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TMI Blog2023 (12) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... tors and other stakeholders. The Resolution Plan approved by CoC and being approved by this Adjudicating Authority shall be binding on the Corporate Debtor and other persons, authorities etc. as specified in section 31 of the Code. Application disposed off. - Shri Rohit Kapoor, Member (Judicial) And Shri Balraj Joshi, Member (Technical) ORDER PER CORAM 1. This Court convened through hybrid mode. Preliminary 2. I.A. (IB) No. 1391/KB/2023 is an application under section 30(6) of the Insolvency and Bankruptcy Code, 2016, after approval of the resolution plan by the Committee of Creditors ( CoC ). 3. This application was filed by Mr. Ravi Sethia, Resolution Professional of McNally Bharat Engineering Company Limited [CIN: L45202WB1961PLC025181] by invoking the provisions of section 30(6) of the Insolvency and Bankruptcy Code, 2016 ( the Code or IBC ) read with regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ( CIRP Regulations ) for approval of a Resolution Plan in respect of McNally Bharat Engineering Company Limited ( Corporate Debtor ). 4. The underlying Company Petition in C.P. (IB) No. 891/KB/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date of the CoC Meeting 12th CoC meeting 07.01.2023 13th CoC meeting 13.01.2023 14th CoC meeting 21.01.2023 15th CoC meeting 21.02.2023 16th CoC meeting 01.03.2023 17th CoC meeting 06.03.2023 18th CoC meeting 17.03.2023 19th CoC meeting 21.03.2023 20th CoC meeting 28.03.2023 and 29.03.2023 21st CoC meeting 05.04.2023 22nd CoC meeting 10.04.2023 23rd CoC meeting 24.04.2023 24th CoC meeting 16.05.2023 25th CoC meeting 20.05.2023 26th CoC meeting 22.05.2023 27th CoC meeting 01.06.2023 28th CoC meeting 05.06.2023 29th CoC meeting 12.06.2023 and 13.06.2023 30th CoC meeting 30.06.2023 31st CoC meeting 13.07.2023 32nd CoC meeting 27.07.2023 33rd CoC meeting 24.08.2023 34th CoC meeting 22.09.2023 Collation of claims 10. The amounts claimed and admitted are summarised below: Amount in INR/Cr. Nature of Creditor Amount Claimed Amount Admitted Secured Financial Creditors 3,559.17 3,514.65 Unsecured Financial Creditors 2,304.11 1,282.58 Operational Creditors Statutory Authorities 175.31 34.53 Operational Creditors Employees and Workmen 0.37 0.03 Other Operational Creditors 315.63 182.47 Other Creditors 473.68 1.01 Total 6,828.27 5,015.28 CIRP and compliances 11. The Applicant submits that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The order of the Hon ble NCLAT was challenged before the Hon ble Supreme Court by one of the prospective Resolution Applicants which was dismissed. Thereafter, Rashmi Metaliks Limited filed its Resolution Plan with the Resolution Professional. 18. The CoC decided to conduct the challenge process on 27 December 2022 in the 11th CoC meeting which was held on 20 December 2022. The Challenge Process took place on 21 January 2023 and the four Prospective Resolution Applicants viz. Amit Metaliks Limited, Nalwa Steel and Power Limited, BTL EPC Limited and Rashmi Metaliks Limited participated in the said Challenge Process. The Challenge Process was of seven rounds and in the end of the 7th round, BTL EPC Limited was declared as the H1 Resolution Applicant with a plan value of Rs.353.98Crore. 19. In the 17th CoC meeting, the COC resolved with 85.56% voting shares, to conduct a fresh Challenge Process in view of the maximization of the Resolution Plan for the Corporate Debtor. In the 18th CoC meeting held on 17 March 2023, the CoC agreed to conduct the second Challenge Process on 21 March 2023. 20. Amit Metaliks Limited vide email stated that it does not wish to participate in the second Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 29. The Applicant has submitted details of various compliances as envisaged within the Code and the CIRP Regulations which a Resolution Plan should adhere to, which is reproduced hereunder: I. Submission of Resolution Plan in terms of sub-section (2) of section 30 of the Code: Clause of s. 30(2) Requirement How dealt with in the Plan 1. Plan must provide for payment of CIRP cost in priority to payment of other debts of CD in the manner specified by the Board. Clause 5.5.1 at Page 29 of the Resolution Plan. 2. (i) Plan must provide for payment of debts of OCs in such manner as may be specified by the Board which shall not be less than the amount payable to them in the event of liquidation u/s 53; Clause 5.5.3., Clause 5.5.4. at Pages 37-39 of the Resolution Plan amended by the Addendum dated 16.05.2023 at Sl No. 8 at Pages 4-5. (ii) Plan must provide for payment of debts of OCs in such manner as may be specified by the Board which shall not be not less than amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any debt due from the corporate debtor; Not proposed in the Resolution Plan. (f) reduction in the amount payable to the creditors; Not proposed in the Resolution Plan. (g) extension of a maturity date or a change in interest rate or other terms of a debt due from the corporate debtor; Not proposed in the Resolution Plan. (h) amendment of the constitutional documents of the corporate debtor; Clause 5.16 at Page 46, Clause 8.2 at Page 51 of the Resolution Plan, amended by Addendum at Sl. No. 12 at Page 6. (i) issuance of securities of the corporate debtor, for cash, property, securities, or in exchange for claims or interests, or other appropriate purpose; Clause 5.16 at Page 46 of the Resolution Plan amended by Addendum at Sl. No. 12 at Page 6. (j) change in portfolio of goods or services produced or rendered by the corporate debtor; Not proposed in the Resolution Plan. (k) change in technology used by the corporate debtor; and Not proposed in the Resolution Plan. (l) obtaining necessary approvals from the Central and State Governments and other authorities. Clause 13.5 at Page 62, Schedule 5, Clause 1.6 at Page 80 of the Resolution Plan. (m) sale of one or more assets of corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Plan. (b) it is feasible and viable; Clause 4.4.2 at Page 27 of the Resolution Plan. (c) it has provisions for its effective implementation; Clause 4.4.3 at Page 27, Schedule 2 at Page 68-69 of the Resolution Plan. (d) it has provisions for approvals required and the timeline for the same; and Clause 13.5 at Page 62, Schedule 5, Clause 1.6 at Page 80 of the Resolution Plan. (e) the Resolution Applicant has the capability to implement the resolution plan. Clause 2 at Pages 10-17 and Clause 4.4.4 at Page 27 of the Resolution Plan. 30. The Resolution Applicant has submitted affidavit of eligibility under section 29A of the Code. Details of Resolution Plan/Payment Schedule 31. The relevant information with regard to the amount admitted and the amount proposed to be paid by the Successful Resolution Applicant, i.e., BTL EPC Limited, under the said Revised Resolution Plan is tabulated hereunder: Creditors Amount Admitted (Rs. in Crore) Amount Propose d (Rs. in Crore) % of claim admitted Payment Schedule CIRP Cost 0 To be paid out of the cash available with the Corporate Debtor --- Within 60 days of NCLT approval Secured Financial Creditors 3514.65 428.73 12.05% 61.18 crores within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to a period prior to the Appointed Date. 3. The Monitoring Committee shall allow possession of the premises / offices of the Corporate Debtor, all passwords, bank account details, cheque books, statutory registers, minutes books, financial and tax records, all communication with vendors, customers, government and regulatory authorities and all other documents pertaining to the Corporate Debtor and its business, information technology systems (including all software and hardware), access to ERP system, etc to the Resolution Applicant within 7 (seven) days of the Effective Date. 4. All the attachments and execution process levied against the Assets of the Corporate Debtor, shall be lifted and released. 5. Any and all unauthorised possession/encroachments on the movable/ immovable Assets of the Corporate Debtor, irrespective of period and irrespective of any claim on adverse possession basis, to be declared vacated immediately and the Corporate Debtor's ownership and possession to be admitted and established. The Corporate Debtor should have right to recover and take possession of all such Assets and/or land not under its possession, for which, whether or not any agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Department, Excise Department, Service Tax Department, Pollution Board, etc.), etc., under Applicable Law or otherwise for any reason whatsoever, where the relevant arrangement is being discontinued or terminated. Effect on past liabilities 12. Upon approval of this Resolution Plan by the Adjudicating Authority, all liabilities (including without limitation, for any penalty, interest, fines or fees) (admitted/ verified/ filed or not) or obligations of the Corporate Debtor, in relation to: (A) any investigation, inquiry or show cause, whether civil or criminal; (B) any non-compliance of provisions of any laws, rules, regulations, directions, notifications, circulars, guidelines, policies, licenses, approvals, consents or permissions; (C change of control, transfer charges, unearned increase, compensation or any other such liability whatsoever under any contract, agreement, lease, license, approval, consent, privilege or permission to which the Corporate Debtor or its subsidiaries, joint ventures or associates are entitled; (D) any leasehold rights or freehold rights to movable or immovable properties in the possession of the Corporate Debtor; (E) any contracts, agreements or com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld co-operate with the Corporate Debtor to renew / obtain such permits / approvals; (iv) permit the Resolution Applicant to continue to operate the business of the Corporate Debtor pending such permits / approvals at least till a period of 12 (twelve) months from the Effective Date; and (v) to not charge any charges, penalty, interest, etc., till the time such permits / approvals are received. Contracts and Agreements 15. In the interest of keeping the Corporate Debtor as a 'going concern', unless otherwise specified in the Resolution Plan, all contracts and agreements shall continue to remain valid and notwithstanding any lapse, non-compliance, breach or expiry of underlying terms of such contracts and agreements or requirement of prior approval upon change of control; these contracts and agreements shall be deemed to continue without disruption and without any further acts, deeds, cost, penalty, etc., for the benefit of the Corporate Debtor for their original tenure including subsequent tenures wherever the Corporate Debtor is entitled for renewals. 16. Any change in the management of the Corporate Debtor shall not affect the validity and enforceability of any agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Date but pertaining to a period prior to the Effective Date, shall be deemed to have been withdrawn and/or dismissed and/or abated and will he deemed to have been barred. 23. Upon approval of this Resolution Plan by the Adjudicating Authority, all inquiries, investigations and proceedings, whether civil or criminal, notices, causes of action, suits, claims, disputes, litigation, arbitration or other judicial, regulatory or administrative proceedings against, or in relation to, or in connection with the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future, (including without limitation, any investigation, action, proceeding, prosecution, whether civil or criminal, by the Central Bureau of Investigation, the Enforcement Directorate or any other regulatory or enforcement agency), in relation to any period prior to the Effective Date or arising on account of the acquisition of control by the Resolution Applicant over the Corporate Debtor pursuant to this Resolution Plan shall stand withdrawn or dismissed and all liabilities or obligations in relation thereto, whether or not set out in the balance sheets of the Corporate Debtor or the prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor should not be considered when the Corporate Debtor applies for credit rating with any agency/ bank/ financial institutions. Compliances under 2013 Act 27. The Corporate Debtor, pursuant to the provisions of this Resolution Plan and the authority contained therein, shall cause its Board to take steps for implementation of the provisions of the Resolution Plan, which inter alia includes - (i) execution of appropriate loan agreement, modifications of previous documents for creating security and filing of appropriate forms under Company Law or other laws, with, amongst others, the Registrar of Companies and MCA or other statutory authorities; (il) issuance of shares and instruments as provided in the Resolution Plan; and (iii) other compliances as per the governing law. The Corporate Debtor shall file the order of the Adjudicating Authority approving this Resolution Plan with the Registrar of Companies and MCA or any other regulatory authority, instead of resolution of Board or the shareholders of the Corporate Debtor that were otherwise required for actions that are affected through an order of the Adjudicating Authority approving this Resolution Plan, and that shall be suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor and/or its successors on account of settlement of Financial Creditors and Operational Creditors pursuant to implementation of this Plan. 34. Necessary directions, instructions be issued to the CBDT, Customs, Value Added Tax authorities, Central Sale Tax authorities, GST authorities, entry tax and other Tax authorities whether central or state to exempt income/gain/profits, if any, arising as a result of giving effect to the Resolution Applicant under the provisions of Income Tax Act, 1961, value added tax, customs, octroi, excise duty, service tax, goods, and service tax, including but not limited to any income tax and MAT Liability arising on capital reduction in the Corporate Debtor, waiver/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 un brought forward tax and book loss / depreciation and waive all Liabilities whether crystallised or not in respect of Taxes (including interest and penalty) arising in respect of periods up to the Appointed Date and arising out of implementation or sanction of the Resolution Plan 35. It is further clarified that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), appointment of Board of Directors including Key Managerial Personnel and any other action taken to implement the Resolution Plan and that the fees payable to the RoC in respect of amendment of the memorandum of association and articles of association of the Corporate Debtor be waived and the RoC be directed to approve the relevant forms under the 2013 Act and rules thereto without payment of fees in respect thereof. Similarly, the stamp duty arising on issuance of shares by the Corporate Debtor be waived. 39. It is envisaged that, dispensation/ waiver be given by the State Governments, Central Governments or any other authorities, from payment of any stamp duty on transfer of land, salami on transfer, transfer fees on account of change in shareholdings pursuant to this plan, Khazana, land taxes, conversion of land including interest, penalty or other charges/fees relating to the transfer/takeover of Assets or state levies which may arise in the event of change in management of the Corporate Debtor pursuant to the acceptance of this Resolution Plan. Further direction be issued to the state authorities for suitably amending all the licenses and rights pursuant to the change of man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty, late fees, damages on account of failure of the Corporate Debtor to comply with the terms and conditions for grant of such incentive/subsidy/benefit or due to change in management arising due to implementation of the Resolution Plan and no litigation/proceedings shall be instituted against the Corporate Debtor or Resolution Applicant on this account and any pending litigation/proceedings shall stand quashed/withdrawn without any Liability on the Corporate Debtor/Resolution Applicant and the relevant authority including any district industrial center / State Government / Central Government or any implementing authority appointed under any law for the time being in force shall act in accordance with the aforesaid directions. Waiver of Valuation of Pricing of Shares by Registered Valuer 44. Approval of Resolution Plan by the Adjudicating Authority will treated as waiver of the requirements of the valuation of pricing of shares by Registered Valuer under any Act, Law, Statute, Rules, Regulations etc applicable or in vogue for computation to issue equity shares or equivalent instruments through Preferential Allotment as well as Debt Instruments to RA, Investors, KMP, Employees etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, orders, show causes, notices, suits, litigation etc. (including those arising out of any orders passed by the Adjudicating Authority pursuant to Sections 43, 45, 49, 50, 66, 68, 70, 71, 72, 73, 74 of the Code) or any acts or omissions in breach of Applicable Law which occurred prior to the Effective Date or (ii) that may arise out of any proceedings, inquiries, investigations, orders, show cause, notices, suits, litigation etc. (including any orders that may be passed by the NCLT pursuant to Sections 43, 45, 49, 50, 66, 68, 70, 71, 72, 73, 74 of the Code), shall arise in respect of the Corporate Debtor or the Resolution Applicant or the Resolution Professional and his representatives who shall at no point of time, directly or indirectly, have any obligation, liability or duly in relation thereto. If any criminal proceedings initiated against the officers of the Corporate Debtor prior to the Effective Date cannot be disposed of by the Adjudicating Authority under Applicable Law, the same shall continue against such officers. However, any liability accruing to the Corporate Debtor or the Resolution Applicant as a result of or in relation to any criminal proceedings against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the information memorandum so that the resolution applicant is aware, as to what are the liabilities, that he may have to face and provide for a plan, which apart from satisfying a part of such liabilities would also ensure, that the Corporate Debtor is revived and made a running establishment. The legislative intent of making the resolution plan binding on all the stake-holders after it gets the seal of approval from the Adjudicating Authority upon its satisfaction, that the resolution plan approved by CoC meets the requirement as referred to in sub-section (2) of Section 30 is, that after the approval of the resolution plan, no surprise claims should be flung on the successful resolution applicant. The dominant purpose is, that he should start with fresh slate on the basis of the resolution plan approved. 62. This aspect has been aptly explained by this Court in the case of Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra). 107. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot per se operate as a discharge of the guarantor's liability shall apply. 37. In view of the above position of law, the Resolution Plan approved by CoC and being approved by this Adjudicating Authority shall be binding on the Corporate Debtor and other persons, authorities etc. as specified in section 31 of the Code. 38. With respect to the reliefs and waivers sought for all inquiries, litigations, investigations and proceedings shall be granted strictly as per the section 32A of the Code. 39. The Resolution Plan has to be consistent with extant law. The Resolution Applicant shall make necessary applications to the concerned regulatory or statutory authorities for renewal of business permits and supply of essential services, if required, and all necessary forms along with filing fees etc. and such authority shall also consider the same keeping in mind the objectives of the Code, which is essentially the resolving of the insolvency of the Corporate Debtor and enabling the Corporate debtor to stand on its feet again. 40. In case of non-compliance of this order or withdrawal of Resolution Plan, the payments already made by the Resolution Applicant shall be liable for forfeiture. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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