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TMI Blog2020 (3) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... ng their proper/own jurisdiction to pass any appropriate order as the case may be. The resolution applicant(s) on approval of the plan may approach those competent authorities/courts/legal forums/offices-Government or Semi-Government/State or Central Government, for appropriate relief(s) sought for in Clause No. (e) of Chapter IV of the resolution plan - Thus, not allowing the clause No. (e) of Chapter IV of the resolution plan, is not going to make any hindrance for proper implementation of the resolution plan as those are the subject-matter of the concerned/appropriate competent authorities. The resolution applicant(s) has/ have liberty to approach competent authorities for any concession, relief or dispensation as the case may be. The Adjudicating Authority, are of the considered opinion and also being satisfied that the resolution plan along with final addendum dated September 11, 2019 as approved by the committee of creditors (CoC) meets the requirements as referred to under section 30(2) of the Code - Application allowed. - I. A. No. 664 of 2019 in C. P. (IB) No. 299 of 2018. - - - Dated:- 1-1-2020 - Ms. Manorama Kumari (Judicial Member) And Chockalingam Thirunavukkara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convened on March 14, 2019 to initiate the expression of interest (in short EoI) process and accordingly, the applicant made the public announcement in newspapers inviting EoI in Form G on March 29, 2019. 5. It is stated that in pursuant to the invitation inviting EoI, the applicant received two EoIs one from Chamaria Fashions P. Ltd., and the other from Vikash Enterprises. Thereafter, Vikash Enterprises withdrew their resolution plan and thus, Chamaria Fashions P. Ltd., was the only resolution applicant. The resolution plan dated May 23, 2019 submitted by Chamaria Fashions P. Ltd. (hereinafter referred to as RA ) was discussed in the 4th meeting of the CoC on June 17, 2019. 5.1 It is stated that the said resolution plan was revised and the RA sub-mitted the revised resolution plan dated June 20, 2019 and the said revised resolution plan dated June 20, 2019 was discussed by the CoC in its 5th meeting held on July 6, 2019 wherein the CoC was of the opinion regarding improvement of resolution plan and accordingly RA was given a chance to rectify the resolution plan. 5.2 It is further stated by the RP that in the 5th meeting of the CoC, it was resolved by the CoC to extend t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section/-Regulation Requirement of the Code and CIRP Regulations Clause of the resolution plan 1. Section 25(2)(h) Whether the resolution applicant meets the criteria approved by the CoC having regard to the complexity and scale of operations of business if the CD ? Demonstrated along with EoI submitted Yes 2. Section 29A Whether the resolution applicant is eligible to submit resolution plan as per final list of resolution -professional or order, if any of the Adjudicating Autho-rity ? The resolution professional has received affidavit for stating and affirming that RA is eligible to submit the resolution plan under section 29A of the IBC, 2016 Yes 3. Section 30(1) Whether the resolution applicant has submitted an affidavit stating that it is eligible -do- Yes 4. Section 30(2) Whether the resolution plan : ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the resolution plan shall provide : (a) the term of the plan and its implementation schedule ; (b) for the management and control of the business of the corporate debtor during its term ; and (c) adequate means for supervising its implementation ? (a) Part L (b) Part M (c) Part N Yes Yes Yes 11. Regulation 38(3) Whether resolution the plan demonstrates that : (a) (a) Yes (a) it addresses the cause of default ? (b) (b) Yes (b) it is feasible and viable ? (c) Part L (c) Yes (c) it has provisions for its effective implementation ? (d) (d) Yes (d) it has provisions for approvals required and the timeline for the same ? (e) (e) Yes (e) the resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs seventy three thousand one hundred ninety two) as set out in part of the resolution plan, based on the information memorandum. That, as per the information memorandum provided by the resolution professional, there is no amount outstanding due to worker or employee of the corporate debtor. A statement showing the amount of claim and amount proposed to be paid is given below : Name of claim Amount of claim admitted by IRP/RP Amount proposed by RA IRP cost 25,00,000 25,00,000 Financial creditors 16,31,41,624 4,44,00,000 Workers Nil Nil Employees Nil Nil Operational creditors 1,37,73,192 6,00,000 Statutory dues Nil Nil Shareholders NA Nil Total : 17,94,14,816 4,75,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,48,50,375 Q-2 49,78,625 - 49,78,625 2,98,71,750 Q-3 49,78,625 7,46,794 57,25,419 2,48,93,125 Q-4 49,78,625 6,22,328 56,00,953 1,99,14,500 Q-5 49,78,625 4,97,863 54,76,488 1,49,35,875 Q-6 49,78,625 3,73,397 53,52,022 99,57,250 Q-7 49,78,625 2,48,931 52,27,556 49,78,625 Q-8 49,78,625 1,24,466 51,03,091 - Total 4,44,00,000 26,13,779 4,70,13,779 10. Funds infused by the resolution applicant shall be distributed as per section 53(1) which speaks as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll ; and (ii) the term 'workmen's dues' shall have the same meaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). 11. Thus, section 53 of the Code lists the priorities to be given to the bene-ficiaries, of liquidation value of the assets of the corporate debtor. The provisions of section 53 make it amply clear that operational creditors are at the end of the list of beneficiaries as the secured financial creditors have edge over the others. 12. It would also be pertinent to mention here that the operational creditors have no locus standi as far as approval of the resolution plan by the CoC is concerned. As per section 24(3)(c), they are not eligible to attend and vote at the meetings of the CoC, if, they are holding less than 10 per cent. of the total debt. Section 24(3) of the Code reads as under : 24. (3) The resolution professional shall give notice of each meeting of the committee of creditors to- (a) member of committee of creditors, including the authorized representatives referred to in sub-sections (6) and (6A) of section 21 and sub-section (5) ; (b) members of the suspended board of directors or the partners of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination of stakeholders. Read with long title of the I and B Code , functionally, the resolution plan must resolve insolvency (rescue a failing, but viable business) ; should maximize the value of assets of the corporate debtor , and should promote entrepreneurship availability of credit and balance the interests of all the stakeholders. In the backdrop of the object of the IBC, it is amply clear that the resolution is rule and the liquidation is an exception . Liquidation brings the life of a corporate to an end. It destroys organisational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only if there is any surplus after satisfying the claims of a prior set of stakeholders fully. The IB Code, therefore, does not allow liquidation of a corporate debtor directly. It allows liquidation only on failure of the corporate insolvency resolution process. It rather facilitates and encourages resolution in several ways. The said objective of the resolution plan is affirmed in the decision in the matter of K. Sashidhar v. Indian Overseas Bank [2019] 213 Comp Cas 356 (SC). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor ; (b) provides 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 ; (c) provides for the management of the affairs of the corporate debtor after approval of the resolution plan ; (d) the implementation and supervision of the resolution plan ; (e) does not 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. Explanation.-For the purposes of clause (e) if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. (3) The resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir own jurisdiction. The said clause No. (e) is reproduced hereunder : All business permits required by the corporate debtor to conduct its business and which have not been granted, cancelled, terminated, revoked, suspended or not renewed ; having been granted or rein stated, as the case may be, at no additional cost to the resolution applicant or corporate debtor. 16. In this regard, we are of the view that approval of the resolution plan does not mean automatic waiver or abatement of legal proceedings, if any, which are pending by or against the company/corporate debtor as those are the subject-matter of the concerned competent authorities having their proper/own jurisdiction to pass any appropriate order as the case may be. The resolution applicant(s) on approval of the plan may approach those competent authorities/courts/legal forums/offices-Government or Semi-Government/State or Central Government, for appropriate relief(s) sought for in Clause No. (e) of Chapter IV of the resolution plan. 17. Thus, not allowing the above said clause No. (e) of Chapter IV of the resolution plan, is not going to make any hindrance for proper implementation of the resolution plan as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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