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TMI Blog2020 (3) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case is/are herein under: 2.1 CP(IB)No.172 of 2018 was filed by Operational Creditor viz. SKE Projects Pvt. Limited, under section 9 of the IB Code, seeking initiation of Corporate Insolvency Resolution Process (hereinafter referred as "CIRP") against the Corporate Debtor which was admitted on 02.11.2018 by this Adjudicating Authority. The Applicant was appointed as_ Resolution Professional (hereinafter referred as "RP") vide order dated 23.01.2019. 2.2 That the Committee of Creditors (hereinafter referred as "CoC") was formed, which met time to time and latest Information Memorandum was prepared pursuant to and based on the audited financial statements of Corporate Debtor for the Financial Year ending on 31.03.2018. 2.3 That on the expiry of 180 days of CIRP further 90 days beyond 180 days was extended vide order dated 25.04.2019. Thereafter, vide order dated 04.09.2019, the CIRP for further extended till 27.09.2019 2.4 The RP called for Expression of Interest (hereinafter referred as "Eol") vide publication dated 18.02.2019 but no Eol was received by the Applicant. Thereafter, Applicant extended the time for filing the Eol and further, CoC decided to re-issue the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Process for Corporate Persons) Regulations, 2016 as well as Section 30 of the Code, and sought for approval of the Resolution Plan by this Adjudicating Authority. 4. On perusal of the records, it is found that the Resolution Applicant has taken account the interest of all stakeholders of the Corporate Debtor to the extent possible, as envisaged in this Resolution Plan for insolvency resolution of "Jaihind Projects Limited" and to ensure continuity of business along with (i) most effective use of the assets, (ii) maximizing of the value of the assets and (iii) balance the interest of all stakeholders of Jaihind Projects Limited as going concern basis. Business Rationale and Revival Plan envisaged by Resolution Applicant in brief is as follows: Resolution Plan envisaged under this Resolution Plan provides for Financial Restructuring through Compromise or Arrangement with the Financial Creditors and Operational Creditors and change of management of Corporate Debtor. Further it envisaged about proposals with respect to: a. Proposal for insolvency Resolution Process Costs in priority to b. Proposal for Financial Creditors (Secured and Unsecured) c. Proposal for Wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as provided in Information Memorandum dated 20th April 2019 under the head "List Of Operational Creditors", "List Of Other Creditors" And "Particulars Of A Debt Due From Or To The Corporate Debt Or With Respect To Related Parties" (other than government and statutory dues) is tabulated below: No. Particular Total Claim Received (Amount in Rupees) Amount Admitted by RP (amountin Rupees) 1 Operational Creditors 3,07,58,66,617 47,39,65,796 2 Other Creditors 1,69,42,608 NIL 3 Related Party 2,42,48,224 NIL Total 3,11,70,57,449 47,39,65,796 It has been brought to the notice of Resolution Applicant vide e-mail dated 19th July 2019, that few of the Operational Creditors had filed application under the provisions of IBC for admission of their respective claims. In case such claims will be admitted on a later date, the total claim amount and admitted amount will be increased with such amount. The detailed terms and conditions are given under Part C at page no. 36 of the application, which shall form the part of this Order. 8. Further with regard to the sources of funds and applicability of the funds, it is mentioned hereunder: Application of Funds Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank Limited filed its objection/ Intervention, agitating inter alia, that the Resolution Plan of the Resolution Applicant is illegal, contrary to the law, voilative of provision of Code and deserves to be rejected along with the following prayer; a) Direct the members of the CoC and/or Resolution Applicant to distribute the upfront amount payable to the Financial Creditors in such manner that the Objector is paid a sum of Rs. 15.09 crores or at least sum of Rs. 8.60 crores in terms of section 30(2)(b) of the IB Code read with Section 30(4); Or in alternative; b) Reject the present application and not approve the Revised Resolution Plan of the Resolution Applicant. 12. The main contention of the Axis Bank, who is one of the dissenting member of the COC, is that the mechanism of distribution adopted by CoC is substantially lower than the liquidation value, let alone the fair value, while other members of CoC receive much higher value which is reflected by the valuation report given by two valuers namely, GAA Advisory and Mukesh shah The liquidation value and fair value worked out by the said valuers is tabulated in the chart below- GAA Mukesh Shah Average ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall provide the payment of Financial Debts of a dissenting Financial Creditor which should not be less than the amount to be paid in the event of liquidation of Corporate Debtor in accordance with Section 53(1) of the IB Code. 15. It is further stated that the valuation report obtained by the Applicant also works on the same principle of liquidation value and fair value of each asset of the Corporate Debtor. Therefore, the Objector is, at least, entitled to the liquidation value i.e. Rs. 8.60 crores. 16. It is a matter of record that the Resolution Plan is amended from time to time. The initial Resolution Plan was dated 10.06.2019, and thereafter, the Resolution Applicant submitted a Revised plan dated 20.07.2019(hereinafter referred as Revised plan). On perusal of the record, it is found that and as also submitted that the Revised Resolution Plan was further amended twice i.e. on 26.07.2019 and 06.08.2019. During the interregnum, the Amendment brought in by the Legislature, vide Insolvency and Bankruptcy Code (Amendment) Act 2019 (hereinafter referred as "Amendment 2019" or "IB Code") dated 05.08.2019, which has come into effect from the date of ratification i.e. on 16.08.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event ofa liquidation of the corporate debtor. Explanation 1. - For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2. - For the purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect ofa resolution plan,] (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the argument that the plan be approved as early as possible to save the Corporate Debtor as a going concern. Moreover, he is losing interest on the Bank Guarantee which is a huge amount. FINDINGS: 22. Looking to the entire facts of the case, it is found that the COC has approved the plan with 72.03% voting in favour of the approval of the plan. However, the only objection raised by Axis Bank is in view of recent amendment in Section 30(2)(b) that he is entitled for liquidation value at least, if not fair value as stated hereinabove. Under such circumstances, when there is no other objection in respect to the Resolution Plan and only one objection is raised by the dissenting Financial Creditor i.e. Axis Bank Limited, with regard to distribution on pro-rata basis, we are of the opinion and also in view of recent amendment, as well as, on the ground of reasonability and equity, the Axis Bank is entitled for liquidation value i.e. Rs. 8.60 crores, if not fair value i.e. Rs. 15.09 crores, as against pro-rata of Rs. 2.44 crores. Moreso, when the Resolution Applicant fulfils the mandatory contents of the Resolution Plan as provided under Regulation 38 of Insolvency and Bankr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2: Venus Atlantis, Ahmedabad, Gujarat Office Area 30.26 21.18 26.89 18.82 28.57 20.00 Terrace Area 1.82 1.27 1.05 0.74 1.44 1.00 Plant & Machinery 0.01 0.01 - - 0.01 0.01 Sub Total 32.09 22.47 27.94 19.56 30.02 21.01 Location 3: Village Khumbiwali, Taluka- Khalapur, District- Raigarh Land 1.74 1.04 0.65 0.65 1.20 0.85 Location 4: Assam- not visited Plant and Machinery - - - - - - Location 5: Saudi Arabia- not visited Plant and Machinery - - - - - - Non Current Asset Total 47.29 28.58 45.31 28.57 46.30 28.57 Current Assets 4.86 3.43 3.97 2.99 4.42 3.01 Total Non Current Assets + Current Assets 52.00 32.00 49.28 31.16 50.64 31.58 24.Under the fact and circumstances as discussed, herein above in sequence, we hereby direct the other Financial Creditors to contribute the remaining amount either on pro-rata basis and /or in proportion to the extent of their debt and/or as agreed by the other Financial Creditors, to the Axis Bank, so as to get atleast the liquidation value i.e. Rs. 8.06 crores, in view of the recent amendment made in Section 30 of the IB C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in its recent judgment in Civil Appeal No. 10673 of 2018 in K. Sashidhar Vs. Indian Overseas Bank & Ors. comprising of Hon'ble Justice A.M. Khanwilkar and Hon'ble Justice Ajay Rastogi observed that Adjudicating Authority has no jurisdiction to interfere with the commercial wisdom of the CoC. On the backdrop of the decision taken by Hon'ble Supreme Court, it is pertinent to note herein that in the instant case, there is no interference with commercial wisdom of CoC with regard to the implementation of the Resolution Plan. However, the observation so made is in view of the disparity caused in the distribution of the amount on the pro-rata basis as the Axis Bank is getting lesser amount as compare to other Financial Creditors. 26. However, with regards to the Concession and Relief sought for, by the Corporate Debtor, the Adjudicating Authority is of the opinion that: 26.1 With regard to Part G (1) sub-clause (c) as stated under the head "From the Government of Gujarat", this Adjudicating Authority is of the opinion to allow such relief. 26.2 With regard to Part G (1) sub-clause- (a),(b),(d),(e) & (g), Resolution Applicant may approach/ have all liberty to approach th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther competent authority/ Board/ Tribunal for any concession and waiver. 26.7 With regard to Part H i.e. Extinguishment of Claim / Rights, this Adjudicating Authority is of the opinion that the claim which are not already dealt by RP or COC during the CIRP period or filed within the statutory period cannot be reagitated before the Resolution Applicant after the approval of the Plan. With regard to concession from any competent authority of Government/ Semi Government/ Central or Local Authority, Resolution Applicant shall approach them. 27. it is needless to mention herein that approval of the Resolution Plan does not mean automatic waiver or abetment of legal proceedings, if any, 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(s) 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 "Part G" of the Resolution Plan. 28. Thus, not allowing the above said Part G i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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