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TMI Blog2017 (8) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... ts proceedings. Applicant has proven track record of optimum utilization of the infrastructure and manufacturing facilities of the corporate debtor and it has successfully provide continued and meaning employment to direct/indirect work force of over 1500 employees. Most of these employees are absorbed by the applicant when the corporate debtor ceased operations. It is currently single largest employer of extremely skilled and unskilled persons in the Zone and more than 1500-2000 families depend on the applicant. Apart from others as provided in the resolution plan, it would be in the best interest of the Company, its employees in particular, public in general, and also in the interest of financial creditors to accept the Resolution plan in question. We are unanimous in accepting Resolution plan in question as it meets all parameters including legal and moral. - C.A. No. 123/2017 in CP(IB) No. 01/HDB/2017 - - - Dated:- 2-8-2017 - MR. RAJESWARA RAO VITTANAL AND MR. RAVIKUMAR DURAISAMY, JJ. For The Applicant : Ms. Mamta Binani, RP, Krishnenda Datta, P. Vikram and Nitish Bandary, Advs For The Respondent : S. Niranjan Reddy, Sr. Adv., Jyoti Singh, Adv., Ms. Rubaina Khat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. No. Name of the Financial Creditor Amount of Claim admitted (Rs. in Crores) Percentage share in committee of creditors Percentage Share in Voting 1. Alchemist Asset Reconstruction Company Ltd. (AARC) 122.06 12.56% 13.83% 2. Edelweiss Asset Reconstruction Company Limited (EARC) 86.92 8.94% 9.84% 3. Millennium Finance Ltd. 673.91 69.32% 76.33% 4. Synergies Castings Ltd. 89.26 9.18% 0 TOTAL 972.15 100% iv. That as per the requirements of Section 25(2)(h) of the IBC, the Applicant herein initiated the process of inviting prospective Resolution Applicants for submission of Resolution Plans for the resolution of the Corporate Debtor. The above proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinuity of business along with most effective use of the assets and equipments of SDAL is as detailed below: (a) Financial Re-structuring - Restructuring of Debts by way of settlement in terms of directions of the BIFR and payment of restructured dues over a period of three years. (b) Operational Restructuring - Amalgamation of Corporate Debtor with the Applicant. (c) Capital Restructuring - Allotment of shares of the merged entity to the shareholders of Corporate Debtor and payment of cash towards fractional shares. (d) Payment to Operational Creditors and Statutory Dues - Dues to the Operational Creditors be restructured and payment to such Operational Creditors and the Statutory Dues to be made in a staggered manner after completion of payment to the Financial Creditors. (e) Infusion of fresh funds by the promoters - Fund infusion by promoters of the Applicant Company, if required. (f) Payment of Insolvency Resolution Process Cost in priority to all other debts. (g) IRP Cost Amalgamation with appointed date as 31-03-2017 with the following major benefits:- (i) Operational Synergies (ii) Marketing synergies (iii) Financial synergies (iv) Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been tabulated below: (Rs. In lakhs) Particulars/Year 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Total Insolvency Resolution Cost 50.00 - - - - - 50.00 Payment of EARC 163.00 163.00 163.00 - - 489.00 Payment of AARC 228.92 228.92 228.92 - - 686.77 Payment of MFL 1263.92 1263.92 1263.92 - - 3791.75 Total Secured Payments 50.00 1655.84 1655.84 1655.84 5017.52 Deferred Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proval of the Resolution Plan. iii. CBDT - To exempt SCL in respect of SDAL from the applicable provisions of Section 79 of the Income Tax Act, 1961 with respect to business losses incurred by SDAL. SCL shall be entitled to carry forward and set off the accumulated losses and unabsorbed depreciation as per provisions of Section 72A of the Income Tax Act, 1961. To exempt SCL from the applicability of and payment of Tax under Section 115(JB) of the Income Tax Act, 1961, to accept the repayment of outstanding amount of ₹ 5.29 lakhs TDS dues in three equal annual instalments without any interest, damages, penal interest etc. iv. The Company will have the option to pre pay the dues of the Banks/Financial Institutions/Creditors, without any additional levies. v. In the event of failure on the part of the Company to adhere to make payments to Financial Creditors for an amount and in the manner and in accordance with the terms as envisaged in the scheme, the financial creditors will be entitled to reinstate their dues to the original status as per the admitted claims by the Resolution professional along with the security available to them as on COD. However, the principal ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution plan of Respondent No.3 is in contravention of Section 13(4) of IBC, and the same was not passed with vote of 75% of voting shares of financial creditors. (b) The Respondent No.2 (MFL) was wrongly included in the COC as financial creditor of Corporate Debtor basing on the alleged three assignment agreements evenly dated 24-11-2016 are not executed in accordance with law. Moreover, Respondent No.3 is a related party of Corporate Debtor assigned more than 90% of its debt holding in the Corporate Debtor to the Respondent No.2 (MFL). And these agreements were executed immediately prior to the coming to the effect of SICA Repeal Act in November, 2016. (c) They have earlier filed C.A.Nos. 43,56, 57 and 124 of 2017 by questioning the constitution of the COC, related party issue etc. and all CAs are pending for adjudication before this Tribunal. (d) In spite of the objection raised by the Respondent No. l, the IRP/RP steadfastly maintained that as a RP, she does not have power to enter into enquiries regarding the validity of documents or inter se disputes amongst the creditors of Corporate Debtor. (e) It is further alleged that no consideration has been paid by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not less than seventy-five per cent of voting share of the financial creditors. (5) The resolution application may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered; Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors, unless such resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating authority. 31(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall be order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave carefully perused the Resolution Plan submitted by SCL, to the Resolution Professional vide letter dated 05-07-2017 (Exhibit A -Page 17 of material papers). An undertaking dated 05-07-2017 is also given by SCL (Page 18 of the material papers) by undertaking to take care of issues relating to stamp duty, implications, staggered payment to the revenue authorities as and when they arise in compliance with the assurances given by them during second COC held on 24-06-2017, and also undertakes to comply with all provisions of law relevant to the Company and to infuse fresh funds as when need arises, and finally declared that the resolution plan in question is strictly in accordance with extant law. 13. The Resolution plan provides compliance of all the requirements of Section 30 of IBC, and main contents of the plan are as follows: (a) Amalgamation of Synergies Dooray Automative Limited with Synergies Castings Limited; (b) Payment of Insolvency Resolution Process Cost in priority to all other debts of the Corporate Debtor; (c) Payment to all the Financial Creditors of corporate Debtor in equal instalments over a period of three years, without interest; (d) Payment to O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowings of corporate debtor. And the same was also recognized by BIFR in one of its proceedings. The applicant has proven track record of optimum utilization of the infrastructure and manufacturing facilities of the corporate debtor and it has successfully provide continued and meaning employment to direct/indirect work force of over 1500 employees. Most of these employees are absorbed by the applicant when the corporate debtor ceased operations. It is currently single largest employer of extremely skilled and unskilled persons in the Zone and more than 1500-2000 families depend on the applicant. 16. In the light of the above benefits, apart from others as provided in the resolution plan, it would be in the best interest of the Company, its employees in particular, public in general, and also in the interest of financial creditors to accept the Resolution plan in question. We are unanimous in accepting Resolution plan in question as it meets all parameters including legal and moral. 17. In the result, the Company application bearing C.A. No. 123/2017 in CP(IB)No.l/HDB/2017 is allowed with following directions: (a) The resolution plan, as submitted by the Synergies Casti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iations were received from various quarters including foreign corporates, investment arms, etc., which is the major reform in the financial/corporate sector in the recent years. Therefore, a single financial creditor holding less than 9% of the total share of debt cannot super impose; to scuttle the process of the entire Resolution Plan. If Adjudicating Authority accepts the plea without any supporting evidence, we feel the preamble of the IBC Code will be jeopardized considering the social object of benefitting more than 1500 families directly/indirectly associated with SDAL. (g) We have also observed that the Corporate Debtor and the Resolution Applicant is from South, Resolution Professional is from East, Banks/financial institutions/EARC are from West and an ARC and most of the Counsels are from North, therefore we further observe that Pan India efforts were involved to revive the Corporate Debtor namely SDAL. (h) A copy of this order be filed with the Registrar of Companies, Hyderabad. (i) Before parting with the case, we hereby record our appreciation to all learned Senior Advocate/Counsels appearing for the parties who have fully co-operated and assisted the Adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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