TaxTMI 
TaxTMI 
2025 (6) TMI 26
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....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 of the appellant, Mr. Deepak Netto and Ms. Radha Rawat and the RP of the cor....
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....he 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 within 1 week after he received the details of the bank. This Court also observed that in the meantime, PNB as well as SBI shall take....
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....7.02.2024 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 obtain necessary approval the plan has failed and it is submitted that appellant has no capacity to deposit the amount which is reflected from the ....
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.... 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 resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution p....
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.... 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. Application I.A.1857/2023 was filed by the SBI only on 28.04.2023, that is much after the elapse of period of 1 year from passing of the order. By the impugned order passed by the adjudicating authority on 08.12.2023 appellant was directed ....
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....ution 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 advise on options available with lenders. Representative from SAM team advised that Resolution Plan is to be implemented by 08.02.2024 as per NCL T order dated 08. 12.2023, hence, any extension of timeline will require NCL T approval. If lenders decide to allow extension of timeline as per request of t....
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....pplication 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 invoke the PBG and file a suitable application before the NCLT for initiating liquidation against the corporate debtor. Under Part IV, following decision was taken in the JLM: "iv) The lenders discussed the matter at length and following decisions were taken unanimously: A. Even after consuming more than 2 years, the SRA is still struggling to obtain funds and requisite approvals for imp....
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....rate 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"), with zero dividend and non- cumulative in nature at their face value. The value of these preference shares is dependent on the recovery of the receivables by the Corporate Debtor IUIL within 3 (three) years of the Closing Date (as defined under the Resolution Plan). However, as these New Preference Shares are to be issued to 2 (two) foreign financial creditors, namely the foreign branches of Canara Bank and Indian Bank (erstwhile Allahabad Bank), the Corporate Debtor/UIL therefore app....
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....BI." 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 condition in the letter of the SBI and requirement of obtaining finances from specified agencies, the appellant could not deposit the amount as was offered by it in order dated 05.07.2024 of this Court. We need not enter into the reasons due to which appellant could not deposit the amount offered by it in order dated 05.07.2024. The order dated 05.07.2024 was passed on the request of the appellant to show his bona fide that he has capacity to park the amounts under the resolution plan with the branch of SBI at Singapore or UAE. The said d....
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....oval 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 step had been added at a 'pre- Adjudicating Authority' approval stage. It would therefore be logical to hold that obtaining prior approval of the CCI before the CoC approval, would seamlessly cover the 'pre-Adjudicating Authority' approval stage without any possible disruption." 24. The present is a case where there was no requirement obtaining any prior approval prior to approval of the resolution plan, however, under Section 31(4) all regulatory approval are to be obtained within a period of 1 year. When the approvals have not been obtained by SRA, w....