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2019 (6) TMI 522 - AT - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process - maintainability of Resolution Plan filed by the Operational Creditor - non-compliance of the provisions of Sections 56 57 of the Companies Act, 2013 - HELD THAT - We have noticed that though time was allowed to Mr. Sunil Jain to pay the NPA amount of the Corporate Debtor in terms of Clause (c) of Section 29A but he expressed his inability to pay the same. So far as right of Shareholders are concerned, from the record we find that shareholders claim have been taken into consideration by Successful Resolution Applicant in the Resolution Plan submitted by him. In view of proposal of taking over the shares of the Promoters as approved by the Adjudicating Authority, it is not required to comply with the provisions of Sections 56 57 of the Companies Act, 2013 being a formality which can be completed even after the approval of the Resolution Plan , at the stage of implementation of the plan. We find no merit in the appeal Payment of supplied the goods during the period of the CIRP - As per Regulation 31 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, if the Appellant has supplied the goods during the period of the Corporate Insolvency Resolution Process to keep the company as a going concern, it was the duty of the Resolution Professional to include such cost towards Resolution Process Cost for payment in favour of Appellant for non-inclusion of the same, it can be held that the Resolution Plan in question is in violation of Section 30(2) (a) of the I B Code . However, taking into consideration the fact that it is failure on the part of the Resolution Professional who had not included the same nor looked into the matter, we do not want to put blame on Successful Resolution Applicant . However, to uphold the Resolution Plan and to hold that the plan is in accordance with law, subject to some modifications.
Issues Involved:
1. Approval of the Resolution Plan for Divya Jyoti Sponge Iron Private Limited. 2. Rejection of the Resolution Plan submitted by Mr. Sunil Jain. 3. Rejection of the Resolution Plan submitted by Mr. Prakash Chand Jain. 4. Non-payment of dues to M/s. MV Projects during the Corporate Insolvency Resolution Process (CIRP). 5. Contempt application arising from an alleged violation of the order dated 24th April 2018. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan for Divya Jyoti Sponge Iron Private Limited: The Adjudicating Authority approved the Resolution Plan submitted by CP Ispat Private Limited, which was challenged by shareholders/promoters Mr. Sunil Jain and Mr. Prakash Chand Jain. The Tribunal upheld the approval, noting that the plan was superior in terms of maximizing the value of assets and was in compliance with relevant legal provisions. 2. Rejection of the Resolution Plan submitted by Mr. Sunil Jain: Mr. Sunil Jain's Resolution Plan was rejected as he was deemed ineligible under Section 29A(c) of the I&B Code. The Tribunal found that the Committee of Creditors (CoC) rightly rejected his plan due to his inability to pay the full claim amount to the Financial Creditors, as required under the code. The Tribunal also noted that the shareholders' claims were considered in the approved Resolution Plan, and compliance with Sections 56 and 57 of the Companies Act, 2013, was a formality that could be completed during the implementation stage. 3. Rejection of the Resolution Plan submitted by Mr. Prakash Chand Jain: Mr. Prakash Chand Jain's Resolution Plan was rejected by the CoC as it was submitted after the cutoff date and was considered inferior in terms of the value offered compared to the approved plan. The Tribunal noted that the CoC found the approved plan superior in terms of feasibility, suitability, and commercial viability, and thus, there was no ground to interfere with the impugned order. 4. Non-payment of dues to M/s. MV Projects during the CIRP: M/s. MV Projects, an Operational Creditor, supplied coal to the Corporate Debtor during the CIRP, but their dues remained unpaid. The Tribunal highlighted that as per Section 30(2)(a) of the I&B Code, the Resolution Professional was required to include such costs as part of the Insolvency Resolution Process Costs. The Tribunal modified the Resolution Plan to ensure that the dues to M/s. MV Projects were paid in full within 30 days, failing which the plan could be deemed in violation of the I&B Code. 5. Contempt application arising from an alleged violation of the order dated 24th April 2018: The Tribunal dismissed the contempt petition, noting the absence of any deliberate and willful violation of the order. Conclusion: The appeals by Mr. Sunil Jain and Mr. Prakash Chand Jain were dismissed, while the appeal by M/s. MV Projects was allowed with specific directions to ensure the payment of their dues. The contempt petition was dismissed and closed.
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