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TMI Blog2019 (5) TMI 1930X X X X Extracts X X X X X X X X Extracts X X X X ..... basing on the value of security. There are no ground to direct Resolution Applicant again to revive the allotment basing on the percentage of the claim admitted by Resolution Professional of the amounts due to Financial Creditors. Application dismissed. - IA No.121 of 2019, 24 of 2019 IN CP (IB) No. 41/7/HDB/2017 - - - Dated:- 9-5-2019 - Hon'ble Shri Ratakonda Murali, Member (Judicial) Parties/counsels present: For Indian Overseas Bank: Arcot Srinivas, Advocate. For IDBI Bank : Durga Bose Gandham, Advocate. Resolution Professional: Mamta Binani. Resolution Applicant: Khaitan Co. For Canara Bank:T. Nagender, Advocate. ORDER Per: Hon'ble Shri Ratakonda Murali, Member (Judicial) 1. The Present applications are filed by IDBI Bank and India Overseas Bank who are members of the Committee of Creditors ( COC ) under Section 60(5) of Insolvency and Bankruptcy Code, 2016 for seeking following main reliefs: a) Declare that the Resolution Professional was not eligible to place the Resolution Plan before the COC for voting and that COC is not eligible to vote on such plan in the absence of ascertaining compliance with the mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .85% of the COC voting against the same. e) It is averred that that Resolution Applicant by the amendment made to its Earlier Resolution Plan on 10.07.2017, modified the settlement offered to the selected Financial Creditors against their respective admitted claims and pro-rata entitlement. It is further averred that it was done with mala fide intention by the Resolution Applicant to achieve the threshold votes by purchasing votes of select Financial Creditors to turn their dissent into assent and somehow attain the requisite majority for approval of the Resolution Plan. f) It is averred that the Resolution Plan of the Resolution Applicant dated 12.05.2018, clearly shows that the Applicant was offered an upfront cash settlement of ₹ 50 crores, however, the same was thereafter reduced to ₹ 13.4 crores in the subsequent Resolution Plan dated 11.12.2018. g) It is averred that the issue of Resolution Plan being discriminatory interse Financial Creditors and being contrary to the provision of the Code was again raised by the Applicant vide its letter dated 27.11.2018 addressed to the Resolution Professional. The letter was also copied to the other members constituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered non- critical being classified as FC Category-B. It is further averred that the Code does not provide for any classification or priority or differential treatment among secured financial creditors and unsecured financial creditors at the stage of the corporate insolvency resolution process. m) It is averred that Financial Creditors who are FC Category B and have security on admittedly non-critical assets have been provided with settlement over and above that proposed for FC Category A. It is further averred that FC Category B gets to retain the benefits of the assets exclusively secured in their favour in addition to what FC Category A is entitled to - i.e. participation in upfront cash payment to be made to the Financial Creditors in the amount prescribed and the entitlement to receive certain equity as prescribed in the Resolution Plan. n) It is averred that the total amount of claims admitted by the Resolution Professional for all the Financial Creditors is ₹ 8,180.65 Crores. The Applicant has a share of 6.71% of the total admitted claims of all the Financial Creditors. o) It is averred that In the Resolution Plan, the upfront cash arnount offered to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s based on Core Assets and Non- Core Assets of the Corporate Debtor. It is further averred that there are 37 financial creditors which falls under the 'financial creditor category A' and there are 8 financial creditors which falls under the category 'financial creditor - category B'. It is pertinent to mention herein that the applicant dissenting financial creditor viz, IDBI Bank falls under the category A and there is no discrimination made by the resolution applicant in distribution of the funds under the resolution plan among the financial creditors - category A and category B. g) It is averred that the financial creditors under category B suggested that they may be allowed to sell the non-core assets of the corporate debtor themselves and realized their dues from the same. It is further averred that the Applicant is under the impression that is the only charge holder of the trademarks of the Corporate Debtor. sole charge holder of the trademarks of the corporate debtor. But the fact is that a memorandum of understanding was executed by and between 6 financial creditors of the corporate debtor including IDBI Bank agreed to sell the trademark of the Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insolvency Bankruptcy Code,2016. 7. The brief averments made in the Counter filed by the Canara Bank are as follows: a) It is averred that the revised Resolution Plan dated 11.12.2018 is not entirely a different plan but it is a improved version of the earlier plan, emerged after several rounds of discussions/ deliberations held among Committee of Creditors 'COC' where the applicant is also a member. b) It is averred that the Resolution Plan is IBC compliant, the same was discussed in COC, where, the applicant was also a member and the Resolution Plan was passed in the E voting with 81.39% voting rights and the Resolution Professional followed the due process of the CIRP. c) It is averred that the classification of Financial Creditors into category A lenders and category B lenders for segregating the assets which are required for the Corporate Debtor for running the business and which are not required for running the business only in a view to maximize the value to the lenders. d) It is averred that the Resolution Application amount was allotted strictly on the basis of the priority of charge. e) It is averred that the IDBI does not have any security in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The present Resolution Plan is drafted in such a way to get approved by majority lenders and to detriment of minority secured creditors. h) It is averred that as per the Resolution Plan, the upfront cash offered to the Financial Creditors is ₹ 350 Crores, the Indian Overseas Bank (i.e. Applicant) was offered is ₹ 4 Crores and also authorised the Bank to exercise its right over the exclusive securities. The amount that was offered to the Applicant in the upfront cash Resolution amount is lower than the certain financial creditors and some financial creditors have been provided with disproportionate higher amounts against their admitted Pro-rate entitlement. 10. The brief averments made in the Counter filed by the Resolution Applicant are as follows a) It is averred that there is no discrimination made by the Resolution Applicant in distributing the proceeds under the Resolution Plan to the Financial Creditors. b) It is averred that the COC failed to arrive a decision as regards to distribution of the proceeds under the Resolution Plan among the Financial Creditors and it is only there after the Resolution Applicant exercised its own judgement after carryin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the Counsel for Canara Bank, the Counsel for Resolution Applicant and also the Resolution Professional. 14. The Learned Counsel for Applicant / Financial Creditor mainly contended, the Applicant being member of COC raised objection to the Resolution Plan in the 12thCoC meeting held on 14.06.2018, among others inter-alia that amount offered under the Plan to the Applicant against its claim is unacceptable being less than its prorata entitlement and that Applicant should be treated at par with other Financial Creditors and there shall not be any discrimination between the Financial Creditors. 15. The contention of the Learned Counsel for Applicant, the amount proposed in the Resolution Plan by the Resolution Applicant to the Applicant Bank is not according to its entitlement under pro-rata basis. The counsel contended, the Resolution Plan being discriminatory inter-se Financial creditors and it is against to the provisions of the Code. Counsel contended as per Resolution Plan, the upfront cash resolution amount offered to the financial Creditors is ₹ 350 crores and amount offered to the Applicant is ₹ 13,49,75,617/- which comprises merely 4.11% of the total up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistrative functions are over seen by the COC and by the Adjudicating Authority. The Resolution Applicant has to ensure that the plan submitted is complete in all respects before it is placed for consideration by COC. She contended that 12thCoC was held on 14.06.2018. The minutes of meeting are fairly recorded in a correct manner. She has taken every endeavour to record the minutes of the meeting and in 12 thCoC various issues were discussed. She further stated, 13thCoC was held on 22.06.2018. She averred that minutes of the meeting were correctly recorded. Thus, contention of the Resolution Professional that Resolution Plan was considered by COC and it was approved with overwhelming majority of 81.39%. The objection raised by IDBI Bank was recorded and it was also taken note of by the COC. 18. The Resolution Applicant filed reply. The Resolution Applicant would contend that from time to time it had revised its Resolution Plan as per directions of COC. The Resolution Applicant first requested the COC to suggest method010U/ mode of distribution of the Resolution Fund to various Financial Creditors. The Resolution Applicant further contended, in spite of several months of deliber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge over the Trade Marks of the Corporate Debtor and IDBI is not a sole charge holder of the Trade Marks. The MoU is dated 30.05.2014. As per the MOU, these Financial Creditors to sell the Trade Marks of Corporate Debtor and distribute the funds among them. The copy of MOU is shown as Annexure-D to the reply filed by Resolution Applicant. So, IDBI Bank is having 1/6thcharge in the Trade Marks of the Corporate Debtor. 22. The Resolution Applicant contended, Resolution Plan was approved by overwhelming majority of 81.39% of members of COC. Thus, there is no discrimination. 23. The Canara Bank who is shown as Respondent No.3 representing COC filed reply. The case of Canara Bank that there is no discrimination among the Financial Creditors in the matter of allotment of Resolution Fund offered by Resolution Applicant. The account is not a consortium account. It has multiple banking facility. Each individual bank has exclusive Prime Collateral Securities besides holding securities on pari-passu basis. The Resolution fund was allotted to various Financial Creditors on the basis of security interest. The Resolution Applicant made allocation as there was no consensus among the memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Thus, it is also the case of 10B that Resolution Plan is discriminatory in allotting amount from out of the Resolution Fund. 26. The Resolution Applicant also averred same ground as far as this Applicant is concerned as stated in the case of IDBI Bank. The Counsel for Canara Bank contended, the Resolution Plan was approved by members with voting share of 81.39%. The Applicant / 10B is holding security interest i.e hypothecation of trade marks in their favour.No doubt there shall not be any discrimination among the Financial Creditor in the matter of allotment of Resolution Fund. However, if allotment is made basing on the security, then it cannot be said there is discrimination. The Learned Counsel for Canara Bank relied on the following decisions: i) Hon 'ble Apex Court judgement in Civil Appeal No. 10673 of 2018 dated 05.02.2018. ii) Hon'ble NCLAT Judgement in Company Appeal (AT) (Insolvency) No.82 of 2018. iii) Hon'ble NCLAT Judgement in Company Appeal (AT) (Insolvency) No. 316 317 of 2018. iv) Hon'ble Apex Court judgement in AP (Civil) No. 99/2018. 27. The Learned Counsel for Canara Bank relied on the decision of Hon 'ble Apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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