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TMI Blog2019 (3) TMI 1771X X X X Extracts X X X X X X X X Extracts X X X X ..... This authority deems it fit to direct to the ECGC/RBI/DRI/Income-tax/Sales Tax/ESI or any regulatory/ revenue authority to remove the company's name from SAL, defaulters' list/wilful defaulters' list and discharge/write-off any liability levied on, etc. The reason for giving this direction is that the operational creditors, except the provision(s) made in the resolution plan, would not get anything in the event of liquidation of the corporate debtor. Therefore, for successful implement of the resolution plan as approved by the CoC, the resolution applicant and its nominees will take over the management of the company and if the resolution application is saddled with statutory liabilities then the resolution plan will get frustrated and the company has to face the liquidation under the IBC, 2016. The resolution plan approved by the CoCs with 100 per cent. voting share and placed before this authority appears to be in line with the object and purport of the I and B Code, 2016, as it provides for insolvency resolution in a time bound manner for maximization of value of assets, viability of credit and balancing the interest of the stakeholders - thus, the resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and B Code, 2016 by passing an order in M. A. No. 207/2018 on July 6, 2018. Thereafter, the CoCs was reconstituted subsequent to further claims received from the financial creditors of the corporate debtor. 5. As per section 25(2)(h) of the I and B Code, 2016, the resolution professional has invited expression of interest (EoI) calling for the resolution plan for the corporate debtor from the prospective resolution applicants. Pursuant to the invitation of EoI , the resolution professional received two resolution plans from the proposed resolution applicants, viz., Sandya Aqua Exports P. Ltd. (SAEPL) and Seelam Infra Developers P. Ltd. (SIDPL). Both the resolution plans were placed before the CoCs in its fifth meeting, held on September 3, 2018 for deliberation. After deliberations and discussions, the resolution applicants were given an opportunity to submit an improved resolution plans for ₹ 50.46 crores. 6. One of the resolution applicants, viz., SIDPL has submitted the improved resolution plan, which was placed before the CoCs in its sixth meeting, held on September 14, 2018. The resolution plan submitted by SIDPL was unanimously approved by the CoCs in its sev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be planed based on the requirements from time-to-time and working capital to be met out of equity and internal accruals and through additional sources, i. e., debt. The resolution plan further provides for the payment of the dues for workmen and employees of the corporate debtor. It provides the details of the liabilities and borrowings, debtors and loans of the company, the position of the creditors of the corporate debtor as accepted by the IRP, the securities held by the financial creditors and the details of the personal guarantees. It also provides the details of amounts due to the workmen and employees for the period of two years and twelve months respectively preceding the date of the CIR process. 8. As regards to the distribution of money towards the statutory liabilities, the resolution plan provides for the various creditors mentioned therein such as the CIRP expenses, employees and workmen and specifically noted that the resolution applicant will not consider any other liability pertaining to the operational creditors such as Income-tax, sales tax and any other statutory dues apart from wages of workmen and salaries of employees. The reason given for the said tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision could be made as provided under section 30(2)(b) of the IBC. Therefore, under second situation the claims of the operational creditors like Income-tax Department, Sales Tax Department or any of the other statutory authorities cannot be met out of the sale of the assets of the corporate debtor in the event of liquidation. In the said situation no provision could be possible to be made in the resolution plan . Besides this, the regulation quoted above clearly provides that a resolution plan shall provide for measures as may be necessary for insolvency resolution process of the corporate debtor for maximization of value of its assets by curing or waiving off any breach of the terms of any debt due from the corporate debtor and to reduce the amount payable to the creditors. This makes it clear that the resolution plan which cures or waives of any breach of the terms of any debt due from the corporate debtor and reduces the amount payable to the creditors is valid in the eye of law and can be approved by the Adjudicating Authority provided the same is in compliance with section 30(2) of the I and B Code, 2016 and the Regulations made thereunder. The net effect of the approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allocated by CoC (Rs. crores) CIRP 0.95 0.95 Operational creditors Workmen 0.11 0.11 Employees 0.78 0.78 Audit fees 0.06 0.06 Director s remuneration 0.19 Combat Security Services 0.06 0.06 ESIC 0.09 0.09 PF 0.11 0.11 Essae Teraoka P. Ltd. 0.02 0.02 Secured financial creditors-Union Bank of India 45.86 45.86 Unsecured financial creditor-ICICI Bank 2.23 2.23 Allocation towards statutory dues 0.19 Total 50.46 50.46 11. The total a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g this direction is that the operational creditors, except the provision(s) made in the resolution plan, would not get anything in the event of liquidation of the corporate debtor. Therefore, for successful implement of the resolution plan as approved by the CoC, the resolution applicant and its nominees will take over the management of the company and if the resolution application is saddled with statutory liabilities then the resolution plan will get frustrated and the company has to face the liquidation under the IBC, 2016. Therefore, there must not be any financial obligations other than as provided in the resolution plan to be met by the resolution applicant and the corporate debtor till the resolution plan is implemented in its length and breath. 13. From the plan approval date, all inquiries, investigation and proceedings, whether civil or criminal, suits, claims, disputes, proceedings in connection with the corporate debtor or affairs of the corporate debtor, pending or threatened, present or future in relation to any period prior to the plan approval date, or arising on account of implementation of this resolution plan shall stand withdrawn and dismissed. 14. In shor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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