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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 ..... 18 are as follows:- A. That the CIRP was commenced vide orders dated 13.03.2018, B. That the Applicant herein who was appointed as IRP was confirmed as RP at the 1st CoC meeting held on 12.04.2018. C. That the Publication for Invitation for Expression of Interest (EOI) was issued in Newspapers on 14.05.2018. D. That the Request For Proposal (RFP) and the evaluation criteria was approved by the CoC in its meetings dated 25.06.2018 and 16.07.2018 and Pursuant there to, a Resolution Plan from Dr. Bavaguthu Raghuram Shetty (B.R. Shetty) through his business entity Dr. Shetty's New Medical Center Private Limited (herein after to be referred as 'SNMC') was placed before CoC. E. That in the meetings dated 10.08.2018 & 22.08.2018 the CoC deliberated and discussed upon the Resolution Plan proposed by the Resolution Applicant and the suggestions of the CoC were incorporated and a revised Resolution Plan was submitted by the said Resolution Applicant. F. That the revised Resolution plan was deliberated upon by the CoC in their 9th meeting dated 03.09.2018, subsequently, by electronic voting held from 04.09.2018 to 05.09.2018, Resolution Plan was approved by the members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy consisting of senior management of SNMC and/or such other senior members as may be nominated by the Resolution Applicant. The CoC shall be entitled to appoint one member on the monitoring agency as its representative till the date of payment of settlement of amounts to financial Creditors as per the Resolution Plan, following which, the representative of CoC shall automatically cease to be a member of the monitoring agency. VIII. The monitoring agency shall be responsible inter alia for the following: * To oversee and supervise the Resolution Plan as approved by the Adjudicating Authority within the defined time lines. * To provide regular updates to the CoC as per the directions of Adjudicating Authority as may be applicable. * To provide updates to IBBI as and when required. * To oversee and supervise the disbursement of dues to the Creditors as per the approved Resolution Plan. IX. The Resolution Plan as required under Reg. 38(3) of the CIRP Regulations discloses the details of Resolution 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 admissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erational Creditors (other than employees and workmen dues & Doctors dues filled in incorrect forms) would be paid 75% of the admitted claim amount of INR 62.2 Crores i.e., INR 46.67 Crores (other than amounts claimed by statutory authority). * The plan proposes a sum of Rs. INR 102.03 Crores as against the claim of INR 140.88 Crores to be paid to MCGM based on mutual agreement (Annexure - 19 to the Resolution Plan) the Resolution Applicant undertakes to comply with the MCGM agreements for 20% reservation for Yellow and Orange Card holder. 8. The financial Proposal made by the Applicant as narrated above, in Section 2.2.3 of the Resolution Plan (pages 229 to 233) has been perused. 9. The implementation of the Resolution Plan as set out in Section 1.4 (pages No. 222 & 223 of the Resolution Plan) has been perused. The Resolution Applicant seeks for a time 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 Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any; or (b) Through infusion of shareholder funds, by way of debt or equity 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 Rs. 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. Standard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tities 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 making reply submissions. The matter was adjourned for hearing on 16.07.2019. 21. During the hearing held on 16.07.2019, the Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-23 2023-24 Operational Bed 306 823 1122 1272 1346 1500 Percentage of beds Reserved for MCGM 20% 20% 20% 20% 20% 20% Number of beds reserved for MCGM 61 165 224 254 269 300 (c) This 20% Scheme shall be applicable to operational beds as provided above and will also be applicable for the 'out patient department' (OPD) of the Hospital. The Resolution Applicant shall comply with all conditions specified in the Existing Arrangements and the MoU with respect to the 20 % Scheme. II. Timely Completion of Project: (a) The Resolution Applicant shall ensure that the number of operating beds in the said Hospital facility will be increased from the current 306 beds (with 61 beds reserved for MCGM) to 1500 beds (with 300 beds reserved for MCGM) by March 2024. III. Compliance with Contract Agreement: (a) The Resolution Applicant shall comply with all the terms of the Contract Agreement and the MOU, read with the NOC, including the period of lease granted by MCGM to SHPL, in relation to the subject land located at Marol, Andheri East, Mumbai ("Project Land") without any deviation from, during the tenure of the Contract Agreement. (b) The Resolution Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract Agreement read with the NOC. The Resolution Applicant agrees that any mortgage to be created over the Project Land and structures thereon, In favour of prospective financial creditors will be in compliance with the terms and conditions stated in the NOC. It is hereby clarified that in the event of any conflict between the terms of the Contract Agreement and the NOC, the terms stated in the NOC shall prevail. (c) However, please note that the previous NOC was issued the circumstances and conditions as prevalent on the date of issuance of the NOC. The draft and process prescribed in the NOC may vary. Therefore, in the event of the Resolution Applicant seeking permission for creation of a mortgage on the Project Land and/or structures thereon in favour of any financial entity, we shall issue a no objection certificate to the relevant financial entity from time-to-time. However, at this stage, we can confirm that, we will consider issuing such no objection. Kindly provide us with the details of the new lender with an acceptance from such lender that the conditions specified by MCGM in the NOC with respect to creation of mortgage are acceptable to them, and we shall accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hospital activities on said plot under the Contract Agreement dated 20/12/2005 and Inspite of being well aware of the same MCGM has been kept out of COC and has only been called as a "Special Invitee". b. The said contract agreement contemplates the execution of a lease deed subject to various obligations being first complied with by the corporate debtor. The contract agreement mandatorily provided for the corporate debtor to complete the construction of the respected building (i.e., with 1500 bed Hospital with OPD, ICU etc.,) within the project period of 60 months (excluding monsoon). This was a condition precedent for the lease deed (format annexed at Annexure II to the contract agreement) being executed. The said condition precedent were not complied with and no lease deed has been executed. c. The said mandatory project period of 60 months (excluding monsoon) expired on 24/4/2013. As per clause 15(g) of the Contract Agreement, the lease deed was to be executed within one month from 24/4/2013. The said period is now over and the contract agreement stands terminated under clause 26(K). No leasehold right ever came into existence in favour of the Corporate Debto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly been invited as a special invitee to the various COC meetings held. j. That due to the pendency of the present CP and the actions of SHPL, the Corporation has been unable to provide 300 beds and other medical facilities to the public at large Inspite of being owner of the said premises. k. In reference to letter dated 30/7/2018 and Resolution Plan dated 29/8/2018, submitted by BRSVIL, a meeting was called by MCGM on 27/9/2018. During the discussion which took place in the presence of RP and representative of RA- BRSVIL, the said RA-BRSVIL accepted to submit a Revised Proposal for resolution regarding disputed claims and other issues of MCGM. l. Accordingly, the RA-BRSVIL has submitted to MCGM through RP a revised proposal dated 9/10/2018 and received on 10/10/2018 via-email along with the letter of commitment. The submission of the said revised proposal after the decision of the COC on 3/9/2018, demonstrates that even the COC decision of 3/9/2018 is not a final Resolution Plan and therefore there is no question of same being considered favourably by this Adjudicating Authority. m. The said revised proposal dated 9/10/2018 was put up before the Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judgment of Rajendra K Bhuta, Resolution Professional's case (supra), wherein the NCLAT held that since the 270 day period had lapsed, the moratorium came to an end. u. The Resolution Plan does not contain any provisions in relation to the property taxes due and payable and thus the dues of the Operational Creditors have been excluded. In this regard, it is clear that the Resolution Plan has not given due consideration to the interests of all the stakeholders (i.e- MCGM as an Operational Creditor). It is not in dispute that property taxes from the year 2013, in the approx. Sum of Rs. 48 crs are outstanding and payable to MCGM, in this regard a warrant of attachment had been issued. Despite this no provision of whatsoever nature is made in the Resolution Plan for payment of the dues. As per the ratio of the Judgment in Edelweiss Asset Reconstruction Co. Ltd. vs. Bharati Defence & Infrastructure Ltd. (See: At paras 52, 56, 57, 75 and 79) the Resolution Plan ought not to be approved. v. That the Public Representatives have resolved to reconsider the contract agreement with SHPL and to take over land back so as to serve the public purpose and to serve the needs of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on process and the resolution plan since the third meeting of the COC as it was permitted to attending such meetings as a participant and has never raised any objections-to either the process or the resolution plan,' (e) Fifthly, MCGM has filed detailed written submissions dated 28.11.2018 (MCGM submissions) before this Tribunal wherein MCGM has unequivocally confirmed that it has accepted the terms of the resolution plan subject to certain conditions. The MCGM submissions relied on the proposal made in the letter dated 09.10.2018 from the resolution applicant to the MCGM (whereby 100% pay out i.e., Rs. 140.88 Crores was assured to MCGM). The proposal was accepted by MCGM at para 11 of the written submissions. The acceptance by MCGM was subject to conditions which were in line with provisions of the Contract Agreement between MCGM and the Corporate Debtor. On the date of filing, such conditions were already met in the resolution plan. This is because under the plan the resolution applicant had categorically agreed to abide by the terms of the Corporate Debtor's agreements with MCGM. (f) Therefore, having placed its acceptance of the resolution plan on record. MCGM is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions on 16.07.2019. viii. In any event, this is patently false because (i) MCGM's representative has attended each and every meeting of the COC starting from the third COC meeting as admitted at paragraph 19 of the Memo; (ii) MCGM had signed a confidentiality undertaking and pursuant to such confidentiality undertaking had access to all information shared with members of the CoC; (iii) MCGM has had access to all minutes of meetings from time-to-time as a participate 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous and incorrect. For the sake of briefness, the submissions made by RP as stated supra are not discussed in detail once again. This Adjudicating Authority is of the view that the contentions raised by MCGM cannot be accepted due to the conflicting and contradictory stands taken by it in the course of hearings. Further, the contention 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 conso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of 2018 filed in CP(IB) 282/7/HDB/2018 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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