TaxTMI 
TaxTMI 
2023 (4) TMI 1489
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....ittee of Creditors (COC), in its 39th meeting which was held on 12.01.2023. The present application was reserved for orders on 16.03.2023. 2. The Company Petition CP (IB) No. 35/Chd/HP/2018 was filed by the Financial creditor Phoenix Arc Private Limited against the corporate debtor, which was admitted into the Corporate Insolvency Resolution Process ('CIRP') vide order dated 06.07.2018 3. Mr Jalesh Grover was appointed as Interim Resolution Professional ('IRP') vide Order dated 12.07.2018, and the public announcement as per Regulation 6 of the CIRP Regulations in Form A, as prescribed under the schedule, was made on 14.07.2018 in two newspapers, in Amar Ujala (Hindi) and Financial Express (English), inviting claims from the creditors of the corporate debtor as envisaged under the Code. 4. Pursant to the public announcement, the Applicant constituted the Committee of Creditors on 01.08.2018 in terms of Section 21 of the Code comprising of Phoenix ARC Private Limited and State Bank of India, with the following voting share :- S. No. Name of Financial Creditors Voting Share Percentage (%) 1. Phoenix ARC Private Limited 92.55% 2. State B....
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....able taxes. * The COC approved the appointment of the security agency for the factory premises and registered office of Corporate Debtor for which the payment of services was ratified. * The COC ratified the fees of the IRP for Rs. 3,00,000/- plus applicable taxes and the expenses for period from 12.07.2018 to 09.08.2018. The COC agreed that the IRP/RP can draw expenses and his fees from the cash flows of the Corporate Debtor. * The IRP was confirmed as the RP with 100% voting shares. 2nd CoC meeting 11.09.2018 * RP apprised that the Information Memorandum shall be shared with the members as and when undertaking is received by him. Discussion took place regarding the publication of the invitation of expression of Interest in Form G. CoC recommended that publication be done in Punjab, Haryana, Himachal Pradesh and also in Mumbai edition. CoC further opined that a process advisor be appointed and quotes for same be invited. * Discussion about Application filed by the RP in NCLT for directions to electricity department to not disconnect the electricity and the order of the NCLT thereby allowing the same. RP updated the CoC members ....
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....L. * Discussion about the Application filed by the Himachal Pradesh State Electricity Board for the directions in response to the order passed by the Himachal Pollution Board for disconnection of electricity of the Corporate Debtor. * Discussion about the reconciliation of land ownership of the Corporate Debtor. The COC approved shorter notice for the future meetings and further decided that notice shall not be for less than two working days for upcoming meetings. * The COC members having voting share of 92.58% approved filing of application before NCLT, Ahmedabad in matter of clearance of dues by AMIPL. * The COC ratified the travelling, and other expenses incurred by the RP for the period of 16.10.2018 to 05.11.2018. * The COC ratified the expenses of Rs. 5,40,000/- regarding the application filed before Hon'ble NCLT by a voting share of 92.58%. * The COC authorized the RP to file an application before Hon'ble NCLT against HSBC and to take further action in this regard. 5th CoC Meeting 06.11.2018 Discussions about Application filed before Hon'ble NCLT, Ahmedabad for clearance of dues by Arcelor Mittal (Resolution Applicant in the matter of Essa....
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....ions and legal opinion received for the compliant Resolution Plan and discussed the matter with CoC members before initiation of Negotiation Process with the Resolution Applicants. ..The Forensic & Transaction Auditor informed that there is sufficient evidence to prove the existence of preferential, undervalued and fraudulent transactions, the RP requested them to provide summary of transactions under specific head so as to file application with Hon'ble NCLT. 10th CoC Meeting 21.02.2019 ..The COC informed that the last proposed amount i.e. Rs. 74.5 Cr. of H1 Resolution Applicant is not accepted and directed the RP to invite prospective Resolution Applicants for further negotiation. * The COC informed that due to constraint in timelines, the re-publication of Form G may not lead to better compliant Resolution Plan for the Corporate Debtor and decided to further negotiate with the existing Resolution Applicants. RP informed that the Application * filed by the Job Work Supplier of the Corporate Debtor and a Resolution Applicant has been disposed off by the Hon'ble NCLT, Chandigarh with a liberty to file a detailed representation befor....
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....CLT in the matter of GPI Textiles Limited. ..RP informed that the insurance claim amount has been used for the repair and maintenance of the Factory Mills to run the 16000 spindles, which were not working earlier with the approval of COC members. RP informed the COC that the * financial closure of the Resolution Applicant Aggarsain Spinners Limited has not been received yet. * RP gave status update about the disputed land of the Corporate Debtor. 14th CoC Meeting 27.06.2019 * The RP presented the cash flow statement for the CIRP period and projected cash flow for the period of July, August and September, 2019. The COC approved the * resolution with 92.575% voting share to raise the interim finance amount upto Rs. 1.50 Cr. to keep the company a going concern. 15th CoC Meeting 19.07.2019 * Discussion on the current status of operations of the Corporate Debtor. RP informed the COC that the * application for early hearing in respect of approval of Resolution Plan has been dismissed by the Adjudicating Authority. Discussion on email sent by the * Executive Director (Powers suspended) containing queries related to the Resolutio....
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....the current status of operations of the Corporate Debtor and appropriate steps to be taken during the Lock down period. * RP discussed that the intention of the RA is that if the company is not a going concern, he may opt to back out since he submitted the Resolution Plan for a going concern unit and the RP requested the COC to decide whether to run the unit in loss or to close the unit with the risk of the back step of the RA. 21st CoC Meeting 21.05.2020 * Discussion on the current status of operations of the Corporate Debtor and brief about the operations started by the Job Work Contractor after approval of Resolution Plan in 12th CoC Meeting. * The Representative of Phoenix ARC Private Limited suggested the RP to publish an invitation to submit the quotation to run the factory and that there shall be open negotiation between all the interested parties. 22nd CoC Meeting 22.05.2020 * Discussion on selection of the Job Work Contractor to run the factory of the Corporate Debtor and it was decided that final negotiation with both the parties shall be done and the H1 Party shall be asked to run the factory at ze....
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....of the application), the members have resolved to publish a fresh FORM-G in order to invite fresh resolution plans for the Corporate Debtor and it was decided to publish the FORM G in two newspapers namely "Indian Express- all India edition" and "Amar Ujala". The last date of submission of EOI as per Form G was 17.06.2022. In the 28th meeting which was convened on 16.06.2022 (Annexure A-9 of the application), the CoC approved the Evaluation Matrix and the Request for Resolution Plan (RFRP). After the publication of Form G, It was apprised by the applicant in 29th meeting held on 01.07.2022, 18 Expression of Interest were received till the last date of submission i.e. 17.06.2022 and the last date for submission of resolution plan was fixed as 19.07.2022. 10. In the 30th meeting of the Committee of Creditors was convened on 20.07.2022, the Applicant apprised that 11 Resolution Plans has been received till the last date of submission of the resolution plan i.e. on 19.07.2022. All the eligible Prospective Resolution applicants in accordance with Section 29A of the Code were invited to the meeting and their Resolution Plans were presented before COC members. All PRA's were invite....
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....avit under Section 29A of the Code along with undertaking under Regulation 36 of the CIRP Regulations on 06.01.2023 and 30 days expired on 08.01.2023 and no resolution plan from Aggarsain Spinners Limited has been received till 08.01.2023. 15. In terms of Regulation 39(3)(c) of the CIRP Regulations, 2016, the compliant resolution plans shall be placed before the Committee of Creditors for its approval/rejection. The Committee of Creditors also discussed and approved the Tie-Breaker formula. The Applicant placed the Reports under Section 29A of the Code and accordingly, placed the nine (9) Resolution Plans for voting in the 39th meeting of the CoC held on 12.01.2023. In the same meeting, the applicant placed the resolution for approval of Resolution plans and to liquidate the Corporate Debtor before the CoC for voting. 16. The Resolutions were placed for e-voting, which commenced on 15th January, 2023 to 31st January. After the conclusion of the e-voting, the Resolution Plan of Mr Anil Sharma & Mr Satvinder Singh has been approved by 100% voting share of the Committee of Creditors. A copy of the Resolution Plan along with Addendum is attached as Annexure A-27 of the applicatio....
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.... Himachal Pradesh Excise Act, 2011, Excise revenue Department will have the first and recoverable as arrears of land revenue on the account of the judgement dated 06.09.2022 passed by Hon'ble Supreme Court of India in the matter of State Tax Officer (1) Vs. Rainbow Papers Limited in Civil Appeal No.1661 Of 2020 With With Civil Appeal No.2568 OF 2020 order dated 06.09.2022 Case citation: (2022) ibclaw.in 107 SC. After the discussion of the same in the 39th meeting held on 12.01.2023, it is decided that a total secured amount of Rs. 4.09 crores shall be paid to the State Tax & Excise Department as a Secured Creditor in accordance with the State Tax Officer Vs Rainbow Papers Limited judgement (Supra) in proportion to other secured financial creditors. The resolution plan considers the claims of statutory authorities where a security interest is created by law, as secured creditors for distribution under Section 53(1) of the Code. The aforesaid affidavit furnished by Resolution Professional has been filed as Annexure A-8 of the Diary No. 00456/01 dated 20.02.2023. 21. The Resolution Professional has also filed a compliance affidavit under Section 30(2)(b) The Resolution Professi....
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....orm H filed at Annexure A-29 of the application which is reproduced as below :- (Amount In Lakhs) Sl. No. Category of Stakehol der* Sub-Category of Stakeholder Amount Claimed Amount Admitted Amount Provided under the Plan(In lakhs) Amount Provided to the Amount Claimed (%) (1) (2) (3) (4) (5) (6) (7) 1 Secured Financial Creditors (a) Creditors not having a right to vote under Sub Section (2) of 21 (b) Other than (a) above: (i) who did not vote in favour of the resolution Plan (ii) who voted in favour of the resolution plan 30953.33 30953.33 14889 48.10% Total[(a) + (b)] 30953.33 30953.33 14889 48.10% 2 Unsecure d Financial Creditors (a) Creditors not having a right to vote under sub-section (2) of section 21 23858.85 949.73....
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....h the submission of Resolution plan Submission of Bank Guarantee of Rs. 16.50 Crores- 10% of the plan value) or bank transfer through normal banking channels Within 7 business days of approval of resolution plan by CoC Effective date X Formation of Monitoring Agency X+7 Vacation of the office of suspended directors, appointment of new directors in the board of corporate debtor X <= 30 Extinguishment of all existing shares and issue of fresh shares in f/o new Resolution Applicant or the persons nominated by them X <= 30 Intimation to the statutory authorities, creditors, existing shareholders and other stakeholders of the Company Within 7 days from the date of final payment CIRP cost 100% within 30 days of effective date (without interest) Rs. 700.00 lacs Financial Creditors 100% within 30 days of effective date (without interest) Rs. 15000.00 lacs* Workmen and employee dues 100% within 30 days of effective date (without interest) Rs. 450.58 lacs* Operational Creditors dues 100% within 30 days of effective date (without interest) Rs. 249.42 lacs* Return of Pe....
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....editors or adjusted with the final amount as mentioned in the Resolution Plan". (b) provides for the payment to the operational creditors? At Page No 51 - 57 of the Resolution Plan which is attached as Annexure No. A-27 (Relevant page no. 580-594) of the main application. Yes (c) provides for the payment to the financial creditors who did not vote in favour of the resolution plan? At Page No 49 of the Resolution Plan which is attached as Annexure No. A-27 (Relevant page no 585-588) and addendum to the Resolution plan attached as Annexure No. A-27 (Relevant page no 633-634) of the main application, the Resolution Applicant has stated as follows: "Dissenting financial creditors shall be paid in priority over financial creditors who voted in favour of the plan (Regulation 38(1) (b) of CIRP regulations). (vi) Section 30(2) (b) of IBC- Dissenting Financial Creditors RA defines term of payment of Dissenting FC as 24 hours in priority to other financial creditors For the purpose of this financial proposal, the Resolution Applicants have assumed that there are no Dissenting Financial Creditors. However, if there are any Dis....
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....proved by the CoC with 66% voting share? Yes, approved by 100% Voting Share at ANNEXURE A-26 Page No. 501-502 of the main application(E- Voting Results) Yes Section 31(1) Whether the Resolution Plan has provisions for its effective implementation plan, according to the CoC? Yes, CoC has approved the appointment of Monitoring Professional Mr. Jalesh Kumar Grover for the implementation of the Resolution Plan in the 39TH CoC Meeting held on 12.01.2023 (ANNEXURE A-25) at Page No. 461 of the main application (Minutes of the 39TH CoC meeting). Voting Sheet (Page No. ANNEXURE A-26 Page No. 520 Monitoring shall be done by Monitoring Agency consisting of one representative of the Resolution Applicant, representative of the CoC and the present Resolution Professional; Yes Regulation 38 (1) Whether the amount due to the operational creditors under the resolution plan has been given priority in payment over financial creditors? At Page No 51 - 57 and Page 59 of the Resolution Plan which is attached as Annexure No. 27 (Relevant page no. 588-594) of the main application. Yes Regulation 38(1A) Whether the resolution pla....
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....e No 62-63 of the Resolution Plan which is attached as Annexure 27 (relevant page no. 599-600) of the main application. Yes (vii) (b) it is feasible and viable? At Page No 62-63 of the Resolution Plan which is attached as Annexure 27 (Relevant Page no.599-600 of the main application.) Yes (c) it has provisions for its effective implementation? At Page No 62-63 of the Resolution Plan which is attached as Annexure No. 27 (Relevant page no. 599-600 of the main application). (viii) (d) it has provisions for approvals required and the timeline for the same? At Page No 62-63 of the Resolution Plan which is attached as Annexure No.27 (Relevant Page No. 599-600 of the main application. (ix) (e) the resolution applicant has the capability to implement the resolution plan? At Page No 62-63of the Resolution Plan which is attached as Annexure 27 (Relevant Page No. 599-600 of the main application. The Resolution Applicant has claimed to be financially sound and capable of implementing the Resolution plan, which has to be considered by the Committee of Creditors (x) 39(2) (c) Whether the RP has filed ....
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....sfer of Corporate Debtor's assets to one or more person. N.A. Regulation 37(b) of CIRP sale of all or part of the assets whether subject to any security interest or not N.A. Regulation 37(ba) of CIRP restructuring of the corporate debtor, by way of merger, amalgamation and demerger NA as no merger, amalgamation or demerger has been proposed during the tenure of plan. Regulation 37(c) of CIRP Substantial acquisition of shares or merger or consolidation of corporate debtor with one or more person Existing shares of the Corporate Debtor shall be extinguished and the RA will issue fresh Shares. Point no. 1 (Page 63) Regulation 37(ca) of CIRP Cancellation or delisting of any shares of the corporate debtor, if applicable The shares of existing Corporate Debtor will automatically stand cancelled by way of Reduction of Share Capital upon approval of this Resolution Plan by the Adjudicating Authority. Pointno.1(Page63) Regulation 37(d) of CIRP Satisfaction or modification of any security interest The Security Interest (mortgage/ hypothecation/ pledge/lien/encumbrance)of any creditor on the as....
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.... that no tax (including interest and penalty) would be paid for any liability or claim raised or non-compliance for the period up to the effective date. Further, any re-assessment, revision or other proceedings under the provision of Income tax act would be deemed to be barred in relation to any period prior to the effective date by virtue of order of Hon'ble NCLT approving this Resolution Plan and the Company and/or the RAs shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. 3. The Company be allowed to carry forward losses and depreciation as per provision of the Income Tax Act, 1961 under section 79 of the Income tax Act. There has been amendment in Income tax Act in the Budget for the year 2018-19 as enumerated below: After the second proviso, the following proviso shall be inserted, namely: Nothing contained in sub-section (1) shall apply,- to a company where a change in the shareholding takes place in a previous year pursuant to a resolution plan approved under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), after affording jurisdictional Principal Commissioner or a reasonable opportunity of being heard to the....
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....rroneously refunded or input credit wrongly availed or utilized, any contravention of any provision of any indirect taxes act or rules made thereunder as may be prescribed by the company or existing promoters, directors, KMPs, subsidiary/ associate/group companies, for a period up to the effective date. 6. The Company shall be entitled to carry forward the accumulated input tax credit balances under the Indirect Tax Laws and to utilized such amounts to set off against tax liability arising in future in accordance with the applicable laws. 7. All benefits, exemptions, deductions, rebates, reliefs, credits etc. under any tax laws in India available to the Company shall not lapse pursuant to the Resolution Plan and shall be available post implementation date. This is for Income Tax Authorities and Custom authorities to Consider, keeping in view the objects of IBC, 2016. 3. RBI to waive all past non-compliances of the Company under FEMA, Reserve Bank of India Act and the regulations, notifications, directions, guidelines, circulars, press release (hereinafter collectively referred to as "Regulatory Framework") issued thereunder and the Company and/or RAs s....
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....tain of the business permits of the corporate debtor have lapsed, expired, suspended, cancelled, revoked or terminated or the corporate debtor has non compliances in relation thereto. Accordingly, all Government authorities that have issued or granted such business permits to provide reasonable time period of at least twelve months after the effective date in order to the Resolution Applicant to assess the status of business permits and applicable laws without initiating any investigation, action or proceeding in relation to non- compliance, and to permit the Resolution Applicant to continue to operate the business of the corporate debtor as carried out prior to effective date. 6. 100 % extinguishment of unclaimed amount of all other Central and state Government Authorities (Including dues of Land Revenue Department (if any) up to effective date. 7. All concerned revenue or stamp authorities to waive penalties for non-registration and inadequate or non-stamping of documents executed by the Company up to the effective date. 8. No liability towards unearned increase, processing fee, extension fee and other fee, charges, dues as may be applicable on account of transf....
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....reme Court in case of Ghanshyam Mishra and Sons Private Limited through Authorised Signatory vs. Edelweiss Asset Reconstruction Company Limited through the Director & Ors. 2021 SCC Online SC 313. For the other reliefs, those are to be considered by the respective financial institutions keeping in view the objects of the IB Code,2016. 7. 1. To waive off all the future/subsequent demands/claims/suits etc. against the corporate debtor related to the events up to effective date; 2. To waive off the contingent liability as may arise up to effective date and also which are not captured related to period before approval of Resolution Plan. 3. All claims, rights of existing Promoter/ Promoter group against the Corporate Debtor, unless covered in the Resolution Plan, shall stand irrevocably and unconditionally extinguished and ineffective on approval of Resolution Plan. 4. All Government/ Regulatory Authorities to grant any relief, concession or dispensation as may be required for implementation of the transaction contemplated under the Resolution Plan. 5. Himachal Pradesh State Electricity Board to continue supply the electricity without insisting the old dues....
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....on for Avoidance Transactions are pending and the following information is furnished as to who will pursue those applications and bear expenses on the same :- S.NO. Under Section Diary No. / IA No. To be pursued by Expenses Incurred by 1. 45 and 49 Diary No 00246/2023 dated 17.01.2023 Resolution Professional To be incurred by both FCs in a manner proportionate to their claim 2. 66 Diary No 00247/2023 dated 17.01.2023 Resolution Professional To be incurred by both FCs in a manner proportionate to their claim 3. 50 Diary No 00248 dated 17.01.2023 Resolution Professional To be incurred by both FCs in a manner proportionate to their claim Findings 35. On hearing the submissions made by the learned counsel for the Resolution Professional and perusing the records, we find that the Resolution Plan has been approved at a total Resolution Value of Rs. 16500 Lacs. The resolution applicant proposes to make payment to secured financial creditors Rs. 14889 Lacs and Rs. 420.86 Lacs to the Operational Creditors(including statutory dues) and Rs. 450.58 Lacs to Workmen/employees. 36. As per the CoC, the Resolution Plan meets the r....