TaxTMI 
TaxTMI 
2020 (4) TMI 447
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....cess (CIRP) in the case of M/s SRS Meditech Limited (hereinafter referred to as Corporate Debtor) and the same was admitted vide order dated 2-11-2018 and the CIRP of the corporate debtor was initiated. It is submitted that the applicant was appointed as Interim Resolution Professional (IRP) vide order dated 15-11-2018 and within two days of the appointment order, the IRP issued a public announcement as per Regulation 6 of the Regulations read with Section 15 of the Code in Form A in two newspapers i.e. Amar Ujala, (Hindi) dated 17-11-2018 and Business Standard (English) on 17-11-2018 thereby inviting claims from the creditors of the corporate debtor as envisaged in the Code. 3. It is submitted that in pursuance of the public announcement, total 7 claims were received from the financial creditors which were verified and after collation, the IRP constituted the CoC provisions of Section 21 of the Code It is stated that initially the CoC was constituted with seven financial creditorsi.e., State Bank of India having a voting share of 59.39%, Epimoney Private Limited having a voting share of 1.58%, Edelweiss Retail Finance Limited having a voting share of 4.47%, United Petro Finance L....
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....ggarwal, Prudent ARC Limited and Vaibhav Buildtech Private Limited. The COC approved the eligibility criteria of net worth of Rs. 5.00 crores for submission of resolution plan and the evaluation matrix proposed by the RP. The RP also apprised the COC regarding appointment of Statutory Auditor for the financial year 2017-18. The last date for submission of resolution plan was fixed at 15-4-2019. 7. The RP apprised the CoC in its 4th meeting that the eligibility criteria of all the resolution applicants is as per EOI published on 31-1-2019 and therefore invitation for submission of resolution plan has been sent to all the four prospective applicants. The last date for submission of resolution plan was extended to 31-5-2019 as verification of plant and machinery by the resolution applicants were still pending. 8. CA No. 324 of 2019 was filed by the RP under section 12(2) of the IBC, 2016 for extension of the CIRP time period by a further period of 90 days and the same was allowed vide order dated 10-5-2019. A copy of the order is at Annexure A-11 of the paper book. It is stated that on receipt of request from one of the prospective resolution applicant i.e. Vaibhav Build Tech Privat....
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....ution plan stands duly approved by the 93% of the voting share of the financial creditors. 13. It is submitted that the CoC while accepting the bid had taken care of all the provisions of the Code and the Regulations. It is prayed that the application may be allowed and the resolution plan as approved by the CoC in the CIRP of the corporate debtor be approved. 14. The learned counsel for the resolution professional submitted that as per revised Form H (AnnexureA-1, Diary No. 5221 dated 30-9-2019), all the provisions of the Code and the Regulations were complied with and that the approval of the resolution plan was made by 93% voting share of the financial creditors in the meeting of the CoC held on 31-7-2018 and therefore, the resolution plan submitted by M/s.Vaibhav Buildtech Private Limitedmay be approved. 15. During the course of hearing on 22-10-2019, the learned counsel for the RP was directed to file the computation in terms of amended Section 30(2) of the Code, missing Annexures 1 to 3 of the plan and the details of the reference made/amounts received by the RP during CIRP period and how these funds are kept and the details of how they are going to be utilised. 16. In co....
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....The member of Advisory Board referred in the resolution plan is technical expert by the CoC. The revised affidavit as per Section 29 A is annexed as Annexure A-2 of the affidavit. 19. We have carefully considered the submissions of the learned counsel for the RP and the learned Senior Counsel for the resolution applicant and have also perused the record. 20. The corporate debtor was incorporated on 28-6-2010 and as discussed above, the CIRP proceedings were initiated by order delivered on 2-11-2018. The present application is filed for approval of the resolution plan submitted by M/s.Vaibhav Build tech Private Limited. The approval has been sought under the provisions of Section 31 (1) of the Code. 21. We may first of all state that after receipt, verification and collation of claims as discussed above, the IRP constituted the CoC as per the provisions of Section 21 of the Code. The details of the financial creditors, the distribution of voting share among them and the position of voting for the resolution plan is as under (para no. 4 of Form H - Annexure A-1, Diary No. 5221 dated 30-9-2019) Sl. No. Name of Creditor Voting Share (%) Voting for Resolution Plan (Voted for/Diss....
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....Applicant has submitted an affidavit 1st August 2019 stating that, they are eligible to submit Resolution Plan. Annexure A-19 Page 285- 286 Yes Section 30(1) Whether the Resolution Applicant has submitted an affidavit stating that it is eligible? The Resolution Applicant has submitted an affidavit 1st August 2019 stating that, they are eligible to submit Resolution Plan. Annexure A-19 Page 285- 286 Yes Section 30(2) Whether the Resolution Plan: (a) provides for the payment of insolvency resolution process costs? Part IV of the Resolution Plan, Para 3 Page 264 Yes The Resolution Applicant provides for the full CIRP cost in priority to all other debts with in 30 days of the approval of resolution plan. (b) provides for the payment of the debts of operational creditors? Part IV of the Resolution Plan, Para 6 Page 267 Yes The Resolution Plan provides for payment of debt due to operational creditors with in 90 days of the approval of resolution plan (c) provides for the management of the affairs of the Corporate debtor? Part -1, Business Plan of the Resolution Applicant in Resolution Plan, Para 2 Page 254-259 Yes The Resolution Plan provides complete plan for management....
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....icant ("Implementation and Monitoring Committee"). In the Resolution Plan, Schedule 4 for Implementation Provisions is given, where Resolution Plan steps are provided by the Resolution Applicant. Part II, Mandatory Provision of the Plan. Schedule 4 of the Resolution Plan Page 261 Page 278-280 Yes Regulation 35A Where the resolution profesional made a determination if the corporate debtor has been subjected to any transaction of the nature covered under sections 43, 45, 50 or 66,before the one hundred and fifteenth day of the insolvency commencement date, under intimation to the Board? The Resolution Professional based on the report of the Transaction Auditor has made determination of Preferential Transactions and Fraudulent Transactions under section 43 and 66. The same could not be done in 115 day of the Insolvency Commence date, as due to fire in the premises of corporate debtor, all the books of accounts were destroyed. The same were recovered from email data of the corporate debtor. The Forensic Auditor submitted his report on 15thJuly 2019 and same was discussed in ....
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....ts or before 31st March 2020. The payment of Rs. 35.00 Lakh to operational creditors and payment of Rs. 25.00 Lakh unsecured financial creditors is also upfront. (b) for the management and control of the business of the corporate debtor during its term? The Resolution Plan provides for the management and control of the business of corporate debtor during its term. On and from the NCLT Approval Date, and till the occurrence of the Effective Date, the Corporate Debtor shall be managed by the Implementation and Monitoring Committee. Upon the NCLT Approval Date, an Implementation and Monitoring Committee comprising 3(three) persons of which 1(one) will be RP, 1 (one) will be nominated by the Key Lenders, and 1 (one) will be a member of the Advisory Board as selected by the COC, will be constituted without any further action or omission required from the Corporate Debtor or the Resolution Applicant ("Implementation and Monitoring Committee"). After the Effective Date, and following the acquisition by the Resolution Applicants of control of the Corporate Debtor, the Resolution Applicants shall constitute the board of directors of the Corporate Debtor or the Amalgamated Company, as th....
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....(b) it is feasible and viable. The Resolution Plan was circulated to COC and COC members deliberated on the plan. State Bank of India (56.52% voting share) has team of specialized person for verification of commercial viability of the Plan. They have also checked the feasibility and viability of the resolution plan (c) it has provisions for its effective implementation. The Resolution Plan has provided provisions of effective implementation of the Plan. (d) it has provisions for approvals required and the timeline for the same? The Plan does not envisage any special approval from any agency except for the permissions already available and required in normal course of business. (e) the resolution applicant has the capability to implement the resolution plan? As per Resolution Plan, the Resolution Applicant has the capability to implement the Resolution Plan and resolution applicant have already made tie up with suppliers, buyers, key employees, land and building and professional agencies as Part I (Business Plan of the Resolution Applicant) Part 1, Business Plan of the Resolution Applicant Part 1, Business Plan of the Resoluti....
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....uch creditors. Explanation 2.--For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- - (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;]" 25. It is observed that the amount payable towards the operational creditors is Rs. 0.35 crore as provided in the resolution plan. Further, the amount to be distributed between operational creditors in the event of liquidation, if distributed in order of priority in Section 53(1) of the Code would be NIL. There are 5 dissenting unsecured financial creditors i.e. EPI Money Pvt. Ltd., United Petro Finance Limited, Oxyzo Financial Services Pvt. Ltd., Bajaj Finance Limited and Eq....
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....of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) confirms to such other requirements as may be specified by the Board. 30. The compliance of Section 30(2) of the Code is given in para No. 9 of Form H (supra). The same is being further examined as under: - Section 30(2)(a): The resolution plan (page 264 of the application) provides for the full payment of CIRP cost in priority to all other debts. The CIRP cost aggregate to Rs. 75,00,000/- approximately and are to be paid upfront. Section 30(2)(b): It is stated in Form H that the average liquidation value is Rs. 135.09 lacs. It is further stated that the unsecured financial creditors shall be paid an aggregate amount of Rs. 0.25 crore and the operational creditors shall be paid an amount of Rs. 0.35 crore. The liquidation value payable to the unsecured financial creditors and operational creditors is Nil. The payment is to be made from upfront infusion of funds. The resolution plan provides for upfront payment of Rs. 1.25 crore towards workmen and employees dues. The claims by Government are stated ....
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....Private Limited has submitted affidavit pursuant to Section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit the resolution plan and the contents of the said affidavit are in order. The RP has submitted that the resolution plan has been approved by the CoC with 93% voting share in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering the feasibility and viability and other requirements specified by the CIRP Regulations. It has been held in para 42 of K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312 (SC) by the Hon'ble Supreme Court inter alia that no corresponding provision has been envisaged by the legislature to empower the resolution professional., the Adjudicating Authority (NCLT) or for that matter the Appellate Authority (NCLAT), to reverse the "commercial decision" of the CoC. It was also held that whereas, from the legislative history there is contra indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority. In view of the above discussion, the dec....