TaxTMI 
TaxTMI 
2021 (8) TMI 1282
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.... taken up for hearing and disposal along with this Application on the same, the prayer as sought for in the present Application has become infructuous. Accordingly, IA/647/IB/2020 stands closed. 2. The Application viz. MA/43(CHE)/2021 is moved by the Resolution Professional of the Corporate Debtor viz. M/s. Siva Industries and Holdings Limited under Section 12A of IBC, 2016 read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as "CIRP Regulations, 2016") seeking relief as follows; a) Pass an order allowing this Application filed under Section 12A of the Code read with Regulation 30A of the CIRP Regulations; b) Pass an order allowing withdrawal of the original Application filed under Section 7 of the Code; c) Pass an order directing the Corporate Debtor to implement the approved Settlement Plan in full letter and spirit; d) Pass an order allowing the original petitioner or any other creditor approving the Settlement Proposal to seek initiation of liquidation proceedings of the C....
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.... 9 Bank of India 1.53 (iv) It is also seen that the Applicant has received claims from the Operational Creditors and admitted the same to the tune of Rs. 461.02 Crore. Further, the claims of other creditors were also admitted to the tune of Rs. 40.55 Crore. (v) Thereafter, it is seen that in compliance with Section 25(2)(h) of IBC, 2016 the Applicant has issued Form -G as mandated under the CIRP Regulations, 2016 on 17.06.2019 in "Financial Express", All India Edition and also in "Dinamani", Tamil Nadu Edition, inviting Expressions of Interest (Eol) for submission of the Resolution Plan from the prospective Resolution Applicants. Further, in terms of the advertisement, the last date was fixed as 03.10.2019, which was extended upto 13.10.2019. (vi) In pursuance to the same, it is seen that the Applicant has received two Eol's from the prospective Resolution Applicants viz. (1) Mr. Sadayandi Pothiraj, Director of Otto Clothing Pvt. Ltd. and Pothys Pvt. Ltd. and (2) M/s. Atyant Capital Management Limited. Thereafter, it is seen that both the prospective Resolution Applicants had withdrawn their Eol on 03.12.2....
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....site majority of 66% of votes and it has received only a vote of 60.90% in favour of the Resolution Plan. Since the Resolution Plan has failed, the Applicant immediately moved an Application under Section 33(1)(a) of IBC, 2016 seeking initiation of liquidation process in relation to the Corporate Debtor. (xii) In the meantime, it is seen that on 31.08.2020, one shareholder of the Corporate Debtor has filed an Application under Section 60(5) of IBC, 2016 viz. IA/647/2020 before this Tribunal seeking necessary directions for consideration by the CoC on a proposed purported to be a One Time Settlement Offer. In the said Application, this Tribunal vide its order dated 05.10.2020 had directed the RP to convene a meeting with the CoC to consider the proposal submitted by the shareholder/erstwhile Directors, pursuant to which, it is seen that the 13th CoC meeting was conducted on 13.10.2020 wherein the CoC members have decided that further time be taken by all the lenders to discuss on the offer and seek necessary approvals and then accordingly revert to the RP. (xiii) The shareholder of the Corporate Debtor on 14.12.2020 submitted a detailed Se....
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....ed their withdrawal in Form - FA as mandated under the CIRP Regulation, 2016 and also the requisite Bank guarantee for a sum of Rs. 5 Crore has been produced by the shareholder of the Corporate Debtor, the present Application has been purportedly moved by the Applicant under Section 12A of IBC, 2016 seeking withdrawal of the CIRP in relation to the Corporate Debtor. 4. The Learned Counsel appearing on behalf of the Applicant/RP submitted that the entire conditions as stipulated under Section 12A of IBC, 2016 read with Regulation 30A of the CIRP Regulations 2016 has been fulfilled by the Applicant and as such prayed that the present Application should be allowed. Further, in support of his contention the Learned Counsel for the Applicant pressed into service the following judgments of the Supreme Court; (i) Arun Kumar Jagatramka Vs. Jindal Steel and Power Ltd., Civil Appeal No. 9664 of 2019 (ii) Jaypee Kensington Boulevard Apartments Welfare Association Vs. NBCC (India) Ltd., Civil Appeal Nos. 3395, 3396 of 2020" (iii) Swiss Ribbons (P) Ltd. Vs. Union of India, (2019) 4 SCC 17 (iv) India Resur....
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....earned Senior Counsel for the IDBI Bank submitted that the Liquidation value as per the average valuation done during the CIRP period is approximately Rs. 229 Crore. Further, it was also submitted that the Resolution Plan submitted by the RFIPL, the prospective Resolution Applicant was for a sum of Rs. 245 Crore, out of which the share of IDBI Bank was only Rs. 12 Crore. However, it was submitted that the CoC in its commercial wisdom have not approved the Resolution Plan submitted by RFIPL. 8. Further, the Learned Senior Counsel for the IDBI Bank submitted that the offer of the promoters is Rs. 328 Crores which is more than the liquidation value of Rs. 229 Crore and also it was submitted that the settlement offer arrived at by the IDBI was only in relation to the admitted claims of M/s. Siva Industries and Holdings Limited and M/s. Rudhra Mineral Pte Limited with an aggregate principal amount of Rs. 111.82 Crore and that the Settlement proposal envisages the IDBI Bank to continue/pursue legal action in respect of recovery of Rs. 644.71 Crore against M/s. Axcel Sunshine, over which the Corporate Debtor stood as a Corporate Guarantor. It was also submitted that in the worst case s....
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....oposal as given by the erstwhile promoters of the Corporate Debtor that the same appears to be more like a Corporate Restructuring and Resolution Plan or a Business Restructuring Plan rather than a settlement simpliciter under Section 12A of IBC, 2016. First in this regard, this Adjudicating Authority wishes to highlight one of the clauses given under settlement proposal dated 14.12.2020, which is Clause 2 of Chapter VII - Miscellaneous as follows; 2. Effective Date and Failure of Approved Settlement Plan: This document constitutes a biding proposal of the Promoters in respect of settlement of dues of the Company. However, the proposal of the Promoters is subject to negotiation with the Committee of Creditors. Therefore, the terms of the Approved Settlement Plan may be different from the terms proposed herein. 12. The above clause posits the fact that even after the proposal is approved, the promoter of the Corporate Debtor can change the terms of the proposed settlement plan. Also, the Settlement Plan governs the terms of implementation, which is more like a Resolution Plan proposed under Section 30 of IBC, 2016 and cannot....
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....rther, it is seen from the attendance of the CoC meetings that the RP has allowed certain Authorized Representatives on his part to appear in the CoC meeting, which we find that it is quite unusual. 16. It is also required to be noted that once the CIRP is triggered in relation to a Corporate Debtor, the same is an order in rem and not in personam and that whether the Corporate Debtor is required to be wriggled out of the CIRP is to be decided by this Adjudicating Authority by exercising its "judicial wisdom" and cannot be carried away by the "commercial wisdom" of the CoC in this regard. 17. We are also conscious of the fact that the Financial Creditor has full freedom to decide on the quantum of amount which they are willing to accept in respect of the overall dues pending against the Corporate Debtor and this Adjudicating Authority consciously restrains from making any observation in this regard and leaves the same to the "commercial wisdom" of the CoC. However, this Adjudicating Authority is duty bound to examine the consequences of a purported Settlement proposal which is proposed by the promoter of the Corporate Debtor and the position of the Corporate Debtor once the a....
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.... in its 17th CoC meeting with a majority vote of 94.23%. However, nowhere in the minutes it has been stated that the CoC has accepted the Settlement proposal given by the promoter of the Corporate Debtor and the Settlement proposal per se was not put to vote by the members of the CoC. 21. Even though the Application filed by the Applicant contains Form FA and the copy of the bank guarantee for a sum of Rs. 5 Crore as mandated under the CIRP Regulations, 2016 we find that the present Application filed under Section 12A of IBC, 2016 is not required to be allowed in view of the fact that it will have some serious ramifications, since in the present case, till this time, the money has not been paid to the Financial Creditors and that the dues of the entire Financial Creditors are to be cleared by the promoters of the Corporate Debtor only after a period of 180 days from the approval granted by this Tribunal. Further as already discussed, the Corporate Debtor once comes out of CIRP cannot be pushed directly into liquidation, since such a scenario is unfounded in the provisions of IBC, 2016. Also it is relevant to point out here that, only a violation of the terms and conditions of a ....
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....rporate Debtor and the IDBI Bank, would not apply to the facts of the present case, since here the settlement proposal as envisaged by the promoter of the Corporate Debtor is not a settlement simpliciter as envisaged under Section 12A of IBC, 2016. 25. For all the aforestated reasons, we are of the view that the Settlement Proposal as given by the Corporate Debtor and the approval of the withdrawal of the CIRP in relation to the Corporate Debtor by the CoC in its 17th meeting, is not in conformity with the provisions of IBC, 2016 and also not in line with the judicial conscientiousness of this Adjudicating Authority and also transcends beyond the scope of IBC, 2016. 26. In so far as IA/586/CHE/2021 is concerned, it is seen that the same has been filed by State Bank of India, who is one of the Financial Creditors in relation to the Corporate Debtor who has voted against the Settlement proposal under Section 12A of IBC, 2016 given by the promoter of the Corporate Debtor. The State Bank of India, in IA/586/CHE/2021 has sought for a direction to declare that the mortgage rights of the Applicant over the immovable property offered by the Corporate Debtor will not get diluted upon ....