TaxTMI 
TaxTMI 
2018 (6) TMI 1617
X X X X Extracts X X X X
X X X X Extracts X X X X
....dmitted and moratorium was commenced by appointing Mr. S.K. Gofa as interim resolution professional. 3. Time-to-time the resolution professional has submitted the progress report and the meeting of the committee of creditors ('CoC) held as prescribed under the Code. The insolvency resolution professional has also appraised the financial position by submitting provisional financial statements. 4. During the course of the third meeting of the CoC conducted by the resolution professional, held on the 5th of April, 2018, the sole financial creditor of the corporate debtor, the Bank of Baroda, informed the resolution professional that it had approved and sanctioned a "One Time Settlement" offer issued by one Mr. Mahendra Wig. The Bank of Baroda further informed the resolution professional that they would seek to explore the option of treating the said "One Time Settlement" offer be treated as a resolution plan. A copy of the minutes of the meeting of the CoC meeting held on the 5th of April, 2018 is considered. 5. The resolution professional has also informed that Valuation Reports have been procured depicting average Liquidation Value at Rs. 87.60 lakh. The claim of the financia....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Code (Amendment) Ordinance, 2017 is hereby repealed. Once the expression "hereby" is used in the language, hence, there is no confusion that the repealed Act has come into force from that day. In other words the term "hereby" is also to be read "henceforth". 7.4 Further vide section 10(2) it was made clear that: "Notwithstanding such, repeal, anything done or any action taken under the Insolvency and Bankruptcy Code, 2016, as amended by the said Ordinance, shall be deemed to have been done or taken under the corresponding provisions of the said Code, as amended by the Act." This sub-section has, thus, made it clear that any action taken under the Code shall be deemed to have been done or taken under the corresponding provision of the Act, but this sub-section is silent about the retrospective applicability 7.5 Although the amendment itself is very clear that the provisions of section 29A of the Code had come into force with effect from 23rd November, 2017, but to arrive at a final decision it is expedient to discuss the law laid down relating to applicability of an amendment. Hence a brief description is required. In this regard few case laws are worth mentioning, named as un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n section 5 of "definitions" it is defined that the "insolvency commencement date" means the date of admission of an application for initiating corporate insolvency resolution process. It is applicable to all sections, i.e., section 7, 9 or section 10 of the Code. A period is prescribed, i.e., 180 days beginning from the commencement date. Continuity of the proceedings is also demonstrated from the 'headings' of section 10 that the process is initiated by the corporate applicant and to be completed under section 12 within a prescribed period which can be extended but once extended shall not further be extended. Even under section 14 the period of moratorium is effective during the insolvency process, however, shall ceased, to have, effect from the date of approval or resolution plan or pronouncement of liquidation, in simple language the CIRP is a process and can be said to be that the process is nothing but continuous of one proceeding, which commences from the date of 'admission' of an application either under section 7, 9 or 10 and it ends till an Order is passed under section 31, approving the resolution plan or under section 33 by initiating 'liquidation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....equired to be studied before recording subjective satisfaction. If the CoC has submitted the scheme of resolution after visualising the advantage and dis-advantage then such proposal can be termed as just and equitable fit for according satisfaction. An 'objective satisfaction' revolves around the object of enactment of the Code as enshrined In the preamble of the Code, i.e., to revive the financially stressed corporate body. And the 'subjective satisfaction' depends upon logical analysis of the Financial Data supplied so as to match with the business, model of the corporate debtor. A methodical scrutiny of financial statement is expected before concurring with approval of the CoC. Per contra, absence of recording of subjective satisfaction may lead to situation that, being sanctioned without judicial analysis, thus, may not be sustainable in the eyes of law. There are no two views, and must not be, that this I & B Code provides greater accountability both on the insolvency professional, as also on CoC, mainly comprise of lender Banks. Their approval of a resolution plan ought to be judged with due diligence. Therefore, in our humble interpretation the recording of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nding dues of the secured financial creditor ('BoB') shall be written off, hence, the waiver granted is narrated by the resolution applicant as under: 12. The resolution applicant, thus, undertakes to make the payment as under: "Payment Schedule to the financial creditors: 13. That there are other outstanding dues of operational creditors as follows: 13.1 That from the side of resolution applicant a summary of the entire plan is also submitted; Only relevant, portion is reproduced for the sake of completeness, as under- Sl. No. Criteria Provision in resolution plan 1. Provides for the payment of insolvency resolution process costs in priority to the repayment of other debts of the corporate debtor. Paragraph 7 of the resolution plan relates to the payment of insolvency process costs in priority to all other debts. Total insolvency process costs: Rs. 8.85 lakh Corporate Applicant has already paid Rs. 5 lakh. Remaining ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in Rs. 103 lakh and has handed over the same to the financial creditors to show his bona fides (see additional affidavit of resolution applicant indicating source of funds). 2. Provides for the payment of insolvency resolution process costs in priority to the repayment of other debts of the corporate debtor. Paragraph 7 of the resolution plan relates to the payment of insolvency process costs in priority to all other debts. Total insolvency process costs: Rs. 8.85 lakh Corporate applicant has already paid Rs. 5 lakh. Remaining insolvency process costs to be paid in priority to all other debts: Rs. 3.85 lakh See page 31 MA. 3. Provides for the payment of liquidation value owed to operational creditors within a period of 30 days of approval of resolution plan. Paragraph 10 of the resolution plan relates to the payment of dues to operational creditors. A breakdown of the liquidation value due to each creditor under section 53 is provided in paragraph 16.2 of the resolution plan (Page 37 of the MA). As can be seen, the liquidation value available to be paid to the operational creditors (who are all unsecured creditors) is nil. Therefore, there is no liquidat....