TaxTMI 
TaxTMI 
2017 (10) TMI 1444
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....IFR) proceedings were finalized in respect of part of the outstanding Debt? b) Whether the Insolvency Resolution Process be commenced in respect of the entire Debt or confined to the part of the Debt which is not considered or adjudicated upon by the authorities Of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) ? 3. To get the answer, first a Miscellaneous Application (177 of 2017) is to be addressed wherein it is informed that the 'Modified Draft Rehabilitation Scheme' (MDRS) filed by the Petitioner on the basis of an order of AAIFR be considered before appointing an Insolvency Professional, The backgrounds of the events were that the Company was promoted by one Mr. S.N. Shetty in the year 1982 to manufacture snack foods and Soya Oil. In the year 1990 there was a diversification in the business for setting up an alcohol based Glycol Plant near Pune. The Project was originally estimated at R275 crores, however, completed at the cost of 088 crores in 1993. The said Project was part-financed by Term Loan of t218 crores. The completion of the Project had coincided with the de-control of Molasses and Alcohol prices. Due to the said reason the Project has bec....
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....F Department is restrained from taking any coercive against the company and its directors, till the next date of haring. (d) since the dues of the Sales Tax Department, Maharashtra Wilf be part of MDRS, therefore, permission for recovery at this stage is not appropriate, therefore, permission for recovery at this stage is not appropriate, ... " 3.3 Thereafter, efforts have been made to resolve the issue with Sales Tax Department. Hence IDBI Operating Agency (OA) convened a joint meeting on 02-01-2014 for crystallization of dues of Sales Tax Department. On one hand the Company had made an offer of on the other hand the Sales Tax Department offered a final amount of The MDRS was again submitted for due consideration BIFR. On 26.10.2016 the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) had given a direction as under ; " we dispose of this appeal with the direction to the BIFR that the MDRS filed by the appellant should be considered on merits without being influenced, in any manner, by the observations made in the impugned order," 3.4 Thereafter, changes in Law had occurred. On 25.11.2016 vide Notification No. S.O. 3568 (E), the SICA Act 1985 was repe....
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....Hon'ble BIFR stood abated but due to filing an Application before the Hon'ble NCLT within a period of 180 days, those very proceedings shall continue. It is also vehemently pleaded that the new proceedings shall commence from that very stage from where it is transferred. A Notification in the form of Insolvency & Bankruptcy Code (Removal of Difficulties) Order, 2017 had clarified that if an order has been passed by BIFR or AAIFR then for continuing the resolution process the scheme shall be incorporated from the stage where it was before the repeal of the SICA Act. Under the said repealed Act, the resolution plan had already been approved by OA, hence not required to submit another plan. Rather, an argument is that there is no requirement of even a submission of form no.6 and the Professional can submit resolution plan under section 30 of I&B Code. out of abundant precaution Form NO.6 had been filed to be considered for granting permission to carry out the CIRP from the stage it was left before BIFR and other Authorities due to repeal of the SICA Act. The sanctioned SS- 08 scheme thus to be considered as Approved Resolution Plan (ARP). Several Prayers have been made in the ....
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....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, it was to be formulated by a Board. However, under 1B Code, restructuring is to be formulated by an IRP. (b) Under SICA Act, Financial Institutions, Banks etc. were termed as "Operating Agencies" (O.A.), whereas under 1B Code, the terminology is "Resolution Professional". However, there is a key departure because the IRP is an independent person as against the O.A. Under Section 15 of SICA Act, the matter was required to be referred to a Board ....
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..... 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 any manner diminish or G taken away. By reason of non obstante clause under Sub-section (1) of section 22 of SICA, the company petitions cannot be entertained and there cannot be an order for advertisement of the petitions. " 5.2 Likewise, on due analysis of a decision of the Hon'ble Supreme Court pronounced in the case of Madura Coats Limited Vs. Modi Rubber Limited (2016) 7 Supreme Court Cases 603), we have noticed that a legal proposition has been laid down that :- ....
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....e 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 NCC T, 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 comparative study as per above paragraphs have also demonstrated that the steps for rehabilitation of a stressed Company are almost identical, therefore, now it is dear that the repetition of those very steps has no logic and shall not going to get a legal sanctity. Up to that stage where certain steps have already been taken and that the Debts have been restructured, now expected to be honored and recognized by the newly enacted Code. 5.4 The Petitioner has placed on record the consent letter of most of the....