBC with immediate effect and as a consequence Chapter XIX (Section 253 of 269) of the Companies Act, 2013, relating to the revival and rehabilitation of Sick Industrial Companies has been omitted 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 B....
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....any of the Ashapura group which was founded more than 50 years ago. The company enjoys an excellent standing amongst all of its stake holders including the customers, employees and amongst the society in the regions from which it operates. Commercially the company is a well-known global supplier 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 regi....
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....epeal Act, 2003 ("SICA Repeal Act") which came into force by virtue of the Notification No. S.O. 3568E dated 25.11.2016. Fait accompli, BIFR and AAIFR stood dissolved and SICA was repealed. Further, the proceedings in respect of the Applicant before the Hon'ble BIFR stood abated after coming into force of the provisions of Section 4(b) of the SICA Repeal Act which were brought into force by virtue of the Notification No. S.O. 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 fail....
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....ore, reproduced for ready reference:- "S.O. 1683(E).-Whereas, the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the said Code) received the assent of the President on 28th May, 2016 and was published in the official Gazette on the same date; And, whereas, section 252 of the said Code amended the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (1 of 2004) in the manner specified 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 ....
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....ction 4, in clause (b), after the second proviso, the following provisos shall be inserted, namely:- "Provided also that any scheme sanctioned under sub-section (4) or any scheme under implementation under sub-section (12) of section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall be deemed to be an approved resolution plan under sub-section (1) of section 31 of the Insolvency and Bankruptcy Code, 2016 and the same shall be dealt with, in accordance with the provisions 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 fi....
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....ramics India Ltd. (Civil Appeal No.7291-7292 of 2018 as under:- "2) Having heard learned counsel in all the three appeals before us for some time, and having gone through the judgment dated 28.05.2018 passed by the National Company Law Appellate Tribunal (NCLAT), we are of the view that the judgment of the NCLAT holding that the appeal filed by the Central Government in that case not maintainable in view of the fact that the Notification dated 24.05.2017 travels beyond the scope of the removal of difficulties provision is correct. 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....
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....es. In that case as well, pursuant to a Scheme the Debtor Company had made a substantial payment, stated to be to the tune of Rs. 150.71 Crores which was about 98.61% of the total liability. In the said decision it was acknowledged that during the pendency of the proceedings a Notification was pronounced (Notification No. S.O. 3568(E) dated 25.11.2016) through which SICA 1985 was repealed and SICA Repeal Act 2003 was promulgated wherein it was prescribed that the proceedings pending before BIFR were to be transferred to NCLT. In the said decision, there was a reference of one more 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.....
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....sanctioned and made enforceable after duly complying with various provisions of Section 18 of SICA, can even be modified by BIFR in accordance with Clause (b) of Sub-section (3) of Section 18 of SICA. Therefore, the implementation of rehabilitation scheme is a continuous process and can never be said to have been completely implemented with reference to one step or steps in the process of rehabilitation. By reason of the fact that by 15-6-2001, the time granted by BIFR for discharging other creditors is over, the protection under Section 22(1) is not taken away. In the case of SICA, having regard to Section 18(3)(b), where power 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 a....
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....id words i.e. to be proceeded with further. As the impugned judgment is based upon wrong assumption of the provision of law and completely ignoring the vital words noticed hereinabove the same cannot be sustained." "27. From the above it is quite clear that different situations can arise in the process of winding up a company under the Companies Act but whatever be the situation, whenever a reference is made to BIFR under Sections 15 and 16 of SICA, the provisions of SICA would come into play and they would prevail over the provisions of the Companies Act and proceedings under the Companies Act must give way to proceedings under SICA." 5.3. In our 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 complete....
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....of any Asset of the Debtor, encumbering any rights over the assets of the Debtor, however, the supply of essential goods or services to the Corporate Debtor shall not be terminated during Moratorium period. It shall be effective till completion of the Insolvency Resolution Process or until the approval of the Resolution Plan as prescribed under section 31 of The Code. (b) The IRP appointed shall act upon as prescribed under the provisions of section 13 of The Code by making a public announcement immediately hereafter within a period prescribed therein. The IRP so appointed shall also comply with the provisions of section 15 onwards of The Code by collating all the claims submitted by other 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....
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....7. As far as the petition U/s 10 is concerned, it is almost mechanical for the Adjudicating Authority to admit the same because in all such cases there is hardly any objector. Same is the position at present. On admission, Corporate Insolvency Resolution Process shall commence henceforth, and IRP shall be appointed. He shall constitute COC and convene the meeting. For the purpose of collection of necessary details for preparation of "Information Memorandum" as prescribed U/s 29 of the Code, it is hereby directed that the Corporate Debtor /petitioner shall immediately furnish the documents and financial data to the appointed IRP so that the requisite information memorandum can be prepared and to be placed before the 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, b....
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....ill completion of the Insolvency Resolution Process or until the approval of the Resolution Plan prescribed under Section 31 of the Code. 32. That the provisions of Section 13 of The Code about Public Announcement are to be carried out as per the instructions pronounced in foregoing paragraphs. 33. The appointed IRP shall also comply the other provisions of the Code including Section 16 to Section 18 of The Code, however, before taking any step required to obtain direction from this Bench to avoid any conflict among the view taken hereinabove and the Corporate Insolvency Resolution Process. Further the IRP is hereby directed to inform the progress of the Resolution Plan to this Bench and submit a compliance report within 30 days of the appointment. A liberty is granted to intimate even at an early date, if need be. 34. The Petition is hereby "Admitted". The commencement of the Corporate Insolvency Resolution Process shall be effective from the date of order. 35. Ordered Accordingly. ============= Document 1 Details of collateral properties mortgaged by the Corporate Debtor S. No. 1 2 DESCRIPTION OF THE PROPERTY First Pari-Passu Charge to BOI Consorti....