TaxTMI 
TaxTMI 
2023 (9) TMI 192
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....ted M/s. TVH Energy Resource Private Limited Versus Mr. Ebenezer Inbaraj, Mrs. Renuka Devi Rangaswamy Clean Wind Power (Devgarh) Pvt. Ltd. Versus Regen Infrastructure and Service Private Limited (RISPL) , Regen Powertech Private Limited(RPPL) Bhilwara Green Energy Ltd. Versus Regen Infrastructure and Service Private Limited (RISPL) , Regen Powertech Private Limited(RPPL) M/s. Regen Infrastructure and Services Pvt. Ltd. Versus M/s. Regen Powertech Private Ltd. Asset Reconstruction Company (India) Limited Versus Ms. Renuka Devi Rangaswamy, M/s Regen Powertech Private Limited Sulochana Cotton Spinning Mills Pvt. Ltd. Versus M/s Regen Powertech Private Ltd., M/s Regen Infrastructure and Services Pvt. Ltd Echanda Urja Private Limited Versus ReGen Powertech Private Limited, Committee of Creditors Of Regen Powertech Private Limited, ReGen Infrastructure and Services Pvt. Ltd., Committee of Creditors of ReGen Infrastructure and Services Pvt. Ltd. GAIL(India) Limited Versus Regen Powertech Private Limited (RPPL), Mr. Ebenzer Inbaraj, Regen Infrastructure and Service Private Limited (RISPL), Ms. Renuka Devi Rangaswamy [Justice M. Venugopal] Member (Judicial) And [S....
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....urbines in India having obtained the licence from Vensys AG, the Chairman Company, which is the owner of the design and copyright of Vensys V87-1500 KW Wind Turbine and its components. It is stated that RPPL has its exclusive manufacturing and repair facility at Tada, Andhra Pradesh. The Appellant had purchased Wind Turbine Generators from RPPL, which is in the business of manufacturing, supply, operation and maintenance of these Turbines. It is stated that RISPL is a wholly owned subsidiary of RPPL with the sole objective of managing the Operation and Maintenance Services of the Wind Turbines, which arrangement was entered into for ease of operation. RPPL was admitted into CIRP on 09/12/2019 and RISPL was admitted into CIRP on 19/02/2020. Subsequently, the Applicant / Appellant had filed their Claim in Form B on 20/12/2019 for an amount of Rs. 25,18,56,602/- with RPPL which was submitted in full by the Resolution Professional (hereinafter referred to as 'the RP'). It was submitted that the Applicant had agreed to take part in the various windfarm projects of RPPL by purchasing the Wind Turbine only because RISPL promised a comprehensive package of supply, erection, commissioning, ....
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....d. No costs. 6. The Learned Senior Counsel appearing for the Appellant submitted that the finding of the 'Adjudicating Authority' that the Appellant having not 'rendered' services to the Corporate Debtor but having received services from the Corporate Debtor and hence, cannot be termed as an 'Operational Creditor', is exfacie contrary to what is provided for under Section 5(21) of the IBC Code, 2016 wherein, an Operational Debt is defined as a 'Claim in respect of the provision of goods or services...'. It is submitted that the definition is wide enough to include goods or services rendered by both the Operational Creditor and the Corporate Debtor and it does not stipulate anywhere that the goods or services should have been provided only by the Operational Creditor. The Learned Senior Counsel relied on the Judgment of the Hon'ble Supreme Court of India in the matter of 'Consolidated Construction Consortium Limited Vs. Hitro Energy Solutions Pvt. Ltd.', in Civil Appeal No. 2839/2020 wherein it was held that 'Debt' which arises out of advance payment made to a Corporate Debtor for supply of goods and services would be rendered as an 'Operational Debt' and thus the Claimant would ....
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.... The Learned Senior Counsel representing the Resolution Professional of RPPL/ the 1st Respondent submitted that the said Appeals are infructuous as the Resolution Plan was approved, vide Order dated 01/02/2022 and that the Appeals challenging the interim Applications [filed in the IA seeking approval of Resolution Plan], can now challenge the Resolution Plan only. It is submitted by the Learned Senior Counsel that the Appellant who has filed the Application IA No. 694/2021 had chosen to submit the Resolution Plan for RISPL and having chosen not to file any Resolution Plan for RPPL cannot now seek a direction for consolidation of CIRP. As regarding the facts of the case, the Learned Senior Counsel submitted that RPPL is engaged in the business of manufacture and sale of wind energy generators, while post sale repairs and maintenance, these generators were handled by RPPL initially and subsequently were taken by RISPL since 2014. RISPL is a wholly owned subsidiary of RPPL. The role of RPPL stops with the sale and delivery of the wind energy generators, the role of RISPL commences thereafter. It is submitted that there is no obligation for RISPL to avail services only from RPPL and ca....
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....and finally that ARCIL, the assignee of L & T Finance Limited which had a majority share of 70.27% in the CoC of RISPL itself had set out that independent CIRP of RISPL should go on unless RPPL CoC consents to simultaneous CIRP. 11. It is submitted that the 'Adjudicating Authority' had extensively considered the position in law that the Tribunal could not act beyond the provisions of the Code and has rightly dismissed all the Applications. It is contended that as independent Resolution Plans have come for both RPPL and RISPL, it shows that both are capable of operating as standalone companies without any need for simultaneous Resolution. The Learned Senior Counsel vehemently opposed to the idea of consolidated CIRP on the ground that none of the Appellants/ Applicants (except for RP of RISPL) have locus in filing these Applications as none of them are part of the CoC of the two Companies, being mere Operational Creditors, mostly of RISPL and they are not competent to decide on how a Resolution should progress and their wisdom cannot override the wisdom of the Financial Creditors of the CoC. The issues of joint CIRP have been dealt with by the 'Adjudicating Authority' on merits a....
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....ses to the Appellant which led to failure of 8 out of 10 Wind Energy Converters. As per O & M Agreement, RISPL is under an obligation to ensure a minimum of 95% of Production capacity and failure to meet these targets, would result in liability to pay liquidated damages. As a result of the failure to abide by the obligations under Contract, the Appellant and other similarly placed entities have suffered continuous losses in production of electricity. 13. The Learned Counsel for the Appellant in this Appeal filed IA 452/2020 and IA 457/2020 seeking a direction from the Respondent to repair the generators of the Appellant and hand over the generators on or before 31/05/2021. The same is also recorded in the daily Order of the 'Adjudicating Authority' dated 27/04/2021. Thereafter, it was submitted vide Status Report filed in IA/452/2020 that the pandemic has disrupted the functioning of RPPL and therefore, it was unable to continue as a going concern and requested some amount from the Appellant i.e., Rs. 2.85,00,00,000/- to service three generators and Rs. 4,84,00,00,000/- to service the remaining four generators and an initial advance of Rs. 1,25,39,000/- was also remitted. Additi....
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....Resolution Plan in a haste, ignoring the mediation process. RPPL has absolved all the assets of RISPL and this is a brazen act of fraud and misrepresentation and therefore, the Impugned Order ought to be set aside. 15. The Learned Counsel appearing for the Appellant in C.A. (AT) (Ins) No. 334/2021 appearing for Clean Wind Power (Devgarh) Private Limited submitted that the 'Adjudicating Authority' ought to have ordered for Consolidation on the basis of the Judgments passed in the matter of 'State Bank of India vs. Videocon Industries Ltd. & Ors.' (Supra), 'Radico Khaitan Ltd. vs. BT & FC Pvt. Ltd. & 6 Ors.' (Supra), and in the matter of 'Oase Asia Pacific Pte Limited Vs. Axis Bank and other Financial Creditors' (Supra) but instead in clear violation of judicial hierarchy, has dismissed the Applications. It is submitted that vide Award dated 02/04/2019, the Appellant was awarded a recovery of a sum of Rs. 12,10,55,648/- from RISPL, together with interest at 15 % p.a. and is thus clearly an 'Operational Creditor'. The Appellant has also made a Claim on the basis of this Award and Section 3(10) of the Code provides for a 'Decree Holder' to file a Claim and therefore, the observation....
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.... the Adjudicating Authority highlighted the need for a joint Meeting and by Order dated 05/04/2021 a need was expressed for an external observer of these proceedings and therefore, the retired High Court Judge was appointed. On 23/04/2021, the Mediator submitted his Report and made certain situations for value addition. In the meantime, NCLT noted that the RP of RPPL has surreptitiously carried out meetings and had its own Resolution Plan approved. The Tribunal castigated this conduct and while at the same time allowed RPPL to take advantage of its conduct reaching a stage where it would be impossible for coordination. The BTA dated 21/02/2019 by virtue of which, erection and commissioning business was transferred to ROMSL has been challenged as a fraudulent and a preferential Transaction before the NCLT in IA No. 1056/2020 in IBA No. 1424/2019. RISPL has got rights of Operation and Maintenance for the Wind Energy Generators by virtue of execution of the BTA dated 05/03/2014 for a consideration of Rs. 310,00,00,000/-. A common suspended Directors of RPPL, RISPL and ROMSL transferred the businesses and gross assets worth of Rs. 251,00,00,000/- through ROMSL and liabilities of RPPL w....
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....mited in Company Appeal (AT) (CH) (Ins) No. 06/2022 submitted that the Appellant is a Financial Creditor of RISPL and RPPL and holds charge on the movable and immovable assets of both the Corporate Debtors and is aggrieved by the Impugned Order. The Appellant had executed an Assignment Agreement dated 12/03/2021 that M/s L & T Finance Limited whereby it has been assigned the loans disbursed by L&T Finance Limited to RISPL amounting to Rs. 2,95,00,00,000/-, vide Sanction letter dated 25/03/2017 against the specific securities including the Pledge of share of RPPL in RISPL. The said facility is also secured by way of Corporate Guarantee dated 05/06/2017 executed by RPPL. The Appellant was clandestinely kept out of the CIRP of RPPL by not considering its Claims as a Financial Creditor. The Original Lender filed a proof of Claims before the Resolution Professional of both the Respondents being the borrower and guarantor and both the Claims were accepted by the respective Resolution Professionals. The Original Lender / Assignor of Appellant was a member of CoC in both the Corporate Debtors. The Original Lender on the advise that a Financial Creditor cannot proceed against the Corporate ....
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....s. The Learned Senior Counsel placed reliance on the Judgment of the NCLAT in the matter of 'Edelweiss Asset Reconstruction Company Limited Vs. Sachet Infrastructure Pvt. Ltd.' in Company Appeal (AT) (Insolvency) No. 377/2019, wherein this Tribunal allowed simultaneous CIRP of the Holding Companies and its five statutory Companies under a common Resolution Professional due to commonalities established therein, which directly applies to facts of the present case. 21. The Learned Counsel appearing for the Appellant / M/s Sulochana Cotton Spinning Mills Pvt. Ltd. in Company Appeal (AT) (CH) (Ins) No. 104/2022, while reiterating the submissions made by the other Appellants submitted that the CoC of RISPL was also of the opinion that consolidation of CIRP Process of RPPL and RISPL would result in maximisation of value and preferred IA/548/CHE/2021 seeking simultaneous CIRP. It is submitted that the Appellant is the owner of fifteen Wind Mills supplied by RPPL and ever since the purchase, the O&M Services are provided by RISPL, wholly owned subsidiary of RPPL. It is also stated that the Appellant had submitted a Resolution Plan in respect of RISPL and the same is pending consideration....
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....tioning of the business and RISPL is dependent on RPPL for repair, services of generators and also for funds and therefore, they are both cojoined twins and cannot be separated. It is submitted that this position has been admitted by the 'Adjudicating Authority' in their Orders dated 19/02/2021, 05/04/2021 and 27/04/2021. 24. As regarding the issue of locus standi, the Learned Senior Counsel for Echanda Urja Private Limited, submitted that RPPL supplied the generators to them during CIRP and the Appellant is the recipient of services for both RPPL and RISPL and is an Operational Creditor. The Learned Counsel placed reliance on the Hon'ble Apex Court in the matter of 'Consolidated Construction Consortium Limited Vs. Hitro Energy Solutions Pvt. Ltd.' (Supra) wherein it was held that an Operational Creditor may have been a receiver of goods or services from the Corporate Debtor. The Appellant has a Claim as against RPPL which is pending Adjudication in MA/918/2020 since September 2020 and this Application was filed much before the issue of consolidation or Resolution Plan was even considered by the CoC of RPPL. It is also submitted that for filing an Application of Consolidation, w....
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....ide any details regarding the said consolidation. It is submitted that the issue of delay cannot be looked myopically, but must take into account the following factors: a) RPPL and RISPL are Single economic unit; b) Consolidation would result in maximising value of Corporate debtor; c) Public interest involved as 2000 MW wind industry is based on Vensys model of generators which can be serviced by combined entity and technology is only with RPPL; d) Usage of independent CIRP of RPPL and RISPL to hide the single economic unit existence; e) Combined Value and its benefits for industry and stakeholders f) Report of Retired Judge; g) Consolidation required in view of MNRE regulations as manufacturer has to provide O&M services; h) Conduct of RP of RPPL despite orders of 'Adjudicating Authority' in rushing to approve the Plan by CoC. 27. The Learned Senior Counsel appearing for GAIL (India) Limited submitted that the Appellant had entered into a Contract for supply, erection and commissioning of Wind Turbine Generators, arrangement of land for setting up of Commercial Wind Energy project and comprehensive O&M for....
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....ese and connected issues can be effectively and comprehensively adjudicated upon only if the Resolution process of the two entities are consolidated in Joint Proceedings in order to maximise the value of the assets of the Corporate Debtors and balance the interests of all Stakeholders. In any case, any entity of person to whom RPPL is transferred as part of a Resolution Plan, would need the expertise and resources of RISPL; the vendors and customers are also common. 29. It is also learnt that the RP of RPPL has filed an Application for avoidance of certain payments to RISPL under Section 45 of the IBC, 2016 which could further drain the resources of RISPL and its ability to pay Claims of its Creditors, particularly Operational Creditors like the Applicant herein, who is a Public Sector Undertaking, dealing in Public Funds. It is also learnt that the RP of RISPL has filed an Application to declare certain transactions as fraudulent under Section 66 of the IBC, 2016. If the proceedings are not consolidated into a Joint Resolution Process, the Stakeholders, particularly, Operational Creditors, like the Applicant (who have little control over the Resolution Process, since the CoCs a....
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....gment of Hon'ble Apex Court in 'Pratap Technocrats (P) Ltd. Vs. Monitoring Committee of Reliance Infratel Ltd.' reported in [(2021) SCC OnLine SC 569] , in which the Hon'ble Apex Court has observed as follows: "22. The resolution plan was approved by the CoC, in compliance with the provisions of the IBC. The jurisdiction of the Adjudicating Authority under Section 31(1) is to determine whether the resolution plan, as approved by the CoC, complies with the requirements of Section 30(2). The NCLT is within its jurisdiction in approving a resolution plan which accords with the IBC. There is no equity-based jurisdiction with the NCLT, under the provisions of the IBC. ... Hence, once the requirements of the IBC have been fulfilled, the Adjudicating Authority and the Appellate Authority are duty bound to abide by the discipline of the statutory provisions. It needs no emphasis that neither the Adjudicating Authority nor the Appellate Authority have an unchartered jurisdiction in equity. The jurisdiction arises within and as a product of a statutory framework." ... "In the present case, the resolution plan has been duly approved by a requisite ....
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....l points, the adherence to the process and compliance with all applicable laws is controlled by the adjudicating authority. The adjudicating authority gives powers to the insolvency professional to take appropriate action against the directors and management of the entity, with recommendations from the creditors committee. All material actions and events during the process are recorded at the PART F adjudicating authority. The adjudicating authority can assess and penalise frivolous applications. The adjudicator hears allegations of violations and fraud while the process is on. The adjudicating authority will adjudicate on fraud, particularly during the process resolving bankruptcy. Appeals/actions against the behaviour of the insolvency professional are directed to the Regulator/Adjudicator. Once again, we must clarify that our observations here are not on the merits of the issue, which has not been challenged before us, but only limited to serve as guiding principles to the benches of NCLT and NCLAT adjudicating disputes under the IBC, going forward." 33. With respect to the aspect of Commercial Wisdom of the CoC, the Learned Senior Counsel placed reliance on the Judgment of t....
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....ment Agreement was executed between RPPL, RISPL and their respective customers on the basis of the Operation and Maintenance Contract originally entered by RPPL. 37. It is submitted that RPPL has manufactured and supplied 1557 Wind Energy Generators to various customers and all the infrastructure and Intellectual Property Rights (IPR) to manufacture these Generators are owned by RPPL and in case of any failure or machinery breakdown, the Generators shall have to be refurbished in the factory of RPPL located at Tada, Andhra Pradesh and then returned to the site of the customers in working condition. All the costs of Refurbishment were borne solely by the RPPL under the BTA dated 05/03/2014 and ADTD dated 18/03/2016 as it was RPPL who manufactured and sold the defective Generators. Matters in relation to manufacturing defects come under the purview of 'Operation and Maintenance Services' and therefore, RISPL would not be able to make payments to the same. It is also submitted that the Insurance Cover against risk of any Machinery break-down due to manufacturing defects has been taken by RPPL from FY 2013-14 to FY 2018-19 and any Claim on account of machinery breakdown was attribut....
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....SPL and its Customers. It is submitted that the RP of RISPL faced huge difficulties in finding the physical assets of the RISPL. The suspended Directors, RP of RPPL in connivance together restricted access to the documents. Therefore, the RP of RISPL also filed an Application under Section 19(2) of the Code in IA 1041/2020 in IBA/1424/2019 against the RP of RPPL and the Suspended common Directors and this Application is pending before the NCLT, Chennai for Adjudication. Some of the assets of the RISPL was in control and possession of RPPL and access to these assets are also denied to this Resolution Professional. Further, assets connected to the O & M Agreement, especially the IPR are totally denied and the 1st Respondent was incapable of doing its core business due to many Litigations between both these Companies connected to the assets, NCLT Chennai ordered a joint Meeting of the CoCs, RPs and the customer on 19/02/2022. During the Joint CoC Meeting, the 1st Respondent's request to allow the RISPL Bidders to give bid for the RPPL was totally denied by the CoC of RPPL. Not having got any fruitful outcome from this Joint Meeting, the NCLT, Chennai ordered for Mediation by appointin....
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....2021, IA/549(CHE)/IB/2021, IA/591(CHE/2021), IA(IBC)1143(CHE)/2021, IA/1082(CHE)/2021, IA(1056)/IB/2020, IA/487(CHE)/2021 and IA/592/2021 in IBA/1424/2019 with different prayers, all having an impact on the prayer for consolidation for CIRP. 42. It is also submitted in the common Counter that the Operational Creditor M/s. SB Aditya Power Projects Private Limited had fraudulently connived with the suspended common Directors of RPPL and RISPL and initiated Section 9 Proceedings against RISPL. It was pointed out in the Objections filed in INV.P./6/2021, specifically on the ground that this initiation of CIRP was against the BTA executed on 05/03/2014 between RPPL and RISPL. It is contended that the RP of RPPL in a mala fide intention restrained ARCIL and L&T Infra Partners from taking part in the CoC of RPPL by choosing not to reply to their resubmission of Claims submitted by these Financial Creditors on 08/12/2020 and sent the Claim rejection intimation after the approval of the Resolution Plan that is on 05/04/2021. ARCIL and L&T Infra are the Financial Creditors of RISPL and as the RP of RPPL did not include them as Financial Creditors of RPPL, the Applications and Appeals file....
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....y projects requiring procurement, erection, commissioning along with Operations and Maintenance by the original equipment manufacturer / RPPL which had entered into O&M Contracts for Maintenance of the Wind Turbines. 45. The Learned Senior Counsel submitted that the Ministry of New and Renewable Energy, Government of India (MNRE) Notification, dated 01/11/2018 is with respect to inclusion of Wind Turbine Models in the revised list of models and manufacturers. In terms of these guidelines, the manufacturer of Windmills need to provide O&M Services for life of the Windmills and only Consolidation would serve the interest of all the Stakeholders. Assessment : 46. At the outset, this Tribunal addresses to the finding by the 'Adjudicating Authority' that the Appellants in Company Appeal (AT) (CH) (Ins) Nos. 323/2021, 96/2022, 334/2021, 335/2021, 104/2022, 328/2021, and in 88/2022 are not 'Operational Creditors'. The Hon'ble Apex Court in the matter of 'Consolidated Construction Consortium Limited Vs. Hitro Energy Solutions Pvt. Ltd.' in Civil Appeal No. 2839 of 2020 has particularly addressed the issue as to 'Whether the appellant is an operational creditor under the IBC even t....
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....to Operations and Maintenance of the said Turbines / Generators. Having paid the advance amount to RISPL, it is the main case of the Appellants that they are purchasers of the Services and therefore should fall within the category of 'Operational Creditors' as defined under the Code and as laid down by the Hon'ble Apex Court in the aforenoted Judgment. 51. Further it is seen from the record that in the case of Clean Wind Power (Devgarh) Private Limited in Company Appeal (AT) (Ins) No. 334/2021, the Appellant is a 'Decree Holder' of Rs. 12,10,55,648/- vide an Award in his favour dated 02/04/2019 and therefore, falls within the definition of a 'Creditor which includes the Decree Holder, as defined under Section 3(10) of the Code. It is also seen from the record that the Appellant / M/s Sulochana Cotton Spinning Mills Private Limited in Company Appeal (AT) (CH) (Ins) No. 104/2022 is not only an Operational Creditor, but also a prospective Resolution Applicant who had submitted a Resolution Plan for RISPL and has given an undertaking that its ready and willing to submit a 'Consolidated Bit' for both RPPL and RISPL. Therefore, this Tribunal is of the considered view that a blanket ob....
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....re promoted by Mr. M.V Murlidher and his wife Padma Murlidher. Murlidhers family holds approximately 77% of total shareholding and 78% of total shareholding in Respondent Nos. 1 and 2 Company respectively, the shareholder of the Respondent No. 2 company together holds approximately 85% of the shareholding in the Respondent No. 1 Company. Thus, both Companies are promoted by the same family and there is unity of ownership and interest. (Please See Page 423 and 431 of Appeal Paper Book) (b) The Respondent No. 1 is controlling company of Respondent No. 2 (Please See Page 432 and 433 of Appeal Paper Book: Note to Accounts of M/s Bangalore Dehydration and Drying Equipment Company, forming part of and annexed to the accounts for the year ended 31st March 2012. 5. Related party discloser (i) Controlling Company M/s BT and FC Pvt. Ltd.) (ii) Common Directors: Mr. M.V. Murlidher and Padma Murlidher both are Directors in Respondent Nos. 1 and 2 Company. Thus, the Directors of the both Companies are Common and there is common control of companies. (Please See Company Master Data of R-1 and R-2 at Page 528 and 529 of Appeal Paper Book) (iii) Common Assets: The Respondent No. ....
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....submitting its claim form before the RP (Please See Page 527 of Appeal Paper Book) and this fact is also mentioned in the Status Report ( See First Line of Page 6) filed by Respondent No. 7. Thus, it is clear that the Respondent No. 2 Company is associated company of Respondent No. 1. In the I&B Code, the word associate company has not been defined. Section 3 (37) of the I&B Code, provides that word and expressions used but not defined in this Code but defined in the Companies Act, 2013 shall have the meaning assigned in the Companies Act, 2013. Section 2 (6) of Companies Act, 2013 defines Associate Company as under: "Associate Company" in relation to another company, means a company in which that other company has a significant influence but which is not a subsidiary company of the company having such influence and includes a joint venture company. Explanation: for this purpose of this clause - (a) The expression significant influence means control of at least 20% of total voting power or control of or participation in business decisions under an agreement...... 55. In the aforenoted matters, The NCLAT, Principal Bench has given a finding that Respondents No. ....
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....y' was right in ordering Consolidation of the three CIRPs and dismissed the Appeal. 57. In the instant case, keeping in view, the ratio in the matter of 'Oase Asia Pacific Pte Limited Vs. Axis Bank and other Financial Creditors & Ors.' (Supra) and in the matter of 'Radico Khaitan Ltd. vs. BT & FC Pvt. Ltd. & 6 Ors.' (Supra), it is imperative to examine whether the criteria for 'Consolidation', which has attained 'finality, (as no Appeals have been preferred against these Orders before the Hon'ble Apex Court), has been fulfilled. 58. The following table explains the relationship between the two Companies with respect to the criteria / requirement to be met for simultaneous CIRP / Consolidation: - Sl. No. Particulars Regen Powertech Pvt Ltd in CIRP Regen Infrastructure & Services Pvt Ltd in CIRP 1 Date of Incorporation 27.12.2006 04.01.2008 2 Common Control a) Has complete control over RISPL which is a wholly owned subsidiary. b) Had transferred right to use the technology required for Operation and Maintenance of the Windmill Turbines. a) RISPL is a wholly owned subsidiary of RPPL b) Common registered offic....
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....arges from all customers. b) RISPL on receiving any complaint attends to the complaint in co-ordination with RPPL. RPPL and RISPL work together to repair generators. 10 Inter-dependence and Intricate link between the businesses of both companies between 2015 - 2019 a) As and when generators reported 'Failure', Customers complain and RISPL takes steps in co-ordination with RPPL. b) Customers under O&M Contract receive priority for service, repair and replacement from RPPL and RISPL Customers under O&M Contract received priority for service repair and replacement from RPPL and RISPL. These customers are the backbone of the entire business. 11 Inter-linked Finances RPPL used the finances of RISPL a) Copy of the Debenture Trust Deed with respect to Corporate Guarantee provided by RPPL in favour of RISPL and Form CHG-I filed with Ministry of Corporate Affairs is annexed as (A 8) b) RPPL has given corporate guarantee to RISPL against the loans taken from SBI (Rs.40,00,00,000/- and from ARCIL, L&T (Rs. 2,50,00,00,000/-). c) RPPL Lands, long leased to RISPL where RISPL's 5 Pooling Sub Stations are constructed, are mortgaged to RISPL's lend....
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....he 'Subsidiary Company' having interconnected business relationships and that RISPL has been created only for the operational convenience of RPPL, in terms of providing repairs and maintenance services to the customers of RPPL. RISPL is dependent on RPPL for servicing of generators and for funds. The technology which is based on Vensys Model of Generators is only with RPPL. Additionally, the 'Mega Insurance Policy' was entered into between the Insurer, 'The Oriental Insurance Company Ltd.' and the Insured, RPPL and RGPL jointly for the period 2017-18 together with the extended warranty. 60. A brief perusal of the Assignment Agreements executed in favour of RISPL by RPPL for the Appellants herein shows that all the provisions contained in the said O&M Agreement executed between the Assignor and the Appellant / Party shall remain in force and effect and that the subject Assignment Agreement, dated 09/10/2015 and the terms thereof shall be read, construed and interpreted as part and parcel of the O&M Agreement and the Provisions contained in Section 8 thereof shall apply mutatis mutandis to this Assignment Agreement for the relationship between the Appellant / Party on one side and....
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....L will undertake at its cost and responsibility during the O&M period, (including pre warranty and post warranty period) any MBD Repair for rectification of manufacturing defects. (xi) RPPL shall hear all costs and expenses incidental and arising out of or in relation to the above stated warranty repairs (as provided in (x) above) including all crane hire and crane mobilization charges associated with any kind of repair and maintenance works. (xii) All costs and expenses in relation to insurance for MBD Repair for manufacturing defects of all WEC machines shall be borne by RPPL until the Final Settlement Date. RPPL hereby agrees, covenants and undertakes that it shall maintain such insurance for MBD Repair in full force and effect until the Final Settlement Date and shall ensure that all proceeds of such insurance shall be utilized for MBD Repair until the Final Settlement Date. (xiii) RPPL shall maintain adequate inventory of all major and minor components of wind turbine in order for the issuer to be in full compliance with requirements under the respective O&M Agreements and avoid availability penalties due to non-availability of such inventory. ....
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....sion, for the benefit of the customers, RPs and the CoCs that the following broad areas of agreements which the parties expressed through their discussions could be incorporated in the resolution plans: 1. There was unanimity that the resolution plan must be a single one for both the Companies and the efforts must be to identify a single entity for purchase of both the Companies. If it was not possible to convince the highest bidder of one Company to match the offer of the highest bid of another Company in order to vest in that entity the benefit of transfers of both the Companies as going concerns, a fresh IM must be published by consolidating both Companies and inviting fresh offers through a single entity for maximum price. The difference of opinion of the parties were on the aspect, whether it was possible legally to extend the conclusion of resolution process and whether it was appropriate to do any act which will erode the sanctity of the bidding process by re-opening of bids. 2. RPPL and RISPL will jointly issue pricing for various products for repairs and replacement and will also publish the date of receipt of purchase orders so that all the repairs are a....
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....is Tribunal addresses to the contention of the Learned Senior Counsel appearing for the RP of RPPL, CoC of RPPL and the Intervention Applicant / SRA that the 'Code' does not provide for Consolidation / Simultaneous CIRP. 66. The Resolution Professional of RISPL filed an Application under Section 25(1), 60(2) and 60(5) of the Code, read with Rule 11 of the NCLAT Rules, 2016 with an Affidavit seeking simultaneous CIRP of RPPL and RISPL on 18/05/2021 in IA/548/(CHE)/2021 in IBA/1424/2019. 67. The Definitions of Sections 25 (1), 60(2), 60(5) of the I & B Code, 2016 and the Rule 11 of the NCLT Rules, are detailed as follows: a. Section 25(1) : 25. Duties of resolution professional-(1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor. b. Section 60(2) : 60. Adjudicating authority for corporate persons: (2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending be....
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....ompanies in which directors or managers have shareholding, companies controlling each other by virtue of contracts, companies with whom there may be de facto association in the form of participation in policy making process, interchange of employees, etc. 69. In the matter of 'Edelweiss Asset Reconstruction Company Limited Vs. Sachet Infrastructure Pvt. Ltd.' in Company Appeal (AT) (Ins) Nos. 377 to 385/2019, dated 20/09/2019, the NCLAT, Principal Bench has held that Consolidated Resolution Plan should be invited to keep the Company as a going concern. In the case of 'Venugopal Dhoot Vs. State Bank of India & Ors.' in C.A. 1022(PB)/2018 and 'SBI Vs. Videocon Industries Limited and Ors.' in C.P. 02/2018 and Ors., dated 08/08/2019, thirteen Corporate Debtors were looked as one economic unit on account of various interlinkages and consolidated CIRP was undertaken. Thus, one Committee of Creditors for all Corporate Debtors was constituted. In the case of Lanco Group, whereby the Parent Company / M/s. Lanco Infratech Limited, the subsidiary and Operational Companies were not made part of the CIRP initially, which resulted in Liquidation of Lanco Infratech Limited due to lack of respo....
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....e European Courts have ruled that the European Insolvency Regulation can be interpreted, under certain conditions, to allow for insolvency proceedings of a member state to cross borders (to a certain extent) and include another company from another member state. 3. Germany * The German Legislator had on 9thMarch 2017 introduced the concept of Group Insolvency into the German Insolvency law. German Insolvency law allows insolvency proceedings to be initiated in respect of companies within a Corporate Group at a single German Insolvency Court and/or to be administered by a single Insolvency Administrator. * The Regulations have provided for some key innovations, viz., (i) a Group venue; (ii) the option to appoint the same person as (Group) Insolvency Administrator/receiver; and (iii) Group Coordination proceedings. 72. The Ministry of Corporate Affairs published an Executive Summary on Group Insolvency on 18/01/2023 and has stated in the introduction as follows: The business of corporations is increasingly conducted by enterprise operating as "groups". This term covers various forms of economic organisation that are link....
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....dings of corporate debtors belonging to a group or to have a common resolution for them. Consequently, the insolvency of different corporate debtors belonging to the same group is dealt with through separate insolvency proceedings for each corporate debtor. However, in recent cases under the Code like "Videocon, Era infrastructure, Lanco, Educomp, Amtek, Adel, Jaypee and Aircel, special issues arose from their interconnections with other group companies." Due to this, the Insolvency and Bankruptcy Board of India ("IBBI") constituted a 'Working Group on Group Insolvency' ("Working Group") under the Chairmanship of Mr. U. K. Sinha, through an office order dated 17 January 2019. The Working Group consulted various stakeholders and undertook a detailed analysis of various issues that may arise in resolving insolvency of group entities in India. Based on this, it released a report on 23 September 2019 providing comprehensive recommendations for establishing an enabling framework for group insolvency that may be implemented in phases. Dr. K.P. Krishnan to analyse the MLEGI through office order dated 21 Feb 2020 (as an addendum to its previous office order dated 23 Janua....
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....apply to solvent members of the group......" 74. In this backdrop, it is seen that the RP of RISPL has preferred an Application in IA No. 548/CHE/2021 in IBA/1424/2019, seeking Consolidation of CIRP with the Holding Company, RPPL. The Ministry has suggested that adopting a purely single entity approach in the Insolvency of Group Members may be divergent from the economic realities of the group as viewed by Stakeholders. Although the Code comprehensively deals with the Insolvency of Corporate Debtors as separate entities, in instances where Insolvency Proceedings had to be Consolidated, the 'Adjudicating Authority', under the Code and the Hon'ble Supreme Court have passed Orders enabling co-ordination of Insolvency Proceedings of the Group Members. The Working Group on Group Insolvency constituted by the Ministry of Corporate Affairs took note of this and discussed that NCLT/ NCLAT have been prompt in responding to economic realities of Companies to enable value maximisation for stakeholders. 75. As regarding the Submission of the Learned Senior Counsels for the CoC of RPPL, the RP of RPPL and the Successful Resolution Applicant ("SRA") about the commercial wisdom of CoC being....
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....ble Subordination. In this case, the Hon'ble Court had observed as follows:- "The Court of bankruptcy are constituted by Sections 1 and 2 of the Bankruptcy Act (30 Stat. 544) and by the latter section are invested "with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings." Consequently this Court has held that for many purposes courts of bankruptcy are essentially courts od equity, and their proceedings inherently proceedings in equity. [Local Loan Co. v. Hunt, 292 U.S. 234, 240]. By virtue of Section 2 a bankruptcy court is a court of equity at least in the sense that in the exercise of the jurisdiction conferred upon it by the Act, it applies the principles and rules of equity jurisprudence. [Larson v. First State Bank, 21 F. 2d 936,938]. Among the granted powers are the allowance and disallowance of claims; the collection and distribution of the estates of bankrupts and the determination of controversies in relation thereto; the rejection in whole or in part "according to the equities of the case" of claims previously allowed; and the entering of such judgments "as may be necessary for the enforcement of....
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...."5.16. Thus, the Hon'ble Supreme Court has vociferously stated that the Adjudicating Authority (NCLT) and also the Appellate Authority (NCLAT) have not been empowered with equity jurisdiction under the provisions of IBC, 2016 and that there is no equity-based jurisdiction with the Adjudicating Authority under the provisions of the IBC, 2016. Also, it is made clear that, under the Indian insolvency regime, it appears that a conscious choice has been made by the legislature not to confer any independent equity-based jurisdiction on the Adjudicating Authority. Further, an attempt was made by the Learned Senior Counsels arguing in favour of consolidations to state that these decisions were rendered on the issue of approval of Resolution Plan and hence the same cannot be applied to the facts of the present case. However, we are unable to accept the said contention, in view of the fact that the ratio decidendi which has been laid down in the above referred Judgment is that in order to exercise an 'equity jurisdiction', the same has to be conferred under the statutory framework i.e. under the provisions of IBC, 2016. 5.17 Further, as emphasized by the Hon'ble Supreme Court in the....
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....r own Projects' for an agreed Consideration of Rs. 310 Crores, settled by issue and allotment of Equity Shares equivalent to the Purchase Price, by REGPL (now RISPL) to RPPL. RPPL retained the business of development and procurement of technology for manufacture, sourcing and supply of Wind Energy Converters (WECs). 81. The Consideration for BTA was sourced from the issue of Debentures initially to Piramal Enterprises Ltd., and then by issuing Additional Debenture Trust Deed ("DTA") dated 20/08/2015 and Amended and Restated Debenture Trust Deed ("ADTD") dated 26/05/2017. For the BTA to come into effect, NOCs from customers of RPPL were duly sought in order to assign the Contracts of Operation & Maintenance to RISPL, which were originally executed by RPPL. Consequently, a Tripartite Assignment Agreement was executed between RPPL, RISPL and their respective customers, on the basis of the Operation & Maintenance Contract originally entered by RPPL. 82. In respective Agreements of Assignment executed in favour of RISPL, RPPL undertook to perform the obligation of RISPL under the O&M Agreement in the event of RISPL's failure. Likewise, the Amended And Restated Debenture Trust Deed....
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....nt of India, regarding inclusion of Wind Turbine Model in the revised list of Models and manufacturers whereby and whereunder guidelines were issued to the manufacturer of windmills to provide O&M Services for life of the windmills, is also to be kept in mind. 87. To reiterate, it is held that the Appellants herein (except for the RP of RISPL) are all Operational Creditors in view of the ratio laid down by the Hon'ble Apex Court in 'Consolidated Construction Consortium Limited Vs. Hitro Energy Solutions Pvt. Ltd.' (Supra) that the definition of an 'Operational Debt' as defined under Section 5(21) of the Code, is broad enough to include all forms of contract for supply of goods and services between the Operational Creditor and the Corporate Debtor, including ones where the Operational Creditor may have been the receiver / purchaser of goods or services from the Corporate Debtor. Hence, this Tribunal holds that the Appellants have the locus in their capacity as 'Operational Creditors' and being 'Aggrieved Parties' to prefer this Appeal. 88. Keeping in view that the parameters set out in 'Radico Khaitan Ltd. vs. BT & FC Pvt. Ltd. & 6 Ors.' (Supra), 'Oase Asia Pacific Pte Limited....