2019 (11) TMI 1651 - Tri - Insolvency and Bankruptcy

Seeking permission to transfer the entire bid amount to the corporate debtor/ liquidator - allotment of shares in newly created share capital of the company - HELD THAT - The total allotment of shares 4,50,00,000 at a face value of ₹ 10/- each which comes to 100% equity of the Corporate Debtor. Since the Applicant is the purchaser of the Corporate Debtor Unit as ongoing concern, the Applicant is entitled to make allotment of shares as he desires as per the provisions of the Companies Act, 2013 by following the procedure prescribed thereunder. The Applicant is also entitled to list shares as per the provisions of law and also he can make request to ROC concerned to make the Company as active by following the procedure prescribed. It is also open to the Applicant to constitute Board as per Companies Act, 2013 and individuals concerned to act accordingly since Applicant purchased the Unit as ongoing concern - The Applicant is also entitled for benefits which are already given to the Corporate Debtor under Special Economic Zone Act, 2005 and these benefits continue to be enjoyed by the Company under the new management of the Applicant. Application disposed off.

Summary

Issues Involved:
1. Payment structure of the bid amount.
2. Transfer of rights, title, and interest in the corporate debtor.
3. Extinguishment of pre-auction liabilities and claims.
4. Non-enforcement of decrees against the corporate debtor.
5. Extinguishment of existing shares and treatment of existing shareholders.
6. Allotment of new shares and constitution of the Board of Directors.
7. Continuation of licenses, approvals, and benefits.
8. Exemption from stamp duty and taxes.

Detailed Analysis:

1. Payment Structure of the Bid Amount:
The applicant requested permission to transfer the bid amount of ?45 crores as equity and ?6.70 crores as unsecured debt. The tribunal directed the liquidator to consider this payment structure if permissible.

2. Transfer of Rights, Title, and Interest:
The applicant sought a direction that upon payment of the entire bid amount, they would obtain all rights, title, and interest in the corporate debtor. The tribunal noted that the applicant, as the purchaser of the corporate debtor as a going concern, would naturally be entitled to these rights upon payment.

3. Extinguishment of Pre-Auction Liabilities and Claims:
The applicant requested that all liabilities and claims prior to the e-auction date be extinguished. The tribunal directed that the applicant would not be liable for any claims arising before the e-auction date, and it was the liquidator's responsibility to handle these claims.

4. Non-Enforcement of Decrees Against the Corporate Debtor:
The applicant sought assurance that any decrees against the corporate debtor would not be enforced. The tribunal clarified that any claims covered by decrees should have been filed with the liquidator and would be handled accordingly.

5. Extinguishment of Existing Shares and Treatment of Existing Shareholders:
The applicant requested that existing shares be extinguished and existing shareholders become claimants from liquidation proceeds. The tribunal held that the liquidator should deal with the interests of existing shareholders under Section 53 of the IBC.

6. Allotment of New Shares and Constitution of the Board of Directors:
The applicant sought to allot 4,50,00,000 shares at ?10 each to specified individuals and reconstitute the Board of Directors. The tribunal allowed the applicant to allot shares and reconstitute the Board as per the Companies Act, 2013.

7. Continuation of Licenses, Approvals, and Benefits:
The applicant requested the continuation of all licenses, approvals, and benefits, including those under the Special Economic Zone Act, 2005. The tribunal granted this request, allowing the corporate debtor to continue enjoying these benefits under the new management.

8. Exemption from Stamp Duty and Taxes:
The applicant sought exemption from stamp duty and taxes. The tribunal directed the applicant to approach the concerned authorities for such exemptions, leaving it to the authorities' discretion to consider the request.

Conclusion:
The tribunal granted the majority of the reliefs sought by the applicant, enabling them to run the corporate debtor as a going concern. The liquidator was directed to facilitate the payment structure, handle pre-auction claims, and ensure the continuation of licenses and benefits. The applicant was allowed to reconstitute the Board and allot new shares, with the tribunal emphasizing compliance with the Companies Act, 2013. The request for tax and stamp duty exemptions was left to the discretion of the relevant authorities.