TaxTMI 
TaxTMI 
2019 (6) TMI 419
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....r approval of a Resolution Plan. On receiving this Application along with Resolution Plan an Order is hereunder passed as prescribed U/s 31(1) of The Code. 2. The 'Operational Creditor' Percula Shipping & Trading INC had filed a Petition by invoking the Provisions of Section 9 of The Code against the Corporate Debtor Dadi Impex Private Limited read with Rule 6 of The Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016. 2.1. After considering the merits of the case, the said Petition was admitted vide an Order dated 22.05.2018 (CP No.1562/I&BP/NCLT/MB/2017). Initially Mr. Sudip Bhattacharya was appointed as IRP. Pursuant to initiation of Corporate Insolvency and Resolution Process, in the first CoC meeting dated 28.06.2018, the IRP Mr. Sudip Bhattacharya was resolved to be replaced by Mr. Martin Golla to act as the Resolution Professional of the Corporate Debtor. The order of substitution of the IRP was passed on 20.07.2018 by this Tribunal. 2.2 The Applicant submits that on 12.11.2018, Mr. Martin Golla was debarred from practising as an Insolvency professional by the IBBI Disciplinary Committee, therefore, in the 6th CoC meeting, Mr. Dhiren Shantilal....
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.... Company, as a part of their moral duties towards their parents, will be helping their parents in the business. With the additional help of the continuing staff, customers, etc., the business of the Company continues and shall continue. 6. The salient features of the Resolution Plan are discussed herein below: (A) PRELIMINARY This Resolution Plan is prepared by Mr. A.P. Choudhari & Mrs. Manju Choudhari (Jointly), hereinafter also called as Resolution Applicant for re-acquire of M/S. DADI IMPEX PRIVATE LIMITED, hereinafter also called as Corporate Debtor (CD) for submission before Mr. DHIREN SHAH, an Insolvency Professional, appointed as Resolution Professional for Corporate Insolvency Resolution Process of the Corporate Debtor under Insolvency and Bankruptcy Code, 2016. The Resolution Plan has been prepared based on the information provided in the Information Memorandum (IM), additional information from the Resolution Professional, Public Domain and application U/s 9 of IBC 2016. (B) OVERVIEW OF THE CORPORATE DEBTOR Sr No. Particulars Particulars 1 Name of Corporate Debtor Dadi Impex Private Limited 2 Registered Address 614, Laxmi Plaza, La....
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.... 2 Mrs. Manju Choudhari (Director) 12,03,000 1,20,30,000 37.59 3 Ms. Neha Choudhari 1,12,000 11,20,000 3.50 4 Ms. Mehak Choudhari 6,95,332 69,53,320 21.73 Total 32,00,000 3,20,00,000 100.00 (F) LIABILITIES OTHER THAN SHARE CAPITAL AND RESERVE AS PER BALANCE SHEET AS ON 22-05-2018 Particulars Amount Term Loans - Secured SBI Car Loan 36,20,372 Capital First Ltd. 5,92,87,848 Tata Capital Finance Service Ltd 2,92,214 Bajaj Finance Ltd 13,61,499 HDFC Bank Ltd 8,61,771 Deutsche Bank 8,48,481 SHORT TERM BORROWINGS Secured Loans Repayable on Demand, from Bank SBI, Cash Credit Account 5,14,84,538 SBI, EPC Account 36,86,87,264 Trade Payables 2,86,30,629 Outstanding Liabilities for Expenses 2,25,99,099 Statutory Dues 51,40,235 Trade Advances 6,76,90,311 TOTAL 61,05,04,260 (G) CURRENT ASSETS AS PER BALANCE SHEET AS ON 22-05-2018 Particulars Amount Trade Receivables 2,19,12,727 Sundry Advances 11,81,269 Trade Receivables 2,08,24,692 BALANCES WITH GOVT. AUTHORITIES ....
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....e of Dues Forum where dispute is pending Period to which the Amount relates Amount involved 1 Income Tax Act Penalty Demand CIT(Appeals) A.Y.2010-11 3,30,630 (M) OVERVIEW OF RESOLUTION APPLICANT Resolution Applicant • 1. Mr. Anand Prakash Choudhari and Mrs. Manju Choudhari Constitution Individuals - Jointly Address A/203 Legend Building, Lokhandwala, Andheri (w), Mumbai - 400053 (N) BRIEF WRITE UP ON RESOLUTION APPLICANT Mr. Anand Prakash Choudhari and Manju Choudhari have been married for 38 years and actively engaged in international trade for over 30 years. Mr. and Mrs. Choudhari have traded in many commodities such as salt, iron ore, cement clinker, sulphur, timber, bauxite, soyabean extract, china silk fabrics, etc. Mr. Anand Prakash Choudhari has a net worth of about 6.14 crores and Mrs. Manju Choudhari has a net worth of about 14.31 crores. Mr. Choudhari has been the President of Kandla Timber Association, Kandla Free Trade Zone, Lions Club of Gandhi Dham and many other associations. Mrs. Choudhari has also been the president of Lions Club of Seaside, Mumba....
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....n Fulfilment of conditions A CIRP Costs (As approved by CoC) Total CIRP Cost which includes any expenses which have been incurred in the during CIRP period and total of outstanding liability as on 28^th February 2019 is Rs. 9.36 crores (subject to para 09 below). In addition to this, as the Corporate Debtor is going concern, any amount which arises after 28^th February 2019 will be added and the same will be paid from the accounts of the Corporate Debtor. Source : Information Memorandum B Payment of liquidation value for Workmen Dues Regulation 38(1) There are no workmen dues claims as on date of CIRP. In case of claims of the Operational Creditors, though the liquidation Value is NIL, the resolution applicant has proposed to pay each of the operational creditors, 2% of the total amount claimed by them in priority to financial creditor as per Regulation 38 (1) of IBC 2016 as upfront payment. Source : Information Memorandum C A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor. Regulation 38(1A) Table no 21 on page No. ....
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.... 2) Residential Flat at Lokhandwala 3) Corporate Office at Laxmi Industrial Estate 4) Residential Flat at Metropolis 5) Office at Corporate Park, Gandhidham, Gujarat (iii) Based on the above details, the Resolution Applicant proposes to reduce the limit as follows: a) To reduce the present total limit of Rs. 42.5 crores to Rs. 38 crores by requesting the bank to liquidate the FDR along with accrued interest till March 2019 which is approximately 4.5 crores, which SBI are already in possession of and to consider this as upfront payment on the approval of the Resolution Plan by the Adjudicating Authority. b) To pay Rs. 3.5 crores within next 12 months from the date of approval of Resolution plan by Adjudicating Authority which will further reduce the overall credit limit to Rs. 34.5 crores. Resolution Applicant proposes to pay this amount on account of expected GST refund. The process of claiming the refund with the GST department has already been initiated. c) In case, the expected GST refund is delayed and not received within 12 months, then the Resolution Applicant propose to pay the amount of Rs. 3.50 crores in 3 equ....
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....se, there is balance left, the same will be utilized for repayment of term loan with SBI. No foreclosure fees will be paid by the Resolution Applicant in such situation. 5. Also the Resolution Applicant propose not to change the status of the Loan account to NPA for non-payment of EMI during CIRP and to maintain the account as Standard Account. 6. Resolution Applicant asks for waiver of penal charges which have arise on account of non-payment of EMI during the CIRP period to IDFC Bank. 7. Based on above we propose to make 100% repayment for the loan of IDFC first. (v) Loan Repayment for others As the corporate debtor is a going concern, the loan which were taken from the below mentioned banks are being paid on regular basis and Resolution Applicant proposes to continue to honour the repayment of the loans. The loan taken from Deutsche Bank and Tata Capital has been repaid in full as on date whereas SBI Car Loan, Bajaj Finance Ltd and HDFC Bank Ltd. Loans are still on going. (vi) Payment to Operational Creditors The claimed operational creditors will be paid 2% of the claim admitted as per information provided b....
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.... its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule. (S) UTILISATION OF FUNDS Sr. No. Nature 30 days FY 2019- 20 FY 2020- 21 FY 2021- 22 FY 2022- 23 FY 2023- 24 FY 2024- 25 FY 2025- 26 FY 2026- 27 TOTAL A Unpaid CIRP Cost (As approved by CoC - approx.) 9.36* - - - - - - - - 9.36 B Payment to Creditors 5.23 6.70 3.12 3.18 3.35 3.59 3.83 3.98 0.29 33.28 GRAND TOTAL 14.59 6.70 3.12 3.18 3.35 3.59 3.83 3.98 0.29 42.64 *(subject to para 09 below). (T) PAYMENT SCHEDULE AND CONDITIONS a. Total Consideration Resolution Applicant has offered to Rs. 42.64 crores as total co....
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....in future as per law. (V) PROPOSED SETTLEMENT OF DUES UNDER THE PROPOSED PLAN Amt in Crores. Sr. No. Claim Type Amount Due TOTAL PAID Unpaid % REPAID A CIRP APPROX. CIRP COST - Unpaid 9.36 9.36 - TOTAL - A 9.36 9.36 * - 100% B FC State Bank of India 42.50 20.50 22.00 48% State Bank of India - Interest on TL - 3.16 - Capital First Limited 5.87 5.87 - 100% Capital First Limited - Interest - 2.50 - SBI Car Loan 0.36 0.36 - 100% Bajaj Finance Ltd 0.14 0.14 - 100% HDFC Bank Ltd 0.09 0.09 - 100% TOTAL - B 48.96 32.62 22.00 55% C OC Starchart Maritime Consultancy ....
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.... para 09 below) The liquidation value is low and does not cover the entire dues of Secured Creditors and Workmen, hence commencement of liquidation is not advisable. (Y) MANAGEMENT OF THE COMPANY The Company shall continue as a going concern and operate in its normal course of business upon implementation of the Proposed Plan. The management of affairs of the Company after approval of the plan would be done as follows: a. Appointment of a Monitoring Agency A committee comprising of one representative State Bank of India being the lead banker and M/s. Parekh Shah & Lodha are proposed to be appointed as monitoring agency for as per the provisions of the Code The monitoring agency shall monitor the day to day operations of the Company and provide regular updates to the Resolution Applicant and financial creditors till all the approvals necessary for implementation of the plan are in place and a professionally managed Board is appointed by the Resolution Applicant. The Monitoring Agency would also supervise the implementation of the resolution plan and would continue to do so even after formation of a Board until the claims of secured financial creditors are settle....
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....lan and settlement of the Creditors happen concurrently, the newly appointed Board shall take up the responsibilities of the day to day affairs of the Company. The Resolution professional /suspended board may be directed to hand over all important documents pertaining to the Resolution applicant on approval of the plan for smooth functioning of the Corporate Debtor. It is requested that, on approval of Resolution Plan by the Adjudicating Authority, the control of the company, possession of all the assets and records to be peacefully handed over to the Resolution applicant. f. Corporate Actions The Company shall take appropriate corporate actions necessary for implementation of all the provisions of the Proposed Plan, which includes (i) Filing of appropriate documents or forms with interalia RoC, SEBI, MCA and RBI and obtaining relevant consents / approvals from such regulatory authorities, (ii) Approval of / intimation to existing shareholders, (iii) Issuance of shares and instruments as provided in the plan and (iv) Regular compliances as per the governing law. (Z) SUPERVISION OF THE PLAN The newly appointed Board shall h....
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...., the proposed Resolution Applicants and the proposed new management of the Company shall be bound by such revised constitutional document. b. Execution of the material agreements by the Resolution Applicant The Resolution Applicant shall execute material agreements as required under the plan, initiate approvals and infuse funds as required under the Proposed Plan. c. Governing Law The Company and the new management shall be governed by the laws of India while giving effect to NCLT order approving the Proposed Plan and any agreements, documents and instruments executed in connection with the Proposed Plan. d. Binding Effect This Proposed Plan once approved by the Adjudicating Authority shall be binding on the corporate debtor, its employees, members, creditors, guarantors and other stake holders. e. Severability In the event that CoC or the Adjudicating Authority determines that any provisions of the plan are prima facie or otherwise unenforceable, the Resolution Applicants may modify the Proposed Plan to the satisfaction of the Adjudicating Authority (option to pull out if any unacceptable clause is approved without affecting our performance Security). f....
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....ebtor. 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. To sum up, in our humble interpretation the recording of an analytical 'satisfaction' is a condition precedent before granting of approval. 8. The Approval of the Resolution Plan is subject to certain qualifications to be read along with the plan and to be followed in implementation of the plan. The first qualification is about the rent of Rs. 80,000/- in respect of property lent out by Mrs. Manju Choudhari to the Corporate Debtor used by the Corporate Debtor for its Corporate Office proposed to be paid to Mrs. Choudhari; is hereby restricted and not to be paid during the implementation period of the Resolution Plan. In lieu, a sum of Rs.25,000/-....
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....rtion of the said judgement is reproduced herein below: "As aforesaid, upon receipt of a "rejected" resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC muchless to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the legislative history and the background in which the I&B Code has been enacted, it is noticed that a completely new approach has been adopted for speeding up the recovery of the debt due from the defaulting companies. In the new approach, there is a calm period followed by a swift resolution process to be completed within 270 days (outer limit) failing which, initiation of liquidation process has been made inevitable and mandatory. In the earlier regime, the Corporate debtor could indefinitely continue to enjoy the protection given under Section 22 of Sick Industrial Companies Act, 1985 or under other such enactments which has....