2019 (9) TMI 965 - Tri - Insolvency and Bankruptcy

Validity of Resolution plan - Attachment of Bank Accounts - HELD THAT - The Plan approved by the Committee of Creditors, giving benefit to all stake holders in proportion to the resolution amounts to be paid by the Resolution Applicant. There are two Financial Creditors, one is Secured Financial Creditor i.e. Allahabad Bank and another is Unsecured Financial Creditor i.e. Todi Investors(India) Pvt. Ltd. While the Secured Financial Creditor voted in favour of the Resolution Plan, the Unsecured Financial Creditor did not choose to vote and thereby dissented from approving the Resolution Plan. The single majority of voting share of Secured Creditors comes to 90.93 percentage, thereby on its strength, the Plan has been approved by the Committee of Creditors - On a look at the distribution of the resolution amounts, it is understood that the Secured Financial Creditor agreed to share 57.3% of total admissible claim to the tune of INR 52.36 crores and the Unsecured Creditor has been provided 0.96 percentage of total admitted claim to the tune of INR 5 lacs. The workmen and the employees, the Operational Creditors, as well as the existing shareholders would also be benefitted to the extent of their proportionate share in the remaining amount available for distribution. This is a case in which the CoC has judiciously distributed the financial bids to the stakeholders as per their entitlements. There is nothing in the plan, so as to disapprove it. The financial matrix has been approved by the CoC already. The Resolution Plan of PND Infrastructure Pvt. Ltd., which is approved by the CoC with 90.93% voting share, is hereby approved under provisions of sub-section(1) of Section 31 of the Insolvency and Bankruptcy Code, 2016, which shall be binding on the Corporate Debtor, KND Engineering Technologies Limited, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan subject to the below mentioned modification - application disposed off.

Issues Involved:
1. Admission of Insolvency Petition
2. Appointment and Replacement of Interim Resolution Professional
3. Declaration of Moratorium and Public Announcements
4. Replacement of Interim Resolution Professional by Committee of Creditors
5. Settlement of Interim Resolution Professional’s Fees
6. Identification of Resolution Applicant
7. Attachment and De-attachment of Corporate Debtor’s Bank Account
8. Ex Parte Proceedings against Non-Responding Authorities
9. Extension of Corporate Insolvency Resolution Process (CIRP) Period
10. Approval of Resolution Plan by Committee of Creditors
11. Objections by Workmen and Dissenting Financial Creditor
12. Admittance of Workmen’s Claims
13. De-attachment of Bank Account by Income Tax Authorities
14. Objection by Unsecured Financial Creditor
15. Compliance with Section 30(2) of Insolvency and Bankruptcy Code, 2016
16. Approval and Modification of Resolution Plan

Detailed Analysis:

1. Admission of Insolvency Petition:
The petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, was filed by the Operational Creditor against the Corporate Debtor. The Corporate Debtor did not contest the petition, leading to its admission.

2. Appointment and Replacement of Interim Resolution Professional:
The Tribunal appointed Mr. Ram Ratan Modi as the Interim Resolution Professional (IRP). Later, the Committee of Creditors (CoC) decided to replace him with Mr. Vishal Sharma, which was approved by the Tribunal.

3. Declaration of Moratorium and Public Announcements:
Upon admitting the petition, the Tribunal declared a moratorium and directed public announcements as per Sections 13, 14, and 15 of the Code. The IRP was instructed to call for claims and perform his duties within the prescribed period.

4. Replacement of Interim Resolution Professional by Committee of Creditors:
The CoC, in its first meeting, decided to replace the IRP. The Tribunal approved the replacement of Mr. Ram Ratan Modi with Mr. Vishal Sharma as the Resolution Professional (RP).

5. Settlement of Interim Resolution Professional’s Fees:
The Tribunal directed the CoC to settle the fees of the erstwhile IRP at the earliest.

6. Identification of Resolution Applicant:
The RP was directed to identify a Resolution Applicant expeditiously. Two prospective applicants, Kontinental Power and Steel Limited and PND Infrastructure Pvt. Ltd., submitted their plans. After evaluation, PND Infrastructure Pvt. Ltd. was declared the H1 Bidder.

7. Attachment and De-attachment of Corporate Debtor’s Bank Account:
The RP filed an application challenging the attachment of the Corporate Debtor’s bank account, which was deemed illegal by the Tribunal. The account was de-attached, allowing the RP to operate it for CIRP purposes.

8. Ex Parte Proceedings against Non-Responding Authorities:
The Tribunal proceeded ex parte against the Joint Commissioner of Sales Tax and the Enforcement Officer of EPFO for failing to appear and submit replies despite valid notices.

9. Extension of Corporate Insolvency Resolution Process (CIRP) Period:
The RP sought an extension of the CIRP period, which was approved for an additional 90 days beyond the initial 180 days.

10. Approval of Resolution Plan by Committee of Creditors:
The CoC approved the Resolution Plan submitted by PND Infrastructure Pvt. Ltd. with a voting share of 90.93%. The RP confirmed the plan’s viability and compliance with the Code.

11. Objections by Workmen and Dissenting Financial Creditor:
Several workmen and one dissenting financial creditor, Todi Investor (India) Pvt. Ltd., objected to the approval of the Resolution Plan. The Tribunal addressed these objections, noting that the claims of the workmen were considered and admitted proportionately.

12. Admittance of Workmen’s Claims:
The Tribunal directed the RP to admit the claims of the workmen who had filed applications, ensuring they received 6.07% of their admitted claims as per the Resolution Plan.

13. De-attachment of Bank Account by Income Tax Authorities:
The Tribunal ordered the de-attachment of the Corporate Debtor’s bank accounts maintained with Axis Bank, allowing the RP to use the funds for CIRP costs. The Income Tax authorities, being operational creditors, were directed to submit their claims to the RP.

14. Objection by Unsecured Financial Creditor:
The objection raised by the unsecured financial creditor regarding discriminatory treatment was dismissed. The Tribunal found no merit in the claim of discrimination as the CoC had judiciously distributed the funds.

15. Compliance with Section 30(2) of Insolvency and Bankruptcy Code, 2016:
The Resolution Plan complied with Section 30(2) of the Code, addressing payment of insolvency resolution process costs, debts of operational creditors, management of the Corporate Debtor, and implementation of the plan.

16. Approval and Modification of Resolution Plan:
The Tribunal approved the Resolution Plan submitted by PND Infrastructure Pvt. Ltd., subject to modifications ensuring the proportionate distribution of funds to all stakeholders. The moratorium ceased, and the RP was directed to forward all records to the Insolvency and Bankruptcy Board of India.

Conclusion:
The Tribunal approved the Resolution Plan of PND Infrastructure Pvt. Ltd., ensuring compliance with the Insolvency and Bankruptcy Code, 2016, and addressing the objections raised by workmen and the dissenting financial creditor. The plan's approval was based on its viability, feasibility, and equitable distribution of funds among all stakeholders.

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