TaxTMI 
TaxTMI 
2020 (10) TMI 325
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....icant in CA No. 293/2018 : Mr. Ish Puneet Singh, Advocate For the Applicant in IA No. 7/2020 : Mr. Gursher Bhandal, Advocate For the Applicant in IA No. 222/2020 : 1. Mr. Alok Kumar, Advocate 2. Mr. Abhayveer Sharma, Advocate For the Applicant-Vistra ITCL (India) Ltd. in IA No. 62/2020, : 1. Mr. Gopal Jain, Senior Advocate 2. Ms. Anindita Roy Chowdhary, Advocate 3. Ms. Vatsala Rai, Advocate 4. Bharat Makkar, Advocate 5. Mr. Rohit Chandel, Advocate For the Resolution Applicant(s)- DVI- in IA No.225/2020, IA No.62/2020 and IA No.237/2020 : 1. Mr. Chetan Mittal, Senior Advocate 2. Mr. Vikram Nankani, Senior Advocate 3. Mr. Chanakya Keswani, Advocate 4. Mr. Himanshu Gupta, Advocate For the Applicant-Vistra ITCL (India) Ltd. in IA No. 237/2020 : 1. Mr. Sudhir Makkar, Senior Advocate 2. Ms. Anindita Roy Chowdhary, Advocate 3. Ms. Vatsala Rai, Advocate 4. Mr. Saurabh Gautam, Advocate 5. Mr. Rohit Chandel, Advocate ORDER Per: Ajay Kumar Vatsavayi, Member (Judicial) I. This order shall dispose of CA No.293/2018, IA No.7/2020, IA No.62/2020, IA No.222/2020, IA No.225/2020 & IA No.237/2020, all filed in CP(IB) 42/Chd/Hry/2017; Corporation Bank Versus Amtek Auto Ltd. Before tak....
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....known as Union Bank of India filed CA No.567/2018, under Section 60(5) read with Section 74(3) of the Code seeking to declare that the Resolution Applicant M/s LHG and its promoters upon whom the resolution plan is binding under Section 31 of the Code, have knowingly contravened the terms of the Resolution Plan and have failed to implement the same. In the said CA, it was also prayed to run the CD as a going concern and to grant 90 days to make a further attempt by fresh CIRP and LHG be debarred from applying for a fresh Resolution Plan and Insolvency and Bankruptcy Board of India may be directed to initiate the process under Section 74 (3) of the Code. Vide order dated 13.02.2019, CA No.567/2018, was disposed of, by holding that Resolution Plan submitted by LHG is not capable of implementation due to default in adhering to the payment schedule, restored the Committee of Creditors for considering the plan of DVI and also excluded certain period from the CIRP. CA No.601/2018, filed by LHG under Section 60(5) of the Code, stating that CIRP of the corporate debtor was vitiated by misrepresentation/fraud/mistake of fact was dismissed by the same order dated 13.02.2019. 2. In an appeal....
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....ddendum dated 07.02.2020, submitted by DVI, in respect of the Corporate Debtor, was approved by the Committee of Creditors by a majority of 70.07% votes, in its meeting held on 07.02.2020. 4. The Hon'ble Supreme Court, vide order dated 08.06.2020 relegated the matter to this Adjudicating Authority and the said order reads as under:- "I.A. NO. 48906/2020 Since the fresh resolution has been passed by the Committee of Creditors with 70% majority, we relegate the mater of I.A. to the NCLT to consider the same and pass appropriate orders, after hearing the parties, within fifteen days from today. The time spent before NCLT and before this Court is excluded for calculating long stop date. The I.A. is accordingly, disposed of." 5. The said order was received in the Registry of this Tribunal on 11.06.2020 and accordingly, all the pending applications in CP(IB) No.42/Chd/Hry/2017, were directed to be listed for hearing through Video Conferencing on 12.06.2020. On the said date, the learned counsel for the Resolution Professional submitted that he is contemplating to file an application under Section 30(6) of the Code read with Section 31(1) of the Code, seeking approval of the....
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....ices for which applicant failed to produce proof of delivery was not admitted. With regard to the prayer of the applicant to revise and ascertain the liquidation value payable to the applicant, which was not seriously pursued by the applicant at the time of oral hearing, the Resolution Professional submitted that the liquidation value was assessed as per the Registered Valuers Reports, who were appointed as per the provisions of the Code and hence, it cannot be said that the liquidation value payable to the applicant was arbitrarily assessed. 3. The Hon'ble Supreme Court of India in Committee of Creditors of Essar Steel India Limited Through Authorised Signatory Versus Satish Kumar Gupta and Others; 2019 SCC OnLine SC 1478, held as under:- "88. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after t....
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.... said plan of LHG on 25.07.2018. Whereas the instant CA 293/2019 was filed on 27.07.2018. 6. In view of the judgment of the Hon'ble Supreme Court in Committee of Creditors of Essar Steel India (Supra) and as followed by the Hon'ble National Company Law Appellate Tribunal in Santosh Wasantrao Walokar (Supra), the instant CA filed for admission of its part claim, after the approval of the Resolution Plan by the Committee of Creditors and also by the Adjudicating Authority, is liable to be dismissed. 7. However, it is submitted that though the CA was filed subsequent to the approval of the resolution plan of LHG by the Committee of Creditors and also by this Adjudicating Authority, but once the said plan was declared as nonimplementable and the Resolution Professional was directed to invite fresh offers by the Hon'ble Supreme Court, it cannot be said that the instant application is not maintainable. The said submission cannot be accepted since a bare perusal of the various orders passed by the Hon'ble Supreme Court in Civil Appeal No.6707 of 2019; Committee of Creditors of Amtek Auto Limited Through Corporation Bank Versus Dinkar T. Venkatsubramanian, makes it clear and unambiguous ....
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....ofessional did not admit the claim for an amount of Rs.54.57 lakhs by stating that the same was already claimed by IDBI Bank in terms of the vendor facility agreement entered into by the applicant with the said bank. It is further submitted that the applicant settled the matter with the IDBI Bank on 27.12.2018 and hence, the applicant preferred its claim for the same amount of Rs.54.57 lakhs, but the same was not accepted by the Resolution Professional and hence, the IA. 4. The instant IA is also liable to be dismissed in view of the judgment passed by the Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited (Supra) and also the judgment of the Hon'ble National Company Law Appellate Tribunal in Santosh Wasant Rao Walokar (Supra), as the instant IA was filed only on 06.01.2020. 5. Further, admittedly, as on the relevant date, in respect of the same amount, the IDBI Bank in terms of the vendor facility agreement executed in its favour by the applicant itself, preferred the claim with the Resolution Professional and the same had also been admitted. Hence, the applicant cannot now raise the same claim, once again. 6. In the circumstances and for the aforesaid....
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....nting creditor and entitled to liquidation value in accordance with Section 53 of the Code and it does not comply with the provisions of Regulation 42 and 44 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. 5. It is also stated that the bills drawn by the vendors of the Corporate Debtor under LCs established by the applicant, were paid to the vendors who happen to be ultimate beneficiaries, as and when the bills became due after debiting the current account of the Corporate Debtor, amounting to Rs.34 Crores and the said amount cannot be treated as recovery by the applicant and cannot be deducted from the final payment to be made to the applicant as per the scheme of distribution of amount under the Resolution Plan. It is also stated that the amounts of Rs.6,22,58,072.64 towards LC payments, and Rs.61,39,000/- towards bank guarantee payments are to be included in the total admitted claim of the applicant. 6. Respondent No.1/Resolution Professional vide his reply stated that the Committee of Creditors, wherein the applicant is also a member, deliberated and consented for all the actions of the Resolution Professional including for the deducti....
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....ant Nos.2 & 3); and (b) pass such further and other directions as this Hon'ble Tribunal may deem fit and expedient." 2. The applicant states that a Security Trustee Agreement dated 28.12.2015 was executed between the applicant No.2 KKR India Financial Services Private Limited as Lender and WLD Investments Private Limited, (in short 'WLD') as borrower and the Applicant No.1 IL&FS Trust Company Limited (now known as Vistra ITCL India Limited) as security trustee. Another security trustee agreement dated 28.03.2016 was executed by and between the Applicant No.2 KKR India Financial Services Private Limited as the Lender and BRASSCO Engineering Private Limited (in short 'BRASSCO') as borrower and the Applicant No.1 IL&FS Trust Company Limited (now known as Vistra ITCL India Limited) as security trustee. Another Security Trustee Agreement dated 30.06.2016 was executed by and between Applicant No.2, KKR India Financial Services Private Limited and Applicant No.3 L&T Fincorp Limited (now known as L&T Finance Limited) as lenders and BRASSCO Engineering Limited as borrower and Applicant No.1 IL&FS Trust Company Limited (now known as Vistra ITCL India Limited), as security trustee. 3. A....
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....ty, recognized and preserved the pledged shares created in favour of the applicant No.1 by the Corporate Debtor, the Applicant did not challenge the non-admission of its claim to recognize as the secured financial creditor of the Corporate Debtor and not making it as a part of the Committee of Creditors. 7. It is further stated that after the orders of this Adjudicating Authority dated 13.02.2019, whereunder it was held that the Resolution Plan submitted by Liberty House Group is not capable of implementation due to default in adherering to the payment schedule and restoring the Committee of Creditors for considering the plan of Deccan Value Investors by excluding certain period and in view of the order dated 16.08.2019, passed by the Hon'ble National Company Law Appellate Tribunal, ordering for liquidation of the Corporate Debtor and in view of the various orders passed by the Hon'ble Supreme Court in Civil Appeal No.6707/2019; a fresh resolution plan was submitted by the Deccan Value Investors. Basing on a filing made with the Bombay Stock Exchange on 08.01.2020, the Applicants became aware of the fact that DVI being selected as a preferred bidder. The Applicant through its vari....
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....smissed on the ground of non-joinder of necessary parties. 9. Admittedly, the Applicants have not lent any money to the Corporate Debtor. Therefore, they cannot be treated as the financial creditor of the corporate debtors. Though the claim of the applicant as a secured financial creditor was rejected by the Resolution Professional in 2017, the applicant has not challenged the same. The applicant having given up its right as a financial creditor of the Corporate Debtor by not challenging the rejection of its identical claim by the Resolution Professional, at the appropriate time, cannot now file the instant IA, belatedly, for the same relief. Its submission that it has not challenged the rejection of its claim as a financial creditor under the bona fide belief that its interest could be sufficiently protected and preserved under the LHG Resolution Plan, does not stand to the legal scrutiny. 10. In view of the findings that the instant IA is not maintainable, we need not delve upon the other issues raised, during the hearing of the IA. 11. In the circumstances and for the aforesaid reasons, we do not find any merit in the IA and accordingly, the same is dismissed. VIII. IA No.22....
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....er Section 30(2) of the Code and he is to confirm that each resolution plan provides for all items listed under Section 30(2)(a) to (f) of the Code. If the aforesaid conditions, as envisaged by Section 30(2) are fulfilled then such a resolution plan is to be presented to the Committee OF Creditors. The Committee of Creditors may then approve a resolution plan by a vote of not less than 66% of voting share of the Committee of Creditors after considering its feasibility and viability along with other requirements, as may be specified by the Board. Under Section 30(6) of the Code, the RP is obliged to submit a resolution plan as approved by the Committee of Creditors to the adjudicating authority. 4. As per the requirement of Section 29 of the Code read with Regulation 36 of the CIRP Regulations, an information memorandum prepared and a certification regarding the same was furnished by the Resolution Professional to the Committee of Creditors as well as before this Tribunal. When the resolution plan as approved by Committee of Creditors is placed before the adjudicating authority then it is to record its satisfaction as per the requirement of Section 31(1) of the Code as to whether t....
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....specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of liquidation of the corporate debtor under Section 53 or the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority under Section 53(1) whichever is higher. The Resolution Professional in Form H, filed vide Spl. Diary No.181 dated 25.06.2020, certified that in Part 2 Clause 3.2 under the heading 'Treatment of Operational Creditors' read with Part 5 Clause 1.4 'Allocation of Funds', the resolution applicant has provided the payment to the operational creditors in terms of Section 30(2)(b) of the Code. As regards, dissenting financial creditors, it is stated in Form 'H' that the Plan provides for the payment to the financial creditors, who did not vote in favour of the resolution plan, at Clause 1.6 of Part IV of the Plan, in terms of Section 30(2) of the Code. 8. The resolution plan must provide for the management of the affairs of the corporate debtor after its approval. There is specific provision made for the management and control of the company a....
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....um dated 07.02.2020, at Page Nos.130 and 131 of the Resolution Plan filed vide Spl. Diary No. 107A dated 15.06.2020, reads as under:- "Changes in 2.5 on Timeline of Events for Implementation of Resolution Plan: Sub-section 2.5.2 shall stand replaced in the clause set out below:- unless waived (where permissible under Applicable Law) by the Resolution Applicants, the consumption and completion (including the Acquisition of the Corporate Debtor by the Resolution Applicants in terms of sub-section 5.1 and disbursement of Upfront Cash Infusion for settlement of dues of the Corporate Debtor (Acquisition as a Going Concern) of this Resolution Plan and any other action set out in sub-section 5.1 and 5.2 (Acquisition as a Going Concern) of the Resolution Plan is are contingent on the following conditions having been fulfilled in a form and manner satisfactory to the Resolution Applicants ("Effective Date Conditions Precedent"): (a) Occurrence of Final NCLT Approval Date; (b) Receipt of a copy of the order of the relevant adjudicating authority NCLT approving this Resolution Plan; and (c) Execution of a long term lease (subsisting for 20 years or more) for the ACE Complex Land....
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.... plan. Hence, we need not go into the issue that whether this adjudicating authority can compel Vistra ITCL (India) Ltd. to act in a particular manner with regard to ACE Complex land, on which it is claiming certain mortgage rights. However, it is made clear that we have not expressed any opinion on the validity or otherwise of the lease deed dated 28.01.2020. (b) (i) Letter of Intent (LOI) and Performance Bank Guarantee (PBG) In the instant case, admittedly no LOI was ever issued to the successful resolution applicant i.e. DVI and also admittedly, the successful resolution applicant-DVI submitted the part Performance Bank Guarantee only i.e. for Rs.150 Crores as against the requirement of Rs.300 Crores. The Resolution Professional through his affidavit bearing Spl. Diary No.247 dated 02.07.2020, while drawing our attention to Step V to Step VIII of Clause 21.1.1 of the request for resolution plan dated 13.12.2019, approved by the Committee of Creditors, stated that as per the said Clause under the RFRP, LOI was required to be issued, stating that the resolution applicant has been selected as the successful resolution applicant and accordingly, the Resolution Professional, vide ....
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....ution Applicant was bound to submit the Performance Bank Guarantee after the hearing before the Hon'ble Supreme Court and the same was not in any way linked to the issuance of the LOI in any manner whatsoever. It is further submitted that since the successful Resolution Applicant has failed to submit the balance 50% Performance Bank Guarantee, this Adjudicating Authority while approving the plan, may direct the resolution applicant to submit the same within a specific time. (b) (v) The learned senior counsel appearing for the successful Resolution Applicant submits that issuance of LOI was a pre-condition for submission of Performance Bank Guarantee. (b) (vi) It is further submitted by learned counsel for the Resolution Professional as well as Committee of Creditors that the approval of the plan and various clauses and conditions therein by the Committee of Creditors is well within its realm of commercial wisdom and hence, this Adjudicating Authority, once satisfied that the plan fulfills the requirements under Section 30(2) of the Code, requires to approve the plan. (b) (vii) A perusal of the various clauses of the RFRP and the provisions of the Code i.e. Section 31 read with S....
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.... clearly show that by virtue of mandatory contents of resolution plan as discussed in the preceding paragraphs in relation to Section 30 and Section 31 of the Code, the requirement of Regulation 38 also stands fulfilled. Even the requirement of Regulation 39 has been satisfied, as the RP has submitted that the resolution plan of Resolution applicant, as approved by the Committee of Creditors, to this Tribunal along with the compliance certificate in Form H, as per the requirements of Regulation 39(4) of the CIRP Regulations meets all the requirements of the Code and the CIRP Regulations and that the resolution plan has been duly approved by the Committee of Creditors. 17. In view of the above, we accept and approve the Committee of Creditors approved resolution plan of Resolution Applicant-DVI. 18. In respect of the reliefs and concessions as set-forth in Section 9-Prayer of the resolution plan dated 17.01.2020 along with addendum dated 07.02.2020, it is not possible for us to issue any direction except to say that the resolution applicant may take appropriate steps in accordance with law, in respect of the said reliefs and concessions. It is needless to say that the public autho....
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....ny manner by approval of the resolution plan by this Hon'ble Adjudicating Authority; In the alternative, the Secured Property/the Mortgatged Property should be directed to be kept outside the CIRP of the Corporate Debtor as well as outside the confines of any resolution plan. (b) Direct the Respondent No.1 to provide a copy of the part of the resolution plan which deals with and discusses the Mortgaged Property; (c) Direct that the lease rentals payable in respect of the security property be deposited in the account of the Security Trustee (d) pass such further and other direction as this Hon'ble tribunal may deem fit and expedient." 2. The Applicant, vide Spl Diary No.216 dated 26.06.2020 has filed the proof of service of advance notice of the IA before its filing i.e. on 19.06.2020 and also the proof of service of the IA on 23.06.2020 in terms of the notice issued by the NCLT in IA by order dated 23.06.2020 on respondent No.4- Gateway Impex Private Limited. But inspite of the said service of notice, there is no representation on its behalf in the IA. 3. It is stated that the applicant filed the IA in its capacity as the Security Trustee for and acting on the instructi....
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....ssets or such land to the applicant and the description of the said land, wherein the land and building called as 'ACE Complex Land' is a part, is as under:- "The freehold plot of industrial land (admeasuring approximately 21.11 acre) together with all properties and structures built thereon and immovable property comprised therein, located at Industrial Sector-9/10, Dharuhera, District Rewari, Haryana' (Secured Property/Mortgaged Property)" 5. It is also submitted that prior to the period of mortgage, 4 unregistered lease deeds were entered into by and between the Respondent No.4 Gateway and the corporate debtor. All the four said lease deeds were dated 16.03.2016 and were expired on 31.03.2019, i.e. during the period of CIRP. 6. The learned senior counsel appearing for the applicant-Vistra ITCL (India) Ltd., at the outset, submitted that if the clauses/paragraphs mentioned in the resolution plan read with addendum of DVI and pertaining to ACE Complex land property, which is part of the industrial land, admeasuring approximately 21.11 Acres and has been mortgaged to the applicant, are deleted, it has no objection for the Plan. In view of the same, it is necessary to note the ....
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....CE Complex Land and shall be suitable protective terms acceptable to the Resolution Applicants including: (i) confirmation of the validity and subsistence of the lease arrangement by way of prior written consent of Vistra ITCL (India) Limited acting as the security trustee on behalf of KKR India Financial Services Limited and L&T Finance Limited in a form and substance acceptable to the Resolution Applicants; (ii) no right of termination accruing to the lessor as long as lease rentals are paid; and (iii) right of first refusal accruing to the Resolution Applicants, in case of sale of ACE Complex Land. ACE Complex Land Shall mean 21.11 acres of land located at village Malpura, Industrial Area, Sectyor 9/10, Dharuhera, District Rewari, Haryana. Section 5:- Acquisition as a Going Concern "Substitution of the opening paragraphs in sub-sections 5.1 and 5.4 on Acquisition as a Going Concern: The opening paragraph of sub-section 5.4 shall stand replaced by the clause set out below: On the date identified by the Resolution Applicants which shall be (a) after the completion of the Condition Precedent for execution of a long term lease for the ACE Complex Land with Acceptable ....
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....s a going concern, and accordingly, to pass an order directing that (a) the Corporate Debtor shall be entitled to continue to use and enjoy tenancy, leasehold and easement rights over the ACE Complex Land for a period of 20 years from the NCLT Approval Date without any interference, so long as the Corporate Debtor continues to pay rent for the enjoyment of such tenancy, leasehold and easement rights in accordance with its existing arrangements; and (b) Section 238 of the Code overrides any provision under Applicable Law which restricts the usage of ACE Complex Land by the Corporate Debtor to manage the operations of the Corporate debtor as a going concern;" Addendum dated 07.02.2020 " xxxx xxxx xxxx xxxx xxxx II. The following sub-section of Part IV of the Resolution Plan are amended and / or replaced by the sub-sections set out below: 1. Insertion of sub-section 1.6(xi) on conditional NOC: The following sub-section 1.6 (xi) shall be inserted in the Resolution Plan: In consideration of the transactions contemplated in this Resolution Plan, each Financial Creditor agrees and undertakes to issue a conditional NOC to the Corporate Debtor which shall be effective on Closin....
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....attention to the various clauses of the facility agreement and other connected documents thereon, submits that there was no bar on Gateway from executing the lease deed in favour of the corporate debtor in respect of the ACE Complex land. He further submits that Section 65A of the Transfer of Property Act, 1882, has no application to the facts of the present case. However, the learned counsel has submitted that the execution of the registered lease deed in respect of ACE Complex land by Gateway in favour of the corporate debtor for a period of 20 years is highly essential and crucial for the continuation of the corporate debtor as a going concern and for effective and successful implementation of the resolution plan of DVI. 11. The learned counsel for the Committee of Creditors of the corporate debtor while supporting the submissions made by the learned counsel for the RP further submitted that the lease of ACE Complex Land forms an integral part of the business of the corporate debtor and the prayer in Section 9 (xiv) of the Resolution Plan, though stated to be a condition not precedent for approval of the plan, may be granted for the effective implementation of the resolution pl....