TaxTMI 
TaxTMI 
2025 (6) TMI 26
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....ng for direction to the SRA to implement the revised resolution plan. By the impugned order, prayers made in I.A. i.e., Prayer (a) has been allowed directing the SRA (appellant) to implement the resolution plan within a period of 2 months. Aggrieved by which order, this appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding the appeal are: i. The corporate debtor, namely Ushdev International Limited was admitted to Corporate Insolvency Resolution Process (CIRP) by order dated 17.05.2018 passed by the adjudicating authority on an application filed under Section 7 by the SBI. ii. The appellant submitted revised resolution plan on 22.06.2021. Revised resolution plan of the appellant was approved by the Committee of Creditors (CoC) on 22.06.2021 by the CoC with 91.06%, vote shares. iii. The adjudicating authority vide its order dated 03.02.2022 allowed the I.A. filed by the Resolution Professional (RP) for approving the plan. After approval of the resolution plan an Implementation and Monitoring Agency (IMA) of the corporate debtor was constituted consisting the two members of the CoC (SBI & IDBI Bank) two members o....
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....efore the NCLT for initiation liquidation against the corporate debtor. In pursuance of the JLM held on 05.02.2024, the PBG was invoked on 09.02.2024. x. The appellant filed the present appeal on 16.02.2024, challenging the order impugned directing the appellant to implement the resolution plan in a timeframe not later than 2 months. Appeal was entertained on 19.02.2024, and time was allowed to the SBI to file a reply to the appeal as well as stay application. On request of the appellant, the appeal was adjourned on several occasion. Counsel for the SBI also took time to obtain instructions with regard to stage of process regarding Reserve Bank of India (RBI) approval. xi. On an application filed by the appellant, Punjab National Bank (PNB), the authorised dealer of the corporate debtor was also impleaded who was also allowed time to file a reply. Reply was filed on behalf of PNB. The appeal was heard on 05.07.2024. Reply affidavit filed by PNB was also noticed by this Tribunal in its order dated 05.07.2024. Appellant submitted that appellant is ready to park the balance amount in Singapore/UAE SBI branch. Appellant offered to deposit the amount Rs.225.14 crore wi....
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....t in the meeting of the IMA held on 06.02.2024, asked for only one week time to implement the resolution plan, thereafter, he sent an email on 07.02.2024 asking for 1 month time to implement the resolution plan. Appellant having failed to implement the plan in the JLM held on 08.02.2024, it was decided to invoke the PBG and file an application for liquidation which has been done. It is submitted that the Request for Resolution Plan (RFRP) itself contemplated that all necessary and regulatory approvals are to be obtained by the resolution applicant and resolution applicant having failed to obtain necessary regulatory approval from Reserve Bank of India. Resolution plan has to implemented in the timeline. It is submitted that a resolution plan was approved by the adjudicating authority on 03.02.2022 and from approval of the resolution plan more than 3 years have elapsed, but the appellant has failed to implement the plan. It is submitted that under Section 31(4) of the Insolvency and Bankruptcy Code, 2016, (for short the 'IBC' or the 'Code'), the resolution applicant has to obtain all necessary approvals required under any law within a period of 1 year. Appellant having failed to obt....
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....Statutory and Regulatory Approvals The Successful Resolution Applicant is expected to obtain all the relevant statutory and regulatory approvals required under Applicable Law for the Proposed Transaction upon acceptance of the Resolution Plan by the Adjudicating Authority, including, but not limited to, approvals required from the Competition Commission of India, under the Competition Act, 2002/ any other regulatory approvals, within a period of one year from the date of approval of the Resolution Plan by the Adjudicating Authority or within such period as provided for under Applicable Law, whichever is later. It is hereby clarified that neither the Resolution Professional nor the COC shall be responsible in any manner whatsoever for obtaining these approvals." 8. The provisions in the IBC, which provides for obtaining necessary approvals in Section 31(4) which provides as follows: "31. Approval of resolution plan. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the....
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....pondent, and the Monitoring Agency, where the Applicant is a member, shall extend full cooperation for obtaining approvals, as may be required for implementation of the Revised Resolution Plan. Accordingly, prayer (a) is allowed." 11. Other prayers in the applications were not allowed. The first submission which has been pressed by the appellant is that the direction to implement the plan within 2 months is modification of the resolution plan which is beyond the jurisdiction of the adjudicating authority. We fail to see any substance in the submission of the appellant. The resolution plan was approved by the adjudicating authority on 03.02.2022. It was the case of the appellant before the Monitoring Committee Meetings that approval from the RBI with respect to certain transactions under the resolution plan are awaited hence, the resolution plan has not yet been implemented. As per the RFRP, Clause 3.1 noted above, it is the obligation of the resolution applicant to obtain necessary (regulatory approvals) and under Section 31(4) time allowed to the resolution applicant is for obtaining the necessary regulatory approval is only 1 year from the date of passing of the order. Applica....
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....ollows: "1. Status of implementation of Resolution Plan. i) AGM, SBI informed that NCL T, Mumbai vide its order dated 08.12.2023 had passed an *order directing the Successful Resolution Applicant ("SRA") to implement the resolution plan of the Corporate Debtor ("Resolution Plan") within a period of two months from the date of its order i.e. by 08.02.2024. ii) The matter was taken up with the SRA and the SRA in Interim Monitoring Agency ("IMA") meeting held on 11.01.2024 apprised that they are in discussion with their investors M/s. ANZA Capital and entire resolution amount of Rs. 227 crores will be remitted in upfront (instead of four monthly tranches as per Resolution plan) well before 08.02.2024. However, in last IMA meeting held on 06.02.2024 the SRA has requested for extension of the timeline by one week. Therefore, SRA was advised to submit formal request in this regard so that matter can be taken up in the Joint Lenders Meeting ("JLM"). Further, SRA vide its email dated 07.02.2024 has sought extension of timelines by one month (instead of one week as sought in IMA meeting dated 06.02.2024). iii) Thereafter, the SAM team was requested to adv....
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....iginal amount) and PBG of Rs. 11.50 crores (Original amount) have been kept in form of FDRs with SBI. The same will be invoked and transferred in the No lien account of SBI. C. Filing of suitable application with NCL T for initiating liquidation against the Corporate Debtor. IDBI Bank requested SBI to select Mumbai based liquidator before filing of the liquidation application with NCL T. SBI advised that they will take up the matter with their higher authority in this regard. D. Filing of necessary information with the IBBI regarding default of the SRA in implementation of Resolution Plan under Section 74(3) of IBC. vi) On query raised by IDBI Bank on continuation of IMA as it consists of (SRA members also, representative from SAM replied that IMA will continue till liquidation order passed by NCLT or we need to take specific directions from NCLT in this regard. IDBI Bank requested SAM team to provide advice in this regard." 15. The aforesaid minutes noticed that as per the direction of the NCLT, the appellant has to implement the resolution plan by 08.02.2024. The lenders deliberated on all necessary option and decision was taken to authorise SBI to i....
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....nexure A-4 at Pg. 97 of Vol I Appeal) as approved by the Ld. Adjudicating Authority by its order dated 3'd February, 2022 (Annexure A-5 at PS. 173 of Vol II Appeal ("Resolution Plan"): (a) Assignment of debt - In terms of the Resolution Plan, Taguda India Private Limited, an affiliate of the Appellant / SRA ("TIPL") is required to acquire debt aggregating to INR 50,00,00,000/- (Indian Rupees Fifty Crores) ("Assigned Debt") from the financial creditors of the Corporate Debtor I TJIL including the foreign financial creditors. An amount of INR 2,40,22,633/- (Indian Rupees Two Crore Forty Lakh Twenty-Two Thousand Six Hundred Thirty-Three) is to be paid in consideration for assignment of debt from the foreign financial creditors of the Corporate Debtor I TJIL. Since the above is a capital account transaction, prior approval of the RBI will be required. (b) Conversion of balance financial debt to preference shares - The Appellant in its Resolution Plan has also proposed to restructure the balance unpaid financial debt of the financial creditors of the Corporate Debtor I UIL and convert it into non-convertible redeemable preference shares ("New Preference shares"), w....
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.... with Mr. Aditya Gaiha, Chief General Manager-in-Charge, Foreign Exchange Department of RBI took place, wherein it was decided that the Corporate Debtor ought to submit a compounding application regarding contravention of provisions of FEMA. Accordingly, the Corporate Debtor / UIL's officials (including the SRA) were asked to prepare a draft of the compounding application for approval of IMA members. The members of the IMA were informed that a compounding application can be filed after submission of the APRs etc. sought by RBI." 20. From the reply affidavit filed by the PNB, it is clear that authorised dealer PNB has taken all necessary steps, it was due to certain contravention, pointed out by the RBI that approval has not yet been granted. 21. Be that as it may, the fact remains that regulatory approval which was required to be obtained by the SRA as per Clause 3.1 of the RFRP has not been obtained. The period of 1 year which is statutorily prescribed under Section 31(4) has also elapsed. 22. Learned counsel for the appellant referring to its additional affidavits filed after 05.07.2024 has sought to contend that it was due to requirement of inclusion of certain cond....
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....reting the provisions of Section 31(4). The above judgement, although was considering Section 31(4) proviso which require approval of the Competition Commission of India (CCI) prior to approving the resolution plan by the CoC and in the said case, prior approval having not been obtained by the CCI prior to approval of the plan by CoC, the plan was held to be violated mandatory provisions and was struck down. The relevant paragraph of the Judgement is as follows : "73. Both the Notes on Clauses and the Memorandum clearly mention that the approval from the CCI for the combination must be obtained prior to, the approval of the Resolution Plan by the CoC. However, the last line in the Memorandum states that the same is to clarify that the approval from CCI for the combination, shall be obtained prior to the approval of the Resolution Plan, by the Adjudicating Authority, instead of CoC, as mentioned in the preceding line and also the inserted proviso. A question might therefore arise - whether it was an inadvertent legislative error? As can be appreciated, the erstwhile Ordinance provided for a 'postAdjudicating Authority' approval stage. The Memorandum clarified that a new ste....