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TMI Blog2019 (10) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ution plan submitted by the successful resolution applicant being Embassy Property Developments Private Limited, Bangalore; and/or (ii) pass such other orders or further orders in this regard as this Hon'ble Tribunal may deem fit and proper and thus render justice. 3. Initially, CP/39/IB/2018 was filed under Section 7 of I&B Code, 2016 read with Rule 4 of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by M/s. Udhyaman Investments Private Limited (in short, 'Financial Creditor') against M/s. Tiffins Barytes Asbestos & Paints Limited, (in short, 'Corporate Debtor'). CP/39/IB/2018 has been admitted on 12.03.2018 under which CIR Process was initiated against the Corporate Debtor, moratorium was declared and the Applicant was appointed as IRP. 4. It is averred that the Corporate Debtor viz., M/s. Tiffins Barytes Asbestos & Paints Limited, has a mining lease for iron ore in the state of Karnataka at Bellary and mining lease for Baryte mines in the state of Andhra Pradesh at Kadapa. It is further averred that the Corporate Debtor owns inter alia (a) factory for processing iron ore and red oxide near its mines in Bellary, (b) mining equipment, (c) transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution Plan owing to fact that certain Applications were pending before this Authority for deciding the status of some of the financial creditors and voting rights. This Authority vide Order dated 19.02.2019 directed to conduct the CoC meeting for approval of the Resolution Plan by 2 sets of votings - the 1st set excluding 5 members of the CoC and the 2nd set with all CoC members and this Authority directed the CoC not give effect to the decisions without the leave of this Authority. 10. It is averred that during the CoC meeting held on 27.02.2019, the Resolution Professional had circulated a copy of the Resolution Plan along with Resolution Professional's certificate of compliance of Section 30 (2) of the I&B Code, 2016. It is further averred that the Resolution Professional had placed both the Plans before the CoC for their deliberations and each of the Resolution Applicants was given an opportunity to present their respective plans before the CoC. The CoC members after detailed discussions with the representatives of both the Resolution Applicants reviewed and noted the scores obtained by both the Resolution Plans. The Resolution Plan submitted by VITPL scored 12.69 while the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors have been declared as Operational Creditors by this Authority due to which the total voting percentage became 96.45%. 14. During the course of hearing one of the shareholders and a dissenting financial creditor have filed the objections to the resolution plan. The gist of the objections and findings thereon are noted below:- I. The objections filed by shareholder viz., Mr. Ravi Shankar Vedam: The Objector viz., Mr. Ravi Shankar Vedam is the shareholder of the Corporate Debtor viz., M/s. Tiffins Barytes Asbestos and Paints Ltd., and is the absolute owner of 35,590 shares and upon his father's intestate demise in April 2013, he and his brother viz., Mr.Sriram Vedam, inherited the 12,938 shares and therefore has a substantial interest in the Corporate Debtor. The objector has alleged that the Resolution Professional has not shared the documents with him which is in violation of the Principles of Natural Justice. The decision of the Committee of Creditors is not in accordance with law as the constitution of the committee is invalid. The Resolution Professional and other persons will get illegal benefit from the approval of the Resolution Plan. The Objector has also stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant is a related party, who has played different roles in the past in relation to the Corporate Debtor. The objector alleged that the Resolution Applicant lacks mining industry experience and the prayer for extinguishing and abating of claims as set out in the Resolution Plan is contrary to the Provisions of the applicable Law. It is noted that the Objector is a dissenting Financial Creditor having 1.82% voting right in the meetings of the CoC in which the Resolution Plan was approved with 96.45% voting share of the Financial Creditors. The dissenting Financial Creditor being the part of the CoC has availed sufficient opportunities to raise the issues, which did not find favour with majority of the Financial Creditors and they proceeded to approve the Resolution Plan. Therefore, this authority is not required to go into such details of the objections raised, as this Authority is not possessed with the powers of the judicial review to review the 'commercial decision' of the CoC. In this connection the reliance is placed on the judgement of the Hon'ble Apex Court given in K. Sashidhar v. Indian Overseas Bank and Ors., reported in MANU/SC/0189/2019,2, wherein, it has been held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 89,43,05,699 18. The "Resolution Plan' offered by the Resolution Applicant viz., M/s. EPDPL provides for the management of the business and operations of the Corporate Debtor from the 'Approval Date' till the 'Effective Date' and on or after 'Effective Date', in the manner set out as under.: * A Monitoring Committee is to be formed comprising of existing Resolution Professional, 1 representative of Financial Creditors and 2 representatives of Resolution Applicant ("Monitoring Committee"). The Resolution Professional shall be paid the Resolution Professional' Costs as mutually agreeable in consideration of fulfilling his obligations under this Plan. The constitution of the Monitoring Committee, including its reconstitution from time to time, shall be at mutually agreed terms with CoC Members for the period with effect from the Approval date to the Effective date. It is clarified that such reconstitution shall, at all times until the Effective Date, ensure that the Monitoring Committee shall have at least 1 representative of Financial Creditors and 2 representatives of Resolution Applicant. If required, the Monitoring Committee will appoint an interim board for the Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor, and to operate the bank accounts of the Corporate Debtor. * The powers of the Board of Directors of the Corporate Debtor shall remain suspended until the Effective Date and shall be exercised by the Monitoring Committee. All existing directors of the Corporate Debtor as of the Insolvency Commencement Date would be deemed to have vacated office. * The Resolution Applicant has submitted INR 5,00,000 (Rupees Five Lakhs only) as process participation deposit as per requirement of the Process Note. The aforesaid amount shall be refunded to the Resolution Applicant on Approval Date as per the terms of the Process Note. * On the Effective Date, the Resolution Applicant shall assume Control of the management of the Corporate Debtor including to re-constitute the Board of the Corporate Debtor and the reconstituted Board of the Corporate Debtor shall manage the business and operations of the Corporate Debtor. The Resolution Applicant will be entitled to file appropriate forms with the Registrar of Companies and such directors shall provide all necessary support, including by providing forms, undertaking as may be required, to the Resolution Applicant to achieve the foregoing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount is received by the Resolution Professional or the Corporate Debtor in furtherance thereof such sum shall be deemed to have been received for the benefit of Resolution Applicant. The Resolution Applicant shall cause the Corporate Debtor to render reasonable co-operation to the Resolution Professional or any Person pursuing the remedies contemplated herein, without inhibiting or interfering with the functioning of the Corporate Debtor in any manner. 19. The 'Resolution Plan' further offers the declarations of the Resolution Applicant i.e., i) the Plan is not in contravention of the provisions of the Process Note, the Code, the CIRP Regulations and other Applicable Law; ii) The Resolution Applicant has not been declared as a wilful defaulter by RBI and the names of none of its directors appear in the list of wilful defaulters issued by RBI; iii) The Resolution Applicant has dealt with the interests of all Stakeholders under this Plan, in a manner compliant with the provisions of the Code; iv) The Resolution Applicant has the necessary financial resources available for supporting the Plan and any further infusion/contribution of additional funds into Corporate Debtor, as indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Bank (IOB) aggregates to INR 14,20,25,914 shall be paid towards full and final payment within a period of 15 days from the Approval Date. Upon payment, the security created in favour of IOB shall stand released and free from all encumbrances and no further charge shall attach on the same. As regards the other Financial Creditors, the claim admitted aggregates to INR 1,95,10,13,277, the Resolution Applicant proposes to proportionately settle upto 25% of the said claim aggregating to 48,77,53,319 as full and final settlement of all claims by operating the iron ore and barytes mines of the Corporate Debtor as a going concern and by sale of existing stock. In this manner, the Resolution Applicant proposes to generate sufficient cash flows to enable the Corporate Debtor to settle the other Financial Creditors. The payments to the other Financial Creditors shall be proportionately disbursed to each of the other Financial Creditor as full and final settlement of the said Financial Creditors' claims on the first anniversary of the Approval Date. iv. The claims of the Operational Creditors are aggregating to INR 94,63,86,409 (Rupees Ninety Four Crores Sixty Three Lakhs Eighty S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuation of the Business Operations The Monitoring Committee should ensure continuation of the Business Operations on a going concern basis Intimation to the MCA, CoC, IBBI, RBI, Tax Authorities and various other Statutory Authorities (as applicable) The Monitoring Committee will be responsible for intimating the Statutory Authorities (as applicable) regarding the Approval of the Plan and effects of the same on implementation. Intimation to all Creditors, Existing Security Holders and other stakeholders of the Company The Monitoring Committee will be responsible for intimating the various stakeholder of the Corporate Debtor regarding the Approval of the Plan and effects of the same on implementation. Other Approvals/Filings required under the Plan - RBI - Filing of various documents with MCA - Other Authorities The Monitoring Committee is responsible for filing the requisite Forms which is necessary and mandatory in nature to be filed Infusion of Funds by Resolution Applicant either directly or through its wholly owned subsidiary The Monitoring Committee will be responsible to monitor the payment to all Creditors as set forth in Schedule 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... among the respective class of creditors based on the percentage of the admitted claim amount. Any surplus available will satisfy the claims in another class." (Emphasis supplied) 23. On issue No. ii, the clarification given by the Resolution Applicant through the said Affidavit is as follows:- "that our Resolution Plan contains a detailed financial proposal in schedule 10 and a snapshot of the key financial proposal is extracted at para 4.2, page 7 of the plan and accordingly we reiterate that the value of the resolution plan stands at Rs. 89,43,05,699/-, which shall not exceed or fall short as envisaged in the resolution plan. We hereby undertake to adhere to schedule 10 of the plan without any deviations, subject to approval of the Resolution Plan, wherein we have provided and payment of dues of financial creditors, operational creditors, CIRP Cost, workmen and Employees dues as per the code and working capital requirements to keep the corporate Debtor as a going concern." 24. It is noted that the clarifications mentioned above, shall form part and parcel of the Resolution Plan [to the extent of pending matters as on the date] submitted by the Resolution Applicant and any pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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