TaxTMI 
TaxTMI 
2019 (7) TMI 284
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....HAYA, J. This appears to be one of the malicious initiation of proceedings initiated by the 'Corporate Debtor' under Section 10 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) with malicious intent for any purpose other than for the resolution of insolvency, or liquidation. 2. However, the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata, while approving the so-called 'Resolution Plan' which is against the object of the 'I&B Code', observed: "The Resolution Plan in the case in hand is a unique plan which provides no revival of the corporate debtor but to close it by discharging its debts to all stakeholders inclusive of its staff and workmen." 3. The Appellants have challenged the common impugned order dated 6th March, 2018 passed by the Adjudicating Authority whereby the 'Resolution Plan' submitted by the 'Corporate Applicant'- 'Burn Standard Company Limited'- has been approved which provides for no revival of the 'Corporate Debtor' but closure and retrenchment of all the workmen. 4. Two appeals have been preferred by 'Industrial Services'- ('Operational Creditor') alleging non-consideration of its claim b....
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....2.0.1 Burn & Company came into existence in 1781 at Howrah, West Bengal. The Company with rich legacy had the experience of building many important structures in Calcutta like St. Andrews Church in 1818, the 152m high Ochterlony Monument (now known as Shahid Minar) in 1828. Subsequently its Construction business was taken over by Sir Rajen Mukherjee's Company Martin & Co (founded in 1890), which has to its credit of building waterworks at Palta, Ahmedabad, Lucknow and Benares. But its major contribution are architectural -marvels like Esplanade Mansion near Raj Bhavan/Great Eastern Hotel, Standard Chartered Building, South Eastern Railway Headquarters in Garden Reach, Tipu Sultan. Mosque, the Victoria Memorial etc. BurnC6 had a major role for construction of Kolkata prestige such St. Xaviers' College, Oriental Seminary, Belur Math, the headquarters of the Ramakrishna Mission, Darbhanga House - the Calcutta residence of Darbhanga Raj, Assembly House, Grand Hotel Arcade, United Bank Building, New Secretariat Building, Club House at Eden Gardens. 2.0.2 The ever-increasing traffic movement between the twin cities of Calcutta (now Kolkata) & Howrah demanded a wider and stronger....
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.... net worth, Company was referred to BIFR i? November 1994 & officially declared sick in January 1995. Rehabilitation package approved by BIFR in April 1999 was declared failed in 2001. Efforts to bring in change in management did not fructify. Then a revival plan Was approved by CCEA in August 2010. After revival Of package, Company came under the administrative control of Ministry of Railways (MOR) from Ministry of Heavy Industry & Public Enterprises on15.09.2010. 2.1.2 The reasons for declaring the scheme as failed were as follows : i) Production in the following years did not increase as projected because of dearth of orders of wagons. ii) It was observed that the viability of the scheme could be achieved only by further restructuring of GOI liabilities and support from other agencies. 2.1.3 Accordingly, BIFR the Company to submit modified rehabilitation scheme based on the commitments of GOI for additional relief & concessions. Subsequently GOI explored the possibility of dive of shares of the company. BIFR directed 1131, the operating agency to advertise for change of management but there was no response in this matter. Subsequently BIFR app....
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....orporate Applicant' submitted the plan in question as noticed which does not provide revival of the 'Corporate Debtor' but to close it by discharging its debts to all stakeholders including its staff and workmen. 16. The 'Committee of Creditors' was happy as they were getting full payment, therefore, they approved the plan without going through the question as to whether the plan in question is in conformity with Section 30(2) (e) of the 'I&B Code' and achieves the Objects of the 'I&B Code'. 17. The plan filed by the 'Corporate Applicant' shows that the Ministry of Railways (Railway Board), Government of India made provision to pay total outstanding dues of Rs. 417.10 Crores which means that the 'Corporate Debtor' on receipt of amount is in a position to pay the total dues of all the creditors, as appears from proposed strategy of 'Resolution Plan', which is as follows: CHAPTER - III RESOLUTION PLAN 0 Main strategy proposed 3.01 Ministry of Railways (Railways Board), Government of India , has communicated vide letter No. No.: 2010/M (W)/300/2 dated 12th Feb 2010 (copy enclosed as annexure - A) that the revival plan submitted by the company, vide their ....
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....t of India (GOI). * Arear payment for all concerned officers against 1992 pay revision which has been admitted will be paid in the 2nd Qtr of 2018 -19 on receipt of fund from the Government of India (GOI). * All Government (dues of Government of India as well as dues of Government of West Bengal) will be paid within the 2nd Qtr of 2018 -19 on receipt of fund from the Government of India (GOI). * Voluntary Retirement Scheme (VRS) is to be Introduced. All the 500 employees on roll of the company will be offered VRS and final settlement will be done within 1st Qtr of 2018- 19 and effort will be made to pay all dues within in the 1st Qtr of 2018-19 on receipt of fund from the Government of India (GOI). Balance payment if any will be paid in the 2nd Qtr of 2018-19 3.1.3 Schedule of payment for the Resolution Plan: Particular Amt. (Rs./Cr.) As provided by Management As considered the in plan Payment schedule * Cost of Insolvency Resolution Process (approved by COC) 0.17 0.00 Fully paid * Pending dues to the employees: ....
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.... the years has shown decline and there seems no prospect of revival/turn around in future as BSCL is engaged in mainly wagon manufacturing for which there is an already developed competitive market. Ministry of Railways (Railway Board) has recommended closure of the company. Fund provision of Rs. 417.10 Crore already made In the Railway Budget for the financial year 2018 -19 ((copy enclosed as Annexure-B) for settlement of liabilities of company so that the closure of the company can be effected. In view of the above, Resolution Plan has been prepared for ensuring settlement of dues of the creditors on receipt of fund as proposed in payment Schedule of the Resolution Plan Supervision & implementation of the resolution plan will be done by the Board of Directors of the Company as "going concern". 18. Though during the 'Resolution Process', and thereafter, the 'Resolution Applicant' is required to ensure that the company remains as a going concern but contrary to the provisions of the 'I&B Code', closure of the 'Corporate Debtor' has been proposed and approved by the Adjudicating Authority. 19. That immediately after approval of the 'Resolution Plan', on 17th April, 2018,....
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....504 Inamul Haque Helper 7. 3543 Satyanarayan Singh Yadav H/Man 8. 4627 Krishna Ch. Karan Fitter 9. 5448 Gautam Dey Fitter 10. 7001 Lakshman Yadav Erec. 11. 7008 Bala Krishna Sundara Crane Driver 12. 7009 Panchanan Bag Welder 13. 7038 Uday Narayan Gond Tool Issuer 14. 7057 Md. Sawood Khan Co2 Weld/Auto Oprt. 15. 7064 Farooque Ahmed Co2 Weld. 16. 7085 Jhantu Kumar Bayen Fitter 17. 7075 Shiva Sankar Mondal Co2 Weld 18. 7428 Ash. Mohammad Mech. 19. 7765 Jahangir Mistry Mech. 20. 7769 Shyamal Kumar Sarkar Mech. 21. 7771 Sujoy Kumar Das Slinger 22 7772 Tapan Hazra Mech. 23. 7774 Matloob Ahamed Mech. 24. 7777 Sandip Sarkar Mrk./Fitter 25. 8172 Sk. Md. Ayub Fitter 26. 8242 Sudama Yadav H/Man/Ch. 27. 8703 Sanjoy De LL/Man 28. 8715 Braja Gopal Naskar LL/Man 29. 8783 Prosanta Kumar Jana Welder 30. 9396 Kanhaiya Choudhury Engg./Attdn. 31. 9807 Tarun Kamakar Elect. 32. 10022 Dhruba Kum....
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....duction from 2011-12 to 2017-18 (upto January 2018) of the different products is tabulated below:- ITEMS 11-12 12-13 13-14 14-15 15-16 16-17 17-18 (Up to Jan 2018) Wagons (Nos.) 1208 1482 1483 707 318 545 780 Bogle (Nos.) 1750 2182 2557 1768 1568 1912 1204 Coupler (Nos.) 91 92 420 1141 1945 2494 1898 Draft Gear (Nos.) 0 0 0 252 485 903 994 Molten Material (MT) 3032 5049 6232 4887 4965 5970 3842 Wagon Repair (Nos.) - - - - 2305 4028 4117 Fabrication of Barges (MT) - - - - 400 400 100 23. It shows that the 'Corporate Debtor' was a going concern and produced 780 Wagons; 1204 Bogie; 1898 Coupler; 994 Draft Gear; 3842 Molten Material (MT); 4117 Wagon Repair and 100 Fabrication of Barges (MT) during the period 1st April, 2017 to January, 2018. 24. The key financial indicators have been shown in the 'Resolution Plan' which are as follows: Kay Financial Indicators 14-15 15-16 16-17 17-18 (Projected) Gross Sales 124.56 116.50 187.99 250.10 ....
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....ing the 'Corporate Debtor' from its own management and from a corporate's death by liquidation, as quoted below: "19. The Preamble of the Code states as follows: An Act to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto." 20. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganization and insolvency resolution of corporate debtors. Unless such reorganization is effected in a time-bound manner, the value 38 maximization of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons....
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....rocess goes through as fast as possible so that another management can, through 40 its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends." 27. In "Y. Shivram Prasad Vs. S. Dhanapal & Ors. ─ Company Appeal (AT) (Insolvency) No. 224 of 2018 etc." this Appellate Tribunal by its judgment dated 27th February, 2019 while referring the decision of the Hon'ble Supreme Court including the provisions of the 'I&B Code' held that the 'Resolution Professional' and the 'Liquidator' are to ensure that the company remains a going concern. Steps should be taken for resolution at different stages including the liquidation stage to keep the Company a going concern in the interest of the employees. On failure, at the last stage the death of the 'Corporate Debtor' be made by liquidation. 28. The Hon'ble Supreme Court in "Swiss Ribbons Pvt. Ltd. & Anr. vs. Union of India & Ors" (Supra) specifically held that the closure of the Company is against the Preamble of the Code, which reads as follows: 21. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate de....