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2022 (6) TMI 542 - AT - Insolvency and BankruptcyLevy of Interest - quantification of interest from the date it became due and payable as per the Resolution Plan or not - seeking direction to Respondent to take immediate steps and expedite removal of all attachments, liens, charges, encumbrances etc. from the assets of the Corporate Debtor - fastening the liability to remove the attachment, lien, charge, encumbrance etc. over the assets of the Corporate Debtor upon the Appellant - permission to Appellant to make payment of the balance amount under the Resolution Plan within a period of 2 months from lifting/removing all the attachment, charges, encumbrances and lien from the assets of the Corporate Debtor - taking urgent steps to get all attachment, charges, encumbrances, lien on the assets of the Corporate Debtor lifted and removed expeditiously - HELD THAT - CIRP shall mandatorily be completed within a period of 330 days from the insolvency commencement date. Including the extension of CIRP Period and time taken in legal proceedings - Liability for prior offences etc. particularly removing/lifting attachments/liens/charges/encumbrances existing prior to CIRP needs to be dealt with in accordance with the provisions of Section 32(A) of the Code. It is very much clear that the Resolution Applicant has got the Corporate Debtor in less than 10% of the value of the admitted claim practically 90% is the waiver. However, this issue cannot be reckoned now but it can have a leverage impact on levy of interest @ 12% p.a. for delay in releasing the balance payment. The interest is to be paid for the period from 27.01.2020 to 15.11.2021. As it looks from the Written Submissions of the SBI submitted to the Registry of this tribunal vide diary no. 33701 dated 21.02.2022. This period also comprises the period resulting from global pandemic covid-19 - Since the Successful Resolution Applicant/Appellant has paid the full amount so now there is no question of going back and hence, perhaps this is the area where the question involved is now as far as whether the interest rate be reduced to be made at par of RBI base rate for lending to banks with additional 2% margin subject to a limit of 12% p.a. or otherwise. The Resolution Professional and the representative of the CoC who are the Chairman/Members of the Monitoring Committee should assist the Resolution Applicant in sorting out the issues pending at various forums be it Excise Authority, Enforcement Directorate etc. As reflected by the Appellant and at the same time the Resolution Applicant will have to bear certain interest burden which should be the rate of interest of RBI Base rate for lending to banks 2% margin as per the rate of interest applicable between 27.01.2020 to 15.11.2021 subject to a limit of 12% p.a. The Appeal is partially allowed.
Issues Involved:
1. Levying of interest @ 12% per annum upon the Appellant. 2. Removal of attachments, liens, charges, and encumbrances from the assets of the Corporate Debtor. 3. Time period for making the total payment under the Resolution Plan. 4. Implementation responsibility of the Resolution Plan. 5. Jurisdiction of the Adjudicating Authority in amending the Resolution Plan. 6. Impact of prior statutory dues and other claims on the Resolution Applicant. Issue-wise Detailed Analysis: 1. Levying of Interest @ 12% per annum upon the Appellant: The Appellant contested the Adjudicating Authority's direction to pay interest at 12% per annum from the date it became due and payable as per the Resolution Plan. The Tribunal acknowledged the Appellant's argument that the imposition of interest should be reconsidered, especially given the global pandemic and the delay in making payments. It was decided that the interest rate should be adjusted to the RBI base rate for lending to banks plus a 2% margin, subject to a limit of 12% per annum. 2. Removal of Attachments, Liens, Charges, and Encumbrances from the Assets of the Corporate Debtor: The Appellant argued that it was entitled to take over the assets and properties of the Corporate Debtor free from any attachments, liens, charges, and encumbrances. The Tribunal referred to Section 32(A) of the Insolvency and Bankruptcy Code (IBC), which provides that the liability for prior offences and encumbrances should cease upon the approval of the Resolution Plan. The Tribunal emphasized that the Resolution Professional and the Monitoring Committee should assist the Resolution Applicant in resolving these issues. 3. Time Period for Making the Total Payment under the Resolution Plan: The Appellant sought an extension of the time period for making the total payment under the Resolution Plan, arguing that the original period of 30 months was revised to 3 months without proper notice. The Tribunal acknowledged that the correction of the typographical error from 30 months to 3 months was necessary but also recognized the Appellant's difficulty in arranging funds within the revised timeframe. The Tribunal partially allowed the Appellant's request by adjusting the interest rate for the delay period. 4. Implementation Responsibility of the Resolution Plan: The Appellant contended that it was the duty of the Resolution Professional to ensure that the assets of the Corporate Debtor were free from encumbrances. The Tribunal agreed that the Resolution Professional and the Monitoring Committee were responsible for implementing the Resolution Plan and ensuring that the assets were free from any encumbrances, liens, or charges. 5. Jurisdiction of the Adjudicating Authority in Amending the Resolution Plan: The Respondent argued that the Appellant was seeking an impermissible amendment to the approved Resolution Plan. The Tribunal clarified that the Adjudicating Authority has the power to correct typographical errors and make necessary adjustments to ensure the effective implementation of the Resolution Plan. The Tribunal emphasized that any such corrections should not be considered irregular or unenforceable activities. 6. Impact of Prior Statutory Dues and Other Claims on the Resolution Applicant: The Appellant highlighted the existence of significant statutory dues and other claims on the properties of the Corporate Debtor, which hindered the funding process. The Tribunal reiterated that the Resolution Applicant should not be held responsible for any outstanding statutory dues or claims for the period before the commencement of the Corporate Insolvency Resolution Process (CIRP). The Tribunal emphasized that the Resolution Applicant should receive the assets free from any encumbrances, as specified in the approved Resolution Plan. Conclusion: The Tribunal partially allowed the Appeal, adjusting the interest rate to the RBI base rate for lending to banks plus a 2% margin, subject to a limit of 12% per annum, for the delay period. The Tribunal also emphasized the responsibility of the Resolution Professional and the Monitoring Committee to assist the Resolution Applicant in resolving issues related to attachments, liens, charges, and encumbrances on the assets of the Corporate Debtor. The Tribunal reiterated that the Resolution Applicant should not be held liable for any prior statutory dues or claims and should receive the assets free from any encumbrances.
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