TaxTMI 
TaxTMI 
2026 (3) TMI 1322
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.... assailing the order dated 21.12.2023 ['Impugned Order'] passed by the National Company Law Tribunal, Kolkata Bench ['Adjudicating Authority'] in I.A(IB) No.501/KB/2022 and in I.A(IB) No.500/KB/2022 in C.P. (IB) No. 595/KB/2017. In Comp. App (AT) (Ins) No. 352 of 2024, Central Bank of India, is the sole Respondent herein. In Comp. App (AT) (Ins) No. 353 of 2024, Indian Overseas Bank, who is the Answering Respondent, is the Respondent No. 1 herein. Assistant Commissioner of Customs and Director General of Foreign Trade, are the Respondent No. 2 and Respondent No. 3, herein 2. It is the case of the Appellant that on 24.08.2017, Allahabad Bank filed C.P.(IB) No.595/KB/2017 before the Adjudicating Authority, under Section 7 of the Code, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, SPS Steels Rolling Mills Ltd. The Adjudicating Authority admitted the application on 22.12.2017 and a public announcement was issued on 28.12.2017 calling for claims from the creditors of the Corporate Debtor. 3. The Appellant submitted that the Appellant, i.e. Shakambhari Ispat and Power Limited, the Successful Resolution Applicant (SRA), s....
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....gin against issuance of Bank Guarantees in favour of statutory authorities at the instance of the corporate debtor in connection with the business operations. The Appellant stated that the said Bank Guarantees were issued before for commencement of the CIRP and since then all such Bank guarantees have expired. The Appellant hence requested the Respondent Banks that said FDRs may be liquated and the corresponding amount with commercial interest may be returned to the corporate debtor, which is now under the management and control of the Appellant. 7. The Appellant stated that the Central Bank of India and Indian Overseas Bank were members of CoC, who has already received their dues as provided in the approved Resolution Plan towards absolute satisfaction of all their claim in respect of the corporate debtor in terms of the Resolution Plan. Thus, the Resolution Plan has been fully implemented and the Appellant has made the complete payment as contemplated/mentioned in its resolution plan. 8. It is also the case of the Appellant that the Adjudicating Authority failed to consider that admittedly the FDRs lying with the respondent Banks were in the name of the Corporate Debtor (SP....
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....Corporate Debtor prior to the commencement of the CIRP and after the commencement of the CIRP in FY 2018-19 and in FY 2019-20, TDS on the above deposits were deducted and remitted during FY 2018-19 and FY 2019-20. 15. The Respondent Banks further submitted that since the said FDR's were not made part of the assets of the Corporate Debtor in the Information Memorandum and discovered by the Appellant only after the approval of the Resolution Plan, the Answering Respondents have transferred the amount in the CC loan account of the Corporate Debtor as per the terms of the sanction. 16. The Respondent Banks also stated that the Appellant, vide his letters ordered the Respondent Banks for the closure of the FDR account. The Respondent Banks replied to the Appellant and provided the information pertinent to the deposits and also intimated that deposits stand adjusted towards settlement of Bank dues as the said FDRs were not made part of list of assets in the Information Memorandum, therefore the same has been adjusted as per the terms of sanction. 17. The Respondent Banks conceded that no burden of new claims can be passed upon the Successful Resolution Applicant, however, if....
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....Guarantees (BGs) issued by Indian Overseas Bank and Central Bank of India between 2005 to 2013 and 2012 to 2014 respectively. We have also been informed that all the BGs expired between 2009 to 24.08.2017 and the said FDRs of the Corporate Debtor were not part of the Information Memorandum. We also note that the Appellant i.e., Shakambhari Ispat and Power Limited was approved as SRA under Section 31 of the Code and since then, the Appellant has said to have implemented the Resolution Plan and paid the due amount against the final settlement of their admitted claims and took over the assets and management of the Corporate Debtor. 25. We also note that there is no dispute amongst the parties including Respondent Banks that, the Appellant, after implementation of the approved resolution plan, has stepped into the shoes of the Corporate Debtor and took over management of the Corporate Debtor. The only difference of opinion is regarding the effects of the successful resolution of the Corporate Debtor post CIRP, i.e. whether in such case, any newly found assets of the Corporate Debtor, remains with its new management or belong to the erstwhile CoC. 26. The Appellant has interpreted....
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.... matter to be placed before the erstwhile members of the CoC of Corporate Debtor, and the distribution of this amount is decided by them in the CoC meeting which will include the respondent Bank as well. 29. As noted earlier, the issue is regarding the assets which has not been mentioned in the information memorandum. The Respondent Banks have pleaded empathetically that the SRA will have right only over the assets mentioned in the information memorandum or the Resolution Plan. Further assets not mentioned in the information memorandum cannot be treated as the assets of the Corporate Debtor. In this connection, we refer to Regulation 36 IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 regarding information memorandum which reads as under: - Regulation 36: Information memorandum. (1) Subject to sub-regulation (4), the resolution professional shall submit the information memorandum in electronic form to each member of the committee [on or before the ninety- fifth day from the insolvency commencement date [, and its subsequent updates thereof]] (2) [The information memorandum shall highlight the key selling propositions and con....
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.... [(ha) details of all identified avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code and subsequent filings before Adjudicating Authority, as referred under sub- regulation (3A) of regulation 35A;] (i) the number of workers and employees and liabilities of the corporate debtor towards them; [[(j) company overview including snapshot of business performance, key contracts, key investment highlights and other factors which bring out the value as a going concern over and above the assets of the corporate debtor such as brought forward losses in the income tax returns, input credit of GST, key employees, key customers, supply chain linkages, utility connections and other pre-existing facilities [;] [(ja) details of all allottees, including their names, amounts due, and units allotted, whose claims are either reflecting in the books of accounts of the corporate debtor or in the records of the Real Estate Regulatory Authority as established under the Real Estate (Regulation and Development) Act, 2016 (16 of 2016), but have not submitted their claims to the resolution professional;] ....
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....ter corporate receivables and receivables arising under any contact, should also be mentioned. We further find that the explanation given under Regulation 36(2) provides that description includes the details such as date of acquisition, cost of acquisition, remaining useful life, depreciation, book value, geographical coordinate of fixed assets and other relevant details. Regulation 36 also provides for inclusion of latest financial statements and audited financial statements of the Corporate Debtor for last two financial years. Similarly, Regulation 36(2)(l) stipulates to include other information, which the Resolution Professional deems relevant. 32. From above, we note that information memorandum is supposed to contain the details of assets and liabilities as far as possible. We further observe that the word "contingent liability" has been added in Regulation 36(2)(a), however, the word "contingent assets" has not been mentioned anywhere. 33. In this connection, we observe that the word "contingent liabilities" are mentioned since details of contingent liabilities may be available and are required to be mentioned in the annual financial statement of the Corporate Debtor. B....
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....hat sometime the assets may be found in the premises of the Corporate Debtor which may be discovered physically later and do not find place in the information memorandum. It cannot be the case that the assets discovered later by the SRA, post approval of the Resolution Plan should never become the property of the Corporate Debtor and should be returned to the erstwhile members of CoC. 39. At this stage, we also take into consideration relevant regulation pertaining to Resolution Plan, which reads as under: - Regulation 37: Resolution plan. [37. A resolution plan shall provide for the measures, as may be necessary, for insolvency resolution of the corporate debtor for maximization 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; (b) sale of all or part of the assets whether subject to any security interest or not; [(ba) restructuring of the corporate debtor, by way of merger, amalgamation and demerger;] (c) the substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate d....
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....the Adjudicating Authority at any time in the past.] (2) A resolution plan shall provide: (a) the term of the plan and its implementation schedule; (b) the management and control of the business of the corporate debtor during its term; and (c) adequate means for supervising its implementation. [(d) provides for the manner in which proceedings in respect of avoidance transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, will be pursued after the approval of the resolution plan and the manner in which the proceeds, if any, from such proceedings shall be distributed: Provided that this clause shall not apply to any resolution plan that has been submitted to the Adjudicating Authority under sub-section (6) of section 30 on or before the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022.] [(2A) A resolution plan shall not provide for assignment of any avoidance transactions under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of t....
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....n the final list may submit resolution plan or plans prepared in accordance with the Code and these regulations to the resolution professional electronically within the time given in the request for resolution plans under regulation 36B along with (a) an affidavit stating that it is eligible under section 29A to submit resolution plans; (b) [***]; and (c) an undertaking by the prospective resolution applicant that every information and records provided in connection with or in the resolution plan is true and correct and discovery of false information and record at any time will render the applicant ineligible to continue in the corporate insolvency resolution process, forfeit any refundable deposit, and attract penal action under the Code. [(1A) The resolution professional may, if envisaged in the request for resolution plan- (a) allow modification of the resolution plan received under sub-regulation (1), but not more than once; or (b) use a challenge mechanism to enable resolution applicants to improve their plans. (1B) The committee shall not consider any resolution plan- (a) received after the time as specif....
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....gulation 36B]]. (5) The resolution professional shall forthwith send a copy of the order of the Adjudicating Authority approving or rejecting a resolution plan to the participants and the resolution applicant. ^12[(5A) The resolution professional shall, within fifteen days of the order of the Adjudicating Authority approving a resolution plan, intimate each claimant, the principle or formulae, as the case may be, for payment of debts under such resolution plan: Provided that this sub-regulation shall apply to every corporate insolvency resolution process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2020;] (6) A provision in a resolution plan which would otherwise require the consent of the members or partners of the corporate debtor, as the case may be, under the terms of the constitutional documents of the corporate debtor, shareholders' agreement, joint venture agreement or other document of a similar nature, shall take effect notwithstanding that such consent has not been obtained. (7) No ....
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....n shall stand frozen and will be binding on all the stakeholders having interest. We rely upon the judgement passed by the Hon'ble Apex Court in Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited reported in (2021) 9 SCC 657: "95. In the result, we answer the questions framed by us as under: (i) That once a resolution plan is duly approved by the Adjudicating Authority Under Sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan; (ii) 2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I&B Code has co....