2019 (4) TMI 2175 - Tri - IBC

Approval of Resolution Plan - Section 30(6) of the Insolvency Bankruptcy Code 2016 read with Regulation 39(4) of the Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) 2016 - HELD THAT - An observation can be made in a situation when a Resolution Plan is approved by the majority voting as per the prescribed percentage by the Members of the CoC the same is required to be accepted/approved by the Adjudicating Authority. Now this view is taken because of the latest decision of the Hon ble Supreme Court wherein the scope of any suggestion or alteration in the impugned resolution plan is discussed and directions issued. As far as the procedure is concerned in this case the same has been followed as per the provisions of the Insolvency Code therefore the Resolution Plan has to be approved. The Resolution Applicant has submitted an affidavit as required U/s 30(1) of the Code stating that he is eligible U/s 29A of the Code. The Resolution Plan 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 shall cease to have any effect henceforth. The Resolution Professional shall submit the records collected during the commencement of the Proceedings to the Insolvency Bankruptcy Board of India for their record and also return to the Resolution Applicant or New Promoters. Certified copy of this Order be issued on demand to the concerned parties upon due compliance. Conclusion - The Resolution Plan met the requirements of Section 30(2) of the IBC and adequately addressed the interests of all stakeholders and thus stands approved. Application disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The Tribunal considered the following core legal issues:

- Whether the Resolution Plan submitted by the Resolution Applicants (a consortium of M/s Khilari Infrastructure Pvt. Ltd. and M/s Topnotch Chemicals Pvt. Ltd.) meets the requirements under Section 30(2) of the Insolvency and Bankruptcy Code, 2016 (IBC) and whether it should be approved.

- Whether the Resolution Plan provides for the payment of insolvency resolution process costs, operational creditors, and financial creditors in accordance with the IBC.

- Whether the Resolution Plan adequately addresses the interests of all stakeholders, including employees, workmen, financial creditors, and operational creditors.

- Whether the Tribunal should grant the reliefs and concessions requested by the Resolution Applicants, including waivers of certain statutory liabilities and approvals for the implementation of the Resolution Plan.

- Whether the Resolution Plan complies with Section 29A of the IBC, which disqualifies certain persons from submitting a resolution plan.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Compliance with Section 30(2) of the IBC

- Relevant legal framework and precedents: Section 30(2) of the IBC requires that a resolution plan must provide for the payment of insolvency resolution process costs, repayment of debts of operational creditors, and management of the affairs of the corporate debtor after approval.

- Court's interpretation and reasoning: The Tribunal examined the Resolution Plan to ensure it complied with the statutory requirements. It noted that the plan provided for the payment of insolvency resolution process costs in priority to other debts and addressed the repayment of operational and financial creditors.

- Key evidence and findings: The Resolution Plan was approved by the Committee of Creditors (CoC) with a 77.08% voting share, exceeding the required 66% threshold.

- Application of law to facts: The Tribunal found that the Resolution Plan met the requirements of Section 30(2) of the IBC, as it provided for the necessary payments and management structure post-approval.

- Treatment of competing arguments: The Tribunal did not find any competing arguments that would prevent the approval of the Resolution Plan.

- Conclusions: The Resolution Plan complied with Section 30(2) of the IBC and was eligible for approval.

Issue 2: Interests of Stakeholders

- Relevant legal framework and precedents: The IBC requires that the resolution plan should consider the interests of all stakeholders, including financial creditors, operational creditors, employees, and workmen.

- Court's interpretation and reasoning: The Tribunal reviewed the provisions of the Resolution Plan that addressed the claims of various stakeholders, including financial creditors, operational creditors, employees, and statutory dues.

- Key evidence and findings: The Resolution Plan proposed payments to financial creditors, operational creditors, and statutory dues, and provided for the continuation of employment for existing employees.

- Application of law to facts: The Tribunal found that the Resolution Plan adequately addressed the interests of all stakeholders.

- Treatment of competing arguments: The Tribunal did not find any competing arguments that would undermine the interests of stakeholders.

- Conclusions: The Resolution Plan adequately addressed the interests of all stakeholders.

Issue 3: Reliefs and Concessions

- Relevant legal framework and precedents: Reliefs and concessions may be granted under the IBC to facilitate the implementation of a resolution plan.

- Court's interpretation and reasoning: The Tribunal considered the reliefs and concessions requested by the Resolution Applicants, including waivers of certain statutory liabilities and approvals for the implementation of the Resolution Plan.

- Key evidence and findings: The Tribunal noted that certain requested concessions could not be granted due to lack of corroborative evidence or uncertainty.

- Application of law to facts: The Tribunal granted some reliefs and concessions while denying others, such as waivers of outstanding tax demands, which must be dealt with according to the respective provisions of law.

- Treatment of competing arguments: The Tribunal balanced the need for reliefs and concessions with the requirements of applicable laws and regulations.

- Conclusions: The Tribunal granted some reliefs and concessions but denied others due to legal constraints.

Issue 4: Compliance with Section 29A of the IBC

- Relevant legal framework and precedents: Section 29A of the IBC disqualifies certain persons from submitting a resolution plan, including those who have been convicted of an offense or are connected to a willful defaulter.

- Court's interpretation and reasoning: The Tribunal reviewed the affidavit submitted by the Resolution Applicants to ensure compliance with Section 29A.

- Key evidence and findings: The Resolution Applicants submitted an affidavit stating that they were not disqualified under Section 29A.

- Application of law to facts: The Tribunal found that the Resolution Applicants were eligible to submit the Resolution Plan.

- Treatment of competing arguments: There were no competing arguments regarding the eligibility of the Resolution Applicants under Section 29A.

- Conclusions: The Resolution Applicants complied with Section 29A and were eligible to submit the Resolution Plan.

3. SIGNIFICANT HOLDINGS

- The Tribunal approved the Resolution Plan submitted by the Resolution Applicants, finding that it met the requirements of Section 30(2) of the IBC and adequately addressed the interests of all stakeholders.

- The Tribunal granted certain reliefs and concessions requested by the Resolution Applicants but denied others due to legal constraints.

- The Tribunal found that the Resolution Applicants were eligible under Section 29A of the IBC to submit the Resolution Plan.

- The Tribunal emphasized the importance of the CoC's commercial wisdom in approving the Resolution Plan, as highlighted by the Supreme Court in the case of K Sashidhar & Indian Overseas Bank & ors.

- The Resolution Plan is binding on the corporate debtor and all stakeholders, and the "Moratorium" imposed under Section 14 of the IBC shall cease to have any effect.

- The Tribunal granted liberty to the Resolution Applicants to move a Miscellaneous Application if required in connection with the implementation of the Resolution Plan.