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2019 (10) TMI 102 - Tri - Insolvency and BankruptcyValidity of Resolution Plan - initiation of CIRP - Corporate Debtor - Section 7 of I B Code, 2016 read with Rule 4 of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - The Resolution Plan approved by the CoCs with 96.45% voting share and placed before this Authority appears to be in line with the object and purport of I B Code, 2016, as it provides for insolvency resolution in a time bound manner for maximization of value of assets, viability of credit and balancing the interest of the stakeholders. Thus, Resolution Plan filed meets the requirements of Section 30(2) of I B Code, 2016 and Regulations 37, 38, 38(1A) and 39 of IBBI (CIRP) Regulations, 2016. The Resolution Plan is also not in contravention of any of the provisions of Section 29A. The Resolution Professional has also certified that the Resolution Plan approved by the CoCs does not contravene any of the provisions of the law for the time being in force. The Resolution Applicant shall, pursuant to the Resolution Plan approved under Sub-section (1) of Section 31 of the I B Coded, 2016, obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the Resolution Plan by this Authority or within such period as provided for in such law - order of moratorium dated 12.03.2018 passed by this Adjudicating Authority under Section 14 of I B Code, 2016 shall ceased to have effect from the date of passing this Order.
Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) read with Section 31 of the Insolvency and Bankruptcy Code, 2016. 2. Objections raised by a shareholder regarding the Resolution Plan. 3. Objections raised by a dissenting financial creditor regarding the Resolution Plan. 4. Analysis and compliance of the Resolution Plan with statutory requirements. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan: The Resolution Professional filed Miscellaneous Application No. 179/2019 seeking approval for the resolution plan submitted by Embassy Property Developments Private Limited (EPDPL), Bangalore. The application was filed under Section 30(6) read with Section 31 of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor, M/s. Tiffins Barytes Asbestos & Paints Limited, had undergone the Corporate Insolvency Resolution Process (CIRP), with the Interim Resolution Professional (IRP) inviting claims from creditors and forming the Committee of Creditors (CoC). The CoC evaluated the resolution plans and voted in favor of EPDPL's plan with 96.45% voting share. 2. Objections by Shareholder: A shareholder, Mr. Ravi Shankar Vedam, objected to the resolution plan, alleging that the Resolution Professional did not share documents with him, violating the Principles of Natural Justice. The shareholder argued that the CoC's decision was invalid due to its constitution and claimed that the Resolution Professional and others would benefit illegally from the plan's approval. The tribunal noted that the Insolvency and Bankruptcy Code (IBC) does not require shareholder approval for actions under the Resolution Plan, referencing Section 30(2) of IBC, 2016. The tribunal cited the NCLAT judgment in JM Financial Asset Reconstruction Co. Ltd. v. Well-Do Holding and Exports (P.) Ltd., stating that shareholders and promoters ineligible under Section 29A have no right to raise grievances. Consequently, the shareholder's objections were rejected. 3. Objections by Dissenting Financial Creditor: Mrs. Sujathaa Mehta, a dissenting financial creditor, raised objections, stating that pending applications involving rejected claims should be resolved before approving the resolution plan. She questioned the Resolution Applicant's lack of mining industry experience and alleged that the plan's provisions for extinguishing claims were contrary to applicable laws. The tribunal noted that the dissenting financial creditor had a 1.82% voting right and had sufficient opportunities to raise issues during CoC meetings. The tribunal referenced the Supreme Court judgment in K. Sashidhar v. Indian Overseas Bank and Ors., emphasizing that the commercial decisions of the CoC cannot be interfered with by the Adjudicating Authority. The objections, except for pending matters relating to rejected claims, were rejected. 4. Analysis and Compliance of the Resolution Plan: The Resolution Plan submitted by EPDPL was evaluated in detail. It provided for the management of the Corporate Debtor's business, payment and settlement of claims, and formation of a Monitoring Committee. The plan met the requirements of Section 30(2) of the IBC, 2016, and Regulations 37, 38, 38(1A), and 39 of the CIRP Regulations, 2016. The Resolution Professional certified that the plan did not contravene any provisions of the law. The tribunal directed the Resolution Applicant to file an affidavit clarifying the treatment of claims admitted in pending adjudication and the timeline for infusing funds into the Corporate Debtor. The clarifications provided were incorporated into the Resolution Plan. The tribunal approved the Resolution Plan, subject to the observations made, and directed the Resolution Applicant to obtain necessary approvals within one year. Conclusion: The tribunal approved the Resolution Plan submitted by EPDPL, noting that it complied with statutory requirements and addressed the interests of all stakeholders. The objections raised by the shareholder and dissenting financial creditor were rejected, except for pending matters relating to rejected claims. The order of moratorium ceased to have effect from the date of the order, and the Resolution Professional was directed to forward records to the Insolvency and Bankruptcy Board of India (IBBI). The Resolution Plan became effective from the date of the order and was binding on all stakeholders.
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