TaxTMI 
TaxTMI 
2024 (5) TMI 1721
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....fit and proper in the facts and circumstances of the present case" 2. To put the facts concisely, the underlying main petition C.P.(IB)- 2581/(PB)/2020 was filed by Jakson Engineers Limited against the Corporate Debtor, namely, UM Green Lighting Private Limited under Section 9 of the IBC, 2016, which was admitted vide Order dated 13.12.2021 of this Adjudicating Authority and the Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor was initiated. The Corporate Debtor is currently represented through its RP, Mr. Rajiv Bhatnagar. 3. This Tribunal initially appointed Mr.Amar Gopal Gambhir as the IRP of the Corporate Debtor who was replaced by Mr.Rajiv Bhatnagar, RP in the Second Meeting of CoC dated 11.02.2022. 4. It is stated by the Applicant that in terms of Regulation 6(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Applicant made a Public Announcement in Form-A on 17.12.2021 to invite claims, a copy of which was also uploaded on the website of IA. No. 5974/2023 in (IB)-2581/(ND)/2019 Insolvency and Bankruptcy Board of India (IBBI). It is further stated by the Applicant that it had constituted CoC wit....
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....G, Request For Resolution Plan, Evaluation Matrix, albeit incomplete in view of the continuing non cooperation by the suspended management of the Corporate Debtor. 6th Meeting 08.02.2023 The Applicant convened the 6th meeting of CoC on 08.02.2023, wherein the issues with respect to the appointment of valuers, Information Memorandum, Form G and appointment of forensic/ transaction auditors was against discussed. However, since the relevant records were yet to be obtained from the suspended management, all such issues were again deferred. 7th Meeting 17.03.2023 In the 7th CoC meeting held on 17.03.2022, the CoC took inter alia the following decisions for the CIRP of the Corporate Debtor: a. Appointment of 2 Registered Valuers for the Corporate Debtor; b. Seeking exclusion of period from 13.12.2021 to 10.01.2023 and further extension of 180 days from 10.04.2023 from this Hon'ble Tribunal in the CIRP period of the Corporate Debtor; c. Publication of Form G to invite expression of interest from prospective resolution applicants; d. Approval of the proposed evaluation matrix; and e. Approval of the proposed RFRP. 8th M....
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.... 12,12,12,121 .23 46.23 8. Unsecured Financial Creditors NIL - - - 9. Operational Government 3,32,68,330 1,11,111.11 0.33 Creditors Tax Dues (2) Workmen/Employees (1) 15,28,489 15,28,489 100 Other Operational Creditors (11) 18,94,70,671 .25 10,00,000 0.53 10. Other debts and dues - - - Grand Total 48,64,68,739 .25 12,38,51,721.34/ 25.45% 40. That in addition to the aforesaid, the Resolution Applicant has also proposed to infuse an amount of INR 24,61,410.03 in the form of Working Capital, as and when the need arises. Furthermore, the Regulatory Fee under Regulation 31A of the CIRP Regulations has also been proposed to be borne by the Resolution Applicant over and above the amounts proposed under the Resolution Plan. 41. That the respective payments proposed to the Operational Creditors by the Resolution Applicant are proposed to be completed within 60 days from the approval of the R....
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.... NIL NIL NIL 3 Operational Creditors (a) Related Party of Corporate Debtor NIL NIL NIL NIL (b) Other than (a) above: (i) Government 332.68 332.68 11.11 0.33 (ii) Workmen NIL NIL NIL NIL (iii) Employees 15.28 15.28 15.28 100 (iv) Other Operational Creditors 2237.70 1894.70 10 0.53 Total[(a) + (b)] 2585.66 2242.67 26.39 1.17 4 Other debts and dues NIL NIL NIL NIL Grand Total 5207.68 4864.68 1238.51 25.45 12.1 The other compliances under the relevant Sections of the Code and the Regulations made thereunder are as below: I. Provisions under Section 30(1) and (2) of the Code Compliance under Resolution Plan Section 30(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under sectio....
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.... for Corporate Persons) Regulations, 2016 (a) transfer of all or part of the assets of the corporate debt to one or more persons; Not Applicable (b) sale of all or part of the assets whether subject to any security interest or not; Not Applicable (ba) Restructuring of the Corporate Debtor, by the way of merger, amalgamation and demerger. Not Applicable (c) the substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate debtor with one or more persons; YES Clause 7k & 71, Page 384-386 of IA 5974/2023 & page 70-72 of the Resolution Plan (ca) cancellation or delisting of any shares of the corporate debtor, if Applicable YES Clause 7k & 71, Page 384-386 of IA 5974/2023 & page 70-72 of the Resolution Plan (d) satisfaction or modification of any security interest; YES Clause 7d (c)(vi) at page 378 of the IA 5974/2023 & page 64 of the Resolution Plan (e) curing or waiving of any breach of the terms of any debt due from the corporate debtor; YES Clause 7ak (15) at page 399 of the IA 5974/2023 & page 85 of the Resolution Plan (f) reduction in the amount pa....
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....o the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past. YES Clause 9.17, Page 423 of IA 5974/2023 & page 109 of the Resolution Plan Regulation 38(2) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Compliance under Resolution Plan a) The term of the plan and its implementation schedule; YES Clause 7ai - 7aj, Page 393 - 395 of IA 5974/2023 & page 79 - 81 of the Resolution Plan (b) The management and control of the business of the corporate debtor during its term; YES Chapter 8, Page 408 - 415 of IA 5974/2023 & page 94 - 101 of the Resolution Plan (c) Adequate means for supervising its implementation; YES Chapter 8, Page 408 - 415 of IA 5974/2023 & page 94 - 101 of the Resolution Plan d) Provides for the manner in which proceedings in respect of avoidance litigation transactions, if any, under Chapter III or fraudulent or wrongful trading under Chapter VI of Part II of the Code, shall will be pursued after the approval of Final resolution plan and the manner in which the proceeds, if ....
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.... Regulation 39(1A) A resolution plan which does not comply with the provision of sub-regulation (1) shall be rejected. The Resolution Plan is compliant. 13.1 The Resolution Professional has stated that the Corporate Debtor is a MSME and has filed an affidavit stating that the Resolution Applicant is not disqualified under the provisions of Section 29A of the Code. In the course of the present proceedings, the matter was listed for being spoken to, seeking clarification pertaining to the compliance of Section 29A of the Code. The Resolution Professional has stated that the Affidavits from the two PRAs, who have subsequently been SRAs, were submitted at the time of submission of the Expression of Interest. The Resolution Professional in his Affidavit dated 10.05.2024 has enclosed the copies of the Section 29A Affidavits submitted by the two SRAs i.e. Embrace Gas Pipeline Private Limited and Printtech (a Partnership Firm). 13.2 As regards compliance with Section 30(2) of the Code, it is stated that the liquidation value payable to the Operational Creditors (other than workmen and employees) is NIL as the amount of the admitted claim of the Secured....
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....New Directors / New Promoters / Resolution Applicants: S No. Particulars Amount (Rs.) 1. On or before 90 days from the date of issue of certified copy of order for approval of Resolution Plan INR 12,88,51,721.34 (including the balance amount already infused as security deposits plus interest accrued thereon) Total INR 12.88,51,721.34 (including the balance amount already infused as plus interest accrued security deposits thereon) b) The aforesaid amount is to be utilized for the purpose of payment of payment to the various stakeholders as per the terms of resolution plan. c) The Resolution Applicant will arrange the Funds from its internal accruals and its own resources/ reserves and their relatives. d) The Resolution Plan needs to be approved in its entirety and if any of the Resolution Plan cannot be enforced for any reason, the Resolution Applicant shall proceed to enforce the Resolution Plan to the extent possible. The Resolution Applicant shall not be liable for any damage/ loss on account of such impossibility to perform. e) The Resolution Applicant is open to modify the struct....
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....Applicant (RA). It also proposes to restructure the equity of the Corporate Debtor by substantial acquisition of shareholding by the RA and to continue to remain listed on Bombay Stock Exchange. Provisions for appointment of Statutory, Internal and Cost Auditors have also been made. It also provides for continued Corporate existence, whereby the operation change in the normal course of business of the Corporate Debtor shall continue under the supervision of the Resolution Applicant. It provides for Indemnification of the Corporate Debtor and member of the new promoter group." 17. As can be seen from the Clause-7 of the certificate given by the RP on prescribed form viz. Form-H, the SRA has proposed to pay much less than the amount admitted by the RP and the Liquidation value, to the different stakeholders. 18. But as per the law laid down by the Hon'ble Supreme Court in Ebix Singapore Private Limited Vs Committee of Creditors of Educomp Solutions Limited & Anr., (Civil Appeal No. 3224 of 2020) that while considering an application for approval of plan, this Adjudicating Authority need only to see as to whether there is compliance of the provisions of Section 30(2) of IBC,....
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....h Rs.5 Crore deposited by the SRA vide RTGS Mode. The Bank Statements in respect of the same have been placed on record. 21. The Applicant has sought various reliefs and concessions stipulated under Clause 7ak of the Resolution Plan, which reads thus :- Sr. No. Relief and/or Concessions and Approvals Sought Competent Authority/ Courts/ Government/Semi- Government Authority for relief sought 1. All or any non-compliances on account of filings to be done with ROC/MCA shall be deemed to be complied with on the date of approval of this Resolution Plan and the Resolution Applicant shall not be liable for making good such non compliances or pay off any related penalties / Fines / Interest. The Authorities/ Courts/ Government/ Semi- Government authority include but are not limited to Hon'ble NCLT, Delhi 2. That there will be complete protection for the new management/ promoters from any/ all prosecution, attachment and/or seizure against the corporate debtor under any law for the time being in force pursuant to Section 32A Read with Section 238 of IB Code, 2016. 3. Immediately from the Effective Date the existing directors....
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....w Management by virtue of the Approved Resolution Plan will have no obligation or any liability towards the earlier promoters under any circumstances whatsoever. b. It is to be noted that the recourse against the Personal or Co-orporate Guarantees shall be free from any subrogation rights of these Guarantors. This arrangement in relation to the Personal or Corporate Guarantees relies that it shall in no way or manner permit the Guarantors to claim any right of subrogation, indemnity, security, recompense or any Claim of whatsoever nature (whether under contract, equity or Applicable Law) against the Corporate Debtor or the RA, and all such rights and obligations stand irrevocably and unconditionally extinguished in Prosperity. c. In case at any stage, the extinguishment or cancellation, as per this Plan, of the right of subrogation available to any person other than the Corporate Debtor which has guaranteed/ secured the existing debts availed by the Corporate Debtor, is held to be invalid or not sustainable in law by a court or tribunal of competent jurisdiction, and such action to enforce their right of subrogation persons take any against the Corporate payment (on obl....
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....t is hereby clarified that any admission made by the Resolution Applicant under this Clause shall at all times be without prejudice to any rights of the Resolution Applicant and, or, the Corporate Debtor under the Applicable Laws. 13. All the Legal cases submitted by RP during CIRP Period on behalf of Corporate Debtor will be followed up by the RA. 14. On account of any form or security provided by any person for and on behalf of, and /or in order to secure any obligations of the Corporate Debtor (whether by way of hypothecation, pledge, mortgage, guarantee or otherwise) be transferred to Corporate debtor. 15. All claims that may be made or arising against the Corporate Debtor for any breach contravention or non-compliance of any Applicable Law (including but not limited to Employees Provident Funds and Miscellaneous Provisions Act, 1952, Payment of Bonus Act, 1965,Employees State Insurance Act, 1948, the Payment of Gratuity Act, 1972, environmental laws, Taxation Laws (Direct and Indirect) statutory liabilities, any violation of the applicable building bye laws, standards etc.), whether or not such claim wa....
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....pplicants. 21. The Central Board of Direct Taxes shall exempt income/ gain/ profits, if any, arising as a result of giving effect to the Resolution Plan from being subjected to tax under the provisions of the Income Tax Act, 1961. 22. The Central Board of Direct Taxes shall exempt income/ gain/ profits, if any, arising as a result of giving effect to the Resolution Plan from being subjected to tax under the provisions of the Income Tax Act, 1961. 23. Any approvals that may be required from Governmental Authorities (including tax authorities) in connection with the implementation of the Resolution Plan including on account of change In ownership/ control of CD shall be deemed to have been granted on the Effective Date. 24. For Claims by Government Authorities - Approval of the Resolution Plan will be treated as Approval by AA/NCLT that claims of government authorities including DGFT, in relation of all taxes etc. for period pertaining prior to the insolvency commencement date and till the date of AA/NCLT order shall stand extinguished and ineffective, except to the extent provided for....
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....pproval of this Resolution Plan, all new inquiries, investigations, notices, suits, claims, disputes, litigations, arbitrations or other judicial, regulatory or administrative proceedings will be deemed to be barred and will not be initiated or admitted against CD and/ or its new management in relation to any period prior to the Effective Date. 28. Except to the extent of payments to be made to the Financial Creditor and Operational and Other creditors under Chapter 7 and This Chapter above, the Resolution Applicant and CD shall have no liability towards any Operational Creditors and other creditors with respect to any claims (as defined under the Code) relating in any manner to the period prior to the Effective Date. Any such liability shall be deemed to be owed and due as of the Insolvency Commencement Date, the liquidation value of which is NIL and therefore no amount Is payable in relation thereto. All such liabilities shall immediately, irrevocably and unconditionally stand fully and finally discharged and settled with there being no further claims whatsoever, and all forms of security created or suffered to exist, or rights to create such a security, ....
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....ties will be required to drop all proceedings against the company upon approval of the plan by NCLT. 33. For Brands / Copyright / Intellectual Property rights- In order to efficiently revive the operations post implementation of Resolution Plan, the Brands / Copyright / Intellectual Property rights of CD shall continued to be used by corporate debtor and RA shall not have any restraint in using these Brands / Copyright / Intellectual Property rights. No act of suspended board shall lead to siphoning off of such Brands / Copyright / Intellectual Property rights to other entity. 34. In the event any material fact, which was available with the RP/COC during the process but was not provided to the Resolution Applicant, comes to the knowledge of the Resolution Applicant subsequently and because of such material non-disclosure the RA suffers a financial loss, the RP/ COC shall be liable for such financial loss. 35. The Company shall take appropriate corporate actions necessary for implementation of the all the provisions of the Resolution Plan, which includes: a) filing of appropriate documents or forms with....
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....any person by the corporate Debtor stands revoked with effect from the date of NCLT approval. 41. For Grace period to comply with various future statutory /regulatory requirements: a. Grant of 6 (Six) months grace period (from the date of NCLT / AA approval) to be provided to the Corporate Debtor to comply with the provisions of the various Acts / Regulations, to enable Corporate Debtor to ascertain the status of various compliances and take necessary steps to regularize the same b. During grace period, no additional charges/ fees etc. to be charged including on account of Interest Penal Interest, Penalty, Interest on Penalty, any kind of Late Fee or Damages. 42. For Issuance/Renewal of all kinds of licenses/permissions / approvals - Central / State Government Departments / Local Bodies to Renew / Issue Fresh licenses/permissions / approvals on application of the same within 30 days of the Application. 43. For Pollution Control Consent - To issue Consent to Operate by the respective pollution authorities to sustain the operations of the CD within 15 days of receipt of application from the Corpora....
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....ection 14 of the code is extracted below: "14. Moratorium. - (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: - (a) ..... (b) ..... (c) ..... (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. Explanation .- For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the....
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....he approved resolution plan and the same shall be dealt in accordance with the appropriate authorities concerned as per relevant laws. We are of the considered view that if any waiver is sought in the resolution plan, the same shall be subject to approval by the concerned authorities. The same view has been held by the Hon'ble Supreme Court in Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited and Embassy Property Development case (supra)." The Hon'ble NCLAT, however, dismissed the Appeal with the following observation: "Adjudicating Authority has already referred to the Judgment of the Hon'ble Supreme Court in the matter of Ghanshyam Mishra & Sons Private Limited' Vs. `Edelweiss Asset Reconstruction Company Limited', in Civil Appeal No. 8129 of 2019, which clearly laid down that all claims which have not been dealt in the Resolution Plan does not survive after the approval of Resolution Plan. 6. Insofar as statutory waivers and concessions, Adjudicating Authority has rightly observed that SRA to file appropriate necessary application before the necessary Forum/ Authority in order to avail the relief....