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TMI Blog2018 (9) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... essary for the disposal of IA 180/2018 are as follows:- 3. M/s. Rama Road Lines/Operational Creditor triggered the Corporate Insolvency Resolution Process in respect of The Sirpur Paper Mills Ltd. U/s 9 of the IB Code by filing CP(IB) 52/9/HDB/2017. This Adjudicating Authority, by its order, dated 18.09.2017, commenced Corporate Insolvency Resolution Process by appointing Mr. Mahadev Tirunagari Insolvency Professional as Interim Resolution Professional. 4. Thereafter, on the Application of CoC vide CA No. 192/2017, this Adjudicating Authority, as per the recommendation of the CoC, appointed Mr. Ram Ratan Kanoongo as Resolution Professional. 5. The CoC, in its 3rd meeting, held on 08.12.2017, resolved to call for Expression of Interest ("EoIs") and consequential submission of Resolution Plan from the prospective Resolution Applicants and accordingly, an advertisement was made in the newspaper on 11th and 13th of December, 2017 stating the last day for submission of Expression of Interest was 22.12.2017. 6. By the last date, seven Resolution Applicants had shown Expression of Interest. They were given time till 25.01.2018 to conduct their due diligence, plant visit, meeting with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Professional placed the revised draft Resolution Plan before the CoC on 05.03.2018. The CoC decided to wait for the confirmation relating to various benefits and concessions offered by the Govt. of Telangana. 15. The CoC instructed Resolution Professional to seek an extension of CIRP Process period for 90 days and accordingly Resolution Professional filed CA No. 50 of 2018 in CP (IB) No. 52/9/HDB/2017 and this Authority extended the duration of CIRP Process period by further 90 days, thereby granting time till 15.06.2018. 16. On 21.03.2018 the Industries and Commerce (IP & INF), Department of the Government of Telangana issued Government Order (G.O. Ms. No. 18) granted tailor made concessions and benefits to the Resolution Applicant, i.e. M/s. JK Paper Limited. 17. The Resolution Applicant-M/s. JK Paper Limited submitted its final revised Resolution Plan to the Resolution Professional and the same was placed before the CoC in its 9th meeting conducted on 28.03.2018. The CoC suggested for further improvements and requested the Resolution Applicant to submit its final revised Resolution Plan. Accordingly, the Resolution Applicant submitted the revised and improved Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t /new banks/financial institutions 118 135 138 391 1.5 Incentive from Govt. of Telangana - 22 28 50 1.6 Total Funding 371 207 204 782 2 Settlement 371 - - 371 2.1 Capex - 112 204 316 2.2 NCA/WC - 75 - 75 2.3 Cash for Contingencies - 20 - 20 2.4 Total Uses 371 207 204 782 25. The Resolution Plan was put to vote as required under section 30(4) of the Code and Regulation 39(3) of CIRP Regulations. 26. The CoC in its 11th meeting, held on 16.05.2018, passed the following regulations: "RESOLVED THAT pursuant to Section 30(4) of the Code, Resolution Professional has confirmed that the Resolution Applicant, M/s. JK Paper Limited is not ineligible to be a Resolution Applicant as defined under Section 29A of the Code and accordingly the Committee of Creditors (hereafter referred to as "COC") is satisfied to approve the Resolution Plan." "FURTHER RESOLVED THAT pursuant to Regulation 39(3A) of IBBI (CIRP) Regulations, 2016, the COC while approving the Resolution Plan under Section 30(4) of the Code confirms that the Resolution Plan specifies the amount payable from the resources as specified under Regulation 38(1) of IBBI (CIRP) Regulations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the Resolution Plan. (3) After the order of approval under sub-section (1), - (a) The moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) The resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the Resolution Plan to the Board to be recorded on its database. 30. Before approving the Resolution Plan, as approved by the CoC, it is the duty of the Adjudicating Authority that it should satisfy that the Resolution Plan, as approved by the CoC, under sub-section (4) of section 30 meets the requirements as referred to sub-section (2) of Section 30. 31. Therefore, it is necessary to refer to sub-section (2) of section 30, which reads as follows:- Submission of Resolution Plan. Sec. 30 30.(1) A Resolution Applicant may submit a Resolution Plan to the resolution professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each Resolution Plan received by him to confirm that each Resolution Plan- (a) Provides for the payment of insolvency resolution process costs in a manner specified by the Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) of section 30 have been complied with or not. 34. A perusal of the Resolution Plan, approved by the CoC which is Annexure K (colly), provides for payment of Insolvency Resolution Process costs, set apart the amount for payment of operational creditors and it also provides for management of affairs of the Corporate Debtor after approval of the Resolution Plan. 35. The Resolution Applicant is not disqualified U/s. 29(a) of the IB Code. The operational creditors that choose to dispute the rejection of their claims also stated that they have no rejection for the approval of the Resolution Plan. 36. In the case on hand, the Resolution Plan, as approved by the CoC, is a conditional Resolution Plan and the integral part of the Resolution Plan is having certain concessions given by the Government of Telangana. 37. In this context it is necessary to make a mention. But for the G.O.Ms No. 18 issued by the Government of Telangana it would not have been possible to revive the Corporate Debtor. The Resolution Plan, if approved, would revive the Corporate Debtor and it would help all the stakeholders. The concessions given by the Government of Telangana in making this Resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48. The Nomination and Remuneration Committee of the Corporate Debtor, in the meeting, on 23.01.2017, approved the remuneration and terms and conditions of appointment of the Applicant as Whole Time Director with designation as Executive Director and CEO of the Company and recommended for approval of the Board of Directors of the Company. The Company approved the appointment of the Applicant for a further period of two years i.e. from 23.01.2017 to 22.01.2019 with a designation as Executive Director & CEO of the Company and in the AGM held on 29.09.2017 the IRP, Mr. Mahadev Tirunagari appointed by this Authority was also present. 49. It is stated by the Applicant that after the admission of CP(IB) 52 of 2017 in respect of the Corporate Debtor, this Adjudicating Authority by its Order, dated 18.09.2017, appointed Mr. Mahadev Tirunagari, Insolvency Professional as Interim Resolution Professional. The said IRP sent an e-mail, dated 29.09.2017, which reads as under: - "As per the provisions of IBC and corresponding regulations, IRP can appoint any person to undertake and oversee the affairs of the company and report to IRP. In this regard, I appoint Mr. N. Veda Kumar as CEO of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed for an amount of Rs. 5,40,000/- and balance of Rs. 8,10,000/- is rejected. 59. The Resolution Professional filed reply. The appointment of the Applicant as Whole Time Director designated as Executive Director and CEO by the Board Resolution, dated 23.01.2015 for the period of two years from 23.01.2015 to 22.01.2017 on a remuneration of Rs. 1,50,000/- per month has not been approved by the Ministry of Corporate Affairs as can be seen from the e-mail, dated 14.10.2016 on the ground that "No Objection Certificate (NOC) from the lenders" has not been furnished. 60. The Resolution Professional stated in the reply that the reappointment of the Applicant for the period from 23.01.2017 to 22.01.2019 on a remuneration of Rs. 1.50 lakhs per month is also without the approval of the CoC members. 61. The Resolution Professional stated that in view of the Section 17(l)(b) of the Code, the powers of the Board of Directors stand suspended and such powers are vested in the Interim Resolution Professional. 62. The appointment of the Applicant in the 8th Annual General Meeting held on 29.09.2017 has also not been approved by the MCA on the ground that no NOC from the lenders (members of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the approval of the CoC for the appointment of Applicant as CEO but the remuneration of the CEO has to be approved by the COC. 80. In the case on hand the CoC did not approve the remuneration of the Applicant. 81. Moreover Applicant is on leave from 21.10.2017 to 31.01.2018. 82. The Applicant did not file any document to show that he has got leave to his credit which earns salary for him. 83. In the absence of such documents it cannot be said that Applicant is entitled for salary during his leave period even if it's a leave with the permission of IRP. 84. Therefore, the Applicant was on duty from 23.01.2017 to 20.10.2017. The Applicant is paid salary upto 18.09.2017. That means Applicant has not been paid salary from 19.09.2017 to 20.10.2017. 85. In view of the fact that the Applicant worked as CEO during the period from 19.09.2017 to 20.10.2017 he is entitled for his salary but not by way of a claim filed during the CIRP Process Period. 86. The claim has to be filed by the employees only as on the date of commencement of CIRP Process Period. 87. The adjudication of the claims that arose after the commencement of CIRP Process Period is not covered by Form-B,C,D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 306 30/06/2014 supply 83,451.22 0.00 83,451.22 16. 1311 02/07/2014 supply 94,090.37 0.00 94,090.37 17. 1330 04/07/2014 supply 80,384.71 0.00 80,384.71 18. 1377 08/07/2014 supply 93,364.71 0.00 93,364.71 19. 1379 08/07/2014 supply 94,628.77 0.00 94,628.77 20. 1419 11/07/2014 supply 86,154.90 0.00 86,154.90 21. 1420 11/07/2014 supply 86,517.72 0.00 86,517.72 22. 1435 12/07/2014 supply 85,078.11 0.00 85,078.11 23. 1452 13/07/2014 supply 80,384.71 0.00 80,384.71 24. 1520 17/07/2014 Diesel Esc. June'14 78,142.34 0.00 78,142.34 25. 1526 18/07/2014 supply 86,342.16 0.00 86,342.16 26. 1527 18/07/2014 supply 85,078.11 0.00 85,078.11 27. 1546 19/07/2014 supply 94,804.33 0.00 94,804.33 28. 1554 19/07/2014 Power Esc. June '14 137,491.43 0.00 137,491.43 29. 1566 20/07/2014 supply 82,737.26 0.00 82,737.26 30. 1623 24/07/2014 supply 94,265.93 0.00 94,265.93 31. 1624 24/07/2014 supply 93,727.54 0.00 93,727.54 32. 1661 26/07/2014 supply 94,265.93 0.00 94,265.93 33. 1662 26/07/2014 supply 86,330.46 0.00 86,330.46 34. 1727 29/07/2014 Fixed Facility 68,764.32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74. 2978 16/10/2014 Power Esc. Sept'14 93,265.80 0.00 93,265.80 75. 91822678 28/10/2014 Fixed Facility 61,200.00 0.00 61,200.00 76. 3384 13/11/2014 Short Lifting Sept '14 (partly) 114,177.82 0.00 114,177.82 77. 91387711 13/11/2014 Short Lifting Oct'14 654,286.33 0.00 654,286.33 78. 91851758 29/11/2014 Fixed Facility 61,200.00 0.00 61,200.00 79. 91866882 16/12/2014 Short Lifting Nov'14 654,286.33 0.00 654,286.33 80. 91879204 30/12/2014 Fixed Facility 61,200.00 0.00 61,200.00 81. 91887776 08/01/2015 Short lifting Dec'14 654,286.33 0.00 654,286.33 82. 91917534 11/02/2015 Fixed Facility 61,200.00 0.00 61,200.00 83. 91918615 12/02/2015 Short lifting Jan'15 654,286.33 0.00 654,286.33 84. 91930728 26/02/2015 Fixed Facility 61,200.00 0.00 61,200.00 85. 91956054 26/03/2015 Fixed Facility 61,200.00 0.00 61,200.00 86. 91986073 29/04/2015 Fixed Facility 61,200.00 0.00 61,200.00 87. 92009112 26/05/2015 Fixed Facility 61,200.00 0.00 61,200.00 88. 92038931 29/06/2015 Fixed Facility 61,200.00 0.00 61,200.00 89. 92064767 28/07/2015 Fixed Facility 61,200.00 0.00 61, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort lifted quantity @ Rs. 6.05 per SM3. 98. The invoices mentioned in the item Nos. 12, 34, 54, 72 ,75, 78, 80, 82 and 84 to 99 were raised in accordance with the Facility Charges clause mentioned in the Purchase Order, which states that the Applicant shall install 1 No. 20KL VIE and AV Coil for maintaining Liquid Oxygen supplies at Corporate Debtor's premises and the Corporate Debtor shall pay facility charges @ Rs. 3 per litre per month of the gross capacity of VIE extra i.e., Rs. 60,000/- per month excluding applicable excise duty. 99. The Applicant addressed letter, dated 26.09.2014, to the Corporate Debtor requesting for to the payment of Rs. 47,51,929/- outstanding as on 31.08.2014 and a letter, dated 11.07.2016, to the Corporate Debtor requesting for payment of Rs. 1,01,49,709/- excluding an interest @18% outstanding as on 30.06.2016 and for the return of residual Liquid Oxygen, return of Liquid Oxygen Storage Tank, AV Coil and related equipment. 100. The Applicant also sent email dated 17.11.2014 to the Corporate Debtor regarding payment of outstanding amount of Rs. 60,94,019/- as on 31.10.2014. 101. Pursuant to the letter of the Corporate Debtor, dated 31.03.2015, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned stating that the claim is for Rs. 1,01,32,362/- and the admitted amount is Rs. 51,67,213/-. The Resolution Professional rejected Rs. 49,65,149/- out of the total amount claimed by the Applicant. The Resolution Professional stated that the claim is admitted to the extent it is outstanding in the Company's books of account. 111. No reasons have been mentioned by the Resolution Professional for rejection of the claim either in the claim status report or in response to its letter dated 26.03.2018. 112. It is stated by the Applicant that Resolution Professional cannot reject a claim solely based on the books of account and there is a possibility of non-updating of books of account of the Corporate Debtor. 113. According to the Applicant, it must be given an opportunity to re-submit its claim of any whole or part rejection of claim by the Resolution Professional. 114. A reading of Regulation 14(2) shows that the IRP or RP shall revise the amounts of claims admitted as soon as may be practicable, when he comes across additional information warranting such information and it is also stated by the Applicant that section 60(5) of IBC, NCLT shall have jurisdiction to entertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort lifting charges or not. 125. Taking into consideration the fact that the operations of the factory has been closed from 24.09.2014, this aspect has to be gone into while determining the claim of the Applicant. 126. The Resolution Professional without going into those aspects simply basing on the Books of the Corporate Debtor admitted certain portion of the claim amount and rejected the rest of the claim amount. 127. No reasons were given by the Resolution Professional for rejecting the claim of the Applicant in part. 128. In the case on hand, the Resolution Applicant has filed a Resolution Plan and it has been approved by the CoC and the same is placed before this Authority by the Resolution Professional for its approval and this Authority by this common order is approving the Resolution Plan filed by the Resolution Applicant. 129. In the Resolution Plan, certain amount is set apart for payment towards operational creditors. 130. Since the claim of the Applicant involves questions of law and fact, it needs to be decided on evidence. 131. The Applicant is at liberty to revive its claim before the appropriate forum, at appropriate stage and as decided by such forum, the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Copy of order regarding dismissal of appeal filed against the award has not been submitted thus it sees that the matter is subjudice before the Judicial Forum. In the light of moratorium imposed during the corporate insolvency resolution process, the proceedings for these cases has been stayed. Hence the validity of the claim amount would be decided after the judicial proceedings are completed." 142. It is stated by the Applicant that Resolution Professional has not acted in conformity with the provisions of the IBC as well as the Insolvency and Bankruptcy Board of India (Insolvency Professionals Regulations r/w IBBI Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 143. The Resolution Professional without giving any opportunity to the Applicant rejected its claim. 144. The Resolution Professional stated that the Applicant did not provide the copy of the order passed by the Appellate Court dismissing he appeal. 145. It is stated by the Applicant that rejecting the claim on the ground of moratorium is not correct. 146. It is pointed out by the Applicant that in view of the Judgment of the Hon'ble NCLAT rendered in Ksheeraabd Constructions Pvt. Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional of the Corporate Debtor to pay an amount of Rs. 3,50,000/-. 158. It is stated by the Applicants that as per the directions of this Tribunal a sum of Rs. 2,00,000/- was deposited by the Proprietor of the Applicant firm in IRP's designated Bank Account, a sum of Rs. 1,50,000 towards part payment and a sum of Rs. 50,000 towards statutory expenses. According to the Applicant he is entitled to get a sum of Rs. 3,50,000. 159. It is stated that the CoC replaced IRP Mr. Mahadev Tirunagari with Mr. Ram Ratan Kanoongo as Resolution Professional. 160. It is stated that IBBI issued a circular dated 16.01.2018 to all the Registered Insolvency Professionals stating that the fees payable to any person acting as a Resolution Professional shall be included in the "Insolvency Resolution Process costs" which needs to be paid in priority under section 5(13) of the Code. 161. It is also pointed out by the Applicant that as per Sec. 5(27) "Resolution Professional" for the purposes part II of the Code means an Insolvency Professional appointed to conduct the corporate insolvency resolution process and includes Interim Resolution Professional. 162. The Applicant requested the Resolution Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess; and (e) Any other costs as may be specified by the Board; 173. Section 30(2) says the Resolution Professional shall examine each Resolution Plan received by him and satisfied with the Resolution Plan provides for the payment of Insolvency Resolution Process costs in a manner specified by the Board in priority to the repayment of other debts of the Corporate Debtor. 174. Section 53(l)(a) of the Code says the proceeds from the sale of the liquidation assets shall be distributed by giving first priority to the insolvency resolution process costs and the liquidation costs paid in full. 175. As already pointed out, Section 5(13) says what constitute Insolvency Resolution Process costs. 176. The fee paid to the Interim Resolution Professional certainly amounts to Insolvency Resolution Process costs since Sec. 5(27) says Resolution Professional means an Insolvency Professional appointed to conduct the CIRP Process and includes Interim Resolution Professional. 177. The publication that is made after admission of the Application and after appointment of IRP by this Authority is also a statutory function in the Corporate Insolvency Resolution Process. 178. Therefore, the fee pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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