AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 544
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.... of the Application bearing IA No. 408/2018 are as follows:- A. That the CIRP was commenced vide orders dated 13.03.2018, B. That the Applicant herein who was appointed as IRP was confirmed as RP at the 1st CoC meeting held on 12.04.2018. C. That the Publication for Invitation for Expression of Interest (EOI) was issued in Newspapers on 14.05.2018. D. That the Request For Proposal (RFP) and the evaluation criteria was approved by the CoC in its meetings dated 25.06.2018 and 16.07.2018 and Pursuant there to, a Resolution Plan from Dr. Bavaguthu Raghuram Shetty (B.R. Shetty) through his business entity Dr. Shetty's New Medical Center Private Limited (herein after to be referred as 'SNMC') was placed before CoC. E. That in the meetings dated 10.08.2018 & 22.08.2018 the CoC deliberated and discussed upon the Resolution Plan proposed by the Resolution Applicant and the suggestions of the CoC were incorporated and a revised Resolution Plan was submitted by the said Resolution Applicant. F. That the revised Resolution plan was deliberated upon by the CoC in their 9th meeting dated 03.09.2018, subsequently, by electronic vot....
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.... the control of the Corporate Debtor during the term of the said Resolution Plan in terms of Reg. 38(2)(c) of the CIRP regulations through a monitoring agency consisting of senior management of SNMC and/or such other senior members as may be nominated by the Resolution Applicant. The CoC shall be entitled to appoint one member on the monitoring agency as its representative till the date of payment of settlement of amounts to financial Creditors as per the Resolution Plan, following which, the representative of CoC shall automatically cease to be a member of the monitoring agency. VIII. The monitoring agency shall be responsible inter alia for the following: * To oversee and supervise the Resolution Plan as approved by the Adjudicating Authority within the defined time lines. * To provide regular updates to the CoC as per the directions of Adjudicating Authority as may be applicable. * To provide updates to IBBI as and when required. * To oversee and supervise the disbursement of dues to the Creditors as per the approved Resolution Plan. IX. The Resolution Plan as required under Reg. 38(3) of the CIRP Regu....
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.... into account the order of priority specified by the RP. * The plan proposes to settle the claims of doctors submitted in incorrect forms amounting to INR 2.54 Crores @ 75% of the amount, i.e., 1.90 Crores. In accordance with the priority. * Operational Creditors (other than employees and workmen dues & Doctors dues filled in incorrect forms) would be paid 75% of the admitted claim amount of INR 62.2 Crores i.e., INR 46.67 Crores (other than amounts claimed by statutory authority). * The plan proposes a sum of Rs. INR 102.03 Crores as against the claim of INR 140.88 Crores to be paid to MCGM based on mutual agreement (Annexure - 19 to the Resolution Plan) the Resolution Applicant undertakes to comply with the MCGM agreements for 20% reservation for Yellow and Orange Card holder. 8. The financial Proposal made by the Applicant as narrated above, in Section 2.2.3 of the Resolution Plan (pages 229 to 233) has been perused. 9. The implementation of the Resolution Plan as set out in Section 1.4 (pages No. 222 & 223 of the Resolution Plan) has been perused. The Resolution Applicant seeks for a time period of 45 days from date of approval....
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....he Existing Equity Shareholders shall be cancelled. (b) Step 2- Infusion of Contribution towards Payment to Creditors and CIRP Costs (a) Through raising of debt in the books of the Company or otherwise, availed from third party lenders, which may be secured by way of hypothecation or mortgage over the land, buildings and other assets of the Company; or (b) Through infusion of shareholder funds, by way of debt or equity or such form as may be permissible under the Applicable Laws; or (c) Combination of (a) and (b); Further, on and from the Effective Date and before implementation of the plan and simultaneously with Step 1, the Company shall issue and SNMC shall subscribe to new shares of the Company towards equity share capital infused by SNMC into the Company resulting in 100% of the paid up share capital of the Company being held by SNMC. 12. From the above, the proposal provides for fresh infusion of funds as per requirement subject to a minimum of Rs. 250 Crores. 13. The Plan provides for keeping the Company as a going concern and operate in its normal course of business upon implementation of Resolution Plan. The plan also prov....
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....nsel for RP made clarifications sought by this Adjudicating Authority and inter alia stated that the Resolution Applicant has received a sanction letter from the third party lender for infusion of INR 990 crores in the form of debt in the Corporate Debtor and that the Resolution Applicant would provide his personal guarantee to the new lender. It was stated that the Resolution Applicant has already incorporated intermediate entities in order to infuse Shareholder's funds in the Corporate Debtor. It was further stated that the Resolution Applicant has also provided an unequivocal, irrevocable and unconditional performance bank guarantee for successful bid value as part of the Resolution Plan. It was contended that though the court nor the CIRP Regulations required Resolution Professional to be a member of the Monitoring Committee, it would be agreeable for the Resolution Applicant to appoint Resolution Professional as a member of the Monitoring Agency in the interest of an expeditious decision on the approval Application. 20. During the hearing on 15.07.2019, the counsel for RP was present and prayed time till next day for filing required information in sealed cover. Mr. Kevi....
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....reserve 20 % of the total beds and out-patient department facilities in the hospital (as defined below) for employees of MCGM, Municipal Councilors and citizens of Mumbai having yellow and Orange ration cards and provide all benefits to such persons ("20 % Scheme") as identified in and in accordance with the terms of the Contract Agreement and the MoU. (b) The 20% Scheme shall be executed in the following manner: Current Proposed 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Operational Bed 306 823 1122 1272 1346 1500 Percentage of beds Reserved for MCGM 20% 20% 20% 20% 20% 20% Number of beds reserved for MCGM 61 165 224 254 269 300 (c) This 20% Scheme shall be applicable to operational beds as provided above and will also be applicable for the 'out patient department' (OPD) of the Hospital. The Resolution Applicant shall comply with all conditions specified in the Existing Arrangements and the MoU with respect to the 20 % Scheme. II. Timely Completion of Project: (a) The Resolution Applicant....
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....Such payment shall be made in full to MCGM prior to or along with the payments being made to secured financial creditors pursuant to the CIR Process. V. Creation of Mortgage: (a) The Resolution Applicant agrees, acknowledges and confirms that MCGM is the absolute owner of the Project Land. Any mortgage/security interest on the Project Land and structures thereon shall be created only with the prior written approval of MCGM. The procedure for obtaining such approval shall be as specified in the Contract Agreement. (b) The Resolution Applicant acknowledges, agrees to and confirms the conditions stipulated for creation of any security interest on the Project Land and structures thereon, as specified in the Contract Agreement read with the NOC. The Resolution Applicant agrees that any mortgage to be created over the Project Land and structures thereon, In favour of prospective financial creditors will be in compliance with the terms and conditions stated in the NOC. It is hereby clarified that in the event of any conflict between the terms of the Contract Agreement and the NOC, the terms stated in the NOC shall prevail. (c) However, please note that ....
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....led a memo dated 29.04.2019 in IA No.408/2018 stating that the Resolution Applicant accept all the terms and conditions conveyed by MCGM to Resolution Applicant and prayed that the plan of the resolution applicant be accepted. 26. In the Memo, dated 16th July, 2019, MCGM took a totally contrary stand and stated its objections for approval of the Resolution Plan by the Adjudicating Authority by giving the following reasons:- a. MCGM is the undisputed owner of the Municipal Plot at Survey No.155(Pt.), 156(Pt.), 162(Pt.) to 168(Pt.) of Village Marol, at Marol, Andheri (E), Mumbai, which was handed over to Sevenhills Healthcare Pvt. Ltd. (hereinafter for the sake of brevity referred to as "SHPL") in order to carry out construction of Hospital Building and running the hospital activities on said plot under the Contract Agreement dated 20/12/2005 and Inspite of being well aware of the same MCGM has been kept out of COC and has only been called as a "Special Invitee". b. The said contract agreement contemplates the execution of a lease deed subject to various obligations being first complied with by the corporate debtor. The contract agreement mandatorily ....
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....efaults committed by SHPL and what has been entered into is merely a Contract Agreement without a Lease Deed and thus in the absence of the said Lease Deed the rights of MCGM cannot be done away with. The NCLT, Mumbai Bench in case of State Bank of India v. Monnet Ispat & Energy Ltd. 2018 SCC Online NCLT 514,, has clearly held that a vesting order under the Coal Mines Development and Production Agreement in the absence of a mining lease would not aid the Resolution Professional to take shelter under Section 14 (l) (d) of the I&B Code. h. Before the notice period could expire, Axis Bank filed the present CP and order dated 13/3/2018 was passed under which the CP was admitted, and moratorium came into operation. i. That the constitution of the COC is improper as the MCGM is not a part of the COC and has only been invited as a special invitee to the various COC meetings held. j. That due to the pendency of the present CP and the actions of SHPL, the Corporation has been unable to provide 300 beds and other medical facilities to the public at large Inspite of being owner of the said premises. k. In reference to letter dated 30....
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.... MCGM being a public body and planning authority, it is mandatory for MCGM to follow the provisions of the MMC Act and thus all actions have to be taken by the Improvement Committee of the Corporation. s. That Show Cause Notice'(SCN) dated 23/1/2018 was already given by the MCGM for termination of the Contract Agreement and that there was no response and that in the absence of a lease, the provisions of Section 14 (l) (d) of the I&B Code will not stop the MCGM from terminating the Agreement. t. The period of CIRP in the case at hand began on 13/3/2018 when the Petition was admitted and 270 days expired on 8/9/2018; an extension of 90 days as provided in Section 12 (3) was granted by the Adjudicating Authority on 4/9/2018 and the extended period came to an end on 7/12/2018 and thus the CIRP has lapsed by efflux of time. Similar situation was considered by the NCLAT in the case of the Judgment of Rajendra K Bhuta, Resolution Professional's case (supra), wherein the NCLAT held that since the 270 day period had lapsed, the moratorium came to an end. u. The Resolution Plan does not contain any provisions in relation to the proper....
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....of the Hon'ble Supreme Court that written submissions cannot travel beyond pleadings. (b) Secondly, this objection especially cannot be entertained at the present stage once orders have been reserved in the application for approval of resolution plan, in the presence of MCGM. The application for approval of the resolution plan was only re-opened for 'suo-motu' for clarifications sought by this Tribunal' and for no other objections by any third party. (c) Thirdly, MCGM had sought to implead itself in the insolvency application prior to passing of the order dated 13.03.2018 (Admission order). The Adjudicating Authority permitted MCGM to be impleaded and disposed of such application directing in the Admission Order that the Resolution Professional shall take into account concerns of MCGM being the owner of the land on which the hospital has been operating. (d) Fourthly, in public interest MCGM has been allowed to participate in all COC meetings on the resolution process and the resolution plan since the third meeting of the COC as it was permitted to attending such meetings as a participant and has never raised any objections-to either the pr....
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....tter states as follows: Sl. No. Description Rate Amount 1 Lease rent of 5 years from 29.04.2013 Rs. 9,00,97,685 per annum Rs. 45,04,88,425 2 Penalty for non-completion of project (for 5 years from 29.04.2013) At the rate of 25% of lease rent of Rs. 9,00,97685 per annum = Rs. 2,25,24,422 Rs. 11,26,22,110 3 Interest @ 15% for non payment of lease rent Rs. 19,73,97,245 Total amount Rs. 76,05,07,780 v. MCGM has been allowed to attend and participate in COC meetings due to its position as owner of the land on which the Mumbai Hospital of the Corporate Debtor is located. vi. Assuming for the purpose of argument that no leasehold rights exist in favour of the Corporate Debtor, such a finding can only be rendered by a competent court after a civil trial. vii. It is submitted that the MCGM has falsely contended in its memo dated 16.07.2019 (Memo) that it was excluded from financial discussions on the resolution plan. It is pertinent to note that this was not pressed by the MCGM during oral submissions on 16.07.2019. viii. In any event, this is paten....
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....s invited to attend COC meetings on special approval from the COC. The RP has also facilitated, where requested, meetings between the potential and relevant officials at MCMG..." * Reiterating above, counsel for RP prayed to allow Application for approval of Resolution Plan: 28. Heard both the sides and perused the record including the Resolution Plan and written submissions filed in both the Applications. 29. It may be relevant to note here that the Application for approval of the resolution plan was filed on 07.09.2018. The MCGM at a belated stage has come up with its objections to the Resolution Plan with the contention that it is undisputed owner of the plot on which one of the hospitals of the Corporate Debtor in Mumbai is built. The various objections raised by MCGM as enumerated hereinabove at a belated stage are neither tenable nor acceptable. It is clear from the record that MCGM is taking a stand which is totally contrary to its own decisions and factual submissions. The final prayer of MCGM is to reject the 'resolution plan' and order for liquidation of the Corporate Debtor. The RP in his submissions has clearly pointed out as to why the aver....
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....re than that of the value of liquidation of the present Corporate Debtor. 35. The Resolution Applicant to the satisfaction of this Adjudicating Authority regarding sources of funds for the implementation of the Resolution Plan, has stated that they have been adequately tied-up. In this regard, the Resolution Applicant has filed a copy of the Letter of Comfort issued by Yes Bank and copy of Addendum Facility Letter issued by Yes Bank. The Resolution Applicant has also submitted a Financial Guarantee issued by First Energy Bank BSC, Bahrain which has been accepted by the CoC. However, it is noticed by this Adjudicating Authority that the said bank guarantee is valid only upto 30th June, 2019. It is directed that the validity period of the bank guarantee be extended till the complete implementation of the Resolution Plan. 36. Further, this Adjudicating Authority feels it proper to direct the Resolution Applicant to keep Resolution Professional also a member in the monitoring agency until the implementation of the resolution plan and Resolution Professional is further directed to file the status reports from time-to-time in the registry. 37. In the result, above, the 'Reso....