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2019 (12) TMI 1173 - Tri - Insolvency and BankruptcyApproval of the Resolution Plan - extension of time period for legal proceedings - invitation for EoI - filing of the Resolution Plan by the Resolution Applicant - Section 30(6) of I B Code, 2016 - Since the Resolution Plan submitted by the successful Resolution Applicant scored more value, the same was placed before the COC for voting which was ultimately approved by the COC and voted with approval of 81.39% of share and now the Resolution Plan placed for consideration. HELD THAT - It is a settled law that the Financial Creditors and the Operational Creditors cannot be treated on the same footing and moreover, the principle of equality cannot be stretched to treating unequals equally, as that will destroy the very objective of the Code. It is time and again reiterated by the Hon'ble Supreme Court that so long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors and hence the objections made by the Applicants are not sustainable A conjoint reading of Section 25(2)(h) of the IBC, 2016 with Regulation 36A (10), (11) and (12) would posit the fact that objections to inclusion or exclusion of a prospective resolution applicant in the provisional list referred to in sub-regulation (10) can be made with supporting documents within five days from the date of issue of the provisional list - In the present case, the intended prospective resolution applicant viz. Sai Trading and Interiors has expressed their interest by way of an email to the Resolution Professional on 17.04.2019 and his name was included in the provisional list of resolution applicant released by the Resolution Professional on 23.04.2019, however his name was left out from the final list of prospective resolution applicant released by the Resolution Professional on 28.04.2019. A perusal of the minutes of the 8th COC reveals the fact that exclusion of M/S. Sai Trading and Interiors from the prospective list of resolution applicant was deliberated upon by the COC in its 8th COC meeting dated 28.04.2019 and the COC and the Home buyers had serious doubts as to the capability, competence, quality, bonafide and financial soundness of M/S. Sai Trading and Interiors and upon detailed discussions made thereunder, it was finally resolved to exclude M/S. Sai Trading and Interiors from the prospective list of resolution applicant and moreover, as per Regulation 36A (11) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the COC is empowered to include or exclude any person from the prospective resolution applicant. The person challenging the Resolution Plan is not even an unsuccessful Resolution Applicant but only an intended prospective resolution applicant, whose name has been left out from the final list of resolution applicants, M/S. Sai Traders and Interiors has no vested right that his resolution plan ought to have been considered by the COC and no challenge can be preferred thereof before this Adjudicating Authority. The Resolution Plan is hereby approved and is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 of IBC, 2016 shall not have any effect henceforth - application disposed off.
Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016. 2. Objections raised by Operational Creditors. 3. Objections raised by Dissenting Financial Creditors. 4. Objections against rejection of claims by the Resolution Professional. 5. Objections raised by Home Buyers. 6. Objections filed by the Income Tax Department. Detailed Analysis: 1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016: - The Resolution Professional sought approval for the Resolution Plan submitted by M/S. RCC e-Construction Pvt. Ltd. - The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on 13.07.2018. - The Committee of Creditors (COC) was constituted on 18.08.2018. - The Resolution Plan was filed with the Adjudicating Authority on 03.06.2019. - The Resolution Plan complies with all provisions of the I&B Code, 2016, and the CIRP Regulations. - The COC approved the Resolution Plan with 81.39% voting share. 2. Objections raised by Operational Creditors: - Several Operational Creditors filed applications objecting to the Resolution Plan, primarily due to the proposed payment of only 1.5% of their admitted claims. - The Tribunal noted that the liquidation value due to Operational Creditors is NIL, and the allocation of 1.5% is in accordance with Section 30(2) of the Code. - The Supreme Court's decision in Essar Steel India Limited was cited, emphasizing that Financial and Operational Creditors cannot be treated equally. - The objections were overruled, and the applications were dismissed. 3. Objections raised by Dissenting Financial Creditors: - The sole Dissenting Financial Creditor, Sanchit Sales Private Limited, filed an application objecting to the 100% haircut proposed in the Resolution Plan. - The Tribunal noted that the classification of Financial Creditors based on their Security Interest is rational and practical. - The objection was overruled, and the application was dismissed. 4. Objections against rejection of claims by the Resolution Professional: - Several applicants filed applications against the rejection of their claims by the Resolution Professional. - The Tribunal considered each case and found that the Resolution Professional's decisions were fair and reasonable. - The applications were dismissed, but the applicants were given the liberty to approach the Resolution Applicant under specific clauses of the Resolution Plan. 5. Objections raised by Home Buyers: - Home Buyers objected to the classification of their claims as "Duplicate Claims" and the proposed payment of 20% of their admitted claims. - The Tribunal found the Resolution Professional's rationale reasonable and just. - The Resolution Applicant agreed to increase the payout to 30% for these Home Buyers. - The objections were overruled, and the applications were dismissed with the condition of a 30% payout. 6. Objections filed by the Income Tax Department: - The Income Tax Department objected to the waiver of tax dues and the carry forward of tax losses. - The Tribunal directed the Resolution Applicant to seek necessary relief from the appropriate authorities in accordance with the law. - The Tribunal emphasized that it does not have jurisdiction over public law matters. Conclusion: - The Resolution Plan was approved by the Tribunal, binding on the Corporate Debtor and other stakeholders. - The Tribunal directed the formation of a Monitoring Committee for the implementation of the Resolution Plan. - The Resolution Professional was instructed to hand over all records and project sites to the Resolution Applicant. - Applications under Sections 43, 45, 50, and 66 of the IBC, 2016, will be taken up separately.
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