2021 (8) TMI 1388 - AT - Insolvency and Bankruptcy

Seeking to increase the authorized share capital without paying any fees / Stamp duty to the RoC - HELD THAT - The Adjudicating Authority while approving the Resolution Plan has expressly covered the issues as required for the approval of the plan and nowhere such waival is explicitly or implicitly provided for - there are no reason that when a new company takes over and starts at a new slate and take certain management decision then everything cannot be exempted at a later stage as it is a business decision to expand the business and based on those probability of cash inflow, cash outflow is provisioned for. There are no merits in the appeal - appeal dismissed.

Issues:
1. Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 against an order passed by the Adjudicating Authority.
2. Request to increase authorized share capital without paying fees or stamp duty.
3. Interpretation of Resolution Plan provisions regarding fee waiver.
4. Applicability of Ministry of Corporate Affairs Circular No. 12/2020.
5. Dispute over waiving fees and stamp duty for increasing capital.
6. Compliance with Companies Act and related regulations for fee and stamp duty charges.

Analysis:
1. The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 against an order by the Adjudicating Authority regarding the Resolution Plan of the Corporate Debtor. The Resolution Applicant sought to increase the authorized share capital without paying fees or stamp duty, claiming entitlement under the Resolution Plan. The Adjudicating Authority rejected the application, stating that the decision to expand business or increase capital rests with the Corporate Debtor, and no waiver was provided in the Resolution Plan.

2. The Resolution Applicant argued that the Resolution Plan, approved by the Adjudicating Authority, should entitle them to fee and stamp duty waivers as part of the plan. Citing specific provisions and interpretations from the Resolution Plan, the Applicant insisted on the remissions mentioned in the plan. However, the Adjudicating Authority found no explicit or implicit provision for fee waiver in the approved Resolution Plan, emphasizing that business decisions such as capital expansion should not automatically entail fee exemptions.

3. The RoC representative referred to the Ministry of Corporate Affairs Circular No. 12/2020, which introduced the Companies Fresh Start Scheme, 2020, allowing companies to rectify compliance defaults without additional fees. The RoC maintained that fees and stamp duty were charged in accordance with the Act and related regulations, highlighting the importance of compliance with statutory requirements.

4. The Tribunal carefully reviewed submissions, the Resolution Plan approval order, the rejection of fee waiver, government instructions, and legal citations provided. It concluded that the Resolution Plan did not contain provisions for fee waivers, and decisions regarding business expansion and financial implications were part of regular business operations. Therefore, the appeals were dismissed, upholding the Adjudicating Authority's decision. Any pending applications were disposed of, and interim orders were vacated, with no costs imposed.

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