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TMI Blog2022 (4) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... eady been transferred to the Corporate Debtor as directed by the Adjudicating Authority on 07th April, 2022. There is no lack of intention on the part of the SRA for implementation of the plan after the Judgment of the NCLAT dated 04.03.2021 including offer to deposit the entire amount in the Escrow Account, the pendency of the Appeal of the Vanguard before the Hon ble Supreme Court and further making the payment of ₹ 12.49 Crores to the CIRP Cost on 18th June, 2021 and making Payment of ₹ 7 Crores for workmen which indicate the willingness of the SRA to implement the plan. The Order of the Adjudicating Authority giving five days time as a last opportunity to transfer the amount in the Corporate Debtor s Account can in no manner be said to be contrary to the orders passed by the NCLAT dated 04.03.2021. The Appellant who is born only on 23rd April, 2021 i.e., after the Order of the Adjudicating Authority want to push the Corporate Debtor to the Liquidation to realize its dues to the maximum, cannot be the reason for allowing the Application filed by the Appellant for liquidation and Adjudicating Authority after taking into consideration entire facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order dated 04.09.2019. The Monitoring Agency constituted to implement the Resolution Plan consist of six Members; One Resolution Professional, Two members of the SRA and three representatives of the CoC i.e., the Appellant, Punjab National Bank and Axis Bank Limited. Challenging the Order dated 04.09.2019 of the Adjudicating Authority approving the Resolution Plan, 8 Appeals were filed before National Company Law Appellate Tribunal, New Delhi (hereinafter referred to as NCLAT ). The SRA had also filed an Appeal challenging the Order of the Adjudicating Authority only to the extent of not allowing terms contemplated in Clause 15.5 of the Resolution Plan. One of the Appeals was filed by Vanguard Credit Holding Pvt. Ltd. who was claiming to be owner of the land on which factory of the Corporate Debtor is situated. The claim of the Vanguard Credit and Holding Pvt. Ltd. was that Resolution Plan in respect of the Corporate Debtor contemplate transfer of land belonging to the Appellant and not of the Corporate Debtor measuring about 52.49 acres situated at Durgapur in the Bardhaman District, West Bengal. The promoter also challenged the approval of the Resolution Plan. All the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out, during the course of hearing on 09th February, 2022 that a sum of approximately 322 crore, which represents the entire resolution amount, has been parked in a separate account and can be transferred to the Corporate Debtor s account without any further delay. Therefore we hereby direct as follows: (a) The full resolution plan amount now parked in a separate account, be transferred to the account of the corporate debtor without further ado, and in any case, no later than five days from the date of this order. (b) The said amount be distributed in accordance with the approved Resolution Plan immediately upon receipt. The entire process be completed within a period of one month from today. (c) The management of the Corporate Debtor be transferred to the Successful Resolution Applicant shortly thereafter. 10.2. With these directions, we hope that the CIRP of the Corporate Debtor, which began with an order of admission dated 08th January, 2018, will now filed closure after four years and a quarter. We are convinced that the above directions will lead to a rapid and efficient resolution of the Corporate Debtor. 10.3. All three applications, viz., IA( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor s Assets. It is submitted that SRA initially expressed its intention to withdraw from the Resolution Plan and even after the dismissal of its Appeal by NCLAT did not take steps to deposit the amount by implementing the Resolution Plan. It is submitted that for 21 months the plan has not been implemented and the SRA has lost its right to implement the plan and the Adjudicating Authority ought to have directed for liquidation. The Adjudicating Authority has wrongly characterized the action of the Appellant as having obstructed the defaulting Resolution Applicant whereas the Appellant was only complying with the directions of this Hon ble Appellate Tribunal by filing the application for liquidation. It is further submitted that parking of amount of ₹ 320 Crores in the Bank Account which is not the Bank Account of the Corporate Debtor is not an implementation of the plan and after the Order of the NCLAT dated 04.03.2021 there was no reason for not implementing the Resolution Plan by SRA and by not taking any steps for implementation of the Resolution Plan, SRA has contravened the Resolution Plan. Learned Sr. Counsel submits that the Appellant is holder of the 88 % of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Financial Creditors, amount be not disbursed till the Vanguard Appeal is decided. Moreover in 08th Meeting of the Monitoring Committee held on 27th May, 2021 SRA offered to deposit the entire amount in the escrow account. It is submitted that the SRA always after the Judgment of the NCLAT dated 04.03.2021 took steps to implement the plan and deposited the entire CIRP costs of ₹ 12.49 Crores on 18th June, 2021, paid the workmen dues up to 07 Crores on 18th June, 2021 and has also paid day to day expenses of the Corporate Debtor for the month of May, 2021. In the Monitoring Committee Meeting dated 07th July, 2021, it is the Appellant who obstructed the implementation of the Plan by taking stand before the Monitoring Committee Meeting that Plan be not implemented till the compensation/interest is paid by the SRA to the Appellant. It is thus Appellant who has obstructed the implementation of the plan which is apparent from the minutes of the Meeting dated 07th July, 2021. It is submitted that Appellant filed an Application on 12th July, 2021 seeking compensation/interest from the SRA and Appellant s case was that it is the NCLT which shall take decision on the claim of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to find out as to whether after the Judgment of the NCLAT dated 04.03.2021 steps have been taken by the SRA for implementation of the Resolution Plan and whether the actions and conduct of the SRA is such that Corporate Debtor ought to be sent to the Liquidation, accepting the prayers made by the Appellant for liquidation. 9. After the Judgment of the NCLAT dated 04.03.2021, Appeals were filed before the Hon ble Supreme Court challenging the Order dated 04.03.2021 also by the SRA which Appeal came to be dismissed on 04th May, 2021. After the dismissal of the Appeal by the Hon ble Supreme Court, Monitoring Committee held 07th 8th Meeting on 20th and 27th May, 2021 respectively and the SRA offered to deposit the entire amount in the Escrow Account subject to condition that amount not to be disbursed to the Financial Creditors till the Vanguard Appeal is pending before the Hon ble Supreme Court. SRA also offered to deposit the CIRP cost and also stated that performance security interest ought not to be disbursed since any order by Hon ble Supreme Court in favour of Vanguard may necessitate to refund the money to the SRA. On 08th June, 2021, the Appellant filed an Application I.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated by SRA: Mr. Pankaj Bagla, representative of the RA, re-iterated that any such pre-condition for payment of compensation/interest is not acceptable to them. The resolution plan, as approved by NCLT also does not provide for any such compensation. He drew reference to Annexure 2 clause 4 step 5 (d) on page 49 of the Resolution Plan, which reads as follows: Notwithstanding anything contained in this Resolution Plan, no payments over and above the payments set out above shall be made by the Resolution Applicant towards any charges, imposts or amount called in whatever name save and except the fees payable to the security trustee. Therefore, it is clear that the approved resolution plan clearly stipulates that there shall be no additional payment. It was also stated by the RA, that the maximum liability of the Resolution Applicant towards all financial creditors of the Corporate Debtor shall not exceed INR 351 crores and the Resolution Applicant shall not be required to make any payment beyond the aforesaid amount to the Financial Creditors. In view of the strong opposition from the RA, and disagreement with the other lenders, Mr. Pankaj Agnihotri (CFMARC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toring Committee could not take decision for implementation of the Resolution Plan on account of pre-condition put by the Appellant himself that unless the Payment of Compensation/Interest is made they shall not participate in discussion regarding the implementation of the Resolution Plan. The Appellant thus did not consent to the implementation of the Resolution Plan, which is apparent from the minutes of the Monitoring Committee minutes as noticed above. From the minutes of Monitoring Committee, it is clear that SRA only objected the claim of the Appellant for payment of Compensation/interest and it clearly mentioned its readiness and willingness to implement the plan. It is also relevant to notice that even before the meeting dated 07 th July, 2021 of the monitoring committee following payments were made by the SRA: i. Workmen dues paid on 18th June, 2021 ₹ 07 Crores. ii. CIRP cost paid on 18th June, 2021 ₹ 12.49 Crores. iii. For the purposes of meeting day to day expenses of Corporate Debtor for the month of May, 2021 paid ₹ 18 Lakhs. iv. For the purposes of meeting day to day expenses of Corporate Debtor for the month of June, 2021 paid & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rohtgi that there is a firm offer of ₹ 525 Crores on 100% cash basis if the Liquidation is initiated and Corporate Debtor s Assets are sold. Learned Sr. Counsel-Mr. Rohtgi during the submissions has referred to the above offer given by Orissa Metaliks Private Limited who was H-2 in the CIRP. Orissa Metaliks Private Limited has also filed a Resolution Plan where H-2 Bidder Orissa Metaliks Private Limited has given total Bid of ₹ 1014.99 Crores with an upfront payment of ₹ 281.90 Crores, CoC accepted the Resolution Plan for H-1 for a total bid of ₹ 670.50 Crores solely on the ground that upfront payment of ₹ 351 Crores which was higher than the upfront payment of Orissa Metaliks Private Limited . Orissa Metaliks Pvt. Ltd. filed Company Appeal (AT) Ins. No. 1159 of 2019 challenging the Order dated 04.09.2019 which Appeal got dismissed by the Order dated 04.03.2021 passed by this Appellate Tribunal. 17. We find substance in the submissions of Dr. Singhvi that with the aid of the Appellant, now Orissa Metaliks Pvt. Ltd. wants to have second inning in the proceeding due to which the Appellant is pressing for the liquidation of the Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts feet, not being a mere recovery legislation for creditors 20. When the Application filed by the Appellant for liquidation is to be considered the law laid down by the Hon ble Supreme Court in the above cases, has to be kept in mind. The Adjudicating Authority while analyzing the conduct of the SRA, in the Order dated 06th April, 2022 gives detailed reasons in Paragraph 9. It is useful to extract paragraph 9.10, 9.11, 9.12, 9.16, 9.17 of the Order/Judgment of the Adjudicating Authority which is to the following effect: 9.10. As judicially noticed by the Hon'ble Supreme Court in Swiss Ribbons (supra) and Babulal Gurjar (supra), the Preamble of the Code lays a lot of emphasis on insolvency resolution within the timelines prescribed. Liquidation should be the last resort, when everything else has been attempted and failed. In the present case, we have a successful resolution applicant who is ready and willing to implement the approved resolution plan as it is. Although there were some delays in the insolvency resolution process of the corporate debtor, attributable to the fact that many appeals came to be filed right upto the Supreme Court, we now have a situation wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney. On an overall conspectus, we would urge, hope and expect that time being wasted in this manner in unnecessary litigation should now stop. Therefore, rather than the mathematically projected liquidation value being more than the value offered by the SRA, it would be better to look at the value addition that a running enterprise would bring over the long term to the economy and various stakeholders. Time and again, we see that liquidation does not necessarily satisfy the projected liquidation value, and the liquidator has had to reduce the reserve bid in order to find buyers. Therefore, at least in the present compendium of facts it is a mirage that is best not pursued. 21. In the above paragraphs, the Adjudicating Authority has given due consideration to the principles of law and the facts in the present case and sequence of the events. The Adjudicating Authority in its Order had noted that amount of ₹ 322 Crore was already parked by the SRA in an Account which was pointed out in the course of hearing on 22nd February, 2022 which amount was directed to be transferred by the Adjudicating Authority not later than 5 days from the date of the Order i.e. five days from 07 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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