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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 ..... e, shows the disparity in the distribution. It is directed that 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 Code. By doing so, a going concern can be saved as the plan has been already approved by majority of voting share as such for disagreement in allocation of funds, the plan cannot be disturbed which has already been delayed. Any further delay, due to the dispute in allocation / distribution of the funds between the Financial Creditors will have far reaching consequences on the economy as a whole as well as it will be prejudicial to the interest of public and other stakeholders, workers, employees; whose livelihood is based on the Corporate Debtor. The Adjudicating Authority, is of the considered opinion and also being satisfied that the Resolution Plan as approved by the Committee of Creditors (CoC) meets the requirements as referred to under section 30(2) of the Code. However, one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, four Eols were received namely, (i) Mr. Dilipkumar S Sakhwala, (ii) Parixit Irrigation Limited, (iii) Mono Steel (India) Limited and (iv) Riyan Developers and Technologies Pvt. Limited and thereafter, two Resolution Plan were submitted respectively by- Parixit Irrigation Limited and Mono Steel (India) Limited. 2.6 That time to time, the above stated plans were discussed amongst the CoC. However, only two plans i.e. Parixit Irrigation Limited and Mono Steel (India) Limited came forward with application along with various documents including the affidavit Under Section 29A of IB Code. That the two plans were put for consideration and voting for approval before the CoC in its 16% Meeting held on 03.09.2019. Out of the two plans, the plan submitted by Parixit Irrigation Limited was approved by the CoC with 72.03% of voting. 2.7 The Applicant filed Compliance Certificate in Form H as reflected at page no. 82 as Annexure D of the application. Applicant has also submitted the two Liquidation value from two different valuers as reflected from page no. 83 of the application. Pursuant to the approval of the Resolution Plan by the CoC under Section 30(4) of the IB Code (as amende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gratuity) d. Proposal for Operational Creditors e. Proposal for Statuary Dues f. Proposal for Contingent Liabilities and other dues g. Proposal for Consideration to the Equity Shareholders of Corporate Debtor pursuant to its change of management. 5. As per the Information Memorandum dated 20.04.2019, under List of Financial Creditors total outstanding of Financial Creditors of the Company is Rs. 1030.94 crores as follows: Inward No Name of the Amount Claimed Amount Principal Amount Interest Amount Claim Admitted Voting Share 1 Axis Bank 45.77 39.56 6.21 45.77 4.61% 2 Bank of Baroda 142.78 84.58 58.2 142.78 14.38 % 3 IDBI Bank Limited 314.53 188.21 126.32 314.53 31.67 % 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shortfall. Likewise, in the event available Cash Balance is more than Rs. 800 Lakhs, the same will be continued in Corporate Debtor to meet future needs of it. If cash balance or any other current assets of Corporate Debtor has been utilized for meeting payments detailed in the Table of Application of Funds given in Point 5 of Part J of this plan, the same Shall be adjusted towards that head and only balance amount will be paid. 10.On perusal of the record, it is found that the Resolution Applicant has also filed Form H as Annexure D under regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 at page no. 82 of the application which is self explanatory. 11. During the pendency of the instant application filed under section 31 of the IB Code for sanction of the Resolution Plan of Parixit Irrigation Limited , the Axis Bank 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.07 16.72 12.13 15.09 * 8.60 * Location 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. As per the said Amendment, sub- clause (b) in Clause (2) of Section 30 of the IB Code has been inserted as per which the dissenting Financial Creditor is required to be paid a minimum value which shall not be less than the amount in the event of liquidation of the Corporate Debtor as per Section 53 (1) of the IB Code. Under the said Amendment, the Legislature had also inserted: Explanation-1, which removes the doubt that the distribution of the amount in accordance with the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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. [Explanation. - For the purposes of clause (e), tf 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 the resolution plan, such approval shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. Regulation 38 is reproduced herein under- 38. Mandatory contents of the resolution plan. (1) A resolution plan shall identify specific sources of funds that will be used to pay the - (a) insolvency resolution process costs and provide that the insolvency resolution process costs will be paid in priority to any other creditor; (b) liquidation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.53 0.77 2.72 1.63 2012 1.20 Plant and Machinery 11.93 4.30 14.00 10.50 12.97 7.40 Sub Total 13.46 5.07 16.72 12.13 15.09 * 8.60 * Location 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Liquidation is an Exception . Liquidation brings the life of a corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only, if there is any surplus after satisfying the claims of a prior set of stakeholders fully. The IB Code , therefore, does not allow liquidation of a corporate debtor directly. It allows liquidation only on failure of corporate insolvency resolution process . It rather facilitates and encourages resolution in several ways. The said objective of the Resolution Plan is affirmed in the decision in the matter of K. Sashidhar Vs. Indian Overseas Bank 8 Ors. The Supreme Court has observed that National Company Law Tribunal has no jurisdiction and authority to analyze or evaluate the commercial decision of the Committee of Creditors (CoC) to enquire into the justness of the rejection of the Resolution Plan by the dissenting Financial Creditors. Keeping in view such object behind the enactment of the Code, intention of the Legislature, that the priority is to be given to the resolution than liquidation in the larg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntingent dues, it is only applicable for those whose application is pending/subjudiced or as the case may be. 26.3 With regard to Part G (2) and (3) i.e. Concession from SEBI and stock exchange and RBI , the Resolution Applicant have the liberty to approach the concern statutory/competent authority for any concession, waiver or exemption as the case may be, in view of the Resolution Plan. 26.4 With regard to Part G (4) (5) sub clause (a) (b) i.e. Concession/relief sought from the unsecured Financial Creditor and Operational Creditor including statutory Operational Creditors, this Adjudicating Authority is of the opinion that whoever, whether they are Operational Creditor or Financial Creditor or unsecured Financial Creditor or other stakeholder, have approached and lodged their claim before RP and the same is either admitted/rejected, they do not have the liberty to agitate the claim for reconsideration before the Resolution Applicant as the approval of the plan reaches to its finality. 26.5 With regard to Part G (6) sub-clause (a), (b), (c) (d) i.e. under the head Claims of previous management, Directors, Shareholders, its Associates and Family Members , this Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate effect. ii. The Resolution Plan shall be subject to the various existing laws in force and shall also confirm to such other requirements specified by the Board and _ other Statutory /Competent Authorities as the case may be. iii. The Resolution Applicant(s) shall pursuant to the Resolution Plan approved under section 31(1) of the Code, obtain the necessary approvals required under any laws for the time being in force within a period of one year from the date of approval of the Resolution Plan by the Adjudicating Authority under section 31(1) or within such period as provided for in such law, whichever is later or as the case may be. iv. The Resolution Professional shall forward all records relating to the conduct of the corporate insolvency resolution process and Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. 30. Under such facts and circumstances, we, the Adjudicating Authority, is of the considered opinion and also being satisfied that the Resolution Plan as approved by the Committee of Creditors (CoC) meets the requirements as referred to under section 30(2) of the Code. However, one of the dissenting Financial C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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