TaxTMI 
TaxTMI 
2018 (4) TMI 1779
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....cribed U/s 31(1) of The Code. 2. The Corporate Debtor M/S. Raj Oil Mills had filed a Petition by invoking the Provisions of Section 10 of The Code read with Rule 7 of The Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016 on 23rd of June, 2017. 2.1. After considering the merits of the case, the said Petition was admitted vide an Order dated 10.07.2017 (TCP No.1132/I&BP/NCLT/MB/2017). Initially Mr. U.V.G. Nayak, Chartered Accountant was appointed as IRP. The said IRP had carried out the duties assigned under the I&B Code, namely:- (a) Published the commencement of CIRP in newspapers on 15.07.2017; (b) Constituted the Committee of Creditors and called First meeting on 09th August, 2017 (c) Appointed two Valuers to determine the Value of the assets. 2.2. A Resolution was passed by the Committee of Creditors for substitution of the IRP, as a consequence, a Miscellaneous Application (MA No.362/2017) was moved on 24.08.2017. Vide an Order dated 15.09.2007, the NCLT has approved the substitution by appointing Resolution Professional Dr. Rajendra M. Ganatra. It was also directed to outgoing IRP to hand over all the information collected b....
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....e COC again impressed upon the improvement in the respective Resolution Plans. It has also been communicated that a final Revised Plan be submitted by 21.12.2017. 2.8. During this interregnum, 180 days were scheduled to expire on 06.01.2018. As a consequence, an Application was submitted (MA No.5/2018) for seeking extension of 90 days. The said Application was allowed by this NCLT Bench vide Order dated 05.01.2018. 2.9. An E-Voting was held in accordance with Regulation 26(4) of the CIRP Regulations. The COC had voted in favour of the Resolution Plan submitted by RHIL jointly with Mukhi Industries Limited (MIL) by 77.68% voting. 2.10. The Resolution Professional has also communicated that in the light of the newly introduced Section 29(A) [with retrospective effect from 23/11/2017 Insolvency & Bankruptcy Code (Amendment) Act 2018] to be read with Regulation 39(3) of CIRP Regulation, a report U/s 30(2) of The Code has also been submitted. The main feature are stated to be as under :- 2.11. The Resolution Professional has thus submitted his comments as prescribed UIs 30(2)(a) to Section 30(2)(f) of the Insolvency Code, revolving around the Resolution Plan submitted by RHIL and MI....
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....nswer, a Chartered Accountant Of Resolution Applicant made a representation on the said Resolution Plan to the Committee of Creditors and some of the salient features are as under :- "(a) the three promoters had about Rs. 25 crore in their capita/ account from which investible surplus would be deployed (no estimate or details surplus was available), and, (b) company had two contracts valued at Rs. 75 crore and the cash-flow from those project would be deployed for the commitment in ROIL. 2.15. It has also been informed that on MCA search it was found that the Promoters have promoted six Companies including Rubberwala Housing and Infrastructure Ltd. (RHIL). Track record of the Resolution Applicant has also been examined. It has also been informed that RHIL is banking upon the background of Mukhi Industries Ltd. (MIL). The net worth of MIL as on 31st March, 2017 and the paid up capital stated to be Rs. 254 lakhs, however, there were no operations during last two financial years. The Committee of Creditors had accepted the feasibility of the projected infusion of Promoter's contribution. The Resolution Plan which was received on 08.12.2017 was placed for consideration before ....
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....ny Order, Judgment, etc. Any property over which the Lenders or the Government Body has exercised their control belonging to the Corporate Debtor, should be released from lien subject to approval by Adjudicating Authority. On payment of the amount settled the Secured Creditors shall vacate the charge and the mortgage on the property or personal guarantee. This condition was not acceptable to Committee of Creditors. 2.20. In respect of the payment to Workers and Employees, RA had undertaken to make payment of the outstanding dues of Workers and Employees. This was accepted by the Committee of Creditors. The Resolution Professional has accepted the claim of Workers and Employees, as admitted by the Resolution Applicant. 2.21. As per the details of the Accounts, RA had noticed that in all there are 1,483 Fixed Depositors. In terms of the Resolution Plan and also accepted by the Committee of Creditors U/s 30(4) of The Code, the RA had proposed to pay 100% of the Principal i.e. 5.36 Crores in four equal quarterly instalments starting from 5th quarter i.e. 90 days after approval of the Resolution Plan. 2.22. It was resolved that the Resolution Professional is required to h....
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.... Manor, taluka Palghar, Thane - 401 404. Board of Directors are as under:- Azamkhan Lohani Abdulla Musla Shaukat Suleman Tharadra Saryu Chimanlal Vora Balsubramanya Hiriyannaiah Rudrapatna Rashidbhai Ismailbhai Tharadara Pragnaben Prabhulal Joshi Ishwarlal Dhudalal Jagania 3.1. As per IM at present 81 Workers are employed and 165 Other Employees are working in the Company. Company had not paid dues to its Employees since 10th July, 2017 aggregating to Rs. 35,58,196/-. However, the total outstanding which includes PF, Bonus, Gratuity and Salary is to the tune of Rs. 1,61,92,329/-. 3.2. The IM contained details of Legal matters pending, stated to be "Statutory Liability". The list contained Sales Tax Liability for several Financial Years totaling Rs. 88.62 Crores and Income Tax Liabilities for which several appeals are pending totaling Rs. 234.07 Crores. 4. During the period of next four years the affairs of the Company shall be supervised by a 'Supervision Committee' consisting of Managing Director, a Representative of the Secured Creditors, and an Independent Auditor so that the Terms of the Resolution Plan be implemented correctly. 5. The Resolution Pro....
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....solution Plan submitted by Dipti Vegoils Limited, an aggregate sum of Rs. 1,61,00,000/- (Rures One Care Sixty One Las) was proposed to be paid to SICOM with an upfront payment of Rs. 1,07,00,000/- (Rupees One Crore and Seven Las only) and the balance payable in eight quarterly installments. SICOM craves leave to refer to and rely upon the plan submitted by Dipti Vegolis Limited when produced." 6.1. The objection is that the Applicant has dissented the approval of the Resolution Plan, therefore, as per the communication received, disentitled for the claim. It is informed in this Application that on 11.01.2018 the Resolution Professional addressed an e-mail stating therein that since SICOM voted against the approved Resolution Plan hence to be treated as "dissenting Creditor" and will be entitled only to receive the Liquidation Value. In short, it is pleaded that after detailed discussion and through exchange of number of email, the representation made by SICOM was not placed before the Hon'ble Tribunal. As a result, the outcome of the Insolvency Resolution Process is prejudicial to the interest of SICOM. Through this Application SICOM is making a representation for its entitle....
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....s unjustifiable to take a view against the dissenting Creditor. 6.5. Admitted position is that SICOM has not blatantly opposed the Resolution process but in the voting held on 21/12/2017 voted in favor of Dipti Vegoils Limited on the ground that in the said Plan there was a better repayment terms favourable to him. Therefore, it is a case of giving preference to one Resolution Plan over the other one. Undisputedly this 'dissenting creditor' is otherwise part of the COC. The COC had approved a plan and that plan has made a provision for this Creditor, which means that his claim is in-built in the approved Resolution Plan. Resultantly, the Miscellaneous Application 27 of 2018 submitted by SICOM is partly allowed to the extent that the sum receivable of Rs. 1.07 Crore being an Unsecured Loan shall be considered only after the Settlement of the Secured Loans. 7. 'RESOLUTION PLAN' 'FINDINGS' :- Finally, after having a detailed foregoing discussion on Insolvency Process adopted so far, now the feasibility of the Resolution Plan is required to be examined. The revised Resolution Plan was submitted on 21st December 2017. Only the main feature relevant for s....
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....y in the company and to own the company upto 75% of the enlarge capital. The objective is to retain the status of Listed Company in the stock exchange. The Resolution applicant will take ever (sic 'over' ) the management of the company by inducting promoter director and independent directors. The resolution applicant has full freedom of Management of the company. The resolution applicant will abide by its commitment to infuse the funds requirement for initial payment and subsequent instalment in a timely manner. Resolution applicant has adequate resources to induct additional capital as will be required in future with the consent of BOD and Shareholders. Resolution Plan is in adherence to the Regulations 37 & 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Details are as per the following information forming part of this Resolution Plan KEY OBJECTIVES BEHIND THE RESOLUTION PLAN The Resolution Plan envisaged by New Promoter ('INP') for Insolvency resolution of Raj Oil Mills Limited ('ROM') and to ensure continuity of business....
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....of initial amount will be paid by 25th March, 2018. -We have committed Rs. 15cr. to Edelweiss Assets Reconstruction Company Limited as initial amount. We may clarify that 10% amounting to Rs. 2.7cr. of Rs. 27 cr. is getting deposited on 21st December, 2017 Rs. 4.05cr. will be deposited/ paid on approval of Resolution Plan by NCLT and balance Rs. 5.25cr. shall be paid by 25th March, 2018. We have committed Rs. 20.50cr. to SVC Bank as initial amount. We may clarify that 10% amounting to Rs. 2.05cr. of Rs. 20.50 cr. is getting deposited on 21st December, 2017 Rs. 1 cr. will be deposited / paid on approval of Resolution Plan by NCLT and balance Rs. 2.45cr. shall be paid by 25th March, 2018. INSOLVENCY RESOLUTION PROCESS COST We have considered the Insolvency resolution process cost Of Rs. 0.6 cr. The same will be paid under this resolution plan on approval by NCLT PAYMENT TO WORKERS We have perused the copy of Information Memorandum as per the point 15 on page no. 110 Resolution Professional has stated that they have received claim from some Of the Ex- employees which are under review. As the amount has not been ascertained and the claims are not quantified it is not ....
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....in fifteen quarterly instalments of Rs. 1cr. each 3. City Bank will be paid Rs. 6 lakhs as initial payment and balance of Rs. 30 lakhs in Five quarterly instalments of Rs. 6 lakhs each. 4. Bank Of Baroda will be paid Rs.O.06 Crores as part Of initial payment PUBLIC FIXED DEPOSIT Public Fixed Deposit is from socially weaker section and senior citizens. We intend that the small fixed deposit holders should not suffer; therefore we are proposing to settle the principal amount due to fixed deposit holders @ of 100% of the amount. The amount will be paid to the fixed deposit holders who have submitted the claims which are in the books of the company will be verified and accepted not exceeding Rs. 5.36 Crores. The amount so settled shall be paid in eight quarterly instalments starting from 30th June, 2019. Public Fixed Deposits Amount Claimed Settled @Percentage Amount Settled Quarterly Instalment (beginning 30th June,2019) Rs. 5.36 Crores 100% Rs. 5.36Crores 0.67Crores SUNDRY CREDITORS (UNSECURED OPERATIONAL CREDITORS) The amount outstanding of sundry creditors' claims to be admitted amounts to Rs. 24.40 cr. as under: Sundry Creditors as per boo....
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....mand maximum to Rs.O.89 crores. The amount due on the settlement as stated above will be paid in 4 equal quarterly instalments starting from Sep, 2019. The details are as under : " Sundry Liabilities Amount Claimed Settled@Percentage Amount setteled Quarterly Instalment (beginning 30th June 2020) Sales Tax 88.62 Crores 1% 0.89 Crores 0.22 Crores Income Tax 258.07 Crones 1% 2.58 Crores 0.65 Crores At the time of approval of this Resolution Plan by the Adjudicating Authority, NP seeks claim exemption from the statutory dues from the Adjudicating Authority. CAPITAL RESTRUCTURING Present Capital structure of the company is as under: Particulars Number of Shares amount Authorised Capital 16,00,00,000 1,60,00,00,000 1600 lakhs equity shares Of FV Of Rs. 10 each Subscribed and Paid up Capital 7,49,43,438 74,94,34,380 749.43 lakhs equity shares of Face Value Of Rs. 10 each Net worth of the company is totally eroded. Present net worth of the company as on 31st March, 2017 is Rs. 43.66 Cr. negative. The liquidation value as valued by the approved valuer is Rs. 22.82 Cr. against the total liab....
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....pees 10 each amounting to Rs. 11,24,15,130/-. In addition to this amount NP will induct Rs. 32.08 Cr. by way of loan to the company. NP would induct total Rs. 43.33 Crores. In addition to the above, NP also has the capability of raising funds in normal course of business as and when deemed necessary to continue the operations of the Corporate Debtor as a going concern. IMPLEMENTATION AND SUPERVISION The Implementation of the Resolution Plan shall commence from the date of approval of Adjudication plan by NCLT. The Resolution Professional to hand over the charge of affairs of tge(sic.the) corporate Debtor Raj Oil Mills to Mr. Sufyan Maknojia. All the records, books of accounts, assets of the company documents, agreements copy shall be handed over to Mr. Sufyan Maknojia. The affairs of the company will be managed by Mr. Sufyan as Managing Director of Raj Oil Mills Limited. The Company will operate all its products and production facilities and shall continue its operation as on going concern. Mr. Sufyan will be supported by CEO and CFO to be appointed within shortest possible time frame. The affairs of the plant will be managed by the plant in-charge to be appointed. Al....
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.... of Maharashtra for dues payable under MVAT act which shall stand released upon the approval of this Resolution Plan by the Adjudicating Authority / moveable, Tangible/intangible, current assets, loans and advances, Investments, trade deposits, inter-corporate deposits balances with banks, cash balances shown in the books of the company, stock of goods and receivables as stated in the books of the company shall continue as assets Of the company without any charge hypothecation, mortgage and encumbrances unless and othenMise as mentioned as securities of secured lenders. All the assets should be handed over by RP under his control and possession to NP. All the rights in terms of leases, tenancy shall continue to be property' and rights of company without any breakage or disturbances. RAJ OIL MILLS LTD Projected Balance Sheet:- 8. It has been brought to our notice that one of the justifications for approval of the Resolution Plan is that the Liquidation Value is minimal comparing the proposals made in the Resolution Plan. To demonstrate this fact following chart is worth reproduction :- "LIQUIDATION VALUE WATER FALL Amount (Rs in Cr) Sr. waterfall Particulars A....
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....l 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. To sum up, in our humble interpretation the recording of an analytical 'satisfaction' is a condition precedent before granting of approval. 10. To sum up the above discussion, the Resolution Plan as approved by the Committee of Creditors is by and large hereby sanctioned by this Order subject to certain minor qualifications, noted below:- a) As already held above, the claim of Debt of the dissenting Financial Creditor viz. SICOM cannot be rejected out-rightly and to be considered as directed supra. b) The Resolution Applicants/ New Promoters shall abide and be resp....