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2017 (12) TMI 1212 - Tri - Insolvency and BankruptcyCorporate insolvency resolution process - Held that - Sub-section 5 starts with non-obstante clause saying that notwithstanding any other law contrary to this Code this Authority shall have jurisdiction to decide any application or proceeding by or against the Corporate Debtor or corporate person any claim made or against by the Corporate debtor or corporate person including clients by or against any of its subsidiaries situated in India and also in respect to the priority of any question of law or facts in relation to insolvency resolution or liquidation proceeding of the corporate debtor or corporate person under this Code. This is a non-obstante clause provision giving right to file any application or claim in respect to the corporate debtor or corporate person despite such issues are governed by some other law in conflict with this law. It has to be borne in mind it is an overriding provisions in respect to other laws but not to the provision of this Code therefore if any law is laid down in this Code to do a particular thing in particular manner this Authority cannot exercise this jurisdiction given under this sub-section to override a specification already given in this Code by giving an interpretation contrary to the mandate in that particular section. It has to be understood that this sub-section is not meant for exercising jurisdiction over the mandates already given in the Code. Therefore asserting jurisdiction u/s 60(5) of the Code to tweak super majority is a misconceived idea therefore we have not found any merit to consider the plea of this applicant to direct the committee of creditors to take up something which has already been decided by them in compliance of the provision of this Code. The applicant counsel has raised various contentions saying that workmen will suffer; the resolution plan value is double to the net liquidation value given by the valuers likewise many other contentions. By seeing all these contentions can all these assume jurisdiction to this Authority to go as if they were not in the mind of the legislators when this Code has been passed. To bring in this Code thorough exercise has been done by studying the Indian law and various foreign laws thereafter committee dedicated its time and then it went before parliament referred to standing committee soon after examination by the standing committee; bill has been approved by the Parliament after thorough discussion. Can such legislation be changed by this Authority applying its wisdom or ignorance ignoring all the exercises that have been made by this country? We believe it is not. As to Notification given by government on 25.10.2017 it has been given to say that requisite of shareholders resolution or approval is not an impediment to carry out the resolution plan it need not be read into to say that this Bench has to give clarification before passing order of liquidation. The language is simple and clear saying shareholder approval is not required to the resolution plan or to any of its clauses. Application filed by the Workmen stating that if this company has been liquidated the workmen will suffer for it - Held that - the jurisdiction lies with this Bench to exercise its power u/s 31 of IBC only when a plan is approved by the CoC as stated in the Code here for no plan has been approved by the CoC there cannot by any occasion to this Bench to make any observation in respect to a decision come from CoC meeting. In section 30 also no discussion has made in respect to rejection of a Resolution Plan it only talks about approval of a Plan with 75% super majority of vote share of the CoC. When there is no consensus to take any decision with 75% majority it cannot be said that this Bench will interfere with the rights of the Committee of Creditors. When no decision has been taken by CoC no jurisdiction will lie to this Bench to make any observation that apart the jurisdiction given u/s 30 is only limited to approve or reject the Resolution Plan approved by the CoC with super majority. When such is the case how could it be expected that this Bench would be in a position to invoke its jurisdiction to go into the claim made by the workmen. Therefore this Application is hereby dismissed making an observation that this Bench is devoid of jurisdiction to decide this application. Prayer to pass an order requiring the Corporate Debtor to be liquidated in terms of the provisions of Chapter III of Insolvency & Bankruptcy Code to issue a public announcement stating that the Corporate Debtor is in liquidation - Held that - The Insolvency Resolution Process of 270 days is already over by 14.10.2017 since no resolution plan has been received by this Bench as contemplated u/s 30(6) of the Code this Bench hereby orders the Corporate Debtor to be liquidated in the manner as laid down in this Chapter to issue a public announcement stating that corporate debtor is in liquidation and also to send this order to the RoC with which the corporate debtor is registered by appointing the Resolution Professional herein as the Liquidator u/s 34 of the Code for the purposes of this liquidation by holding that all powers of the Board of Directors key managerial personnel and the partners of the Corporate Debtor will cease to have effect and shall be vested in the liquidator with direction to the personnel of the corporate debtor and to extend cooperation to the liquidator as may be required by him in managing the affairs of the corporate debtor. RP appointed as liquidator is entitled to charge fees for the conduct of the liquidation process as agreed by the CoC in the 12th meeting held on 10.10.2017 in the alternative as prescribed in the IBBI (Liquidation Process) Regulations. It has been further directed that the company shall be liquidated as laid under Chapter III of IB Code r.w. IBBI (Liquidation Process) Regulations 2016.
Issues Involved:
1. Applicability of Ministry of Corporate Affairs' Circular to the Corporate Insolvency Resolution Process (CIRP). 2. Requirement of shareholders' approval for actions under the resolution plan. 3. Submission and approval of a revised resolution plan. 4. Jurisdiction of the Adjudicating Authority over the Committee of Creditors' (CoC) decisions. 5. Voting threshold for approval of the resolution plan by the CoC. 6. Impact of liquidation on stakeholders, including workmen. 7. Role and powers of the Resolution Professional (RP) during the liquidation process. Detailed Analysis: 1. Applicability of Ministry of Corporate Affairs' Circular to the CIRP: The Resolution Applicant sought a declaration that the position of law clarified by the Ministry of Corporate Affairs' Circular dated October 25, 2017, would apply to the CIRP of the Corporate Debtor. The Tribunal acknowledged the circular but emphasized that the statutory mandate requiring a 75% voting threshold by the CoC for approving a resolution plan remains unaffected by the circular. 2. Requirement of Shareholders' Approval: The applicant requested that the approval of shareholders for actions under the resolution plan be deemed given upon the plan's approval by the Tribunal, as per the Ministry's circular. The Tribunal noted the circular's clarification that shareholders' approval is not required for actions under the resolution plan, aligning with the provisions of the Companies Act, 2013. 3. Submission and Approval of a Revised Resolution Plan: The applicant sought permission to submit a revised resolution plan after reducing the time for obtaining shareholders' approval. The Tribunal highlighted that the CoC did not approve the initial resolution plan, with only 66.57% voting in favor, falling short of the required 75%. The Tribunal reiterated that it lacks jurisdiction to alter the statutory voting threshold or compel the CoC to reconsider its decision. 4. Jurisdiction of the Adjudicating Authority Over CoC Decisions: The Tribunal emphasized its limited jurisdiction under the Insolvency and Bankruptcy Code (IBC). It stated that it cannot interfere with the CoC's decisions unless a resolution plan is approved with the requisite 75% voting share. The Tribunal underscored that the Code mandates a supermajority for CoC decisions and that this requirement is not subject to judicial interpretation or alteration. 5. Voting Threshold for Approval of the Resolution Plan by the CoC: The Tribunal reiterated that the IBC mandates a 75% voting threshold for CoC decisions, including the approval of resolution plans. The applicant's reliance on previous judgments to argue that the 75% requirement is directory and not mandatory was rejected. The Tribunal clarified that the statutory language is clear and unambiguous, requiring a supermajority for CoC approvals. 6. Impact of Liquidation on Stakeholders, Including Workmen: The Tribunal acknowledged the concerns raised by workmen regarding the adverse impact of liquidation on their livelihoods. However, it reiterated that its jurisdiction is limited to approving or rejecting resolution plans based on statutory requirements. The Tribunal emphasized that it cannot compel the CoC to approve a resolution plan or interfere with its decision to liquidate the company. 7. Role and Powers of the Resolution Professional During Liquidation: The Tribunal addressed the application filed by the RP seeking liquidation of the Corporate Debtor. It noted that the RP had followed due process, including appointing valuers and presenting offers to the CoC. The Tribunal ordered the liquidation of the Corporate Debtor, appointing the RP as the liquidator and directing the continuation of the moratorium and the RP's remuneration during the liquidation process. Conclusion: The Tribunal dismissed the applications seeking to compel the CoC to reconsider its decision or approve a resolution plan with less than 75% voting share. It upheld the statutory mandate requiring a supermajority for CoC decisions and emphasized its limited jurisdiction under the IBC. The Tribunal ordered the liquidation of the Corporate Debtor, appointing the RP as the liquidator and directing the continuation of the moratorium and the RP's remuneration during the liquidation process.
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