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2022 (5) TMI 715 - AT - Insolvency and BankruptcyCIRP - Physical inspection of plant and machinery of the Corporate Debtor - seeking to undertake detailed analysis and assessment of the plant for four days with their technical team which was declined by the Monitoring Committee observing that first the SRA should deposit the substantial amount as required under Resolution Plan and then only they can undertake the necessary visits - HELD THAT - After approval of the Resolution Plan on 30.05.2019, Appellant by 10.06.2019 has made payment of INR 10.55 Crores. The Monitoring Committee has met in the month of June, 2019 itself on several occasions to consider steps towards implementation of the plan. In the meeting of the Monitoring Committee dated 06.06.2019, the request made by representative of the Successful Resolution Applicant to undertake visit of the plant for four days was noticed and not acceded to with observation that first the Appellant should deposit the substantial amount as required under the Resolution Plan and only then they can do undertake the necessary visit - It is also relevant to notice that the Appellant made request to the Monitoring Committee to permit the Appellant to make payment in a revised time schedule. The Monitoring Committee held its meeting on 29.08.2019, in which revised schedule for payment of the amount was decided and the lenders recorded their no objection. The Adjudicating Authority passed an order dated 03.09.2019 which order records the decision of the Monitoring Committee taken on 29.08.2019. After approval of the Resolution Plan, Monitoring Committee under the statutory scheme is to function for process of implementation of Resolution Plan and has not to act as any adversary body to the Resolution Applicant. If there were any genuine roadblocks found in the implementation of the plan, Monitoring Committee as well as Monitoring Professional is to use their good offices to sort out the difficulties and not to create roadblocks themselves in successful resolution of the Corporate Debtor. First prayer in the application is direction is sought against the Appellant under Section 74(3) read with Section 235A of the Code. In the entire application there is not even pleading that Appellant has even primafacie knowingly and willfully contravened any provision of plan within the meaning of Section 74 - For offence under Section 74(3), there is to be pleading that SRA or any person knowingly or willfully contravened any of the terms of the Resolution Plan. In entire application neither any pleadings nor averments have been made that SRA has willfully and knowingly contravened the terms of Resolution Plan. The Adjudicating Authority has not even adverted to Section 74(3) and had directed for making a reference to IBBI for taking appropriate action under Section 74(3), which order is unsustainable. Application disposed off.
Issues Involved:
1. Challenge to orders dated 01.11.2021 by the Adjudicating Authority. 2. Implementation of the Resolution Plan by the Successful Resolution Applicant (SRA). 3. Extension of time for payment under the Resolution Plan. 4. Alleged encroachment on the land of the Corporate Debtor. 5. Payment of interest on delayed payments. 6. Forfeiture of amounts deposited by the SRA. 7. Reference for prosecution under Section 74(3) of IBC. Issue-Wise Detailed Analysis: 1. Challenge to Orders Dated 01.11.2021: The Successful Resolution Applicant (SRA) filed appeals against two orders dated 01.11.2021 by the Adjudicating Authority (NCLT), Principal Bench, New Delhi. The appeals challenged the disposal of C.A. No. 2357/2019 and C.A. No. 1170/2019, and the order allowing C.A. No. 1246/2019 filed by the Monitoring Professional. 2. Implementation of the Resolution Plan by the SRA: The Corporate Debtor, M/s Allied Strips Ltd., underwent the Corporate Insolvency Resolution Process (CIRP) initiated by the Financial Creditor, M/s Oriental Bank of Commerce. The SRA submitted a Resolution Plan offering INR 233.71 Crores, which was approved by the Committee of Creditors (CoC) on 27.12.2018 and by the Adjudicating Authority on 30.05.2019. The SRA made initial payments but faced issues regarding plant inspection and alleged encroachment on the land. 3. Extension of Time for Payment Under the Resolution Plan: The SRA requested an extension of time for payment, which was initially agreed upon by the Monitoring Committee on 29.08.2019 and approved by the Adjudicating Authority on 03.09.2019. Despite this, the SRA faced difficulties due to alleged encroachment and other issues. The Adjudicating Authority's order dated 01.11.2021, which rejected the extension request, was found to be unsustainable as it did not consider the payments made by the SRA and the genuine issues raised. 4. Alleged Encroachment on the Land of the Corporate Debtor: The SRA claimed that approximately 7.5 Acres of the Corporate Debtor's land was encroached upon by third parties, which was not disclosed in the Information Memorandum. This claim was supported by a report from the Sub-Divisional Officer dated 21.12.2021, confirming the encroachment. The Adjudicating Authority failed to consider this issue adequately. 5. Payment of Interest on Delayed Payments: The Monitoring Committee's decision dated 29.08.2019 included a provision for the SRA to pay interest at 11% per annum from the date of plan approval (30.05.2019) until the payment was made. The SRA was found liable to pay interest for the periods from 30.05.2019 to 28.10.2019 and from 02.11.2021 until the payment is made. 6. Forfeiture of Amounts Deposited by the SRA: The Adjudicating Authority's order dated 01.11.2021 directed the forfeiture of INR 10.55 Crores deposited by the SRA. This order was found to be unsustainable as the SRA had deposited a total of INR 70.25 Crores by 08.11.2019, and the revised payment timelines were approved by the Adjudicating Authority on 03.09.2019. 7. Reference for Prosecution Under Section 74(3) of IBC: The Adjudicating Authority directed a reference to the IBBI for taking appropriate action under Section 74(3) of IBC, alleging willful contravention of the Resolution Plan by the SRA. This direction was found to be unsustainable as there was no prima facie evidence or pleading of willful contravention by the SRA. Conclusion: The appeals were allowed, and the orders dated 01.11.2021 were set aside. The SRA was granted time until 30.05.2021 to deposit the balance amount of INR 165.31 Crores along with interest. The Monitoring Committee and Respondent No. 1 were directed to hand over possession of the Corporate Debtor's assets and provide necessary clearances. The Compliance Report was to be filed within six weeks.
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