TaxTMI 
TaxTMI 
2020 (3) TMI 1419
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....d qua Jaihind Projects Limited 2. The facts of the case is/are herein under: 2.1 CP(IB)No.172 of 2018 was filed by Operational Creditor viz. SKE Projects Pvt. Limited, under section 9 of the IB Code, seeking initiation of Corporate Insolvency Resolution Process (hereinafter referred as "CIRP") against the Corporate Debtor which was admitted on 02.11.2018 by this Adjudicating Authority. The Applicant was appointed as_ Resolution Professional (hereinafter referred as "RP") vide order dated 23.01.2019. 2.2 That the Committee of Creditors (hereinafter referred as "CoC") was formed, which met time to time and latest Information Memorandum was prepared pursuant to and based on the audited financial statements of Corporate Debtor for the Financial Year ending on 31.03.2018. 2.3 That on the expiry of 180 days of CIRP further 90 days beyond 180 days was extended vide order dated 25.04.2019. Thereafter, vide order dated 04.09.2019, the CIRP for further extended till 27.09.2019 2.4 The RP called for Expression of Interest (hereinafter referred as "Eol") vide publication dated 18.02.2019 but no Eol was received by the Applicant. Thereafter, Applicant extended the time for filing th....
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....ulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as well as Section 30 of the Code, and sought for approval of the Resolution Plan by this Adjudicating Authority. 4. On perusal of the records, it is found that the Resolution Applicant has taken account the interest of all stakeholders of the Corporate Debtor to the extent possible, as envisaged in this Resolution Plan for insolvency resolution of "Jaihind Projects Limited" and to ensure continuity of business along with (i) most effective use of the assets, (ii) maximizing of the value of the assets and (iii) balance the interest of all stakeholders of Jaihind Projects Limited as going concern basis. Business Rationale and Revival Plan envisaged by Resolution Applicant in brief is as follows: Resolution Plan envisaged under this Resolution Plan provides for Financial Restructuring through Compromise or Arrangement with the Financial Creditors and Operational Creditors and change of management of Corporate Debtor. Further it envisaged about proposals with respect to: a. Proposal for insolvency Resolution Process Costs in priority to ....
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....sional is Rs. 4,58,120/-. The detailed terms and conditions are given under Part B (II) at page no. 34 of the application, which shall form the part of this Order. 7. The amount due to the Operational Creditors, Other Creditors and related party of Jaihind Projects Limited as provided in Information Memorandum dated 20th April 2019 under the head "List Of Operational Creditors", "List Of Other Creditors" And "Particulars Of A Debt Due From Or To The Corporate Debt Or With Respect To Related Parties" (other than government and statutory dues) is tabulated below: No. Particular Total Claim Received (Amount in Rupees) Amount Admitted by RP (amountin Rupees) 1 Operational Creditors 3,07,58,66,617 47,39,65,796 2 Other Creditors 1,69,42,608 NIL 3 Related Party 2,42,48,224 NIL Total 3,11,70,57,449 47,39,65,796 It has been brought to the notice of Resolution Applicant vide e-mail dated 19th July 2019, that few of the Operational Creditors had filed application under the provisions of IBC for admission of their respective claims. In case such claims will be admitted on a later date, the total claim amount and ....
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....also filed Form H as Annexure D under regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 at page no. 82 of the application which is self explanatory. 11. During the pendency of the instant application filed under section 31 of the IB Code for sanction of the Resolution Plan of 'Parixit Irrigation Limited', the Axis Bank Limited filed its objection/ Intervention, agitating inter alia, that the Resolution Plan of the Resolution Applicant is illegal, contrary to the law, voilative of provision of Code and deserves to be rejected along with the following prayer; a) Direct the members of the CoC and/or Resolution Applicant to distribute the upfront amount payable to the Financial Creditors in such manner that the Objector is paid a sum of Rs. 15.09 crores or at least sum of Rs. 8.60 crores in terms of section 30(2)(b) of the IB Code read with Section 30(4); Or in alternative; b) Reject the present application and not approve the Revised Resolution Plan of the Resolution Applicant. 12. The main contention of the Axis Bank, who is one of the dissenting member of the COC, ....
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....is Bank) that by virtue of Section 30(2)(b) of the IB Code (as amended upto date), the Objector was entitled to get at least the liquidation value of the asset exclusively charged to it i.e. Solar Project. As per the valuation report obtained by the RP, the fair value of Solar Project is Rs. 15.09 crores and the liquidation value thereof, is Rs. 8.60 crores. Therefore, the Objector is entitled to receive a sum amounting to Rs. 8.60 crores, if not fair value. Instead of that, by adopting the pro-rata basis, the Axis Bank is provided a meagre sum amounting to Rs. 2.44 crores. 14. The Objector stated that by virtue of amendment more particularly in Section 30(2)(b) of the IB Code, Resolution Plan shall provide the payment of Financial Debts of a dissenting Financial Creditor which should not be less than the amount to be paid in the event of liquidation of Corporate Debtor in accordance with Section 53(1) of the IB Code. 15. It is further stated that the valuation report obtained by the Applicant also works on the same principle of liquidation value and fair value of each asset of the Corporate Debtor. Therefore, the Objector is, at least, entitled to the liquidation value i.e. ....
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....y the Board in priority to the [payment] of other debts of the corporate debtor; [(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than- (i) the amount to be paid to such creditors in the event ofa liquidation of the corporate debtor under section 53; or (ii) 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 in subsection (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event ofa liquidation of the corporate debtor. Explanation 1. - For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2. - For the purpose of this clause, it is her....
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....ovided in the IB Code. Subsequently, by an amendment, this period was increased to 330 days. However, as on date 486 days have already been passed and if the said plan is not allowed or approved, in that event, the Resolution Applicant has to bear irreparable loss due to the delay in approval of the plan as the condition of the project is steeply deteriorating. It is needless to mention herein that as against the liquidation value of Rs. 3300 lakhs, the Resolution Applicant is paying upfront amount of Rs. 5854.81 lakhs (including capex of Rs. 250 lakhs for Solar Plant.) The Resolution Applicant was present in person during the course of argument and submitted that, if the approval of Resolution Plan is further delayed for one or the other reason(s), he will be constrained to withdraw his plan. Under such circumstances, he further prayed during the argument that the plan be approved as early as possible to save the Corporate Debtor as a going concern. Moreover, he is losing interest on the Bank Guarantee which is a huge amount. FINDINGS: 22. Looking to the entire facts of the case, it is found that the COC has approved the plan with 72.03% voting in favour of the approval o....
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....of the asset (in crores) in respect of Solar Plant, upon which Axis Bank has exclusive charge, shows the disparity in the distribution. The said chart is reproduced herein below for the sake convenience- GAA Mukesh Shah Average (Report dated 02.11.2018) (Reports dated 26.04.2019) Fair Value Liquidation Value Fair Value Liquidation Value Fair Value Liquidation Value Non Current Asset Location 1: Village Chadiyana, Taluka Santalpur, District Patan, Gujarat- SOLAR PLANT Land at Chandiyan a village, Santalpur- Taluka, Patan Dist., Gujarat. 1.53 0.77 2.66 1.59 2.09 1.18 Building and shed - - 0.06 0.04 0.03 0.02 Land and Building Sub total 1.53 0.77 2.72 1.63 2012 1.20 Plant and Machinery 11.93 4.30 14.00 10.50 12.97 7.40 Sub Total 13.46 5.07 16.72 12.13 15.09 * 8.60 * Location 2: Venus Atlantis, Ahmedabad, Gujarat Office Area 30.26 21.18 26.89 18.82 28.57 20.00 Terrace Area 1.82 1.27 1.05....
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....ilitates and encourages resolution in several ways. The said objective of the Resolution Plan is affirmed in the decision in the matter of K. Sashidhar Vs. Indian Overseas Bank 8 Ors. The Supreme Court has observed that National Company Law Tribunal has no jurisdiction and authority to analyze or evaluate the commercial decision of the Committee of Creditors (CoC) to enquire into the justness of the rejection of the Resolution Plan by the dissenting Financial Creditors. Keeping in view such object behind the enactment of the Code, intention of the Legislature, that the priority is to be given to the resolution than liquidation in the larger interests of the public, workmen, stakeholders and the other employees of the corporate debtors in the interest of justice and in order to achieve the object of the Code and liquidation of a company can be only as a last resort, wherein, all efforts for brining Resolution Plan were failed or it cannot be found workable in the larger public interest. Hence, now the approval of Resolution Plan by this Adjudicating Authority is rule as per the apex court's decision in the matter of K. Sashidhar Vs. Indian Overseas Bank & Ors as discussed abov....
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....Creditor including statutory Operational Creditors, this Adjudicating Authority is of the opinion that whoever, whether they are Operational Creditor or Financial Creditor or unsecured Financial Creditor or other stakeholder, have approached and lodged their claim before RP and the same is either admitted/rejected, they do not have the liberty to agitate the claim for reconsideration before the Resolution Applicant as the approval of the plan reaches to its finality. 26.5 With regard to Part G (6) sub-clause (a), (b), (c) & (d) i.e. under the head 'Claims of previous management, Directors, Shareholders, its Associates and Family Members', this Adjudicating Authority is of the opinion that these issues are directly dealt with RP and COC and thereafter, the resolution is approved. Hence, it requires no further adjudication. Moreover, all the Financial Creditors, who are the member of the COC, considered the Resolution Plan looking to the lien and charges and has approved the plan accordingly. 26.6 With regard to Part G (7) sub-clause (a) & (b), this Adjudicating Authority is of the opinion that the Resolution Applicant will approach the statutory/competent authority of local bo....