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TMI Blog2019 (4) TMI 1790X X X X Extracts X X X X X X X X Extracts X X X X ..... the existing directors deemed to have resigned on the Effective Date. All powers given to the erstwhile management and promoter group will be withdrawn and the memorandum and articles of association of the CD will stand substituted. 8. On and from this Tribunal 's approval date and until the Effective Date, CD will continue be managed and controlled by the RP under the guidance of a monitoring committee of 1 representative of approving financial creditors, the RP and 1 representative of JSW. On and from this Tribunal's approval date the reconstituted board shall constitute the board of directors of the CD and the new board and the monitoring committee shall be responsible for implementation of this resolution plan along with the resolution applicant JSW and within 30 days of the Effective Date JSW will submit a report to the statutory auditor of the CD confirming the status of implementation of resolution plan. The resolution plan also provides for an implementation schedule which envisages completion of the implementation on the 45th dayfrom date of approval of resolution plan by this Tribunal. 23. In view of the restriction on powers of this Tribunal, we cannot sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the relief asked for will be allowed subject to the approval of the Income Tax Department of the same. iii. In relation to Cl. IX (4) at page 18 dealing with proposal relating to subsidiaries, associate companies and joint ventures of the CD and in relation to Cl. 1.7(ii) of Schedule 4 at page 29, the relief asked for will be granted for the joint venture JSW Vallabh Tinplate Private Ltd. ("JVTPL") subject to consent of.JVTPL to the same, filed through a board resolution. iv. In relation to Cl. 1.6(ii) of Schedule 4 at page 28, the relief that all notices, assessments, appellate or other proceedings, pending or threatened in relation to the CD will stand terminated and withdrawn and that all consequential liabilities will stand extinguished, will be granted subject to approval of the authorities concerned with the notices, proceedings etc. v. If there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, in accordance with law, against the concerned persons, directors and officials of the CD " Paragraphs 7 and 8 3. The RA states that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to paragraph 23 that confusion had arisen in relation to the guarantee offered and it was clarified by the Learned Counsel that even though a mortgage has been created in favour of PNB and OCB but no guarantee was offered. Taking into consideration this submission of the RA, paragraph 23 will now read as follows: "23. In view of the restriction on powers of this Tribunal, we cannot send back the resolution plan for revision; we can either admit or reject it. Rejection of the resolution plan because PNB's claim has not been admitted, which would entail liquidation of CD is unreasonable and unfair, and would defeat the mandate of the Code. Thus, a more appropriate action would be to continue the mortgage of PNB without casting any additional obligation or liability on the CD. PNB, as such, on date has not claimed any amount in default from the principal debtor, namely Vallabh Steels Ltd nor has invoked the guarantees, if any offered by the CD in relation to the same. In this regard approval of the resolution plan by this Tribunal will not diminish or enhance the liability of the CD in terms of any agreement/consent as entered into between the CD and PNB. Further, JSW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al." A requirement to pay the receivables to the financial creditors or operational creditors materially affects the business plan and could make the resolution plan not viable. Hence the RA requests the Tribunal to modify the final order dated 19.12.2018 and delete the condition as contained in paragraph 27(i), 10.The condition contained in paragraph 27(i) has been imposed to further the object of the Code to maximise the value of the assets for all stakeholders involved in the CIRP. Considering that the financial funding Of the resolution plan is not dependant on money that may be recovered in the future by the CD, this Tribunal thinks it fit to direct that if any recoveries are made by the CD from existing debts which have been written off or debts which are in the books of the CD but not yet recovered, then the benefit of that extraordinary gain should not be enjoyed only by the CD but should be distributed amongst the Other stakeholders as well, especially the operational creditors who did not have a vote in the decision making. If this is not provided for then the extraordinary gain to the CD would be at the expense of its creditors foregoing their claims and thus, would am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27(iii) 13. The RA states that since the Tribunal has expressly approved Cl. IX(4) of the resolution plan for JVTPL and while it appears such clause of the resolution plan has been approved, however, it could be argued by relevant third parties that such provisions with respect to the Other subsidiaries, JVs and associates have not been granted as the same have not been specifically mentioned in the order dated 19.12.2018. Therefore, the RA requests that it would be in the interest of all stakeholders to have it clarified expressly that all reliefs sought in Cl. IX(4) at page 18 dealing with proposal relating to subsidiaries, associate companies and joint ventures of the CD have been allowed, including that the CD shall not be a promoter of any of the subsidiaries, joint ventures or associates existing as on the NCT Approval Date and that only the claims and obligations Of the CD towards or in relation to JVTPL shall continue. 14.CI. IX(4) at page 18 of the resolution plan states that the RA, the SPV and the CD shall not be liable towards any claims or obligations towards or relating to the subsidiaries or associate companies of the Company that relate to a period prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll stand deleted from paragraph 27(iii). Paragraph 27(iv) 18. The RA states that no authority has filed a claim during the resolution process. Thus, the RA requests that the Tribunal should clarify that the condition in paragraph 27(iv) only intends that the withdrawal and extinguishment of the notices, assessments, appellate or other proceedings, pending or threatened in relation to CD shall required an approval of the relevant authority before which it is pending but notwithstanding such approval for withdrawal or extinguishment, the liability of the CD in relation to such notices, assessments, appellate or other proceedings, pending or threatened in relation to the CD shall be "nil". 19.A recent order passed by the Hon'ble NCLAT in Pr. Director General of Income Tax (Admn. & TPS) vs. Synergies Dooray Automotive Ltd & Ors. Holds that the income tax authority, sales tax authority and other local authorities are operational creditors and their claims are to be treated like the claims of operational creditors. Considering that the authorities are to be treated as operational creditors under the Code and that no authority has come forward during the resolution process with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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