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TMI Blog2019 (10) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... ng filed by one party or the other, and matter being contested before Hon'ble NCLAT and Hon'ble Supreme Court, the final hearing on IA 408 of 2018 could not be taken-up and concluded by this Adjudicating Authority. The Resolution Applicant to the satisfaction of this Adjudicating Authority regarding sources of funds for the implementation of the Resolution Plan, has stated that they have been adequately tied-up. In this regard, the Resolution Applicant has filed a copy of the Letter of Comfort issued by Yes Bank and copy of Addendum Facility Letter issued by Yes Bank. The Resolution Applicant has also submitted a Financial Guarantee issued by First Energy Bank BSC, Bahrain which has been accepted by the CoC. However, it is noticed by this Adjudicating Authority that the said bank guarantee is valid only upto 30th June, 2019. It is directed that the validity period of the bank guarantee be extended till the complete implementation of the Resolution Plan. The 'Resolution Plan' is hereby approved, which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan including Resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Plan on 05.09.2018 as tabulated under Page 4 of IA 408/2018. 3. The Resolution Plan placed for consideration is approved unanimously by CoC. 4. The Resolution Plan placed for consideration before this Adjudicating Authority, inter alia, provides for: I. Writing off the issued and paid up share capital followed by infusion of ₹ 1002.54 Crores towards subscription of Equity shares of the Corporate Debtor. The source for the aforesaid INR 1002.54 Crores shall be raised by the Resolution Applicant through a third party lender in the following manner: (a) Through raising of Debt in the books of the Company or otherwise which may be secured by way of hypothecation or mortgage over the land, building and other assets of the Company or (b) Through infusion of shareholders fund by way of Debt or Equity or such form as may be permissible under the applicable law or (c) Combination of (a) (b) above. II. Payment of CIRP cost, Liquidation value due to Operational Creditor and Liquidation value due to dissenting Financial Creditor to be made in priority to other payments being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Applicant as well as other connected persons at Section 2.1(i), Part - B with Annexures 6A and 6B of the Resolution Plan. X. As directed in the admission order, the plan provides for top priority to the claims raised by the doctors in accordance with Law. Approx. around 75% of the admitted claim amounts would be paid to all the doctors irrespective of whether they have submitted their claims in correct forms or not. XI That at Section 2.2.3(f), of the Resolution Plan, the proposal from the Resolution Applicant proposes to settle the Corporate Debtor's disputes with MCGM. XII. In view of the above, CoC in accordance with section 30(4) of the Code and Reg. 39(4) of the CIRP Regulations has approved the Resolution Plan by a vote of 100% of the CoC members. 5. The Resolution Applicant herein is Dr. B.R. Shetty through its business entity M/s. Dr. Shetty's New Medical Center Private Limited (SNMC). 6. The identity of the Resolution Applicants have been duly verified by the RP and affidavit as per section 30(l) of the Code has been obtained from the Resolution Applicants stating that it is not ineligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of 45 days from date of approval of Resolution Plan for obtaining all the necessary approvals from various authorities required for implementation of the Resolution Plan. During the said period, the operations of the Company would be monitored by the monitoring agency appointed under the Resolution Plan. 10. The Net worth Certificate dated 12.05.2018 of the Resolution Applicant (placed at page 257 258 of the Resolution Plan), issued by M/s. Arun and Ramadas, Chartered Accountants, Kochi has been perused. It has been certified that the Resolution Applicant is a non-resident Indian with an approx Net worth of ₹ 1,36,30,13,74,164/- (Rupees Thirteen Thousand Six Hundred Thirty Crores Thirteen Lakhs Seventy Four Thousand One Hundred Sixty Four only) based on the information gathered, verification of records and explanations received from the sources. 11. The proposal for funding by the Resolution Applicant as set out in Section 2.3 of the Resolution Plan (Pages 234 235) has been perused and is reproduced below: A summary of utilization of the funds that are proposed to be infused by the Resolution Applicant in the Company is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or such form as may be permissible under the Applicable Laws; or (c) Combination of (a) and (b); Further, on and from the Effective Date and before implementation of the plan and simultaneously with Step 1, the Company shall issue and SNMC shall subscribe to new shares of the Company towards equity share capital infused by SNMC into the Company resulting in 100% of the paid up share capital of the Company being held by SNMC. 12. From the above, the proposal provides for fresh infusion of funds as per requirement subject to a minimum of ₹ 250 Crores. 13. The Plan provides for keeping the Company as a going concern and operate in its normal course of business upon implementation of Resolution Plan. The plan also provide for retention of existing employees of the Corporate Debtor. 14. The Resolution plan provides for settlement of all the claims within 30 days from the date of Approval of Resolution Plan by this Adjudicating Authority. 15. It is also observed that the Resolution professional in terms of the Judgment rendered by Hon'ble Supreme Court in the matter of Vijay Kumar Jain v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al guarantee to the new lender. It was stated that the Resolution Applicant has already incorporated intermediate entities in order to infuse Shareholder's funds in the Corporate Debtor. It was further stated that the Resolution Applicant has also provided an unequivocal, irrevocable and unconditional performance bank guarantee for successful bid value as part of the Resolution Plan. It was contended that though the court nor the CIRP Regulations required Resolution Professional to be a member of the Monitoring Committee, it would be agreeable for the Resolution Applicant to appoint Resolution Professional as a member of the Monitoring Agency in the interest of an expeditious decision on the approval Application. 20. During the hearing on 15.07.2019, the counsel for RP was present and prayed time till next day for filing required information in sealed cover. Mr. Kevic setalwad, Sr. Counsel representing MCGM made some objections in relation to the IA No. 408 of 2019, filed documents and sought a day's time for filing written submissions. Mr. Niranjan Reddy, Sr. Counsel representing one of the shareholders (Airro Mauritius (I) Holdings) also prayed time for mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mumbai having yellow and Orange ration cards and provide all benefits to such persons ( 20 % Scheme ) as identified in and in accordance with the terms of the Contract Agreement and the MoU. (b) The 20% Scheme shall be executed in the following manner: Current Proposed 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 Operational Bed 306 823 1122 1272 1346 1500 Percentage of beds Reserved for MCGM 20% 20% 20% 20% 20% 20% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the terms thereof. IV Pending Payments to/ Claims of MCGM: (a) Upon approval of the Resolution Plan by the NCLT the Resolution Applicant shall forthwith pay to MCGM the aggregate amount of ₹ 140,88,00,000 (Rupees One Hundred and Forty Crore and Eighty Eight Lakh) towards the following dues of SHPL to.MCGM: Sl. No. Particulars of dues/payments Amounts (Rs. Cr) (a) Lease Rent for past 5 years = Advance Rent for Apr. 2018-19 54.06 (b) Municipal Tax = Octroi Bank Guarantee Charges 47.97 (c) Penalty for non-completion of project 13.51 (d) Accrued interest at the rate of 15% per annum 25.34 Total Claims 140.88 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VI. Please note that the approvals on the Prospective Proposal and the Resolution Plan are being provided subject to and based on inter alia the review of the letter of commitment dated 23 July 2018 issued by Yes Bank and the net worth certificate dated 13 June 2018 issued by HLB Hamt, Chartered Accountants. VII. In the event all the conditions specified as above, are satisfied by the Resolution Applicant and we reach a mutually feasible proposal, kindly confirm that the Resolution professional and the committee of creditors shall ratify the Prospective Proposal and the conditions specified herein and update the Resolution Plan accordingly. Further, an amendment to the Resolution Plan reflecting the revised understanding should be filed in the NCLT. VIII. Please note that the approval provided by MCGM to the resolution applicant in relation to the Prospective proposal and the terms of the resolution plan are subject to the aforementioned conditions and in case such conditions are not met, the MCGM reserves the right to take all such actions as are available to it in Law. 24.1 MCGM reiterated the above submissions in the written submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line NCLAT 850, has held that if the ownership of the land has not transferred in favour of the Corporate Debtor then the asset cannot be treated as the asset of the 'Corporate Debtor' for application of provisions of Section 14 (l) (d) of the I B Code. Thus, applying the said principle, it is clear that the land in question cannot be termed as an asset of the 'Corporate Debtor' notably the SCN for termination dated 23/1/2018 (Served on 24/1/2018) has resulted in the contract agreement being terminated upon non - compliance of the requisites contained therein not being complied with, and MCGM is entitled to repossession of the Municipal plot of land e. That MCGM had entered into the Contract Agreement dated 20/12/2005 under which SHPL was to pay an amount of ₹ 10,41,04,000/- to the MCGM per year and an MOU dated 13/12/2013 for seeking 20% of the beds and that right from the incept SHPL has defaulted in the said payments and nor has it provided the said 20% beds to MCGM. f. That due to failure of SHPL in performing its obligations, MCGM had issued a SCN notice to SHPL on 23/1/2018 for termination of the said contract agreement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by MCGM on 28/11/2018 in IA 207 of 2018 filed by MCGM for being added as a Financial Creditor. n. MCGM further stated that on 02.07.2019 this Adjudicating Authority directed RP to give a clarification in relation to Resolution Plan and accordingly RP has submitted a memo on 3/7/2019 without acknowledging MCGM's interests. o. RP in its memo submitted on 3/7/2019, the RP has made various submissions which are contradictory to previous Written/Oral submissions of RP in relation to the interests of MCGM. In the said memo the RP has stated that, The plan provided for raising of debts in the book of CD which may be secured by mortgage of land, assets and other assets or infusion of shareholders' funds. p. That the Adjudicating Authority had given various directions to RP to submit a detailed and specific submission in relation to reliefs and prayers sought by the RA at Page No.249 of Application (Part 'E') . q. That in the IA No. 408/2018, MCGM has not even been a party inspite of the order of the Tribunal dated 13/3/2018. That MCGM in its Written Submissions has clearly sought a revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties and to collaborate with reputed government run medical institutes. The said resolution is under process of consideration of the MCGM due to the overwhelming and large public interest for providing medical services and facilities. w. As a result, the following reliefs are prayed by MCGM: i. The Resolution Plan (dated 3/9/2018) be disapproved; ii. That as a consequence of the disapproval of the Resolution Plan, the order of liquidation of SHPL be passed. iii. For the CIR process, the hospitals/assets of SHPL at Mumbai and at Vishakhapatnam be separated and separate liquidation valuation of Hospital at Mumbai to be submitted to Hon'ble Tribunal as well as MCGM being the Land Owner. 27. In reply to submissions made by MCGM, the Counsel for RP stated as under: MCGM ought to be permitted to oppose the Resolution Plan: (a) MCGM cannot be permitted to make any submissions to oppose the Resolution plan at this belated for the following reasons: (a) Firstly, MCGM has only filed IA 207 of 2018 for being treated as a Financial Creditor under the resolution plan. The reliefs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resolution plan on record. MCGM is therefore stopped from raising any pleas to the contrary. (g) Further, the Corporate Debtor has paid an amount of ₹ 5 Crores as property tax to the MCGM, out of which ₹ 2 Crores was during the CIRP. (h) In any event, none of the submissions of MCGM as set out below constitute objections within the limited scope of section 31 of the Insolvency and Bankruptcy Code, 2016. In so far as the contention of MCGM that there exists no leasehold rights in favour of the corporate debtor, therefore, no such rights can be transferred through the Resolution Plan, it was submitted by the Counsel for RP that the same is incorrect for the following reasons- i. MCGM has categorically admitted in paragraph 4 of IA No. 207/2018 that MCGM as owner of land bearing survey no. 155 (pt), 156(pt), 162(pt) to 168(pt) of village Marol at Moral, Andheri East 400059 (said land) has leased said land to the Corporate Debtor. ii. MCGM filed IA No. 207/2018 claiming that the such lease was a capital or finance lease and the unpaid lease rentals were a financial debt within the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticipate in the COC which have been produced as part of its compilation of documents; (iv) MCGM has personally interacted with the potential resolution applicants from time-to-time including the successful resolution applicant. This was for the reason that the RFP clearly stipulated that the potential RA would have to settle all. disputes independent of the resolution plan. ix. In this context, the following are one of the excerpts of the minutes of various meetings of the COC which may be noted: * Minutes of 4th Meeting of COC: ... Dr. Maharudara Kumbhar from MCGM stated that a successful resolution applicant and plan be submitted to MCGM for timely permissions at their end. Dr. Kumbhar stated that any part settlement will require approval of the general body but a 100% settlement (which may be through a one time or a staggered payment) could be approved by the MCMG Commissioner without reference to the general body. He also mentioned that the MCGM would be willing to enter into discussions with multiple applicants to understand their plans in case of a shortlist of more than one applicant. * Minutes of 6th Mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of MCGM relating to expiry of the period of 270 days is untenable and unacceptable for the reason that the Application by the Resolution Professional for the approval of the Resolution Plan has been made well before the expiry of the period of CIRP and the same is in accordance with the provisions of the Code. Therefore, the objections raised by the MCGM are hereby rejected. 30. Further, though the Application for approval of the Resolution Plan was filed on 07.09.2018, but, due to multiple Interlocutory Applications being filed by one party or the other, and matter being contested before Hon'ble NCLAT and Hon'ble Supreme Court, the final hearing on IA 408 of 2018 could not be taken-up and concluded by this Adjudicating Authority. 31. The Preamble of the Code of the Insolvency and Bankruptcy Code provides as under: An Act to consolidate and amend the laws relating to re-organisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding Resolution Applicant. 38. Accordingly, the MoA and AoA shall be amended and be filed with the RoC for information and record as prescribed. While approving the 'Resolution Plan', as mentioned above, it is clarified that the Resolution Applicant shall pursuant to the Resolution Plan approved under Sub-Section (1) of Section 31 of the I B Code, 2016, obtain all the necessary approval as may be required under any law for the time being in force within the period as provided for in such law. 39. The order of moratorium dated 13.03.2018, passed by this Adjudicating Authority under Section 14 of the IB Code, 2016 shall ceased to have effect from the date of passing of this Order. 40. The Resolution Applicant shall be liable to pay all the statutory taxes and applicable stamp duty, if any. 41. The Resolution Professional shall forward all record relating to the conduct of the CIRP and the 'Resolution Plan' to the IBBI, so that the Board may record the same on its data-base. 42. The approved 'Resolution Plan' shall become effective from the date of passing of this Order. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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