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TMI Blog2020 (4) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Resolution Plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this subsection, satisfy that the resolution plan has provisions for its effective implementation - Where the Adjudicating Authority is satisfied that the Resolution Plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the Resolution Plan. Scope and ambit of jurisdiction of Adjudicating Authority and Appellate Tribunal while approving Resolution Plan - Whether a conditional Resolution Plan can be approved? - HELD THAT:- The Adjudicating Authority and Appellate Authority cannot go into the feasibility and viability of the Resolution Plan which requires commercial wisdom of the Committee of Creditors. The Adjudicating Authority and Appellate Authority has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT:- The Hon ble High Court of Bombay had granted leave to the Respondents to initiate CIRP vide order dated 02.11.2018 and put the matter to rest by retrospectively validating the CIRP. Overriding effect has also been given to the I B Code over any other law in force and therefore, the Adjudicating Authority had rightly initiated The Resolution Plan as approved by the Adjudicating Authority is in accordance with Insolvency and Bankruptcy Code, 2016 and various propositions of law as laid down by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta Ors. [ 2019 (11) TMI 731 - SUPREME COURT ]. The Hon ble Supreme Court has reiterated the issue on commercial wisdom of Committee of Creditors, hence the Adjudicating Authority per se is not to be involved in the commercial wisdom area of the Committee of Creditors, particularly, in the approval of commercial side of Resolution Plan/Modified Resolution Plan - there are no ground to interfere with the impugned order dated 22nd July, 2019 passed by the Adjudicating Authority - order of NCLT upheld. - Justice Jarat Kumar Jain Member (Judicial), Mr. Balvinder Singh Member (Technical) And Dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the approval of Resolution Plan and the distribution/payment to various stakeholders therein was in accordance with the provisions of I B Code. ii. Scope and ambit of jurisdiction of Adjudicating Authority and Appellate Tribunal while approving Resolution PlanWhether a conditional Resolution Plan can be approved? iii. Whether those claims that are not dealt under the resolution plan can be held to be extinguished under the provisions of the I B Code? iv. Whether the Adjudicating Authority has power to modify its own order? v. Whether the initiation of CIRP was vitiated in view of the pendency of winding up petition before the Hon ble High Court of Bombay, Nagpur Bench? 5. The Resolution Professional ( RP ) has submitted that the present appeal is infructuous and not maintainable in view of the fact the Hon ble High Court of Bombay had granted leave to the Respondents to initiate CIRP vide Order dated 02.11.2018 and put the matter to rest by retrospectively validating the CIRP.However, the RP also submitted that in view of Section 238 of I B Code, overriding effect has been given to the I B Code over any other law in force and therefore the Adjudicating Authority had rightly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted dues of the secured and unsecured financial creditors of the Corporate Debtor. Modifications/Clarifications Issue Order date 22.07.2019 Order dated 03.07.2019 Approvals from Statutory Authorities Wider approval cannot be granted by this Adjudicating Authority, and the Resolution Applicant has to comply with the directions of Directorate of Geology Government of Maharashtra. The relevant authority to consider the application of the Successful Resolution Applicant/Corporate Debtor, on its own merits within a reasonable time frame. The Successful Resolution Applicant will be required to comply with the applicable laws and directions of such relevant authorities Management of Corporate Debtor The resolution applicant has also proposed that the management and control of the Corporate Debtor will be through Deloitte Touche Tohmatsu India LLP which is not acceptable since this entity cannot exercise the powers of the board of the corporate debtor. Managing Committee comprising of the representative of the Committee of Creditors to control the Corporate Debtor till the time the Successful Resolution Plan is being implemented by the Successful Resolution Applicant, in consultation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be part of the Resolution Plan. 9. Company Appeal (AT) (Ins) No.924 - 925 of 2019 has been preferred by the Operational Creditor to the corporate debtor who filed its claim dated 5th May 2017 ( AS FIRSTCLAIM ) and the following facts are necessary to be pointed out with regard to the present issue: The Appellants here are engaged in the business of Trading and Brokerage of grains and pulses also appellant acts as an commission agent for other industries and enterprises. The corporate debtor approached the appellant to take services and subsequently the corporate debtor issued an authority letter Dated November 21, 2013 which gives authority to the appellant to act as commission agent for the corporate debtor, pursuant to the authority letter the appellant acting as an commission agent on the behalf of corporate debtor the appellant purchased soya beans on lieu of such purchase the appellant issued various debit notes on the corporate debtor which is an amount of ₹ 3,23,03,256 is due and payable by the corporate debtor till march 31,2017 It is submitted by the appellant that its claim has rejected by respondent, inadvertently on account of lack of knowledge and proper a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Read with Section 61(3), IBC. Both the Appellants are unsecured financial creditors. Both the applications seek direction to set aside the Impugned orders dated 03.07.2019 passed by Ld. National Company Law Tribunal, Mumbai bench. The contention on behalf of the counsel for both the Appellants is that Ld. Adjudicating Authority in defiance of the provisions of the code rejected the application for considering claim filed by the Appellants as unsecured financial creditors. It is stated by them that the Ld. Adjudicating Authority further failed to appreciate that that the Resolution Professional kept the Claim filed by the Appellants in abeyance/pending verification in disregard to the documents filed by the Applicant wherein the default on account of corporate debtor is clearly established. It is stated that in case of financial debt, the question of dispute does not arise and it is only the occurrence of default which has to be considered. 11. In reply the Resolution Professional for Murli Industries Limited submits that the existence of debt claimed by the both the applicants has been contested by the corporate debtor in Company Petition No.23 and Company Petition no. 24 of 2016 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 03.07.2019 on application seeking modification of the latter order. The appellant further submits that the Adjudicating Authority has enabled a Managing Committee to be formed after the expiry of CIRP which comprises of member of COC to run the Corporate Debtor till the Resolution Plan is implemented, which is illegal as COC is empowered to run/operate the Corporate debtor only during the CIRP period. The OTS offer of the Appellant on behalf of suspended board of Directors which was more than what the Resolution Plan offers was not considered by the Coc. 15. In this regard the Appellant has relied on the decision of this Appellate Tribunal in the matter of Dinesh Goyal V. DCB Bank wherein it was held that the Adjudicating Authority has not been vested with power to review and modify its own order. In Mallina Bharathi Rao Vs Gowthami Solvent OilsLtd. Ors the Appellant submits that it was held by this Appellant tribunal that the power of review is not an inherent power thus cannot be invoked. 16. The Appellant submits that such an approval which is conditional is outside the purview of IBC and should have been rejected. The Adjudicating authority observing that the resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor pursuant to implementation of the successful Resolution plan would be a more beneficial prospect than liquidation of Corporate Debtor. Arcelormittal India Private Limited Vs. Satish Kumar Gupta Ors is quoted to point out that every attempt should be made to run the Corporate Debtor as a going concern and that liquidation should be avoided at all costs. 20. The Respondent No.2 further submits that it has only filed application for clarification/modification of the order and not review recall , hence the order dated 03.07.2017 was neither reviewed nor recalled by the 22.07.2019 order.. In Schedule 2 of the resolution plan conditions to the implementation of the plan is given below : - Schedule 2 1. Not used 2.The Directorate of Geology and Mining, Government of Maharashtra having issued letters granting its in principle approval, without imposing any onerous conditions, for the reinstatement ( together with the surface rights as applicable) of all Mining Leases (and related licenses) of the corporate debtor that have lapsed, expired, been cancelled , terminated or reposed after having compounded, rectified , waived or dispensed with all the Non- Compliance relating to such mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Touche Tohmatsu, India, Indiabulls Finance Centre, Mumbai. The appellant submits that the corporate debtor defaulted in payment of Central Excise duty/Service Tax, and the same were confirmed against them under several Adjudication Orders against them under the erstwhile Central Excise Act,1944 and the Finance Act. Total outstanding dues as per the Appellant is 64,04,86,019. NCLT vide order dated 03.07.2019. The Appellant submits that the rejection of claim was only communicated to them by email and not by Post. It is also submitted that during the material period in the wake of introduction of Goods and Services Tax, the Appellant Department was in transitional phase and a lot of transformation and re-organisation of the filed formation was underway and re-deployment of the staff was taking place. The Respondent submitted that the claim of the Appellant was rejected as it was not in prescribed format and hence could not be verified and is not in compliance with the IBC as well as the CIRP regulation. The respondent further submits that the reasons given by the Appellant for the delay in filing the claim after it was rejected first time are baseless and that there is no mandate un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent claimants particularly Sales tax department, Income Tax Department etc., who generally are not filing claim, filing claim at a belated stageor filing not in appropriate format as a result of which Government dues are not considered although it may be reflected in the financial statements/books of Accounts of Corporate Debtor and similarly micro claims relating to Individual,MSME, and other small traders are also not considered by the Resolution Professional because of time constraint, belated receipt or non receipt of the claim even though the same may be provisioned for in the books of Accounts of Corporate Debtor hence in order to strengthen the system including the preparation of information memorandum as per regulation 36 of IBBI, it would be fair and proper if appropriate provision is incorporated under IBBI, (Insolvency Resolution Process for Corporate persons) Regulation 2016 for preparation of Balance Sheet as on date of initiation of CIRP process and the same gets audited from a regular Statutory Auditor of the Corporate Debtor certifying all schedules, including micro details of both Assets and Liabilities so that admitted liabilities in the Corporate Debtor records a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority per se will have to go by the Commercial wisdom of Committee of Creditors as has been held in Committee of Creditors of Essar Steel India Limited Through Authorised Signatory Vs. Satish Kumar Gupta Ors. Civil Appeal No. 8766-67 of 2019 and Ors and K.Sashidhar Vs. K. Sashidhar v. Indian Overseas Bank and Ors. Civil Appeal No.10673 OF 2018. However, if workers are interested to revive the said units which is also the purpose of Insolvency and Bankruptcy Code, 2016 and Section 230-232 of the Companies Act, 2013 provides for scheme of arrangement; the workers can always go ahead and discuss with the Resolution Applicant/New management and accordingly can finalize the issue. Since presently workers have not submitted any scheme of arrangement so the Appellate Authority is not in a position to comment on the same. However, it will be open to the workers to bring the scheme of arrangement before the new management for appropriate consideration before the closure of unit and it will be in the public interest also as it involves a large number of workers and their families. 27. The issue raised by the learned Counsel for Appellant in Company Appeal(AT) (Insolvency) No. 880 -881 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 03.07.2019 in this matter. 14.The Registry is directed to immediately communicate this order to the Resolution Professional and the Resolution Applicant. 30. The issues raised in the present Appeal is accordingly answered below: i. Whether the approval of Resolution Plan and the distribution/payment to various stakeholders therein was in accordance with the provisions of I B Code. When the Adjudicating Authority is satisfied that the Resolution Plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this subsection, satisfy that the resolution plan has provisions for its effective implementation. Where the Adjudicating Authority is satisfied that the Resolution Plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the Resolution Pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny order passed by it, and shall make such amendment, if the mistake is brought to its notice by the parties. Rule 154 of the NCLT Rules, 2016 provides that: (1) Any clerical or arithmetical mistakes in any order of the Tribunal or error therein arising from any accidental slip or omission may, at any time, be corrected by the Tribunal on its own motion or on Application of any party by way of rectification. According, the NCLT does not have power to modify its own order but can only correct mistake apparent from the record. The Hon ble Supreme Court has held in Assistant Commissioner, Income Tax, Rajkot Vs. Saurashtra Kutch Stock Exchange Limited that a patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of record and can be corrected. An error cannot be said to be apparent on the face of the recorded if one has to travel beyond the record to see whether the judgment is correct or not. An error apparent on the face of the record means an error which strikes on mere looking and does not need long-drawn out process of reasoning on points where there may conceivabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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