9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 1986 - Tri - Insolvency and BankruptcyApproval of Resolution plan - Maintainability of petition - winding-up petition against the Corporate Debtor is already pending before the Hon ble High Court of Bombay Nagpur Bench - Approval sought for closure of two units and revival of only one unit - HELD THAT - This Company Petition No. 66/2017 is maintainable as no order of liquidation was passed and only a Provisional Liquidator was appointed. Therefore MA No. 105/2018 has been filed by Primo Pick N Pack Private Limited 2018 (11) TMI 559 - BOMBAY HIGH COURT is rejected keeping in view the order passed by the Hon ble Bombay High Court in Jotun India Private Limited v PSL Limited APPEAL LODGING NO. 68 OF 2018 ORDER DATED 26.07.2018 2018 (7) TMI 1741 - BOMBAY HIGH COURT to state that pendency of a winding up petition before the Hon ble High Court cannot be a ground to reject any claim/ application made under IBC. As far as MA 689/2017 for approval of Resolution Plan u/s 30(6) IBC read with Regulation 39(4) of CIRP Regulations for approval of the resolution plan submitted by Dalmia is concerned it is understood that the plan has been approved by 100% vote share of the Committee of Creditors in the 11th CoC meeting held on 20.12.2017. With due regard to the decision of the Hon ble Supreme Court in K Sashidhar Indian Overseas Bank Ors. Civil Appeal No. 10673/2018 Date of order 05.02.2019 2019 (2) TMI 1043 - SUPREME COURT the role of COC now is quite vital for deciding the fate of the company. It has been held that the Adjudicating authority is not required to go into the merits or reasoning of the decision taken by the COC for approval or rejection of a resolution plan. The only benchmark which is set up to be determined by the AA is to see whether the plan has been approved by 66% voting of the COC or not. Therefore the commercial wisdom is not allowed to be interfered with. In this case it is seen that the Resolution Plan provides for a total payment of 401, 62, 00, 000/- as against the liquidation value of the Corporate Debtor which is 231, 10, 00, 000/-. Hence 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 - It is noticed that despite the liquidation value payable to Operational Creditors being nil the plan provides for payment of statutory dues and the liability towards the statutory dues is not extinguished. The Resolution Applicant wishes to run this business by reviving the cement undertaking as a going concern and selling the paper and solvent extraction units of the business - If the CoC is of the view that the Corporate Debtor is capable of being revived by reopening only one unit and the plan being approved by 100% CoC it is presumed that sale of the two units of the Corporate Debtor is also a part of the commercial wisdom exercised by the CoC. Therefore the same need not be interfered. On perusal of the resolution plan submitted by the Resolution Applicant Dalmia Cement (Bharat) Ltd the bench has observed that the Resolution Plan does not discuss the Source of Funds of the Resolution Applicant and the same was submitted by the RP for Approval of the Bench. As per the Resolution Plan clause 2.2.2 under the head Source of Funds it is stated that Resolution Applicant Commitment or by the Resolution Applicant . It is quite strange that even the CoC and RP have approved the Resolution Plan without ensuring whether the funds are coming from the reserve and surplus internal accruals of the Resolution Applicant or Loans from the Bank etc. Suggestions to the Government - Any haircut of more than 25% in cases where the total outstanding is more than Rs. 500 crores is not an ordinary course of business and shareholders who are the ultimate owners of the Financial Creditors and without their approval would undermine their ultimate rights as Shareholders and corporate democracy - May be to begin with approval of shareholders of Resolution Applicant which is a listed Company can be made compulsory when the Resolution Plan consideration is more than Rs. 500 Crores and approval of Shareholders in other cases i.e. Public Ltd Company/Private Ltd. The company approval of shareholders may be made compulsory irrespective of the plan amount. Since certain modifications to the Resolution Plan it further requires the acceptance by the Resolution Applicant. Therefore Resolution Professional is directed for seeking acceptance from the Resolution Applicant regarding proposed modifications - The acceptance report of the Resolution Applicant is to be filed by 12.07.2019. If acceptance of the proposed modification in the resolution plan is not submitted then we shall proceed with the liquidation. List on 12.07.2019 for filing additional affidavit of Resoution applicant regarding accepetence of the modifications in the Resolution Plan.
Issues Involved:
1. Maintainability of the Company Petition No. 66/2017. 2. Approval of the Resolution Plan under Section 30(6) of IBC. 3. Objections raised by various stakeholders against the Resolution Plan. 4. Compliance with legal provisions and regulations. 5. Conduct of the Resolution Professional (RP). 6. Suggestions for policy changes regarding shareholder approval. Issue-wise Detailed Analysis: 1. Maintainability of the Company Petition No. 66/2017: The Tribunal determined that the Company Petition No. 66/2017 is maintainable as no liquidation order was passed, only a Provisional Liquidator was appointed. The Tribunal referenced the Hon’ble Bombay High Court's order in Jotun India Private Limited v PSL Limited, stating that the pendency of a winding-up petition cannot be a ground to reject any claim/application made under IBC. Consequently, MA No. 105/2018 filed by Primo Pick N Pack Private Limited was rejected. 2. Approval of the Resolution Plan under Section 30(6) of IBC: The Resolution Plan submitted by Dalmia Cement (Bharat) Limited was approved by 100% vote share of the Committee of Creditors (CoC) in the 11th CoC meeting. The Tribunal emphasized the importance of the CoC's commercial wisdom, referencing the Hon’ble Supreme Court's decision in K Sashidhar v. Indian Overseas Bank, which states that the Adjudicating Authority should not interfere with the CoC's commercial decisions if the plan is approved by the requisite majority. The Resolution Plan provided for a total payment of ?401.62 crores, which was higher than the liquidation value of ?231.10 crores. 3. Objections Raised by Various Stakeholders Against the Resolution Plan: Several stakeholders, including Mr. Lalchand Maloo, Mr. Santosh Vasantrao Walokar, Mr. Sunil Kumar Maloo, and Gajanan Industries Limited, raised objections against the Resolution Plan. Key objections included: - The undervaluation of the Corporate Debtor's assets. - The plan's proposal to revive only the cement unit while closing the paper and solvent extraction units, leading to retrenchment of employees. - Allegations of non-compliance with SEBI regulations and other legal provisions. - Claims of material irregularities in the CIRP process. The Tribunal addressed these objections by stating that the CoC's commercial wisdom should not be interfered with and directed the RP and Resolution Applicant to comply with applicable laws, including the Industrial Disputes Act, 1947. 4. Compliance with Legal Provisions and Regulations: The Tribunal scrutinized the compliance of the Resolution Plan with various legal provisions and regulations. It directed the Resolution Applicant to comply with the Industrial Disputes Act, 1947, and other applicable laws. The Tribunal also clarified that only crystallized liabilities of the Corporate Debtor would be extinguished upon approval of the Resolution Plan, and contingent liabilities would continue to exist. 5. Conduct of the Resolution Professional (RP): Allegations were made against the RP regarding inefficiency and failure to preserve the Corporate Debtor's assets. The Tribunal stated that the conduct of the RP could only be challenged by the CoC and not by erstwhile promoters/directors. The Tribunal found no application by the CoC questioning the RP's conduct and thus deemed the allegations against the RP as not maintainable. 6. Suggestions for Policy Changes Regarding Shareholder Approval: The Tribunal suggested that the Government of India consider making shareholder approval mandatory for significant haircuts in CIRP cases. It proposed that approval of shareholders of Financial Creditors and Resolution Applicants be obtained in cases where the haircut exceeds a certain percentage, to ensure transparency, corporate democracy, and protection of shareholders' rights. Order: The Tribunal proposed modifications to the Resolution Plan and directed the RP to seek acceptance from the Resolution Applicant regarding these modifications. The acceptance report was to be filed by 12.07.2019, failing which liquidation proceedings would commence. The Tribunal also directed the Registry to communicate the order to the Resolution Professional, Resolution Applicant, and the Secretary, Ministry of Corporate Affairs, Government of India.
|
