TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 1751
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....KKR, Resolution Applicant And M/s. Consolidated Engineer Company Versus Mr. Subodh Kumar Agrawal, Kolkata And Infinity Interiors Private Limited. Versus Mr. Subodh Kumar Agrawal, And NCC Limited Versus M/s. Golden Jubilee Hotels Ltd., Hyderabad, Committee of Creditors, Youth Advancement Tourism and Culture Department, Shilparamam Arts, Crafts & Cultural Society, Hyderabad Shri K. Anantha Padmanabha Swamy - Member Judicial And Hon'ble Shri Binod Kumar Sinha -Member Technicial Parties/Counsels present :- For the RP/Corporate Debtor: Mr. S. Ravi, Senior counsel along with Mr. Suryanarayana, Counsel. Mr. Subodh Kumar Agarwal, RP. For the CoC: Mrs. Varalakshmi Tadepalli, along with Ms. Swagata basu, counsels. For the EIH Ltd/Applicant in IA No. 433.447 & 448/2018: Mr. Niranjan Reddy, Senior counsel along with Ms. Rubaina Khatoon, counsel. For the LN Sharma /Ex-Management/ Applicant in IA No. 61/2019: Mr. Yogesh Kumar Jagia along with Mr. Nitish Bandary, counsels For the NCC/Applicant in IA No. 950/2019: Mr. Avinash Desai along with Mr. TPS Harsha, counsels For the CEC/Applicant in IA No.960/2019: Mr. Sanjeev Sahay, counsel. For the Infini....
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....pass an order confirming that this Resolution Plan for the Company has dealt with the interests of all the stakeholders in the Company, including the Financial Creditors (whether secured or unsecured, assenting or dissenting), Operational Creditors and all other stakeholders in accordance with the Code, and to pass an order directing termination of the Restated Shareholders agreement dated August 28,2009; (iv) To pass an order directing that in accordance with Section 238 of the Code, any action undertaken pursuant to the Resolution Plan by the Resolution Applicant or the Company will not require compliance in relation to requirements under any other laws. For the implementation of this Resolution Plan, and except as set out in the Resolution Plan, upon the Resolution Applicant ensuring compliance with the provisions of the Code, no further compliances, actions or consents will be required under other laws or regulations for undertaking the individual actions contemplated under the Resolution Plan. (v) To declare that the process of approval of resolution plan resolving the corporate insolvency of the corporate debtor under the I & B Code is a complete code in its....
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....er the Resolution Plan between the Resolution Applicant and the GoT; (b) provide consent for creation (by or on behalf of itself or the Company) Encumbrances in favour of the lenders (including their agents or trustees) of the Company, on all the rights of the Company on and in respect of the Project or the land on which the Project is situated (or being constructed); and (x) To direct the GOT to extend or renew the tenure of each of the Lease Agreements until August 1, 2074 (i.e. for another term of 33 years). (Not pressed vide Written Submissions) (xi) To pass an order terminating the following agreements with EIH, without any costs to the Resolution Applicant: (a) Management agreement between the Company and EIH incorporating technical assistance services dated August 5, 2006 between the Company and EIH, read with the supplemental agreement of June 9, 2008. (b) Management agreement between the Company and EIH incorporating technical assistance services dated February 22. 2008 between the Company and EIH. (xii) To pass an order granting a restraint on, and prohibit all Adverse Actions against the Company until the implementati....
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....sion for continuing the Applicant (EIH) as the hotel operator in the resolution plans submitted/proposed to be submitted by the Resolution Applicants and resultantly direct the Respondents to take up for approval and consider only the original resolution plans in terms of the Hotel Operator preference indicated by the Resolution Applicants. II. Prayer in IA 447/2018: To declare and direct that the independent rights of the Applicant (EIH) herein as a Hotel operator based on an independent arm's length Management Agreement and License Agreement remain unaffected by the Corporate Insolvency Process in relation to the Corporate Debtor and the said rights cannot be interfered with, in any manner by and through a Resolution Plan and resultantly direct the Respondent No. 4 (COC) to not to approve any Resolution Plans that provide for any Hotel Operator other than the Applicant and pass such further order or orders as this Hon'ble Authority may deem fit and proper in the circumstances of the case. III. Prayer in IA 448/2018: To declare and direct that the independent rights of the Applicant herein as a hotel operator based on the independent arm's length Management Agree....
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....), the Applicant should not be discriminated qua other creditors. Additionally, provision must be made in the plan for Applicant to get its monies if there are additional cash flows into the company, including due to the various pending arbitration proceedings; (d) Under the plan, Applicant must be given an opportunity to complete Tower II on the terms and conditions mentioned in the contract executed between the Applicant and the company, subject to reasonable price escalation. (e) The Applicant's admitted claim of at least INR 15.92 cr be considered as admitted debt (f) Any further orders may be passed in the interest of justice. Prayers in IA 961/2019 by IIPL, Operational Creditor 7. The present Application bearing IA No. 961/2019 is filed pursuant to the order of Hon'ble NCLAT dated 23.10.2019, by Infinity Interiors Pvt. Ltd U/s.60(5) seeking not to approve the Resolution Plan in the present form and ensure that the Applicant is paid in proportion to the Financial Creditors, and thereby balance the interests of all the Stakeholders and not to discriminate between the Operational Creditors and Financial Creditors and between similarly sit....
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....e Limited (ACRE)). The H1 and H2 were declared by complying with the mechanism agreed and both the shortlisted applicants participated in the outbidding process. As there as no favourable outcome, the bidding was closed and none of the applicants was declared as a successful Resolution Applicant. d. That a fresh advertisement was issued on 6.10.2018, to call for EOI. In pursuance of the fresh advertisement, two Resolution Applicants had submitted their EOI. Accordingly, information Memorandum and Evaluation Matrix were provided to the Two (2) Potential Resolution Applicants. The Resolution Applicants who submitted their Resolution Plans were: (i). Sattva Developers Private Limited (ii). BREP Asia II Indian Holding Co II (NQ) PTE LTD e. That during 18th meeting of the CoC held on 24.10.2018, which was adjourned to 31.10.2018 and concluded on 13.11.2018 the RP facilitated the opening of the sealed bids submitted by the two (2) Potential Resolution Applicants, in the presence of all the members of the CoC. The Resolution Plans were placed before the members of the CoC for consideration and evaluation. f. That it was resolved during the meet....
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....ws; Capex and Working Capital Requirements, on a need to do basis; and Transaction related expenses Identified Bank Guarantees 20.02 Financial Commitment 584.02 ii. Upfront Financial Commitment: That the Resolution Applicant proposes that INR384 Crores will be Upfront Financial Commitment which will include liquidation value payable to the Workmen, Employee, Financial Creditors, Operational Creditors (Mandatory Payment Amounts). This amount will also include the amounts payable to the Department of Youth Advancement, Tourism and Culture (YATC) and of Shilparamam Arts, Crafts and Cultural Society (Society). B. CONDITION PRECEDENT :- i. That the obligation of the Resolution Applicant to implement the Resolution Plan shall commence from the date the Resolution Plan is approved by the Adjudicating Authority, subject to completion, or waiver by the Resolution Applicant, of the following conditions i.e., receipt of the written consent of the Department of Youth Advancement, Tourism and Culture of the Government of Andhra Pradesh ("YATC") and of Shilparamam Arts, Crafts and Cultural Society ("Society", and together with YATC, "GoT") for ....
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....iety Claim, the Resolution Applicant shall (in addition to the Upfront Payment Amounts, if any) pay the Financial Creditors an amount equal to the difference between: (a) INR 17,00,00,000 (Rupees Seventeen Crores only); and (b) 50% (fifty percent) of the incremental amounts to be paid over and above the Society Claim to the GoT. F. EMPLOYEES/ WORKMEN: i. That the Liquidation Value ascribed to such part of the Employees and Workmen Dues, if any, as are payable to workmen for a period of 24 (twenty four) months immediately preceding the Insolvency Commencement Date and are outstanding as on the Insolvency Commencement Date ("Workmen Liquidation Dues") will be paid out on or before the expiry of 30 (thirty) days from the NCLT Approval Date as required under the Code. The Resolution Applicant shall also pay the Liquidation Value to any employees other than workmen for the period of 12 months preceding the Insolvency Commencement Date ("Employee Liquidation Dues"). Both Workmen Liquidation Dues and Employee Liquidation Dues shall be paid out of the operating cash flows of the Company, if the cash - flows are inadequate, the incremental amounts will be met from the Upfront Fi....
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....nts as contemplated in the Resolution Plan no later than 30(Thirty) days from the issuance of CP Satisfaction Notice. L. TREATMENT OF ONGOING LITIGATION AND VIOLATION: i. That the Award passed by the Arbitral Adjudicating Authority in the ongoing arbitration proceedings between EIH and the Company, prior to the Effective Date, such amounts shall be utilized towards payment of the Sustainable Debt. In the event, the Award is passed after the Effective Date, the Company shall distribute the Award Amount to the Financial Creditors upon such terms agreed between the Resolution Applicant and Financial Creditors. In the event the Adjudicating Authority passes any Award adverse to the Company's interest, liability arising out of such Award shall be deemed to be extinguished. M. STAGES INVOLVED IN IMPLEMENTATION OF THE RESOLUTION PLAN :- STEPS DETAILS Appointment of Steering Committee Independent O&M Contractor From the date of approval of Resolution Plan of RA by NCLT up to the effective date: A Steering Committee will be appointed to oversee the functioning of the Company. An independent O&M contractor (nominated by the Res....
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....Admitted Financial Debt; (3) The Operational Creditors (other than the Special Operational Creditor), employees and Workmen and Other Creditors shall be paid NIL. O. That the Resolution Applicant to enable implementation of the Resolution Plan, may incorporate a SPV in India. The SPV shall be funded by the Resolution Applicant. The SPV shall utilize the funds to subscribe to Capital Instruments of the Company and to settle the Upfront Financial Commitment and any amounts as specified. P. That the date on which the Resolution Applicant acquires the complete shareholding and control of the Company will be the Effective Date. Q. That the Resolution plan further contemplates the following terms upon being approved by the Adjudicating Authority : (a) The share transfer shall be deemed to be completed; (b) The preference share capital shall be extinguished, and the equity share capital shall be deemed to be reduced without any approval of the Shareholders or any court or Adjudicating Authority ; (c) The amendments, if any required to the Memorandum of Association and Articles of Association of the Corporate Debtor shall be deemed to have been ....
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.... It is further stated that in view of the various problems being faced by the corporate debtor and in the advent of the corporate insolvency resolution process, it is pertinent to mention that a notice/direction may be given to the Govt. of Telangana who is a crucial stake holder in the project more so when the Govt. is the owner/lessor of the land on which the Hotel project is built and being operated. 12. RP further stated that a direction may be given to the Govt. of Telangana to consider the waiver or concessions as sought under the approved resolution plan by COC and to take all actions and execute all documents required to record the arrangement which has been reached with the resolution applicant which is very vital for the speedy turnaround of the corporate debtor from the financial and operational insolvency. 13. That in response to the preliminary notice for termination issued by the YATC (GOT), the corporate debtor has submitted various representations and sought the co-operation of former for extending the waiver of project related overdue payments which are to be paid to the GOT, and has taken all the necessary steps in submitting the necessary returns/ informati....
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....olution Applicant in its covering letter and the undertaking appended to the Resolution Plan. The Resolution Plan also caters to the interest of all the stakeholders. The Resolution Plan contemplates infusion of capital either through equity or debt which would enable the Corporate Debtor to recover from its financial stress. The Resolution Plan has also been approved by the majority of CoC members. 18. That the Resolution Plan has been drawn up in due compliance with the requirements as contained under Section 30(2) of the Code and the CIRP Regulations. 19. That the grant of all prayers, concessions, reliefs, and dispensations as set out herein in this application is vital for the speedy turnaround of the corporate debtor as going concern and in line with the objectives of the IBC 2016. Therefore, in the interest of company and all its stakeholders it is submitted that the Adjudicating Authority may consider the granting of all the prayers, concessions, reliefs, and dispensations as set out herein in this application. OBJECTIONS TO THE RESOLUTION PLAN BY SUSPENDED DIRECTOR: 20. Against the said Resolution Plan, an Application bearing IA No. 61/2019 was filed by the Sus....
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..../2018 company petition under section 7 IBC was admitted by this Adjudicating Authority and in para 8 this Hon'ble Adjudicating Authority observed and directed that " there cannot be any prejudice likely to cause to the respondent by initiating the instant CIRP and whatever grievances/contentions of the respondent can very well be placed before the interim resolution professional and all the financial creditors will be formed committee of creditors to decide the CIRP. The other lenders of respondent can also place their stated acceptance of OTS etc. before the COC'. d. COC RESPONSE TO SETTLEMENT: i. That the meeting held on 18/04/2018, in this meeting BOB stated "if OTS is accepted, it defeats the whole process of NCLT and hence may not be feasible". Whereas PNB was willing to consider if recovery is more than recovery in CIRP and other banks sought discussion with their higher authorities. ii. That the meeting held on 24/04/2018, BOB stated "that CIRP process is to be continued and the discussion on OTS will not be feasible'. iii. That on 31.07.2018 lenders meeting was held wherein J&K Bank informed that bids received are not on expec....
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.... payment to operational creditors provides NIL amount. iii. That as per plan submitted on 19/10/2018, which was considered in CoC meeting held on 4th December 2018 Rs. 5 crores was reserved for operational creditors which is reduced to NIL in plan approved. iv. That as per the minutes of last meeting of COC held on 18.12.2018, claim admissible of Shilparamam is Rs. 41.99 Crores which is subject to Arbitration whereas nothing is stated about claim of YATC. v. That no payment has been proposed to employees and operational creditors other than special operational creditors because it is expected that liquidation dues to be NIL. Entire plan is silent about liquidation value therefore basis of denying any payment are vague and ambiguous, in support of the same, reliance is placed on Hon'ble NCLAT in para 23 of Binani Industries Vs Bank of Baroda. h. Resolution Plan being contingent contravenes IBC Code and CIRP Regulations: i. That the Resolution Plan submitted does not satisfy conditions mandated in view of the fact that: - ● As per para 2.1.5 of RFRP resolution plan shall be considered non responsive if "the resolution pl....
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....the code. In support reliance is placed on judgment of Hon'ble SC in C.B. Gautam Vs. UOI and para 71 of judgment of Hon'ble Supreme Court in K. Sashidhar Vs Indian Overseas Bank. m. THE PLAN IS NOT FEASIBLE AND VIABLE: i. Regulation 38(3)(b) mandate that resolution plan shall demonstrate that it is feasible and viable whereas resolution plan in consideration is neither feasible nor viable and COC grossly failed in considering feasibility and viability of the plan and considered the plan as mode of recovery of its debt which is contrary to the object of IBC. n. THE PLAN DOES NOT ADDRESS CAUSE OF DEFAULT: i. That the Regulation 38(3)(a) mandatorily require that resolution plan shall address the cause of default whereas plan under consideration sought concessions, waiver and immunity without even looking into cause of default but also from future and possible defaults. ii. That COC in their 14th meeting held on 28/09/2018 decided to have two base/floor base Rs. 415 or Rs. 400 Crores and decided to cancel the existing bids being less than floor price. Having cancelled the bids, COC decided to go for rebidding but in the rebidding com....
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....e debtor preferred filing CIRP and then ensured to handover management of corporate debtor to third party, other than promoters even at throw away price by compromising and ignoring apparent violations of law by forcing and coercing fellow bankers to reach at threshold voting of 66%. ii. That approval of plan herein is a device to subside all the actions taken by corporate debtor for recovery of excess funds paid to EIH Ltd. iii. Bank of Baroda appointed BOB Capital Market Ltd., wholly owned subsidiary of BOB as process advisor so to have complete control and information about CIRP to facilitate manipulation in the process of CIRP. iv. On commencement of CIRP, BOB stopped claiming 32.5% of the gross receipt from EIH ltd. which it was receiving prior to commencement of CIRP under mandate issued by EIH Ltd under interim order passed with consent of EIH by Hon'ble Arbitral Tribunal. q. Fraud committed by the Resolution Applicants Acting in Concert with each other and in connivance with the resolution professional: i. Resolution professional despite of having complete knowledge that both the resolution applicants, Black stone and Sattva ....
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....However, on 15.11.2019 Hon'ble Supreme Court pronounced two judgments in Civil Appeal No. 8766-8767/2019 in the matter of Committee of Creditors of Essar Steel India Limited Vs Satish Kumar Gupta & Ors And Municipal Corporation of Greater Mumbai Vs Abhilash Lal & Ors and in Civil Appeal no. 6350/2019 in the CIRP of Seven Hills Hospital Pvt. Ltd. Both the judgments pronounced have direct bearing on the pending application filed by applicant herein therefore, applicant is seeking to place on record second supplementary submissions highlighting the issues decided by Hon'ble Supreme Court and their relevancy in the facts of CIRP of Golden Jubilee Hotels Private Limited. b. In para 20 to 27 of the judgment, Apex court dealt with the role of Resolution Professional and in para 26, it is held inter alia: 26. " The resolution professional, once he receives a proposed resolution plan, must then conduct due diligence based on the material on record, in order that the prospective resolution applicant complies with Section 25(2)(h) of the Code (which, inter alia, requires prospective resolution applicants to fulfil such criteria as may be laid down, having regard to t....
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....rating as a going concern during the insolvency resolution process and must therefore make past and present payments to various operational creditors without which such operation as a going concern would become impossible". g. Further in para 46 it is held that "if nothing is to be paid to operational creditors, the minimum, being liquidation value, which is most cases would amount to nil after secured creditors have been paid - would certainly not balance the interest of all stakeholders or maximize the value of assets of a corporate debtor if it becomes impossible to continue running its business as a going concern. Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors. In the present case, as stated in the written synopsis, NIL payment is proposed to employees and operational creditors though in the first plan submitted, provisions was made for payment of Rs. 5 Crore but same was withdrawn in revised plan ....
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....rated the provisions of AIDEA. Resolution applicant in Annexure - 4 clause (vii)(a)(b) sought directions to create encumbrance on the land in favour of the lenders of corporate debtor which being contrary to AIDEA cannot be permitted as held by Hon'ble Supreme Court in the matter of Municipal Corporation of Greater Mumbai Vs Abhilash Lal & Ors. in civil appeal no. 6350/2019 decided on 15.11.2019 in the CIRP of Seven Hills Hospital Pvt. Ltd. Hon'ble Supreme Court in para 47 of judgment held which inter alia reads :- 47. In the opinion of this Court, Section 238 cannot be read as overriding the MCGM's right - indeed its public duty to control and regulate how its properties are to be dealt with. That exists in Sections 92 and 92A of the MMC Act. This court is of opinion that Section 238 could be of importance when the properties and assets are of a debtor and not when a third party like the MCGM is involved. Therefore, in the absence of approval in terms of Section 92 and 92A of the MMC Act, the adjudicating authority could not have overridden MCGM's objections and enabled the creation of a fresh interest in respect of its properties and lands. No doubt, the ....
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....nt. II. Such concept of dual capacity is well settled and well recognised in law. Reliance is placed on the following Judgements: ⮚ Ram Pershad v. CIT [(1972) 2 SCC 696 @Para 7] ⮚ Indian Aluminium v. CIT [(1972) 2 SCC 150 @Para 12] B. EIH AS OPERATOR: i. That in its capacity as operator EIH has specific and limited rights only in relation to running the Hotel. ii. That as such operator it doesn't have any role inside Golden Jubilee (Corporate Debtor). In other words, as an operator it is neither the promoter of Golden Jubilee nor it is in control or management of the business of Golden Jubilee. iii. The business of Golden Jubilee as a hotel owner was always under control of Core Group having 84% of shareholding. iv. Supreme Court specifically held in Arcelormittal India Pvt. Ltd. v. Satish Kumar Gupta [(2019) 2 SCC 1 @Para 53] that control and management means proactive control and de facto control. Even 26% shareholding was not accepted as being in control. C. Golden Jubilee has specifically taken a stand in the Management Agreement that EIH has no rights and is only an agent as an o....
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....aning of the word control as opposed to Section 2(27). ⮚ The Resolution Plan foresees an office complex being set up which is unrelated to EIH. ⮚ EIH will have no connection with the bank account and surpluses of Golden Jubilee. EIH is not even going to be on the Board of Golden Jubilee which alone is competent to be in management and control. ⮚ A limited right of running the hotel that too with very limited rights of using the hotel funds only for the specified "Gross Operating Expenses" and thereafter taking management fee and leaving all other surpluses with Golden Jubilee will not mean that EIH would be in control of Golden Jubilee's business under Blackstone. G. That after CIRP started, it is the RP who is controlling the business of Golden Jubilee even while EIH is operating the Hotel dissuades any argument against disqualification being attracted under Section 29A by EIH being shown as future operator. H. That the insistence on EIH's exclusion is not logical as RP can hand over to Blackstone the business of Golden Jubilee in an "as is where is" condition. If the RP could not throw out EIH during CIRP P....
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.... it would not amount to modification of the Resolution Plan, but would merely provide for a certainty in relation to the contingency expressly created under the plan which contingency will only arise if the question of section 29A is held against EIH. N. That on 22.11.2019, the counsel for Applicant/ L.N. Sharma in IA No.61/2019 filed supplementary written submissions to which the EIH Ltd has filed its written submissions inter alia stating as under :- i. The Resolution Plan provides for termination of agreements with EIH only if the Adjudicating Authority holds that continuation of EIH as an Operator would be violative of section 29A of IBC. The Resolution Plan is in fact premised on continuation of the arrangement of EIH as an Operator unless such an arrangement is found to be prohibited under section 29A of IBC. The necessity for such a contingent provision, has been necessitated by the confusion created by the insistence of the Resolution Professional and the CoC, which is unfounded and unsupported in law. ii. The CoC and the Resolution Applicant in their commercial wisdom have therefore provided contingencies within the Plan which are subject to the ....
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....ant through the minutes of the meetings of the CoC, more specifically the 18th meeting dated 24.10.2018, 31.10.2018, and 13.11.2018 and 19th meeting dated 04.12.2018 that the Resolution Plan approved by the CoC meted out discriminatory treatment to all the Operational Creditors except one Operational Creditor vis-à-vis the Financial Creditors in gross violation of the provisions of the Code. D. That the Resolution Plan as approved by the CoC by disregarding the amount to be paid for the claims of Operational Creditors is unfair, unjust, discriminatory and falls foul of the decision of the Hon'ble NCLAT in Binani Industries Limited v. Bank of Baroda, Company Appeal (AT) (Insolvency) No. 82 of 2018 ("Binani"), and affirmed on merits by the Hon'ble Supreme Court in Rajputana Properties Private Limited v. Ultratech Cement Limited, Civil Appeal No. 10998 of 2018 dated on 19.11.2018. E. The relevant portion of the Binani judgment is extracted here, "48. If the 'Operational Creditors' are ignored and provided with 'liquidation value' on the basis of misplaced notion and misreading of section 30(2)(b) of the 'I&B Code', then....
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....atment among the Operational Creditors: (i) That the negotiations and discussions between the RP, CoC and RA also discriminate similarly situated Operational Creditors. It is submitted that YATC, an Operational Creditor alone is being paid over Rs. 118.12 crores, while all the remaining 29 Operational Creditors together have been completely ignored in the Resolution Plan. It is pertinent to submit that YATC did not even file a claim before the IRP/RP as required under the Code. (ii) That the actions of CoC to pay YATC Rs. 118.12 crores as part of the Resolution Plan as against the remaining Operational Creditors clearly shows that the approved Resolution Plan is discriminating similarly situated Operational Creditors. I. That the Hon'ble NCLAT in Binani case has categorically stated that no resolution plan can discriminate among the similarly situated Operational Creditors. It is therefore submitted that the approval of the Resolution Plan is discriminatory and in violation of the provisions of IBC. J. Reiterating above, counsel for the Applicant prayed not to approve the Resolution Plan in the present form and ensure that the Applicant is pa....
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....ero payment. K. That the 20th MOM of the COC records that "in the current plan the payment to Operational Creditors are not there and they have mentioned that if due to regulatory reasons, if RA is directed to make the payment, the incremental amount shall be adjusted with the upfront FC amount in a manner mutually agreed between COC and RA". L. That Allocation of NIL /Zero money towards OC is illegal, discriminatory, and inequitable. It is against the law laid down by the Apex Court and against the provision of the Code. M. That 19th & 20th MOM make it clear that the RP & RA have left the final adjudication of the amount to be paid to the OC on the the Adjudicating Authority. N. That the Applicant being MSME is entitled for entire dues. It has to be appreciated that the annual turnover of the Applicant is aroundRs.23 crores. It's verified claim towards the Corporate debtor is Rs 20,02,07,112/ -. Hence the allocation of Zero money will wipe away almost the entire business of the Applicant. O. That the Financial haircut would have negligible impact on the FC's. However, non-payment of atleast the admitted amount would have debilit....
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....at the NCLT has held that if the leasing and renting is done as a business, then the landlord has to be treated as an Operational Creditor. Hence instead of treating Shilparamam / YATC as a 'Special' Operational Creditors, instead the RP should have treated the MSMEs as Special Operational Creditors by providing full payment to their dues as mandated by the MSME Act as been upheld at various times not to be violative of Article 14 of the Constitution. AA. That the Applicants herein are at the very least similarly situated to Shilparamam / YATC and thus providing 100% of the dues for Shilparamam/ YATC should also necessitate for provision of 100% of the dues of the Applicant. BB. Section 24(3) (c) provides that if the aggregate dues of the OC's is more than 10% of the debt, then OC has a right to participation in COC'S meeting. The aggregate dues of all OC's including YATC is more than 10%, hence they had a right to participate in COC proceedings. CC. In the counter affidavit to IA No. 58/2019 RP misrepresented and falsely represented that YATC is "technically an Operational Creditor", hence the dues of YATC cannot be considered as aggr....
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....ment of Andhra Pradesh to an extent of 4.337 Acres (17,551.748 Sq. Mts) under a Lease Agreement dated 09.05.2007 which has been referred to as the Principal Agreement in the Lease Deed executed by the Respondent No.1 Society in favour of the Corporate Debtor. The Lease period has commenced from 11.06.2009 and continues to be the same under the registered Lease Deed dated 26.04.2012. B. That this Respondent No.1 Society has filed the Claim in Form B on 24.08.2018 wherein under Clause IV the amount due to M/s Shilparamam Arts, Crafts and Cultural Society is shown as Rs. 6,22,31,019/- separately referring to the Agreement date 11.06.2009. The said amount is an undisputed claim which ought to have been allowed by the Resolution Professional and instead of stating that the matter is pending before the Arbitrator which is totally illegal and contrary. C. That as per the Resolution Plan submitted by BREP ASIA II INDIAN HOLDING CO II (NQ) PTE LTD., SINGAPORE, the condition precedent (clause 6.1) in volume No. 3 at page No. 37 requiring receipt of the written consent of the Department of Youth, Advancement, Tourism and Culture of the Government of Andhra Pradesh (YATC) and....
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.... The Resolution plan to the extent of the above segregation is incorrect and requires to be amended. The amount of Rs.6,22,31,019/- which is claimed by the Respondent No.1 Society herein namely M/s Shilparamam Arts, Crafts and Cultural Society has to paid upfront by the Resolution Applicant. J. That in volume No.3 at page 383 the entire amount of Rs. 41,99,92,797/- is shown as Respondent No. 1 Society Claim under the caption Special Operational Creditor and it has been referred in 8.2.1 and 8.2.5. The calculations made by the Resolution Professional/Resolution Applicant in so far as the Respondent No.1 Society is concerned have not been addressed since the claim made by Respondent No.1 Society is not subject matter of arbitration before Justice V. V. S.Rao. In response to the notice issued by Government of Telangana dated 01.09.2017, reply letter dated 14.02.2018 was addressed by the Corporate Debtor to the Government of Telangana in respect to the claims clearly shows that the Corporate Debtor has not made any claim against the Respondent No.1 Society seeking arbitration. The Resolution Professional without making M/s Shilparamam Arts, Crafts and Cultural Society a party ....
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....or forthwith. Submissions of YATC 27. Brief Submissions on behalf of Youth Advancement, Culture & Tourism (T) Department: A. That Youth Advancement, Tourism & Culture Department was the owner of the land and proposed to set up a Five Star Hotel project to an extent of Ac. 4.33 guntas situated in the premises of the Shilparamam at Madhapur, Hyderabad on Build, Operate and Transfer basis under Public Private Partnership basis. B. That as per the approved Resolution Plan submitted by BREP ASIA II INDIA HOLDING CO II(NQ) PTE LTD, SINGAPORE, it is submitted that the condition precedent (clause 6.1)requiring receipt of the written consent of the Department of Youth Advancement, Tourism and Culture of the Government of Andhra Pradesh ("YATC") and of Shilparamam Arts, Crafts and Cultural Society ("Society", and together with YATC, "GoT"). C. That till date either the Resolution Professional or the Resolution Applicant have not approached the Government to accord permission to change of control and restricting the company of M/s Golden Jubilee Hotels Private Limited. D. That being the owner of the land and to protect the interest, YAT&C submit that ....
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....d viability of the project and plan shall also be seen while finalizing the bids. It will also be ensured that the interest of all the stakeholders is taken care of as per the Insolvency and Bankruptcy Code, 2016." I. That the Government of Telangana is the owner of the subject property which was given to the Corporate Debtor on built, operate and transfer basis; the relation between the parties under that agreement is of the lessee and the lessor. Therefore merely because the lessee suffers any orders of the court, the Government of Telangana cannot be subjected to any other conditions that were agreed upon under the agreement with the Corporate Debtor. Further seeking consent from the Government of Telangana to have the resolution plan approved by the Committee of Creditors which is the condition precedent, firstly the Resolution Professional shall approach the Government of Telangana and obtain the consent which is a condition precedent then only he can proceed further with the Resolution plan. Therefore, the contention of the Resolution Applicant that as long as Resolution Plan complies with section 30(2) of the Code he is entitled to go ahead with placing the said pla....
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....9 (1) of the IBC Regulations. B. COC's recording of the Reasons for approving the Resolution Plan: The subject Resolution Plan was the only plan which qualified the prescriptions of the IBC Code and the IBC Regulations after the RP calling for the Expression of Interest for the second time. COC while considering the Resolution Plan during its 18th and 19th meeting examined the viability and feasibility of the Resolution Plan, as prescribed under Regulation 39 (3) of the IBC Regulations, which has been thus recaptured in the Minutes of the Meeting dated 18.12.2018. C. Resolution Plan provides the mandatory contents prescribed under Regulation 38 of the IBC Regulations: The Resolution Plan has provided for the mandatory contents prescribed under Regulation 38 of the IBC Regulations in the manner signposted in the table below; Detail of The Regulation Prescription under the Regulation 38 of the IBC Regulations Reference to the relevant portions and page numbers of the Resolution Plan 38 (1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors Provided....
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....tled to submit any proposal for resolution in view of the provisions contained in Section 29A (as amended). ii. Core Hotels through Mr. L.N. Sharma the promoter and Corporate Guarantor of the Debt to the Financial Creditors and/or could not have sought for the consideration of their OTS (which has lapsed)or any Resolution plan (including other plans if any) as prescribed under the IBC Code or otherwise except as indicated under Section 12A of the IBC Code. iii. That at no point of time the Corporate Debtor has chosen to avail the opportunity of settling the case out of the Adjudicating Authority, by making the necessary payments as prescribed under Section 12A which could have enabled the Financial Creditors/CoC to proceed for the withdrawal of the case in the manner detailed in Regulation 30A of the IBC Regulations 2016. Hence their objections for approval of the Resolution Plan cannot stand. E. Submissions of CoC in relation to the objections of the EIH Ltd/ Operational Manager of the Corporate Debtor: i. Resolution Applicant cannot have EIH as the Operational Manager during the implementation of CIRP in view of the provisions contained under 2....
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....d to scrutiny of the resolution plan "as approved" by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not conform to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code. The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain....
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....a chronic defaulter. The fact that the concerned corporate debtor was still able to carry on its business activities does not obligate the financial creditors to postpone the recovery of the debt due or to prolong their losses indefinitely. Be that as it may, the scope of enquiry and the grounds on which the decision of "approval" of the resolution plan by the CoC can be interfered with by the adjudicating authority (NCLT), has been set out in Section 31(1) read with Section 30(2) and by the appellate Adjudicating Authority (NCLAT) under Section 32 read with Section 61(3) of the I&B Code. No corresponding provision has been envisaged by the legislature to empower the resolution professional, the adjudicating authority (NCLT) or for that matter the appellate authority (NCLAT), to reverse the "commercial decision" of the CoC much less of the dissenting financial creditors for not supporting the proposed resolution plan. Whereas, from the legislative history there is contra indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority." ... 44. Suffice it to....
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....on Applicant in its submissions has inter-alia stated as under: a. That the CoC in its commercial wisdom has approved the Resolution Plan with the Condition Precedent. In light of the law laid down by the Hon'ble Supreme Court in the case of K. Sashidhar v Indian Overseas Bank & Others [2019 SCC Online SC 257] (paras 39-47, 49, 51, 60, 71, 73-74) ("K. Sashidhar judgment"), it is not open for the Hon'ble Tribunal to sit in adjudication over the commercial wisdom of the CoC, and the Hon'ble Tribunal's jurisdiction under Section 31 of the Code is limited to scrutiny of the Resolution Plan 'as approved' by the CoC. It is pertinent to note that the Report on the Insolvency Law Committee of March, 2018, also states that objective of the Code is to respect the commercial wisdom of the committee of creditors. b. The distribution under the Resolution Plan is as per the provisions of the Code: With regard to the contention of the Promoters and the Operational Creditors that since under the Resolution Plan NIL amount is being given to operational creditors, the Resolution Plan is not in compliance with the law and does not deserve to be approved. In r....
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....e of the Resolution Plan with the Code as amended by the Amendment Act and the regulations thereunder and is not required to defer to any findings made by the NCLAT in the aforesaid judgments prior to such amendment. vii. That the decision of the Hon'ble Supreme Court in Swiss Ribbons vs Union of India & Ors. [(2019) SCC Online SC 73] ("Swiss Ribbons judgment"), is in keeping with the changes brought about under the Amendment Act. Paragraph 77 of the said judgment are as under: "77.NCLAT has, while looking into viability and feasibility of resolution plans that are approved by the Committee of Creditors, always gone into whether operational creditors are given roughly the same treatment as financial creditors, and if they are not, such plans are either rejected or modified so that the operational creditors' rights are safeguarded. It may be seen that a resolution plan cannot pass muster under Section 30(2)(b) read with Section 31 unless a minimum payment is made to operational creditors. being not less than liquidation value. Further, on 5-10-2018, Regulation 38 has been amended." ("emphasis supplied") I. Thus, the Swiss Ribbons Judgement....
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....cial Commitment." M. Hence, under the Resolution Plan the actual amount payable to GoT is not capped and entire amount without any cap payable to GoT is the responsibility of the Resolution Applicant without in any manner affecting the payment to financial creditors. To clarify, if any additional amount unlike the October Plan will not be taken from the amounts earmarked for the financial creditors of the Financial Creditors. N. That the power of the CoC to negotiate with the resolution applicant has been recognised both in the CIRP Regulations and the Request for Expression of Interest and Resolution Plan Submission dated 5th October 2018 ("RFRP") issued by the Resolution Professional for submission of resolution plans for the Corporate Debtor. Regulation 39(3) of the CIRP Regulations provides that "The committee may approve any resolution plan with such modifications as it deems fit." c. Treatment of GOT is as per the provisions of the Code: i. The approval of the GoT is a sine qua non for acquisition of the Corporate Debtor by the Resolution Applicant. ii. That the GoT owns the land parcels on which the Project is located. It is submi....
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.... vi. That in the case of M/s Citicare Super Speciality Hospital v Vighnaharta Health Visionaries Pvt. Ltd. [CP (IB) No. 567/2018] a petition was filed under Section 9 of the Code for seeking admission into insolvency of the respondent on account of default in payment of fee by the respondent under a leave and license agreement with the petitioner. The Hon'ble National Company Law Tribunal, Mumbai bench, vide its order dated 11th March 2019 had dismissed the petition on the ground that the claim of the petitioner does not fall under the definition of operational debt and therefore the petitioner cannot be treated as the operational creditor of the respondent. vii. The operational creditors of the Corporate Debtor have been treated similarly under the Resolution Plan. It is therefore submitted that the Resolution Plan does not discriminate inter se between the operational creditors. d. Approval of GOT can be obtained post approval of the Resolution Plan: (i) That under the Resolution Plan, there is no change in the shareholding till implementation of the Resolution Plan. In fact, prior to the implementation of the Resolution Plan, the management....
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....n'ble NCLT Hyderabad Bench in the case of Canara Bank v Deccan Chronicles Holdings Limited, the Hon'ble NCLT Hyderabad Bench [CP (IB) No. 41/7/HDB/2017]; the Hon'ble NCLT Delhi Bench in SBI v Bhushan Energy Limited, the Hon'ble NCLT, New Delhi Bench [CP (IB) No. 530(PB)/2017] in order dated 30th May 2016)the Hon'ble NCLT, Ahmedabad Bench in Korba West Power Company Limited, [CP (IB) No. 190 of 2018], in order dated 24th June 2019. The Adjudicating Authority ought not to concern itself with the government approvals, which the resolution applicant can obtain by making applications/ submissions before the appropriate authorities, in a manner which may be prescribed and obtain the same as per the applicable law. (vi) That the allegations of collusion between the Resolution Applicant and the Sattva Group ("H2 Bidder") cannot be considered by the Hon'ble Tribunal. There is no material on record or evidence to show that the Resolution Applicant and the H2 Bidder were in collusion, or that the CIRP of the Corporate Debtor was impacted by such purported collusion. (vii) That on 22.11.2019, the counsel for Applicant/ L.N. Sharma in IA No.61/2019 file....
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....der: i. That as per the Lease Agreement dated 09.05.2007, the Tenure of Lease is for (33) years commencing from the Appointed Date. Further it is submitted that as per clause 2.6 (Renewal) of Lease Agreement dated 09.05.2007 says that after expiry of the Lease tenure, the Lease may be renewed at the absolute discretion of YATC & (PMU) Department on such terms and conditions as maybe determined by the lessor and the lessee shall have the first right of refusal for the revised terms & conditions. As such, the term of present lease agreement will expire in the year 2041 and the decision on entering into lease agreement for a further period will be decided by the GoT at that time. Hence, there is no possibility of extending the present lease up to 2074 as proposed by the resolution applicant. ii. The obligation of the Resolution Applicant to implement the Resolution Plan as detailed in Clause 6 shall commence immediately from the NCLT Approval Date subject to completion, or waiver by the Resolution Applicant, of the following condition, i.e. receipt of the written consent of the Department of Youth Advancement, Tourism and Culture of the Government of Andhra Pradesh (....
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....r of GJHPL. EIH Ltd. should fulfill the requirements of Section 29A (j) of the IBC. The hurdle posed by Section 29A (j) of the IBC would have to be overcome by EIH Ltd. as it would be a connected person and will be associated with the Resolution Applicants during the implementation of the Resolution Plan. It is a fact that Corporate Debtor's account has been termed as an NPA and EIH Ltd. holds 16% equity share in Corporate Debtor and therefore, EIH Ltd. by virtue of this attracts the disqualification under Section 29A (c) of the IBC. vi. That as per the Management Agreement Incorporating Technical Assistance Services between the Corporate Debtor and EIH Limited, at Page 494, Article XIV, point no. 3, the operator i.e. EIH Limited shall have the sole power to designate the signatories on such bank accounts. The said point no. 3 is reproduced hereunder: "All bank accounts shall be opened and operated by Operator in the name of the Hotel for and on behalf of Owner, and Operator shall have the sole power to designate the signatories on such bank accounts. vii. That EIH Limited filed CA 73 of 2018 in which it prayed for inter-alia directions to the IRP to ....
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....vency Resolution Process for Corporate Persons)Regulations, 2016. RP's reply to NCC, IRPL and CEC (Operational Creditor) X. That within the group of operational creditors there can be a separate class of creditors who have not supplied any essential services or any goods to the corporate debtor at any point of time but fall under the head "operational creditors" by virtue of operation of law. As per the definition under section 5(20) an operational creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. As there was a legally enforceable development & management agreement (with YATC) and Lease agreements with Shilparamam (SACCS) it partakes the character of lease and the debts which are due become the operational debt by virtue of the agreements entered into with the latter. It is submitted that being the owner of the land the GOT, (through YATC & SACCS) which has given the permission/ approval for the construction of the hotel on the premises and which is or forms part of the substratum of the lease agreements. Therefore to contend that the special operational creditor( YATC & S....
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.... 30(2)(b) of the Code, it is clarified by the amended section 30(2)(b) (notified with effect from 06.08.2019). Thus, so long as the payment and distribution to the creditors under the plan is in compliance of the amended Section 30(2)(b)(i) & (ii), the same has been laid down to be fair and equitable by the statute itself thus, the allegation of the payment and distribution being not fair and equitable is liable to be rejected. xiv. The Resolution Professional stated that the reliefs sought in IA 32/2019 at Page 43 & 44 under Para (vii), (ix) and (x) relating to payment of taxes, waivers from GOT and extension of lease from GOT are not being pressed and therefore, the Applicant craves the leave of this Adjudicating Authority to consider all other reliefs as sought under the Application. xv. Reiterating above, the counsel for the RP prayed to pass an order approving the Resolution Plan. RP's reply to L.N. Sharma/Promoter 32. With regard to the contentions of Applicant in IA No. 61/ 2019, the RP has, inter-alia, submitted as under: a. That since the Resolution Plan was not submitted to the Applicant on the date of approval of the plan by CoC i.e 1....
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....ional had facilitated a detailed discussion on Section 12A. The same has been recorded in the minutes of the 21st CoC dated 25.03.2019. The supreme authority for the settlement under OTS or debt resolution plan is the CoC (JLF) and Resolution Professional is only a facilitator for the process. e. That as per provision under the Code, the Resolution Applicant, M/s. BREP ASIA II INDIAN HOLDINGCO II (NQ) PTE LTD., SINGAPORE is statutorily given a time frame of one year to obtain all the necessary approvals, licenses etc., from the Central Government/State Government, Local Authorities. Further, it is submitted that as per Sub- Section (1) of Section 31, upon the approval of plan by the Adjudicating Authority, the plan shall be binding on all the stakeholders including Central Government, any State Government or any local authority. f. That the reliefs sought in IA 32/2019 at Page 43 & 44 under Para (vii), (ix) and (x) relating to payment of taxes, waivers from GOT and extension of lease from GOT are not being pressed by the Resolution Applicant. g. In so far as the allegation that the payment and distribution amongst the creditors under the plan is not fair ....
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....cipated in both rounds of bidding. Therefore, the contention that they were acting in concert stands defeated. Further, as part of the CIRP, the Resolution Professional has duly verified the contents of both the resolution plans after obtaining the requisite legal opinion and satisfying himself with other statutory formalities relating to the Resolution Plans. j. In response to the allegation of the Applicant that the CoC failed to discuss on the feasibility and viability of the Resolution Plan submitted by the successful Resolution Applicant i.e Blackstone, it is submitted that in the 20th CoC meeting held on 18.12.2018, the CoC members informed that the voting result on the plan will imply the CoC's acceptance or otherwise on the feasibility and viability of the Resolution Plan. That the Hon'ble Supreme Court in K. Shashidhar Vs. Indian Overseas Bank &Otrs in CIVIL APPEAL No. 10673/2018has held at Para 33 as follows: ....... The opinion on the subject matter expressed by them after due deliberations in the CoC meetings through voting, as per voting shares, is a collective business decision. k. Thus, the collective decision on the feasibility and....
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.... member of suspended board (Municipal Corporation of Greater Mumbai Vs Abhilash Lal & Ors in Civil Appeal No.6350/2019 are not applicable to the present case as the resolution plan approved by NCLT/NCLAT in that case stands on a different footing. In the said case, no lease agreement was even entered and the lease could be entered only upon completion of the Hospital Project and fulfilment of various other conditions especially those relating to treatment of patients belonging to economically weaker sections etc. It is in this factual background and context that the Hon'ble Supreme Court evaluated the overriding effect of section 238 over the relevant provisions of MMC Act. The approved Resolution Plan in the said case contains the clause mortgaging the project land which belongs to BMC (Municipal Corporation of Mumbai) which is a third party asset there by seriously impeding the independent rights of a statutory body which is governed by the permissions to be accorded by the government. In the instant case (IA No.32 of 2019) filed by the resolution professional, the resolution applicant has sought to seek the approvals and waivers of the YATC connected with the resolution plan....
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....n Professional. In response to the second EOI two potential Resolution Applicants came forward to submit their Plan. However, only one M/s. BREP ASIA II INDIAN HOLDING CP II (NQ) PTE LTD has submitted its Resolution Plan. 37. That the CoC after carefully considering the Resolution Plan has approved the same with 68.26% voting shares in its e-voting dated 21.12.2018 submitted by the Resolution Applicant i.e., BREP ASIA II INDIAN HOLDING CP II (NQ) PTE LTD and accordingly, RP has filed an Application under section 30 of the Code seeking approval of the Resolution plan by this Adjudicating Authority. 38. In terms of provisions section 30(2)(a) to (f) of the Code, this Adjudicating Authority before approving the resolution plan has to satisfy itself to the compliance of the following points. 39. Section 30(2) of the Code as amended w.e.f. 06.08.2019 enjoins upon the resolution professional to examine each resolution plan received by him/her to confirm that such plan - a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor; b) provides for the payme....
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.... the requirements as referred to in sub- section (2) of Section 30. 43. On perusal of the Resolution Plan, this Adjudicating Authority has observed that the Resolution plan placed for consideration provides for the following: a. The plan provides for payment of the CIRP cost. b. The Resolution Plan is approved by 68.2% of the voting shares of the Financial Creditors/CoC. c. The Successful Resolution Applicant is eligible to submit its Resolution plan in terms of Section 29A of the Code. d. The Liquidation value of the Corporate Debtor is assessed to be INR 458 Cr.(Replacement Cost Method) and INR 448cr (DCF Value Method). The plan provides for a payment of 37% of admitted claim for the secured Financial Creditors (including dissenting Financial Creditors) and also to bring in capital funds to the tune of INR 180 Cr. The table as placed in the Plan is extracted below :- Particulars Amounts (INR Crores) 1. Workmen Liquidation Dues, if any. 2. Employee Liquidation Dues, if any. 3. Liquidation Value of Operational Creditors and Other Creditors, if any. 4. Any other Liquidation Value required to be paid under the Code in priority ....
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....26% of voting share of CoC members subject to receipt of written consent from YATC and Society for change of control and restructuring of Corporate Debtor as contemplated under Section 31(4) of the Code. 44. From the above, this Adjudicating Authority finds that the plan submitted by the RP conforms to the conditions laid down in Section 30(2)(a) to (f) of the Code and hence qualifies for approval by this Adjudicating Authority on the following terms: a. Receipt of the written consent of the Department of Youth Advancement, Tourism and Culture of the Government of Andhra Pradesh ("YATC") and of Shilparamam Arts, Crafts and Cultural Society ("Society", and together with YATC, "GoT") for change of control and restructuring of the Company ("Condition Precedent"). b. The Resolution Applicant shall make all efforts as may be commercially reasonable to procure the satisfaction of the Condition Precedent as soon as practicable following the issuance of the LOI, and in any case within 1 (one) year of the NCLT Approval Date. c. In the event of satisfaction / or waiver of the Condition Precedent the Resolution Applicant will within 10 days thereof notify the Res....
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...., extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code; (h) has executed an enforceable guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code; (i) has been subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or (j) has a connected person not eligible under clauses (a) to (i). Explanation. - For the purposes of this clause, the expression "connected person" means- (i) any person who is the promoter or in the management or control of the resolution applicant; or (ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan; or (iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii): Provided that nothing in clause (iii) of this Explanation shall apply to- ....
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....Agreements. The Arbitral Tribunal have only given an interim award for maintaining status quo of respective rights of parties because of which EIH has been continuing as an operator of the Hotel. Nobody can predict the outcome of the arbitration proceedings which will be available only after the approval of the proposed Resolution Plan and cessation of the Moratorium imposed U/s.14 of the Code. Therefore, it will not be proper for this Adjudicating Authority to decide this issue at this juncture, as the same will be nothing but pre- empting the Final Award in the arbitration proceedings. 51. This also brings us to prayer (xi) sought in IA No.32/2019. Since the Management Agreements are subject to the Final Award of the Arbitral Tribunal, we do not find it proper to adjudicate on this issue either. 52. In their Additional Written Submissions filed on 06.12.2019, M/s. EIH Limited have contended that the Hon'ble Supreme Court's Judgement in Essar Steels does not cause any impediment in consideration of the Applications made by EIH Limited, as it would not amount to a modification of the Resolution Plan as the Resolution Plan is premised on continuation of EIH as the oper....
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....f the erstwhile promoter i.e., Mr. L.N. Sharma that the OTS proposal submitted by him was not considered, though he has offered to pay a sum of Rs. 430 Crores to the Financial Creditors as against the instant Resolution Plan which provides for payment of Rs. 342 Crores to the Financial Creditors, this Adjudicating Authority is of the considered opinion that once the CIRP is initiated the Code provides for settlement between the parties in terms of Section 12A of the Code, provided a consensus is arrived between the parties in this regard and the proposal U/s.12A is submitted with the approval of 90% voting share of CoC members. It is pertinent to note that the amounts advanced by the Financial Creditors to the Corporate Debtor are contractual in nature and, therefore, this Adjudicating Authority cannot compel the Financial Creditors to consider the OTS submitted by Mr. L.N. Sharma. 57. The erstwhile promoter has further alleged that the plan suffers from infirmities inasmuch as it does not treat all the Operational Creditors on equal footing and that the Resolution Plan is contrary to the provisions of IB Code,2016. As regards the contention that the Plan gives preferential trea....
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....ending adjudication between YATC and the CD for the alleged breach of contract between them. This Adjudicating Authority, therefore, understands the decision of the CoC to pay out the dues of YATC and the Society more so because they are the lessors of the land in which the business of the CD is being carried out. If in case, YATC and the Society are made to stand along with the Applicants in the above said IA's then YATC and Society are bound to receive no amounts in terms of the Resolution Plan which would result in multiplicity of proceedings bringing into halt of the operations of the Corporate Debtor which would be detrimental to the interest of all the stakeholders of the Corporate Debtor. The members of CoC in their wisdom have taken a commercial decision to pay out the dues of YATC and Society being payment to the Government with a motive to sustain the business operations of the Corporate Debtor. It has been clarified by Hon'ble NCLAT in the case of Jindal vs DCM [CA(I) AT 288/2017] that the relationship of landlord and Lessee is not that of 'Operational Creditor' and 'Operational Debtor'. In the event of considering YATC and Society at par with oth....
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....29A of the IB Code, 2016. 68. The Plan also provides for keeping the Company as a going concern and operate in its normal course of business upon implementation of Resolution Plan. There is no objection filed by any other person in this regard. 69. Copy of Form-H (Compliance Certificate) filed by the RP along with the Plan has been perused and considered. The RP inter alia has certified as under: i. The said Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force. ii. The Resolution Applicant BREP ASIA II INDIAN HOLDING CO II (NQ) PTE LTD has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit resolution plan. The contents of the said affidavit are in order. iii. The said Resolution Plan has been approved by the CoC in accordance with the provisions of the Code and the CIRP Regulations made thereunder. The Resoluti....
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....f the said judgment, Hon'ble Apex Court has observed as under: Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and section 32 read with section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Shashidhar (supra). 75. In view of the discussions in the foregoing paragraphs, the Resolution Plan' filed with the Application meets the requirements of Section 30(2) of the I&B Code, 2016 and Regulations 37, 38, 38(1A) and 39 (4) of IBBI (CIRP) Regulations, 2016. The 'Resolution Plan' is also not in contravention of any of the provisions of Section 29A. Further the prayers (vii), (ix) and (x) regarding concessions in respect of payment of taxes, waivers from Government of Telangana and extension of Lease have been dropped by the Resolution Applicant. Hence, this Adjudicating Authority is satisfied that the Resolution Plan is in accordance with L....