TaxTMI 
TaxTMI 
2019 (7) TMI 465
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.... A.S. Chandhiok, Sr. Adv., Ms. Sweta Kakkad, Priya Agarwal, Ms. Aditi Mohapatra, Angad Baxi, Biswajit Dubey, Ms. Surbhi Khattar, Ms. Ruchi Chaudhary, Vaibhav Mishra, Manu Mridul, Sumit Mamgain, Shalaj Mridul, CA-938 (PB)/2018 : Ms. Sonal Gupta and Ms. Malvika Bhanot, Advs. ORDER S.K. Mohapatra, Member. 1. This is an application filed by the Resolution Professional under Section 30(6) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred as the "Code") read with Regulation 39(4) of The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 seeking approval of the Resolution Plan. The Resolution Plan duly approved by the Committee of Creditors (CoC) with the requisite majority has been placed on record. 2. The facts in brief necessary for disposal of the present application are as follows: - 3. One of the Financial Creditor, namely, Edelweiss Asset Reconstruction Company Limited had preferred an application under Section 7 of the Code for initiation of corporate resolution process against M/s. Tecpro Systems Limited ("Corporate Debtor"). The application was admitted on 7th August, 2017 imposing morator....
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....y the abovementioned resolution applicants. Additional time up to April 27, 2018 was granted to EFPL and KIPL to incorporate the suggestions communicated by the Committee of creditors and accordingly to submit the revised resolution plans. The resolution plan submitted by the Employees of the Corporate Debtor was not considered by the Committee of Creditors as it lacked financial standing. 10. Ernst and Young LLP India was appointed to carry out a compliance check on EFPL and KIPL under Section 29A of the Code and a report was submitted to the members of the Committee of Creditors. On the basis of the said report and documents furnished by EFPL and KIPL, the CoC members concluded that both EFPL and KIPL were not disqualified under Section 29A of the Code and decided to put the resolution plans to vote for approval. 11. Subsequently, the Committee of creditors in its 8th (eighth) meeting dated April 30, 2018 approved the resolution plan submitted by KIPL by a majority vote of 88.39%. The Committee of creditors concluded that the resolution plan submitted by KIPL was commercially superior than the resolution plan submitted by EFPL. 12. Post approval of the KIPL's resolution ....
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....y in case it received such directions from the Tribunal. 18. It is submitted that the draft of the resolution plan was revised by KIPL pursuant to the changes suggested during the 14th CoC meeting and was submitted to the Resolution Professional on March 1, 2019 ("Modified Plan") along with an affidavit stating eligibility under Section 29A of the Code and an undertaking under Regulation 39(1)(c) of the CIRP Regulations. The Applicant circulated the Modified Plan received on March 1, 2019 to the members of the Committee of Creditors and erstwhile promoters of the Corporate Debtor. The members of the Committee of creditors were of the opinion that the Modified Plan submitted by KIPL did not capture the comments/objections raised during the 14th CoC meeting and asked KIPL to further revise the Modified Plan. The Modified Plan was further revised by KIPL and the Final Resolution Plan was submitted by KIPL on 7th March, 2019. 19. Applicant Resolution Professional verified the Final Resolution Plan submitted by KIPL under Section 30(2) of the Code and presented the same before the Committee of creditors for their consideration. The Committee of Creditors in its 15th meeting dated ....
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....y the Committee of Creditors based on facts and circumstances of each case. What can be screened by this Bench is that whether the plan approved by CoC meets the requirements as referred to in sub-section (2) of Section 30 of the Code. 24. Hon'ble NCLAT in the case of Darshak Enterprise (P.) Ltd. v. Chhaparia Industries (P.) Ltd& Ors. passed in Civil Appeal (AT) (Ins) No. 327 of 2017 has held that: "In absence of any discrimination or perverse decision, it is not open to the Adjudicating Authority or the Appellate Tribunal to modify the plan." 25. It is also pertinent to note that a Resolution Plan cannot take care of total outstanding dues of all the creditors. Be that as it may the objections raised during the course of hearing in the following Company Applications filed by different stakeholders are duly considered and are taken up case wise separately. i. CA No. 38 (PB)/2019 ii. CA No. 1219 (PB)/2018 iii. CA No. 557 (PB)/2018 iv. CA No. 828 (PB)/2018 v. CA No. 938 (PB)/2018 vi. CA No. 939 (PB)/2018 vii. CA No. 556 (PB)/2018 viii. CA No. 824 (PB)/2018 ix. CA No. 357 (PB)/2018 ....
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....of Baroda v. Bijay Mumuria [CA (AT) (Ins.) No. 229 of 2019, dated 11-3-2019], has held that: "In fact, the decision of the 'Resolution Professional' does not amount to rejection of the claim, but determination of claim for constitution of the 'Committee of Creditors', which was constituted on the basis of original claim. Thereafter, the Appellant being member of the 'Committee of Creditors' not raised the issue immediately but after about 250 days. In the circumstances, no relief can be granted. However, we make it clear that the order passed by the Adjudicating Authority or this Appellate Tribunal will not come in the way of the Appellant to move before appropriate forum for appropriate relief." (emphasis given) 32. Similarly, Hon'ble NCLAT in the case of, Prasad Gempex v. Star Agro Marine Exports (P.) Ltd. [CA (AT) (Ins.) No. 291 of 2018, dated on 1-2-2019], has held that; "RP has no jurisdiction to decide the claim of one or other creditor, including Financial creditor, operational creditor, secured creditor, or unsecured creditor. RP only collates the claims and accept them to the extent verification made from the record....... .......Notwithstandi....
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..... After the final adjudication order, the claims shall be dealt with in accordance with law. 38. CA No. 939 (PB)/2018 is an Intervention application claiming Rs. 54,13,337/- on account of facility maintenance and management services. It is stated in the affidavit dated 21.01.2019 that claims of applicant CBRE South Asia Private Limited for Rs. 41.57 Lakhs have already been accepted as the same were reflected in the ledger/books of the Corporate Debtor. Resolution Professional has denied that no other pending amounts stands reflected against CBRE in the books of the Corporate Debtor. In that view of the matter it is open to the applicant to move appropriate Forum for adjudication of the disputed left out claim. CA No. 939 (PB)/2018 is disposed of accordingly. 39. CA No. 556 (PB)/2018 has been filed by SAIL with three separate claims in respect of non-performance of work awarded to the Corporate Debtor under the Chanarpur, Meghahatuburu and Bolani contracts respectively. In all these claims there are pendency of disputes and the matters are stated to be subject to adjudication. CA No. 556 (PB)/2018 is disposed of accordingly with the observation that after the final adjudicatio....
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....aim is yet to be adjudicated upon. CA No. 940 (PB)/2018 is disposed of accordingly, with the observation that after the final adjudication by competent Forum, the present claim shall be dealt with in accordance with law. 44. CA No. 603 (PB)/2018 was filed on 14.12.2017 with a claim of Rs. 5,66,84,175/- in respect of outstanding amount for delivery of goods. It is stated in the affidavit dated 21.01.2019 that a Civil Suit in this regard has been filed in Kolkata which is pending adjudication. It is accordingly contended that the claim is yet to be adjudicated upon. CA No. 603 (PB)/2018 is disposed of accordingly, with the observation that after the final adjudication by competent Forum, the present claim shall be dealt with in accordance with law. 45. It is stated in the affidavit dated 21.01.2019 that the claims in Diary No. 7675 filed by M/s. Silver Oaks is pending adjudication before Hon'ble High Court of Delhi. It is contended that such sub-judice claims cannot be over-ridden by Resolution Professional. The consequences of such liabilities are subject matter of the jurisdiction of the Court, where the claims are pending adjudication. It is made clear that after the final a....
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....kmen 1.57 1.33 Employee 13,302.26 8,458.03 Total 11,64,768.20 8,55,641.70 47,300.00 4.06% 51. It is thus seen that as per the liquidation value of the corporate debtor and the waterfall mechanism provided under Section 53 of the Code, no amount would be liable to be paid to persons other than resolution process cost, secured creditors and wages to workmen. However as per compliance certificate of Resolution Professional, Rs. 8 Crore (0.22%) has been kept for operational creditors and 46,500 (5.79%) has been provided for financial creditors. It is no longer res integra that there is an intelligible differentia between the FCs and OCs and such classification between FCs and OCs is neither discriminatory nor arbitrary nor violative of Article 14. The provisions made in the Resolution Plan in favour of the operational creditors is more than the amount which the operational creditors could have received in the event of liquidation of the corporate debtor. 52. Spirit of the Code encourages resolution as against liquidation. Resolution is the rule; whereas liquidation is to be an exception. The....
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....djudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of approval under sub-section (1),- (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub- section (l) or within such period as provided for in such law, whichever is later." (Emphasis given) 56. Therefore, before approving the Resolution Plan, the Code mandates the Adjudicating Authority to ensure that,- (1) the Resolution Plan meets the requirements of Section 30(2) of the Code and (2) t....
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....orm H and inter alia has confirmed that he has examined and verified the Resolution Plan approved by the CoC, in the light of the requirements of the Code and Regulations and that it is compliant to the relevant provisions of the Code and Regulations. 59. In terms of Section 31(1) of the Code, Adjudicating Authority has also to examine whether the requirements of sub-section (2) of Section 30 have been complied with or not. 60. It has been submitted in the application that the final Resolution Plan approved by the CoC meets the requirements laid down in various clauses of Section 30(2) of the Code. 61. In respect of compliance of Section 30(2)(a) there is provision in the resolution plan as at Clause 5.4 (a), which provides for payment of CIRP costs in priority over payments to any other creditors. The clause inter alia provides that each holder of such priority claim shall be unimpaired under the Resolution Plan and would be paid CIRP Costs (estimated at INR 2.0 Crores) in full as per the prevailing Code and CIRP Regulations from the Effective Date prior to payments to all other Creditors. The Resolution Professional has confirmed in the compliance certificate given in Fo....
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....of business upon implementation of the Resolution Plan. The Resolution Professional has confirmed in the compliance certificate given in Form H that sections 5 and 6 of the Resolution Plan provides for the management and control of the business of the corporate debtor. 67. The fourth requirement envisaged by Section 32(2)(d) is that it must provide for the implementation and supervision of the resolution plan. As per clause 5.4.(b)(vii)10 of the resolution plan on receipt of the NCLT approval on the Resolution Plan and based on the terms set out in the definitive, the Resolution Applicant/Company and relevant parties shall seek all requisite approvals, clarifications and regulatory guidance, if required, including but not limited to from Reserve Bank of India for restructuring terms of the debt, competition Commission of India to the extent applicable, securities and Exchange Board of India, Ministry of Corporate Affairs and all other regulatory and judicial authorities for the reduction of capital and all other approvals required from other regulators having jurisdiction over the Company and/or to give effect to this Resolution Plan. The SPV (i.e. Kridhan Projects Private Limit....
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....19), the said Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force. 71. Regulation 36B(4A) of the CIRP Regulations requires that the Resolution Applicant shall provide a performance security. In view of Regulation 36B(4A) of the CIRP Regulations, the Committee of creditors have approved an amount of Rs. 5,00,00,000 (Rupees Five crores) as a performance security to be deposited by KIPL. Moreover, the minutes of the meeting of Committee of creditors shows that KIPL verbally expressed its willingness to furnish performance security in case it received such directions from the Tribunal. 72. Accordingly, in compliance of Regulation 36B(4A) of the CIRP Regulations, the successful Resolution applicant is directed to provide performance security for an amount of Rs. 5,00,00,000 (Rupees Five crores) as stipulated by the CoC within 30 days from the receipt of this order. 73. As a sequel to aforesaid discussions we are s....
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....ution Plan unless it is found contrary to the express Provisions of law and goes against the public interest. Admittedly the revival of the corporate debtor company would certainly enhance the interest of all the stakeholders and is in the line to achieve the object of the Code. 79. In view of the finding that the resolution plan, as approved by the requisite super majority of members of CoC, is in accordance with the sub-section 2 of Section 30 read with Section 31 of the Code and as the Resolution Applicant is not disqualified under Section 29A of the Code and as no infirmity seems to have brought out upon screening of the Resolution Plan; we hereby approve the Resolution Plan under sub-section (1) of Section 31 of the Code. 80. In compliance of Regulation 36B(4A) of the CIRP Regulations, the successful Resolution applicant is directed to provide performance security for an amount of Rs. 5,00,00,000 (Rupees Five crores) as stipulated by the CoC within 30 days from the receipt of this order. 81. As per Section 6.7 of the resolution plan the resolution applicant shall appoint a 'Monitoring Agency' with modification that Resolution Professional shall be a member thereof at ....