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TMI Blog2021 (5) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... rmance security of ₹ 42 crores with balance of ₹ 48 crores to be deposited within 90 days of the CoC's approval. However, till date the Resolution Applicant has failed to deposit the balance amount. As per I B code if no Resolution Plan is approved by the COC/Adjudicating Authority within the prescribed timeline, the extended timeline the natural corollary, automatic next step is only Liquidation of the Corporate Debtor therefore in the instant case the Adjudicating Authority did not satisfy to grant additional time to complete the resolution process as prayed for instead this Adjudicating Authority is completely satisfied to pass an order for Liquidation of the Corporate Debtor - The entire CIRP process has been carried out by exercising the Commercial Wisdom of the COC therefore the failure to implement the plan by the successful Resolution Applicant after carrying out the required due diligence, various approval process including valuation matrix, financial matrix etc therefore there is no need to grant additional time to start the process once again. Considering the above facts and background we are of the considered view that in the interest of all stake h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter pursuant to the first Committee of Creditors held on 25.05.2018, the Applicant was appointed as Resolution Professional ( RP ). 3. The public announcement was made on 27.04.2018 and 28.04.2018 where the Resolution Professional received claims of ₹ 9,553.55 crores from 23 financial creditors out of which ₹ 7,237.39 crores from 19 financial creditors were admitted. Further, the Resolution Professional received claims for ₹ 3,781.73 from 1,153 operational creditors out of which ₹ 284.76 crores were admitted, ₹ 795.47 were contingent liabilities/disputed statutory claims and ₹ 2701.49 were rejected (including workmen, employees and statutory creditors) as on 10.01.2019 Pursuant thereto, a Committee of Creditors ( COC ) was constituted by the Resolution Professional and report certifying the constitution of the COC was filed with the Hon'ble NCLT in accordance with Section 21 of the Code and Regulation 17 of the CIR Regulations. 4. The Resolution Professional, published advertisement on 30.06.2018 with addendums published on 17.08.2018 and 17.09.2018, invited prospective Resolution Applicants to put forward their respective Resolution P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were discussed and denied. The Resolution Applicant was further informed that the information sought by them is being collected and such information sought by the Resolution Applicant was never a condition precedent to the implementation of the Resolution Plan and therefore the Resolution Applicant did not have any basis to delay the implementation of the Resolution Plan. The Resolution Applicant was informed that failure to implement the Resolution Plan by 10.01.2020, would be considered as breach of the Resolution Plan and the lenders would approach the Tribunal to inform such default. Further there was discussion held on conference calls between Resolution Applicant, Monitoring Agency and Steering Committee, wherein the Resolution Applicant said that the Resolution Plan would not be implemented as per agreed schedule. 9. On account of failure by the Resolution Applicant to implement the Resolution Plan, the IDBI Bank, representative of the members of the CoC forfeited a part of the performance security of ₹ 42 crores submitted by the Resolution Applicant and filed an Interlocutory Application No. 249 of 2020 before the Hon'ble NCLT seeking inter alia a direction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and is also of the view that such type of non-compliance by the Resolution Applicant cannot be allowed 11. Thereafter, an appeal from the Order dated 18.02.2020 being Appeal bearing No. 327 of 2020 was filed by the Resolution Applicant before the NCLAT. The said Appeal was filed on the grounds that the Order dated 18.02.2020 could not have been passed by the Hon'ble erstwhile Bench II in view of the Order dated 12.02.2020 already passed by the Hon'ble reconstituted Bench II of NCLT. Further, despite the lapse of 90 days from the order of the NCLT directing RPIFL to submit a performance security of INR 48 crores, RPIFL failed to submit the same. Time and again the Resolution Applicant showed its unwillingness to implement the Resolution Plan. 12. Thereafter, both the Appeals, i.e. Appeal No. 287 of 2020 and Appeal No. 327 of 2020 were listed on 20.03.2020 before the Hon'ble NCLAT. However, the Counsels for Resolution Applicant sought an adjournment. The attempt to delay the implementation of the plan was not entertained by the Hon'ble NCLAT and considering the urgency the Hon'ble NCLAT adjourned the matter to a short date i.e. 07.04.2020. However, due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt also informed the Resolution Applicant about the Order passed by Hon'ble NCLT dated 18.02.2020 directing the Resolution Applicant to implement the Resolution Plan in a week's time, however, as the time period provided by Hon'ble NCLT for implementation of the Resolution Plan had already expired, the Resolution Applicant was called upon to implement the Resolution Plan immediately. The Applicant repeatedly reminded the Resolution Applicant to implement the Resolution Plan. 15. The Resolution Applicant informed the Applicant that as they are an overseas based fund, they require at least some time for obtaining relevant internal approval. The Resolution Applicant further stated that they are internally perusing the Order dated 25.06.2020 and taking necessary views of their board members as per their Fund protocol. The Applicant informed the Resolution Applicant that the request seeking additional time to implement the Resolution Plan is not accepted as the Resolution Plan is approved by the Hon'ble NCLT on 25.11.2019 and hence it is not subject to any internal approval for implementation of the same. 16. On several meetings of the Steering Committee the member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a result of which there is a cash flow in the Corporate Debtor and it is a going concern. The Corporate Debtor has a business for which there was active competition from prospective bidders. The Applicant submits that the Corporate Debtor continues to have the value for prospective bidders. Therefore, the Corporate Debtor and its stakeholders should not be made to suffer by initiating Liquidation process due to the willful and mala fide actions of the Resolution Applicant. 21. The Applicant therefore seeks directions from this Hon'ble Tribunal to reinstate the Committee of Creditors and Resolution Professional and grant the latter 96 days (i.e. from the date of Issue of the Process Document on October 4, 2018 until the date of approval of a resolution plan on January 10, 2019) to make another attempt to invite fresh resolution plans for the Corporate Debtor so as to successfully complete the CIRP of the Corporate Debtor. Judgments for reference:- 22. In Jaiprakash Associates Limited v. IDBI Bank Limited (2020) 3 SCC 328, the Hon'ble Supreme Court granted an extension of 90 days from the date of the order to the Resolution Professional to complete the CIRP. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eatment of cash balances available with the Corporate Debtor, total consideration and also management and control of the Corporate Debtor. In spite of granting various opportunities by NCLT, Hon'ble NCLAT, the Steering Committee, the Resolution Applicant did not, willfully not implemented the resolution plan there by putting all the stakeholders in jeopardy, affecting the interest of various stakeholders viz Financial Creditors, Operational Creditors, Employees, Workmen of the Corporate Debtor etc. In the above background we have no other option but to direct the Steering Committee, the Monitoring Agency to forfeit the Performance Security Amount of ₹ 42,00,00,000/- paid by the Resolution Applicant out of ₹ 90,00,00,000/- Performance security. 27. From the records it appears that the total value of the Resolution Plan is approx. ₹ 900/- crores out of which ₹ 420 crores to be upfront payment and ₹ 480 crores by issuing NCDs and the Resolution Applicant failed to bring in even 5% of the plan amount. CoC permitted the Resolution Applicant to submit performance security of ₹ 42 crores with balance of ₹ 48 crores to be deposited within 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority did not satisfy to grant additional time to complete the resolution process as prayed for instead this Adjudicating Authority is completely satisfied to pass an order for Liquidation of the Corporate Debtor. 32. The entire CIRP process has been carried out by exercising the Commercial Wisdom of the COC therefore the failure to implement the plan by the successful Resolution Applicant after carrying out the required due diligence, various approval process including valuation matrix, financial matrix etc therefore there is no need to grant additional time to start the process once again. Considering the above facts and background we are of the considered view that in the interest of all stake holders it is better to order for liquidation of the Corporate Debtor and the process may be completed at the earliest and in the liquidation the Corporate Debtor may be sold as a going concern among various other methods provided in I B code. 33. Before passing this liquidation order we have also considered the reliance placed by the applicant to various judgments. Further we are also of the view that after the Resolution Plan is approved by the Adjudicating Authority there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion process as envisaged under Chapter-III of the Code and the IBBI (Liquidation Process) Regulations, 2016; d. Public Notice shall be issued in two newspapers, viz., in Times of India (English) and Navshakti (Marathi), having wide circulation stating that the Corporate Debtor is in liquidation, as required in terms of section 33(1) of the Code; e. The moratorium declared under Section 14 of the I B Code shall cease to operate here from. f. All the powers of the Board of Directors and key managerial persons of the Corporate Debtor shall cease to exist. All these powers shall henceforth vest in the Liquidator; g. The personnel of the Corporate Debtor shall extend all cooperation to the Liquidator as required by him in managing the liquidation process of the Corporate Debtor; h. On initiation of the liquidation process but subject to section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor save and except the liberty to the liquidator to institute suit or other legal proceeding on behalf of the Corporate Debtor with prior approval of this Adjudicating Authority, as provided in section 33(5) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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