9911796707
TMI Blog2019 (11) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... n came into force (in fact, January, 2017) and the resolution plan was prepared and approved before that event, the wide observations of the NCLAT, requiring the appellant to match the payout (offered to other financial creditors) to Hero, was not justified. The court notices that the liquidation value of the corporate debtor was ascertained at 36 ₹ crores. Against the said amount, the appellant offered ₹54 crores. The plan was approved and, except the objections of the dissenting creditor (i.e Hero), the plan has attained finality. The order of the NCLT is hereby restored - Appeal allowed. - CIVIL APPEAL NO. 7940 OF 2019 - - - Dated:- 8-11-2019 - JUSTICE ARUN MISHRA And JUSTICE S. RAVINDRA BHAT JUDGMENT S. RAVINDRA BHAT, J. 1. The resolution applicant (hereafter the appellant ) is aggrieved by the decision of the National Company Law Appellate Board (hereafter NCLAT ) in regard to its directions modifying a resolution plan accepted by the adjudicating authority (i.e. National Company Law Tribunal, hereafter NCLT or the adjudicating authority ). The Corporate Insolvency Resolution Process (CIRP) was initiated against M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired the appellant to increase the liquidation value of the offer to Hero, relied on Central Bank of India v. Resolution Professional of the Sirpur Paper Mills Ltd. Ors., Company Appeal (AT) (Insolvency) No. 526 of 2018 and Binani Industries Ltd. v. Bank of Baroda Anr., Company Appeal (AT) (Insolvency) No. 82 of 2018, and noticed that Regulation 38 had been held to be discriminatory in these cases. Accordingly, an amendment was made on 5th October, 2018, and the provision in Regulation 38(1)(c) on liquidation value payable to financial creditors was deleted. The amended regulation was also considered by the Supreme Court in Swiss Ribbons Pvt. Ltd. Anr. v. Union of India, 2019 SCC Online SC 73, which noticed that the amendment strengthens the rights of operational creditors by statutorily incorporating the principle of fair and equitable dealing of operational creditors rights, together with priority in payment over financial creditors. Swiss Ribbons (supra) also observed that the NCLAT, while looking into the viability and feasibility of resolution plans approved by the committee of creditors, has always gone into the question of whether operational creditors are given ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹36 crores only; secondly, Regulation 38(1)(c) mandatorily provided for the maintenance of the liquidation value of dissenting financial creditors before the amendment dated 5th October 2018; thirdly, the committee of creditors, in its meeting, directed the resolution professional to seek a legal opinion on differential value of financial creditors. The committee of creditors accepted the opinion obtained by the resolution professional stating that liquidation value has to be maintained for dissenting creditors. Accordingly, in the next revised resolution plans dated 12th January, 2018, 16th February, 2018, and 5th October, 2018, the resolution applicant offered minimum liquidation value (not a percentage of the claim). 7. It was urged by Mr. Ramji Srinivasan, learned senior counsel, that PSU banks had a higher stake in the total claim value and liquidated value of assets, having security of fixed assets, plant and machinery, debtors, inventory and personal guarantee, etc. On the other hand, NBFCs only had security against specific plant machinery and the personal guarantee of the promoters. It was also argued that the resolution plan has been fully implemented a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in subsection (2). (4) The committee of creditors may approve a resolution plan by a vote of not less than seventy five per cent. of voting share of the financial creditors. (5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority. 11. Section 30 lays out the duties of the resolution professional and the various steps that she or he has to take, as well as the considerations that are to weigh, in examining ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
