TaxTMI 
TaxTMI 
TaxTMI 
2022 (3) TMI 629
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....nkruptcy Code read with Rule 11 of the NCLT rules, 2016 seeking adjudication of unresolved question of law arising out of final resolution plan and consequential directions thereof. 3. The Resolution Plan has submitted by the Taguda was approved with 91.06% voting on 25.06.2021. The applicant with its 8.94% share in the Committee of Creditors dissented against the approval of the final resolution plan because of the uncertainty around enforceability of excluded securities including third party securities and guarantees obtained by the creditor for loan given to the Corporate Debtor. 4. The applicant pointed out that pursuant to the orders of Hon'ble NCLAT dated 08.04.2021 and 24.06.2021, the applicant has filed the present application for adjudication on question of law in relation to enforceability of excluded security including third party securities and guarantees. Further, they reiterated, if the Hon'ble Tribunal were to decide that the excluded securities are enforceable the application is seeking conversation of its votes on final resolution plan from dissent to assent. 5. The question of law as raised by the applicant as follows:- Whether the Excluded Securities includi....
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....ot be extinguished or waived under this Resolution Plan and will continue to be available with the Financial Creditors in accordance with their terms, which may be exercised by the Financial Creditors at their discretion for its debt. All other securities or other Encumbrances provided by the Company including on the fixed assets of the Company shall be extinguished as on the Final Settlement Date. The Financial Creditor reserve the right to take any action against the Promoters". 10. The definition reproduced above defined the rights of the parties under the such security and guarantees. However, the applicant claims that the plan at clause 3.3 also provides that any balance financial debt forming part of admitted debt (unpaid debt) shall stand converted into non-convertible redeemable preference share. 11. Further, the plan at clause 3.3 (iii) and (c) also provides the Resolution Applicant shall assigned the Financial debt of the company of amount equal to Rs. 200 crores (residual debt) out of the admitted debt to an Indian wholly owned subsidy of Resolution Applicant for consideration of Rs. 5 crores. 12. Therefore, the applicant claims that the debt of Rs. 200 crores are bei....
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....ution Applicant and the legal counsel of the Committee of Creditors were present in the Committee of Creditors meeting to respond to the queries raised by the member of Committee of Creditors. The discussion as captured in the 21st meeting is reproduced below:- "ICICI Bank raised the issue that enforcing the personal guarantee and also excluded securities is the right of the lenders. Also requested SAM to give views on impact of the issue of preference shares and SPV structure was provided under Clause 3.3 (III) (h) in the resolution plan and now the revised resolution plan provides the writing off of Rs. 200 crores debt by Corporate Debtor. ICIC Bank enquired how it would impact the right of lenders in enforcing the guarantee and excluded securites. SAM representative again reiterated that there is Hon'ble Supreme Court Judgement in the Lalit Kumar Jain matter on the related point. The representative of SAM mentioned that, as per the above-mentioned judgement. The Supreme Court has clarified in this case that the debt of the borrower is separate from the debt of the guarantor. The release or discharge of the corporate debtor in respect of the debt owned by it to the FCs an out....
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..... The Respondent further contended that the Resolution plan has been approved by approximately 91.00% of Members of Committee of Creditors, the applicant has used its commercial wisdom and exercise its dissenting vote and if the present application is permitted it will open doors of Committee of Creditors Members to seek change of its vote on the resolution plan either in accounts of change of mind or based on different interpretation of clauses of the resolution plan and further delay the CIRP of the Corporate Debtor. The Respondent/RP mentioned that his role is purely administrative in nature and he has acted at all times in complete adherence to the Code. Rejoinder by the applicant:- 19. The applicant claimed that the application is maintainable pursuant to specific liberty granted by an Order of the Hon'ble NCLAT dated 08.04.2021 and 24.06.2021. This application is essentially seeking adjudication of unresolved question of law arising out of the resolution plan and consequential directions thereof. 20. The Resolution plan as approved by the Committee of Creditors is pending approval under Section 31 of the Code. The applicant is only raising serious unresolved question of la....
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....er of Hon'ble NCLAT at para 3 categorically held that "what is being sought from this Tribunal is prejudging an issue which has not arisen on the judicial side and upon approval of plan by the CoC, the matter would than go before the adjudicating authority at that stage, the adjudicating authority will look into legality or otherwise provision of the resolution plan. Para 13 of the Order is reproduced below:- " We have gone through the Application and heard Learned Counsel for the parties. It appears to us that what is being sought from this Tribunal is pre-judging an issue which has yet not arisen on the judicial side. We are not required to give findings in the name of clarification for hypothetical question. The Resolution Plan is before the Committee of Creditors and it is for the CoC to take a decision in its wisdom on the given Resolution Plan if it complies with the requirements under provisions of IBC. If the request of the Applicant is accepted, it would set a wrong precedent where parties would start litigating on the contents of the Resolution Plan before the Adjudicating Authority and this Tribunal even before the Resolution Plan is considered and accepted/rejected by....
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....pon conversion of the Unpaid Debt, shall not have rights to receive any dividends and/or voting rights of any nature whatsoever. The New Preference Shares shall not have any rights appoint director on the board of the Corporate Debtor. The detailed terms of such New Preference Shares are set out in Schedule XII. Further, the rights and obligations of the New Preference Shares shall be governed by the memorandum of association and the articles of association of the Company as well as the agreements, if any, as may be entered into by the Resolution Applicant and the Financial Creditors. Upon approval of the Resolution Plan by the Adjudicating Authority, the provisions of Section 43 and 47 of the Act (including the rules made thereunder) and other Applicable Laws, if any, shall not be applicable to the terms of New Preference Shares set out in Schedule XII". 27. Further, clause (g) defined the security which included excluded securities, however, it is provided that the excluded securities shall not be extinguished or waived under the resolution plan will continue to available with the Financial Creditor in accordance with their terms which may be exercise by the Financial Creditor a....