TaxTMI 
TaxTMI 
2020 (10) TMI 682
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Code for initiation of Corporate Insolvency Resolution Process against M/s. Kalptaru Steel Rolling Mills Limited ("Corporate Debtor"). The Company Petition (IB) 563 (PB) / 2018 was admitted on 14.08.2018 imposing moratorium under Section 14 of the Code and therein appointed the applicant Mr. Prabhakar Nandiraju as Interim Resolution Professional in respect of the Corporate Debtor. 3. Thereafter, in pursuance of Section 15 of the Code the Interim Resolution Professional made public announcement on 18.08.2018 inviting claims and on receipt of claims from various financial creditors and operational creditors, the Interim Resolution Professional constituted the Committee of Creditors in terms of Section 18 read with Section 21 of the Code. 4. Subsequently, in the 1st meeting of the Committee of Creditors held on 11.09.2018, the Interim Resolution Professional was confirmed to act as Resolution Professional as per the provisions of the Code. The Resolution Professional has convened 10 meetings of the Committee of Creditors up to 07.05.2019. 5. The Resolution Professional has further disclosed that in compliance of Regulation 27 read with Regulation 35 of the IBBI (Insolvency Res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on Process for Corporate Persons) Regulations, 2016 along with the application. 10. The resolution plan submitted by M/s. Shiva Ferric Private Ltd. and approved by the requisite majority of CoC has been placed before us seeking our acceptance and approval of the resolution plan in terms of the Code and Regulations framed there under. 11. The break-up of the voting pattern of the Financial Creditors/Members of the Committee of Creditors in approving the Resolution Plan was as under: Sr. No. Financial Creditors Voting Share (%) Voted 1. Andhra Bank 66.13 For 2. APSFC 33.87 Against Total 100 12. That brief contours of the Resolution Plan submitted by M/s. Shiva Ferric Private Ltd. as approved by the CoC along with the amounts provided for the stakeholders under the Resolution Plan is detailed herein below: - Category of Stakeholder Amount Claimed Amount Admitted Amount provide d under the Plan Amount provided to the amount claimed Dissenting secured Financial creditor M/s. Andhra Pradesh State Financial Corporation (APSFC) 4626 4626 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation. (2) Where the Adjudicating 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 requi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... - For the purpose 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;] (c) provides for the management of the affairs of the Corporate debtor after approval 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. Explanation. -For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013(18 of 2013) or any other law for the time being i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Resolution Process cost shall be paid in its entirety by the resolution applicant in priority to other debts of the corporate debtor in terms of Section 30(2)(a) of the Code. 24. As regards compliance of clause (b) of Section 30(2) of the Code, the Resolution Professional has certified that Clause 7 Sl. No. 3 of the resolution plan provides for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under Section 53. During hearing, it was placed before us that there are no operational creditors and there are no claims by way of statutory dues. Similarly, it is placed that there are no pending claims by workmen or employees. Nevertheless, resolution plan provides for one lakh each towards each class of Operational creditor, Government dues, workmen and employees. Be that as it may, on behalf of resolution applicant, it was confirmed during the hearing that workmen's dues for the period of 24 months preceding the insolvency commencement date, if any, shall be paid in its entirety in terms of water fall pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompliance certificate given in Form H that Clauses 12 & 13 of the Resolution Plan provides for adequate means for supervising its implementation. However, in the interest of justice, we direct that the Monitoring Committee be comprised of three members constituting the resolution professional as insolvency professional and two representatives of the resolution applicant, to be chaired by the IP. 30. The fifth and sixth conditions in terms of clause (e) & (f) of sub-section (2) of Section 30 of the Code provide to ensure that the Resolution Plan does not contravene any of the provisions of the law and conforms to such other requirements as may be specified by the Board. 31. In this regard the resolution professional has certified that the said Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code 2016, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and does not contravene any of the provisions of the law for the time being in force. Be that as it may in terms of clause (e) & (f) of sub-section (2) of Section 30 of the Code, we make it clear that the Resolution Applicant shall com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....continue to function as a going concern. The right of rejection or approval of a plan is with the CoC. In a particular case, what should be the percentage of claim amount payable to one or other 'Financial Creditor' or 'Operational Creditor' or 'Secured Creditor' or 'Unsecured Creditor' can be decided by 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 Committee of Creditors meets the requirements as referred to in sub-section (2) of Section 30 of the Code. 38. In the present case the resolution plan has been approved with 66.13 % voting share well above the statutory requirement of 66 % in terms of Section 30(4) of the Code and has the requisite statutory voting share. Besides the decision of Committee of Creditors is a reasoned and self-speaking one as required under proviso to Regulation 39(3) of the CIRP Regulations, 2016. Needless to state here that the Resolution Plan cannot take care of total outstanding dues of the creditors in its entirety. 39. It is well settled proposition of law that commercial and business decisions of Committee of Creditor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....save the company. 44. Insolvency and Bankruptcy Code, 2016 is a complete Code in itself and is exhaustive of the matters dealt with therein. The Code is a comprehensive legislation including both the procedural as well as substantive law. In this regard Hon'ble Supreme Court in the case of M/s. Innoventive Industries Limited vs. ICICI Bank has observed that "it is an exhaustive code on the subject matter of insolvency in relation to corporate entities and others. It is also true that IBC, 2016 is a single unified Umbrella Code, covering the entire gamut of the law relating to insolvency resolution of corporate persons and others in a time bound manner." 45. In the present case with the admission order, CIRP has commenced in respect of the corporate debtor and Moratorium as provided under Section 14 of the Code has been declared prohibiting the institution of suits, or continuation of pending suits or proceedings against the corporate debtor, including execution of any judgment, decree, or order in any court of law, Tribunal, arbitration panel, or any other authority. 46. It is also pertinent to note that Section 238 of the Code gives an overriding effect to the provisions of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is not to revive it, which is absolutely contrary to the letter and spirit of the Insolvency Code. 52. In this regard the Resolution professional in its reply filed on 09.07.2019 contended that 'the resolution plan submitted by the resolution applicant is in compliance with Section 30 of the Code read with Regulation 37 and 38 of the CIRP Regulations and made all the efforts to preserve and revive the corporate debtor.' It is further mentioned that 'the resolution plan contains the provisions for take over of the corporate debtor by the resolution applicant as going concern and amalgamation of the corporate debtor with the resolution applicant pursuant to the provisions of Section 230 of the Companies Act, 2013. 53. The resolution plan thus contains the provision for takeover of the corporate debtor by the resolution applicant as going concern. Provision has also been made to ensure implementation of the plan through a monitoring committee. As regards proposal for subsequent amalgamation, there is no dispute that right to apply for Scheme of Amalgamation has been statutorily provided under Sections 230 to 234 of the Companies Act, 2013. Therefore, it is open for compa....