TMI Blog2019 (4) TMI 1869X X X X Extracts X X X X X X X X Extracts X X X X ..... f2019 IN CP1095/I&BP/NCLT/MAH/2017 - - - Dated:- 18-4-2019 - Hon'ble Mr V.P. Singh, Member (Judicial) Hon'ble Mr Ravikumar Duraisamy, Member (Technical) For the Applicant: Mr Dushyant Dave, Naina Agrawal, Pankaj Vijay and Rohini Menon, Prateek Seksaria, Adv. Ameya Gokhale, Radhika Indapurkar for Chhattisgarh Distilleries Ltd. For the Respondent: Adv. Jatin Kumar, S.N Fauladi and Adv. S.D. Khati for Suspended Directors ORDER V.P. Singh, Member (Judicial) 1. The present application being M.A. 1363/2018 is filed by the Resolution Professional (RP) under section 30(6) read with section 31(1) of Insolvency and Bankruptcy Code, 2016 (I BCode) for seeking approval of this Tribunal to the Resolution Plan dated 02.11.2018 submitted by Dera Finvest Private Limited, Resolution Applicant (RA). 2. The C.P. (IB) 1095/2017 was filed by Punjab National Bank under section 7 of IBC for initiation of Corporate Insolvency Resolution Process (CIRP) against Anand Distilleries Pvt. Ltd., Corporate Debtor. The Petition was admitted by this Tribunal vide order dated 14.02.2018. The Committee of Creditors (CoC) confirmed the appointment of the Interim Resolution Prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution plans of only two resolution applicant were considered henceforth. In the tenth CoC meeting, the Dera Finvest Pvt Ltd improved its resolution plan by a further amount; however, Mr Rajendra Jaiswal refused to improve his bid. 8. The final resolution plan submitted by the resolution applicant Dera Finvest Pvt Ltd was put to the vote for approval after the tenth CoC meeting held on 31.10.2018. The final resolution plan as submitted by the resolution applicant was approved by 98.72% of the CoC in the e-voting conducted on 01.11.2018-02.11.2018. As per the result of the e-voting held on 01.11.2018-02.11.2018, the resolution plan of Dera Finvest Pvt Ltd was approved with the requisite majority in favour. 9. Eventually the RP, on 05.11.2018, filed M.A. No. 1363/2018 under section 30(6) of I BCode placing the resolution plan as approved by the committee of creditors before the Adjudicating Authority. 10. It is pertinent to note the following submission of RP as salient features of the resolution plan: Sr. No Particulars Amount Due Payment Proposed Waiver 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from the sources mentioned hereinabove for repairs, modification, modernisation, and expansion to make the unit of the Corporate Debtor more profitable. c) The Resolution Applicant also reserves the right to change the composition of contribution towards Resolution Plan consideration to be brought in. 12. The resolution plan provides for the payment as per the terms below: Instalment Payment Period Amount (In ₹Cr) 1st Lumpsum Immediately on Receipt of Letter of Intent. 3.00/- 2nd 40% of total minus the lumpsum payment as above Within seven days from the communication of the effective date 6.40 (less EMD already Paid) 3rd Balance 60% Before 31st March 2019 ( However, it should not be less than four months from the communication of the effective date 14.11 Total 23.51 13. It is stated that the Resolution Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor is ₹22.78 crores. According to the Resolution Applicant, the liquidation value of the Corporate Debtor would not be sufficient to cover the amounts owed to even Secured Creditors of the Corporate Debtor in full which is around ₹92.90 crores and thus, the liquidation value to the Operational Creditors would be NIL. However, the Resolution Applicant has proposed to make payment of a sum of ₹9,17,089/- to the Operational Creditors. The Resolution Plan is thus compliant with the provisions of Section 30(2)(b) of the Code. c) Resolution Plan provides for the management of the affairs of the Corporate Debtor after approval of the Resolution Plan. It is noted that management of the affairs of the Corporate Debtor shall be with the Resolution Applicant after approval of the Resolution Plan. The Resolution Plan is thus compliant with the provision of Section 30(2)(c). d) Resolution Plan provides for implementation and supervision of the Resolution Plan and also provides Implementation Schedule of the Resolution Plan. The Resolution Plan is thus compliant with the provisions of Section 30(2)(d). The resolution plan provides that the directors, asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unable to satisfactorily perform the responsibilities or breaches terms of its appointment. 22. The authorised, issued and paid-up share capital of the Corporate Debtor comprises of 3,50,000 equity shares of ₹100/- each amounting to ₹3,50,00,000/-. The amount payable to any shareholder of the Corporate Debtor is nil. The resolution plan proposes to transfer the said shares from the erstwhile shareholders of the Corporate Debtor to his family members, relatives and friends at a consideration of ₹0.10 paise per share. The authorised and paid-up share capital of the corporate Debtor would remain intact. It is also stated that the shares of the Corporate Debtor if at all, they are pledged with any lenders of the Corporate Debtor, the same shall automatically be released upon the approval of the resolution plan by the Adjudicating Authority. 23. It is directed that all consents, licences, approvals, rights entitlement, privileges, whether under law, contract, lease or license, granted in favour of the company shall not be discontinued or terminated on the basis of the fact of admission of CIRP or change of management/ownership of the Corporate Debtor, if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor cannot be transferred to any other entity as per the provisions of the State Excise Act and this would frustrate the purpose of the resolution applicant, the other two resolution plans that were rejected by the CoC have not been given to them and that the resolution applicant has increased the amount offered to the operational creditor from ₹9,17,083/- to ₹2 crore during the course of hearing before this Tribunal through an affidavit and therefore the resolution plan is full of latches. 29. It may be noted that the erstwhile board of directors were allowed to file their objections to the resolution plan vide the order of this Tribunal dated 04.02.2019 wherein it was observed as follows: On the above basis, it is clear that Hon ble Supreme Court has given direction that the erstwhile Board of Directors may be furnished with the copy of the Resolution Plan so that they can participate effectively in the meeting of the CoC. It is pertinent to mention that the judgement of the Hon ble Supreme Court has been pronounced on 31.1.2019 and in this case, meeting of the CoC regarding approval of the resolution plan has already taken place, and the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 05.11.2018 and since then the CIRP period stopped running and thus the present application be considered as filed within the subsistence of the CIRP period. It is stated that the applicant through its letter dated 01.02.2019 informed the RP about its interest in submitting a Resolution Plan for the Corporate Debtor. The applicant has further stated that it seeks permission to submit the resolution plan under which the applicant shall invest approximately ₹ 52.50 crores ,which consist of ₹ 35.60 crores towards the liabilities of the Corporate Debtor, ₹ 12.90 crores towards capital investment for up gradation of the plant of the Corporate Debtor and ₹ 4.00 crores towards working capital for the Corporate Debtor. This Bench in its order dated 14.02.2019 while considering this application has observed that: Before disposing of MA 1363/2018, it is necessary to consider and dispose of MA 602/2019 which has been filed by Chhattisgarh Distilleries Ltd. It is also important to point out that the proposed offer by Chhattisgarh Distilleries Ltd. is more than double the amount which is given in the approved resolution plan. However, to see the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor,(ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v)does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I B Code. The powers and functions of the Board have been delineated inSection196 of the I B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of a variety of factors. Towit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section31of the I B Code dealing with approval of the resolution plan. 35. The following points have been further added by Hon ble Technical Member: a. It is pertinent to mention that the Liquidation Value of the Corporate Debtor is ₹22.75 crores, Fair value is ₹32.48 crores and the Resolution Applicant namely Dera Finvest Pvt. Ltd. offered ₹23.51 crores which was approved by the CoC with majority voting share 98.72%. b. As per IBC and CIRP Regulations, Liquidation Value as per Regulations 2(1)(k) means - the estimated realizable value of the assets of the Corporate Debtor, if the Corporate Debtor were to be liquidated on the insolvency commencement date and Fair value as per Regulations 2(1)(hb) means - the estimated realizable value of the assets of the Corporate Debtor, if they were to be exchanged on the insolvency commencement date between a willing buyer and a willing seller in an arm s length transaction, after proper marketing and where the parties had acted knowledgeably, prudently and without compulsion. The concept of Fair Market Value was introduced in the Regulations with effect from 6.2.2018. In the instant case CoC has approve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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