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2018 (9) TMI 429 - Tri - Insolvency and BankruptcyInitiating Corporate Insolvency Resolution Process - Approval of resolution plan - Held that - The decision of the ARCIL leads to certain shadow of doubts behind the rejection of the plan of the said applicant. However, this Bench power to interfere with the statutory right of the CoC to either approve or reject a resolution plan by a vote of not Les than 75% of voting share of the financial creditors I am liable to approve the resolution plan which was approved with 100% voting share and meets the requirements of sub section (2) of section 30 of the I&B Code. In view of the above, and upon finding that none of the objections raised by any of the objectors against the Resolution Plan submitted by CP Ispat Private Limited stand proved with supporting evidence, it appears to me that the resolution plan of CP Ispat Pvt. Ltd is to be approved as per Sub-Section (1) of Section 31 of the I&B Code 2016. Accordingly, the Resolution Plan submitted by CP Ispat Private Limited is hereby approved.
Issues Involved:
1. Application for initiating Corporate Insolvency Resolution Process (CIRP). 2. Approval and submission of the Resolution Plan by the Committee of Creditors (CoC). 3. Objections raised by rejected resolution applicants. 4. Allegations of irregularities and confidentiality breaches by the Resolution Professional. 5. Approval of the Resolution Plan by the adjudicating authority. 6. Fixation of insolvency resolution costs and fees of the Resolution Professional. Issue-wise Detailed Analysis: 1. Application for initiating Corporate Insolvency Resolution Process (CIRP): The application was filed by Punjab National Bank under Section 7 of the Insolvency and Bankruptcy Code (I&B Code), 2016, for initiating CIRP against Divyajyoti Sponge Iron Ltd. The application was admitted on 23rd August 2017, and Mr. Arun Kumar Gupta was appointed as the Interim Resolution Professional (IRP), later confirmed as the Resolution Professional (RP). 2. Approval and submission of the Resolution Plan by the Committee of Creditors (CoC): The RP convened eight meetings of the CoC, consolidated claims from financial and operational creditors, and after due deliberation, a resolution plan was approved by the CoC. The final resolution plan was submitted before the Bench on 19th February 2018, the last day of the 180-day CIRP period. 3. Objections raised by rejected resolution applicants: Two resolution applicants, whose plans were rejected by the CoC, filed applications challenging the approved resolution plan. Omkara Infraprojects Private Limited alleged irregularities by the RP, including violation of confidentiality and improper approval processes. Another applicant, Mr. Prakash Jain of Simplex Credits and Industries Ltd, claimed discrimination in the acceptance of expressions of interest and sought reconsideration of his plan. 4. Allegations of irregularities and confidentiality breaches by the Resolution Professional: Omkara Infraprojects Private Limited accused the RP of disclosing its bid amount to another applicant, resulting in a higher bid from the approved applicant. The RP was also accused of violating confidentiality and not adhering to the Code's provisions. The Bench found no merit in these allegations, noting that the CoC's decisions were made after due deliberation and that the complainant's revised plan was submitted belatedly. 5. Approval of the Resolution Plan by the adjudicating authority: The Bench reviewed the RP's final report and the approved resolution plan. It was satisfied that the RP met all requirements under Sub-Section (2) of Section 30 of the I&B Code, 2016, and provided the necessary certification under Regulation 39(4)(a) of the IBBI Regulations. The resolution plan submitted by CP Ispat Private Limited was approved with 100% voting share by the CoC, and the objections raised by other applicants were found to lack merit. 6. Fixation of insolvency resolution costs and fees of the Resolution Professional: The Bench expressed concern over the fixation of exaggerated insolvency resolution costs and fees of the RP without considering the volume, nature, and complexity of the CIRP. It noted the need for legitimate guidelines or regulations to ensure reasonable costs and fees, safeguarding the prospects of reviving a corporate debtor. The CoC's decision to approve additional lump sum fees for the RP was also scrutinized. Conclusion: The resolution plan submitted by CP Ispat Private Limited was approved as it met all statutory requirements. The objections raised by other applicants were dismissed due to lack of supporting evidence. The Bench emphasized the need for guidelines on insolvency resolution costs and fees to prevent unreasonable charges. The approved resolution plan was binding on all stakeholders and came into immediate effect, with the moratorium order ceasing to have effect. All records related to the CIRP and the resolution plan were to be forwarded to the Insolvency and Bankruptcy Board of India.
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