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TMI Blog2023 (2) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner or the EPFO have not filed any claims before the resolution professional. Further, the resolution applicant in the Resolution Plan (at Page No. 98 of the application submitted for the approval of resolution plan-para D in the table under Clause II of the Resolution Plan), has proposed to make 100% payment towards the outstanding statutory dues, if any, anytime. The MSME UDYAM Certificate obtained subsequent to the initiation of CIRP is required to be ignored and the Successful Resolution Applicants in the case are not eligible under Section 29A r. w. s. 240A of IBC. The Resolution Plan submitted in therefore not tenable in law and is rejected under section 31(2) r.w.s 30(2)(e) of IBC. Application disposed of. - Hon ble Justice (Retd) T. Krishnavalli, Member (Judicial) And Hon ble Shri Manoj Kumar Dubey, Member (Technical) The RP/Applicant in IA No. 192 of 2022 : Shri. Hari Babu Thota. For the R.P. : Shri. Chandramouli Prabhakar. ORDER PER : MANOJ KUMAR DUBEY, MEMBER (T) 1. This application is filed by Mr. Hari Babu Thota (hereinafter referred to as Applicant /Resolution Professional ) under section 30(6) r/w section 31 of IBC, 2016 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Girish Kambadaraya and Nataraja Nanjundaiah as the registered valuer of Securities and Financial Assets for the purpose of determining the Fair Value and Liquidation Value of the assets of the Corporate Debtor. (d) Pursuant to Section 29 of the Code r/w Regulation 36 of the CIRP Regulations, an Information Memorandum ( IM ) was prepared by the RP in such form and manner as specified under the CIRP Regulations for formulating a Resolution Plan and the same has only been shared with the members who have provided a confidentiality undertaking as required under the Code and CIRP Regulations, and with the Prospective Resolution Applicants (PRAs). (e) It is stated that, the RP in consultation with CoC appointed Mazars Business Advisors Private Limited as Forensic Auditor to examine the books of accounts of the Corporate Debtor and upon verification submitted their final report to the RP. (f) In the 3rd meeting held on 04.08.2021, RP requested the members of the CoC to consider and approve re-issuance of invitation for Expression Of Interest (EOI) in Form G, and accordingly, re-issued Form G on 09.08.2021 and published the same in newspapers on 10.08.2021, wherein, the promoters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21.12.2021 and the financial terms were not acceptable to the CoC, members advised the resolution applicants to submit the revised terms, and the revised resolution plan was again submitted on 19.01.2022. (o) The RP determined that there are certain transactions amounting to Rs. 1,70,74,000/-, made by the Corporate Debtor, are preferential in nature as per Section 43 of IBC, 2016.In this regard, the RP filed an IA bearing IA NO. 26 OF 2022 and the same is pending before this Tribunal. (p) In the 6th CoC meeting held on 28.01.2022, the revised resolution plan was presented before the CoC, and after deliberations, the CoC approved the resolution plan with 100% voting share. The full text of the approved resolution plan is submitted by the Resolution Applicant has been annexed to this Application as Annexure 4 . (q) Pursuant to Regulation 39(4) of the CIRP Regulations, the Applicant has filed the Compliance Certificate in Form -H vide diary no 4010 dated 22.09.2022 and the same is placed on record as Annexure -2. (r) It is certified by the RP in Para 4 of Form-H that the said Resolution Plan complies with all provisions of the Insolvency Bankruptcy Code, 2016 (Code), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btor, no payment was made to the financial creditor but repaid the other interim finances availed. 4) Further, Shree Aashraya Souharda Credit Society Limited, Belagavi has agreed to receive the payment of Rs. 8,25,00,000/- as full and final settlement and approved the resolution plan being the member of the Committee of Creditors with majority voting share. 5) We further state that as 100% payout has been proposed in the resolution plan to the stakeholders of the Corporate Debtor; no further payout towards the stakeholders out of the amount realized in the avoidance application shall arise. 6) That in case the above stated application is allowed by this Hon ble Adjudicating Authority after taking into account and considering the merit in our valid and serious objections to the allegations contained therein, we shall undertake to infuse such amount as the Adjudicating Authority may in such order specify and utilized towards the business operations of the Corporate Debtor. 4. Further, during the hearing on 09.12.2022, the Counsel for the RP stated that promoters of the Corporate Debtor will complete the property and two homebuyers, who are the CoC Members of the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n full . Therefore, the Resolution plan as duly approved by the CoC unanimously does not fall foul of the ratio laid down in Rainbow Papers nor Jet Airways. (a) As regards Bank Guarantee, RP stated that he has duly transferred the amount of performance security as prescribed by the CoC to the bank account of the Corporate Debtor opened during the CIRP period and the same is under the sole control of the Resolution Professional. The said amount has been kept as a fixed deposit by the undersigned in order to earn Interest upon the same until the approval of the resolution plan. It is submitted that the resolution applicant has not given a Fixed Deposit but has duly transferred the money into the Corporate Debtor s Account, which has been put in an interest bearing FD by the Resolution Professional. (b) Regarding the regulatory fee, it is submitted that the Resolution plan value is lesser than the liquidation Value, the payment of Regulatory fees as the Regulation 31A does not arise. Moreover, even assuming that the same is held to be payable, the same would be duly paid by the Resolution Applicants as undertaken in Clause 1 (D) of the Resolution Plan. (c) It is sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption has been granted to MSMEs from the restriction imposed under Section 29A (c) (h). ii). In the instant case, it was noticed that the affidavit regarding the eligibility of Resolution Applicant which was to be filed by the Resolution Applicant itself as per Regulation 39(1)(a), was instead given by the Resolution Professional, filed along with the compliance memo for submission of revised Form-H vide diary no. 4010 dated 22.09.2022. This affidavit has been given by the RP on 21.09.2022; in which it has been certified that none of the Resolution Applicants was ineligible under the provision of Section 29A of the IBC, 2016. iii). However, there is requirement under Regulation 39(1)(a)that such an affidavit has to be given by the Resolution Applicant himself. From the Resolution Plan dated 19.01.2022 submitted vide diary no. 143 dated 30.03.2022 also it is noticed that there is no such affidavit of the Resolution Applicant enclosed. There was only one letter of the Resolution Applicant addressed to the RP that the Corporate Debtor was a MSME Company, and being the Promoters of the MSME, the Resolution Applicants were eligible to submit the Resolution Plan as per Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of the members during the various COC meetings conducted. It was concluded that this was impermissible in view of the judgment of Hon ble National Company Law Appellate Tribunal, dated 04.03.2020 in the case of T. Johnson of St. John Freight Systems Limited vs. St. John Freight Systems Limited, the NCLT, Guwahati Bench, in the case of Bank of India vs. Maxim Infrastructure Real Estate Limited and the NCLAT judgment in the case of Harkirat Singh Bedi vs. Oriental Bank of Commerce, dated 12.01.2021. vii). The NCLT New Delhi in this case has relied upon to the judgment of Hon ble NCLAT dated 09.07.2021 passed in CA(AT)(INS)-43-43A of 2021 in the case of Digambar Anandrao Pingle vs. Shrikant Madanlal Zawar Ors .It is held that the MSME certificate obtained during the CIRP period is required to be ignored and the Promoters cannot suppress it from the RP in order to get over the ineligibility under Section 29A of IBC. Reliance was placed on the above NCLAT judgment specifically in the following paragraph: 14. There is yet another factor which is relevant and we find that the Appellant has obtained Annexure-A-3 an MSME Certificate for which application had been made o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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