2018 (10) TMI 1624 - Tri - Companies Law

Resolution Professional constituting interim Monitoring Committee - Held that - This counsel has filed a memo appending this e-mail correspondence reflecting 2nd Respondent conceding the lenders of the Corporate Debtor to release the payments towards various requirements of the company as mentioned in the e-mail sent by Mr. Ramalingappa, SBI official on 28th September, 2018. Though 2nd Respondent was required to take initiative to constitute Monitoring Committee in consultation with the COC members, the same not having happened, we are of the view that some immediate Steps have to be taken so as to let this company continue as going concern at least until further steps are being taken by the Resolution Applicant. So far the interest of the Financial Creditors has not been cleared by the Resolution Applicant, we hereby suggest the Resolution Professional to constitute interim Monitoring Committee with the officials Of State Bank of India, Union Bank of India, Punjab National Bank, Allahabad Bank and Andhra Bank, thereafter the Resolution Professional shall discharge the functions of the Corporate Debtor as per the instructions of the Monitoring Committee until further orders.

Summary

Issues:
1. Failure of the successful Resolution Applicant to commence implementation of the terms and conditions of the Resolution Plan.
2. Lack of constitution of the Monitoring Committee by the Resolution Applicant.
3. Concerns regarding the continuation of the Corporate Debtor as a going concern.
4. Role and obligations of the Resolution Professional post approval of the Resolution Plan.
5. Resolution of pending payments and obligations to maintain the business operations of the Corporate Debtor.

Analysis:
1. The Tribunal addressed the issue of the successful Resolution Applicant's failure to implement the approved Resolution Plan, leading to concerns about the Corporate Debtor's operations. The Resolution Professional filed a Miscellaneous Application seeking permission to make necessary payments to keep the Corporate Debtor running and to direct the Respondents to implement the Plan immediately.

2. The Tribunal noted the absence of a Monitoring Committee as required by the Resolution Plan. Despite the Resolution Applicant's obligation to constitute the Committee in consultation with the Committee of Creditors, no steps were taken. This lack of action raised concerns about the future functioning of the Company and necessitated immediate intervention.

3. Considering the importance of maintaining the Corporate Debtor as a going concern, especially with over 1000 employees and various financial obligations, the Tribunal emphasized the need for proactive measures. The Resolution Applicant's inaction regarding the Monitoring Committee posed a threat to the Company's operations, prompting the Tribunal to intervene to safeguard its continuity.

4. Post conclusion of the Corporate Insolvency Resolution Process (CIRP), the Resolution Professional's role becomes limited. With the Resolution Plan approved, the Professional's powers are restricted, highlighting the critical need for the Monitoring Committee's immediate constitution to ensure the Company's smooth functioning.

5. To address the pending financial obligations and ensure the Company's operations continue uninterrupted, the Tribunal directed the Resolution Professional to form an interim Monitoring Committee comprising officials from key financial institutions. This step aimed to bridge the gap caused by the Resolution Applicant's delay in constituting the Committee and to facilitate the Corporate Debtor's ongoing operations.

In conclusion, the Tribunal disposed of the Miscellaneous Application, granting liberty to both the Resolution Professional and the Resolution Applicant to seek further directions as necessary. The judgment underscored the importance of timely action and collaboration among stakeholders to uphold the interests of the Corporate Debtor and all involved parties.