9911796707
TMI Blog2018 (4) TMI 1594X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial Creditor under Section 7 of the Code for initiating Corporate Insolvency Resolution Process (in short CIRP) of Electro steel Limited/Corporate Debtor. 3- Vide Order dated 21-07-2017, the application filed by SBI was admitted and the Resolution Professional, Mr. Dhaivat Anjaria was appointed as the interim Insolvency Resolution Professional(lRP). 4. At the first meeting of the Committee of the Creditors(CoC) held on 21- 08-2017, the COC approved the appointment of IRP and confirmed his appointment as the Resolution Professional. Before the expiry of duration of 180 days of the CIR process the duration was further extended to 17.04.2018 vide order in CA(IB) No. 555/KB/2017. 5. In the meanwhile, the Resolution Professional succeeds in his endeavour in identifying four Resolution Plans submitted to him by four Resolution Applicants and submitted all the four Resolution Plans before the COC as per sub-section(4) of Section 30 of the Code for approving one Resolution Plan out of the four Resolution plans. 6. CA(IB) No. 277 of 2018 was filed by the Resolution Professional (RP) for the approval of Resolution Plan of Vedanta Limited approved by the COC by 100% voting shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofessional filed reply affidavit in CA (IB) No.271/KB/2018 denying the allegations levelled against the Resolution Professional and contends that sufficient opportunity was given to the applicant and admitted part of its claim as per the provisions of the Code and the Regulations. The resolution professional further contends that its claim in part was rejected as per the Audit Report and reconciliation of the debit note with the books and ledgers of the Corporate Debtor and rejected the claim of the Applicant aggregating Rs. 1.79 crores which form part of the total claim submitted by the Applicant and that an additional amount of approximately Rs. 0.73 crore was found to be unsupported and hence rejected. 12, He further would contends that out of the total claim of Rs. 313.51 crores, he admitted the claim of Rs. 0.89 crores in September, 2017 which was updated on the website of the Corporate Debtor and several opportunities have been given to the applicant by exchanging various E-mails in terms of which, inter alia, the Resolution Professional at the advice of his Advisors requested additional information and supporting data from the applicant and consequently, he found the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irections passed by the Adjudicating Authority in the common order in CA(lB)No. 202/KB/2018 and in CA(IB) No.203/KB/2018 dated 20-03-2018, did not consider the question of eligibility of Vedanta Limited under Section 29A (d) of the Code independently. Secondly it contends that Vedanta Limited being ineligible to submit the Resolution Plan under section 29A (d) approval of the Resolution Plan of Vedanta Limited is in violation of the Code and therefore, is liable to be rejected. 1 7 The second objection referred to above was raised by the RSIPL in CA (IB) No. 203/KB/2018. RSIPL also raised very same objections against Tata steel Ltd and filed CA(IB) No.202/KB/2018 challenging the decision of the Resolution Professional alleging that its objections regarding the eligibility of Vedanta limited and Tata Steel Limited was not considered by the Resolution Professional. Vide common order dated 20.03.2018 this Bench allowed the applications in part upon the following directions:- (i) A copy of the decision taken by the RP in respect of eligibility of resolution applicant Tata Steel Ltd. and Vedanta Ltd. As per Section 29A, with supporting reasons for taking the decisions is to be given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant in terms of section 29A(d) of the Code by its own reasons. He further submits that Vedanta Limited resolution plan being the highest among the remaining three plans, that resolution plan was put to vote and passed with 100% voting share and it is that plan that came up for consideration before this Bench. 22. The findings of COC for the rejection of the objections of RSIPL as per the report are the following: (i) KCM being a corporate entity and not natural person, cannot be convicted of an offence punishable with imprisonment; (ii) The directors, officers or managers of KCM cannot be considered to be convicted of an offence solely based on the conviction of KCM; (iii) Even if directors, officers or managers of KCM are considered liable for the acts of KCM, such persons do not fall under the definition of 'connected person' under section 29(A)(d) of the Code, (iv) the interpretation of the phrase punishable with imprisonment for two years or more" excluded cases wherein the law does not provide a minimum sentence of two years. 23. The Committee of creditors being arrived at a decision on the aforesaid reasons, let us see whether Vedanta Limited is eligible t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Plc. Therefore, whether the KCM is the subsidiary of Vedanta Limited with in the meaning of Section 29A (j) doesn't arise again in the case in hand. 28. No doubt, the KCM is a subsidiary Company of Vedanta Resources Plc and that Vedanta Limited is the subsidiary of Vedanta Resources Plc. That being so, if KCM is found convicted for any offence punishable for imprisonment for 2 years or more as provided under Section 29A (d), the Vedanta Limited who is the Resolution applicant, in this case, is ineligible. 29. So, the next question is whether the KCM has been convicted for any offence punishable for imprisonment for two years or more as provided in Section 29A (d) of the Code. 30. According to the Ld.Sr.Counsel for the RSIPL, the KCM was convicted for violating provisions of Section 91 (I), Section 24 and Section 86(1 and 3) and under Section 12(b) of the Environmental Protection and Pollution Control(Water Pollution(Effluent and Wastewater)] Regulation Statutory Instrument No. 172 of 1993 as per order passed on 25-11-2010 by Subordinate Court of First Class for the Chingola District Holden at Chingola, Zambia (Criminal Jurisdiction). According to him KCM is convicted by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under a statute, and includes a person resident outside India;. 34. So no doubt a company is a person as per the provisions of the Code and if the company or its directors or officers were convicted for an offence punishable under the purview of Section 29A(d) of the Code no doubt the Vedanta Limited is ineligible. 35. The Ld. Sr. Counsel appearing for the RSIPL at this juncture stressed his argument on the strength of a judgement of Hon'ble Supreme Court in (2005) 4 Supreme Court case 530 (Standard Chartered Bank & Ors. Vs. Director of Enforcement and Ors.) that under Corporate Laws, a Company is liable for fastening criminal liability. 36. By referring to Foreign Exchange Regulation Act, 1973, Section 56(1 the Hon'ble Supreme Court, in the above cited decision has held, per majority, that "though a Company cannot be sentenced to imprisonment, it can nevertheless be prosecuted and the Court can impose punishment of fine instead". 37. On reading of the above said citation what we understood is that even in graver offence punishable with imprisonment and fine, the Court is duty bound to impose punishment to the company by sentencing the Company to pay fine in lieu of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n given additional powers. " 41. At this juncture it is also good to read the object of enactment of the Code. It reads as follows: "An Act to consolidate and amend he laws relating to re- organisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stake holders including alteration in the order of priority of payment of Government dues and to establish an Insolvency ad Bankruptcy Board of India, and for matters connected therewith or incidental thereto." 42. Bare in mind the legislative object of introduction of Section 29(A) to the Code and the object of the enactment of the Code and upon the above said reasons in our considered opinion, the resolution applicant Vedanta Limited cannot be said to be ineligible to submit the Resolution Plan. Accordingly we answer the point in negative and hold that Vedanta Limited is eligible resolution applicant. Point no (ii) 43. The Ld. Counsel for the RSIPL submits that COC, being the statutory body is bound by the decisions of the Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration at the fag end of the expiry of the duration of the CIRP challenging that its claim has not been considered properly by the Resolution Professional. The delay in challenging non inclusion of a claim finalised by a resolution professional before he finalise the resolution plan itself is an indication that there is no bonafide in the challenge raised by the applicant. 48. The Ld. Counsel for the Resolution Professional in answering to the objections of the above said operational creditor submits that the entire claim of all the Operational Creditors were taken into consideration by him in appropriate time as per Regulation 7 of Chapter IV of IBBI(lnsoIvency Resolution Process for Corporate persons) Regulations, 2016 and identified about 430 Operational Creditors till the end of 14-03-2013 and all the claims of the Operational Creditors inclusive of the claims of the applicants have been revived and admitted based on the information made available till 14-03-2018. 49. The Ld. Counsel for the Resolution Professional referred to the list of Operational creditors excluding the employees and the workmen whose claims have been admitted and uploaded. The copy of the list o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant operations, expertise and majority sales in the Indian market. It also experienced in iron ore mining and pig iron manufacturing more than 15 years. The technical and economical viability of the resolution applicant in taking over the company not at all in challenge from any corner. On going through the plan we are also satisfied that the resolution applicant has taken into account the interest of all stakeholders and that the applicant have had necessary infrastructures that will enable the applicant to continue the corporate debtor company as a going concern. So we are satisfied that the corporate debtor is in a safer hand. 53. For the foregoing reasons and discussions recorded herein above, in our considered opinion CA(IB) No.277/KB/2018 is liable to be allowed by approving the resolution plan. CA(13) No.271/KB/2018 and CA(IB) No.281 /KB/2018 is liable to be dismissed. Accordingly we herby approve the resolution plan of corporate debtor upon the following orders:- ORDER CA(IB) No.277/KB/2018 is allowed by approving the Resolution Plan of Corporate Debtor Electro Steels Limited, which is approved by the of COC with a voting share of 100% under section 31 (1) of the Insol ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
