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TMI Blog2019 (10) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... s/Courts/Legal Forums/Offices - Govt. or Semi Govt./State or Central Govt. for appropriate relief(s) sought for in Chapter 18 Other Reliefs Sought - of the Resolution Plan execution of proceedings against the Corporate Debtor Company for actions occurring on or before the date of approval of the Resolution Plan by this Adjudicating Authority. The approved Resolution Plan shall come into force with immediate effect - Application allowed. - I.A. Nos. 224, 160, 402 of 2019 I.A. Nos. 224, 160, 402 of 2019 and I.A. No. 340 of 2018 in CP (IB) No. 118 of 2018and I.A. No. 340 of 2018 in CP (IB) No. 118 of 2018 - - - Dated:- 22-10-2019 - Manorama Kumari, Member (J) and Chocklingram Thirunavukkarasu, Member (T) Advocate and Solicitor Mr. Ajun Sheth and ms. Vidhi Thakkar for ARCIL, Advocate Mr. Raju Kothari, Kotak Mahindra, Advocate Mr.Lalit M Patel, Advocate Mr. Jatin Sehgal, PCS Mr. Rajesh Lohia for the RP, Mr. Mangesh Vitthal kekre, RP himself, Mr. Nitin J. Thakkar on behalf of Maruti Koatsu Cylinders Limited, the Corporate Debtor and Mr. Pankaj N Sanghrajka, Director, Safire Technologies Pvt. Ltd., the Resolution Applicant. PCS Mr. Rajesh Lohia for the RP, Mr. Mangesh Vit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the machinery of the Corporate Debtor and mortgage charge on land and building of the guarantors. 2.5 It is stated that in the 14th meeting of CoC, payout to the Applicant Secured Financial Creditor was reduced as if the claim of the Applicant was not ₹ 6.05 crores but only ₹ 0.79 crores whilst stating in the Resolution Plan that the outstanding amount of the loans granted against the assets of the Corporate Debtor was only 0.79 crores, was approved by 90.09% voting. I. A. No. 224 of 2019 2.6 CP(IB)No. 118/2018 was filed by Binil Traders, the Operational (Original Applicant) under section 9 of the Code read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor Maruti Koatsu Cylinders Limited or ) having its registered office at VIP's APTS, IInd Floor, Nr. Atmajyoti Ashram, Vadodara, Gujarat State. 2.7 The said CP(IB) No. 118/2018 was admitted on 26.04.2018 by this Adjudicating Authority and proposed appointment of Shri Mangesh Vitthal Kekre, as Interim Resolution Professional (hereinafter referred to as IRP ). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discuss the two LA. No. 160 of 2019 and LA. No. 462 of 2019. 3.1 As discussed above in Para 2.1, I.A. No. 160 of 2019 was filed by the RP with a prayer to exclude the period consumed i.e. 31.08.2018 to 22.10.2018 while disposing the LA. No. 340 of 2018 from the CIRP process. It is a settled law that if any period is consumed while disposing any application during the period of CIRP, can be exempted in view of the observations made by the NCLT/NCLAT in ArceMittal. Accordingly, the total period of 53 days is exempted from the CIRP period. In view of the aforesaid exemption, the LA. No. 160 of 2019 is disposed of. 3.2 As discussed above in Para 2.3, LA. No. 402 is filed by the Secured Financial Creditor (ARCIL) whose claim is reduced from ₹ 6.05 crores to only ₹ 0.79 crores. 3.3 This Adjudicating Authority would like to refer its order dated 16.08.2019. during the hearing on 16.08.2019, the ld. lawyer appearing on behalf of the ARCIL fairly submitted that though he has filed an IA bearing No. LA. No. 402 of 2019 having certain reservations over the Resolution Plan so filed by the RP and since RP has clarified their position, they have no further reservation, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c)Provides for management of the affairs of the Corporate Debtor? Clause 14 (pg 36) Yes (d) Provides for the implementation and supervision of the Resolution Plan? Pg 45 Yes (e) contravenes any of the provisions of the law for the time being in force? -No 5. Section 30(4) Whether the Resolution Plan a. is feasible and viable, according to the CoC? b. has been approved by the CoC with 66% voting share? Yes Yes, E-Voting Sheet annexed Yes Yes 6. Section 31(1) Whether the Resolution Plan has provisions for its effective implementation plan, according to the CoC? Please refer Pg 45 Yes 7. Regulation 35A Where the Resolution Professional made a determination if the Corporate Debtor has been subject to any transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Regulation 39(2) Whether the RP has filed applications in respect of transactions observed, found or determined by him? No transactions reported Not Applicable 14. Regulation 39(4) Provide details of the Performance Security received as referred to in sub regulations 4(a) to reg 36B The Resolution Applicant has already deposited INR 50 Lacs along with the Resolution Plan. Further a sum of INR 100 lacs is to be deposited within 15 days of CoC's approval for the Resolution Plan. In accordance with the terms specified in the Evaluation Matrix and subsequent undertaking given by the Resolution Applicant, the said amount of INR 150 lacs shall be forfeited in case the applicant fails to comply with the plan after the approval of NCLT [Copy of FDR attached] 6. On perusal of the Resolution Plan, it is found: Compliance of Section 30(2)(b) r.w. Regulation 38(1)(b) of IBBI (Insolvency Resolution Process for Corporate Persons), 2016 As per the assessment of the Resolution Applicant, it is pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIRP Cost As and When payable 40,00,000/- Total: ₹ 14,21,00,000/-(Rs. Fourteen Crores Twenty One Lacs only The Secured Financial Creditors include Axis Bank, IDBI Bank, Bank of Maharashtra and Arcil. The proposed distribution of Resolution Amount is as under: Sr. No. Particulars Bank of Maharashtra Axis Bank IDBI Bank ARCIL Kotak Bank 1. Charge over company assets YES YES YES YES NO 2. Claim admitted 18.36 27.37 32.37 6.05 2.52 3. O/s amount of the loans granted against the assets of CD 18.36 27.37 32.37 0.79 NIL 4. Sharing proposed 18.36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation Memorandum provided by the Resolution Professional as on 25th July, 2018: Operational Creditors Name Claim Received Amount Admitted (Provisionally) Zhangjagang Tube China Co. Ltd. 1,86,73,000 1,86,73,000 Patel Traders 80,000 80,000 A.K. Automatics 8,70,000 8,70,000 Drona Jigar Ent. Pvt. Ltd. 7,59,000 7,59,000 Vishnu Sales Corporation 2,69,000 2,69,000 Halol (GIDC) Industries Asso. 22,03,000 22,03,000 Batra Associates Ltd. 13,11,000 13,11,000 The Commissioner of Customs 19,33,88,031 NIL Total 21,75,53,031 2,41,65,000 According to the provisions of Section 30(2)(b) of the Code, the Operational Creditors are enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18,11,000 18,11,000 Total 18,11,000 18,11,000 According to the provisions of Section 30(2)(b) of the Code, the Employees and Workmen are entitled to such value as they would have received in the event of the liquidation of the Company under Section 53, which amount is to be paid within 30 days from the approval of the Resolution Plan. It is further clarified in the Resolution Plan that all dues and any amount payable under the Companies Act 2013/1956, Income Tax Act, VAT etc. including taxes, duties, additional fees, penalties, interest, fines, cases, unpaid taxes, unpaid Tax Deducted at Source/tax collected at Source, which is not admitted or contingent, whether part of the above claim or not, pertaining to any period prior to the CIRP commencement date whether part of due diligence finding or not or assisted or unassisted, crystallized or un-crystallized, known or unknown, secured or unsecured, disputed, present or future shall stand extinguished by virtue of the order of this Adjudicating Authority. As such, all statutory dues outstanding as on date and that on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor has relinquished security in the manner set out in section 52; iii. Wages and any unpaid dues owned to employees other than workmen for the period of twelve months preceding the liquidation commencement date; iv. Financial debts owed to unsecured creditors; v. The following dues shall rank equally between and among the following: - (i) Any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date; (ii) Debts owed to a secured creditor for any amount unpaid following the enforcement of security interest; vi. Any remaining debts and dues; vii. Preference shareholders, if any; and viii. Equity shareholders or partners, as the case may be (2) Any contractual arrangement between recipients under sub-section (1) with equal ranking, if disrupting the order of priority under that subsection shall be disregarded by the liquidator. (3) The fees payable to the liquidator shall be deducted proportionately from the proceeds p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Arcelor Mittal India Pvt. Ltd. Vs. Satish Kumar Gupta and Ors. wherein the Hon'ble Supreme Court observed that the Corporate Debtor consists of several employees and workmen whose daily bread is dependent on the outcome of the CIRP. If there is resolution applicant who can continue to run the corporate debtor as a going concern, every effort must be made to try and see that this is made possible. In the backdrop of the object of the IBC, it is amply clear that the Resolution is Rule and the Liquidation is an Exception . Liquidation brings the life of a corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only if there is any surplus after satisfying the claims of a prior set of stakeholders fully. The IB Code', therefore, does not allow liquidation of a corporate debtor' directly. It allows liquidation only on failure of corporate insolvency resolution process'. It rather facilitates and encourages resolution in several ways. Keeping in view such object behind the enactment of the Code, intention of the Legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y approval of shareholders is required under the Companies Act, 2013(18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law.] (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). 5[ (4) The committee of creditors may approve a resolution plan by a vote of not less than 6[sixty-six] per cent of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany for actions occurring on or before the date of approval of the Resolution Plan by this Adjudicating Authority. 20. It is further directed that: i. The approved Resolution Plan shall come into force with immediate effect. ii. 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. iii. The Resolution Applicant(s) shall pursuant to the Resolution Plan approved under section 31(1) of the Code, obtain the necessary approvals required under any laws for the time being in force within a period of one year from the date of approval of the Resolution Plan by this Adjudicating Authority under section 31(1) or within such period as provided for in such law, whichever is later or as the case may be. iv. The RP shall forward all records relating to the conduct of the corporate insolvency resolution process and Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. 21. We, the Adjudicating Authority, are of the considered opinion and also being satisfied that the Resolution Pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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