TaxTMI 
TaxTMI 
2023 (2) TMI 1181
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....h regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) for approval of a Resolution Plan in respect of McNally Sayaji Engineering Limited (Corporate Debtor). 4. The underlying Company Petition in C.P. (IB) No. 131/KB/2020 was filed by ICICI Bank Limited against McNally Sayaji Engineering Limited, the Corporate Debtor, under section 7 of the Insolvency and Bankruptcy Code 2016, which was admitted vide order dated 11 February 2021. 5. Initially, Mr. Jitendra Lohia, the Applicant having IBBI Reg. No. IBBI/IPA-001/IP-P00170/2017-18/10339, was appointed as the Interim Resolution Professional (IRP) and was appointed as the Resolution Professional (RP) of the Corporate Debtor on 27 December 2021. Constitution of CoC 6. The IRP made public announcement on 15 February 2021 in The Economic Times (English) (All India Edition), Dainik Jagran (Hindi) (Dhanbad Edition), Divya Bhaskar (Gujrati) (Vadodra Edition), Hosa Digantha (Kannad) (Bangalore Edition) and Aajkal (Bengali) (West Bengal Edition) newspapers regarding initiation of Corporate Insolvency Resolution Process (CIRP) and c....
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....ll India edition and Sanmarg (Hindi), Lokmitra (Gujarati), Hosa Digantha (Kannada) and Ekdin (Bengali) newspapers. The last date for receipt of EoI was 12 February 2022. 12. The notice was also published on the website of the Insolvency and Bankruptcy Board of India (IBBI). 13. The Applicant submits that in response to the invitation for EoI published on 28 January 2022, the RP received seventeen EoIs. 14. The RP then shared the Information Memorandum, Evaluation Matrix and Request for Resolution Plan (RFRP) with the Prospective Resolution Applicants. 15. The last date for submission of Resolution Plan was 01 April 2022, which was extended till 21 April 2022. Evaluation and voting 16. The Resolution Plans were opened before the CoC in its 5th CoC meeting and the Resolution Plans were placed for discussion before the CoC in its 6^th CoC meeting and the CoC requested for further revision in the Resolution Plans. 17. In the 8^th CoC meeting, all the Resolution Applicants were called for negotiation and bidding. The Resolution Applicants submitted their revised Resolution Plans as discussed in the 8^th CoC meeting. 18. The Resolution Plans were put for e-voting ....
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....no stay on such approval from a court/tribunal of competent jurisdiction; (c) the Resolution Professional having certified the (i) final CIRP Cost payable by the Resolution Applicant in terms of Section 3.2.1 of this Resolution Plan; and (ii) the liquidation value payable to the Dissenting Financial Creditors; and/or (d) there is no pending proceeding which, in the reasonable opinion of the Resolution Applicant, would have a material impact on the implementation of this Resolution Plan or any part thereof". Details on Management/Implementation and Reliefs as per the Resolution Plan - Salient Features 27. The Resolution Plan also provides for - a. Management of company after resolution in Clause 5 of Resolution Plan. b. Term of the resolution plan in Clause 4.2 of Resolution Plan. c. Implementation and Supervision of the resolution plan in Clause 5.2 of the Resolution Plan. Relinquishment/Waiver of liabilities and Approvals 28. The Reliefs, Exemptions and Waivers sought by the Resolution Applicant from the Adjudicating Authority are set out below for the successful implementation of the Resolution Plan. The orders thereon are indicated against ....
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....f required, and all necessary forms along with filing fees etc. and such authority shall also consider the same keeping in mind the objectives of the Code, which is essentially the resolving of the insolvency of the Corporate Debtor. 34. The reliefs sought with respect to subsisting contracts/agreements can be granted, and no blanket orders can be granted in the absence of the parties to the contracts and agreements. With respect to the waivers with regard to extinguishment of claims which arose Pre-CIRP and which have not been claimed are granted in terms of Ghanashyam Mishra and Sons Pvt Ltd v Edelweiss Asset Reconstruction Company Ltd, [2021 SCC OnLine SC 313 decided on 13.04.2021] wherein the Hon'ble Supreme Court has held that once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Govt, any State Govt or any local authority, guarantors and other stakeholders. We place reliance on the recent judgement of Hon'ble High Court of Rajasthan in the matter ....
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....ngs to the Insolvency & Bankruptcy Board of India for their record and also return to the Resolution Applicant or New Promoters. 41. Liberty is hereby granted for moving any application if required in connection with implementation of this Resolution Plan. 42. A copy of this Order is to be submitted to the Registrar of Companies, West Bengal. 43. The Resolution Professional shall stand discharged from his duties with effect from the date of this Order, save and except the duties envisaged in the Resolution Plan. 44. The Resolution Professional is further directed to handover all records, premises/factories/documents to the Resolution Applicant to finalise the further line of action required for starting of the operation. The Resolution Applicant shall have access to all the records and premises of the corporate debtor through the Resolution Professional to finalise the further line of action required for starting of the operation. 45. I.A. (IB) No. 1214/KB/2022 in the main Company Petition, i.e., C.P. (IB) No. 131/KB/2020 shall stand disposed of accordingly. 46. The Registry is directed to send e-mail copies of the order forthwith to all the parties for informatio....
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....olvency resolution of the corporate debtor for maximisation of value of its assets, including but not limited to the following: - (a) transfer of all or part of the assets of Not proposed in the Resolution the corporate debtor to one or more Plan. persons; (b) sale of all or part of the assets Not proposed in the Resolution whether subject to any security interest Plan. or not: (c) restructuring of the corporate Clause 3.4.6 at Pages 63-64 of the debtor, by way of merger, Resolution Plan. amalgamation and demerger; (d) the substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate debtor with one or more persons; Clause 3.4 at Pages 62-63 of the Resolution Plan. Particulars Relevant Page of the Revised Resolution Plan dealing aforesaid compliance with Regulation (e) cancellation or delisting of any shares of the corporate debtor, if applicable; Clause 3.4 at Pages 62-63 of the Resolution Plan. (f) satisfaction or modification of any Clause 3.2.2 (iii) at pages 45-46 of security interest; the Resolution Plan. (g) curing or waiving of any breach of....
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.... Plan Reg. 38(3) (a) the term of the plan and its implementation schedule; (b) the management and control of the business of the corporate debtor during its term; and Clause 4.2 at Pages 79-81 of the Resolution Plan. Clause 5.1 at Page 90 of the Resolution Plan. (c) adequate means for supervising Clause 5.2 at Pages 90-92 of its the Resolution Plan. implementation. A resolution plan shall demonstrate that- (a) it addresses the cause of Clause 2.6 at Pages 36-37 of default: the Resolution Plan. (b) it is feasible and viable: Clause 2.7 and Annexure 5 of the Resolution Plan. (c) it has provisions for its Clause 5.2 at Pages 90-92 of effective implementation; the Resolution Plan. Ref to Requirement relevant Reg. How dealt with in the Plan (d) it has provisions for approvals required and the Clause 5.4 at Page 94 of the Resolution Plan. timeline for the same: and (e) the Resolution Applicant Clauses 2.3 and Annexure 4 of has the capability to the Resolution Plan. implement the resolution plan. Document 6 Nature of Cost CIRP Cost Nature of Cost Propose....
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....te Debtor or its Assets (whether by way of demand, legal proceedings, alternative determination process including arbitration or an expert determination process, the levying of distress, execution of judgment, decree or order, or otherwise) in any court of law, tribunal, arbitration panel or other authority in any jurisdiction whatsoever (including taking any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property) for the purpose of obtaining payment of any Liability, or for the purpose of placing the Corporate Debtor into liquidation or any analogous proceedings; all contracts, deeds, bonds, agreements and other instruments of whatever nature to which the Corporate Debtor is a party, and which are subsisting or having effect immediately before the Sanction Date shall remain in full force and effect, notwithstanding anything to the contrary that may be contained in such contracts, deeds, etc. provided that the Corporate Debtor reserves the right to modify or terminate such contracts with notice to the relevant counterparties without payment of any penalty or an....
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....rcive action is taken against the Corporate Debtor or the Resolution Applicant, especially in view of the limited due diligence offered to the Resolution Applicant; any dues, liabilities, charges, interest, penalty or cost on the Corporate Debtor relating to any period prior to CIRP Commencement Date is deemed to be waived/ written-off and all the cases, show cause notices or proceeding pending at any forum or before any authority against the Corporate Debtor be un- conditionally withdrawn on approval of the Resolution Plan; Document 8 6. 7. 8. 9. 10. SI. No. 11. 12. 13. 14. the Resolution Applicant assumes that, in compliance of its duties under Regulation 35A of the CIRP Regulations, the Resolution Professional had determined whether the Corporate Debtor has been subjected to any transactions covered under sections 43, 45, 50 or 66 of the Code or not and applied to the Adjudicating Authority for seeking appropriate relief. Accordingly, though the Resolution Applicant reserve its right to institute any investigation pertaining to any transaction(s) carried out by the ex-management of the Company or ....
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.... to any contract entered into by the Corporate Debtor including damages on account of termination of such contracts pursuant to this Resolution Plan or claims which are in the nature of recovery, disgorgement, penalty, fees or recoupment of loss, shall be deemed to have been extinguished upon approval of this Resolution Plan, without any liability whatsoever on the Corporate Debtor or the Resolution Applicant; all Books and Records, the custody of the originals of documents of title, and the approvals, permits and licenses in relation to the business activities of the Corporate Debtor, the copy of the entire contents/documents (without any restrictions whatsoever) information technology systems of the Corporate Debtor as on the Transfer Date shall be delivered to the Resolution Applicant to give effect to any waiver and extinguishment under this Resolution Plan, any contract, agreement, deed or document, whether oral or written, express or implied, statutory or otherwise, pursuant to which any such dues, Liabilities, obligations, claims, counter claims, demands, actions, penalties, right, title or interest is claimed (other than....
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.... Plan and the order of the Adjudicating Authority approving this Resolution Plan shall, where applicable, constitute conclusive evidence of any modifications or cancellation or abandonment of contractual arrangements or agreements or leases or licenses as recorded in the Resolution Plan. The mere production and delivery of a certified copy of the approved Resolution Plan and the order of the Adjudicating Authority approving this Resolution Plan shall constitute proof of amendment of any constitutional documents of the Corporate Debtor, the authority to create security over the assets of the Corporate Debtor in favour of any refinancing creditor, change in the shareholding of the Corporate Debtor or its loan capital, change in the management of the Corporate Debtor, cancellation of the share capital of the Corporate Debtor and deemed delisting of the shares of the Corporate Debtor, appointments of Key Managerial Personnel of the Corporate Debtor, removal of the statutory auditor of the Corporate Debtor (if so opted by the Resolution Applicant) or revisions in agreements or arrangements by modification or cancellation or abando....
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....rty or bank account of the Corporate Debtor shall allow possession of such Assets, property or bank account to the Resolution Applicant on and from the Transfer Date, irrespective of any symbolic or actual possession or attachment of Assets, property or bank account by such Person prior to the Sanction Date. No Person (including a Creditor or a Government Authority) shall take possession of and / or create Encumbrance or attach any Assets of the Corporate Debtor after the Transfer Date on account of any claim against the Corporate Debtor which relates to a period prior to the Sanction Date. The Monitoring Committee shall allow possession of the premises / offices of the Corporate Debtor, all passwords, bank account details, cheque books, statutory registers, minutes books, financial and tax records, all communication with vendors, customers, government and regulatory authorities and all other documents pertaining to the Corporate Debtor and its business, information technology systems (including all software and hardware), access to ERP system, etc to the Resolution Applicant within 7 (seven) days of the Transfer Date. All....
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....roval for similar waiver had already been allowed by Kolkata bench of the Adjudicating Authority in In Re. Document 11 Sl. Relief, concessions and approvals sought No. Resolution Plan of Castal Extrusion Private Limited [IA (IB) No. 277/KB/2021 in CP (IB) No. 438/KB/2018]. Right over immovable assets 27. 28. The acquisition of the Corporate Debtor shall be subject to the Resolution Applicant getting title of land owned by the Corporate Debtor and title of such properties (whether or not movable) that are attached to such immovable properties or and title of such movable properties lying on such immovable properties. In relation to any alleged transfer of any economic interest or other beneficial interest by the corporate debtor to any party in the past pertaining to the land parcels where the title and ownership is still lying with the Corporate Debtor, the Resolution Applicant shall have a right to terminate/ cancel such arrangement without any liability (monetary or otherwise) on the Corporate Debtor/ Resolution Applicant. Also, any agreement, MOU, transfer of rights or contract that hampers the assets/rights of Cor....
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....ent of the Corporate Debtor, in relation to any period prior to the completion date or arising on account of the acquisition of control by the Resolution Applicant over the Corporate Debtor pursuant to this Resolution Plan shall be written off in full and shall stand permanently extinguished and the Corporate Debtor shall at no point of time be directly or indirectly held responsible or liable in relation thereto. It may be noted that approval for similar waiver had already been allowed by Kolkata bench of the Adjudicating Authority in In re: Resolution Plan of Jharkhand Mega Food Park Pvt Ltd. [IA (IB) No.842/KB/2021 in CP (IB) No.1231/KB/2019]. Consents and Approval Document 12 Sl. Relief, concessions and approvals sought No. 31. 32. As the Resolution Applicant is required to takeover the Corporate Debtor's business on a going concern' basis, all consents, licenses, approvals, clearances, rights, entitlements, benefits and privileges whether under law, contract, lease or license, granted in favour of the Corporate Debtor or to which the Corporate Debtor is entitled or accustomed to, shall continue to remain valid....
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....ontracts and agreements shall be deemed to continue without disruption and without any further acts, deeds, cost, penalty, etc., for the benefit of the Corporate Debtor for their original tenure including subsequent tenures wherever the Corporate Debtor is entitled for renewals. Any change in the management of the Corporate Debtor shall not affect the validity and enforceablitiy of any agreement, lease deed, contract, etc. executed by the Corporate Debtor with various parties, authorities, companies, etc. save and except the provisions and scope of alterations/modifications/amendments as also such reliefs and concessions provided to the Resolution Applicant and the Corporate Debtor under this Resolution Plan. The Resolution Applicant will, after the Transfer Date, make an assessment of whether it wants to continue with or terminate the contracts agreements entered into by the Corporate Debtor. It is clarified that in case the Resolution Applicant terminates any such old contract agreements, no termination payments or liquidated damages shall be payable by the Resolution Applicant or Corporate Debtor on account of such termina....
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.... stand withdrawn or dismissed and all liabilities or obligations in relation thereto, whether or not set out in the balance sheets of the Corporate Debtor or the profit and loss account statements of the Corporate Debtor, will be deemed to have been written off in full and permanently extinguished and the Corporate Debtor or the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto notwithstanding any adverse order that may be passed in respect of the same by any authority prior to or after the Transfer Date. Upon approval of this Resolution Plan by the Adjudicating Authority, all new inquiries, investigations, whether civil or criminal, notices, suits, claims, disputes, litigation, arbitration or other judicial, regulatory or administrative proceedings will be deemed to be barred and will not be initiated or admitted against the Corporate Debtor in relation to any period prior to the acquisition of by the Resolution Applicant over the Corporate Debtor or on account of the acquisition of control by the Resolution Applicant over the Corporate Debtor pursuant to this....
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....sions of this Resolution Plan and the authority contained therein, shall cause its board of directors to take steps for implementation of the provisions of the Resolution Plan, which inter alia includes - (i) execution of appropriate loan agreement, modifications of previous documents for creating security and filing of appropriate forms under Company Law or other laws, with, amongst others, the Registrar of Companies and Ministry of Corporate Affairs or other statutory authorities; (ii) issuance of shares and instruments as provided in the Resolution Plan; and (iii) other compliances as per the governing law. The Corporate Debtor shall file the order of the Adjudicating Authority approving this Resolution Plan with 44. 45. the Registrar of Companies and Ministry of Corporate Affairs or any other regulatory authority, instead of resolution of board or the shareholders of the Corporate Debtor that were otherwise required for actions that are affected through an order of the Adjudicating Authority approving this Resolution Plan, and that shall be sufficient compliance by the Corporate Debtor. The directors of the reconstitut....
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.... also requested to waive and exempt all MAT and other income tax Liabilities arising on the Corporate Debtor and/or its successors on account of settlement of Financial Creditors and Operational Creditors pursuant to implementation of this Plan. 50. Necessary directions, instructions be issued to the CBDT, Customs, Value Added Tax authorities, Central Sale Tax authorities, GST authorities, entry tax and other Tax authorities whether central or state to exempt income/gain/profits, if any, arising as a result of giving effect to the Resolution Plan and from being subjected to income tax in the hands of the Corporate Debtor or the Resolution Applicant under the provisions of Income Tax Act, 1961, value added tax, customs, octroi, excise duty, service tax, goods and service tax, including but not limited to any income tax and MAT Liability arising on capital reduction in the Corporate Debtor, waiver/write off write down of current amounts due to employees, vendors, Operational Creditors, Financial Creditors, value of assets, value of inventories, etc. without any impact on brought forward tax and book loss / depreciation and waiv....
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.... Necessary directions, instructions be issued to all relevant Governmental Authorities to grant relief/concessions from payment of fees, charges, transfer charges, assignment charges, stamp duty, registration fees (including fees payable to the jurisdictional RoC) for various actions contemplated under this Resolution Plan (including capital reduction, issuance of shares by the Corporate Debtor or increase in authorised share capital or Merger Scheme), appointment of Board of Directors including Key Managerial Personnel and any other action taken to implement the Resolution Plan and that the fees payable to the RoC in respect of amendment of the memorandum of association and articles of association of the Corporate Debtor be waived and the RoC be directed to approve the relevant forms under Companies Act and rules thereto without payment of fees in Document 16 Sl. Relief, concessions and approvals sought No. 54. respect thereof. Similarly, the stamp duty arising on issuance of shares by the Corporate Debtor be waived. It is envisaged that, dispensation/ waiver be given by the State Governments, Central Governments or ....
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....equired to refund any benefit (subsidy / incentive or any monetary benefit) already availed by the Corporate Debtor or pay any interest, penalty, late fees, damages on account of failure of the Corporate Debtor to comply with the terms and conditions for grant of such incentive/subsidy/benefit or due to change in management arising due to implementation of the Resolution Plan and no litigation/proceedings shall be instituted against the Corporate Debtor or Resolution Applicant on this account and any pending litigation/proceedings shall stand quashed/withdrawn without any Liability on the Corporate Debtor/Resolution Applicant and the relevant authority including any district industrial center / State Government / Central Government or any implementing authority appointed under any law for the time being in force shall act in accordance with the aforesaid directions. Miscellaneous 59. 60. 61. The Corporate Debtor shall, at the option of the Resolution Applicant, recast its books of accounts to give effect to this Resolution Plan i.e., to inter alia give effect to reduction of capital, set off the balance in the security ....