9911796707
TMI Blog2019 (4) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of 10 days in addition would also stand excluded for serving the notice to DVI for representing its case before the Committee of Creditors and for which the Committee of Creditors is reconstituted. The Resolution Professional and the Committee of Creditors would take a final decision and report to the adjudicating authority about the final outcome Misrepresentations in the information memorandum by RP - default in implementing the Resolution Plan submitted by the applicant - HELD THAT:- The application of the financial creditor has been disposed of with liberty to the Resolution Applicant or the financial creditors to file a complaint before the Insolvency and Bankruptcy Board of India or the Central Government, claiming that the LHG intentionally and wilfully contravened the terms of the Plan. No effective order therefore, can be passed in this application as the matter would be within the purview of the Competent Authority. The Adjudicating Authority under the Code without passing an effective order cannot lay down the guidelines in the exercise of its jurisdiction, which is to adjudicate the matters under the Code and the Rules and Regulations framed thereunder. We reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections. It is borne out from the record that the Interim Resolution Professional was confirmed as a Resolution Professional by Committee of Creditors. In the meanwhile, certain miscellaneous applications came to be filed, which were disposed of from time to time. 3. The Resolution Professional filed CA No.8 of 2018, seeking extension of time in completion of the Resolution Process as borne out from the order dated 17.01.2018. The initial period of 180 days, prescribed for completion of the Resolution Process under Section 12(1) of the Code, expired on 19.01.2018. For the reasons stated in the order dated 17.01.2018, the period of completion of Resolution Process was extended by 90 days. As such, the total period of CIRP process would have expired in the middle of April, 2018. 4. It is stated that the Resolution Plan submitted by respondent No.1 Liberty House Group Pte Ltd. (for brevity 'LHG'), was approved by this Tribunal, vide order dated 25.07.2018. The successful resolution applicant is said to have failed to honour its commitment to comply with the requirements for implementation of the approved plan and expressed its inability to comply with the commitments on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the applicant, on the ground that those aspects would be raised before the appropriate authority relating to wilful contravention of the terms of the Resolution Plan. The basic ground that has been highlighted is that the Resolution Process needs to be restarted as respondent No.1 has failed to make payment of the upfront amount as required under the approved Resolution Plan. The Corporation Bank, a financial creditor also invoked the bid bond guarantee, against which respondent No.1 has filed the Civil Suit, CS (Comm) 1245 of 2018 before the Hon'ble High Court of Delhi, inter alia, seeking a permanent injunction of the invocation of the bid bond guarantee, which is pending adjudication. 7. Respondent No.2-Resolution Professional has filed his reply by way of affidavit vide Diary No.320 dated 21.01.2019 and the stand of the Committee of Creditors is adopted. It is stated that the Resolution Professional is also a member of the Monitoring Committee to implement the Resolution Plan. The Resolution Professional has also prayed that relief sought by the applicant is not only necessary for the effective resolution of the corporate debtor and protecting the interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant shall create an escrow or any equivalent arrangement for an aggregate amount of 15% (fifteen per cent) of the Upfront Amount, in favour of a member of the Committee of Creditors, on terms and conditions mutually acceptable to the Resolution Professional and the Resolution Applicant. 12. It is stated that before the approval of the Resolution Professional by this Tribunal, the Committee of Creditors sought to introduce unilateral conditions regarding terms of escrow and additional requirement of performance guarantee. It is highlighted that before the Resolution Plan is placed before the Adjudicating Authority for approval, the terms of LOI and the terms of submission of escrow were not finalized. The Adjudicating Authority was not properly assisted at the time of hearing of the application for approval of the Resolution Plan with regard to non-compliance with Section 30(6) of the Code. The Resolution Plan was approved by this Tribunal on 25.07.2018. It is averred that Resolution Plan could not have taken place as the pre-condition of approval by Committee of Creditor under Section 30(6) of the Code was not fulfilled. 13. It is stated that there has not been wilfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for the Liberty House to honour the commitment of furnishing the performance guarantee. It was in this context that Committee of Creditors went to the extent of relaxing the condition for furnishing the performance guarantee. The Hon'ble Principal Bench while allowing the application of the Resolution Professional to withdraw the application for approval of the Plan also permitted the exclusion of certain time and to place the matter before the Committee of Creditors. The Hon'ble Principal Bench also imposed the LHG with costs of ₹ 1,00,0007- keeping in view the conduct of LHG. 16. It is stated that it was agreed between the Committee of Creditors and the Resolution Applicant that they shall be permitted to subsume the performance guarantee in the escrow arrangement, provided such an escrow ensures adequate assurance to the Members of the Committee of Creditors and accordingly, necessary stipulation was also incorporated by LHG in its Resolution Plan. 17. It is also stated that Corporation Bank has been authorized by the Committee of Creditors to file the application before the Tribunal on the basis of the decision of the Committee of Creditors held on 19.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which initiated the process against the respondent under Section 7 of the Code, resulting into its admission, declaration of moratorium and appointment of Interim Resolution Professional. No other financial creditor has approached this Tribunal taking a contrary stand. So the instant applicant is competent. 22. With regard to the jurisdiction of this Tribunal to entertain this application, it would be appropriate to refer to the sub-section (5) of Section 60 of the Code, which reads as under:- (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. Section 60(5) falls in Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion shall not be unreasonably withheld by the CoC Nominee. 24. The management and control of the corporate debtor during the term until closing date, as provided in Clause 5.1 of Part II of the Plan, reads as under:- 5.1 Management and control of the Corporate Debtor during the Term until the Closing Date 5.1.1 Pursuant to the approval of the Plan by the NCLT and until the Closing date, Mr. Dinkar Tiruvannadapuram Venkatasubramanian, Ernst Young LLP, shall be appointed as the Insolvency Professional of the Corporate Debtor in order to supervise, manage and control all the business and operations of the Corporate Debtor in order to supervise, manage and control all the business and operations of the Corporate Debtor from the date of approval of the Plan by the NCLT and until the Closing Date, in accordance with this Plan. 25. In Part IV of the Resolution Plan, the financial proposal of the Resolution Applicant have been stated. The summary of the financial proposal is upfront payment for the financial creditors and Interim Resolution Professional to the tune of ₹ 3525 crores and fresh infusion for stabilizing and improving operations to the tune of ₹ 500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the Resolution Plan, for which we are restraining ourselves from making any observation either way. However, for LHG to say that the Tribunal was not properly assisted at the time of hearing on the application for approval of the Resolution Plan, would be a misplaced allegation. The order dated 25.07.2018 by which the Resolution Plan was approved shows that DVI had raised the issue of eligibility of LHG, which was opposed by LHG tooth and nail. 30. With the aforesaid background, the only issue that requires consideration is the exclusion of time in calculating the maximum period of 270 days permissible under Section 12 of the Code for completion of the Insolvency Resolution Process. As we are not going into the question and detailed assertions of the parties with regard to the wilful or intentional contravention of the terms of the approved Resolution Plan in view of the ultimate submissions made at the stage of final arguments. 31. The learned Senior Counsel for the applicant who is supported by learned counsel for the Resolution Professional vehemently contended that the object of the Code is that the corporate debtor continues to be a going concern and shall maximize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y resolution process. (v) If the corporate insolvency resolution process is set aside by the Appellate Tribunal or order of the Appellate Tribunal is reversed by the Hon'ble Supreme Court and corporate insolvency resolution process is restored. (vi) Any other circumstances which justifies exclusion of certain period. The facts of the present case are not covered under various circumstances from Point Nos. (i) to (v) as laid down by the Hon'ble National Company Law Appellate Tribunal, but the matter in this case is required to be considered under principal Point No. (vi) to see whether the circumstances in the present case are such which would justify the exclusion of certain period. 34. The learned Senior Counsel for the Applicant has also referred to judgment passed by the Hon'ble Supreme Court in Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta [2018] 98 taxmann.com 99/150 SCL 354 (SC), wherein the Hon'ble Supreme Court held that the time taken by a Tribunal should not set at naught the time limits within which the Corporate Insolvency Resolution Process must take place. It was further observed that consequence of the chopper falling is corporate de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng fresh process of advertisement, inviting expression of interest etc., is not permissible. There is no dispute of the fact that originally Insolvency Resolution Process was concluded within a period of 270 days. The Committee of Creditors fixed the evaluation matrix of inviting expression of interest, and the proposed applicants were supposed to fulfil the condition of the bond to make other eligible for submitting the Resolution Plan. As already discussed, there were only two binding Resolution Plan, one submitted by respondent No.1 (LHG) and other by DVI. DVI only backtracked because there was some better amount of bid offered by respondent No.1-LHG. Since the approved Resolution Plan cannot be now implemented because of the default in making payment as per the terms of the Resolution Plan, the period when the Resolution Plan was submitted by DVI till the disposal of the instant application can only be reconsidered by the Committee of Creditors by reconstituting it and not by initiating fresh process, which would defeat the fresh binding timelines provided under the Code to complete the process. No matter if the corporate debtor ultimately has to face liquidation, but the permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituted. The Resolution Professional and the Committee of Creditors would take a final decision and report to the adjudicating authority about the final outcome. The progress reports shall be sent by the Resolution Professional regularly after 10 days from the date of receipt of copy of this order. Rest of the prayers are declined. With the aforesaid observations and directions, CA No.567/2018 stand disposed of. CA No.601/2018 1. The instant application has been filed by successful Resolution Applicant, namely, Liberty House Group Pte Limited (LHG), under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter to be referred as the 'Code') with a prayer that the Corporate Insolvency Resolution Process (CIRP) in respect of Amtech Auto Limited, commencing on 24.04.2017 and culminating into order of approval of Resolution Plan on 25.07.2018 by this Tribunal, is vitiated by misrepresentation/fraud/mistake of fact. The background of the case is that a petition, being, Corpn. Bank v. Amtech Auto Ltd. [2018] 96 taxmann.com 473 (NCLT - CHD.), under Section 7 of the Code, was admitted by this Tribunal on 27.07.2017, declaring moratorium in terms of sub_sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant No.1 and DVI (Mauritius) Limited as applicant No.2, under Section 60(5) (a) and (c), read with Section 31 of the Code. It was averred that the applicant submitted EOI as prospective Resolution Applicant and participated in the process in good faith with complete confidence as set out in the information memorandum. 5. All these applications were decided by order dated 25.07.2018 and CA No.114 of 2018 for approval of the Resolution Plan submitted by LHG was accepted and the Resolution Plan was approved with the modification that the timelines given in the Resolution Plan shall stand extended during the period CA No.114/2018 remained pending i.e. 16.04.2018 up to the date of decision of the application. 6. CA No.112/2018 of the Resolution Professional seeking clarification etc. was also disposed of. Similarly, CA No.140/2018 filed by DVI was also dismissed for the detailed reasons mentioned in the order dated 25.07.2018. It was further directed as under:- It is further directed that the resolution plan so approved shall be binding on the Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. With the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Resolution Professional and preparation of information memorandum, respectively. The Resolution Professional circulated the Information Memorandum dated 21.09.2017 as periodically updated up to 12.04.2018 to the Resolution Applicants to enable them to formulate a Resolution Plan, which contained the liquidation value as on 24.07.2017 at ₹ 4129 crores and the liquidation value for the fixed assets was provided as ₹ 1635 crores; the book value for the corporate debtor as on 24.07.2017 was ₹ 15,189 crores and the book value for fixed assets/tangible assets as on 24.07.2018 was ₹ 9753 crores. 11. As per Clause 1.1.2 of the Process Note dated 07.12.2017 (Annexure A-3), the applicant's representative was allowed to visit the sites of the Corporate Debtor (including the plants), and that too only few sites only once before submission of its Resolution Plan. The applicant had also submitted the detailed bid bond Bank Guarantee dated 23.01.2018 for ₹ 50,00,00,000/-. As on 06.03.2018, the Committee of Creditors, shortlisted the applicant as the preferred bidder and the Resolution Plan was approved in the meeting dated 04.04.2018 and 05.04.2018 by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an observer in the Monitoring Committee. 14. The applicant appointed an observer on the Monitoring Committee and its authorised representatives, started attending meetings of the Monitoring Committee as well as various operational review meetings conducted by the Resolution Professional. 15. The applicant discovered blatant discrepancies in the condition of machineries, valuations and representations made in the Information Memorandum and Valuation Reports, from which the applicant became aware that the information contained in the Information Memorandum was incorrect, false, and reflecting inflated values and information. By making further assertions, it was alleged that the applicant immediately wrote a letter dated 06.11.2018, stating that in view of the developments regarding discovery of serious irregularities in the information shared with the applicant during the bidding process, it was necessary that a meeting be held with the Committee of Creditors, to find a way to discuss and agree to a suitable resolution plan where the true valuation of the corporate debtor is reflected, but no response was received. 16. The application further received letter dated 19.11.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debtor for the quarter and half-year ended September, 2017, on 21.08.2018. It was discovered that the investments of the corporate debtor were overvalued in the Liquidation Reports. As the result, the applicant had acted in good faith by relying information set out in the Liquidation Reports. Thereafter, the corporate guarantee was invoked which was fraudulent, dishonest, and in blatant breach of the terms of the Bank Guarantee. Letter of Intent was admittedly under negotiation and had not been executed. The Corporation Bank made a dishonest statement in the Notice of Invocation that the LoI had been approved by the 25 July order, with a view to unjustly enrich itself despite the parties still being in discussion over the terms of the LoI. The applicant has also filed Civil Suit, being CS (Comm) 1245 of 2018 before the Hon'ble Delhi High Court, for seeking appropriate injunctive relief against invocation/encashment of the Bank Guarantee. Copy of order dated 30.11.2018 in CS (Comm) 1245 of 2018 filed before the High Court of Delhi is at Annexure A-12. 20. It is stated that the main misrepresentations in the information memorandum is with regard to the significant downward a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt sought the quotation which were showing about 30% to 60% lower than the liquidation value and the quotations obtained by the applicant are at Annexure A-16. Even the projected capacity of the plant, as disclosed in VDR, was found to be impossibility. 25. It was also represented that the dependency of the corporate debtor with the group companies was 43%, where it was found in the meeting of the Monitoring Committee that inter-dependency was to the extent of 66% i.e. nearly 50% higher than as implied by the data shared by the VDR. 26. Further, there are several uncertainties with regard to the total liabilities/claim amount against the corporate debtor, which have arisen since the approval of the Resolution Plan. 27. It is stated that the unmatured claims are likely to be admitted as claims against the corporate debtor. In view of the admission dated 14.08.2018, the Hon'ble National Company Law Appellate Tribunal ('NCLAT') in Company Appeal (AT) (Ins.) No. 302 of 2017 held that even unmatured claims are to be considered as financial debts. The claims which are likely to be accepted pertains to four banks on the basis of invocation of the corporate guarantee i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
