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TMI Blog2021 (6) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... RA and the CoC in the best commercial wisdom of CoC. Therefore, the contention of Applicant on this count, being devoid of merit, is rejected. Seeking approval of Resolution Plan - section 31(1) of IBC - HELD THAT:- The resolution plan filed with the Application meets the requirements of section 30 and 31 of IBC, 2016 and Regulation 37, 38, 38(1A) and 39(4) of the IBBI(CIRP) Regulations, 2016. The provisions of Section 29A of IBC are not attracted as declared by the resolution applicant. The RP has also verified that the Resolution Plan approved by the CoC does not contravene any of the provisions of the law for the time being in force. The RP has filed compliance certificate in Form H as required under regulation 39(4) of the IBBI (CIRP) Regulations, 2016. The Resolution Plan for Copia, Sapphire and Techone is hereby approved and the objection raised by the HDFC Bank against the Resolution Plan stands rejected, shall be binding on the corporate debtor and its employees, members, creditors, guarantors, other stakeholders including statutory authorities and the Resolution Applicant - Application allowed. - CA-914/2019, I.A. No. 5/2020 In IB-401(ND)/2017 - - - Dated:- 8-6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pha: i. The Resolution Plan given by M/s Alpha Corp is too extensive and complex to be analyzed meaningfully from commercial and legal angles in the short span of time granted by the Resolution professional before e-voting. In fact, even when the voting had been progressing for the last 27 hours, when the first round of voting of 24 hours had already been completed at 12 Noon on 11.11.2019, M/s Alpha Corp, the Resolution Applicant itself, was still issuing clarifications which were circulated by the Resolution Professional only at 03.57 PM on 11.11.2019. Therefore, hundreds thousands of allottees/homebuyers who had already cast their votes were not having the benefit of clarifications issued at 03.57 PM on 11.11.2019. Thus, they were forced to take decisions which could not be said to be the best ones as all the relevant material and information was not made available to them at the relevant time. ii. This Hon'ble tribunal had not passed any order treating Earth Towne as distinct and separate from other 4 Projects of the Corporate Debtor. iii. The absence of an exit route/plan for such members renders the proposed Resolution Plan invalid non-compliant with the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the new EIL/Corporate Debtor will not have any say in the operation and management of the projects (Sub-paras 2.1 under Para 2 captioned as the Object and scope of Proposed Scheme for Allottees) x. There are several other catches having the effect of substantially enhancing the cost for the homebuyers, and extending the time for completion of the project without any deterrence or penalty for the RA. xi. Claims pertaining to Aurochem (other than 12 claims submitted by allottees of Aurochem) if become payable, are to be borne by allottees (Clause 3, Pg 38-39) xii. No maintenance charges mentioned in Clause 5.2, Pg. 44 of plan. xiii. Resolution applicant is not obligated to complete the construction in 5 years (Clause 7.1) and no liability in case construction is not done in 5 years (Clause 7.4). xiv. Previous agreements including tripartite agreements shall not be applicable on or the responsibility of the resolution Applicant, (Clause 10.3). xv. All government dues, license fee, EDC/IDC and other dues shall be the liability of allottees (Clause 10.9). xvi. No liability to pay towards the land/plots allotted to Aurochem (Clause 10.17). xvii. The Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IBC and relevant regulations have also been violated. The Applicant reiterated other points that were already discussed in the main application contents, hence, not repeated again. 5. The applicants have also filed the written submissions and argued that the RP has not complied with the regulations 25(4) and 26(4) of CIRP regulations. It further stated that high percentage of favourable votes is immaterial if plan non-compliant with section 30 of the Code. Furthermore, the amendments in the resolution plan took place after 90% of the voting had already took place, which was later made part of the resolution plan submitted for the approval of the Hon ble Adjudicating Authority. Moreover, the RP illegally admitted the Alpha Corp Plan beyond the last date and allowed 5-6 revisions of the plan without CoC Approval or adjudicating authority approval. Furthermore, most of the cash inflows deliberately kept out of the Escrow Account. It is further stated that the ground on which the resolution plan of other RA was rejected is also applicable to the RA, whose resolution plan has been approved by the CoC, hence, adopting a double standard and RP deliberately treated 4 different plans as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that it is too complex, there being no assets left with CD, handing over/transferring assets worth over Rs. 1000 crores to newly formed SPV etc. It is also alleged that the Resolution Plan does not provide for various compliances mandated under Section 30 (2) of the Code read with Regulation 38. In this connection, our attention has been drawn to Explanation to section 5(26) of the Code, which reads as follows: Explanation: For the removal of doubts, it is hereby clarified that a resolution plan may include provisions for the restructuring of the Corporate Debtor, including by way merger, amalgamation and demerger; From the above it is clear that the Resolution Plan can also provide for restructuring of the Corporate Debtor including merger, amalgamation and demerger. In the instant case the Plan provides for merger of subsidiary companies (land owning companies) with the CD and demerger of the individual projects to 100% owned subsidiaries of the Resolution Applicant. It is further demonstrated by the Counsel for RP that the Resolution Plan as approved by CoC takes care of compliance with provisions of Section 30 (2) of the IBC and CIRP Regulation 38 thereunder. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pia Project, Earth Sapphire Project and Earth Techone Project. 13. Mr. Akash Shinghal is the Resolution Professional for Earth Infrastructure Limited, who has submitted the Resolution Plan duly approved by the Committee of Creditors (hereinafter referred as CoC ) which is accompanied by the compliance certificate in the prescribed Form H. 14. It is submitted that Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was admitted by this authority vide its order dated 06.06.2018 pursuant to the application filed by Financial Creditor and Mr. Surinder Kumar Juneja was appointed as the Interim Resolution Professional (IRP) vide same order. Furthermore, the public announcement was made on 12.06.2018 as per section 13 of the IBC, 2016. After the constitution of CoC, in the first meeting of CoC dated 5.12.2018 Mr. Akash Shinghal was appointed as RP and same was confirmed by this authority vide order dated 18.03.2019. It is further stated that the CoC as on 9th November 2019 was consisted of Allottees (4229 in number) represented by Mr. Gulshan Gaba and HDFC Bank. The claim of the respective CoC members admitted by the RP was Rs.1410,38,30,803/- and Rs. 44,88, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors Being Allottees By way of construction and delivering the possession of Units for Allottees. 4. Other Financial Creditors 4,00,000/- 5. Operational Creditors 1,00,000/- 6. Statutory Dues 4,00,000/- 7. Creditors other than Financial Creditors, Operational Creditors and Workman Employees 17. In order to implement the resolution plan with respect to the three projects, the resolution applicant has proposed the following schemes with respect to the projects: Earth Copia Project i. The Resolution Applicant proposes that the Earth Copia Project be transferred to the Project SPV in such a manner such that all necessary assets, rights, approvals, consents, licenses whether of EIL, Aurochem and/or the Earth Copia Project be provided to the Project SPV to enable it to revive and construct the said Earth Copia Project with the intention to safeguard all its stakeholders and most importantly deliver the units to the Allottees and register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in this regard shall only transferred to the resolution applicant and/or project SPV, as the case may be, only to the extent specifically assumed by the resolution applicant in terms of this resolution plan. ii. The Resolution Applicant proposes to demerge the Earth Sapphire Court Project along with its land-owning company namely, Nishtha from EIL. It further proposes to merge Earth Sapphire Court Project along with Nishtha in the relevant Project SPV i.e., Rosebuds Buildtech Private Limited, which shall be the subsidiary/associate company of the Resolution Applicant. Mr. Mukul Kumar and Mr. Kapil Yadav shall be the Key Managerial Persons (KMPs) of the Earth Sapphire Court Project SPV and Mr. Sachin Kumar Gupta shall be the organizational manager and the functional head. Earth TechOne Project i. The Resolution Applicant proposes that the Earth TechOne Project be transferred to the Project SPV in such a manner such that all necessary assets, rights, approval, consent licenses whether of EIL, Neo Multimedia and/or the Earth TechOne Project be provided to the Project SPV to enable it to revive and construct the said Earth TechOne Project with the intention to safeguard a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor and the time line within which said amount shall be paid to the bank. 19. RA/Alpha has filed an affidavit in response to the objection raised by the HDFC Bank and as directed by this Authority vide its order dated 09.02.2021 and submitted that in terms of section 5(28) of the Code, based on the proportion of financial debt owed, the voting share of the HDFC is a meagre 0.03%. It is most humbly submitted that in terms of the percentage share of three projects the share of admitted claim amount of HDFC attributable to the Answering Respondent is Rs. 23,93,830/-, the demand of HDFC is bereft of any logic, legal rationale and flies in the face of not only the bare provisions of the Code but also its letter and spirit. Further, bowing to the said demand of HDFC would essentially be rewarding bad behaviour and would allow a dissenting Financial Creditor to recover the entire admitted claim amount, which in turn would encourage a dissenting financial creditor to reject the Plan, however, meritorious it is. The said practice, if adopted, would incentivize rejection of Resolution Plans and would be absolutely contradictory to the object of the Code - i.e., resolution of corporate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. It is submitted that as per the terms of the request for resolution plan ( RFRP ) the successful Resolution Applicant was to submit an amount of Rs. 6,00,00,000/- as Performance Bank Guarantee amounting as required by regulation 36B (4A) of IBBI (CIRP) Regulations, 2016 and the same was submitted on 14.11.2019, which remains in force until 13.11.2021 issued from Punjab National Bank vide bank guarantee No.- 2164ILG011919. This Tribunal vide order dated 25.05.2021 directed the Resolution Applicant to keep the performance bank guarantee alive and valid for period of 5 years. In compliance of that Resolution Applicant filed an affidavit dated 29th May 2021 and undertakes that before the date of expiration of the PBG, the resolution applicant shall keep the PBG alive and valid for a period of 5 years. 23. It is further averred that in terms of provisions of regulation 39(4) of IBBI (CIRP) Regulation, the RP is required to submit the Resolution plan approved by the CoC along with a compliance certificate in form H of the schedule and the evidence of receipt of performance security required under sub-regulation (4A) of regulation 36B. The same is complied with. 24. Appointment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval date Section 30(2)(e) of the IBC, 2016 The Resolution Plan does not contravene any of the provisions of law for the time being in force as declared in clause 7 of Part IA of the Resolution Plan. Section 30(4) of the IBC, 2016 Resolution Plan is approved by 99.97% voting in favour in 19th CoC meeting 26. Thus, the resolution plan filed with the Application meets the requirements of section 30 and 31 of IBC, 2016 and Regulation 37, 38, 38(1A) and 39(4) of the IBBI(CIRP) Regulations, 2016. The provisions of Section 29A of IBC are not attracted as declared by the resolution applicant. The RP has also verified that the Resolution Plan approved by the CoC does not contravene any of the provisions of the law for the time being in force. The RP has filed compliance certificate in Form H as required under regulation 39(4) of the IBBI (CIRP) Regulations, 2016. 27. The Resolution Applicant has prayed for the reliefs as enumerated under the Resolution Plan approved by the CoC. From the plan approval date, all inquiries, investigation and proceedings, whether civil or criminal, suits, cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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