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TMI Blog2021 (1) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to those reliefs. The prayers as regard to various reliefs/ concessions sought by the Resolution Applicant is approved subject to condition that such grant/ approval is in accordance with the scheme and provisions of Insolvency Bankruptcy Code, 2016 and CIRP Regulations made there-under. The Resolution Applicant of the corporate debtor will have all liberty to approach or may approach the concerned Statutory/ Competent Authority for any concession, waiver or exemption as per the applicable laws - the resolution plan is approved - approved 'Resolution Plan' shall become effective from the date of passing of this order - application allowed. - IA 759 of 2020 in IA 661 of 2019 in CP(IB) 453 of 2018 - - - Dated:- 1-1-2021 - MADAN B. GOSAVI, MEMBER (JUDICIAL) AND VIRENDRA KUMAR GUPTA, MEMBER (TECHNICAL) Mr. Kuresh Kharnbati RP for Garden Silk Mills Limited Versus MCPI Private Limited And Mr. Praful Amichand Shah, Mr. Alok Praful Shah, Mr. Suhail Praful Shah Versus Mr. Kuresh Kharnbati RP for Garden Silk Mills Limited, MCPI Private Limited The Applicant Resolution Professional was represented by Senior Advocate Mr. Navin Pahwa, along with Mr Ravi Pahwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Claims were received and updated from time to time. As a consequence, two EOIs were received, however, one party submitted the Resolution Plan. The Resolution Applicant is constituent of The Chatterjee Group (TCG) and one of the major supplier of the material to the Corporate Debtor. In the application, it has been specifically mentioned that Resolution Plan has taken care of interest of all Stakeholders in terms of provision Regulation 38 (1) (A) of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 and value given to all Stakeholders is not less than the value debt to them under the liquidation process. It has also been stated that Resolution Plan has been extensively examined by the CoC before granting unanimously approval in the 6th meeting dated 22/09/2020 23/09/2020. It has also been pleaded that the Resolution Plan commenced the requirement of Section 30(2) of the Insolvency Bankruptcy Code, 2016. An Affidavit as required under Section 29(A) if the Insolvency Bankruptcy Code, 2016 is also enclosed for Resolution Applicant as well as on behalf of the SPV . 4. During the course of hearing it was also submitted that there was a minor chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takings that they are compliant with the requirements of Section 29A of the Code. 7. Now, we consider the facts and submissions made on behalf of the Applicant and the Respondent being the Successful Resolution Applicant. It is noted that the Corporate Insolvency Resolution Process has been conducted in accordance with the provisions of code r.w. relevant Regulations. No objection has been filed by any person against the Resolution Plan. The claim amount has been varied in terms of prayer made in IA No. 813 of 2020, which was allowed on 16.12.2020. The revised amount of claims has been noted and the Resolution Plan take care such revised claims. It is noted that the Resolution Plan, submitted for our approval, has been duly approved by the CoC in its 6th meeting dated 23rd September, 2020 by 100% votes. The Resolution Professional has given requisite certificate that the Resolution Plan complies with all requirements of Section 30(2) of the Insolvency Bankruptcy Code, 2016 r.w. relevant Corporate Insolvency Resolution Process Regulations. The perusal of the Resolution Plan shows that the Financial Creditor will get a sum of ₹ 717.50 Crores (subject to adjustments) agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) a wholly owned subsidiary of the Successful Resolution Applicant. The Resolution Applicant and the SPV have submitted affidavits/ undertakings that they are compliant with the requirements of Section 29A of IBC, 2016. 8. It has been stated that following steps shall take place in the order of sequence as an integral part of the Resolution Plan 1) Delisting As an integral part of the Resolution Plan and with effect from the date of the delisting prescribed by the BSE Limited and National Stock Exchange of India Limited, the equity shares of the Corporate Debtor, shall be delisted from BSE Limited and National Stock Exchange of India Limited in accordance with the order of the NCLT read with Regulation 3(3) of the SEBI (Delisting of Equity Shares) Regulations, 2009. 2) Capitalization of SPV The Resolution Applicant shall infuse amounts up to the Total Discharge Amount in one or more tranches into the SPV, either by way of equity or debt or a combination of both as may be deemed suitable. Subsequent to infusion of amounts towards the New Equity Shares of the Corporate Debtor, or such earlier date as may be agreed between the Steering Committee, the nominees of the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferor company, will stand dissolved without winding up. 5.6 In consideration of the Merger, the Corporate Debtor, as the transferee company shall issue its equity shares to the equity shareholders of the SPV in accordance with the following share exchange ratio: for every 1 equity share having face value of INR 10 each held in the SPV, the equity shareholders of the SPV will be issued 1 equity share of the Corporate Debtor having face value of INRIO each held in the SPV. 5.6. Further, in terms of the IBM, approval of the shareholders of the Corporate Debtor to the transactions contemplated under the Plan including the Merger shall be deemed to have been given on the Approval Date. 5.7. The Resolution Applicant will hold 100% of the total equity share capital of the Corporate Debtor (i.e. the amalgamated entity) upon effectiveness of the Capital Reduction and the Merger. 9. It has also been stated that the Corporate Debtor shall stand converted from a public limited company into a private limited Company and the Memorandum of Association and the Articles of Association of the Company shall be automatically, without any further act or deed, be substituted and replaced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 30(2)(b) of the Code and in priority over payments to assenting Financial Creditors out of the FC Consideration 7. Proposal for other stakeholders (including public shareholders and other creditors) Nil 8. Proposal for Related Parties This Resolution Plan does not propose any payment to the Related Parties of the Corporate Debtor other than those forming part of Balance CIRP Costs approved by the COC or the Resolution Professional 9. Working capital infusion As and when necessary to the extent decided by the Resolution Applicant 12. As regards to the 7 parcels of land at village Jolwa, the submissions on behalf of the suspended management of the Corporate Debtor and Surat Textile Mills Limited have been made as under : A. In respect of 7 parcels of land at Jolwa 1. The Resolution Plan in respect of Garden Silk Mills Ltd ('GSML' or 'the CD') submitted to this Hon'ble Authority vide IA 661 of 2020 in CP (IB) 453 of 2018 has provided information on Jolwa Land of GSML vide Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he title in favour of the CD. It is also submitted that the said Resolution Plan as submitted in the IA No. 661 of 2020 as on today, when approved by this Hon'ble Authority, shall not create any other or further obligation, whether in monetary terms or otherwise on the part of the Land-Owners in respect of conferring the title in favour of the CD over and above what is stated in the said Agreement to Sale' referred to in the 'Declaration cum Undertaking.' Copy of the said two Declaration cum Undertaking is annexed herewith as 'Annexure A' (Colly). B. In respect of Right of way of Surat Textile Mills Ltd 4. The Resolution Plan in respect of Garden Silk Mills Ltd ('GSML' or 'the CD') submitted to this Hon'ble Authority vide IA 661 of 2020 in CP (IB) 453 of 2018 has provided information on interdependence Garden Silk Mills Ltd ('GSML') (CD) and Surat Textile Mills Ltd. ('STML') on each other vide Paragraph 8.2 (on Internal page 51 of Resolution plan and Page 529 of IA 661 of 2020). In the said Resolution Plan, Relief Concession and Dispensation sought for in the said Resolution Plan vide Paragraph 3.8 (on Internal pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sought therein are not contrary to law. No reliefs, licenses, entitlements of the Corporate Debtor should be terminated by reason of the Corporate Insolvency Resolution Process of the Corporate Debtor (CIRP). The resolved Corporate Debtor (Resolution Applicant) should be entitled to all benefits which the Corporate Debtor was entitled to prior to CIRP, which shall continue post CIRP as well. Government authorities should permit the resolved Corporate Debtor (Resolution Applicant) to avail of all benefits, concessions, licenses, approvals which it will be entitled to consequent to approval of the resolution plan submitted by the Resolution Applicant (Resolution Plan). It is submitted that concessions sought are pursuant to the object of the Code, viz., to provide a 'clean slate' to the Corporate Debtor in respect of past claims. Reliance in this respect is made to the judgment of the Hon'ble Supreme Court in the case of Committee of Creditors of Essar Steel India Limited Through Authorised Signatory v. Satish Kumar Gupta. Clause 1: is in relation to compliance of sections of the Companies Act, 2013, which are reliefs and concessions as permitted under Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of the resolution. This is because termination / discontinuation of these contracts would be detrimental to the CD. 3.5/ 3.6 (@Pg 551 / 553 of the Application) The reliefs and concessions sought are restricted to abatement and extinguishment of all previous debts and claims against the Corporate Debtor. Further, the resolved Corporate Debtor (Resolution Applicant) should be entitled to all benefits which the Corporate Debtor was entitled to prior to CIRP and shall continue post CIRP as well 3.7 (@Pg 551 / 553 of the Application) The resolved Corporate Debtor (Resolution Applicant) should be entitled to all benefits which the Corporate Debtor was entitled to prior to CIRP, which shall continue post CIRP as well. Government authorities should permit the resolved Corporate Debtor (Resolution Applicant) to avail of all benefits, concessions, licenses, approvals which it will be entitled to consequent to CIRP. Clause 4 (@Pg 555 of the Application): Concession sought in Clause 4.1 is in line with the 3rd proviso to Section 79 of the Income Tax Act, 1961, which expressly permits this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid 7 (seven) land parcels. The Resolution Professional has received an undertaking from the ex-promoters that necessary documents will be executed. It is requested that these undertakings be recorded in the order of the Hon'ble Tribunal The object of seeking this concession is to maintain the 'going-concern' status of the Corporate Debtor. This relief is claimed in aid of the implementation of the Resolution Plan. The Hon'ble Tribunal is therefore empowered under the proviso to Section 31(1) of the Code to grant this concession. 8.4 / 8.5 / 8.6 / 8.7 The object of seeking this concession is to maintain the going-concern' status of the Corporate Debtor. This relief is claimed in aid of the implementation of the Resolution Plan. The Hon'ble Tribunal is therefore empowered under the proviso to Section 31(1) of the Code to grant this concession. Alternatively, the Hon'ble Tribunal may direct the relevant statutory authority to consider the application of the Successful Resolution Applicant/Corporate Debtor, on its own merits within a reasonable time frame, in line with the objects of the Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to any delisting done pursuant to the terms of a resolution plan approved by the Hon'ble Tribunal. To this extent, the Hon'ble Tribunal is empowered to order the delisting of the shares of the Corporate Debtor, subject to compliance with the provisions of Regulation 3 (3) of the Delisting Regulations. The Resolution Plan contemplates a specific procedure for delisting of the shares under Clause 1.1.1 of Annexure-2 to the Resolution Plan (@ Pg 542 to the Application). Further, in the present case, no exit price is payable to existing public shareholders as the liquidation value due to such shareholders, after paying off dues in order of priority under Section 53 of the Code is NIL. In these circumstances, the Resolution Plan does not contemplate any exit option to existing public shareholders. The Resolution Applicant undertakes to inform the stock exchanges of the delisting of shares within 1 (one) day of the approval of the Resolution Plan by the Hon'ble Tribunal. There is therefore complete compliance with the provisions of Regulation 3(3) of the SEBI Delisting Regulations. Therefore, prayer (d) to the Application ought to be granted. 15. As far as right of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate order as the case may be as per the provisions of relevant statues. We further hold that resolution applicant or the Corporate Debtor has full liberty to approach Competent Authorities for any concession relief or dispensation as the case may be as and effective implementation of the Resolution Plan. 19. Apart from the above observations and directions, it is further directed that : 19.1 The approved 'Resolution Plan' shall become effective from the date of passing of this order. 19.2 The order of moratorium dated 24 June, 2020 passed by this Adjudicating Authority under Section 14 of IBC, 2016 shall cease to have effect from the date of passing of this order. 19.3 The Resolution Professional shall forthwith send a copy of this Order to the participants and the Resolution Applicant. 19.4 The Resolution Plan shall be subject to the various existing laws in force and shall also confirm to such other requirements specified by the Board and other Statutory/ Competent Authorities, as the case may be. 19.5 The Resolution Applicant(s) shall pursuant to the Resolution Plan approved under section 31 (1) of the Code, obtain the necessary approvals required under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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