TaxTMI 
TaxTMI 
2021 (3) TMI 501
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....to as the Code) read with Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as the Regulations) seeking sanction of resolution plan dated 13.03.2019 as restated on 07.05.2019 along with addendums dated 08.05.2019 & 16.05.2019 as approved in the tenth meeting of the Committee of Creditors (CoC) through e-voting held on 18.05.2019 and concluded on 20.05.2019. 2. It has been submitted that the insolvency petition was filed by the operational creditor i.e. Weather Makers Private Limited under Section 9 of the Code for initiation of Corporate Insolvency Resolution Process (CIRP) in the case of M/s Parabolic Drugs Ltd. (hereinafter referred to as Corporate Debtor) and the same was admitted vide order 23.08.2018. It is submitted that vide order dated 30.08.2018, Mr. Sanjay Kumar Aggarwal was appointed as Interim Resolution Professional (IRP), but subsequently Mr. Sanjay Kumar Aggarwal was replaced and Mr. Raj Kumar Ralhan was appointed as RP vide order dated 08.10.2018. The IRP is stated to have issued a public announcement as per Regulation 6 of the Regulations read with Sectio....
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....documents pertaining to the corporate debtor were made accessible to the prospective resolution applicants for their evaluation and preparation of their respective resolution plans for the corporate debtor. 8. It is submitted that after publication of Form G on 12.11.2018, the RP received EOI from six potential investors out of which 5 were eligible prospective resolution applicants namely, (a) JM Financial Asset Reconstruction Company Limited, (b) Dhanuka Laboratories Ltd. (c) Meghani LLP, (d) Shiva Consultants Private Limited and (e) IOL Chemicals & Pharmaceuticals Limited. 9. It is submitted that in the third meeting of the CoC on 29.11.2018, the CoC under the provisions of the Code read with Regulation 36B of the CIRP Regulations decided the issuance of Request for Resolution Plan ("RFRP") to the prospective resolution applicants and in terms of Section 25(2)(h) of the Code, the RP released a RFRP dated 04.12.2018 thereby detailing each step in the process, and the manner and purposes of interaction between the RP and the prospective resolution applicant, along with corresponding timelines and inviting resolution plans from the prospective eligible resolution applicants. ....
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....1.67% voting under Section 30(4) of the Code in the tenth meeting of CoC of the corporate debtor held on 18.05.2019. 15. The RP has filed compliance certificate in Form H (Pg. No. 17-121 Dy.232/4 dt.17.09.2020) as required under I&B Code (Amendment) Ordinance 2018 No.6 of 2018 dated 06.06.2018. It is certified by the RP in para 4 of Form H that the resolution plan complies with all the provisions of the Code, CIRP Regulations and does not contravene any of the provision of law for the time being in force and that the resolution plan stands duly approved by the 71.67% of the voting share of the financial creditors. It is also stated in para 4 (ii) of Form H that the affidavit of the successful resolution applicant regarding its eligibility under Section 29A of the Code is in order. Copy of the affidavit of the resolution applicant regarding its eligibility under 29A is attached as Annexure A-24 of the application. 16. It is also submitted that CoC while accepting the bid had taken care of all the provisions and Regulations. It is prayed that the application may be allowed and resolution as approved by the CoC in the CIRP of the Corporate Debtor be approved. 17. The learned ....
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....NA- -NA- -NA- -NA- (b) Other than (a) above: (i) who did not vote in favour of the resolution Plan 42942 42942 3130 7.3% (ii) who voted in favour of the resolution plan 108616 108616 7238 6.7% Total[(a) + (b)] 151558 151558 10369@ 6.8% 2 Unsecured Financial Creditors (a) Creditors not having a right to vote under subsection (2) of section 21 NA NA NA NA (b) Other than (a) above: (i) who did not vote in favour of the resolution Plan (ii) who voted in favour of the resolution plan NA NA NA NA Total[(a) + (b)] - - - - 3 Operational Creditors (a) Related Party of Corporate Debtor - - - - (b) Other than (a) above: (i) Government 45,044 32,394 375 1.2% (ii)Workmen & Employees 427 379 376 99.1% (iii) Other Operational Creditors 9071 4800 375 7.8% Total [(a) + (b)] 54541 37573 1126 3.0% 4 Other debts and dues - - - - - Grand Total 206099 189131 11495 6.1% Further, the applicant has also offered Equity shares....
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....) Whether the Resolution Plan (a) is feasible and viable, according to the CoC? PART II, Cl. 10 at Pg, 70 Yes (b) has been approved by the CoC with 66% voting share? Yes Voting Result on the Resolution Plan at Pg. 135 Section 31(1) Whether the Resolution Plan has provisions for its effective implementation plan, according to the CoC? Part II Clause 4 Sub Clause 4.2 at Pg. 69 Clause 8 at Pg. 70 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? -NA- The Resolution Professional had appointed a Transaction Auditor to conduct the transaction audit of the transaction entered into by the Corporate Debtor. The Auditor has submitted the Report on 07.01.2019. Accordingly, the RP has filed Application being CA No, 74/2019 with the Hon'ble Adjudicating Authority. Regulation 38 (1) Whether the amount due to the operational creditors under the resolution plan has been given priorit....
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.... section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the 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." 24. The conditions provided for in Section 31(1) of the Code for approval of resolution plan are therefore: - (a) The Resolution Plan is approved by the CoC under Section 30(4) of the Code; (b) The Resolution Plan so approved meets the requirements as referred to in Section 30(2) of the Code; (c) The Resolution Plan has provisions for its effective implementation. The satisfaction of the conditions is discussed below. 25. It i....
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....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 purpose 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 in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. 27. 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 72 of the Dy. No.232/4 dt.17.09.2020) states that payment of insolvency resolution process cost shall be the paid in full towards final payment of the insolvency resolution process costs payable. Further, it is stated that the IRP Costs shall be paid by the Corporate Debtor in priority to any other cred....
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....n shall be treated to be in consonance and in accordance with the requirements of the IBC. They further submitted that, however vide the addendum dated 09.10.2019, (Diary No. 5594 dated 15.10.2019) and the reply of the Resolution Applicant vide Diary No. 232/4 dated 17.09.2020, in terms of the orders/observations of this Adjudicating Authority dated 19.08.2019, the Resolution Applicant provided payment to the dissenting financial creditors, in the following manner:- Particulars As per earlier plan Upfront Deferred Total As per revised plan Upfront Deferred Total Remarks Calculations Upfront Deferred Total Dissenting Creditors 12.65 88.35 101 3.58 27.58 31.17 28.33% of Rs.110 Cr. (Rs.31,16,70,700) Other Creditors 9.07 63.32 72.38 71.6663% of Rs.101 Cr. (Rs.72,38,29,630) Total amount 12.65 88 .35 101 12.65** 9 0.90 103.55 It is further submitted that the contention with regard to priority in payment to the dissenting financial creditors over other financial creditors is not tenable since the amendments are subs....
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....ns made by the Hon'ble NCLAT in the order dated 12.09.2019 in Company Appeal (AT) (Insolvency) No.846 of 2019. Also the resolution applicant, resolution professional as well as the Lenders of the resolution applicant were directed to file their convenience compilations and the resolution applicant was also directed to file an affidavit with regard to the latest amendment made to Section 30(2) of the Code before the next date of hearing. 29. In compliance of the order dated 20.09.2019, the learned counsel for the RP filed affidavit vide Diary No.5673 dated 16.10.2019 stating therein that the expenses incurred for running the corporate debtor as a going concern during the period when the Bailor Bailee Agreement was in subsistence (prior to the initiation of the CIRP of the corporate debtor and immediately thereafter) have been borne out of the interim finance provided by the lenders of the corporate debtor as CIRP costs during the CIRP of the corporate debtor. Therefore, the dues amounting to Rs.2.3 crores payable by Orbit Lifesciences Private Limited should be utilised towards CIRP costs. It is further submitted that in case the above stated amount of Rs.2.3 crore is not utilised....
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....solution applicant is attached as Annexure -1 (Dy. No. 1590) and copy of board resolution dated 13.02.2020 is attached as Annexure -1 (Dy. No. 1591) 33. With regard to complaint of Mr. Japsreet Singh vide email to the Finance Minister against the approval of the said resolution plan and as per order dt.10.11.2020, reply has been filed by 3 financial creditors namely JMFARCL, Central Bank of India (CBI) and SIDBI. The JMFARCL in its reply (Dy. No. 251/10 dt.20.11.2020) has submitted that there is no locus standi of Mr. Jaspreet Singh to challenge the commercial wisdom and decision of the COC. Also reliance has been placed on para 42 of the decision of Hon'ble Supreme Court in K. Sashidhar Vs. Indian Overseas Bank & Ors. (Civil Appeal No.10673 of 2018 dated 05.02.2019) inter alia stating 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 from the legislative history there is contra indication that the commercial or business decisions of the financial creditors are not....
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....contains the details pertaining to the implementation provisions of the plan. The term of the plan is stated to be 4 years from the date of NCLT approval. Apart from infusion of Rs.112,25,60,159/- in the Corporate Debtor for repayment of the Corporate Debtor's creditors, the Resolution Applicant also proposes to infuse additional capital of around Rs.40,00,00,000 for investment in capital expenditure in plant, machinery and equipment and working capital needs. 37. With reference to compliance of Section 30(2) (c) and (d) of the Code, we have discussed that the resolution plan states that the resolution applicant undertakes that on approval of the resolution plan by the Adjudicating Authority, the resolution applicant proposes to appoint a Monitoring and Supervising Committee to provide for implementation and supervision of the plan in Phase I. The constitution of the committee is also discussed above. The terms of the plan and its implementation schedule is stated to be four years from the approval of the plan by the Adjudicating Authority. 38. As per Regulation 39(4) of the regulations, the resolution applicant has furnished performance security in the form of bank guarantee....