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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 ..... , Advocates ms. Vidhi Thakkar, Ms. Krina R. Parikh arid Anuja Saraiya for ARCIL, PCS Mr. Rajesh Lohia for the RP, Mr. Mangesh Vitthal kekre, RP himself. ORDER Manorama Kumari, Member (J) 1. The instant application (IA) No. 224 of 2019 in IA 160 of 219 in IA 340 of 2018 in CP(IB)No. 1188/2018, is filed by the applicant, the Resolution Professional of Corporate Debtor Maruti Koatsu Cylinders Limited (hereinafter referred as Corporate Debtor), under Section 30 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as IB Code), for submission and approval of the Resolution Plan received from Safire Technologies Private Limited (hereinafter referred as Resolution Applicant) in respect of the Corporate Debtor with the prayer to condone the delay in adoption of the Resolution Plan by the Committee of Creditors (hereinafter referred as CoC) and approval of the Resolution Plan. 2. For the sake of brevity, it is mentioned herein that: I.A. No. 160 of 2019 2.1 I.A. No. 160 of 2019 is filed by the RP with the prayer to allow the exclusion of the period between 31.08.2018 to 22.10.2018 (being the date on which the application filed seeking guidance of this Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inafter referred as CIRP) of 180 days, expired on 22.10.2018 and this Adjudicating Authority vide its order dated 23.10.2018 extended CIRP for a further period of 90 days beyond 180 days. The extended CIRP also expired on 22.01.2019. 2.9 The RP caused publication of Expression of Interest (hereinafter referred as Eol) on 4.11.2018. 2.10 It is stated that RP received a Resolution Plan from M/s. Safire Technologies Pvt. Ltd. BF-4, Mohan Complex, H-Block Market, Ashok Vihar, Phase - I, Delhi 110052 with PAN No. AAJCS3768F (hereinafter referred to as Resolution Applicant) on 14.12.2018 which was negotiated and enhanced upward with modified terms on 10.01.2019 and finally on 01.03.2019 final Resolution Plan with enhanced offer and modified terms along with the addendums of undertaking etc was received. 2.11 It is stated that Resolution Applicant was established in the year 2005 and are dealing in i) Fire Safety & Security Systems which includes Fire Protection, Fire Suppression and Fire Detection and ii) Industrial Cylinders & CNG Cylinders; having a vast experience of 14 years in the field. 2.12 It is stated by the RP that final Resolution Plan was considered by the CoC in its 13th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z. ARCIL, the LA. No. 402 of 2019 stands disposed of. 4. It is stated that RP has examined the Resolution Plan and confirm that it meets the criteria as prescribed under Section 30(2) of the IB Code, annexed with the IA as Annexure-4 and submitted the Compliance Certificate as prescribed in Form H under the Regulations (Copy of Form H annexed with the IA as Annexure-5. It is also stated that an affidavit that Resolution Applicant is eligible u/s 29A of IB Code has also been received. 5. The RP has submitted detailed Table showing the compliances of the Resolution Plan with the mandatory requirements under the Code and CIR Regulations. The Table showing the compliances is given hereunder: No. Section of the Code/Regulation No. Requirement with respect to Resolution Plan Clause of Resolution Plan Compliance (Yes/No) 1. 25(2)(h) Whether the Resolution Applicant meets the criteria approved by CoC having regard to the complexity and scale of operations of business of the CD? Clause No. 7 Resolution Applicant's Profile Yes 2. Section 29A Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, If any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 38(2) Whether the Resolution Plan provides: a. the term of the Plan and its implementation schedule? b. for the management and control of the business of the Corporate Debtor during its 'terms? c. adequate means for supervising its implementation? Plz refer Page 52 Clause 20 Page 52 Clause 21 Page 53 Yes 12. Regulation 38(3) Whether the Resolution Plan demonstrate that - (a) it addresses the cause of default? (b) it is feasible and viable? (c) it has provisions for its effective implementation? (d) it has provisions for approvals required and the timeline for the same? (e) the Resolution Applicant has the capability to implement the Resolution Plan? Clause 16A Pg 41-42 Plz refer Page 44 Plz refer Page 45 Plz refer Page 46 Plz refer Page 46 Yes Yes Yes Yes Yes 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 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leven Crores &Seventy One lacs) IVth CIRP Cost As and When payable 40,00,000/- Total: Rs. 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 27.37 32.37 0.79 NIL 5. Sharing Ratio 0.23 0.35 0.41 0.01 NIL 6. Resolution quote Distribution (Rs. 14.21 crores 3.27 4.97 5.83 0.14 It is stated that Resolution Amount will be parked in Escrow Account and to be utilized only on approval by the Adjudicating Authority. It is stated that entire debt due to the Financial Creditors by the Corporate Debtor shall stand satisfied, settled and extinguished, and no claims whatsoever of any nature, either towards the dues, interest or penalty shall subsist against the Corporate Debtor p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the assessment of the Resolution Applicant, it is presumed that the value of assets in case of liquidation will not be sufficient to cover the amounts owed to even Secured Financial Creditors of the Company in full as such value of assets in case of liquidation of the Operational Creditors would be NIL. The entire debt due to the Operational Creditors by the Corporate Debtor shall stand satisfied, settled and extinguished, and no claims whatsoever, of any nature, either towards the dues, interest or penalty shall subsist against the Corporate Debtor. 11. Employees and Workmen: It is stated that as per the Information Memorandum as on 26.07.2018 provided by the RP, the outstanding debts of the Corporate Debtor towards the Employees and Workmen are as under: Name Claim Received Amount Admitted (Provisional) Employees Provident Fund Organisation 72,64,000 72,64,000 ESIC 1,94,36,000 1,94,36,000 Akhil Gujarat Majdoor Sangh 5,04,32,000 5,04,32,000 Total 7,71,32,000 7,71,32,000 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditors NIL NIL NIL 7. Financial Creditors who related Parties and not part of CoC 38,36,000 NIL 38,36,000 Total: 97,79,00,000 14,89,25,000 82,89,75,000 Includes Rs. 19,33,88,031/- payable to the Commissioner of Customs ## Payment proposed to Employees and Workmen confirmed by the RP vide his affidavit dated 26th September, 2019 14. Section 53(1) provides: Notwithstanding anything to the contrary-contained in any law enacted by the parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority and within such period and in such manner as may be specified, namely: - i. The insolvency resolution process costs and the liquidation costs paid in full; ii. The following debts which shall rank equally between and among the following: - (i) Workmen's dues for the period of twenty-four months preceding the liquidation commencement date; and (ii) Debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52; iii. Wages and any unpaid dues owned to employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip, availability of credit, and balance the interests of all stakeholders including alteration in the priority of the payments of the government dues, to establish an Insolvency and Bankruptcy Fund and matters connected therewith or incidental thereto. Thus, the preamble of the I&B Code aims to promote resolution over liquidation. The purpose of resolution is for maximization of value of assets of the 'Corporate Debtor' and thereby for all creditors. It is not maximization of value for a 'stakeholder' or 'assets of a stakeholder' such as creditors and to promote entrepreneurship, availability of credit and balance the interests. The first objective is 'resolution'. The second objective is 'maximization of the value of assets of the 'Corporate Debtor' and third objective is 'promoting entrepreneurship, availability of credit and balancing the interests'. This objective of the I&B Code is sacrosanct. The said objective of the I&B Code is also affirmed by Hon'ble Supreme Court in Arcelor Mittal India Pvt. Ltd. Vs. Satish Kumar Gupta and Ors. wherein the Hon'ble Supreme Court observed that "the Corporate Debtor consists ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... professional prepared on the basis of the information memorandum. (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan-- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the 2[payment] of other debts of the corporate debtor; (b) provides for the 3[payment] of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under section 53; (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) conforms to such other requirements as may be specified by the Board. 4[Explanation. -- For the purposes of clause (e), if any 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iefs Sought - of the Resolution Plan for immunity from proceedings for actions occurring on or before the date of approval of the Resolution Plan by this Adjudicating Authority cannot be allowed as these are the subject matter of the various Competent Authorities having their own jurisdiction. 19. This Adjudicating Authority would like to make it clear to the public at large that approval of the Resolution Plan by NCLT does not mean automatic waiver or abetment of any legal proceedings which are pending by or against the Company/Corporate Debtor as those are the subject matter of the concerned Competent Authorities having their proper/own jurisdiction to pass any appropriate order as the case may be. The Resolution Applicant on approval of the Plan may approach those Competent Authorities/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. 20. It is further directed that: i. The approve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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