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TMI Blog2019 (5) TMI 1633X X X X Extracts X X X X X X X X Extracts X X X X ..... he Resolution Plan is considered, then it will be evident that 25% of the admitted dues of the Financial Creditors have been allowed in the Resolution Plan . On the other hand, the Operational Creditors have been discriminated. The liquidation value being ₹ 597.54 Crores, the upfront payment suggested by the Resolution Applicant being less i.e., ₹ 477 Crores, the payment to the Operational Creditors is lower than the proportionate liquidation value, therefore, the Resolution Plan , as approved by the Adjudicating Authority is against Section 30(2) (b) of the I B Code . In Binani Industries Limited vs. Bank of Baroda Anr. [2018 (3) TMI 1604 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] this Appellate Tribunal taking into consideration the viability and feasibility of the Resolution Plan , held that there cannot be any discrimination amongst the same set of group such as Financial Creditors or Operational Creditors and the Operational Creditors must get roughly the same treatment as Financial Creditors , and if they are not, such plans are to be rejected or modified so that the Operational Creditor s rights are safeguarded - In the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd I.A. No. 675 of 2019 With Company Appeal (AT) (Insolvency) No. 247 of 2019 - - - Dated:- 8-4-2019 - Mr S. J. Mukhopadhaya, Chairperson And Mr A. I. S. Cheema, Member (Judicial) For The Appellant : Mr. Amit Singh Chadha, Sr. Advocate with Mr. John Mathew, Mr. G. Ramakrishna Prasad, Mr. Aditya Shankar, Mr. Prateek K Som, Mr. Soumabho Ghose and Mr. P. Kartik and Mr. S. P. Singh Chawla, Advocates For The Respondents : Mr. Abhinav Vasisht and Mr. Rajiv Nayar, Sr. Advocates with Mr. Venancio D Costa, Ms. Astha, Mr. Rohit Jolly, Mr. Ajay Bhargava and Ms. Wamika Trehan, Advocates, Mr. Ramji Srinivasan, Sr. Advocate with Mr. Verghese Thomas, Ms. Pallavi Kumar, Mr. Raghav Sabharwal and Ms. Sylona Mohapatra, Advocates, Mr. Rajive Mehra, Senior Advocate with Mr. Raghav Sabharwal, Advocate for DB International (Asia) Ltd.), Mr. Arun Kathpalia, Sr. Advocate, Mr. Aditya Verma and Mr. Shrey Patnaik, Advocates JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. In Company Appeal (AT) (Insol.) Nos. 128 247 of 2019 Two appeals have been preferred one by Mr. Padmanabhan Venkatesh - (Promote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion value and the fair value should be adopted before approval of the Resolution Plan . The other ground taken by the objectors was that M/s. Maharashtra Seamless Ltd. - ( Resolution Applicant ) is not eligible to submit the Resolution Plan . 8. Learned counsel appearing on behalf of the Appellant- Mr. Padmanabhan Venkatesh submitted that the liquidation value submitted by the Resolution Professional and accepted by the Committee of Creditors in its meeting dated 16th October, 2018 for approval of the Resolution Plan was ₹ 597 Crores. Therefore, according to him, the plan proposed to upfront amount of ₹ 477 Crores is less than the liquidation value of ₹ 597.54 Crores and the same cannot be accepted. 9. It was submitted that the Resolution Plan is against the object of the I B Code as it does not reflect the maximization the value of the assets of the Corporate Debtor nor balances the other stakeholders. 10. It was further submitted that infusion of funds that is sought to be advanced for the first time by the Resolution Applicant do not form part of the Resolution Plan and, therefore, cannot be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations 35 37 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons), Regulations 2016. 18. Learned counsel for the Indian Bank also submitted that the Resolution Professional declined to accept the revised offer of M/s. Area Projects Consultants Pvt. Ltd. , one of the Resolution Applicants , whose revised offer was ₹ 490 Crores which is more than the offer given by M/s. Maharashtra Seamless Ltd. and profitable. 19. DB International (Asia) Limited has taken plea that it is the largest member of the Committee of Creditors with 73.40% voting shares. It is opposed the prayer made by Mr. Padmanabhan Venkatesh on the ground that the ex-Director has no locus standi. 20. So far as the appeal preferred by Indian Bank is concerned, it is submitted that the Indian Bank is the dissenting Financial Creditor which has expressed its dissent for the Resolution Plan of M/s. Maharashtra Seamless Ltd. of ₹ 477 Crores. 21. According to DB International (Asia) Limited , the acknowledged debt of creditors is itself over ₹ 2060 Crores. Consequently, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval of the plan. 26. Therefore, according to counsel for 4th Respondent, the aforesaid infusion of funds by the 4th Respondent aggregating ₹ 657.50 Crores is for the maximization of the assets of the Corporate Debtor . 27. Learned Counsel for the 4th Respondent highlighted the factors which were considered by 4th Respondent while offering a fair value of ₹ 477 Crores are as follows: a. Long distance from the sea port; b. Unfavourable location from the point of view from both market and raw material; c. Refurbishing cost of the plant, considering the fact that the plant is closed for the last three-four years; d. Infusion of further cost to bring the company back into business, and further increase its manufacturing capacity; e. Interest on the loan amounts of new lenders; f. Value of land at Nalgonda (which is approximately 100km away from Hyderabad); g. Condition of plant and machinery being shut for more than 3 years (needs immediate refurbishment and upgradation) and resolving technical limitations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PARED BY RP: List of Financial Creditors of United Seamless Tubulaar Private Limited (Page 191 of Appeal) Sl. No. Name of Financial Creditor Amount Claimed Amount verified Security Interest 1 DB International (Asia)Limited 1391,72,01,404 1391,72,01,404 1006,50,00,000 2 Deutsche Bank AG, Singapore 259,86,56,081 259,82,96,081 392,86,25,100 3 Indian Bank 245,76,95,828 244,58,20,661 195,00,00,000 4 UMW Holdings Berhad 110,60,63,753 110,60,63,753 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 352 Crores, therefore, the definite conclusion about the liquidation value of the Corporate Debtor cannot be derived except by taking average of the three valuation. 33. In the 9th meeting of the Committee of Creditors held on 16th October, 2018, in Agenda A3, the Committee of Creditors noticed and recorded the liquidation value of the Corporate Debtor , relevant portion of which reads as follows: Agenda A3 To record the views and suggestions expressed by the members of the suspended board, and to reconsider, approve and vote for a Resolution plan amongst the qualified resolution plans (which were already placed before CoC for approval in the Meeting of CoC dated 20th April 2018) in light of the revised liquidation value of the Corporate Debtor, in compliance with the directions of the Hon ble National Company Law Tribunal, Hyderabad Bench vide order dated 28th September 2018 in IA No. 125 282 of 2018 in CP (IB) No. 49/7/HDB/2017. a) The RP submitted to the CoC that in light of the Order of the Hon ble NCLT the revised liquidation value of the Corporate Debtor is ₹ 597.54 Crores being the average of the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nani Industries Limited vs. Bank of Baroda Anr.─ Company Appeal(AT) (Insolvency) No. 82 of 2018 etc. this Appellate Tribunal taking into consideration the viability and feasibility of the Resolution Plan , held that there cannot be any discrimination amongst the same set of group such as Financial Creditors or Operational Creditors and the Operational Creditors must get roughly the same treatment as Financial Creditors , and if they are not, such plans are to be rejected or modified so that the Operational Creditor s rights are safeguarded. 36. The Hon ble Supreme Court in Swiss Ribbons Pvt. Ltd. Anr. vs. Union of India Ors.─ 2019 SCC OnLine SC 73 upheld the decision and held: 71. The NCLAT has, while looking into viability and feasibility of resolution plans that are approved by the committee of creditors, always gone into whether operational creditors are given roughly the same treatment as financial creditors, and if they are not, such plans are either rejected or modified so that the operational creditors' rights are safeguarded. It may be seen that a resolution plan cannot pass muster under Section 30(2)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negotiate and ask the Resolution Applicant to revise its plan, if it does not confront with the I B Code . Such power being vested with the Committee of Creditors , it is also open to the Adjudicating Authority and this Appellant Tribunal to ask the Resolution Applicant to appropriate modification in the plan to make it in consonance with the provisions of the I B Code and thereby to substitute the plan with modification. 40. The object of the I B Code mandates the Resolution in a time bound manner for maximization of value of assets of such persons and to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the priority of payment of Government dues. 41. A Resolution Plan , therefore, must ensure not only maximization of value of assets of the Corporate Debtor as also the value of assets of the Financial Creditors and the Operational Creditors , thereby, balancing the interest of all the stakeholders. 42. In the present case, as we noticed that the upfront amount of ₹ 477 Crores is much less than the average liquidation value of ₹ 597.54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 120.54 Crores in addition to ₹ 477 Crores thereby raising it to ₹ 597.54 Crores (total) and deposit the amount in the Escrow Account within 30 days in such case, the impugned order of approval of the Resolution Plan be treated to be set aside. Thereafter, the Adjudicating Authority will pass appropriate order in accordance with law. In Company Appeal (AT) (Insol.) No. 220 of 2019 48. In Company Appeal (AT) (Insolvency) No. 220 of 2019, the plea taken by M/s. Maharashtra Seamless Ltd. is that the Appellant on 15th February, 2019 issued a cheque for ₹ 4,77,00,00,000/- drawn on HDFC Bank, Kailash Building, 26 Kasturba Gandhi Marg, New Delhi, to the Resolution Professional for presenting it to the designated Escrow Agent, appointed in terms of the Resolution Plan , subject to giving an undertaking that the said funds would be utilized only after physical possession of the plant of the Corporate Debtor . However, the plant has not been handed over to the Appellant. 49. The Resolution Professional accepted that ₹ 477 Crores have been deposited by the Resolution Applicant in the Escrow Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my notice that officials of Resolution Applicant are not allowed to take Corporate Debtor Company and its premises and that there is no cooperation. I already made it clear Resolution Applicant can take steps in the course of implementation of the Resolution Plan to take control of the Corporate Debtor Company only after depositing the bid amount. It is an undisputed fact Resolution Applicant deposited the bid amount. Therefore, Applicant can initiate steps for implementing the Resolution Plan of the Corporate Debtor Company and all the concerned to extend cooperation to the Applicant and also provide access to the accounts in view of deposit of bid amount on or after filing of this Application. 20. Even though appeal is preferred by Respondent No.5 to the Hon ble NCLAT, there is no stay and the appeal is coming up for hearing on 07.03.2019. The implementation of this Plan is subject to the outcome of the Appeal. Therefore, a direction can be given to the concerned to extend cooperation to the Applicant herein in implanting the Resolution Plan of the Corporate Debtor Company and it is only subject to the outcome of the Appeal which is pending before Hon ble NCL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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