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2019 (8) TMI 1528 - Tri - Companies LawApproval of Resolution plan - one of the justifications for approval of the Resolution Plan is that the Liquidation Value is less comparing the proposals made in the Resolution Plan - HELD THAT - The records of the case have revealed that the valuers have valued the liquidated value at ₹13.53 Crores and the Fair Value at ₹ 21.70 Cr. The Resolution Applicant is bringing in a sum of ₹29.74 Crores to satisfy Financial Debt . It is noticed that Karad Bank had raised a claim of ₹ 30.27 crore. however only 60% i.e. ₹ 18.16 Cr. And Janklayan Patsanstha had a claim of ₹ 62 lakhs , against that proposed 60% i.e. ₹ 37 lakhs - Regulation 35 of IBBI (CIRP) Regulations, 2016 prescribes that two registered valuers be appointed to give the RP an estimate of the fair value and the liquidation value, respectively assessed at ₹ 21.70 Cr and 13.53 Cr. A methodical scrutiny of Financial Statement is expected before concurring with approval of the CoC. Per contra, absence of recording of subjective satisfaction may lead to situation that, being sanctioned without judicial analysis, thus may not be sustainable in the eyes of law. There are no two views, and must not be, that this I B Code provides greater accountability both on the Insolvency Professional, as also on CoC, mainly comprise of lender Banks. Their approval of a Resolution Plan ought to be judged with due diligence. To sum up, the recording of an analytical satisfaction is a condition precedent before granting of approval. The Resolution Plan as approved by the Committee of Creditors is by and large hereby sanctioned by this Order - the approval of a Resolution Plan can be accepted U/s 31 (1) IBC by Adjudicating Authority after considering feasibility and viability recorded by COC ( refer Sec. 30(4) IBC ) with a 75%/66% voting share consenting for the said plan - The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 shall cease to have any effect henceforth.
Issues Involved:
1. Rejection of Operational Creditor's claim. 2. Promoter's application to submit a Resolution Plan. 3. Approval of the Resolution Plan by the Resolution Professional. Issue-wise Detailed Analysis: 1. Rejection of Operational Creditor's Claim (MA 1509/2019): The Operational Creditor filed an application due to the rejection of its claim by the Resolution Professional (RP). The creditor had installed an ethanol plant and machinery in the Corporate Debtor's premises, claiming unpaid rent. The RP argued that the claim was incorrectly filed as a Financial Creditor instead of an Operational Creditor and was not submitted in the correct form despite ample opportunity. Additionally, the RP highlighted that one of the Operational Creditor's directors was a key managerial personnel of the Corporate Debtor, thus a related party under Section 5(24)(b) of the I&B Code. The application was also deemed belated, filed after the Resolution Plan approval application was already submitted. Consequently, MA 1509/2019 was rejected. 2. Promoter's Application to Submit a Resolution Plan (MA 2104/2019): The Promoter of the Corporate Debtor sought permission to submit a Resolution Plan, arguing eligibility under the MSME classification. Despite paying a participation deposit, the Promoter failed to submit the plan on time due to personal reasons. The tribunal referenced the NCLAT decision in Mr. Sharad Sanghi V. Ms. Vandana Garg & Ors., emphasizing that once the CoC votes on a Resolution Plan, it cannot be altered later. The tribunal stressed the importance of adhering to the I&B Code's timelines for the revival of sick companies. Since the 270-day period had lapsed and the CoC had already approved a plan, MA 2104/2019 was rejected. 3. Approval of the Resolution Plan (MA 662/2019): The RP filed an application under Section 30(6) of the I&B Code for the approval of a Resolution Plan. The Financial Creditor, Karad Urban Co-operative Bank Ltd., had initiated CIRP against the Corporate Debtor for a default amount. The CoC, holding 98% voting share, approved the Resolution Plan submitted by Sai Agro (India) Chemicals. The Resolution Plan included provisions for fund infusion, payment schedules, and compliance with Section 29A of the I&B Code. The tribunal noted that the liquidation value was less than the proposed amount in the Resolution Plan, which aimed to satisfy the financial debt. The tribunal emphasized the importance of recording satisfaction under Section 31 of the I&B Code, ensuring the Plan met the requirements of Section 30(2). The Resolution Plan was approved, binding on the Corporate Debtor and stakeholders, and the moratorium under Section 14 ceased to have effect. The RP was directed to submit records to the Insolvency & Bankruptcy Board of India and return them to the Resolution Applicant or new promoters. Conclusion: The tribunal rejected the Operational Creditor's claim and the Promoter's late application to submit a Resolution Plan, emphasizing the adherence to procedural timelines and the CoC's commercial wisdom. The Resolution Plan submitted by Sai Agro (India) Chemicals was approved, ensuring the revival of the Corporate Debtor in compliance with the I&B Code.
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