2019 (7) TMI 1603 - Tri - Insolvency and Bankruptcy

Implementation of Resolution Plan - It is due to lackadaisical approach of Liberty House Group in implementing the Plan or it is because the Committee of Creditors/Monitoring Committee's non-cooperation to Liberty House Group in implementing the Plan? - HELD THAT - It is the say of State Bank of India/Committee of Creditors that Liberty House Group was obliged to make upfront cash payment of ₹ 410 Crore within 57 days of approval of the Resolution Plan. They did not make the payment thereby they committed breach of the implementation of the Resolution Plan. As against the Liberty House Group contends that Committee of Creditors/Monitoring Committee did not issue in their favour offer letter of equity shares of the Corporate Debtor. Unless such offer letter is issued, it is difficult for them to invest the funds as per the Plan. All parties in the appeal before Hon'ble NCLAT are bound by this order unless it is set aside or varied by the Appellate Tribunal/Court. This Adjudicating Authority is also bound by this order. In view of the above order this Adjudicating Authority cannot again go in to the question whether Liberty House Group can be allowed to not to make upfront payment because Committee of Creditors/Monitoring Committee did not give them offer letter. In this case, the Committee of Creditors while approving the Resolution Plan of Liberty House Group, did not ask them to give performance security for successful implementation of the Resolution Plan. Moreover, this provision is added in Regulation by Amendment dated 24.04.2019. If this provision is to be used against Liberty House Group by forfeiting their amount treating as performance's security, it would be nothing but penalising them at this stage. Such provision cannot be used retrospectively. Their Plan is approved almost year ago before the amendment. Hence, the prayer of Committee of Creditors to allow them to forfeit sum of ₹ 50 Crore deposited by Liberty House Group treating it as a performance's Security cannot be allowed. e submissions of learned Senior Counsel though appears to be attractive, but cannot be accepted. Committee of Creditors had an opportunity to consider the Plan submitted by M/S Maharashtra Seamless Limited at earlier point of time. Their Plan was rejected by Committee of Creditors because in the Plan they had offered the investment in the Corporate Debtor below the liquidation value. In such a situation, the authority cannot reset the clock back to day one - the Committee of Creditors cannot be allowed to restart the Corporate Insolvency Resolution Period afresh over and again. Since the Liberty House Group, the Successful Resolution Applicant failed to implement Resolution Plan as submitted by them, I cancelled their Resolution Plan and proceed to pass order of liquidation of Corporate Debtor as contemplated under Section 33 of Insolvency and Bankruptcy Code, 2016 - the Liquidator is directed to liquidate the Corporate Debtor as a going concern as per Regulation 32 (f) of Insolvency and Bankruptcy Board of India (Liquidation Process Regulation, 2016) - The Liquidator is directed to proceed with the process of Liquidation in a manner laid down in Chapter Ill of the Insolvency and Bankruptcy Code, 2016.

Summary

Issues Involved:
1. Implementation of the approved Resolution Plan by Liberty House Group.
2. Non-payment of wages to the workmen of the Corporate Debtor.
3. Consideration of MSTC's claim as an Operational Creditor.
4. Direction to the Registrar of Companies, Odisha regarding non-coercive action against the Corporate Debtor.
5. Request for liquidation of the Corporate Debtor.

Issue-wise Detailed Analysis:

1. Implementation of the Approved Resolution Plan by Liberty House Group:
The State Bank of India (SBI) and the Committee of Creditors (CoC) filed applications seeking directions for Liberty House Group (LHG) to act according to the approved Resolution Plan. Later, SBI/CoC sought to cancel the Resolution Plan, citing LHG's breach in its implementation. They requested the revival of the Corporate Insolvency Resolution Process (CIRP) by excluding the period wasted by LHG and considering the Resolution Plan submitted by the earlier H2 bidder, Maharashtra Seamless Limited. They also requested to forfeit ?50 Crore deposited by LHG as performance security for the implementation of the Resolution Plan. The Tribunal held that LHG committed a breach of the terms of the approved Resolution Plan by not making the upfront cash payment within the stipulated period, as directed by the Hon'ble NCLAT. Consequently, the application by LHG requesting cooperation from the CoC was rejected.

2. Non-payment of Wages to the Workmen of the Corporate Debtor:
The workmen of the Corporate Debtor filed an application stating non-payment of wages for several months and sought directions for LHG to make provisions for their salary payments. The Tribunal did not provide a separate detailed analysis for this issue but included it in the overall decision regarding the liquidation process.

3. Consideration of MSTC's Claim as an Operational Creditor:
MSTC, an Operational Creditor, filed an application to direct the CoC to consider their claim. The Tribunal noted that MSTC's claim of ?108.36 Crore was rejected by the Adjudicating Authority at Kolkata, Hon'ble NCLAT, and the Hon'ble Supreme Court. Consequently, MSTC's application was rejected.

4. Direction to the Registrar of Companies, Odisha:
The Monitoring Committee filed an application seeking directions to the Registrar of Companies, Odisha, not to take any coercive action against the Corporate Debtor for not holding the Annual General Body Meeting in time. The Tribunal directed the Registrar of Companies, Odisha, not to proceed against the Corporate Debtor for this issue.

5. Request for Liquidation of the Corporate Debtor:
Given the failure of LHG to implement the Resolution Plan, the Tribunal had no option but to pass an order of liquidation for the Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016. The Tribunal rejected the CoC's request to consider the Resolution Plan of Maharashtra Seamless Limited, stating that the clock cannot be reset to day one and the CIRP period cannot be restarted. The Tribunal appointed Mr. Sumit Binani as the Liquidator and directed the liquidation of the Corporate Debtor as a going concern under Regulation 32(f) of the Insolvency and Bankruptcy Board of India (Liquidation Process Regulation, 2016).

Order:
1. The Corporate Debtor, Adhunik Metaliks Limited, and its subsidiary Zion Steel Limited are admitted into the process of liquidation.
2. Mr. Sumit Binani is appointed as the Liquidator.
3. Public announcement of liquidation to be made in leading newspapers.
4. The Registry to communicate the order to the Registrar of Companies, Odisha, and the Insolvency and Bankruptcy Board of India (IBBI).
5. The moratorium under Section 14 of the I&B Code ceases, and a fresh moratorium under Section 33(5) commences.
6. The Liquidator is directed to liquidate/sell the Corporate Debtor as a going concern.
7. The Liquidator to file a preliminary report within 75 days and continue to file progress reports quarterly.
8. The fee payable to the Liquidator shall form part of the liquidation cost.
9. Pending the process of liquidation, the Registrar of Companies, Odisha, is not to proceed against the Corporate Debtor for not holding the Annual General Body Meeting.
10. All pending applications are disposed of accordingly.
11. Copies of the order to be sent to relevant parties by Speed Post and email.

This comprehensive summary covers all relevant issues and preserves the legal terminology and significant phrases from the original judgment.