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TMI Blog2019 (4) TMI 1797X X X X Extracts X X X X X X X X Extracts X X X X ..... Plan as approved by the Committee of Creditors is by and large hereby sanctioned by this Order in view of the recent judgment of the apex court in K Sashidhar v. Indian Overseas Bank [ 2019 (2) TMI 1618 - SUPREME COURT OF INDIA ] . The Hon'ble Supreme Court in the said order has made clear that the role of CoC is quite vital for deciding the fate of the company It has been held that the Adjudicating authority is not required to go into the merits or reasoning of the decision taken by the CoC for approval or rejection of a resolution plan. The only benchmark which is set up to be determined by the AA is to see whether the plan has been approved by 75% voting of the CoC or not. Therefore, the commercial wisdom is not allowed to be interfered with. The approval of a Resolution Plan by the CoC is to be accepted in toto by the Adjudicating authority if a 75% voting share approves the said plan. Because of the latest decision, the scope of any suggestion or alteration in the impugned resolution plan is very limited. As far as the procedure is concerned, in this case, the same has been followed as per the provisions of the Insolvency Code, therefore, the Resolution Plan has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of one Mr. Ajay Nair is no more in existence being allowed to be Withdrawn, as a consequence the only Resolution Plan for due consideration is of Osian India (Mr. Sandeep Mehta Proprietor). The R.P. has therefore, moved one more Misc. Application (MA-1376/2019) annexed therein the Resolution Plan of M/s. Osian India, stated to be approved by the CoC. As a consequence, this Misc. Application stood merged to be decided by this Common Order. 3. MA 1376/2018: This Application is submitted by the R.P. dated 05.03.2019. CoC, in its meeting dated 15.02.2018 has approved the Revised Resolution Plan put up by Osian India. The CIRP period was extended and consequentially, CIRP cost was also increased by an amount of ₹ 5,00,000, which the CoC asked the Resolution Applicant to consider in its Resolution Plan. The tenure of payment was increased to 45 days from 30 days. It was directed to the new Resolution Applicant viz . Osian India to make an Earnest Money Deposit of ₹ 10,00,000/, which was done by way of Fixed Deposit. It is worth to note that this Resolution Applicant has revised its Resolution plan time and again and improved the offer on the direction of the CoC. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess: Current Liabilities Provision 55,732,186 50,690,093 31,269,288 41,945,733 37,238,920 34,148,896 OSIAN (INDIA) (B) PROFIT LOSS A/C FOR THE YEAR ENDED 31-03-2018, 31-03-2017 31.03.2016 PARTICULARS 31.03.2018 31.03.2017 31.03.2016 Unaudited (Rs) Audited (Rs) Audited (Rs) INCOME: - Sales Turnover 153,519,025* 196,587,571 151,471,056 Total Income 153,519,025 196,587,571 151,471,056 EXPENDITURE: - Cost of Goods sold 129,484,940 176,977,426 135,417,807 Administrative Expenses 6,545,151 11,959,704 8,588,687 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 3,88,66,749 2,21,92,393 28,44,376 6 Non Government Dues 4,49,04,674 2,46,68,928 99,02,172 7 Share Holders Fund (15,57,34,530) - - 5,96,37,402 41,02,45,940 6,10,61,280 Observations on the Plant and Machinery - Most of the Machinery was purchased in F.Y. 2000 and has become old. - No maintenance carried out in the Plant since 2000. - There has been lot of damages in the machinery, which can prove fatal. This would require fabrications at various places in the plant to bring the machinery to proper working conditions. Photos of damages attached - The quality of the product has gone down and as a result of which 3 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,13,000/- 5 Sanitation and Hygienic Measures (Under Swatch Bharat Defection free environment) 98,000/- 6 Debottlenecking of Existing paint dryers plant 32,00,000/- 7 Health audit of workers 85,000/- 8 Renewal of licence (Explosive, Solvent Handling) Post December 2018 1,50,000/- 9 Refurbishment of Existing Lab 8,00,000/- Total additional expense to run the plant in Safe and Sound condition without Accident due to above requirements 1,25,72,000/- Subject to change on the date of carrying out the changes. The above cost is estimated cost and is based on the various quotation received and factory visit done by relevant competent professionals. Estimated additional cost to be incurred to carry out the repairs and maintenance of the plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 - sub-total 59,564,459 355,711,347 45,500,000 Un-secured Manoj Agarwal (HUF) 650,000 1,191,411 50,000 Manoj Agarwal 650,000 1,104,250 48,000 Shareholders 1,320,040 Claims not submitted Directors 22,440,670 - Trade Deposit 300,000 Other Loans Deposits 40,312,533 sub-total 65,673,243 2,295,661 98,000 Total (B) 125,237,702 358,007,008 45,598,000 4 Other Creditors Government dues Assistant Commissioner of Sales Tax (JAG-VAT-D-008) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68,928 9,902,172 Total (C) 83,771,423 50,500,903 12,546,548 5 Share Holder Fund Share Capital 18,540,000 0 Reserves and Surplus - 174,274,530 0 Total (D) - 155,734,530 Total 215,371,932 413,885,522 6,10,61,280 *Trade Payables (Balance accounts) - 6 Nos. (₹ 39,00,000/-) (1) M/s. Shiristab Pvt. Ltd. amount ₹ 20,00,000/- considered for payment. (2) M/s. Balaji Trading ₹ 12,00,000/- considered for payment (3) All other payables to be considered for ₹ 5,00,000/- Maximum. (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( a ) transfer of all or part of the assets of the corporate debtor to one or more persons; NCLT will transfer all the assets in the books of Corporate Debtor clean of any charge on passing the order. ( b ) sale of all or part of the assets whether subject to any security interest or not; NCLT will give us clear title of all the assets in the books which are subject to lien or on which any security charge is created on passing the order. Any asset sales initiated by old promoters in last 2 years shall be reversed as per applicable law. ( c ) the substantial acquisition of shares of the corporate debtor, or the merger or consolidation of the corporate debtor with one or more persons; 100 % share holding will be transferred to us and NCLT will give us clear title of all the assets in the books which are subject to lien or on which any security charge is created on passing the order. ( d ) satisfaction or modification of any security interest; NCLT will give us clear title of all the assets in the books which are subject to lien or on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be done in our favour by NCLT This will be subject to the limitation of the statutory liabilities accepted to be settled by us in the Resolution Plan. (J) Regulation 38 Resolution Plan Regulation 38. Resolution plan. Resolution plan offered by Mr. Sandeep Mehta (1) A resolution plan shall identify specific sources of funds that will be used to pay the - The following are the Sources of Funds Bank Balances (as on date of the submission of proposal) ₹ 4,64,00,000/- Fixed Deposits with Bank ₹ 1,40,00,000/- Total ₹ 6,04,00,000/- Bank Certificate and Fixed Deposit Certificate attached. ( a ) insolvency resolution process costs and provide that the insolvency resolution process costs will be paid in priority to any other creditors; Insolvency resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng its term will be carried out by Mr. Sandeep Mehta as Director and a Technical Director having requisite experience in the Industry will be appointed as well. ( c ) adequate means for supervising its implementation. Mr Sandeep Mehta has requisite experience in field and the implementation will be carried under his guidance. (3) Resolution plan shall demonstrate that ( a ) it addresses the cause of default The following are the reasons identified by us as the reason of default Poor Raw material selection and price of procurement being very high making it uncompetitive in the markets and hence supplies were made to B class customers. Inefficiency of Plant and Management to ramp-up capacities against the expenses incurred. Excess back office manpower. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made good. However it is subject to the actual practical issues that will be actually faced while running the plant, current market conditions and age cycle or the product manufactured. ( c ) it has provisions for its effective implementation The plant is viable once the above mentioned faults are made good as we have adequate resource to buy appropriate material at lesser cost and have a credit standing in the markets. However it is subject to the actual practical issues that will be actually faced while running the plant, current market conditions and age cycle or the product manufactured. ( d ) it has provisions for approvals required and the timelines for the same Necessary approvals for running the plant or transfer of ownership of plant will be done by NCLT within a reasonable period for us to commence operations. Further NCLT will give appropriate standing directions to all the authorities involved in the order and also NCLT shall in its order direct local authorities to give back all the connections required to run the plant including but not limited to Electricity NOC, Water Works NOC required. Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NOC, Water Works NOC required. Necessary directions to carry out amendment in MIDC shall be given in our favour by NCLT.This will be subject to the limitation of the statutory liabilities accepted to be settled by us in the Resolution Plan above (L) Explanatory note on payment to certain class of Operational Creditors:- Payment to Operational creditors are being considered for payment is the proposal to the following reasons :- Operational creditors has been serving the company for more than a decade and on more than 10 (Ten) occasions when the current plant was in deep trouble or closure the operational creditors has extended extraordinary support to resumption of plant by supplying Raw Material and some of the products are proprietary products of the creditors from various manufacturers, however the support is no longer available as the Company is under NCLT and the operational creditors will loose their money. We had discussions with the said operational creditors and they have assured us to supply the Raw materials at most competitive prices (on 0.5% Commission Addition) 180 Days direct credit for future supplies for next 3 years. The said operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of plant Complete cleaning Maintenance Shifting of back operation to site for reducing cost Fire safety Audit Structural Audit Health audit of workforce All Statutory NoC are required This proposal is subject to 100%debt free Equity participation 5. It has been brought to the notice that one of the justifications for approval of the Resolution Plan is that the Applicant wishes to run this business as a going concern and hence taken all measures viz . payments to employees salary/gratuity in full. Due care has been taken to square up the operational creditors accounts in the plan submitted. 6. The Procedure as prescribed under The Code is that a Resolution Plan is required to be submitted by a Resolution Application u/s. 30 of The Code. On approval, the Resolution Professional is to submit u/s. 30(6) the Resolution Plan, as approved by the Committee of Creditors, to the AA. Therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um up the above discussion, the Resolution Plan as approved by the Committee of Creditors is by and large hereby sanctioned by this Order in view of the recent judgment of the apex court in K Sashidhar v. Indian Overseas Bank [2019] 152 SCL 312. The Hon'ble Supreme Court in the said order has made clear that the role of CoC is quite vital for deciding the fate of the company It has been held that the Adjudicating authority is not required to go into the merits or reasoning of the decision taken by the CoC for approval or rejection of a resolution plan. The only benchmark which is set up to be determined by the AA is to see whether the plan has been approved by 75% voting of the CoC or not. Therefore, the commercial wisdom is not allowed to be interfered with. The relevant portion of the said judgment is reproduced herein below: As aforesaid, upon receipt of a rejected resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 shall cease to have any effect henceforth. The Resolution Professional shall submit the records collected during the commencement of the Proceedings to the Insolvency Bankruptcy Board of India for their record and also return to the Resolution Applicant or New Promoters. Certified copy of this Order be issued on demand to the concerned parties, upon due compliance. 10. That the incoming Management shall not be personally responsible for any act, omission, commission and/or offence committed by the erstwhile Management in their personal capacity of the Corporate Debtor till commencement of CIRP. 11. That liberty is hereby granted that if deem fit and legally permissible, can move Miscellaneous Application if required in connection with implementation of this Resolution Plan. 12. That in respect of stepping by the New Promoters/Resolution Applicant into the shoes of the erstwhile Company and taking over the business, the provisions of Companies Act, 2013, shall be applicable and because of this reason a copy of this Order is to be submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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