2018 (9) TMI 1828 - Tri - Insolvency and Bankruptcy

Revision of Resolution Plan - requirement of production of various documents - RP has submitted in present application that the interest of Operational Creditor can be protected by way of Bank Guarantee from the financial creditor - HELD THAT - The right/title over the goods under question as appearing on bill of lading/other import documents were transferred in favor of buyer in pursuance to High Seas sale agreements and as per the agreements, the buyer is under obligation to meet custom obligations whatsoever arises in the matter, no recourses/claim in this connection can be raised against the seller at all. Even otherwise the alleged custom duty liability as imposed by the custom authorities vide order, got cancelled in pursuance to order dated 08.11.2017 passed by Hon'ble CESTAT. Tribunal is of the opinion that the resolution professional shall undertake the following actions, which makes it clear that the provision is a mandatory provision thus the prayer by the RP to dispense the public notice is not tenable. Application disposed off.

Summary

Issues:
1) Validity of the claim made by the Operational Creditor
2) Protection of Operational Creditor's interest through Bank Guarantee
3) Waiving the requirement of public invitation for resolution plan submission
4) Compliance with duties of Resolution Professional
5) Reduction of claim amount by the Resolution Professional
6) Dispute over alleged custom duty liability
7) Compliance with previous orders of the Tribunal

Analysis:
1) The Tribunal had previously directed the Resolution Professional (RP) to prepare a revised resolution plan considering the Operational Creditor's claim. The RP raised concerns about the lack of valid unpaid invoices supporting the claim, stating that all invoices produced were paid by the Corporate Debtor (CD). The Committee of Creditors (COC) approved a Bank Guarantee for the disputed amount, pending resolution by the High Court. The RP emphasized the need for valid invoices to support the claim.

2) The COC set an eligibility criterion for the management continuity of the CD, seeking a waiver of public invitation requirement. The Operational Creditor (OC) questioned the RP's conduct in not inviting other Resolution Applicants and submitting a sole plan from the Promoters/Directors. The RP's reduction of the claim amount without proper examination was also contested by the OC.

3) The OC highlighted discrepancies in the RP's handling of the claim and disputed custom duty liability. The RP suggested protecting the OC's interest through a Bank Guarantee, but the OC found this approach vague. The Tribunal emphasized the mandatory nature of inviting prospective resolution applicants, rejecting the RP's request to dispense with public notice.

4) The Tribunal reiterated its previous order regarding the OC's claim and directed compliance by the RP. The OC was instructed to produce invoices, with the CD directed to make payments without a Bank Guarantee. Pending customs classification issues were noted, with potential adjustments based on the Supreme Court's verdict in favor of the CD.

5) The Tribunal addressed the RP's request for a CIRP extension, granting a 60-day extension. The RP's duties, including inviting resolution applicants, were deemed mandatory, emphasizing the importance of public notice for transparency. The applications were disposed of accordingly, with directions for compliance and further proceedings outlined by the Tribunal.