2020 (10) TMI 328 - Tri - IBC

Approval of Resolution Plan - Section 30 (6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - In K Sashidhar v. Indian Overseas Bank Others 2019 (2) TMI 1043 - SUPREME COURT the Hon ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon ble Court observed that the role of the NCLT is no more and no less . The Hon ble Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan as approved by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. Application allowed.

Summary

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with the provisions of the Code and Regulations.
3. Financial terms and priority of payments.
4. Appointment of new management and monitoring committee.
5. Reliefs, concessions, and waivers sought by the Resolution Applicant.
6. Treatment of dissenting financial creditors.
7. Observations from relevant Supreme Court judgments.

Detailed Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the Resolution Professional seeking approval of the Resolution Plan submitted by Shri Sai Priya Sugars Limited. The Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor was initiated on 21/08/2019, and the Committee of Creditors (CoC) confirmed the Applicant as the Resolution Professional (RP) in its meeting on 24/09/2019.

2. Compliance with the provisions of the Code and Regulations:
The Resolution Plan was evaluated and approved by the CoC with a voting share of 95.21% in its 9th meeting held on 26/02/2020. The RP ensured that the Resolution Plan complied with the provisions of the Code and Regulations 38 and 39 of the Insolvency and Bankruptcy Board of India (Corporate Insolvency Resolution Process) Regulations, 2016. The RP submitted Form H under Regulation 39(4), confirming the Plan’s compliance.

3. Financial terms and priority of payments:
The Resolution Applicant proposed to infuse ?60 Crores within 30 days of approval. The distribution included:
- CIRP Costs: ?0.90 Crores
- Secured Financial Creditors: ?54.25 Crores
- Workmen’s Dues: ?0.02 Crores
- Employees’ Dues: ?0.03 Crores
- Operational Creditors: ?4.80 Crores
The Plan provided for priority payment of CIRP costs and a sum of ?4.83 Crores to Operational Creditors, despite their liquidation value being NIL.

4. Appointment of new management and monitoring committee:
The Resolution Applicant proposed appointing Mr. Murugesh R. Nirani and Mr. Rachappa V. Karehonnas as Directors of the Corporate Debtor. A Monitoring Committee was also proposed, including representatives from the Financial Creditors and the Resolution Applicant.

5. Reliefs, concessions, and waivers sought by the Resolution Applicant:
The Tribunal did not grant the requested reliefs, concessions, or waivers. The Resolution Applicant was advised to approach the concerned authorities for permits and licenses, which would be considered as per the law.

6. Treatment of dissenting financial creditors:
IFCI Limited, with a voting share of 4.79%, abstained from voting and was treated as a dissenting Financial Creditor. Payment to this creditor was prioritized as per Regulation 38(1)(b).

7. Observations from relevant Supreme Court judgments:
The Tribunal referred to the Supreme Court's observations in the cases of Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors. and K Sashidhar v. Indian Overseas Bank & Others. The judgments emphasized that a successful resolution applicant should not face undecided claims post-approval, and the Adjudicating Authority’s role is limited to ensuring compliance with Section 30(2) of the Code without modifying the Resolution Plan approved by the CoC.

Conclusion:
The Tribunal approved the Resolution Plan submitted by Shri Sai Priya Sugars Limited, making it effective immediately. The Plan is binding on all stakeholders, including the Corporate Debtor, its employees, members, and creditors. The RP and the Monitoring Committee are to supervise the Plan's implementation, and the moratorium under Section 14 of the Code ceased to have effect from the date of the order. The RP is required to forward all records to the Insolvency and Bankruptcy Board of India (IBBI) and send a copy of the order to the CoC and the Resolution Applicant.