2021 (6) TMI 482 - Tri - Insolvency and Bankruptcy

Approval of Resolution Plan - section 30 (6) of the Insolvency Bankruptcy Code, 2016 - HELD THAT - The Resolution Applicant takes over the Corporate Debtor with all its assets and liabilities as specified in the Resolution Plan subject to orders passed herein. The Resolution Plan has been approved by the CoC in its meeting held on 17.09.2020 with 100% votes - As held by Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta Ors 2019 (11) TMI 731 - SUPREME COURT , it was held that the limited judicial review available to AA has to be within the four corners of section 30(2) of the Code. Such review can in no circumstance trespass upon a business decision of the majority of the CoC. As such the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. T he instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38 (1A) and 39 (4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - Application allowed.

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016.
2. Compliance with the provisions of the Insolvency & Bankruptcy Code and CIRP Regulations.
3. Financial terms and management changes proposed in the Resolution Plan.
4. Directions sought by the Resolution Applicant from the Tribunal.
5. Reliefs and concessions related to Income Tax and other statutory obligations.
6. Implementation and supervision of the Resolution Plan.

Detailed Analysis:

Issue 1: Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016
The application was filed by the Resolution Professional seeking approval of the Resolution Plan submitted by Mikata Industries and Tech Services LLP. The Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor was initiated on 20.08.2019, and the Applicant was appointed as the Interim Resolution Professional (IRP). The Committee of Creditors (CoC) confirmed the Applicant as the Resolution Professional (RP) and conducted the CIRP in compliance with the Code and Rules.

Issue 2: Compliance with the provisions of the Insolvency & Bankruptcy Code and CIRP Regulations
The Resolution Plan was evaluated and approved by the CoC with a 100% voting share. The Resolution Professional confirmed that the plan complies with Sections 38 & 39 of the Insolvency and Bankruptcy Board of India (Corporate Insolvency Resolution Process) Regulations, 2016. The plan is in compliance with Section 30(2) of the Code and the Resolution Applicant is not ineligible under Section 29A of the Code.

Issue 3: Financial terms and management changes proposed in the Resolution Plan
The Resolution Plan involves a financial commitment of ?8.55 crores, with upfront payment of ?1.20 crores within two months and an additional ?80 lakhs as specified in the plan. The plan includes obtaining alternative lands for compensatory afforestation to maximize the value for the Corporate Debtor. The suspended Board of Directors will be dissolved, and new directors nominated by the Resolution Applicant will be appointed. A Monitoring Committee will oversee the implementation of the plan.

Issue 4: Directions sought by the Resolution Applicant from the Tribunal
The Resolution Applicant sought directions from the Tribunal for various non-financial aspects, including:
a) Change of name implementation for leased land within three months.
b) Re-examination of land classification as Forest Land.
c) Acceptance of alternative land under the Compensatory Afforestation Scheme.
d) Local administration assistance in plan implementation.

Issue 5: Reliefs and concessions related to Income Tax and other statutory obligations
The Resolution Applicant requested certain reliefs and concessions related to Income Tax and exemption of Capital gains. However, the Tribunal did not grant these concessions, directing the Resolution Applicant to approach the concerned authorities for necessary permits.

Issue 6: Implementation and supervision of the Resolution Plan
The Resolution Applicant proposed the appointment of new Directors and the establishment of a Monitoring Committee for plan implementation. The plan includes a declaration that it does not contravene any existing laws and complies with Regulation 38. The Tribunal emphasized that the successful resolution applicant should not face undecided claims post-approval, referencing the Supreme Court judgment in the Essar Steel case.

Order and Conclusion:
The Tribunal approved the Resolution Plan submitted by Mikata Industries and Tech Services LLP, making it effective immediately and binding on all stakeholders. The approval does not waive any statutory obligations/liabilities, and the Corporate Debtor must seek necessary approvals from relevant authorities. The moratorium under Section 14 of the Code ceases, and the Monitoring Committee will supervise the plan's implementation, reporting quarterly to the Tribunal. The Applicant must forward all records to the IBBI and communicate the order to the CoC, Resolution Applicant, and Registrar of Companies, Hyderabad.

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