TaxTMI 
TaxTMI 
2023 (8) TMI 1694
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....nfrastructure Limited Versus Rajneesh Sharma, Administrator of SREI Infrastructure Limited. And Authum Investment and Infrastructure Limited. Versus Rajneesh Sharma, Administrator of SREI Infrastructure Limited. And Abhilasha Bothra, Manoj Kumar Bothra Versus Rajneesh Sharma, Administrator of SREI Equipment Finance Limited and SREI Infrastructure Finance Limited, National Asset Reconstruction Company Limited, VFSI Holdings Pte, Ltd., Arena Investors, Authum Investment & Infrastructure Ltd., Canara Bank, Union Bank of India, Punjab National Bank, State Bank of India, Bank of Baroda, Indian Bank, Punjab and Sind Bank, Central Bank of India, UCO Bank, Bank of India, Indian Overseas Bank DBS Bank India Limited., Small Industries Development Bank of India (SIDBI), Standard Chartered Bank, Aozora Bank, Axis Bank Limited., Axis Trustee Services Limited., Bank of Ceylon, Bank of Maharashtra, Belgian Investment Company for developing countries SA/NA-Bio Boulevard Bischoffsheimlaan, Catalyst Trusteeship Limited., DEG - Deutsche Investitions und Entwicklungsgesellchaft mbH Kammergasse, Dhanlaxmi Bank Ltd, Export Import Bank of United States, Finnish Fund for Industrial Cooperation Ltd. (FINNF....
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....A. (IB) No. 464/KB/2023 : Mr. Vikram Nankani, Senior Advocate, Mr. Shadab S Jan, Advocate, Mr. R. Upadhyay, Advocate In I.A.(IB) No. 428/KB/2023 and I.A. (IB) No. 434/KB/2023 : Mr. Krishnendu Datta, Advocate, Mr. Saurav Panda, Advocate, Mr. Deepanjan Dutta Roy, Advocate, Ms. Arushi Chandra, Advocate, Ms. Rashi Sharma, Advocate, Ms. Sanjana Jha, Advocate COMMON ORDER Per: Rohit Kapoor, Member (Judicial) and Balraj Joshi, Member (Technical) Preliminary 1. This Court convened through hybrid mode. 2. I.A.(IB) No. 389/KB/2023, I.A.(IB) No. 535/KB/2023, IVN.P.(IB) No. 8/KB/2023, I.A. (IB) No. 428/KB/2023 in C.P.(IB) No. 294/KB/2021 along with I.A.(IB) No. 1692/KB/2022, I.A.(IB) No. 391/KB/2023, I.A.(IB) No. 532/KB/2023, IVN.P. (IB) No. 2/KB/2023, IVN.P. (IB) No. 9/KB/2023, I.A.(IB) No. 413/KB/2023, I.A. (IB) No. 464/KB/2023, I.A. (IB) No.557/KB/2023, I.A. (IB) No. 434/KB/2023 and I.A. (IB) No. 392/BK/2023 in C.P. (IB) No. 295/KB/2021 are being decided vide a common order. I.A.(I.B.C.) No.1692/KB/2022 3. The averments contained in this IA are summarized hereinafter ;- i. The Applicant i.e. Manoj Kumar Gupta is the shareholder holding approximately 1080 pai....
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.....e.f. 1st October, 2019. The essential ingredients of admission of application under Section 7 "existence of debt" is not present in the instant case. viii. The date of default is within the period of moratorium imposed under Section 10A of IBC, therefore, this Adjudicating Authority had no jurisdiction to admit the petition of RBI. There was no debt and there could not have been any default. There is a jurisdictional error committed by Adjudicating Authority in admitting this petition. ix. This Adjudicating Authority is not required to travel beyond the record to see whether order dated 8th of October, 2021 is correct or not. Applicant has not preferred any appeal against order dated 8th of October, 2021 passed by this Adjudicating Authority and is filing this instant petition in pursuant to order dated 12th of December, 2022 passed by Hon'ble Supreme Court of India. Applicant being a shareholder of Corporate Debtor will be prejudiced, if SIFL is taken into insolvency despite there being no debt or default. x. The reliefs claimed by the Applicant in the present IA are as follows: a. An order and/or orders recalling the order dated 8th Octobe....
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....cation for Financial Creditor under Section 7 of IBC, 2016. The Applicant also submitted that as has been held by the Supreme Court of India in Swiss Ribbons -vs- Union of India,[ 2019) 4 SCC 17 at para 58] an opportunity was required to be given to the Corporate Debtor to file a reply to Company Petition under Section 7. In view of order passed by the Hon'ble High Court at Calcutta, RBI could not have initiated CIRP against SIFL and SEFL. Applicant had filed an appeal under Section 61 of IBC in November, 2021 from the order of admission dated 8th October, 2021. There were defects in filing and delay in refiling the same. The delay was not condoned and the appeal was not considered on merits by the Appellate Tribunal. iv. Applicant aggrieved thereafter filed an appeal before the Hon'ble Supreme Court of India which came to be dismissed on 30th of January, 2023.[Annexure-D, Pg. 75-91; Annexure E, Pg. 92-93 in I.A(I.B) 389/KB/2023] v. In the present application, the following reliefs have been sought by the Applicant: a) An order be passed rectifying the mistake apparent from the records in the order dated 8th October 2021 passed by this Hon'ble Tri....
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....ollusion between the Administrator and RBI. The administrator appointed by RBI did not contest the petition. The order of admission is bad on the face of it. Applicant seeks recalling and/or setting aside of order dated 8th of October, 2021 and all proceedings till the disposal of this application. I.A. (I.B.C) No. 391/KB/2023 6. This IA has been filed by Adisri Commercial Private Limited on identical grounds as in IA (I.B.C) 389/KB/of 2023 referred hereinabove seeking an order to rectify the mistake apparent from records in order dated 8th October 2021 passed by this Tribunal in C.P (IB) 295/KB/2021 (Reserve Bank of India v. SREI Infrastructure Finance Limited). The following reliefs are sought for by the Applicant: a. "An order be passed rectifying the mistake apparent from the records in the order dated 8th October 2021 passed by this Hon'ble Tribunal in C. P. (IB) No. 294/KB/2021 and thereby recalling the same and quashing the Corporate Insolvency Resolution Process initiated in respect of the SREI Infrastructure Finance Ltd b. Stay of Corporate Insolvency Resolution Process of SREI Infrastructure Finance Ltd till the adjudication of this instant app....
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....old a meeting of creditors to vote on the scheme and restrained creditors and all governmental or regulatory authorities from taking any coercive steps having the potential to prejudice the status of account of the Company; iii. The scheme was rejected and the sale under the BTA did not fructify; iv. Pending the final decision, status quo has been maintained qua the BTA by both SIFL and SEFL; v. Once CIRP of SIFL commenced, the Administrator's application for withdrawal of the scheme was allowed by this Hon'ble Tribunal in the Company Petition on February 11, 2022. 9.4. As noted in the Annual Returns for FY 2021-22, the Administrator had mentioned that- "In accordance with the obligations imposed on the Administrator under Section 18 (f) of the Code, the Administrator has taken custody and control of the Company with the financial position as recorded in the balance sheet as on insolvency commencement date on an "as-is where-is" basis. The accounts for the quarter and year ended March 31, 2022 have been taken on record by the Administrator in the manner and form in which it existed on the insolvency commencement date in view of the ini....
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.... emails to the Administrator, on November 30, 2021 and May 14, 2022, after the commencement of CIRP. These emails have been suppressed by the Applicant with mala fide intention, in all proceedings and pleadings across fora. In the email dated November 30, 2021 the Applicant has attached an unsigned letter wherein he inter alia objected to the appointment of Ernst and Young as the process advisors to SIFL and SEFL in November 2021. The aforementioned letter also references a news article dated November 3, 2021, published on the website of the Economic Times, which clearly highlights the commencement of CIRP in SIFL and SEFL. By way of the email dated May 14, 2022, the Applicant has attached an unsigned letter wherein he inter alia requests for a copy of a letter from RBI to the lenders of SIFL and SEFL. Here again, he references a news article dated May 3, 2022, published on the website of the Economic Times, which clearly highlights the commencement of CIRP in SIFL and SEFL. This clearly demonstrates that the Applicant was aware of CIRP being initiated in SIFL as far back as November 2021. Not only has the Applicant suppressed this information, but also has made blatantly dishonest....
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....It is noteworthy to mention that the Appeal filed by majority shareholder i.e. Adisri Commercial Private Limited was dismissed by the Hon'ble NCLAT on 21.12.2022 and subsequently by the Hon'ble Supreme Court on 30th of January, 2023. The Applicant i.e. Manoj Kumar Gupta is trying to circumvent thirty days limitation period in the guise of this application seeking recalling and / rectification. 10.7. The Applicants have not come with clean hands and there is an inordinate delay in challenging admission order which otherwise is not permissible in the present proceedings. A person cannot be permitted to approach at his own leisure or pleasure. Applicants are engaged in forum shopping and are only interested in derailing the CIRP process of Corporate Debtor. They do not have any bona fide interest except to derail the entire process of CIRP. 10.8. There is no mistake or error apparent on the face of record as contended by the applicant and, therefore, this Tribunal does not have any reason or power to correct the same. Order of admission has been passed strictly in conformity with law and there is no violation as alleged. There is no violation of principles of natural jus....
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....er 25 March 2020 for a minimum period of six months which may be extended to a year by notification The Central Government has vide notifications S.O. 3265(E) and S.O. 4638(E) dated 24 September 2020 and 22 December 2020 respectively extended the application of the provision contained in Section 10A of the IBC for a further period of 6 months from 25 September 2020, till 24 March 2021. Therefore, no application for initiation of corporate insolvency resolution process against any default arising between the period 25 March 2020 and 24 March 2021 could have been filed. 4. As it appears from a bare perusal of the Impugned Order, the Impugned Order has been passed on the basis of the recorded dates of default being, the purported date of delay of interest payment in respect of the working capital facility being 1 February 2021 and the purported date of default in respect of the principal amount being 9 January 2021 In accordance with the provisions of Section 10A of the IBC. no application under the IBC could have been admitted on the basis of any default arising on the admitted purported dates of default and therefore, the Impugned Order deserves to be set aside. 5.....
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....ce and in violation of the mandatory directions given by the Hon'ble Supreme Court of India in M/s. Innoventive Industries Limited vs. ICICI Bank and Anr. (Civil Appeal No. 8337-8338 of 2017) [2018 1 SCC 407] as well as by this Hon'ble Appellate Tribunal in M/s. Innoventive Industries Limited vs. ICICI Bank Limited (Company Appeal (AT) (Insolvency) No. 1-2 of 2017) [2017 SCC OnLine NCLAT 70], In Company Appeal (AT) (Insolvency) No. 1-2 of 2017 this. Hon'ble Appellate Tribunal was pleased to hold that the National Company Law Tribunal being the Adjudicating Authority is bound to issue only a limited notice to the corporate debtor before admitting a case under Section 7 uf the IBC. It is an admitted position in the instant case at hand as would be evident from the Impugned Order that no notice whatsoever was issued by the Hon'ble Adjudicating Authority upon the Corporate Debtor before filing the Application under Section 7 of IBC by the Respondent No. 1. 8. The Supreme Court in its decision of Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminium Industries Private Limited & Anr (Civil Appeal No. 6347 of 2019) at Para 19:2 held that after completion of all other....
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....on'ble Adjudicating Authority on the same day in the afternoon and the Impugned Order was passed in breach of the principles of natural justice as well as without complying with the directive and/or observations laid down in the judgment passed by the Hon'ble Appellate Tribunal in Innoventive Industries Limited vs. ICICI Bank Limited as the Hon bi Adjudicating Authority admittedly failed to issue a limited notice to the Corporate Debtor before admitting the application under Section 7 of IBC. 11. The Respondent No. 2 Company is a non-banking financial company and is a financial service provider falling within the ambit of Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (hereinafter referred to as the "FSP Rules 2019"). As the per the PSP Rules 2019, any application filed by Reserve Bank of India would be treated as an application under Section 7 of IBC and thus principles laid down in the judgment passed by the Hon'ble Appellate Tribunal in Innoventive Industries Limited us. ICICI Bank Limited of giving a limited notice to the Corporate Debtor before admissio....
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.... Application filed by the Respondent No. 1, it would have been demonstrated to the Hon'ble Adjudicating Authority that there exists no default to trigger any corporate insolvency resolution process against the Respondent No. 2 Company. 15. Hence this present appeal."[Pg.33-40 of the Administrator's Reply in I.A.(I.B.C.) No.389/KB/2023] 10.14. The Administrator has also referred to the Civil Appeal preferred by Adisri Commercial Private Limited which was filed against the judgment passed by the Hon'ble NCLAT on 21.12.2022. It is also contended that the issue raised and the grounds taken in the Civil Appeal are identical to those taken in appeal before the Hon'ble NCLAT. The prayers in the said Civil Appeal are stated as hereunder: " In the aforesaid circumstances it is most respectfully prayed that the Hon'ble Court may graciously pleased to: a. Allow and admit the present Civil Appeal and set aside the Impugned final Judgment and Order dated 21st December, 2022 passed by the Hon'ble National Company Law Appellate Tribunal, Principal Bench at New Delhi in Company Appeal (AT) 9Insolvency) No. 1293 of 2022; b. Pass any further....
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.... Hon'ble Supreme Court in Civil Appeal No. 473 of 2023 ("SC Appeal") by way of order dated 30 January 2023. 26. It is pertinent to highlight that the submissions made in SC Appeal make it abundantly clear that the Applicant has already raised the same issues in respect of the Admission Order before the Hon'ble Supreme Court and despite that, the Hon'ble Supreme Court has rightly dismissed the appeal filed by the Applicant against the dismissal order of the Hon'ble NCLAT in respect of the Admission Order. With the dismissal of the challenge by the Hon'ble Supreme Court, the Admission Order has already attained finality and the Applicant is barred from now raising the same issues before this Hon'ble Tribunal. Issue (II) at Page No. 18 of the SC Appeal: "Whether the Ld. NCLT could have passed the order dated 8 October 2021 for initiation of CIRP against a purported default which has occurred within the period of time specified in Section 10A of the IBC in view of the decisions of this Hon'ble Court in Ramesh Kymal vs Siemens Gamesa Renewable Power Private Limited (2021)3SCC 224" Grounds at O, P and Q at Page No. 50 of the SC Appea....
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....urisdiction to recall its own order. It is submitted that the proceedings before the Hon'ble Tribunal are summary in nature and no power of 'review' or 'recall' is vested with this Hon'ble Tribunal. 21. It is submitted that there is no express provision in the Code that allows the Hon'ble Tribunal to recall its own order. It is submitted that in Anant Kajare v. Eknath Aher and Anr., 2017 SCC Online 434, the Hon'ble NCLAT held that in the absence of any power of review or recall vested in the Hon'ble NCLT, the Hon'ble NCLT had rightly refused to recall its own order. 22. It is further submitted that in Agarwal Coal Corporation Pvt. Ltd. v. Sun Paper Mill Ltd., I.A. 265/2019 in Company Appeal (AT) (Ins) 412/2019, the Hon'ble NCLAT has upheld that: "27. It is the well laid down proposition of law that 'in the absence of any power of 'Review' or 'Recall' vested with the 'Adjudicating Authority' - 'Appellate Authority', an order/ judgment passed by it cannot be either Reviewed or Recall as opined by this Tribunal. 31. It cannot be gainsaid that there is no express provisio....
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....n the best interest of all stakeholders should have rather been supported by the Applicant, being a shareholder. It is evident by the conduct of the Applicant that he is approaching the Hon'ble NCLT with unclean hands and has no locus standi to pursue this application."[Pg.31-32 of IVN.P. No.8/KB/2023] 11.3. IVN.P. No. 9/KB/2023 has been filed on behalf of UCO Bank acting on behalf of the Consolidated Committee of Creditors to intervene in I.A.(I.B.C)No. 391/KB/2023 which was filed by the Applicant namely Adisri Commercial Private Limited in C.P.(I.B.) No. 295/KB/2021. 12. Submissions by the Ld. Senior Counsel appearing on behalf of the Applicant in I.A.(I.B.C) No. 1692/KB/2022 are summarized as hereunder: 12.1.The Ld .Senior Counsel appearing for the Applicant i.e., Manoj Kumar Gupta submitted that there is no delay in filing the application as the limitation to file an application under Section 420(2) of the Companies Act is two years from the date of the impugned order. The contention of the respondents that the applicant is now approaching this Hon'ble Tribunal after a delay of one year is thus not tenable in view of section 420(2) of the Companies Act. The App....
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....ld that "a patent, manifest and self evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the fact of record and can be corrected". 12.5.Further, a judgment was referred wherein the Hon'ble National Company Law Appellate Tribunal ["NCLAT"] also in catena of judgements, more particularly in Santosh Basant Yalocar v. Vijay Kumar Aiyar (being Company Appeal (AT) (Insolvency) No. 871-872 of 2019 - judgement dated 24.01.2020) has also acknowledged and affirmed the powers of this Hon'ble Adjudicating Authority under section 420(2) to recall or rectify its orders when there is an error apparent on the face of record. 12.6. The Applicant places reliance on the judgment of the Hon'ble NCLAT in Radius Infratel Private Limited versus Union Bank of India [Company Appeal (AT) (Insolvency) No. 535 of 2018, Order dated 13.11.2018, para 6] ; In this judgement, liberty was given by Hon'ble NCLAT to a shareholder/director of the Corporate Debtor to move an appeal challenging the order of admission. 12.7. It also stated that, a shareholder of a Corporate Debtor is a stakeholder and is entitle....
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....ble Supreme Court in Ramesh Kymal v. Siemens Gamesa Renewable Power Private Limited (2021) 3 SCC 224 (Paragraphs 8, 9, 11, 18, 19, 21, 22, 24, 25, 27 and 28). The Supreme Court in Paragraphs 18, 19, 24, 27 and 28 of Ramesh Kymal has held that : "no application shall ever be filed" for the initiation of the CIRP of a corporate debtor for a default occurring during the prohibited period mentioned under Section 10A of IBC, 2016. The Hon'ble Supreme Court has further held that "The expression "shall ever be filed" is a clear indicator that the intent of the legislature is to bar the institution of any application for the commencement of the CIRP in respect of a default which has occurred on or after 25-3-2020 for a period of six months, extendable up to one year as notified. The Explanation which has been introduced to remove doubts places the matter beyond doubt by clarifying that the statutory provision shall not apply to any default before 25-3-2020." 12.13. In Electroparts (India) Private Limited v. Videocon Infinity Infrastructure Private Limited (IA No. 907/KB/2021 in CP No 140/KB/2021 - Judgment dated 18.07.2022) - this Hon'ble Adjudicating Authority presided by J. Ro....
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....ic financial institutions/banks were transferred to SREI Equipment Finance Limited. Thus, despite having no debt, UCO Bank in collusion and connivance with RBI and in collusion and connivance with the Administrator and the erstwhile promoters of SIFL has initiated the insolvency proceedings fraudulently and with malicious intent for any purpose other than resolution of insolvency as in the present case SIFL did not have any debt towards UCO Bank or any other public sector banks since October, 2019, a fact which has also now been affirmed and acknowledged by the Respondent No. 2 Administrator. The Respondent No. 2 i.e., the Administrator as well as RBI is thus estopped from contending that there is debt and thus insolvency proceedings should continue. 12.16. The said admission order dated 8th October, 2021, was obtained through misrepresentation of facts and/or collusion and/or fraud, in making such order a nullity and non-est. The Administrator appointed by RBI had superseded the presently suspended Board of Directors of SIFL even before the application filed by RBI for commencement of CIRP against SIFL was filed. The Administrator was in management and control of SIFL on 8th Oc....
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....d by the administrator to larger bench as there was a subsequent judgment of NCLAT holding that NCLT has power to recall its orders. ii. Rajendra Mulchand Varma and others versus K.L.J. Resources Limited and another - NCLAT judgment cited by the Administrator has also been referred to a larger bench along with Agarwal Coal Corporation and the same does not hold good anymore. Judgment relied upon by the administrator of NCLT Ahmedabad in Alliance Industries Limited versus People General Hospital Private Limited also does not hold the field any more because of the subsequent and recent 3-member bench decision of NCLAT in Kushal Limited. Further, the judgment also speaks about patent error which is manifest and self-evident in paragraph 16. Thus the reliance of the Administrator on the Adish Jain NCLAT judgment is also misconceived. iii. The judgment relied upon by the Administrator in Kunhayammed and others versus State of Kerala, Supreme Court, on the issue of doctrine of merger is not applicable on the facts of this case as in this case the appeal filed before the NCLAT and before the Hon'ble Supreme Court of India by separate shareholder was dismissed on the ....
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....gations. In the instant case, RBI moved an application for initiation of CIRP on 8 October 2021 and the administrator appointed by the RBI did not contest the said application and the entire process was RBI v. RBI which led to violation of principles of natural justice. 13.4.The Applicant also submitted that this Adjudicating Authority has the power to recall its order. They placed reliance on judgments in Kushal Limited v. CoC of Rainbow Papers Limited (Company Appeal (AT) (Insolvency) No. 678 - 681 of 2022 (3 member bench of NCLAT) and judgement dated 21.07.2022 - Page 32, 33 and 36 of the judgment), Santosh Wasantrao Walokar v. Vijay Kumar V. Iyer, Resolution Professional, Murli Industries Limited and another C.A. (AT) (Insolvency) No. 871-872 of 2019 judgment dated 24.01.2020 paragraph 41, page 7, read with paragraph 30 iv. At page 25 to 26. Another important judgment referred is Union Bank of India (erstwhile Corporation Bank) v. Dinkar T. Venkatasubramanian & Others [Company Appeal (AT) (Insolvency) No. 729 of 2020], in which a five judge bench of the Hon'ble National Company Law Appellate Tribunal, New Delhi has held that this Tribunal can entertain an application for....
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....nterim orders passed by NCLT, Kolkata Bench as well as by the Hon'ble Calcutta High Court. While placing the above arguments they have placed reliance on the order dated 21 October 2020 [Page 32 of I.A.(IBC) 389 of 2023] passed in CA (CAA) No. 1106/KB/2020 wherein NCLT Kolkata Bench directed the creditors of Srei Infrastructure Finance Limited ("SIFL") and Srei Equipment Finance Limited ("SEFL") to maintain status quo from the said date and not to classify loan account as NPA and were estopped from taking any coercive steps including reporting any form and/or changing in the status of SEFL. They further relied upon the interim order passed on 10 December 2020 by the Hon'ble High Court at Calcutta restraining RBI from taking any coercive action against NBFC's. 13.11. The Applicant submitted that the Adjudicating Authority can only consider the pleading of the RBI and nothing beyond it. They placed reliance on the judgment in Babulal Vardharji Gurjar versus Veer Gurjar Aluminium Industries Private Limited and another passed by the Hon'ble Supreme Court. [(2020) 15 SCC 1 (Paragraph 35, 35.1)] 14. Submissions made by the Ld. Senior Counsel appearing on behalf of t....
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....T Ahmedabad), IA 259 of 2017 in IA 16 of 2016 in CP No. TP 120 of 2016, Para 14-16, 24, 29] d. Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji; [(1971) 3 SCC 844, Para 4] e. Printland Digital (India) (P) Ltd. v. Nirmal Trading Co; [2022 SCC OnLine NCLAT 297, Para 7] f. Budhia Swain v. Gopinath Deb; [(1999) 4 SCC 396, Para 8-9] g. K.L.J. Resources Ltd. v. Rajendra Mulchand Varma; [2022 SCC OnLine NCLAT 402, Para 13] h. Kapra Mazdoor Ekta Union v. Birla Cotton Spg. and Wvg. Mills Ltd. [(2005) 13 SCC 777, Para 17, 19-20] 14.7.The inherent power of this Adjudicating Authority under Rule 11 of the NCLT Rules is limited to pass such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of Tribunal. In the present case the Applicants have engaged in forum shopping and they were at all times aware of the admission orders and also about the key events in respect of CIRP of SIFL and SEFL which in itself is an abuse of the process of law. 14.8.It was submitted that filing of the recall application at this belated stage of CIRP are prejudicial to the CIRP and the Hon'ble Tribunal ought not to....
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....nt, none of the parameters set out for recall of a judgment i.e. any procedural infirmity or fraud, as specified in Union Bank v. Dinkar (supra) dated February 9, 2023 have been satisfied in the present IAs. Also it is pertinent to note that the aforesaid judgment is only concerned with the power of recall of the NCLAT and not the NCLT. 14.13. Also the judgment in Kiran Singh & Ors. Vs. Chaman Prasad & Ors. [(1955) 1 SCR 117] would not assist the Applicants as in the said judgment it is the appellate court and not the original court that declared the order a nullity. Therefore their contention that the Admission Orders were fundamentally without jurisdiction, and therefore, are a nullity; and that therefore this Hon'ble Tribunal has the power to recall the Admission Orders is not maintainable. 14.14. It was submitted that even if the Hon'ble Appellate Tribunal and Hon'ble Supreme Court dismissed the Appeals on limitation, the same would still operate as res judicata against the Applicants, in view of Explanation V of Section 11 of the CPC. This is because, the result of the dismissal of the Appeals by the Hon'ble NCLAT and Hon'ble Supreme Court is that the....
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....SCR 876, Para 7] where the Hon'ble Supreme Court has settled the principle that a company is a separate juristic entity from its shareholders; in ICP Investments (Mauritius) Ltd. v. Uppal Housing Pvt. Ltd.,[2019 SCC OnLine Del 10604, Para 18-26] where the Hon'ble Delhi High Court has held that once a company is admitted into CIRP, shareholders may no longer maintain a derivative action in the company's name; in Darius Rutton Kavasmaneck v. Gharda Chemicals Ltd.,[2014 SCC OnLine Bom 1851, Para 25] where the Hon'ble Bombay High Court has held that a shareholder filing a derivative action must have clean hands, must not be competing with the interests of the company, or have an alternate remedy. 14.18. He further submitted that a shareholder cannot be considered as a stakeholder for the purpose of admission of CIRP. Sections 31 and 59 of the IBC only deal with resolution plan and liquidation. The stakeholders' right is not applicable at the admission stage; else, every shareholder would be knocking this Adjudicating Authority's door filing frivolous applications hindering the CIRP process. 14.19. It was submitted that the applicants have approached this A....
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....A 389 / 2023, Para 9(a)-(b), Pg. 9 r/w Annexure C @ Pg. 32 - 63] which were set aside by the NCLAT in an appeal by way of orders dated September 7, 2021 and February 11, 2022, respectively. 14.23. The Applicant namely Adisri Commercial Pvt Ltd has also stated that the Hon'ble High Court of Calcutta has by way of an order dated December 10, 2020, granted a similar prayer to the petitioner in the matter of Hire Purchase & Lease Association and Anr. v. Reserve Bank of India and Ors. (W.P.A 9255 of 2020).[IA 391 / 2023 - Para 11(c) @ Pg. 10 r/w Annexure D @ Pg. Nos. 283 - 293; and IA 391 / 2023 - Para 9(c) @ Pg. 10 r/w Annexure C @ Pg. Nos. 64 - 74] In the said Writ Petition, the Hon'ble Court having acknowledged the plight of the NBFCs caused due to the discriminatory approach of the RBI's circulars dated June 7, 2019 read with RBI circular dated August 6, 2018, was pleased to restrain the RBI from taking any coercive steps against the petitioner NBFCs in that case. SIFL and SEFL do not appear to be a party to that case, and so the interim order would not apply to them. It is also pertinent to mention that the said order was only to extend till April 8, 2021. [IA 391 / ....
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....15.4.As per the proviso to Section 420 of the Companies Act, 2013 ("CA 2013"), once the appeals have been preferred, no application is maintainable under Section 420 of the CA 2013. Since the Admission Order is in rem, and limitation has expired, the bars on maintainability would apply even to the Applicants herein. 15.5.It was submitted that the Applicants have approached the Tribunal with unclean hands as they were aware of the ongoing CIRP of SEFL and SIFL, hence they cannot approach this Tribunal at this belated stage. The Applicants have engaged in forum shopping and have always attempted the gross abuse of the process of law. The Appeals were dismissed and the Applicant namely Adisri Commercial Private Limited took the same grounds in the Appeals as taken in the present IAs, res judicata would apply in view of Explanation V to Section 11 of the Code of Civil Procedure, 1908. 15.6.The Company Petition was not barred under Section 10A IBC as the dates of default mentioned in the petition are the first date of default. The default committed by SEFL and SIFL is a continuing one which is recorded in the order of admission as well. [Pg. 48 in IA 1692/2022] Where there are def....
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....tta granted a similar prayer to the petitioner in the matter of Hire Purchase & Lease Association and Anr. v. Reserve Bank of India and Ors. (W.P.A 9255 of 2020). The Applicants have stated that in the said Writ Petition, the Hon'ble Court having acknowledged the plight of the NBFCs caused due to the discriminatory approach of the RBI's circulars dated June 7, 2019, read with RBI circular dated August 6, 2018, was pleased to restrain RBI from taking any coercive steps against the petitioner NBFCs in that case. But SIFL and SEFL do not appear to be a party to that case, and so the interim order would not apply to them. Also, upon perusal of the orders it is clear that the aforesaid orders were only extended till April 8, 2021 and did not remain in effect as wrongfully alleged by Adisri until October 4, 2021. All the orders cited by the Applicants are only restrictive of coercive steps. CIRP is not a coercive step, it is for the benefit of a corporate debtor. These orders were limited only to classification and recovery actions and cannot be so over broadly extended to apply to restricting CIRP. 15.11. It is also argued while opposing these applications, order of admission....
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.... the threshold basis the doctrine of laches. 16.4.Applicants' reliance on Section 420 of the Companies Act is inapplicable. Section 420(1) of the Companies Act only the "parties to any proceedings" have to be provided with a "reasonable opportunity of being heard". In an application filed under Section 7 of the Code read with Section 227 and Rule 5 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 ("FSP Rules"), the relevant parties are only the corporate debtor and the financial sector regulator. The Applicant is a mere shareholder of SIFL and accordingly, was neither a necessary nor proper party for the said proceedings. Therefore, the Applicant had no locus of being heard before this Adjudicating Authority passed the Admission Order. 16.5.Proviso to Section 420(2) stipulates that amendments cannot be made in respect of an order against which an appeal has been preferred. In the instant factual matrix, on 19 November 2021, the Applicant had filed appeals under Section 61 of the Code against the Admission Order bearing CA(AT)(Ins.) No. 1293 of 2022 and and CA(A....
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....f applicants, shareholders of Companies under CIRP to file these IAs, we refer to plea of the applicants herein after: (a) A shareholder of a Corporate Debtor is a stakeholder and is entitled to distribution under a resolution plan as provided for under Section 30 read with Section 53 of IBC, 2016, any resolution plan approved in respect of the Corporate Debtor under Section 31 of IBC, 2016 would also be binding on the shareholder and as such shareholders have locus standi to challenge the order of admission, (b) Thus, applicants are vitally interested the affairs of the companies under CIRP and are affected by order of admission passed by this AA; we seek aid of law laid down by the Hon'ble Supreme Court of India in Bacha F. Guzdar, Bombay v. Commissioner of Income Tax, Bombay [Civil Appeal No. 104 of 1954, decided on October 28, 1954 (1955) 1 SCR 876 : AIR 1955 SC]: " It was argued by Mr Kolah on the strength of an observation madeby Lord Anderson in Commissioners of Inland Revenue v. Forrest that an investor buys in the first place a share of the assets of the industrial concern proportionate to the number of shares he has purchased andalso buys....
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....and astray observation in a case which has no bearing upon the presentquestion does not advance the solution of the question. There is nothing in the Indian law to warrant the assumption that a shareholder who buys shares buys any interest in the property of the company which is a juristic person entirely distinct from the shareholders. Thetrue position of a shareholder is that on buying shares an investorbecomes entitled to participate in the profits of the company in whichhe holds the shares if and when the company declares, subject to the Articles of Association, that the profits or any portion thereof should be distributed by way of dividends among the shareholders. He has undoubtedly a further right to participate in the assets of the company which would be left over after winding up but not in the assets as a whole as Lord Anderson puts it." 20. Further, while considering the issue of right/locus of applicants, we may also refer an order passed by the Hon'ble NCLAT in Company Appeal (AT) (CH) (Ins.) No. 142 of 2022, Nirej Vadakkedathu Paul & amp; Ors Versus Sunstar Hotels and Estates Private Limited [Order dt. February 27, 2023 (NCLAT), IA Nos. 328, 329, 217, and 518 o....
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....arties." Similarly, this 'Appellate Tribunal' also take note of its earlier order, where it has been held that an investor in a 'Corporate Debtor' cannot claim to be an 'aggrieved person' for preferring an appeal against an order against insolvency petition in Company Appeal as held in CA (AT) (Insolvency) No. 296 of 2017 in the matter of Anant Kajare Vs. Eknath Aher & Anr. wherein the relevant para reads as under :- "4. Heard learned counsel for the Appellant. Admittedly, the Appellant is an Investor therefore, the Appellant cannot claim to be an 'aggrieved person' for preferring appeal against the order dated 2nd May, 2017 passed by Adjudicating Authority whereby the application under Section 9 of the 'I&B Code' was admitted. In fact, the Appellant being an investor is entitled to file its claim before the 'Insolvency Resolution Professional." (emphasis applied) The term 'investor' has not been defined in the I & B Code, 2016 as well as in the Companies Act, 2013. A reference, therefore, has been made to 'Investopedia' where investor has been defined as under :- "What Is an Investor....
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.... However, this 'Appellate Tribunal' after careful considerations of these Citations / Judgements', comes to the conclusion that these cases are not directly connected or similar to the present `Appeal', and therefore, it is not of any assistance to the 'Appellants'. Having considered all the averments made by the 'Appellants' as well as the 'Respondents', including various Written Submissions made available to this 'Appellate Tribunal' and after careful consideration of various judicial pronouncements of the Hon'ble Supreme Court of India as well as this 'Appellate Tribunal', comes to concrete conclusion without any hesitation that in the present `Appeals', the 'Appellants' do not have any `Locus', and therefore the present `Appeals', are 'not maintainable'. This 'Appellate Tribunal', therefore, does not find any 'Error'/`Legal Infirmity', in the 'impugned order', on this issue. Having decided the non-maintainability of the `Appeals'itself, this 'Appellate Tribunal', has not traversed on any other issues, touching upon th....
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....ry 2021 and the purported date of default in respect of the principal amount being 9 January 2021. In accordance with the provisions of Section 10A of the IBC. no application under the IBC could have been admitted on the basis of any default arising on the admitted purported dates of default and therefore, the Impugned Order deserves to be set aside. 5. Moreover, for the period commencing from 21 October 2020 till 7 September 2021 there was no scope of any default since by virtue of the interim order dated 21 October 2020 passed by the Hon'ble National Company Law Tribunal, Kolkata Bench in an application filed by the Respondent No 2 under section 230 of the Companies Act, 2013, the Respondent No 2 and the Respondent No 3, the Hon'ble NCLT had directed all lenders and regulatory authorities of both the companies to maintain status quo with respect to the contractual terms and lending status. This position was continued till 7 September 2021 when the Hon'ble NCLAT set aside the said order dated 21 October 2020. As such the purported date of default of interest payment in respect of the working capital facility being 1 February 2021 and the purported date of defa....
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....by the Hon'ble Adjudicating Authority upon the Corporate Debtor before filing the Application under Section 7 of IBC by the Respondent No. 1. 8. The Supreme Court in its decision of Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminium Industries Private Limited & Anr (Civil Appeal No. 6347 of 2019) at Para 19:2 held that after completion of all other requirements, for admitting such an application of the financial creditor, the Adjudicating Authority has to be satisfied, as per sub section (5) of Section 7 of the Code, that "default" has occurred and in this process of consideration by the Adjudicating Authority, the Corporate Debtor is entitled to point out that default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. 9. In Sree Metaliks Ltd. v. Union of India & Anr 12017 SCC Online Cal 21455], the constitutionality of Section 7 was challenged on the ground that the said provision does not provide the corporate debtor an opportunity to be heard before an application to initiate CIRP is admitted. The High Court of Calcutta at Para 15 relying on Sectio....
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....he "FSP Rules 2019"). As the per the PSP Rules 2019, any application filed by Reserve Bank of India would be treated as an application under Section 7 of IBC and thus principles laid down in the judgment passed by the Hon'ble Appellate Tribunal in Innoventive Industries Limited us. ICICI Bank Limited of giving a limited notice to the Corporate Debtor before admission of any application under Section 7 of IBC, 2016 shall also be applicable Admittedly, the Hon'ble Adjudicating Authority did not give any limited notice before passing the Impugned Order and admitted the application under Section 7 of IBC, 2016, for which the Impugned Order deserves to be set aside. 12. As per Rule 6(5) of the FSP Rules 2019, the Respondent No .! should have dispatched forthwith a copy of the application filed with the Hon'ble Adjudicating Authority by registered post or speed post to the registered office of the Respondent No. 2 Company. In the instant case at hand, as it appears from the Impugned Order, the application was filed in the morning of 8 October 2021 and was moved on the same date without serving a copy upon the Respondent No. 2 Company. The Appellant till date does not....
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....ppeal filed by Adisiri Commercial Private Limited (Applicants in IA(IB) 389/KB/2023, IA(IB) 391/KB/2023, IA(IB) 532/KB/2023 and IA(IB) 535/KB/2023) before the Hon'ble Supreme Court of India was also dismissed on 30.01.2023, order of which is extracted herein below: With the dismissal of the appeal by Hon'ble NCLAT on 21.12.2022 and subsequently by Hon'ble Supreme Court on 30-01-2023, issues sought to be raised, as noted above, in these IAs including plea of 10A was put to rest and is thus beyond the scope of being raised in these IAs or in any proceedings. 25. Having held the applicants have no right/locus to have filed these IAs and hence are disallowed, now we deal with the plea of applicants regarding recalling of order of admission dated 8-10-2021 on the grounds of bar under Section 10-A of IBC. 26. After having considered in detail the submissions of applicants in these IAs, rebuttal thereto, case law cited including position of law as referred above in preceding paragraph, after analysis, we conclude: A. Admittedly statutory appeal was filed by the Applicant i.e., Adisri Commercial Private Limited before the Hon'ble NCLAT in November 2021 and....
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....he recall to a contested order has to be decided in a limited sphere and should not be permitted to expand the horizon of the consideration or the points which have been dealt with in a judgment and order passed in pursuit of dispensation of justice and adjudication of rights of the parties. Neither the review jurisdiction nor an application for recall should be permitted for re-visitation, re-writing and/or re-appreciation of the facts as its applicability is within the limited contour envisaged under the law." The Hon'ble High Court of Calcutta in the above judgment further observed: "It would not be incorrect, in our opinion, what we gather from the stand of the applicants that the instant application has been taken out to achieve a thing indirectly, which cannot be achieved directly. What is intended by filing the instant application is the re visitation of the judgment rendered in the contempt application and any findings incidentally or accidentally made in the instant judgment to take advantage thereof, which, in our opinion, should be deprecated." Emphasis applied D. Applicant through these IAs are in fact seeking rehearing and setting asid....
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....ompleteness. B-1. I.A(I.B.C)No 413) /KB/2023 has been filed by Authum Investment and Infrastructure Limited (Authum) in C.P.(I.B.)No.295/KB/2021 on 16.02.2023 seeking the following reliefs :- a. To pass an Order setting aside the Scored Evaluation Matrix (appearing at Exhibit-E) and any action taken pursuant thereto. b. To pass an Order setting aside any letter of intent that may have been issued by the Administrator in connection with the corporate insolvency resolution process of the Corporate Debtors; c. To pass an Order directing the Administrator to place before the Committee of Creditors a revised evaluation matrix (along with scoring) after providing at least five marks to the Applicant for offering equity to the financial creditors; d. To pass an Order directing the Administrator to place before the Committee of Creditors revised evaluation matrix (along with scoring) providing the true, fair and correct revised evaluation of the resolution plan; e. To pass an Order directing the Administrator to extend the voting period for voting on the resolution plans received in the corporate insolvency resolution process of the Corporate....
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....cordance with the Evaluation Matrix pending hearing, adjudication and final disposal of the present application. f. To pass any order or grant any other relief in the interest of justice. g. Cost B-3 I.A(I.B.C)No. 557/KB/2023 has been filed by Authum Investment and Infrastructure Limited in C.P.(I.B.)No.295/KB/2021 on 17.03.2023 seeking the following reliefs :- a. This application be heard, adjudicated and decided prior to hearing, adjudication and disposal of I.A. Nos. 428 & 434 of 2023; b. this Hon'ble Tribunal be pleased to pass an order declaring that resolution plan submitted by Respondent No. 2 is non-compliant with Section 30(2) of the Insolvency & Bankruptcy Code, 2016 read with Reg. 38 of IBBI (Resolution Process for Corporate Persons) Regulations, 2016; c. this Hon'ble Tribunal be pleased to reject I.A. Nos. 428 & 434 of 2023 filed by Respondent No. 1 (under Section 31 of the Insolvency & Bankruptcy Code, 2016) for approval of resolution plan submitted by Respondent No. 2; d. this Hon'ble Tribunal be pleased to declare that any concession/relaxation exemption granted by Committee of Creditors to Responde....
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....Debtors") and appointed Mr. Rajneesh Sharma as the Administrator of the Corporate Debtors ("Administrator") in terms of the Reserve Bank of India Act, 1934 [RBI Press Release - Annexure A, Volume I of I.A. (IB) No. 428/KB/2023; Page 59]. 33. On October 8, 2021, RBI filed the Company Petition No. 295 and 294 of 2021 against SIFL and SEFL respectively [Para 4 of Volume I of I.A. (IB) No. 428/KB/2023; Page 4], under Section 227 read with Section 239(2)(zk) of the Insolvency and Bankruptcy Code, 2016 ("Code"/"IBC") read with Rule 5 and Rule 6 of the Insolvency & Bankruptcy (Insolvency & Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 ("FSP Rules"). 34. By orders dated October 8, 2021 [Admission Order - Annexure C, Volume I of I.A. (IB) No. 428/KB/2023; Page 61 & Annexure D, Volume I of I.A. (IB) No. 428/KB/2023; Page 68] ("Admission Order"), this Hon'ble National Company Law Tribunal, Kolkata ("NCLT") initiated corporate insolvency resolution process ("CIRP") in respect of the Corporate Debtors and confirmed the appointment of Mr. Rajneesh Sharma as the Administrator. 35. The committee of creditors of both the C....
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....spectively by this Hon'ble NCLT under Section 31 of the Code. The plans are essentially the same and it appears that they have been filed via two separate petitions to maintain the continuity. 40. The RBI on March 23, 2023 [Annexure X of Supplementary Affidavit in I.A. (IB) No. 428/KB/2023; Page 12] provided its no-objection to the proposed change in management and control of the Corporate Debtors as required in terms of Rule 5 (d) (ii) of the FSP Rules. 41. Further, the Competition Commission of India ("CCI"), on April 6, 2023 issued its acknowledgment cum approval letter [Annexure Y of Supplementary Affidavit in I.A. (IB) No. 428/KB/2023; Page 13] for the combination envisaged under the Resolution Plan, as required by the provisions of the Code. JUDICIAL PRECEDENTS CITED: 42. Mr. Vikram Nankani and Mr. Prateek Sakseria, Mr. Arun Kathpalia, Mr Ravi Kadam and Mr. Sudipto Sarkar Ld. Sr. Counsels appearing for Bothras, Authum, CoC, SRA and the Administrator respectively handed in the elaborate compilations of various judgements in various cases and drew parallels to their case at hand. A list of the case laws referred during the hearing is given below for reference an....
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....tors of Meenakshi Energy Ltd v Consortium of Prudent Arc Limited SCC Online NCLAT 614 Para 113 3. IMR Metallurgical Resources AG v. Ferro Alloys Corpn. Ltd 2020 SCC OnLine NCLAT 1213 Paras 12 4. IMR Metallurgical Resources AG v. Ferro Alloys Corpn. Ltd and Others Civil Appeal No. 2720/2020 Paras 1 5. Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd (2022) 1 SCC 401 Para 213-214 6. Kalpraj Dharamshi v KIAL 2021 10 SCC 401 Paras 150-172 7. K. Sashidhar v. Indian Overseas Bank &Ors. (2019) 12 SCC 150 Para 64 8. Maharashtra Seamless Limited v. Padmanabhan Venkatesh & Others Civil Appeal No.4242 of 2019 Para 30 9. Mahendra Jain v Indore Development Authority 2005 1 SCC 639 Para 40 10. Mahesh Oza and Ors. v. Jindal Creations Private Limited Company Petition 136 of 2020 Paras - 16, 18 and 19 11. Pegasus Assets Reconstruction Pvt. Ltd. v. Kshitiz Chhawchharia and Others Company Appeal (AT) (Insolvency) No. 988 of 2019 Relevant paras 189, 190, 191 and 192 12. PNC Infratech Limi....
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....imited & Ors. (2022) 6 SCC 172 Paras 31,32 14. PNC Infratech Limited vs Deepak Maini & Anr CA (AT) (Ins) No. 143 of 2020 Paras 32, 33, 35, 38, 39 15. Punjab National Bank v. Prithvi Ferro Alloys Private Limited 2021 SCC OnLine NCLT 11285 Paras 2.5, 2.32 16. Pratap Technocrats (P) Ltd. V. Reliance Infratel Limited (Monitoring Committee) (2021) 10 SCC 623 Paras 44-47 17. Shrawan Kumar Agrawal Consortium v. Rituraj Steel Private Limited [2020 SCC Online NCLAT 380] Paras 114, 24 18. Super Poly Fabriks Ltd. V. CCE (2008) 11 SCC 398 Paragraphs 8- 11 19. UCO Bank V. PMT Machines Limited I.A> (IB) No 1932/2021 in C.P. (IB) No 2469/MB/2018 Paras 3, 9, 12, 13 20. Vistra ITCL India Limited VS Torrent Investments Private Limited Company Appeal (AT) (Insolvency) No. 132, 133 & 134 of 2023 Paragraphs 49 to 51 and 53 43. SUBMISSIONS ON BEHALF OF THE CONSOLIDATED COC 44.1.As already stated above that on February 14th, 2022, a consolidation of CIRP of both SEFL and SIFL was approved by this Adjudicating Authority following the laid down procedure being IA (IB) no. 1100/KB/2021 in CP(IB) no. 295/KB/2021 a....
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....ful resolution applicant ("NARCL/SRA") by a majority of 89.25%, in accordance with Section 30(4) read with Regulation 39(3B) of the CIRP Regulations. In view thereof, per the instructions of the CoC, the Administrator issued a Letter of Intent to the SRA on February 15, 2023. On February 14, 2023, the Administrator filed applications before under Section 31 of the Code (being I.A 428 of 2023 in C.P(IB) No. 294 of 2021 and I.A 434 of 2023 in C.P(IB) No. 295 of 2021) (referred as "Plan Approval Application(s)"). The Reserve Bank of India has granted its "No Objection" to NARCL's plan, as mandated under Rule 5 of the FSP Rules on March 23, 2023 (Annexure-X at page 12 to the Additional Affidavit of the Administrator in the Plan Approval Applications). Subsequently the Competition Commission of India has also granted its approval to NARCL's plan on April 6, 2023, under Section 6 of the Competition Act, 2002 read with Regulations 5 and 5A of the Competition Commission of India (Procedure in regard to the transactions of business relating to combinations) Regulations, 2011 (Annexure-Y at page 13 to the Additional Affidavit of the Administrator in the Plan Approval Applications). ....
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....reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. 46. Submissions on behalf of NARCL - The Successful Resolution Applicant 46.1. NARCL, the Successful Resolution Applicant has furnished an elaborate reply covering various objections raised by the objectors namely Authum and Bothras. They have also filed elaborate written submissions in the matter comprising inter-alia, a detailed chronology of events along with remarks thereon have been given in a tabular form The present written submissions ("Written Submissions") have been filed by and on behalf of National Asset Reconstruction Company Limited, the successful resolution applicant ("NARCL"/"Successful Resolution Applicant") 46.2.The Bothras lack locus to challenge NARCL's resolution plan. Authum, being an unsuccessful resolution applicant does not have a right to challenge the scoring applied by the CoC to the successful resolution applicant's resolution plan as the same alongwith the evaluation matrix fall squarely within the commercial wisdom of the CoC 46.3. The jurisdiction of this hon'ble NCLT does not extend to adjudicating the commercia....
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....3 spread over almost 20 hearings, whereby ample opportunity was given to all the sides for making up their respective cases. A brief snapshot of the elaborate hearings, is given in the ensuing text. We have tried to restrict ourselves to the actual submissions made by respective Counsel supported by the pleadings in the matter and confining ourselves to the crux of issues. Some overlapping however can not be ruled out. 51. Ld Sr. Counsel Mr. Vikram Nankani appearing on behalf of the applicant presented in IA 464 of 2023 led us to various dates of list of events and specifically mentioned the voting window for approving the plan, the window being opened on 21st January, 2023 and closed on 14th Feb.2023. 52. He averred that Clause 3.9 of the resolution plan RA has sought for an exemption which has been granted belatedly after plans were put to vote. Referring to a statement by the Administrator in reply affidavit at para 76 page 85, he stated that whereas it has been categorically mentioned that NARCL was not given any exemption whatsoever (either in term of Clause 3.9 or its plan or otherwise) from the discounting rates stipulated under the evaluation matrix. He built up his a....
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....se of the Evaluation Matrix which is placed below: 55. He narrated the methodology adopted/ to be adopted for determining NPV with reference to the Evaluation Matrix which gave certain discount rates against various types of cash recoveries for example discount rate for a period of cash recovery of 0 to 90 days would be Zero, whereas that for a cash recovery occurring between 7 to 10 years would be 30% which eventually would mean that cash recovery in future would not mean the same as cash recovery in the present time. 56. Extending this logic he went on to further explaining the inclusion of other instrument where Evaluation Matrix gives various types of discount rates for NPV calculations. The bone of contention here is that the PTCs/SRs/payable-when-able instruments assume to be realize at the end of 8th year would be discounted at a rate of 60%. However, any other instrument with committed repayment schedule would draw a discount rate of plus 10% to the table of the cash recovery. It is pertinent to mention here that the Security Receipts were supposed to be evaluated with the discount rate of 60%. However, a head start has been given to the NARCL by using a discount rate....
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.... available to all the CoC members who get a copy of the resolution plan before start of the voting. He expressed surprise that whereas the Bothra's and other debentures holders represented by Axis trustee participated in the entire process and did not even raise a whisper about the integrity of the process but now suddenly they have come up and expressed reservation and protest on the resolution plan which already stands duly approved by the CoC. 63. This is so because now Authum Investment & Infrastructure Limited has turned out to be H2 and therefore they come out in his support and more surprising is that in their application they makes Authum Investment & Infrastructure Limited as a party and serve a copy of this application by virtue of which Authum Investment & Infrastructure Limited gets to know about the resolution plan which essentially remains a confidential documents until at least approved by CoC. 64. He averred that it is very clear that this circumvention by providing a copy of the resolution plan of NARCL to Authum Investment & Infrastructure Limited with a motive to enable him to take on the same and vitiate the process is nothing but an abuse of the whole....
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.... as given by Authum Investment & Infrastructure Limited in their plan is also uncertain, but these matters being of commercial wisdom are best left to the CoC who is ably supported by the experts in the field. 69. Mr. Sakseria Ld. Senior Counsel appearing for Authum Investment & Infrastructure Limited ( IA557) echoed the views of by Mr. Nankani (IA 464) and went on to explain painstakingly that SR could no way be called NCDs just because of assumption that the SRs would be backed by a committed instrument like NCD. He averred that when there were clear cut classes of instruments provided for in the Evaluation matrix, inventing a new class of instruments, unauthorisedly need a much closer look and therefore concluded that the entire process has been vitiated, thereby giving an undue advantage to NARCL This has clearly jeopardized his chances of becoming a SRA as against ending up a Runners Up. He also asserted that section 71 of the Companies Act, 2013 were violated. 70. His next argument was to emphasise to persuade us that the plan was not viable since the repayment has to be done through the financial resources of the SEFL itself and that there was no recourse to the Debent....
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.... the security receipts at the end of the respective tenure of non-convertible debentures, the Consolidated CoC deliberated and arrived at the view that these secured non-convertible debentures would be considered as committed (secured first pari passu) instruments for the purpose of computation of NPV under the Note on Challenge Process." (Emphasis supplied) (Para 23(c) at pg.12 of the CoC's Reply to the Bothra's Application). 73. In the above conspectus following issues emerge for consideration: 73.1.Questions about the locus of Debenture holders to object to the proceedings in which they participated. Are they not estopped now in challenging the same? 73.2. Whether the copy of the Resolution Plan of NARCL provided by the Debenture holders Authum, is in violation of the orders of Hon'ble NCLAT passed in the matter of jet airways. 73.3. Whether the conditions of the Evaluation Matrix were contravened in any way? 73.4. Whether any relaxation was given to NARCL in assigning discounting factors in contravention to the laid down procedure of conducting the CIRP ? 73.5. Whether the plan violates section 30(2)(e) of the Code and is in contravention of law. ....
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....ve under clause(a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share." iii. In this regard we refer to the regulation 2(aa) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ('CIRP Regulations") which defines the term "Class of Creditors", which is reproduced hereunder for ease in reference: - 2(aa) "class of creditors" means a class with at least ten financial creditors under clause (b) of sub-section (6A) of Section 21 and the expression "creditors in a class" shall be construed accordingly. iv. Thus, a bare perusal of the regulation 2(aa) of the CIRP Regulations as aforesaid, would showcase that only those creditors who fall within the ambit of section 21 (6A) (b) of the Code are 'Class of Creditors' who are entitled for appointment of their Authorised Representative. In the present case, the NCD holders are creditors that fall within the purview of section 21 (6A)(a) of the Code and thus, are represented by the Debenture Trustee in the meetings of the CoC. ....
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....H2 bidder by the applicants. i. During the hearing it was discerned that the pleadings in IA 557 contained the resolution plan of NARCL, which is the SRA, with a confidential water mark and a question got raised as to how Authum could source a copy of the SRA's plan. At that time the Ld. Sr. Counsel appearing for the administrator of SREI informed that since the Bothras were a part of the CoC, they were privy to all the deliberations and documents of the CoC. However, handing it over to the most formidable competitor is in the teeth of judgment of Hon'ble NCLAT in the matter of Jet Airways . ii. In this regard, even though the Ld. Sr. Counsel for the Administrator appeared to strike a conciliatory note, the issue still remains as to whether a confidential document be passed on to parties outside CoC, much less to the next competitor to the SRA, which has led to raising of the objections delaying the matter further without any benefit or credence to the applicant other than getting exposed on account of nexus between him and the H2 bidder. It was submitted by the applicants that the above objections is legally erroneous as the NARCL Resolution Plan has ceas....
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....ative of the provisions of IBC During the hearing primarily following objections were voiced: a. The Plan violates section 30(2)(e) of the Code and is in contravention of law. b. Violation of Regulation 36(b)(1) read with regulation 39(3) is as much as it is contrary to the pre-determined matrix. c. The Plan is neither feasible nor viable and hence cannot receive the approval of the Court. Section 30 stipulates that: The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan - (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the 3 [payment] of other debts of the corporate debtor; 4 [(b) provides for the payment of debts of operational creditors in such manner which shall not be less than- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-s....
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....y and violation of the laid down process. While various other objections have been dealt with in the ensuing text, we take up the purported violations of the process and more specifically the regulations as contended: 74.4. Whether the provisions of 36(B )(1) read Regulation 39 have been violated regarding the Evaluation Matrix? Regulation 36(b)(1) provides as under: 36B. Request for resolution plans. (1) The resolution professional shall issue the information memorandum, evaluation matrix and a request for resolution plans, within five days of the date of issue of the provisional list under sub- regulation (10) of regulation 36A to - (a) every prospective resolution applicant in the provisional list; and (b) every prospective resolution applicant who has contested the decision of the resolution professional against its non-inclusion in the provisional list. Regulation 39(3) provides as under: The committee shall - a. Evaluate the resolution plans received under sub-regulation (2) as per evaluation matrix, b. Record it deliberations on the feasibility and viability of each resolution plan; and c. Vote on all such resolution plans simulta....
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.... recovery Discount rate (%) i. 0-90 days 0 ii. 91 days - 1 year 8 iii. > 1 year - 3 years 10 iv. >3years - 5 years 12 V. >5 years - 7 years 15 vi. >7 years - 10 years 30 vii. > 10 years 40 B. Nature of instrument i. First Pari Passu secured As per table with committed repayment schedule above ii. Any other +10% to the rate in. the table above instrument with committed repayment schedule iii. Compulsorily 60% redeemable preference shares (CRPS) assumed to be realised at the end of 20th year iv. PTCs/SRs/ payable when able instruments assumed to be realised at the end of 8th year 60% The heads were subsequently categorised in line with the Challenge process note. Read with Clause 2(iii) of the Note for Challenge Process dated December 27, 2022, the "Identified Criteria" for the scoring mechanism in the Challenge Process comprised of 2 parameters viz (i) Upfront Cash recovery and (ii) Committed instruments (any instrument (non-convertible debentures /term loan/any other instrument having a fixed committed repayment schedule). The consolidated CoC w....
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.... of events has been captured in the table below: DATE EVENT 01.04.2022 RFRP and EM were uploaded on the VDR. 24.09.2022 RFRP was re-isued 26.09.022 RFRP was uploaded on VDR 02.12.2022 NARCL filed Resolution Plan 03.12.2022 Resolution Plans were opened before the CoC. 26.12.2022 CoC approved the challenge mechanism 27.12.2022 Note on Challenge mechanism was issued and PRAs were requested to update their Resolution Plans accordingly. 31.12.2022 Revised Resolution Plan filed 03.01.23 COC Meeting held and results of Challenge Mechanism were presented. NPV of NARCL was found to be the highest on the basis of self- declaration. 06.01.23 R-1 presents Final Resolution Plans of all PRAs in the meeting of COC and representatives of respective PRAs were invited for discussion 11.01.23 COC extends further time for PRAs to submit Final Resolution Plan incorporating the comments/suggestions of COC by 14 January 23 14.01.2023 PRAs submit the plans 17.01.23 Process Advisor (SBI Caps) makes presentation on the Plans and awarded scores. All PRAs were directed to submit their further modified Resolution Plans by 18 Ja....
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.... be the basis for the Challenge Process. The determination of NPV of the financial proposals by the Consolidated CoC and is advisors shall be binding on the Eligible RAs which shall not be challenged/objected to by the Eligible RAs which shall not be challenged /objected to by the Eligible RAs. It is clarified that the Discount Rate set out in the EM shall be sued for the purpose of computation of NPV for the purpose of this Challenge Process and the details are set out in the Annexure-A. (iii) The Eligible RAs shall provide the calculated NPV for each financial proposal on a selfcertification basis. Notwithstanding the aforesaid, the calculation of the NPV by the Consolidated CoC and its advisors will be based solely on the financial proposal(s) submitted by each of the Eligible RAs in the Excel/PDF format; i.e., the details of the values filled up for the Identified Criteria. For avoidance of doubt, it is clarified that in the event of any inconsistency between the values provided for the Identified Criteria by the Eligible RAs in the financial proposal and the self-certified NPV provided by the Eligible RAs, the values provided for the Identified Criteria by the Eligible RAs ....
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.... designated date of the Challenge Process, the Eligible RAs shall be required to submit their bids for the first round, within the designated deadline intimated by the Administrator. Within 10(ten) minutes of such submission, the Eligible RAs shall share the password of the proposal document with the Administrator. The consolidated CoC and its advisors shall thereafter determine the NPV of the financial proposals. The Administrator shall intimate the Eligible RAs of the financial proposal with the highest NPV of the said round along with the name of the Eligible RA who has submitted the financial proposal with the highest NPV, as provided to him by the CoC/its Advisors, within 1(One) hour of receipt of all the financial proposals post which the next round shall commence immediately. The same process shall be followed for each round of the Challenge Process. It is hereby clarified that the details of the financial proposal submitted by the Eligible RAs and other terms of the resolution plans submitted by each of the Eligible RAs shall not be disclosed to the other Eligible RAs. In each round, each Eligible RA shall submit only 1(one) financial proposal. In the event that the E....
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....ordance with the Challenge Process and the terms of this document, within [24 hours] from the closure and declaration of the name of the Eligible RA with the highest NPV at the end of the Challenge Process. 74.5.3. Further, for Challenge process for which an elaborate note was well circulated beforehand, comprised of 5 rounds of bidding. At the end of each round, the Eligible PRAs were informed of the highest NPV scored. In each successive round, the Eligible PRAs could revise their financial proposals such that their respective NPV values shall not be less than the sum of the highest NPV declared in the immediately preceding round and the stipulated amounts (INR 200 cr. in the 2nd and 3rd round and INR 100 cr. in the rounds thereafter). Following this elaborate process, which was circulated well in advance to all the participants including the CoC members and the PRAs, the challenge process was culminated and the final NPV obtained by various bidders was frozen. It is important to note here that NO Change was made to the Challenge mechanism as circulated to all the participants. The respective Ld. Sr. Counsel appearing for the CoC and the Administrator submitted that no relaxat....
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....of the Challenge Mechanism. The Addendum in the last para contains the following text, the last para of which was argued at length by both the sides i.e. for and against .: SBICAP, the CoC Advisor highlighted to the lenders that as per the Compliance Submission, there is no change in the Plan structure proposed by NARCL. NARCL will continue to offer Security Receipts to the FCs and the redemption of the same (including the upside) will be based on the recovery from the SEFL NCDs which will be issued by SEFL to the ARC Trust. The above clarification was discussed in detail with the CoC members and the CoC Legal Counsel also gave their views on the same. Based on the discussion. considering that the outstanding NCDs are proposed to be transferred to the SR holders at the end of the respective tenure of NCDs, it was decided that the for NARCL, the secured committed NCDs is be considered for the purpose of computation of NPV under the Challenge Mechanism and accordingly, the applicable discounting rate as per the Evaluation Matrix may be taken. " ... Based on the discussions, considering that the outstanding NCDs are proposed to be transferred to the SR holders at the....
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....fications that formed a part of the addendum to the minutes of 32nd CoC, the proceedings of which were circulated to the members of CoC on the VDR. It may also be pertinent to mention here that after the hearing was over, a sealed envelope was received in the Registry of this Tribunal which with a forwarding letter purportedly by the CoC. This envelope contains one page transcript of the proceedings of 32rd CoC held on 03-01-2023 along with the minutes of proceedings of 33 rd CoC meeting of SIFL and SEFL(Being held as 30 th. consolidated CoC meeting) of SIFL & SEFL held through video conferencing. There was one pen drive purportedly containing video recording of 30 the meeting as per covering letter. This video recording was never asked for by us and thus we did not deem it necessary to see it. The documents and pen drive have been put in cover, sealed and made a pert of these proceedings. 74.5.11. Ld. Sr. Counsel for the SRA stated that the provision for voting on the plans in Regulation 39 of the IBBI (CIRP regulations), is to give a final opportunity to the CoC to exercise its wisdom on whether to agree or not to agree to the plan. The fact remains that the plans have been ap....
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....nds only when a resolution plan approved by the CoC does not comply with the provisions of the law. However, the Adjudicating Authority cannot review the adequacy or rationale of the assessment made by the CoC. 74.6.3. While we do not have any qualms on the issue in the wake of this catena of judgements delivered by the higher courts including the Apex Court, we are further convinced that even if we want to peep in the skin of the matter we are confronted with issues like - Nature of these instruments, the discount rate applied and the manner of marking or allocation of scores, the projected veracity of the propositions like transfer of the unserviced NCDs to the creditors and their likely value as SRs in future and its effect on the NPV being worked out and their overall effect on the viability of the plan on a future date. These are the issues that are the products of financial expertise being also dependant on the future economic scenario of the country. 74.6.4. In this context it may be appropriate to refer to the comparative table attached with the IA 557 (and elsewhere too), which shows the qualitative and quantitative scores marks awarded to various PRAs based on the p....
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....n Plan as approved by CoC meets the requirements specified in Section 30(2) of the Act. The Hon'ble Court observed that the role of the NCLT is 'no more and no less'. The Hon'ble Court further held that the discretion of the NCLT is circumscribed by Section 31 and is limited 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 NCLT 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. 74.6.8. The comparative roles of the CoC and NCLT have been duly circumscribed by Hon'ble Supreme court in terms of the stipulations of the Code and the issue of non-justiciability of the Commercial Wisdom of the CoC has been dealt in much detail in K.Sashidhar. This aspect has further been treated in Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd., (2022) 1 SCC 401 : 2021 SCC OnLine SC 253 at page 549 as below: In K. Sashidhar [K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 : (2019) 4 SCC (Civ) 222], while setting out the relevan....
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.... evaluate the various possibilities and make a decision. It has been observed thus: "The key economic question in the bankruptcy process When a firm (referred to as the corporate debtor in the draft law) defaults, the question arises about what is to be done . Many possibilities can be envisioned. One possibility is to take the firm into liquidation. Another possibility is to negotiate a debt restructuring, where the creditors accept a reduction of debt on an NPV basis, and hope that the negotiated value exceeds the liquidation value. Another possibility is to sell the firm as a going concern and use the proceeds to pay creditors. Many hybrid structures of these broad categories can be envisioned. The Committee believes that there is only one correct forum for evaluating such possibilities, and making a decision: a creditors committee, where all financial creditors have votes in proportion to the magnitude of debt that they hold. In the past, laws in India have brought arms of the Government (legislature, executive or judiciary) into this question. This has been strictly avoided by the Committee. The appropriate disposition of a defaulting firm is a busin....
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....e in light of various judgements cited above. 77. In view of the foregoing discussion, we do not find any merit in the IAs 413, 464 and 557 in CP(IB) 295/KB/2021 and these are accordingly rejected. I.A. (IB) No. 428/KB/2023 and I.A. (IB) No. 434/KB/2023 (RESOLUTION PLAN) (RESOLUTION PLAN) Preliminary 78. Now we proceed to consider the Resolution Plan which has been filed before this Adjudicating Authority through I.A. (IB) No. 428/KB/2023 and I.A. (IB) No. 434/KB/2023 which are applications filed under section 30(6) of the Insolvency and Bankruptcy Code, 2016, after approval of the resolution plan by the consolidated Committee of Creditors ("CoC") of SREI Equipment Finance Limited and SREI Infrastructure Finance Limited. 79. These applications were filed by Mr. Rajneesh Sharma, Administrator of SREI Equipment Finance Limited ("SEFL") and SREI Infrastructure Finance Limited ("SIFL"), by invoking the provisions of section 30(6) of the Insolvency and Bankruptcy Code, 2016 ("the Code" or "IBC") read with regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) for approv....
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....nk of India 3. Punjab National Bank 4. State Bank of India 5. Bank of Baroda 6. Indian Bank 7. Punjab and Sind Bank 8. Central Bank of India 9. UCO Bank 10. Bank of India 11. Indian Overseas Bank 12. Bank of Maharashtra 13. IDBI Bank 14. Lakshmi Vilas Bank 15. Dhan Laxmi Bank 16. Axis Bank 17. South Indian Bank 18. Karur Vysya Bank 19. Karnataka Bank 20. ICICI Bank 21. HDFC Bank 22. SIDBI 23. NABARD 24. IFCI ltd. 25. Bank of Ceylon 26. People's Bank 27. Standard Chartered Bank 28. Aozora Bank Ltd. 29. ING Bank, a branch of ING-DiBa AG 30. DEG - Deutsche Investitions-und Entwicklungsgesellschaft mbH ("DEG") 31. Sumitomo Mitsui Finance and Leasing Co., Ltd. 32. Finnish Fund for Industrial Cooperation Ltd. (FINNFUND) 33. Belgian Investment Company for Developing Countries SA/NA - BIO 34. Société de Promotion et de Participation pour la Coopération Economique S.A ("PROPARCO") 35. Export Import Bank of United States (represented by International Advisors) 36. Gl....
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....ages 1534-1535 in I.A. (IB) No. 434/KB/2023]. The Administrator then shared the Information Memorandum, Evaluation Matrix and Request for Resolution Plan (RFRP) with the Prospective Resolution Applicants on 01 April 2022, the RFRP was re-issued on 24 September 2022. 89. In the interregnum the Administrator received several EoIs, which was informed to the Consolidated CoC. The Consolidated CoC resolved to issue a note to the interested parties that to submit EoI and Resolution Plans with the prior approval of the members. The said resolution was published between 05 October 2022 and 07 October 2022. 90. The last date for submissions of Resolution Plans was extended on nine occasions and the last date for submission of Resolution Plan was 02 December 2022. 91. As per regulation 35(2) of the CIRP Regulations, after receipt of the Resolution Plan, the Administrator informed the fair value and liquidation value of the Corporate Debtor to the CoC. Evaluation and voting 92. The Resolution Plans received from National Asset Reconstruction Company Limited ("NARCL"), Consortium of VFSI Holdings Pte. Limited and Arena Investors LP and Authum Investment and Infrastructure Limite....
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....Resolution Plans was discussed in the Consolidated CoC meeting held on 20 January 2023. The feasibility and viability of the Resolution Plans have been recorded by the CoC [Pahe 88C in I.A. (IB) No. 434/KB/2023]. After due discussions the Administrator placed the said Resolution Plans before the Consolidated CoC for e-voting on 09 February 2023 which was further extended to 14 February 2023. The Consolidated Resolution Plan submitted by NARCL ("Successful Resolution Applicant") on 18 January 2023 [Annexure S at Pages 1534-1672 in I.A. (IB) No. 434/KB/2023 64 Annexure U at Pages 1680-1681 in I.A. (IB) No. 434/KB/2023] along with addendum dated 24 January 2023 was approved with 89.25% voting share [Annexure U at Pages 1680-1681 in I.A. (IB) No. 434/KB/2023] 98. The Applicant issued the Letter of Intent on 15 February 2023 to the Successful Resolution Applicant [Annexure V at Pages 1682-1685 of I.A. (IB) No. 434/KB/2023] which was duly acknowledged by the Successful Resolution Applicant [Annexure W at Pages 4-5 of the Supplementary Affidavit dated 10 April 2023]. 99 In accordance with regulation 36B(4A) of the CIRP Regulations, the Successful Resolution Applicant has deposited t....
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....Part V at Pages 85-89 respectively of the Consolidated Resolution Plan. (d) Implementation and Supervision Section 7 of Part V at Pages 87-89 of the Consolidated Resolution Plan. (e) Plan does not contravene any of the provisions of the law for the time being in force. Section 1.2.5 and Section 1.6 at Pages 13, 14 respectively of the Consolidated Resolution Plan. (f) Conforms to such other requirements as may be specified by the Board. Resolution Plan does not contravene to any other requirements as may be specified by the Board. II. Measures required for implementation of the Resolution Plan in terms of regulation 37 of CIRP Regulations: Particulars Relevant Page of the Revised Resolution Plan dealing Aforesaid compliance with Regulation A resolution plan shall provide for the measures, as may be necessary, for insolvency resolution of the corporate debtor for maximisation of value of its assets, including but not limited to the following: - (a) transfer of all or part of the assets of the corporate debtor to one or more persons; Not proposed in the Consolidated Resolution Plan. (b) sale of all or part of the assets whether sub....
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.... The amount payable to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. Section 3.2.5 in Part II at Page 25 of the Consolidated Resolution Plan. The amount payable to the financial creditors, who have right to vote and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan. Section 3.3.3 (a) in Part II at Page 32-33 of the Resolution Plan. A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors of the corporate debtor. Part II at Pages 1558-1574 of the Resolution Plan. A resolution plan shall include a statement giving details if the resolution applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past. Section 1.10.2 at Page 16 of the Resolution Plan. 38(2) A resolution plan shall provide: (a) the term of the plan and its implementation schedule; Section 8.9 in Part ....
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....ting to INR 14,867,50,00,000 (Indian Rupees Fourteen Thousand Eight Hundred and Sixty Seven Crores Fifty Lakhs Only) (the "Total Resolution Amount"), which amount shall be utilized for funding payments proposed to be made to the stakeholders of the Corporate Debtors, subject to the terms of this Resolution Plan. In addition, the CIRP Costs (to the extent unpaid as on Effective Date) and Interim Period Costs will be paid in the manner set out in Section 3.1 (Payment of CIRP Costs and Interim Period Cost) of this Resolution Plan. The components of the Total Resolution Amount are as follows: Sr. No . Particulars Amount (in INR Crore) 1. AFCs Cash Portion (1A+1B) 3180 A Estimated Cash and Cash Equivalents of Corporate Debtor 2580 B Cash Portion of the Assignment Payments 600# 2. Equity stake in SIFL to Financial Creditors (20%)* 200 3. Deferred Payment A Security receipts of upto INR 1800 Crores (i.e., 75% share) from ARC Trust ** backed by committed NCDs redeemable from recoveries of underlying assets of SEFL 3487.50 B Optionally Convertible Debentures (OCDs) from SEFL 8000 Total 14,86....
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.... Encumbrances relating to invoked/uninvoked bank guarantees form part of the cash and bank balance and cash equivalents of the Corporate Debtors, which in turn form part of the AFC's Cash Portion as specified in Section 2.4.1 of the Resolution Plan. These uninvoked bank guarantees and all margin money, liens and related Encumbrances relating to any bank guarantees will be held and maintained till the relevant bank guarantee is valid and subsisting and till the date of its respective expiry. In the event that any bank guarantee expires until the occurrence of Closing Date, the same shall be automatically renewed and extended by the respective issuing banks, without treating such renewal as a new credit facility and without imposing any additional margins, till such time as the Corporate Debtors request the cancellation of such bank guarantees. It is clarified that since the Admitted Financial Creditor Debt includes such uninvoked bank guarantees and the financial proposal herein is for the settlement of entire Admitted Financial Creditor Debt, in the event that any of these bank guarantees are invoked by its respective beneficiaries till or post the Closing Date (a) the relevant....
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....oposes to commence the steps set out in Section 4 (Steps of Implementation) which date shall not be later than 7 (seven) days from the date of issuance of the Implementation Notice". Details on Management/Implementation and Reliefs as per the Resolution Plan - Salient Features 111. The Resolution Plan also provides for - 111.6. Management of company after resolution in Section 6 in Part V at pages 85-86 of the Resolution Plan. 111.7. Term of the resolution plan in Section 8.9 in Part VI at Pages 95-99 of the Resolution Plan. 111.8. Implementation and Supervision of the resolution plan in Section 7 in Part V at pages 87-89 of the Resolution Plan. Section 7.3 (g) states tat the Implementation and Monitoring Committee shall ensure utilisation of the Corporate Debtor's funds and payment of dues in accordance with the terms of this Resolution Plan, and supervision of the withdrawals of funds from the bank accounts of the Corporate Debtors. Relinquishment/Waiver of liabilities and Approvals 112. The Reliefs, Exemptions and Waivers sought by the Resolution Applicant from the Adjudicating Authority are set out below for the successful implementati....
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....the losses under section 79 of the Income Tax Act of Corporate Debtors immediately and unconditionally on sanction of the Resolution Plan. 4. On approval of resolution plan, all expenses claimed and income earned by the Corporate Debtors in the preceding eight years and returns as submitted or not submitted to be treated as assessed and all carry forward losses and depreciation to be treated as allowed. 5. To grant waiver to the Corporate Debtors/ Resolution Applicant from applicability of section 281 of the Income Tax Act, in respect of any transaction carried out before the Closing Date or contemplated under the Resolution Plan. 6. The Corporate Debtors and Resolution Applicant shall be entitled to the benefit of carry forward losses, notwithstanding any default of the Corporate Debtors to file tax returns within the due date and in accordance with the provisions of the Income Tax Act. 7. To provide relief from any tax liability arising out of the non- compliance of conditions specified in section 47(iv) of the Income Tax Act pertaining to transfer of fund-based business (comprising lending business, interest-earning business and leasing business) of SIFL ....
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....ransaction contemplated in this Plan as being void or non-compliant with any provisions of the Income Tax Act, 1961 and b) applying provisions of Chapter X-A (GAAR) of Income Tax Act, 1961 in respect of transactions arising as a result of giving effect to the Resolution Plan Relief with respect to Central Board of Indirect Taxes & Customs; Ministry of Finance of the relevant State Government and Union Territories. 17 To provide relief to the Corporate Debtors such that all pending litigation, notices, past and on-going assessments and audits, past and on-going investigations, tax demands under all Indirect Tax statutes (including, but not limited to those set out in Annexure 10 of this Resolution Plan), towards the Corporate Debtors would be treated as closed and no further action would be taken for any action / transaction carried out before the implementation of this resolution plan. It is clarified that no tax (including interest and penalty) would be paid for any liability or claim raised for period up to the Closing Date. 18 To provide relief to the Corporate Debtors from proceedings and interest/penalties basis any non-compliances under all the Indire....
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.... available post the Closing Date. 25 To provide relief from non-compliance of any provision of Indirect Tax laws in relation to the Business Transfer Agreement effective October 1, 2019. To issue instructions or directions to the Indirect Tax authorities to approve transfer of input tax credit, if any, under the Business Transfer Agreement and treat the transaction as transfer of business as a going concern. 26 The Resolution Applicant, or the Corporate Debtors shall not be liable to pay any indirect taxes whatsoever arising (directly or indirectly on such entity) as a result of the actions taken by the Corporate Debtors prior to the Closing Date or arising from the actions under this Resolution Plan. It may also be clarified that any Tax Liabilities pertaining to any period or action prior to the Closing Date, whether assessed or unassessed, by the relevant Government and statutory authority shall be deemed to have been extinguished and written-off on the Closing Date. Reliefs with respect to Regulatory Framework 27 RBI to waive all past non-compliances of the Corporate Debtors under the Reserve Bank of India Act, 1934 and the Regulations / Notificat....
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....tted between NCLT Approval Date and Closing Date, and neither the Corporate Debtors nor the Resolution Applicant shall be prosecuted for any such offence on and from the NCLT Approval Date to the Closing Date. If a prosecution has been instituted during this period against the Corporate Debtors or the Resolution Applicants, the same shall be extinguished and the Corporate Debtors and the Resolution Applicants shall stand discharged from the same. 31 The Hon'ble NCLT be pleased to give or issue necessary directions, instructions that the moratorium granted to Corporate Debtors under Section 14 of the Code, shall be deemed to be continued to be in effect during the period between NCLT Approval Date and Closing Date, and in any case till the implementation of this Resolution Plan in full. 32 The Hon'ble NCLT be pleased to give or issue necessary directions, instructions to exempt Resolution Applicant, the Corporate Debtors and other stakeholders in the Resolution Plan from levy of stamp duty and other costs (including payment of registration fees) applicable on the value of assets transferred and the assignment of the debt in the manner contemplated under this Resolution P....
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.... carry on business as an 'infrastructure finance company' and the certificate of registration dated February 19, 2014 issued to SEFL by RBI to carry on business as an 'asset finance company'), and the Corporate Debtors and the Resolution Applicant shall not be liable for any non-compliances under Applicable Law and licenses/ registrations granted thereunder. 37 Save and except as referred to in Section 3.2.8 of Part A (Financial Proposal), the Hon'ble NCLT be pleased to give or issue necessary directions, instructions such that any and all claims or demands made by, or liabilities or obligations owed or payable to (including any demand for any losses or damages, or interest, back wages, compensation, penal interest, liquidated damages already accrued/accruing or in connection with any claims) any present or past, direct or indirect, permanent or temporary employee and/or workman of the Corporate Debtors, whether claimed or unclaimed, admitted or not, due or contingent, asserted or unasserted, crystallised or not, known or unknown, secured or unsecured, disputed or undisputed, present or future, whether or not set out in the provisional balance sheet, the balance sheets of the....
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....ld responsible or liable in relation thereto. 39 Any and all other dues including claims or demands which have been or could have been made by or liabilities or obligations owed or payable to (including any demand for any losses or damages, principal, interest, compound interest, penal interest, liquidated damages and other charges already accrued/ accruing or in connection with any third party claims) any actual or potential creditors of the Corporate Debtors or in connection with any debt of the Corporate Debtors, including those debts arising out of any letters of credit, letters of undertaking, guarantees, counter guarantees, bank guarantees, performance guarantees or indemnities provided by the Corporate Debtors, whether claimed or unclaimed, admitted or not, due or contingent, asserted or unasserted, crystallised or not, known or unknown, disputed or undisputed, present or future, whether or not set out in the provisional balance sheet, the balance sheets of the Corporate Debtors or the profit and loss account statements of the Corporate Debtors or the List of Creditors, in relation to any period prior to the Closing Date, shall to the extent not assigned/ novated/ tran....
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....Creditors or not) whether claimed or unclaimed, admitted or not, due or contingent, asserted or unasserted, known or unknown, disputed or undisputed, discovered prior to Closing Date or after the Closing Date, shall be deemed to be permanently extinguished with effect from the NCLT Approval Date by virtue of the order of the NCLT approving this Resolution Plan and the Corporate Debtors or the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. 42 The Hon'ble NCLT be pleased to give or issue necessary directions, instructions such that any liability or indemnity obligations of SEFL arising prior to Closing Date in relation to Servicer Agreements, whether general or specific, claimed or unclaimed, due or contingent, asserted or unasserted, crystallised or not, known or unknown, disputed or undisputed, shall be deemed to be permanently extinguished with effect from the Effective Date by virtue of the order of the NCLT approving this Resolution Plan and the Corporate Debtors or the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. 43 ....
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....rovided by Controlla Electrotech Private Limited in respect of any Debt owed by SIFL/SEFL) as per Applicable Law (including for any losses suffered by such beneficiaries in relation to such Guarantee Obligations). It is further clarified that the beneficiaries of any guarantees issued on behalf of the Corporate Debtors and the guarantor thereof shall be under an obligation to do all acts as may be necessary to give effect to the extinguishment of the subrogation rights of such guarantor of the Corporate Debtors upon approval of this Resolution Plan by the NCLT. 45 The Hon'ble NCLT be pleased to give or issue necessary directions, instructions such that the erstwhile Promoters, shareholders, managers, directors, officers, employees, workmen or other personnel of the Corporate Debtors shall continue to be liable for all the liabilities, claims, demand, obligations, penalties etc. arising out of any proceedings, inquiries, investigations, orders, show cause, notices, suits, litigation etc. (including any orders that may be passed by the NCLT pursuant to Sections 43, 45, 49, 50, 66, 68, 70, 71, 72, 73, 74 of the IBC), whether civil or criminal, that may be initiated or instituted....
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....iminal in relation to the foregoing shall be disposed of and the Corporate Debtors or the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. 47 The Hon'ble NCLT be pleased to give or issue necessary directions, instructions such that all present and future, claims, dues, liabilities, amounts, arrears, dividends or obligations owed or payable by the Corporate Debtors to the erstwhile Promoters or any subsidiary, associate Corporate Debtors, related party, joint ventures, affiliate of the Corporate Debtors or any such entity or person controlled by the erstwhile Promoters (or any lenders or financial creditors of such persons) or any holder of any securities (whether convertible into equity shares or not) of the Corporate Debtors prior to the Closing whether claimed or unclaimed, admitted or not, due or contingent, asserted or unasserted, crystallised or not, known or unknown, secured or unsecured, disputed or undisputed, whether or not set out in the provisional balance sheet, the balance sheets of the Corporate Debtors or the profit and loss account statements of the Corporate Debtors or the List of Credi....
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....or judicial authority, and on and from the NCLT Approval Date any related claims, demands, liabilities or obligations of the Corporate Debtors in connection thereto shall be permanently discharged or extinguished. 50 The Hon'ble NCLT be pleased to give or issue necessary directions, instructions such that, in accordance with Section 238 of the IBC, any action undertaken pursuant to the Resolution Plan by the Resolution Applicants will not require compliance with requirements under any other laws. For the implementation of this Resolution Plan, and except as set out in the Resolution Plan, upon the Resolution Applicants ensuring compliance with the provisions of the IBC and the CIRP Regulations, no further compliances, actions or consents will be required under other laws or regulations for undertaking the individual actions contemplated under the Resolution Plan, including requirement of obtaining any approval/consent from any person under any agreement, the constitutional documents of the Corporate Debtors and under Applicable Law. The IBC is a complete code in itself and the NCLT acting under the IBC functions as a single window clearance for all actions proposed to be unde....
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....ant judicial authority for getting itself admitted to all the proceedings pending against any of its borrower where the time period of filing the financial claims has expired prior to the Closing Date. 58. The Hon'ble NCLT be pleased to give or issue necessary directions and instructions such that, on and from the NCLT Approval Date, the Corporate Debtors shall, in case of default in repayment of the outstanding loan amount or occurrence of any event of default under the security / lending documents executed by it, be entitled to enforce its security against its borrower(s) for recovery of outstanding loan amount along with the interest, whether penal or otherwise, irrespective of any limitation of time to initiate such enforcement proceedings. 59. The Hon'ble NCLT be pleased to give or issue necessary directions and instructions such that in the event of any decree passed in any legal proceedings relating to the Avoidance Transactions, such decreed claims shall continue to be secured by the security interests (of whatsoever nature, including any contractual comforts etc.) that were created to secure the rights and interests of SIFL/SEFL (as applicable) at the t....
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....and 27 above that the Successful Resolution Applicant has received approval from the Reserve Bank of India and the Competition Commission of India. 115. We have perused the reliefs, waivers and concessions as sought and as given in Section 10 at Pages 105-115 of the Resolution Plan. While some of the reliefs, waivers and concessions sought by the Resolution Applicant come within the purview of the Code while many others fall under the power and jurisdiction of different government authorities/departments. This Adjudicating Authority has power to grant reliefs, waivers and concessions only in relation to the Code and the Companies Act 2013 (within the powers of the NCLT) for achieving the objective of the Code. No reliefs, waivers and concessions that fall within the domain of other government department/authorities are granted. The reliefs, waivers and concessions that pertain to other governmental authorities/departments shall be dealt with the respective competent authorities/forums/offices, Government or Semi Government of the State or Central Government with regard to the respective reliefs, waivers and concessions. The competent authorities including the Appellate authoriti....
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....roceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under section 31 could be continued. 119. With respect to the waivers sought in relation to guarantors, the judgment of Lalit Kumar Jain v Union of India & ors, [2021 SCC OnLine SC 396 decided on 21.05.2021] wherein the Hon'ble Supreme Court held in para 133 that sanction of a resolution plan and finality imparted to it by section 31 does not per se operate as a discharge of the guarantor's liability shall apply. 120. With respect to the reliefs and waivers sought for all inquiries, litigations, investigations and proceedings shall be granted strictly as per the section 32A of the Code and the provisions of the law as may be applicable. 121. As far as the question of granting time to comply with the statutory obligations or seeking approvals from authorities is concerned, the Resolution Applicant is directed to do so within one year from the date of this order, as prescribed under section 31(4) of the Code. 122. In case of non-compliance of this order or withdrawal of Resolution Plan, the payments already made by the Resolution Applicant sh....