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TMI Blog2019 (11) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... CIRP costs in priority over payments to any other creditors. The clause inter alia provides that each holder of such priority claim shall be unimpaired under the Resolution Plan and would be paid CIRP Costs (estimated at INR 2.0 Crores) in full as per the prevailing Code and CIRP Regulations from the Effective Date prior to payments to all other Creditors. The Resolution Professional has confirmed in the compliance certificate given in Form H that the Resolution Plan provides for the payment of Insolvency Resolution Process costs. Section 30(2)(a) stands satisfied and it is made clear that Insolvency Resolution Process cost shall be paid in its entirety by the resolution applicant in priority to other debts of the corporate debtor. As per Section 30(2)(b) of the Code, the Resolution Plan must provide for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under Section 53. In this connection Regulation 38(1) of CIRP Regulations provides for payment to the operational creditor in priority to the financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DER DR. DEEPTI MUKESH, MEMBER (J) 1. This is an application filed by the Resolution Professional Mr. Hemant Gupta, under Section 30 (6) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred as the Code ) read with Regulation 39(4) of The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 seeking approval of the Resolution Plan. The Resolution Plan duly approved by the Committee of Creditors (CoC) with the requisite majority has been placed on record. 2. The facts in brief necessary for disposal of the present application are as follows: - One of the Operational Creditor, namely, Mr. Shanti Lal Jain (Sole Proprietor of M/s. Jainsons (India)) had preferred an application under Section 9 of the Code for initiation of corporate resolution process against M/s. Jasper Engineers Private Limited ( Corporate Debtor ). The application was admitted on 05th September, 2018 imposing moratorium under Section 14 of the Code and the applicant, Mr. Hemant Gupta was appointed as the Interim Resolution Professional. 3. Thereafter, public announcemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sented the same before the Committee of creditors for their consideration. The Committee of creditors in its 5th (fifth) held on 24th February, 2019, deliberated and discussed the resolution plans submitted by the abovementioned 4 resolution applicants. Additional time was granted to all the 4 resolution applicants to incorporate the suggestions communicated by the Committee of creditors and accordingly to submit the revised resolution plans. 10. Subsequently, the Committee of creditors in its 7th (seventh) meeting dated 7th May, 2019 approved the resolution plan submitted by M/s. BCH Electric Limited by a majority vote of 100%. The Committee of creditors concluded that the resolution plan submitted by M/s. BCH Electric Limited was commercially superior than the resolution plan submitted by M/s. KMG Industrial Traders Private Limited. 11. The list of financial creditors of the corporate debtor, distribution of voting share amongst them and the result of voting concluded in 7th CoC meeting held on 7th May, 2019 are enumerated as under: Sl. No. Name of Creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Resolution Plan, it should be ensured that it is advantageous to all the stake-holders and amounts to maximisation of the assets of the Corporate Debtor and promotes entrepreneurship and to ensure that the Company continue to function as a going concern. The right of rejection or approval of a plan is with the CoC. In a particular case, what should be the percentage of claim amount payable to one or other Financial Creditor or Operational Creditor or Secured Creditor or Unsecured Creditor can be decided by the Committee of Creditors based on facts and circumstances of each case. The Adjudicating Authority is only required to supervise whether the plan approved by CoC meets the requirements as referred to in sub-section (2) of Section 30 of the Code, or not and eligibility conditions of proposed resolution applicant are fulfilled or not. 16. Hon ble NCLAT in the case of Darshak Enterprise (P.) Ltd. v. Chhaparia Industries (P.) Ltd. Ors. Passed in Civil Appeal (AT) (Ins) Np. 327 of 2017 has held that: In absence of any discrimination or perverse decision, it is not open to the Adjudicating Authority or the Appellate Tribunal to modify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - TOTAL 1251.36 1035.61 560.42 IRP Cost 19.81 19.81 19.81 Total amount provided in the Resolution Plan 1271.17 1055.42 580.23 18. It is thus seen that as per the liquidation value of the corporate debtor and the waterfall mechanism provided under Section 53 of the Code, no amount would be liable to be paid to persons other than resolution process cost, secured creditors and wages to workmen. However as per compliance certificate of Resolution Professional, ₹ 67.98 lakhs (35.73%) has been kept for operational creditors and ₹ 466.72 Lakhs (70%) has been provided for financial creditors. It is no longer res-integra that there is an intelligible differentia between the FCs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan has provisions for its effective implementation, as laid down in proviso to Section 31(1). In respect of compliance of point (A) above, sub-section 2 of Section 30 casts duty on the Resolution Professional to examine the resolution Plan received by him to confirm that such Resolution Plan provides for the payment of insolvency resolution process costs, provides for the payment of the debts of the operational creditors in such manner as may be specified, provides for the management of the affairs of the corporate debtor after approval of the Resolution Plan; the implementation and supervision of the Resolution Plan, that the Resolution Plan does not contravene any of the provisions of the law. and that the Resolution Plan conforms to such other requirements as may be specified by the Board. 23. In compliance of the said provision, the Resolution Professional has filed compliance certificate in Form H and inter alia has confirmed that he has examined and verified the Resolution Plan approved by the CoC, in the light of the requirements of the Code and Regulations and that it is compliant to the relevant provisions of the Code and Regulations. 24. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority in priority over Financial creditors. The distribution of amount provided amongst Operational Creditors will be in a pro-rata basis to the number of claims admitted by the Resolution Professional as disclosed in Resolution Professional s documents. Any other additional claims that may be admitted by the competent judicial authority, shall be paid on similar basis as above. The Resolution Professional has confirmed in the compliance certificate given in Form H that the payment to Operational Creditors have been given priority over payment to Financial Creditors. Therefore Section 30(2)(b) read with Regulation 38(1)(b) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations. 2016 stands satisfied. 28. In terms of Section 30(2)(c), the Resolution Plan provides for management of affairs of the corporate debtor after approval of the Resolution Plan. The term of Plan and its implementation schedule as per Regulation 38(2)(a) has been provided for at Clause 6 of the Resolution plan which provides that the Company shall continue as a going concern and operate in its normal course of business upon i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Eight Lakhs Two Thousand Two Hundred and Ninety-Nine Only) as a performance security to be deposited by M/s. BCH Electric Limited. 33. Accordingly, in compliance of Regulation 36B(4A) of the CIRP Regulations, the successful Resolution applicant has submitted a bank guarantee of ₹ 58,02,299/- as performance security as per the following details:- Date of issuance of Bank Guarantee- 16.05.2019 Name of Issuing Bank- Punjab National Bank Amount of Bank Guarantee- ₹ 58,02,299/- Period of Bank Guarantee- Valid upto 15.11.2019 34. As a sequel to aforesaid discussions we are satisfied that all the requirements of Section 30 (2) are fulfilled and no provisions of the law at present in force has been contravened. 35. It is relevant to note here that Explanation in sub-section (2) of Section 30 provides deemed approval of shareholders for implementations of actions under the Resolution Plan, making it clear that it shall not be a contravention of law. 36. In respect of reliefs and concession sought for in the Plan which are beyond the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution plan, as approved by the requisite majority of members of CoC, is in accordance with the sub-section 2 of Section 30 read with Section 31 of the Code and as the Resolution Applicant is not disqualified under Section 29A of the Code and as no infirmity seems to have brought out upon screening of the Resolution Plan; we hereby approve the Resolution Plan under sub-section (1) of Section 31 of the Code. 41. The resolution applicant shall appoint a Monitoring Agency with modification that Resolution Professional shall be appointed as Monitoring Agency to monitor and supervise the implementation of the Resolution Plan. We also grant Liberty to the monitoring Agency to apply to the Tribunal for any further direction in order to ensure effective implementation of the plan, if such a necessity arises. 42. It is hereby declared that the Resolution Plan is binding on the corporate debtor, members, employees and workmen of the corporate debtor, creditors of the corporate debtor and other stakeholders involved in the Resolution Plan. 43. The resolution applicant shall obtain the necessary approval required under any law for the time be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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