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TMI Blog2019 (9) TMI 1618X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant conveniently ignored the fact that the Code provides for a particular process in which the CIRP has to be conducted and suggesting a new method which is totally against the Provisions of the Code cannot be appreciated. It is irrelevant to discuss whether a creditor will get more or less in liquidation, at the stage of Resolution, since an argument can never be based on a hypothetical situation. Inter se bidding - HELD THAT:- It is to be noted that the Committee of Creditors have to approve a Resolution Plan by a voting of 66% of Financial Creditors after considering its feasibility and viability and such other requirement as may be specified by the Board. The CoC is not empowered to select two or more Resolution Plans and to go for inter se bidding among them. In view of this, there is no question of Inter se bidding before the CoC or before the Adjudicating Authority - as held in the land mark judgment of M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT ]. by the Hon ble Supreme Court, it is of utmost importance that a CIRP process should end in a period of 270 days. The Code envisages that the whole CIRP process have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor, which would in turn balance the interest of all the stakeholders and thus would be an act in consonance with the objectives of the code. Thereafter, it is also apprised by the Applicant that in a total claim of ₹ 1073 Crores of the Corporate Debtor, they are only getting ₹ 111 Crores. The reason as per the Applicant behind this is the utter failure of the valuers to properly value the assets of the Corporate Debtor. 5. Also drawing our attention towards the Operational Creditors, the Applicant has apprised us with the fact that as against the admitted claim of ₹ 99.64 Crores pertaining to the Operational Creditors, both the Resolution plans only offer a meagre amount of ₹ 6 Crores. Therefore, against the total debt due of 1174 Crores (Approx.) the approved Resolution plan only tends to offer a meagre amount of ₹ 121 Crores. It is alleged that the Resolution Plan has been completely ignoring and differentiating between financial and operational creditor. For the same reliance has been placed various landmark judgements such as Binani Industries Ltd (NCLAT), Bharat Defence Infrastructure Ltd (NCLT, Mumbai). 6. Therefore, on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n report dated 02.01.2016 the Balva unit was valued upto ₹ 486.86 Crores, which is more than six time the value being offered as per the Resolution Plan of ARCIL. Similarly, even the Vapi Unit which is being terribly undervalued by the successful Resolution applicant by offering only 60 Crores as against to ₹ 274.72 Crores as per the Valuation report. b) It is also observed that in the duration that the Corporate Debtor was undergoing the CIRP proceedings, it was a going concern. During this time this company was manufacturing varioushealth care products using its formulas. It is clear that the Corporate Debtor has done reasonably good business during the CIRP period. Therefore, it is wrong and unlawful on the part of the earlier CIRP valuations to have given NIL value to these intangible assets, which are actually the soul and skeleton of this company and help in running the business. Apart from that even the valuation of Plant machinery was terribly undervalued in compared to the earlier balance sheets. c) It has been argued by the Successful Resolution Professional that the claims of the employees have been rejected on the ground that no claim was raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating authority, if I don t make an attempt to save the ship before it is sunk, I am not happy and it cannot be felt I have done my duty. In the best possible manner. Furthermore, to add the role of the Resolution professional and his conduct in the present case is one thing that always rise my eyebrows. It is for the CoC and the Resolution Applicants who are justified in arguing their case, but whereas in this present case the Resolution professional had always supported the argument of the assenting CoC and the so-called Successful ResolutionApplicant. Having understood the entire background of the case, I am clear in my mind that unless a fresh valuation is done by an eminent valuer with a reasonable degree of integrity, the actual picture does not emerge and giving a decision on the suspicious circumstances without valid material may not be just and fair. 10. Accordingly, this Misc. Application is hereby allowed wherein we direct appointment of an independent valuer for a fresh valuation of the Corporate Debtor. Name of the Liquidator shall be released in due course after obtaining details from the market. 11. Based on the aforesaid, Misc. Application no. 384 of 2018 beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reconstruction Co. The CoC in the meeting held on 26.12.2018 approved the Resolution Plan submitted by ARCL consortium and the Resolution Plan submitted by Omkara Asset Reconstruction Pvt. Ltd. was not put up for voting for the reasons recorded in the CoC meeting held on 24.12.2018 and continued on 26.12.2018. 4. Subsequent to the approval of Resolution Plan by the CoC, the following are the details of the Applications filed by various parties: Application No. Filed by Relief Sought 384/2019 Corporation Bank To not approve the liquidation plan and to pass a liquidation order against the Corporate Debtor. 1406/2019 Corporation bank Mentioned supra MA 21/2019 Omkara Asset Reconstruction Direction to CoC to reconsider applicant s Resolution Plan and to Stay the Resolution Plan approved by CoC MA 23/2019 Resolution Professional Approval of Resolution Plan MA 758 Successful Resolution Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 Bank of Maharashtra 5.98 5.98 10 Asset Care and Reconstruction Pvt. Ltd. 4.07 4.07 11 Omkara Asset Reconstruction Pvt. Ltd. 3.44 3.44 12 IDBI Bank 3.30 3.30 13 Standard Chartered Bank 3.25 3.25 14 Jammu Kashmir Bank 2.80 2.80 15 HSBC (Hong Kong) 2.48 2.48 16 HSBC (India) 1.53 1.53 17 DBS 1.00 1.00 Total 100 72.25 27.75 7. The main iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acha, Assistant General Manager of the Applicant participated and it was noted in the minutes at Item No. 4 in one of the bullet points as below: Final report from valuers- Received The chairman appraised the Members of the CoC that the final report from Delta Valuers and Appraisers LLP has been received. 12. In the 12thCoCmeeting held on 04.12.2018, wherein one Mr. Surendra Kumar Singh, Chief Manager of the Applicant herein participated and it was noted in the minutes at Item No. 4 in one of the bullet points as below: Valuation Report The chairman appraised the Members of the CoC that final Valuation reports has been received from the valuers. The CoC Members took note of the same and requested the chairman to share the reports with them. To this chairman confirmed that report will be shared after the meeting is over. 13. From the minutes of the above said CoC meetings, it is abundantly clear that the all the CoC members including the Applicant were put on notice about the valuation reports received from the valuers but there was no query or objection from the side of the Applicant about the valuation, until the approval of the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he followings averments were made in the Application which speak about some unfair practice, etc and the same is extracted below: At page 24 of the Petition it is stated as below: A/13 Warning letter dated 12.08.2016 received by the CD. Minor compliances have to be made to cure the defects by infusing the necessary CAPEX amount which is not more than ₹ 20 crores. The CoC members have been totally misguided by the consultants engaged by the RA that huge amount is to be invested for curing the defects shown in the warning letters and the manufacturing will also be stopped, which will directly affect the profit to be achieved by the RA. The Financial Creditors were thus totally misrepresented in this regard due to which they were unable to question the drastic under valuation of the assets of the CD by the CIRP valuers At Page No. 28 of the Petition it is stated as below: The Resolution Applicants and the parties who had participated in the instant CIRP process (inter alia the CIRP valuers and the RP) has acted in a totally unfair manner at every stage with the mischievous intentions. The entire C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving specialised skills and knowledge and this bench cannot analyse valuation to form an opinion upon its correctness, unless contrary is proved based on strong and undisputable evidence. It is apt to quote the judgement of the Hon ble Supreme Court in the case of Hindustan Lever Employees' Union vs Hindustan Lever Limited And Ors [1995 Supp. (1) SCC 499], even though it is a judgement relating to approval of scheme petition under Section 391, Companies Act, 1956(relating to restructuring), the court has said: But what was lost sight of that the jurisdiction of the Court in sanctioning a claim of merger is not to ascertain with mathematical ac- curacy if the determination satisfied the arithmetical test. A company court does not exercise an appellate jurisdiction. It exercises a jurisdiction founded on fairness. It is not required to interfere only because the figure arrived at by the valuer was not as better as it would have been if another method would have been adopted. What is imperative is that such determination should not have been contrary to law and that it was not unfair for the shareholders of the company which was being merged. The Court's obligation is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the object of the code is to provide Resolution to a derailed enterprise, notwithstanding the fact that haircut is heavy but when approved by the CoC in their Commercial wisdom, provided it satisfies Section 30 Code, the Adjudicating Authority is left with the Hobsons choice of approving it. 22. Furthermore, another grievance of the Applicant is that the Operational Creditors and the Financial Creditors were not treated equally in the Resolution Plan approved by the CoC. This is an issue to be considered at the time of approval of resolution plan under Section 31, this will not have any bearing, while deciding whether revaluation is required or not. 23. The Applicant have contended at para 13 of the Application that they are not interested in driving the Corporate Debtor to be sold in slump sale but in the event of auction proceedings under liquidation process, if the Corporate Debtor is sold in slump sale as a going concern, the lenders may get much higher price than the value offered by the valuers. The Applicant conveniently ignored the fact that the Code provides for a particular process in which the CIRP has to be conducted and suggesting a new method which is tota ..... X X X X Extracts X X X X X X X X Extracts X X X X
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