TaxTMI 
TaxTMI 
2024 (7) TMI 192
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....idhya Kumar, Ms. Rajiv Shah and Ms. Riya Vasa, Advocates for Edelweiss JUDGMENT ASHOK BHUSHAN, J. The above first five appeals have been filed against order dated 11.03.2024 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench -1 allowing I.A. No.2969 of 2021 filed by the Financial Creditor for liquidation and deciding other I.As. by the same order filed in the case. The sixth appeal being Company Appeal (AT) (Ins.) No.975 of 2024 has been filed against order dated 04.01.2024 passed by the Authority (National Company Law Tribunal), Mumbai Bench -1 in I.A. No. 5843 of 2023 filed by the Appellant. All the appeals having arisen out of the common facts and events have been heard together and are being decided by this common judgment. Brief facts of the case necessary to be noted for deciding the appeals are: (i) The Corporate Debtor - Amar Remedies Ltd. was subjected to insolvency on an application filed by the Corporate Debtor itself under Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code") by order dated 16.06.2017. (ii) In the CIRP of the Corporate Debtor, the Appellant submitted R....
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....on 18.10.2021, where under Item No.1, Non-implementation of duly approval Resolution Plan by the SRA was discussed. Under Item No.2 discussion was made on possible action under I&B Code for non-implementation of Resolution Plan. (x) An I.A. No.2747 of 2021 was filed by the Appellant seeking direction to the Registrar of Companies to update the status of the Corporate Debtor in the records as 'active' and not 'under liquidation'. The Appellant has also written a letter to the Monitoring Committee to take steps to obtain clarifications from the Adjudicating Authority. (xi) An I.A. No.2399 of 2021 was filed by the Appellant seeking direction to the Securitization and Exchange Board of India (SEBI) to not take any coercive action against the Appellant and further Appellant sought waiver of applicability of the amendment in the Securities Contracts (Regulation) Rules 1957 so that the Resolution Plan can be implemented without contravention of any law. (xii) I.A. No. 2969 of 2023 was filed by Edelweiss Asset Reconstruction Company Limited on 13.12.2023 praying for direction to liquidate the Corporate Debtor on account of failure of the Successful Resolution App....
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....ed by the Appellant 5843 of 2023, 2399 of 2021, 2494 of 2022 and I.A. No.327 of 2024 were dismissed. It was also noted in the order dated 11.03.2024 that I.A. No. 2747 of 2021 is disposed of in terms of order dated 04.01.2024. (xx) The Appellant aggrieved by order dated 04.01.2024 has filed Company Appeal (AT) (Ins.) No.975 of 2024 and all other Appeals have been filed against order dated 11.03.2024. (xxi) The Adjudicating Authority passed order dated 04.01.2024 directing the SRA to deposit the amount of resolution money in the escrow account and the CoC was to appropriate the same towards implementation of the plan. The SRA did not comply with the order and did not deposit the money and filed application for modification of the order, as noted above. (xxii) The Adjudicating Authority thereafter heard the parties on all the applications and by the impugned order has directed for liquidation. The Adjudicating Authority returned the finding that the SRA has failed to implement the plan. The Adjudicating Authority has held that the payment of resolution money is dehors any of the conditions as sought to be put by the Appellant, it was also noticed b....
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....nding on them. To show its bonafide to deposit the amount in the escrow account, the Appellant filed IA No.5843 of 2023. The Adjudicating Authority by the order dated 02.01.2024 directed the amount to be deposited in the escrow account and further directed the ROC to change the status of the Corporate Debtor to 'active'. On the next date i.e. 04.01.2024, direction was also issued to appropriate the amount, which was prayed to be modified by filing the application by the Appellant. The Adjudicating Authority has wrongly inferred that the de-listing of shares is a condition precedent for the implementation of the Resolution Plan. The Appellant has already filed a Writ Petition in the Bombay High Court seeking direction with respect to the listing of the company and has been actively pursuing the said Writ Petition. The Objective of the Code is value maximization of the Corporate Debtor. The plan value submitted by the Appellant is much more than the liquidation value of Rs.17,72,53,337/- and fair value of Rs.29,54,59,986/-. It is submitted that there is no default by the SRA since the amount was to be infused as share capital and the company being not active no share capital could be....
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....al is as to whether the Appellant has failed to implement the Resolution Plan approved by the Adjudicating Authority on 25.03.2024 and whether the company being not active, the Appellant could not infuse the share capital for payments to the creditors as per the Resolution Plan. We need to first notice the contents and necessary clauses of Resolution Plan to answer the question. Copy of Resolution Plan has been filed in all the appeals. In Company Appeal (AT) (Ins.) No.975 of 2024, the plan is filed as Annexure 13 to the appeal. 6. In the Resolution Plan Section 5 Clause 5.1(c) deals with infusion and utilization of funds by the Resolution Applicant, on which much reliance has been placed by the learned counsel for the Appellant. Clause 5.1(c) is as follows: "c. Infusion and Utilisation of Funds by Resolution Applicant: SOURCING OF FUNDS Rs. In Crores Sr. No. Particulars Notes Amount 1 Existing Business of Resolution Applicant (a) Share Capital 26.06 (b) Unsecured Loans 5.53 TOTAL 31.59 UTILISATION OF FUND Rs. In Crores Sr. No. Nature Notes....
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....nk Guarantee of Rs.35 lakhs and Rs.25 lakhs amount deposited as EMD to be adjusted in the total payment. Complete control of the company (corporate debtor) to be handed over to the RA simultaneously against payment. 3 Payment 900.00 91 to 120 4 Payment 900.00 121 to 150 5 Payment 809.00 151 to 180 Rest all assets to be released, lien to be released and original documents to be handed over simultaneously against payment. TOTAL 3159.00 8. Clause (c) on which reliance has been placed by the Appellant is under heading 'sourcing of fund'. When we look into Clause 5.2, which is payment schedule and conditions, timelines for payment have been provided, which is 180 days from the approval of the Resolution Plan. Upfront payment of Rs.525 Lakhs was to be paid within 90 days in which Bank Guarantee of Rs.35 Lakhs and Rs.25 Lakhs deposited as EMD was to be adjusted. In Section 5, Para 5.1, Resolution Applicant submitted that the company needs to be remain listed on Bombay Stock Exchange as well as National Stock Exchange and request was made to the Adjudicating Authority to pass necessary order a....
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....ey by the CoC is depended on adjudication of three conditions, subject to which the money is agreed to be deposited. However, this Bench finds that, as far as prayer IV (3) is concerned, this Bench cannot deal with the same as this would tantamount to review of its own order. Counsel for the SRA also accepts that this Bench may not deal with this prayer in this Application. 3. As far as prayer IV (1) is concerned, this Bench has already directed the RoC vide order dated 02.01.2024 to modify the status of the Corporate Debtor as "Active" subject to conditions placed therein. 4. The only prayer which remains is IV (2). The registry is directed to post this IA on 10.01.2024. 5. In view of this the SRA is directed to deposit the amount of resolution money within the proposed period in Escrow account and the CoC shall be at liberty to appropriate the same towards implementation of the Plan." 13. We may also notice the prayers in IA No. 5843 of 2023, which prayers have been referred to in order dated 04.01.2024. IA No.5843 of 2023 was filed by the Appellant in which following reliefs were sought: "21. In the above circumstances, the Applicants humbl....
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....rised the members that Hon'ble NCLT, Mumbai Bench vide its order dated 25/03/2021 approved the Resolution Plan submitted by M/s. PK Hospitality Services Private Limited. Therefore, in compliance to the approved Resolution Plan, the Resolution Applicant was required to implement the Resolution Plan within 6 months from the effective date i.e. 25/03/2021 but no payment has been made by the successful Resolution Applicant till date." 15. Under Item No.2, the Committee also deliberated on possible action under IBC for non-implementation of Resolution Plan. In Item No.2 following was minuted: "Item No. 2 To consider possible actions under the IBC 2016 for non-implementation of the Resolution Plan The Chairman of the Monitoring Committee apprised the members that Resolution Applicant was required to implement the Resolution Plan within 6 months from the date of approval of Resolution plan i.e. 25/03/2021 but no payment has been made by the successful Resolution Applicant till date therefore the remedy available with the creditors are as follows; 1. To invoke Performance Security amounting to Rs. 2 Cr. submitted by SRA during the submission of Resolu....
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....e 5 (c) of the Resolution Plan (Infusion and Utilization of Funds by the Resolution Applicant), as noted above. Clause 5 was sourcing of fund and the payment schedule and conditions and timelines for payment were not dependent on or conditional to sourcing of funds. In event the funds are not provided as per Clause 5 (c), the plan has to fail. The implementation of plan being not dependent on sourcing of funds because sourcing of fund was responsibility of the Resolution Applicant and the Resolution Applicant cannot be heard on contending that since the status of company was not changed into 'active', he cannot infuse the fund and make payment. The plan was approved on 25.03.2021 and in three years no payment was made as per the Resolution Plan. 18. There is one more aspect which need to be considered. The submission which has been pressed by the Appellant is that he has to infuse share capital of Rs.26.06 Crores which has to be infused as per the 'sourcing of funds' in the Resolution Plan and Rs.5.53 Crores was to be realized by unsecured loans. Even upfront payment of Rs.525 Lakh which payment was obligation of the Resolution Applicant and could have been discharged as per Cla....
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....cified in the Plan and nothing else and the same would have to be based on clean slate principle. 17. As far as the waiver sought in the Resolution Plan in respect of Minimum Alternate Tax Liability (MAT), the SRA has to approach the jurisdictional Income Tax Authority concerned which will be decided in accordance with law. No direction in that regard can be passed. 18. The Resolution Applicant has sought certain other reliefs and concessions. We however are not inclined to grant such concessions or reliefs. The Resolution Applicant needs to approach the authorities concerned (viz. SEBI, Stock Exchanges, etc.) for permits, licenses, renewal of various facilities like electricity connections etc. as and when required. They shall have to be considered by the appropriate authorities in accordance with law." 21. When the Adjudicating Authority expressly refused to grant any reliefs and concessions, as prayed, the plan was to be implemented by the Successful Resolution Applicant and Appellant cannot be heard to say that unless the Registrar of Companies change the status of the Corporate Debtor into active implementation of plan cannot proceed further. It is also re....
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....2). The registry is directed to post this IA on 10.01.2024. 5. In view of this the SRA is directed to deposit the amount of resolution money within the proposed period in Escrow account and the CoC shall be at liberty to appropriate the same towards implementation of the Plan. 7.8. Prior to this, learned counsel for SRA had submitted before us on 14.12.2023 that if the Monitoring Committee gives details of the Escrow Account, then they will deposit the amount within two weeks from the date of intimation. Accordingly, the money was to be deposited within two weeks from the order dated 04.01.2024, however, it is pleaded in the next hearing by the counsel for the SRA that the order dated 04.01.2024 was displayed on the DMS Portal on 14.01.2024. Accordingly, this Tribunal permitted the SRA to deposit the money within three weeks from 14.01.2024. 7.9. Instead of payment of the money SRA filed an application No. 327/2024 on 29.01.2024 praying for rectification of the order dated 04.01.2024 contending that without clarity as to whether the shares of the Corporate Debtor will be listed again on the recognized stock exchange, the deposit into Escrow account and ap....
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....cords and assets in their possession." 22. We fully concur with the view taken by the Adjudicating Authority that the Resolution Applicant has failed in implementing the Resolution Plan and despite giving opportunity to the Appellant to deposit the amount by order dated 04.01.2024, the amount has not been deposited rather Appellant has challenged the order dated 04.01.2024 by filing Company Appeal (AT) (Ins.) No.975 of 2024. 23. Learned counsel for the Appellant has contended that the order dated 04.01.2024 is against the terms of the Resolution Plan. We fail to comprehend as to how order dated 04.01.2024 is against the terms of the Resolution Plan. The Appellant under the plan was required to pay entire payment within 180 days from the date of approval of the Resolution Plan and on application filed by the Appellant that he is ready to deposit the entire amount, said order was passed. The insistence of the Appellant that amount in the escrow account should not be appropriated, is clearly unjustified. The amount of the Resolution Plan has to be disbursed as per the Resolution Plan and it is for the benefit of the creditors. Appellant could not be heard to say that although he....