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TMI Blog2021 (5) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... thermore, there is no change or modification regarding allocation of funds. The stakeholders of the Corporate Debtor are not affected by this change of infusion of fund sought by the Applicant. The approved Resolution Plan can be implemented in toto. This application seeks for change of shareholding pattern, and infusion of funds, and takeover of debt, between the Resolution Applicants. Since there is no bar as per RBI guidelines and further stakeholders are not affected, this application may be allowed - keeping in mind the preamble to Insolvency and Bankruptcy Code, 2016, this Adjudicating Authority deems it fit to approve the revisions in the Approved Resolution Plan as sought for by the Applicant in order to protect the best interest of all the stake holders of the Corporate Debtor. Accordingly, revision of the resolution plan as regards the amended shareholding pattern necessitated on account of the changed infusion mechanics and the assignment of the debts as observed herein above earlier is permitted to be carried out without affecting the rights of the stakeholders to the resolution process, which includes achieving resolution for the Corporate Debtor and value maximizat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal deems fit and as the nature and circumstances of the present case may require. 2. By an order dated 15th October 2018 this Tribunal initiated CIRP in relation to the Corporate Debtor and appointed one Mr. Arumugam as the Interim Resolution Professional. The said IRP was thereafter replaced by one Ms. Vandana Garg as the Resolution Professional of the Corporate Debtor vide order dated 21.10.2018. 3. Pursuant thereof, after issuance of the Expression of Interest (EoI) followed by the Request for Resolution Plan (RFRP), the Applicant herein submitted its resolution plan to the RP on 19.07.2019. Pursuant to various deliberations between the Applicant and the CoC, the Resolution Plan was revised multiple times and finally submitted before the CoC on 29.08.2019 for its consideration. However, a majority of the CoC (88.16%) have voted against the Resolution Plan on 09.09.2019 and consequent thereto, an application for liquidation of the Corporate Debtor was filed by the RP on 10.09.2019. However, the said Application was withdrawn by the RP on 19.11.2019 based on certain developments which happened thereafter. 4. The Applicant thereafter wrote to the CoC and RP that it fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt payment is infused in the SPV. The summary of the amount to be distributed to the claimants of the Corporate Debtor as follows; 8. The timelines for the implementation schedule as provided in Clause-1 of section 4, part A of the Approved Resolution Plan is extracted as follows:- 9. It was submitted by the Learned Senior Counsel for the Applicant that all the actions up to Sl. No. 4 of the above table have already been successfully completed and implemented. However, the actions to be taken from Sl. No. 5 onwards are subject to the necessary equity infusion into the SPV prior to amalgamation of the SPV into and with the Corporate Debtor. In terms of the same, it was submitted by the Learned Senior Counsel for the Applicant as follows; (i) An ARC has been specifically recognized under the Code to be a potential resolution applicant with direct reference to ARC'S in the exemption from the rigours of ineligibility under Section 29(A)(c) of the Code as well as in the definition of the term connected person (Explanation II of Section 29A clarifies that for the purpose of Section 29A, the term financial entity would include an ARC within its ambit). (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant further stated that the RBI vide its letter dated 19th August 2020 replied to UVARC in which it has stated (while referring to the letter issued by it on 28th August 2019) in respect of similar permission sought by UVARC as part of implementation of the resolution plan for another insolvent company, wherein the RBI had stated that the request of UVARC to submit the resolution plan and subscribe to fresh equity capital was not in conformity with RBI's extant guidelines and the provisions of the SARFAESI Act), that UVARC's proposal to submit a resolution plan under the Code, is not in conformity with the RBI's guidelines for ARCs and the provisions of the SARFAESI Act. A copy of the letter dated 27th July 2020 is attached as Annexure-5, (vii) It has been further contended by the applicant that pursuant to denial of permission by RBI, UVARC has engaged with senior representatives of RBI (including the RBI Governor) with respect to RBI's view that an ARC cannot submit a resolution plan under the Code on account of the same being contrary to RBI guidelines and SARFAESI Act, and it has made various submissions, however, the RBI has currently not changed its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Corporate Debtor and also to extend encumbrance on the assets of the Corporate Debtor, subject to release of existing charge on such assets, or on the assets of Resolution Applicant or each of the Consortium Members or on the assets of SPV, if any. Provided that the Resolution Applicant shall be entitled to exercise this right without any further concurrence of CoC . 6. (a) [......] v. Sources of Funds: As specified in Schedule VII hereto. Provided that the Resolution Applicant is at liberty to change the mode and manner of source of funding including the instruments through which such funds are required to be raised in the Corporate Debtor subject to prior intimation by the Resolution Applicant in this regard to the Monitoring Committee . iv) In furtherance of the foregoing, and to ensure timely implementation, the Resolution Applicant proposes to change the infusion mechanics such that the entire equity infusion of ₹ 10 Crore into the SPV shall happen directly through WLSPL from its internal accruals. This shall be in addition to the debt infusion of ₹ 21.5 crore in the SPV + ₹ 67 crore in the Corporate Debtor which shall also take place throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted above, the Applicant is fully committed and is willing to implement the Approved Resolution Plan. However, the Applicant has not been able to proceed with the implementation on account of the RBI prohibiting the direct equity infusion by UVARC into the SPV and the view taken by the RBI that the submission of the Approved Resolution Plan is not in conformity with RBI's extant guidelines and the provisions of the SARFAESI Act, even though all the necessary funds required for the equity infusion had already been arranged for. ix) Even in terms of the revisions proposed by the Applicant, WLSPL will now be making the entire equity infusion of ₹ 9,99,99,860 into the SPV. The funds for such equity infusion have also been made available by WLSPL and are ready to be mobilized, as soon as this Tribunal allows the present application for implementing the Approved Resolution Plan through the revised fund flow mechanism. x) The delay in timelines are entirely attributable to the RBI approval not being granted for the equity infusion of ₹ 8,99,99,860 by UVARC into the SPV, though no fault of the Applicant. Even the rejection letter by the RBI was issued only on 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . vs. Suspended Board of Directors of Digjam Ltd. Ors. IA No. 144 of 2020 in CP(IB) No. 594/NCLT/AHM/2018(NCLT Ahmedabad) and Swiss Ribbons Pvt. Ltd. Anr. Vs. Union of India Ors. AIR 2019 SC 739, it was observed that: What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. and Y. Shivaram Prasad v. S. Dhanapal - (2019) 153 SC L153 and NUI Pulp and Paper Industries Pvt. Ltd. v. Roxel Trading GMBH (2019) 155 SC L462 and S.K. Gupta Ors. v. K.P. Jain Ors. AIR 1979 SC 734. 14. In this circumstance, it is seen that what sought for by the Applicant is not a modification of the Resolution Plan which was approved by this Tribunal on 20.07.2020; the Applicant has only sought for the change in the funds infusion mechanism and change in the shareholding pattern. It is also pertinent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 05.04.2021 by the Authorized Representative for UVARCL and WLSPL, wherein they have reasserted the position that WLSPL shall infuse funds into the Project and successfully implement the approved Resolution Plan. 19. In page No. 4 of the Affidavit filed by the Applicant, they have sought for the following reliefs: i. To allow the revision of the Approved Resolution Plan as regards the amended shareholding pattern necessitated on account of the permitted change in infusion mechanics; and ii. To allow the revision of the Approved Resolution Plan as regards the changed infusion mechanics allowing WLSPL (instead of UVARC) to acquire the debt with the financial creditors of the Corporate Debtor for an amount of INR 35 Crore; and iii. To exclude the time period from the date of rejection of the Applicant's request by the RBI i.e., August 19, 2020 till the date of orders of this Hon'ble Tribunal, from the calculation of the timelines envisaged under the Approved Resolution Plan . 20. The Learned Senior Counsel Mr. Arvindh Pandian, appearing on behalf of R1/Monitoring Committee categorically states that There is no bar for ARC to participate as Resolution App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e resolution plan which is capable of reviving the Corporate Debtor and continuing its business as a going concern, is expected to benefit all stakeholders on a long-term basis. Accordingly, revision of the resolution plan as regards the amended shareholding pattern necessitated on account of the changed infusion mechanics and the assignment of the debts as observed herein above earlier is permitted to be carried out without affecting the rights any of the stakeholders. 26. It is also further, considering the fact that only on 19.08.2020 the RBI has rejected the request of UVARC for infusion of funds by equity though RBI was approached as early as on 19.12.2019 seeking approval and that no objection has ever been raised by any of the stakeholders of the Corporate Debtor (including the monitoring committee) to the revised Resolution Plan and also considering the peculiar circumstances arisen due to Covid-19 pandemic and also invoking Regulation 40(C), the following regulation under:- 40C. Special provision relating to time-line. Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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