TaxTMI 
TaxTMI 
2023 (12) TMI 1390
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.... Limited ("Corporate Debtor"). 4. The underlying Company Petition in C.P. (IB) No. 891/KB/2020 was filed by Bank of India, the Financial Creditor against McNally Bharat Engineering Company Limited, the Corporate Debtor, to initiate Corporate Insolvency Resolution Process ("CIRP"), under section 7 of the Insolvency and Bankruptcy Code 2016, which was admitted vide order dated 29 April 2022. 5. Initially, Mr. Anuj Jain was appointed as the Interim Resolution Professional (IRP). At the 1st meeting of the CoC held on 03 June 2022, the CoC proposed to appoint Mr. Ravi Sethia, the Applicant herein, as the Resolution Professional. The appointment of the Resolution Professional was confirmed by this Adjudicating Authority on 26 August 2022. ] Constitution of CoC 6. The IRP made public announcement on 07 May 2022 in Financial Express, the Telegraph (English) (Kolkata Edition) and EkDin (Bengali) (Kolkata Edition) newspapers regarding initiation of Corporate Insolvency Resolution Process and called proof of claims from the financial and operational creditors, workers and employees of the corporate debtor in the specified forms. The last date of submission of claims was 18 May 202....
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....h CoC meeting 22.09.2023 Collation of claims 10. The amounts claimed and admitted are summarised below: Amount in INR/Cr. Nature of Creditor Amount Claimed Amount Admitted Secured Financial Creditors 3,559.17 3,514.65 Unsecured Financial Creditors 2,304.11 1,282.58 Operational Creditors - Statutory Authorities 175.31 34.53 Operational Creditors - Employees and Workmen 0.37 0.03 Other Operational Creditors 315.63 182.47 Other Creditors 473.68 1.01 Total 6,828.27 5,015.28 CIRP and compliances 11. The Applicant submits that in terms of the provisions of section 25(2)(h) of the Code read with regulation 36A(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, invitations in Form 'G' for Expressions of Interest ("EoI") from potential resolution applicants was issued on 05 July 2022 in Financial Express (English), The Telegraph (English) (All India edition) and Ek Din (Bengali (Kolkata edition) newspapers wherein the last date of receiving EoI was 10 August 2022. 12. The notice was also published on the website of the Insolven....
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....d Rashmi Metaliks Limited participated in the said Challenge Process. The Challenge Process was of seven rounds and in the end of the 7th round, BTL EPC Limited was declared as the H1 Resolution Applicant with a plan value of Rs.353.98Crore. 19. In the 17th CoC meeting, the COC resolved with 85.56% voting shares, to conduct a fresh Challenge Process in view of the maximization of the Resolution Plan for the Corporate Debtor. In the 18th CoC meeting held on 17 March 2023, the CoC agreed to conduct the second Challenge Process on 21 March 2023. 20. Amit Metaliks Limited vide email stated that it does not wish to participate in the second Challenge Process and requested for the refund of their Bank Guarantee. No response was received from Rashmi Metaliks Limited. 21. In the 22nd CoC meeting held on 10 April 2023, the second Challenge Process was conducted and only two Prospective Resolution Applicants viz. Nalwa Steel and Power Limited and BTL EPC Limited participated in the Second Challenge Process. Nine rounds of bidding were conducted in the Second Challenge Process and Nalwa Steel and Power Limited was declared as the highest bidder. 22. The Revised Resolution Plans al....
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.... debts of CD in the manner specified by the Board. Clause 5.5.1 at Page 29 of the Resolution Plan. 2. (i) Plan must provide for payment of debts of OCs in such manner as may be specified by the Board which shall not be less than the amount payable to them in the event of liquidation u/s 53; Clause 5.5.3., Clause 5.5.4. at Pages 37-39 of the Resolution Plan amended by the Addendum dated 16.05.2023 at Sl No. 8 at Pages 4-5. (ii) Plan must provide for payment of debts of OCs in such manner as may be specified by the Board which shall not be not less than 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 sub-section (1) of section 53, whichever is higher; Clause 5.5.3., Clause 5.5.4. at Pages 37-39 of the Resolution Plan amended by the Addendum dated 16.05.2023 at Sl No. 8 at Pages 4-5. (iii) provides for 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. Clause 5.5.2.1 at Page 30 of the Resolution Plan. (c) Management of the affairs of the Corpor....
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....tutional documents of the corporate debtor; Clause 5.16 at Page 46, Clause 8.2 at Page 51 of the Resolution Plan, amended by Addendum at Sl. No. 12 at Page 6. (i) issuance of securities of the corporate debtor, for cash, property, securities, or in exchange for claims or interests, or other appropriate purpose; Clause 5.16 at Page 46 of the Resolution Plan amended by Addendum at Sl. No. 12 at Page 6. (j) change in portfolio of goods or services produced or rendered by the corporate debtor; Not proposed in the Resolution Plan. (k) change in technology used by the corporate debtor; and Not proposed in the Resolution Plan. (l) obtaining necessary approvals from the Central and State Governments and other authorities. Clause 13.5 at Page 62, Schedule 5, Clause 1.6 at Page 80 of the Resolution Plan. (m) sale of one or more assets of corporate debtor to one or more successful resolution applicants submitting resolution plans for such assets; and manner of dealing with remaining assets. Not proposed in the Resolution Plan. III. Mandatory contents of Resolution Plan in terms of regulation 38 of CIRP Regulations: Ref to relevant Reg. Req....
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....2 at Page 68-69 of the Resolution Plan. (d) it has provisions for approvals required and the timeline for the same; and Clause 13.5 at Page 62, Schedule 5, Clause 1.6 at Page 80 of the Resolution Plan. (e) the Resolution Applicant has the capability to implement the resolution plan. Clause 2 at Pages 10-17 and Clause 4.4.4 at Page 27 of the Resolution Plan. 30. The Resolution Applicant has submitted affidavit of eligibility under section 29A of the Code. Details of Resolution Plan/Payment Schedule 31. The relevant information with regard to the amount admitted and the amount proposed to be paid by the Successful Resolution Applicant, i.e., BTL EPC Limited, under the said Revised Resolution Plan is tabulated hereunder: Creditors Amount Admitted (Rs. in Crore) Amount Propose d (Rs. in Crore) % of claim admitted Payment Schedule CIRP Cost 0 To be paid out of the cash available with the Corporate Debtor --- Within 60 days of NCLT approval Secured Financial Creditors 3514.65 428.73 12.05% 61.18 crores - within 60 days Unsecured Financial Creditors 1282.59 3.46 0.15% 50 crores - within 150 days 40 crores - 2....
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....unt of any claim against the Corporate Debtor which relates to a period prior to the Appointed Date. 3. 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 Effective Date. 4. All the attachments and execution process levied against the Assets of the Corporate Debtor, shall be lifted and released. 5. Any and all unauthorised possession/encroachments on the movable/ immovable Assets of the Corporate Debtor, irrespective of period and irrespective of any claim on adverse possession basis, to be declared vacated immediately and the Corporate Debtor's ownership and possession to be admitted and established. The Corporate Debtor should have right to recover and take possession of all such A....
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.... including but not limited to various government authorities, corporates, private person, government departments (Income Tax Department, Customs Department, Excise Department, Service Tax Department, Pollution Board, etc.), etc., under Applicable Law or otherwise for any reason whatsoever, where the relevant arrangement is being discontinued or terminated. Effect on past liabilities 12. Upon approval of this Resolution Plan by the Adjudicating Authority, all liabilities (including without limitation, for any penalty, interest, fines or fees) (admitted/ verified/ filed or not) or obligations of the Corporate Debtor, in relation to: (A) any investigation, inquiry or show cause, whether civil or criminal; (B) any non-compliance of provisions of any laws, rules, regulations, directions, notifications, circulars, guidelines, policies, licenses, approvals, consents or permissions; (C change of control, transfer charges, unearned increase, compensation or any other such liability whatsoever under any contract, agreement, lease, license, approval, consent, privilege or permission to which the Corporate Debtor or its subsidiaries, joint ventures or associates are entitled; (D) any ....
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....usiness Permits / statutory approvals and Applicable Law; (ii) should not initiate any investigations, actions or proceedings in relation to such non- compliances; (iii) should co-operate with the Corporate Debtor to renew / obtain such permits / approvals; (iv) permit the Resolution Applicant to continue to operate the business of the Corporate Debtor pending such permits / approvals at least till a period of 12 (twelve) months from the Effective Date; and (v) to not charge any charges, penalty, interest, etc., till the time such permits / approvals are received. Contracts and Agreements 15. In the interest of keeping the Corporate Debtor as a 'going concern', unless otherwise specified in the Resolution Plan, all contracts and agreements shall continue to remain valid and notwithstanding any lapse, non-compliance, breach or expiry of underlying terms of such contracts and agreements or requirement of prior approval upon change of control; these contracts 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 the....
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.... utilities in relation to the existing units of the Corporate Debtor shall be continued and any request for reconnection shall be allowed without any reconnection charge or fresh security deposit. Proceedings, Inquiries and Investigations 22. Any proceedings arising after the Appointed Date but pertaining to a period prior to the Effective Date, shall be deemed to have been withdrawn and/or dismissed and/or abated and will he deemed to have been barred. 23. Upon approval of this Resolution Plan by the Adjudicating Authority, all inquiries, investigations and proceedings, whether civil or criminal, notices, causes of action, suits, claims, disputes, litigation, arbitration or other judicial, regulatory or administrative proceedings against, or in relation to, or in connection with the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future, (including without limitation, any investigation, action, proceeding, prosecution, whether civil or criminal, by the Central Bureau of Investigation, the Enforcement Directorate or any other regulatory or enforcement agency), in relation to any period prior to the Effective Date or arising ....
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....The lenders (including secured Financial Creditors) of the Corporate Debtor shall regularize all the loan accounts of the Corporate Debtor and shall ensure that the asset classification of such loan accounts is "standard" in their books with effect from the Effective Date. 26. The past performance of the Corporate Debtor should not be considered when the Corporate Debtor applies for credit rating with any agency/ bank/ financial institutions. Compliances under 2013 Act 27. The Corporate Debtor, pursuant to the provisions of this Resolution Plan and the authority contained therein, shall cause its Board 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 MCA or other statutory authorities; (il) 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 thi....
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....d notification, the CBDT is requested to allow the reduction of total amount of loss brought forward (including unabsorbed depreciation) from the book profits of the Corporate Debtor for the purposes of levy under Section 115 JB of the Income Tax Act, 1961. The CBDT is 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. 34. 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 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, va....
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....38. 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), 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 the 2013 Act and rules thereto without payment of fees in respect thereof. Similarly, the stamp duty arising on issuance of shares by the Corporate Debtor be waived. 39. It is envisaged that, dispensation/ waiver be given by the State Governments, Central Governments or any other authorities, from payment of any stamp duty on transfer of land, salami on transfer, transfer fees on account of change in shareholdings pursuant to this plan, Kh....
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....the Corporate Debtor pertaining to the period prior to the Effective Date except to the extent provided for payment by the Resolution Applicant in this Resolution Plan, if applicable. Benefits received by the Corporate Debtor 43. That the Corporate Debtor or Resolution Applicant shall not be required 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. Waiver of Valu....
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....in the books of account as on the Insolvency Commencement Date. 48. Transfer of any amount lying in the banks for more than 7 (seven) years or otherwise to investor protection fund under the provisions of 2013 Act shall be exempted and use of such funds in operating the Corporate Debtor shall be allowed. 49. It is expressly clarified that no liabilities, claims, demand, obligations, penalties etc. whatsoever arising out of or in relation to (i) proceedings, inquiries, investigations, orders, show causes, notices, suits, litigation etc. (including those arising out of any orders passed by the Adjudicating Authority pursuant to Sections 43, 45, 49, 50, 66, 68, 70, 71, 72, 73, 74 of the Code) or any acts or omissions in breach of Applicable Law which occurred prior to the Effective Date or (ii) that may arise out of any proceedings, inquiries, investigations, orders, show cause, notices, suits, litigation etc. (including any orders that may be passed by the NCLT pursuant to Sections 43, 45, 49, 50, 66, 68, 70, 71, 72, 73, 74 of the Code), shall arise in respect of the Corporate Debtor or the Resolution Applicant or the Resolution Professional and his representatives who sh....
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....ourt 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. The relevant part of the Ghanshyam Mishra judgment(supra) in this regard is given below: 61. All these details are required to be contained in the information memorandum so that the resolution applicant is aware, as to what are the liabilities, that he may have to face and provide for a plan, which apart from satisfying a part of such liabilities would also ensure, that the Corporate Debtor is revived and made a running establishment. The legislative intent of making the resolution plan binding on all the stake-holders after it gets the seal of approval from the Adjudicating Authority upon its satisfaction, that the resolution plan approved by CoC meets the requirement as referred to in sub-section (2) of Section 30 is, that after the approval of the resolution plan, no surprise claims should be flung....
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....t or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under section 31 could be continued. 36. With respect to the waivers sought in relation to guarantors, the judgment of Lalit Kumar Jain v Union of India & Ors, [2021 SCC OnLine SC 396 decided on 21.05.2021.] wherein the Hon'ble Supreme Court held in para 133 that sanction of a resolution plan and finality imparted to it by section 31 does not per se operate as a discharge of the guarantor's liability shall apply. 37. In view of the above position of law, the Resolution Plan approved by CoC and being approved by this Adjudicating Authority shall be binding on the Corporate Debtor and other persons, authorities etc. as specified in section 31 of the Code. 38. With respect to the reliefs and waivers sought for all inquiries, litigations, investigations and proceedings shall be granted strictly as per the section 32A of the Code. 39. The Resolution Plan has to be consistent with extant law. The Resolution Applicant shall make necessary applications to....