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2020 (2) TMI 385 - Tri - Insolvency and BankruptcyApproval of the resolution plan for the Corporate Debtor - extension of CIRP extended - Section 30(6) of IBC, 2016 - differential treatment inter se the secured financial creditors - HELD THAT - In the resolution plan of Patanjali it is specifically stated that the resolution plan is submitted after considering and evaluating several factors such as including the assets, liabilities, future cash flows of the business, tracking of developments taking place post CIRP Date etc. and not alone the amount of claims made by the creditors of a company under insolvency . Referring to the decision of this Tribunal directing repayment of the ₹ 65.98 crores, it is stated that the resolution plan was submitted after considering the said amount. Therefore, it follows that the resolution applicant has appropriated this ₹ 65.98 crore in its resolution plan in case it is reversed and repaid to the Corporate Debtor. Since the CoC has approved the resolution plan with a 96.95% majority; it can be safely presumed that CoC considered, evaluated and approved every clause of the resolution plan individually as well as the resolution plan as a whole in its entirety. Therefore, the appropriation of the said ₹ 68.98 crores by the resolution applicant is approved by the CoC and can be taken as the decision of the CoC upon the said amount as per our order dated 12.03.2019. The Resolution Professional has cited the judgment of Hon'ble Supreme Court in the case of Managing Director, ECIL, v. Karunakar 1993 (10) TMI 310 - SUPREME COURT , wherein the Five Judge Bench of the Hon'ble Supreme Court has held that while a court of law promulgates a new principle, its application is made prospective. The resolution plan approved with modifications, which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors, Resolution Applicant and other stakeholders involved in the resolution plan - List on 1.8.2019 for filing additional affidavit of Resolution applicant regarding acceptance of the modifications in the Resolution Plan and submitting the other informations.
Issues Involved:
1. Approval of the resolution plan for the Corporate Debtor. 2. Compliance with the directions of the Hon'ble Supreme Court. 3. Distribution of proceeds under the resolution plan. 4. Claims and objections raised by financial creditors. 5. Reliefs, concessions, and dispensations sought in the resolution plan. 6. Compliance with applicable laws and regulations. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan for the Corporate Debtor: The Miscellaneous Application (MA) No. 1721 of 2019 was filed by the Resolution Professional (RP) under Section 30(6) of the Insolvency and Bankruptcy Code, 2016, seeking approval of the resolution plan submitted by the consortium led by Patanjali Ayurved Limited. The resolution plan was approved by the Committee of Creditors (CoC) with a vote share of 96.95%. The RP verified and constituted the CoC, invited Expressions of Interest (EOI), and evaluated resolution plans from various applicants. The final resolution plan proposed an infusion of ?4,350 crores, with specific allocations for different classes of creditors and stakeholders. 2. Compliance with the Directions of the Hon'ble Supreme Court: The Hon'ble Supreme Court, in Vijay Kumar Jain v. Standard Chartered Bank, directed that the time utilized in proceedings must be excluded from the resolution process period. The CoC was required to deliberate on the resolution plans afresh. Consequently, the approval of AWL's resolution plan was interdicted, leading to the withdrawal of MA 926/2018. The CoC later approved the resolution plan submitted by the Patanjali Consortium. 3. Distribution of Proceeds under the Resolution Plan: The resolution plan proposed specific payments to various creditors, including secured financial creditors, workmen and employee dues, unsecured financial creditors, statutory dues, and operational creditors. The plan provided for a maximum offer of ?4,235 crores for settling claims and ?115 crores for equity infusion. The CoC approved the distribution mechanism, which was challenged by DBS Bank Ltd. (DBS) on the grounds of unequal treatment of secured creditors. However, the tribunal upheld the CoC's decision for pari passu distribution among secured financial creditors, rejecting DBS's claim for differential treatment. 4. Claims and Objections Raised by Financial Creditors: DBS objected to the distribution mechanism, seeking differential treatment based on the quality of security held. The tribunal rejected this claim, citing the Hon'ble NCLAT's decision in Jyoti Structures Ltd. and the Supreme Court's dismissal of DBS's appeal in a similar matter. ICICI Bank Ltd. (ICICI) also filed an application regarding its increased claim due to ongoing proceedings before the Hon'ble NCLAT. The tribunal noted that the resolution plan accounted for the potential reversal of ?65.98 crores and rejected ICICI's application for revised claims. 5. Reliefs, Concessions, and Dispensations Sought in the Resolution Plan: The resolution plan sought various reliefs, including suspension of legal proceedings, tax exemptions, and waiver of stamp duty. The tribunal denied the extension of the moratorium period and tax exemptions, directing the resolution applicant to comply with applicable laws. The request for unilateral modification of contracts was also rejected, with the tribunal emphasizing adherence to due process. 6. Compliance with Applicable Laws and Regulations: The resolution plan was certified by the RP as meeting all requirements of the Insolvency and Bankruptcy Code and related regulations. The tribunal directed the RP to ensure compliance with all applicable laws and obtain necessary approvals within one year from the date of the order. The tribunal also required the submission of detailed information on the source of funds, CIRP costs, and remuneration for the monitoring agent. Conclusion: The resolution plan submitted by the Patanjali Consortium was approved with modifications, subject to compliance with the tribunal's directions. The plan was found to have necessary provisions for effective implementation and was binding on all stakeholders. The tribunal emphasized the importance of adhering to legal requirements and ensuring equitable treatment of creditors.
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