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TMI Blog2024 (9) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor may issue new shares worth INR 10,00,000/- (Indian Rupees Ten Lacs only) (100,000 equity shares @ Rs. 10 each (Rupee Ten each) which will be issued and allotted to Innopark (India) Private Limited and its nominees - Post the infusion of Rs. 10,00,000 (Indian Rupees Ten Lacs only) towards Equity Shares allotment, a direction may be issued that, the Bidder may be permitted to structure the balance amount of INR 1,36,44,000/- (Indian Rupees One Crore Thirty-Six Lacs Forty-Four Thousand only) by way of Optionally Convertible Debentures/Non-Convertibles Debentures/Secured Term Loan or such other instrument as may be decided from time to time, with terms and conditions as mutually agreed between the Bidder and the Corporate Debtor. Financial Creditors - HELD THAT:- All accrued or unpaid interest, including penal interest, claim, fee, commissions, charges etc. in relation to the financial debt of the Corporate Debtor, arising for any period until the Transfer Date shall stand permanently extinguished and the Corporate Debtor or the Bidder shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto - Other than amount received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod prior to the Transfer Date shall cease and the Corporate Debtor and Bidder, shall not be prosecuted or liable for any civil or any other consequence including penalty arising from any such offence. Further no action shall be taken against any property of the Corporate Debtor and/or the Bidder in relation to an offence committed prior to the Transfer Date, upon change in control of the Corporate Debtor in favour of the Bidder. Taxation - HELD THAT:- A direction be issued that the Corporate Debtor and the Bidder shall not be liable for from all Taxes, levies, fees, transfer charges, transfer premiums, surcharges, interests, penal charges and any such other levies, that arise from or relate to the Acquisition, since payment of these amounts may make the Acquisition unviable. Income tax authorities to allow representation of the case/appeal for the different financial years, without any additional burden on the Corporate Debtor and/or Bidder, for the income tax notices/ demands/ penalties/ assessments/ adjustments of the accumulated losses (including but not limited to additions/ adjustments under Transfer Pricing under the Income Tax Act, 1961) up to the Transfer Date, where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and conditions for participating in the E-Auction Process, the Liquidator proposed to sell the Corporate Debtor on a going concern basis as contemplated under Regulation 32(e) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Copy of the E- Auction Sale Notice and corrigendum are annexed as Annexure-2 3. 2.4 It is stated that Innopark (India) Private Limited ( Applicant / Bidder ) had submitted the letter of submission of Expression of Interest ( Applicant's EoI ) on 28.07.2023, pursuant to the Revised Invitation. Along with the Applicant s EoI, the Applicant also annexed several necessary documents including deposit of EMD Amount in the name of M/s.KSK Energy Company Private Limited amounting to INR.12,14,400/- and application money of Rs.1,00,000/-. Copy of the Applicant s EoI is herewith annexed as Annexure - 4. 2.5 It is stated that the Applicant was shortlisted as a qualified bidder by the Liquidator vide an Email dated 31.07.2023. The said Email indicated that the Liquidator was in receipt of the Applicant's EoI and that the documents submitted by the Applicant are prima facie in order and further stated that the Applicant was el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ). The Approval by the Adjudicating Authority shall be deemed to be due compliance of all provisions of Applicable Law in this regard, and there shall be no requirement to add and reduced in the name of the Corporate Debtor. Further, the Capital Reduction, would not involve either a diminution of liability in respect of unpaid share capital, if any, or payment to any existing share holder of any unpaid share capital. ii. A direction may be issued that on the Transfer Date, the Corporate Debtor may issue new shares worth INR 10,00,000/- (Indian Rupees Ten Lacs only) (100,000 equity shares @ Rs. 10 each (Rupee Ten each) which will be issued and allotted to Innopark (India) Private Limited and its nominees: Name of Shareholder Post Takeover Number of shares Innopark (India) Private Limited 99,999 Nominee of Innopark (India) Private Limited 1 Total 100,000 iii. Post the infusion of Rs. 10,00,000 (Indian Rupees Ten Lacs only) towards Equity Shares allotment, a direction may be issued that, the Bidder may be permitted to structure the balance amount of INR 1,36,44,000/- (Indian Rupees One Crore Thirty-Six Lacs Forty-Four Thousand only) by way of Optionally Convertible Debentures/Non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or unknown, disputed or undisputed, present or future, whether or not set out in the audited financial statements, or the list of stakeholders, in relation to any period prior to the Transfer Date, shall, on and from the Transfer Date, stand permanently extinguished by virtue of the order of the Adjudicating Authority and the Corporate Debtor or the Bidder shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. Provided that the liability of any guarantor towards the debt of the Corporate Debtor shall continue and such person shall continue to remain liable for their personal/ corporate guarantees. However, the Corporate Debtor and/or the Bidder shall not be liable against personal guarantees. c. On payment of the Consideration by the Bidder, the Creditors shall have the effect to have released their charges over all the assets of Corporate Debtor, including the charges registered with Registrar of Companies, which have been provided as security against the facilities availed from the financial creditors and no amount of any nature shall be payable either by the Bidder or by the Corporate Debtor having new management / directors. d. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Sales Tax Act, 1956 read with Central Sales Tax Rules, 1957 in relation to any transaction which may have taken place prior to the Transfer Date shall be extinguished in entirely from the Transfer Date. c. That, on and from the Transfer Date, waiver of any past, present or future claims in respect of any liabilities that have accrued prior to the Transfer Date with respect to operational creditors, intercorporate loans, non-convertible debentures or any form of liabilities. 2.12 Legal/ Litigations i. That, on and from the Transfer Date, the liability of the Corporate Debtor for an offence committed prior to the issuance of Sale certificate under the liquidation process shall cease, and the Corporate Debtor shall not be prosecuted for such an offence. Further no action shall be taken against any property of the Corporate Debtor in relation to an offence committed prior to the issuance of Sale certificate under the liquidation process and upon change in control of the Corporate Debtor pursuant to the Acquisition. ii. Litigations/Legal Proceedings: direction(s) may be issued in relation to the following reliefs: a. As mentioned hereinabove, the Bidder hereby reiterate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Return under Section 139 of Income-tax Act, 1961 including any other forms as required to be filed by Corporate Debtor under provisions of Income-tax Act, 1961. Any transaction entered by Corporate Debtor having an impact on taxable income, brought forward losses and/or Tax payable/ Tax refund of such entity for any period prior to Transfer Date and any underreporting or misreporting in relation to the same. b. All Claims (whether contingent or crystallized, known or unknown, filed or not filed) of Governmental Authorities in relation to all Taxes/interest/ penalty which the Corporate Debtor was or may be liable to pay (including with respect to financial years under assessment), all deductions and all withholding Taxes on any payment, as required under Applicable Law and pertaining to the period prior to the Transfer Date shall stand extinguished on the Transfer Date. Furthermore, and without prejudice to the generality of the foregoing, any assessment, re- assessment, revision or other proceedings under the provisions of the applicable Laws relating to Taxes would be deemed to be barred in relation to any period prior to the Transfer Date, by virtue of the order of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor, if any, whether by contract or by Applicable Law, whether created for the benefit of the Corporate Debtor or any third party, shall stand unconditionally and irrevocably settled and released with effect from the Transfer Date and all enforcement of security by any Persons commenced over any of the assets of the Corporate Debtor or over any Securities of the Corporate Debtor shall stand released and reversed, without the requirement of any further deed or action on the part of the Bidder or the Corporate Debtor including any priority of claims that could have otherwise been claimed by the Tax Authorities under Section 281 of the Income Tax Act, 1961. vii. Waiver/Exemption from requirement of No Objection Certificate under Sec 281 of the Income Tax Act, 1961 by the selling shareholders, provision of taking over predecessor's tax liability under Sec 170 of the Income Tax Act, 1961 and specific order for treating such transactions as void under Section 281 of the Income Tax Act, 1961 for any claims in respect of tax or any other sum payable by selling shareholders. viii. Grant relief under Section 28, Section 41, Section 56, Section 115 JB, and Section 170 ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no consents, licenses, approvals, rights, entitlements, benefits and privileges whether under Applicable Law, contracts, leases, granted in favour of Corporate Debtor, shall be terminated on the grounds of initiation of insolvency/liquidation of the Corporate Debtor under the IBC, change of control over the Corporate Debtor pursuant to the acquisition by the Bidder or on account of unpaid dues which have been settled pursuant to this acquisition. ii. A direction be issued that all subsisting consents, licenses, approvals, rights, entitlements, benefits and privileges whether under law, contract, lease or license. granted in favour of the Corporate Debtor or to which the Corporate Debtor is entitled to shall, notwithstanding any provision to the contract in their terms and irrespective of the commencement of the insolvency/liquidation proceedings under the IB Code, in relation to the Corporate Debtor be deemed to continue without disruption, for the benefit of the Corporate Debtor and all additional licenses, registrations and consents required by the Corporate Debtor to be made available immediately from the Transfer Date, to facilitate running of the business as going concern. ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned three parties have submitted the bid application along with the requisite Earnest Money Deposit of Rs.12,14,400/- (Rupees Twelve Lakhs Fourteen Thousand Four Hundred Only). Accordingly, the liquidator had shortlisted the above three applicants as the Eligible/Qualified Bidders for participating in the E- Auction Process. It is stated that the E-Auction was held on 11.08.2023 from 03.00 PM to 05.00 PM and Kalinga Metallics Limited did not participate in the E-Auction. The auction went for six (6) rounds wherein the Applicant M/s. Innopark India Private Limited made the highest bid for an amount of Rs.1,46,44,000/- against the Reserve Price of Rs.1,21,44,000/- (i.e., higher by 20.59% of Reserve Price) to acquire the Corporate Debtor on a going concern basis. Copy of the E-Auction Report is annexed as Annexure-A6. 3.6 It is stated that the applicant being the H1 bidder, the liquidator confirmed the applicant s bid and conveyed the same by way of an e-mail to the applicant on 11.08.2023. It is stated that the Liquidator issued a letter of Intent on 14.08.2023 to M/s. Innopark India Private Limited (Successful Bidder) and intimated that within 90 days from the date of issuance of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concern basis and hence, the Applicant / Successful Bidder ought to have certain consequential reliefs to achieve the object of running the Corporate Debtor as a going concern and in light of the same, does not have any objections to the grant of exemptions/reliefs sought by the Applicant / Successful Bidder in the instant Application. 3.12 It is therefore prayed by the Respondent/Liquidator for the Corporate Debtor that there is no objection to the grant of exemptions/reliefs sought by the Applicant/ Successful Bidder in the instant Application. 4. We have perused the facts pleaded and the reliefs prayed in the petition. In the light of the facts of the case, we are of the view that the following Exemptions, Reliefs and the Directions can be allowed. Accordingly, we pass the following orders:- S. No. Reliefs sought by the Applicant/ Successful Bidder Observations 1. Capital Structure Related/Share Issuance/ ROC Related . i. A direction may be issued that on the Transfer Date, the entire existing Equity Shares and Preference Shares issued by the Corporate Debtor (held by the erstwhile Promoters Group as well as Captive Customers) shall stand cancelled without any further act or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly, held responsible or liable in relation thereto. B. Other than amount received by the Liquidator from the Bidder which is distributable under Section 53 of IBC, all other dues including claims or demands made by or liabilities or obligations owed or payable to (including any demand for any loss or damages, principal, interest, compound interest, penal interest, liquidated damages, notional or crystalized mark to mark losses on derivatives, including claims under existing outstanding Bank Guarantees or Corporate Guarantees (whether claimed or not) or claims under existing outstanding Letter of Credits and other charges already accrued accruing or in connection with any third party claims), any actual or potential financial creditors of the Corporate Debtor or in connection with any debt of the Corporate Debtor (including those arising out of any contractual liability such as corporate guarantee, pledge, shortfall undertaking or similar instruments issued by Corporate Debtor to secure loans taken by its subsidiaries or associate company or any other person, and any transaction in derivatives), whether admitted or not, due or contingent, asserted or un-asserted, crystalized or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor to file the charge satisfaction with ROC. Granted 3 Operational Creditors- i. Effects on operational debt dues or claims of Operational Creditors/Statutory Authorities/ Creditors of the Corporate Debtor-direction(s) may be issued in relation to the following reliefs: A. Upon the distribution of the proceeds in terms of Section 53 of the IBC, the liabilities of the Corporate Debtor towards the dues owed to Operational Creditors/Statutory Dues shall stand settled in full, including any claims whether filed or not, whether admitted or not, whether asserted or not and whether or not set out in the audited balance sheet or the list of stakeholders. B. All demands/interest and penalty charges for the period up-to the Transfer Date including but not limited to dues with respect to the pending income tax, customs, DGFT, GST, Professional Tax, PF, Labour Laws (As applicable), ESI, RBI Guidelines/regulations, Foreign Exchange Management Act, Prevention of Money Laundering Act, etc., shall be extinguished in entirety from the Transfer Date. Further, any pecuniary liability arising out of non-issuance/non-submission of forms inter alia including Form C. F. El, and E2 required to be issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges payable in connection with the Acquisition and the consequent change in ownership and Control of the Corporate Debtor. Further: All the assessments, proceedings, demand notices, penalty proceedings, show- cause notice and appeals, whether completed or uncompleted, initiated or not initiated with respect to Income Tax, Central Sales Tax, GST, VAT, CENVAT, MODVAT, Customs and any other applicable Taxes under any applicable Laws, shall be deemed to have been completed and closed and the Bidder and/or the Corporate Debtor shall not be liable to pay any Taxes or interest or penalty or any prosecution arising out of such assessments or adjust its taxable income or brought forward -tax Act, 1961 pertaining to any period prior to the Transfer Date including but not limited to claim arising out of any notice or order received by Corporate Debtor pertaining to any period prior to Transfer Date having an impact on the taxable income, brought forward losses and/or Tax payable by the Corporate Debtor on account of following reasons or other reason not listed below: Any non-compliance in relation to filing of Income-tax Return under Section 139 of Income-tax Act, 1961 including any other fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction in Corporate Debtor, consolidation of share capital of Corporate Debtor, write off write down of current amounts due to employees, vendors, Operational Creditors, Financial Creditors, value of assets, value of inventories, etc. without any impact on brought forward tax and book loss / depreciation; and waive all respect of Taxes (including interest and penalty) arising in respect of periods up to the Transfer Date. A direction be issued to the effect of waiving any withholding tax, income-tax and MAT liability or consequences (including interest, fine, penalty, etc.) on Corporate Debtor, including without limitation on: Waiver of MAT and income tax implication arising due to write back/write off of liabilities in the books of accounts of Corporate Debtor without any impact on brought forward tax and book loss/depreciation, pursuant to the Acquisition. A direction be issued that all Encumbrances created or suffered to exist over the assets of the Corporate Debtor or over the Securities of the Corporate Debtor, if any, whether by contract or by Applicable Law, whether created for the benefit of the Corporate Debtor or any third party, shall stand unconditionally and irrevocabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase/appeal for the different financial years, without any additional burden on the Corporate Debtor and/or Bidder, for the income tax notices/ demands/ penalties/ assessments/ adjustments of the accumulated losses (including but not limited to additions/ adjustments under Transfer Pricing under the Income Tax Act, 1961) up to the Transfer Date, where the Corporate Debtor failed to represent the case effectively. Such representation/ appeal should not be treated as time barred. B. On and from the Transfer Date, any debit or credit, being the balancing figure, shall be adjusted by the Corporate Debtor in the capital/other reserve at its sole discretion and the same shall be deemed to be in compliance with the applicable accounting standards without any tax implications on the Corporate Debtor upon such adjustment. In so far as the taxation is concerned the Applicant can approach the authorities concerned in this regard. Concerned Authorities shall take decisions as per prevailing law, rules and regulations 6. General Reliefs i. A direction may be issued that on and from the Transfer Date, no consents, licenses, approvals, rights, entitlements, benefits and privileges whether under Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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