2018 (11) TMI 803 - AT - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Resolution Plan approved by the Committee of Creditors - Whether the Committee of Creditors discriminated between the eligible Resolution Applicants while considering the Resolution Plan of Rajputana Properties Private Limited ? - Whether the Resolution Plan submitted by Rajputana Properties Private Limited is discriminatory? - Held that - If need be and if an extraordinary situation so arises the Committee of Creditors holds the discretion in conformity with the Regulations framed by the Board to extend the timeline over and beyond the process documents . The said fact is also evidenced in the proviso to Clause 1.3.1 of the process document which provided that even after the deadline of the submission of the Resolution Plan any Resolution Plan could be verified by the Resolution Professional as per I B Code and be considered by the Committee of Creditors . However it is also provided that the Committee of Creditors may it its discretion evaluate accept or reject such Resolution Plans . It is informed that the Committee of Creditors by majority decision has approved the plan submitted by Ultratech Cement Limited which was found to be eligible in absence of any demerit under Section 29A of the I B Code . i. The Resolution Professional had approached the Adjudicating Authority for seeking clarification in respect of the applications filed by the IDBI for being representative as a member of the Committee of Creditors . ii. The Adjudicating Authority passed order on 17th November 2017 against which the appeal was filed by the IDBI before this Appellate Tribunal wherein by order dated 18th December 2017 we directed the Resolution Professional to reconsider the claims of IDBI uninfluenced by the decision of the Adjudicating Authority Principal Bench. In compliance with such order the Resolution Professional admitted the claim of IDBI and SBI (Hong Kong) as beneficiaries of corporate guarantees issued by the Corporate Debtor and included their representatives to be part of the Committee of Creditors subject to any final determination of the claims of IDBI and SBI (Hong Kong) at any judicial forum including the National Company Law Appellate Tribunal. iii. Eventually IDBI and the members of Committee of Creditors arrived at a settlement in consequence of which this Appellate Tribunal allowed IDBI to withdraw its appeal. The Resolution Professional thereby became bound by the settlement and the decision of this Appellate Tribunal by which claims of IDBI and SBI Hong Kong were allowed and incorporated. In this background in absence of any fault on the part of the Resolution Professional it was not case for the Adjudicating Authority to pass adverse observations against the Resolution Professional . iv. The approval of the Resolution Plan is in the domain of the Committee of Creditors and not that of Resolution Professional and therefore if the Resolution Plan provides for the mandatory contents and is in accordance with the I B Code even if in case a Resolution Plan does not provide for full satisfaction of claims of Operational Creditors in absence of any power of the Resolution Professional to reject such Resolution Plan the Resolution Professional cannot be blamed. The Adjudicating Authority has failed to notice the aforesaid fact and made adverse comments against the Resolution Professional by impugned order dated 2nd May 2018 which are uncalled for. In exercise of powers conferred by Section 31 of the I B Code read with order of remand by the Hon ble Supreme Court we have gone through the records revised Resolution Plan submitted by Ultratech Cement Limited gist of which noticed earlier and being satisfied that the Resolution Plan approved by the Committee of Creditors under sub-section (4) of Section 30 in its 17th meeting held on 28th May 2018 meets the requirements as referred to in sub-section (2) of Section 30 we approve the revised Resolution Plan submitted by Ultratech Cement Limited which shall be binding on the Corporate Debtor and its employees members Creditors guarantors and other stakeholders involved in the Resolution Plan .

Summary

Issues Involved:
1. Interaction and meeting with bidders/Resolution Applicants, Financial Creditors, and stakeholders.
2. Acceptance of Binani Industries Limited's proposal for repayment and closure of the Corporate Insolvency Resolution Process (CIRP).
3. Consideration of the settlement plan proposed by Binani Industries Limited.
4. Approval of the Resolution Plan submitted by Rajputana Properties Private Limited.
5. Adverse observations against the Resolution Professional.

Issue-wise Detailed Analysis:

1. Interaction and Meeting with Bidders/Resolution Applicants, Financial Creditors, and Stakeholders:
The Appellant, Binani Industries Limited, contended that the Adjudicating Authority should have allowed them to interact with and/or meet the bidders, Resolution Applicants, Financial Creditors, and other stakeholders of the Corporate Debtor from time to time. The Tribunal did not grant this request, leading to an appeal.

2. Acceptance of Binani Industries Limited's Proposal for Repayment and Closure of CIRP:
Binani Industries Limited appealed against the order dated 2nd May 2018, where the Adjudicating Authority refused to accept their proposal for repayment of the dues of the Financial Creditors and close the CIRP, citing a lack of jurisdiction. The Tribunal upheld this decision, noting that there is no provision in the I&B Code for settlement once the CIRP is initiated.

3. Consideration of the Settlement Plan Proposed by Binani Industries Limited:
Rajputana Properties Private Limited appealed against the order dated 27th March 2018, which granted liberty to the Committee of Creditors (CoC) to consider the settlement plan proposed by Binani Industries Limited. The Tribunal found that the CoC did not properly consider the revised offer from Ultratech Cement Limited and discriminated against other Resolution Applicants by only negotiating with Rajputana Properties Private Limited.

4. Approval of the Resolution Plan Submitted by Rajputana Properties Private Limited:
The Tribunal found that the Resolution Plan submitted by Rajputana Properties Private Limited was discriminatory and contrary to the scheme of the I&B Code. The plan provided 100% of the verified claims to certain Financial Creditors while giving lesser percentages to others like Export-Import Bank of India (72.59%) and State Bank of India-Hong Kong (10%). The Tribunal directed the CoC to consider other Resolution Plans, including those submitted by Ultratech Cement Limited, which offered better terms for all stakeholders.

5. Adverse Observations Against the Resolution Professional:
The Resolution Professional, Mr. Vijay Kumar Iyer, appealed against the adverse observations made by the Adjudicating Authority. The Tribunal found these observations uncalled for, noting that the Resolution Professional had acted in compliance with the orders of the Tribunal and the settlement reached between the CoC and IDBI. The Tribunal set aside the adverse observations.

Conclusion:
The Tribunal dismissed the appeals by Rajputana Properties Private Limited and Binani Industries Limited, while allowing the appeal by the Resolution Professional, setting aside the adverse observations against him. The Tribunal approved the revised Resolution Plan submitted by Ultratech Cement Limited, which was found to be non-discriminatory and in compliance with the I&B Code, and remitted the records to the Adjudicating Authority for implementation.